Judge Asks for Clarification in Oracle/DoJ Trial

A federal judge presiding over the fate of Oracle’s
quest for PeopleSoft asked for a clarification from both
parties before he renders his decision.

District Judge Vaughn Walker issued an order Monday suggesting that the
“unilateral effects” of the proposed deal were not clearly stated in court.

Last week, the two sides issued “Findings of Fact” and are expected to
issue their closing arguments on July 20. Judge Walker may not render his
decision until at least August.

“It appears from the evidence that ‘high function’ enterprise
applications software is neither homogenous nor standardized and transparent
in pricing. Hence, coordinated effects analysis would appear to afford the
court relatively little guidance in assessing the effects of the proposed
merger,” Judge Walker said in his filing.

The two sides must first clarify if they believe there is a coordinated
effects approach, or “collective dominance,” in play. Second, the court
requested that the parties provide a detailed analysis of the legal
framework to be used in analyzing unilateral effects claims.

The order follows an antitrust suit filed by the U.S. Department of
Justice to block Oracle’s unsolicited bid. The government spent four weeks
trying to prove that the deal would limit choice and create uncertainty in
the enterprise resource planning (ERP) market.

Oracle’s lawyers called several witnesses to the stand, including CEO
Larry Ellison. The company argued that the ERP definition is too narrow and
must be widened to include Microsoft and IBM, as well as Fidelity and
Ceridian, which they claim bend the rules when it comes to ERP.

Rob Christopher, a partner with Coudert Brothers who has been following
the Oracle case, said one thing learned from the disclosures about
contemplated mergers is that the high end of the enterprise software space
already is highly consolidated, highly coveted and highly influential.

“We also have seen that the presence of three major players in this
segment of the software business makes for robust competition, with sometimes
steeply discounted pricing that serves user organizations — whether
business or governmental — very well,” Christopher told
internetnews.com. “Neither Oracle nor SAP like that, which explains
their witnesses’ key testimony more than any other single cause. On
balance, I found Oracle’s defense to be mostly smoke and mirrors, but I
think it was well strategized and well presented to a judge who hinted from
the outset at some skepticism about the government’s case. Consequently,
the outcome is far from clear.”

Despite its additional legal obstacles, Oracle said it is committed to go
the distance in its quest to acquire its cross-town rival.

The Redwood Shores, Calif.-based software vendor issued a statement
Monday saying it would extend its offer of $21 per-share or $7.7 billion for
PeopleSoft. It is the latest such extension since Oracle dropped
its takeover price from $26 per-share or $9.4 billion. The company said its
tender offer was previously set to expire at midnight on Friday, July 16,
2004. Oracle said it currently has approximately 4,693,092 shares or about
1.3 percent of PeopleSoft’s shares in its favor.

A spokesperson for PeopleSoft characterized the offer as “another anemic response
from investors.”

Oracle’s takeover plan for PeopleSoft still faces many hurdles including
PeopleSoft’s civil trial filed against the merger that is scheduled for
November, the company’s shareholder rights “poison pill,” its Customer
Assurance Program and a potential antitrust challenge from the European
Union.

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