Oracle Corp. vowed to vigorously challenge the Justice Department's lawsuit to block its hostile bid to take over PeopleSoft Inc. Oracle plans to take its case directly to a PeopleSoft user group on Monday, while at the same time continuing its $26-a-share offer for PeopleSoft shares.
"The decision was very clear," said the DOJ's Assistant Attorney General, Antitrust Division, Hewitt Pate, in a press conference outlining his decision. "We took this action because it's the right thing to do. We believe this transaction is anticompetitive--pure and simple."
Market definition is a key to the issue with PeopleSoft--and now the DOJ, which is arguing for a narrow definition of the market with just three key players: Oracle, PeopleSoft, and SAP. Oracle maintains the market--human-resources and financial-management software, essentially--is much wider and includes multiple firms competing vigorously with each other.
Pate said his staff had interviewed customers who rely on such software and found that "a great number of them were very concerned" about the prospect of reduced competition that could result from a merger of the two firms. He said also that consulting companies were also interviewed in the DOJ investigation.
Even Microsoft--currently a minor player in this market--was interviewed about "potential for entry," but Pate indicated the potential-for-entry issue did not play an important part in its investigation.
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