Connecticut is suing Oracle Corp. on antitrust grounds in order to block its acquisition of PeopleSoft Inc., state leaders announced on Wednesday.
Governor John G. Rowland, Attorney General Richard Blumenthal and State Comptroller Nancy Wyman issued a release saying that the lawsuit would be filed on Wednesday in U.S. District Court in Hartford.
The lawsuit alleges that Oracles hostile takeover bid would “violate state and federal anti-trust laws, directly damage the state and its economy, and raise prices for businesses, governments and consumers by significantly reducing competition in the markets PeopleSoft serves and forcing current PeopleSoft customers to replace their software with other companies products,” the statement said.
Gov. Rowland said in the statement that Oracles move to acquire PeopleSoft has the potential to cost the state millions of dollars and would be a threat to the technology improvements the state has made over the years.
Those improvements include an ongoing project to convert the states computer system, known as Core-CT, which represents a $100 million contract based on software the state bought from PeopleSoft under a 5-year contract signed in 2002.
The revamped Core-CT is scheduled to be switched on for its debut next month. Now that PeopleSofts fate is up in the air, the project might have to be completed with new software purchased from a replacement company, Wyman said in the release—a change that would cost Connecticut taxpayers tens of millions of dollars at a time “when we can least afford it,” she said in the release.
“It would also mean an incredible loss of work and employee training that has been invested in this important project,” Wyman said. “I am hopeful that the Attorney Generals action can prevent what would be a terrible waste of time and money.”
The statement noted that Oracle, PeopleSoft and SAP AG are the only “meaningful participants” in the markets for enterprise software for financial management, human resources and suites, as well as customer relations and student administration software. The merger would create a duopoly, the state charged, were that already small pool to shrink down to two players.
The release noted that Connecticut is assembling a “powerful coalition” of other state governments and consumers who will also suffer from high costs if the takeover goes through. Calls to the Attorney Generals office to determine what other states and consumer entities are in on the action were not returned as of the time this story was posted.
Oracle executives responded to the suit by saying they are eager to meet with Connecticut to explain why the deal would be a boon rather than a burden. “We welcome the opportunity to meet with the State of Connecticut and explain the substantial benefits of our PeopleSoft acquisition to State agencies,” said Jennifer Glass, an Oracle spokeswoman, in a release. “We are confident agencies in Connecticut will have lower costs, better support and enhanced functionality after this deal is closed. We also look forward to explaining why this acquisition will result in substantially more competition in enterprise software markets.”