Oracle Moves to Dismiss Suit as DOJ Rests Case

 
 
By John Pallatto  |  Posted 2004-06-25
 
 
 
SAN FRANCISCO–Oracle Corp. Thursday asked the court to summarily dismiss the Department of Justices lawsuit on the grounds that the government had totally failed to prove its case that Oracles bid to buy PeopleSoft Inc. would violate federal antitrust law.

DOJ lead attorney Claude Scott opposed the motion and claimed the government had presented "ample evidence" to support its claims that the buyout would create an uncompetitive market in the United States that would drive up prices for high-end enterprise application software.

Oracle lead attorney Daniel Wall moved to dismiss the suit after the DOJ finally rested its case by presenting a video deposition by Orlando Ayala, Microsoft Corp.s senior vice president of small and mid-market solutions and partner group. A dismissal motion is standard procedure for defendants in a lawsuit after the plaintiff rests its case.

However, U.S. District Court Judge Vaughn Walker did not rule on the motion Thursday and it was unclear whether he would make a decision before Oracle completes its case next week. Wall estimated in court that his team is prepared to present three or four more days of testimony before it rests its case.

The DOJ had failed to prove its case on "all the essential elements" that the PeopleSoft buyout would produce the "unilateral effect" of creating an uncompetitive market, Wall said. The evidence presented by the DOJ also didnt support its argument that there were distinct "high-function" or "mid-range function" customers who would only be served by distinct classes of software vendors.

Instead, the testimony showed that were a variety of vendors selling "an ever-changing basket of goods" to meet the diverse needs of corporate customers of many different sizes, business lines and structures, he said.

Scott countered that the government had shown that Oracle, PeopleSoft and SAP AG were the only meaningful competitors in the U.S. market, which is separate and distinct from other markets around the world. Oracle and PeopleSoft, in particular, found themselves in head-to-head competition for U.S. customer contracts far more often than they went head to head with SAP, he said.

He also argued the testimony showed that SAP has had persistent difficulty building up its financial management products to penetrate the U.S. market in competition with Oracle and PeopleSoft.

Click here to read about SAPs testimony that Oracles buyout of PeopleSoft would intensify competition in the enterprise applications software market.

If Oracle is allowed to acquire PeopleSoft, it would be in a position to raise prices and customers wouldnt have adequate alternatives that would tend to moderate prices, Scott said. The DOJ had shown that the other companies suggested by Oracle, such as Microsoft, Lawson Software Inc. and Automatic Data Processing Inc., have neither the capability nor the intention of moving in to the "high-function" enterprise market.

The government presented Ayala testimony Thursday to further bolster its contention that the Microsoft Business Solutions products are squarely targeted at the mid-range corporate market.

In the deposition video, Microsofts Orlando Ayala confirmed as accurate statements Microsoft has made to customers that "the large enterprise market is not a natural extension" of the MBS business model.

Ayala said it will take years for Microsoft to build up its MBS sales even in midrange corporate markets around the world. Microsoft has always engaged in a "high-velocity" business model in which it sells high volumes of packaged software, Ayala offered.

Sales of software such as the MBS products take a lot of time, resources and money to gradually build up the business, he said.

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