Oracle hoping Microsoft can help it win antitrust battle

Oracle has vowed to call witnesses from its old adversary, Microsoft. It hopes they will convince Judge Walker that, despite what the deal may do to the existing market for enterprise software, Oracle is about to face stiff competition from Bill Gates' company, according to reports.

Enterprise software deals with the co-ordination of business functions such as financial planning and reporting, human resources and supply chain management. Oracle's battle began in June last year when it submitted an offer to buy rival firm PeopleSoft. At the time the bid was largely seen as a spoiler to prevent PeopleSoft amicably acquiring another player in the market, JD Edwards.

That acquisition went ahead, but Oracle has stuck to its plans to buy PeopleSoft, despite lawsuits filed against it by PeopleSoft, JD Edwards and the State of Connecticut. Antitrust investigations by the Department of Justice and the European Commission were also instigated, with the Commission due to report in May this year.

On Thursday, the US Department of Justice filed its own antitrust lawsuit.

"We believe this transaction is anticompetitive – pure and simple," said R Hewitt Pate, Assistant Attorney General in charge of the Department's Antitrust Division.

"Under any traditional merger analysis this deal substantially lessens competition in an important market," he continued. "Blocking this deal protects competition that benefits major businesses, as well as government agencies that depend on competition to get the best value for taxpayers' dollars."

According to the Justice Department, Oracle, PeopleSoft and one other company, SAP, are the only companies that currently compete to develop and sell the high-function integrated human resource management and financial management services software that meets the needs of these large enterprises.

Consequently, Oracle and PeopleSoft frequently engage in head-to-head competition during the complicated and lengthy bidding process through which these software solutions are purchased, with customers benefitting from aggressive price discounts and more innovative software as a result.

"Large companies, institutions, organisations and government entities depend on competition to provide and maintain enterprise software that is critical to their efficient and cost-effective day-to-day operations," added Pate. "This lawsuit seeks to ensure that there will continue to be vigorous competition in this important industry."

Oracle has vowed to fight. "The Department of Justice decision follows an aggressive lobbying campaign by PeopleSoft management," said Oracle spokesman Jim Finn.

He continued: "It is inconsistent with the overwhelming evidence of intense competition in the markets we serve, and we believe it is without basis in fact or in law. A combined Oracle/Peoplesoft will significantly benefit all customers and shareholders involved."

San Jose Mercury News reports that in Judge Walker's most recent high-profile antitrust case, he declined to block the sale of the San Francisco Examiner to Hearst Corp. and accused the Justice Department of "cronyism" for its role in the case.

Oracle also announced yesterday that it has extended the deadline for its latest offer to PeopleSoft shareholders to 25th June.