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Post date: February 26 2004

U.s. Department Of Justice And New York State Sue To Stop Oracle Takeover Effort

State Attorney General Spitzer today announced that New York has joined the United States Department of Justice’s lawsuit to prevent Oracle Corporation from acquiring PeopleSoft, Inc. Oracle and PeopleSoft are two of the largest sellers of computer software to large commercial and governmental customers in the United States and worldwide. DOJ and New York argue that a merger would reduce competition in the sale of these important products, which are used to automate business processes, such as accounting, payroll, and employment records.

Currently, Oracle and PeopleSoft compete head to head to sell software applications to government entities across the United States, offering customers reduced ownership costs and options for advanced technology. New York State spends or will spend millions of dollars to purchase and install the software.

The lawsuit, brought today in federal court in San Francisco by the Antitrust Division of the U.S. Department of Justice, Attorney General Spitzer and the Attorneys General of six other states alleges that an Oracle takeover of PeopleSoft would substantially lessen competition in the sale of large enterprise software in violation of federal antitrust law. According to the complaint, Oracle’s attempted acquisition of PeopleSoft, if completed, would raise prices, reduce innovation, and limit the choices available to commercial and government users. The complaint identifies SAP as the third software seller to large enterprises.

"Without PeopleSoft in the market, Oracle would lose the incentive to offer lower prices, better services, and more innovative products. It is unlikely that other companies could fill the competitive void that an acquisition of PeopleSoft by Oracle would create," Spitzer said. "We are concerned with getting the best value for taxpayers’ tax dollars. If Oracle’s tender offer were successful, many state and local agencies will have only two viable options to buy software that is critical to their organizations."

Its takes years for a company to develop the customer base necessary to establish itself as a reliable choice for demanding commercial and governmental customers. With PeopleSoft removed from the market, only Oracle and SAP would have the experience to provide these types of applications to the largest enterprises.

The lawsuit follows an extensive investigation by federal and state antitrust officials, which began shortly after Oracle announced its public takeover in June 2003.

The case is being handled by Assistant Attorneys General Howard Wettan, John Ioannou and Sondra Roberto of the Attorney General’s Antitrust Bureau, under the direction of Bureau Chief Jay Himes.