Advocacy Group Calls on Michigan, DOJ to Drop Oracle Suit

Both entities' recent purchases of enterprise software from companies other than the three named in the case contradict their position that Oracle's takeover of PeopleSoft would be anticompetitive, the Association for Competitive Technology says.

The Association for Competitive Technology, an education and advocacy group that represents about 3,000 software developers, system integrators and IT consultants, is demanding that the state of Michigan and the U.S Department of Justice immediately withdraw their lawsuit against Oracle Corp.

Michigan Attorney General Mike Cox on Wednesday laid claim against Oracle of Redwood Shores, Calif., by joining the Justice Departments federal suit to block Oracles takeover bid for rival PeopleSoft Inc.

The Justice Department is suing to block Oracles $9.4 billion hostile bid to acquire PeopleSoft of Pleasanton, Calif., on the grounds that the deal would be anticompetitive to the software industry. The department said a successful acquisition would narrow the field from three enterprise-software providers—Oracle, PeopleSoft and SAP AG—to two.

Oracle will argue in a San Francisco federal court this summer that the Justice Departments definition of the Enterprise Resource Planning market is too narrow and that the industry is in fact rife with competition.

ACTs issue with the state of Michigan, and ultimately with the Justice Department, is that both entities have recently purchased enterprise software from companies other than the three named in the case.

"The lawsuit Michigan chose to join is predicated on a single fact: Oracle, SAP and PeopleSoft are the only companies in the world providing accounting and human resources software to large companies and government agencies," ACT president Jonathan Zuck said in a statement. "Yet the state of Michigan itself uses software from a completely different company than the only three options named in the lawsuit."

According to news reports, the Justice Department on Tuesday awarded a $24 million contract for accounting software to Fairfax, Va.-based American Management Systems Inc. The state of Michigan, meanwhile, uses ERP software from Lawson Software Inc. of St. Paul, Minn., as well as accounting software from AMS, according to ACT, which is based in Washington, D.C.

/zimages/3/28571.gifOracle and Dell recently announced that they are bundling Oracle Database 10g on Dell servers in a move on the SMB market. Click here to read more.

While Oracle includes midmarket vendors such as Microsoft Corp. and Lawson in its definition of competition, the Justice Department has confined its definition of the market to enterprise software providers that serve large companies—leaving out midmarket players as well as vendors that market primarily to governmental agencies.

Despite efforts to buy more COTS [commercial off-the-shelf] applications, many governmental agencies still purchase software specifically geared toward the public sector. AMS caters to governmental agencies and has a separate defense and intelligence business.

But AMS announced in March that it will merge with CGI Group Inc. and sell its defense and intelligence business to CACI International Inc. for $415 million in cash. CACI of Arlington, Va., is one of the largest governmental IT contractors, according to business research firm Hoovers Inc.

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