Oracle, U.S. antitrust case comes to close

Spencer Swartz

SAN FRANCISCO: Oracle Corp. released IBM documents that it said shows IBM feared the competitive effects of an Oracle-PeopleSoft Inc. merger as Oracle finished witness testimony in its quest to gain approval of its hostile takeover of rival PeopleSoft.

A so-called "rebuttal" witness from the University of Chicago business school also argued on the government's behalf that he believed around 10,000 PeopleSoft employees stood to lose their jobs if Oracle succeeded in buying PeopleSoft.

The testimony from both sides came on the final day of the one-month antitrust trial that will determine whether Oracle's $7.7 billion bid for PeopleSoft can move forward.

Final arguments in the trial are scheduled for July 20. U.S. District Court Judge Vaughn Walker, who will solely decide the outcome of the trial, is not expected to issue a ruling until at least August.

The U.S Justice Department sued to block the takeover merger because it argues customer choice would be reduced and prices would rise for software that big companies use to run their human resource and financial operations.

Dan Wall, Oracle's lead attorney, told reporters he believed Oracle had established how the takeover was not anti-competitive.

"We're very pleased with how the trial went and I think we accomplished a lot of the goals we set out from the beginning," Wall said.

Oracle has argued that companies like Microsoft Corp. and SAP AG of Germany - the world's biggest business software maker - compete with Oracle and PeopleSoft in the U.S. enterprise software market.

The government argues that market, limited to human resource and financial management software, is essentially comprised of two competitors, Oracle and PeopleSoft.

JOB LOSSES, IBM

Mark Zmijewski, a professor at the University of Chicago's Graduate School of Business, said by his own estimates based on documents he had reviewed from Oracle that around 10,000 PeopleSoft employees stood to lose their jobs if Oracle succeeded in its takeover bid.

Zmijewski said Oracle's cost-saving estimates of about $1.2 billion resulting from the merger were not "verifiable" because there was "no methodology" and "no factual" basis upon which Oracle's figures rested. The professor, however, said he used the same information to derive his job-loss estimates.

Oracle said last Friday it believed about 6,000 PeopleSoft employees stood to lose their jobs in the event of a takeover.

The released International Business Machine Corp. documents had been put under court seal at the outset of the trial because of IBM's concerns about the confidentiality of the information.

The documents, however, released Thursday still kept IBM's estimate on the potential financial impact of an Oracle/PeopleSoft merger under court seal.

Oracle said at the beginning of the trial that the documents show IBM fears losing millions of dollars if Oracle succeeds in its hostile takeover bid.

David Teece, a professor at the University of California at Berkeley's Haas School of Business, also cited separate internal IBM documents that refer to the changing technology market and how IBM could counter the competitive threat of a merged Oracle/PeopleSoft.

Teece, Oracle's final witness, testified he also believed the U.S. government's case to block Oracle's takeover bid ignores competition that would keep a lid on software prices even if the two companies merged.