Says the transaction would result in lessened competition in the area of enterprise software, including CRM.
As expected,
the U.S. Department of Justice last week sued to block the proposed merger of
Oracle and PeopleSoft, citing antitrust issues.
In a press statement, the department said that
if the merger were allowed to proceed, it would eliminate competition between
two of the three largest providers of enterprise software and that it would
result “in higher prices, less innovation and fewer choices for the businesses,
government agencies and other organizations that depend on this type of
software.” The third competitor is considered to be SAP.
The DOJ also noted that the attorneys general from Hawaii, Maryland,
Massachusetts, Minnesota, New York, North Dakota and Texas are joining the
suit.
“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. 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.”
Oracle, which embarked on the hostile bid
to buy PeopleSoft back in July, said it was unhappy with the decision
and that the merger would only benefit customers. "The Department of
Justice decision follows an aggressive lobbying campaign by PeopleSoft
management," said Jim Finn, an Oracle spokesman. "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."
In early February, PeopleSoft's board rejected Oracle's latest bid,
an offer totaling about $9.4 billion, saying it undervalued the company. Oracle,
for its part, is pinning its merger hopes on PeopleSoft's upcoming
stockholder's meeting, in which it hopes PeopleSoft shareholders will vote out
the current board in favor of new directors more friendly to the idea of a
merger. That meeting is scheduled for March 25.
For more information, visit PeopleSoft here and Oracle
here.
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