Oracles President Downplays Oligopoly Comment

Oracle's Philips answers the DOJ's questions about a 2002 report he wrote that described a back-office applications provider "oligopoly" composed of Oracle, PeopleSoft and SAP AG.

Wrapping up the second week of a trial that has the U.S. Department of Justice seeking a federal injunction to block Oracle Corp.s proposed acquisition of rival PeopleSoft Inc., the Justice Department leaned on testimony from Oracle President Charles Phillips to bolster its case.

The Justice Department played its taped deposition of Phillips Friday in the San Francisco U.S. District Court, Northern District of California courtroom. Phillips was presented with a 2002 report he wrote that described a back-office applications provider "oligopoly" composed of Oracle, PeopleSoft and SAP AG.

The DOJs line of questioning was not without some irony. Despite Phillips writing the report some two years ago, it can be used today to describe the DOJs case against Oracle.

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The term "oligopoly"—a market condition in which sellers are so few that the actions of any one of them will materially affect price—sums up the DOJs definition of the enterprise market should a merger between Oracle and PeopleSoft occur: one that would shrink from three players—Oracle, PeopleSoft and SAP—to two. The result would be a negative impact on pricing, innovation and, ultimately, consumers, according to the DOJ.

Phillips downplayed the report—and his influence as a technology analyst with one of the worlds top investment firms—classifying it as only a quarterly report that "very few people actually read," according to news reports.

Phillips wrote the report during his tenure with Manhattan based-Morgan Stanley. Oracle hired Phillips away from that post last year and quickly promoted him to president, serving alongside Safra Catz. Phillips is also the most public proponent of Oracles proposed $7.7 billion buyout of PeopleSoft.

With this second full week of testimony behind it, the DOJ will rest its case next week after potentially pivotal testimony from the typically bombastic Oracle CEO Larry Ellison on Monday—presented as taped testimony—and from Microsoft Corp.s Business Solutions executive Doug Bergum on Wednesday.

The DOJ will also present additional expert testimony early next week.

Once the DOJ rests its case, Oracle will have an about two and a half weeks to present its case. The company will seek to prove that the enterprise software market comprises far more companies than the DOJs definition—including the likes of Microsoft, of Redmond, Wash.

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