EU stalls for US decision on Oracle

David Lawsky

BRUSSELS: European regulators may find a way to delay a decision on blocking U.S. software company Oracle's hostile bid for rival PeopleSoft to let U.S. authorities decide first, experts said.

The European Commission must act by May 11 or Oracle wins automatic approval for the deal under European Union law. At the same time, a U.S. decision may not come until July or August.

But the European Union (EU) clock can be stopped if a company fails to provide vital evidence, and re-started once it comes in. In the U.S. case, the authorities have said such evidence was withheld and the EU could follow suit.

"I've never heard of a case in which the Commission (delayed the date) so as to synchronize proceedings on both sides of the Atlantic", said a Brussels competition lawyer who asked not to be identified.

But he added: "Since the Commission would genuinely be wanting this information, this (delay) is something they could properly do."

The $9.4 billion merger case is moving forward. Another step was taken on Thursday, when Oracle answered questions on the second and final day of a closed hearing.

At this point, some European Commission staffers would prefer that the United States decide first on the deal, which involves two companies from California.

The U.S. criticized the Commission three years ago for blocking General Electric's takeover of Honeywell. Some criticized and others praised the Commission for ruling last month to rein in software monopolist Microsoft Corp.

THE SAME TRACK

In both cases it was at least arguable that the U.S. and the EU were on different tracks. Not this time.

The Justice Department sued to block the Oracle deal and the EU said it had serious doubts.

The Justice Department suit will be considered at a trial beginning on June 7 with a final decision a month or more later.

Leading up to the trial, U.S. authorities accused Oracle of withholding critical evidence known as "discount" forms.

"These documents were among the most important evidence in this investigation," the Justice Department said in a court filing. "They provide first-hand accounts from (Oracle's) salespeople and executive of how competition affects pricing."

Antitrust authorities say there are only three major players who make software used by big multinational firms to co-ordinate and plan their financial and human resources, and relationships with customers. SAP of Germany is the third.

The Justice Department says the documents are direct evidence the disappearance of PeopleSoft into Oracle would damage competition as they show "the presence of PeopleSoft in the marketplace directly affects the prices and features of (Oracle's) software".

Oracle replies that the market is far broader and encompasses many other players, who are in a good position to compete with the big three.

Last month the U.S. judge ordered Oracle to turn the documents over.

U.S. and European Commission authorities have worked closely in developing their cases and any documents vital to the U.S. case are likely to be equally vital in making the case here.

Although the Commission makes its ruling administratively, without going to court, it could need such evidence to defend itself if later challenged in court.

The U.S. Justice Department has not said yet if it has received the evidence. It is also possible that once Justice does get it they would be passed on to the Europeans, with the permission of Oracle.

But if that does not happen, the Commission could put things on hold.

(Additional reporting by Peter Kaplan in Washington)

© Reuters