Should PeopleSoft Wave the White Flag?

The stakes are so high in Oracle's interminable campaign to buy out PeopleSoft that both companies could end up bleeding themselves to exhaustion in this war of attrition.

Oracle has triumphed in many more ways than one with the U.S. District Courts decision to deny the Justice Departments request for a permanent injunction against its buyout of PeopleSoft.

But this decision could prove to be just one skirmish in what has been a long, complicated and costly campaign to determine whether PeopleSoft will survive as an independent company.

The injunction would have been the quickest relief PeopleSoft could expect from the interminable and debilitating fight to fend off Oracles takeover bid.

But U.S. District Judge Vaughn Walkers decision last week showed that the government built its case on a weak foundation of vague and arbitrary market definitions. In fact, the government failed to prove nearly all of its key legal assertions.

It failed to prove that the relevant market for ERP (enterprise resource planning) software was limited to Oracle, PeopleSoft and SAP. The market should include a handful of mid-market players such as Microsoft, Lawson Software and ADP, Judge Walker found.

/zimages/4/28571.gifMicrosofts questionable contention that it wasnt ready to enter the ERP market fell apart in the trial, according to Microsoft Watchs Mary Jo Foley. Read more here.

It also failed to prove its curious assertion that, for the purposes of this antitrust trial, the ERP market is not global, but is instead limited to the United States because thats where the competition among Oracle, PeopleSoft and SAP was the most intense.

Having failed to prove each of these assertions, the government could hardly demonstrate that if Oracle succeeded in buying out PeopleSoft it would be in a position, either on its own or in collusion with SAP, to control prices in the U.S. market for ERP software.

/zimages/4/28571.gifClick here to read why analysts say Oracle will have to substantially boost its bid have a chance to buyout PeopleSoft.

R. Hewitt Pate, assistant attorney general in charge of the Justice Departments antitrust division, says it is "considering its options" in terms of whether there are any promising avenues for appeal. But that approach hardly seems viable, considering that the courts decision totally demolished the governments case.

Next Page: Decision puts PeopleSoft on the defensive.

John Pallatto

John Pallatto

John Pallatto has been editor in chief of QuinStreet Inc.'s since October 2012. He has more than 40 years of experience as a professional journalist working at a daily newspaper and...