SAN FRANCISCO—Oracle Corp.s attempted hostile takeover of PeopleSoft Inc. is a "textbook definition of predation" under currently defined antitrust law and should be barred by the federal courts, PeopleSoft contends in a white paper it prepared at the request of the U.S. Department of Justice.
PeopleSoft released copies of the white paper to the media Tuesday because Oracles lawyers had already referred to the document in its cross-examination of government witnesses, said PeopleSoft spokesman Steve Swasey.
The company decided it would be best to release the entire document at once rather than let it leak out "in bits and pieces" during the course of the trial, even though the report contains information the company regards as confidential, Swasey said.PeopleSoft released the white paper in advance of the appearance scheduled for Wednesday of Phil Wilmingon, PeopleSoft vice president of Americas, who will testify for the government.
The paper, titled "A Hostage Taking," claims Oracles bid is as much an effort to disrupt PeopleSofts business plans and slow its sales growth as it is an attempt to take over the company. The report was prepared for PeopleSoft by Gary Reback, an attorney with the law firm Carr & Ferrell of Palo Alto, Calif.
Reback argues that the Oracle bid "was a sham from the beginning" and cited internal Oracle e-mails in his claim that Oracle executives themselves conceded that the buyout was "an overly aggressive move" to keep PeopleSoft from "overtaking Oracle as the number two apps vendor."
Reback says in the report that it has been a long-accepted tenet in "antitrust circles" that predatory conduct can include manipulation of "administrative or judicial proceedings to prevent, delay, or raise the cost of a rivals entry into the market."
This view is also supported by earlier U.S. Supreme Court decisions that described business conduct as predatory if it "does not further competition on the merits or does so in an unnecessarily restrictive way."
The paper also supports the DOJs contention that customers will suffer if the takeover is approved because Oracle intends to migrate customers to Oracle applications rather than provide long-term support for PeopleSofts ERP (enterprise resource planning) software.
The buyout would do more than "inflict tens of billions of dollars of injury on customers and diminish competition in what are now robust and competitive" ERP markets. It also would undermine competition in the enterprise database software market and "solidify Oracles market position."
This is because PeopleSoft applications run on multiple relational database systems, including IBMs, while Oracle applications only run on Oracle databases, Reback wrote.