Oracle-DoJ Case Moves to Videotape

While the government and ten states maneuver in their bid to prevent Oracle from its $9.4 billion proposal to acquire PeopleSoft , the judge in the case is mulling how both sides will present their cases in court — including the use of videotape and secure servers.

But documents filed this week show a contrasting approach to the evidence by both sides, and underscore how difficult it can be to follow the paper trail even with several months of preparation.

The DoJ is seeking to block Oracle’s PeopleSoft takeover bid by arguing that the merger between two major enterprise software providers would be anti-competitive and limit customers’ choices. Oracle is fighting to thwart the DoJ’s stance.

District Court Judge Vaughn R. Walker will hear arguments from lawyers with the U.S. Department of Justice and Oracle on a handful of key points, including the so-called “Discount Forms,” which Oracle uses in selling software and services; a tutorial to familiarize the Court with the products involved; and the handling of confidential corporate information.

During the first pre-trial hearing, the court overseeing the case ordered a tutorial that would “basically familiarize the Court with the products involved,” and illustrate “the technological characteristics of the type of software” at issue. Judge Walker and others are skeptical of the government’s connection between the market definitions of enterprise resource planning (ERP) tools — Human Resource Management or Financial Management Services — and
Oracle’s traditional database products.

The DoJ is expected to submit two videotapes taken
in July, 2001 from Keane Consulting. The Boston-based firm videotaped overview presentations and demonstrations made separately by both Oracle and PeopleSoft to better inform its customers in their evaluations of the software products. But Oracle argued that, instead of using videotapes, a three-hour live presentation by each side is the best way to educate the judge about the issues involved in the case.

Equally daunting is the task of sifting through Oracle’s “Discount Forms”
documentation. After a trial run and four separate attempts at passing the
information electronically, Oracle handed over some 188 boxes of materials
earlier this month to separate out the discount request forms (e-mails and
other documents) while working on getting the DoJ a usable electronic
version of the files. The DoJ said plodding through the files has been a
“Herculean task” that is preventing it from preparing its experts.

Oracle called the issue “one-sided,” suggesting that the DoJ has already
had the best and earliest access to the kinds of pricing data relevant to
this case not to mention many months of documentation from PeopleSoft, SAP
and other firms.

Judge Walker is also expected to welcome three new states to the DoJ’s
case. Last week, Michigan, Connecticut, and Ohio threw their
hats in the ring

Representatives with the Department of Defense and Fidelity Employer
Services — both large customers of Oracle’s — as well as rivals like
Microsoft , SAP , Siebel Systems, Sungard
Bi-Tech and niche software vendors such as Lawson Software and QAD , have asked the court to block
certain parts of their business technology and best practices from being
entered as evidence. The documents could contain detailed data on customers,
competitive bids on contracts, pricing details, budgets and product

Judge Walker ruled the documents would need to be stored on a
non-Oracle server and remain on each company’s individual servers. The judge
said Oracle’s lawyers would need to be supplied with special, secure and
restricted access to the filings. The Judge is expected to fine-tune the
order in preparation of the exhibits being exchanged on May 14.

Analysts said time was the enemy when Oracle was thinking of preventing the J.D. Edwards deal before PeopleSoft prevailed in its merger with the enterprise software company; and if Oracle is seriously considering spinning the company off, if its takeover of PeopleSoft is allowed, time is still the enemy.

“The longer this drags on, the slimmer are the chances of this deal
succeeding,” Melanie Hollands, president of Koala Capital, a hedge fund that
focuses on technology stocks, told

And even if it does clear the DoJ, EU and various “poison-pill” measures
still left in place in PeopleSoft, there are customers that would not buy
the PeopleSoft product from an “Oracle/PeopleSoft”, even if Oracle swears it
will continue to “support” it, Hollands said.

“Folks will assume that Oracle will under-invest in the further
development of the application — and no one wants to invest in ERP software
that is bound to become obsolete in four to five years.”

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