Justice Department sues to block Oracle-PeopleSoft merger

WASHINGTON (AP) _ The Justice Department filed a lawsuit Thursday to block Oracle Corp.'s proposed $9.4 billion takeover of software rival PeopleSoft Inc. <br><br>``We believe this transaction is anticompetitive,

Thursday, February 26th 2004, 12:00 am

By: News On 6

WASHINGTON (AP) _ The Justice Department filed a lawsuit Thursday to block Oracle Corp.'s proposed $9.4 billion takeover of software rival PeopleSoft Inc.

``We believe this transaction is anticompetitive, pure and simple,'' said R. Hewitt Pate, assistant attorney general in charge of the antitrust division.

The lawsuit, filed in U.S. District Court in San Francisco, contends that the proposed merger between two top business software companies would lead to higher prices, less innovation and fewer choices for customers.

Oracle executives had hoped that Pate would reject a Justice Department staff recommendation that the deal be scuttled and clear the path for the Redwood Shores, Calif.-based company to make its case directly to PeopleSoft shareholders at a meeting scheduled March 25.

But Pate said that Oracle, Pleasonton-Calif.-based PeopleSoft and one other firm, SAP, are the only companies that compete with each other to develop and sell enterprise human resource management and financial services software for large businesses, government and non-profit organizations.

The fact that the firms frequently engage in bidding wars to win these big contracts helps ensure that customers benefit from the fruits of competition, Pate said.

``Blocking these deals protects competition that benefits major businesses, as well as government agencies that depend on competition to get the best value for taxpayers' dollars,'' he said.

Oracle in 2003 earned some $9 billion in revenue, including $2 billion from its enterprise software applications. PeopleSoft had $2 billion in revenue in 2003, all of it from enterprise software.