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Judge Sets Oracle Antitrust Trial

March 11, 2004|Joseph Menn | Times Staff Writer

SAN FRANCISCO — A federal judge on Wednesday set a June 7 trial date for the U.S. Justice Department's attempt to block Oracle Corp.'s $9.4-billion effort to buy PeopleSoft Inc., giving the two sides three months to prepare for a case that could reshape the market for business-management software.

Government antitrust lawyers and Redwood City, Calif.-based Oracle had asked for a speeded-up trial starting June 21, citing the uncertainty that's disrupting the $40-billion market for software that manages such functions as payroll and customer service. In his first hearing in the case, U.S. District Judge Vaughn Walker moved up that date by two weeks.

Walker also weighed in on a handful of procedural motions during the hearing here. He pushed Oracle to turn over evidence about discounts it has given to large customers, but he sided with the company in two of its attempts to get more information from the government.

While the hearing was intended for scheduling and other routine matters, both sides used it to try to shape Walker's view in advance of the trial, which is expected to last a month.

Oracle attorney Daniel Wall castigated the government's lawsuit for giving only a vague description of the business-management software market. Antitrust enforcers say that if the deal goes through, the field will shrink from three dominant players -- SAP, Oracle and PeopleSoft -- to two.

"I believe it is among the most ambiguous anti-merger complaints the department has ever filed," Wall told the judge, noting that the suit fails to give the estimated share of the market belonging to each of the three companies. Pleasanton, Calif.-based PeopleSoft has urged its shareholders to reject Oracle's hostile bid for the company. The offer is essentially on hold during the legal proceedings.

Lawyers for the Justice Department, which usually succeeds in derailing the mergers it opposes, argued that large companies seeking back-office software have little choice beyond SAP, Oracle and PeopleSoft. Oracle maintains that big customers buy essentially the same programs as mid-size customers, a market in which there is more competition.

Germany-based SAP, which doesn't object to the merger, said it has 54% of the market, followed by Oracle at 13% and PeopleSoft at 12%. It pegged the share for Microsoft, a late entrant to the field, at 11%. Oracle says Microsoft will keep competition intense, but the software powerhouse has said it has no plans to chase the biggest business-software buyers.

Walker, who once presided over a fraud suit brought by Oracle shareholders against the company, urged the two sides to compromise on matters related to evidence. But he also told Justice Department lawyer J. Bruce McDonald to start answering Oracle's written questions.

"We've got to start defining the case in concrete terms so that it can be tried," Walker said from the bench.

On Nasdaq on Wednesday, Oracle shares rose 10 cents to $12.41 while PeopleSoft dropped 72 cents to $19.19. Oracle's offer values PeopleSoft at $26 a share.

Bloomberg News was used in compiling this report.

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