Oracle responds to DOJ’s antitrust lawsuit

Oracle’s attempted takeover of PeopleSoft would enhance competition, not harm it, the company argued Thursday in its response to the U.S. Department of Justice’s antitrust lawsuit seeking to block the merger.

Oracle’s attempted takeover of PeopleSoft would enhance competition, not harm it, the company argued Thursday in its response to the U.S. Department of Justice’s (DOJ) antitrust lawsuit seeking to block the merger.

The takeover would allow Oracle to compete better with SAP, the market leader in human resource management (HRM) and financial management services (FMS) software, Oracle’s lawyers argued in a response to the DOJ filed Thursday in the U.S. District Court for the Northern District of California. The merger would also help Oracle compete with Microsoft, which is “aggressively expanding its position in enterprise applications software,” Oracle’s lawyers argued.

The DOJ’s view that Oracle, PeopleSoft and SAP are the only vendors that meet the needs of the large enterprise market for HRM and FMS software is “illogical and wrong,” Oracle’s answer to the DOJ said. Other software vendors produce HRM and FMS packages used by companies of varying sizes, including enterprises, Oracle argued.

Oracle argued the DOJ has failed to define a particular market that would be harmed by the merger, and the DOJ is artificially drawing a distinction between enterprises and smaller businesses to give the impression of a small number of vendors of what the DOJ calls “high-function” HRM and FMS software.

A merged Oracle and PeopleSoft would have about 14% of total revenues for HR and payroll software licenses and maintenance, the Oracle document argued.

The DOJ had no comment on the Oracle court filing, according to a spokesman there.

The DOJ has argued that a merger between Oracle and PeopleSoft would drive up prices for HRM and FMS software because Oracle would have little incentive to give large customers discounts. The merger would give the new company little incentive to innovate and create new products, the DOJ argued in its lawsuit, filed in February.