DOJ Moves to Block Oracle's Bid for PeopleSoft - InformationWeek

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DOJ Moves to Block Oracle's Bid for PeopleSoft

The Department of Justice, joined by seven states, said it would file a civil antitrust lawsuit against Oracle Corp. to block its attempt to acquire PeopleSoft Inc.

The Department of Justice, joined by seven states, said Thursday that it would file a civil antitrust lawsuit against Oracle Corp. to block its attempt to acquire PeopleSoft Inc.

“We believe this transaction is anticompetitive -- pure and simple,” said Assistant Attorney General R. Hewitt Pate of the Department's Antitrust Division in a statement. “Under any traditional merger analysis this deal substantially lessens competition in an important market.”

In deciding to move against Oracle's hostile bid, Pate followed the advice of his staff members who had recommended against the takeover.

In announcing its decision, the Antitrust Division said that the only firms competing in the development and sale of high-function integrated human resource management and financial management services software were Oracle, PeopleSoft and SAP.

“Consequently,” the division said in a statement, “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 benefiting from aggressive price discounts and more innovative software as a result.”

The states joining the division in the civil suit include the Attorneys General of Hawaii, Maryland, Massachusetts, Minnesota, New York, North Dakota and Texas.

There was no comment from Oracle immediately after the announcement. In the past Oracle's Chief Executive Larry Ellison has indicated that Oracle might appeal a negative decision by the Justice Department.

In a statement, PeopleSoft said the DOJ's decision confirms what the company has argued since Oracle's unwelcome bid. Peoplesoft has maintained that the merger would likely be prohibited under antitrust law.

"Now that the antitrust day of reckoning has arrived and the Justice Department has announced its decision to sue to block the transaction, it is time for Oracle to abandon its efforts to acquire the company," Craig Conway, PeopleSoft president and chief executive, said. "Both companies should now devote all of their energy to competing in the marketplace to provide better products and services for customers. That's the PeopleSoft way of creating greater value for our stockholders."

Additional reporting by Antone Gonsalves.

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