DOJ is optimistic about Oracle trial at halftime

Halfway into the U.S. government's case to block Oracle Corp.'s takeover of PeopleSoft Inc., a high-ranking official from the U.S. Department of Justice (DOJ) expressed optimism in blocking the database vendor's US$7.7 billion [b] bid.

The government's trial team, led by Claude Scott, has provided "compelling" evidence that the acquisition will be anticompetitive and result in higher prices, less innovation and fewer choices for businesses, government agencies and other organizations relying on human resource and financial management enterprise software, said R. Hewitt Pate, assistant attorney general in charge of the DOJ's antitrust division, in a statement Tuesday after the government rested its case.

Only three companies -- Oracle, PeopleSoft and SAP AG -- currently supply this type of software to large companies, and head-to-head competition among them, according to customer and expert testimony, has kept prices competitive, Pate said. The loss of that competition, he said, would lead to higher prices and less innovation for enterprise software.

Pate dismissed claims by Oracle that new companies entering the marketplace would keep the company's prices in check, arguing that entry into the enterprise market is "extraordinarily difficult" and could require years to accomplish.

The assistant attorney general also discredited attempts to draw attention to Microsoft Corp.'s consideration of becoming a major player in the enterprise software market by acquiring SAP. Such a move, he said, would create no new competition.

The remarks from Pate come nearly two weeks after Judge Vaughn Walker, on the first day of the trial, peppered Scott with questions about the DOJ's market definition. The judge asked why the DOJ has focused its cased on the U.S. software market rather than the worldwide market, and why it considers Oracle, PeopleSoft and SAP to be the only alternatives for "high-function" enterprise applications used by large corporations.

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