Oracle, DOJ Lawyers Spar To The End

The 3 1/2-hour round of closing arguments offered the opponents a final chance to present their contradictory views to U.S. District Judge Vaughn Walker, who is expected to issue his decision within two months.

The ruling could extend or end Oracle's relentless pursuit of Pleasanton, Calif.-based PeopleSoft--a saga that began in June 2003 with a hostile bid that stunned the software industry.

People lined up to secure one of the roughly 110 seats about 90 minutes before the arguments began. The courtroom audience included the Justice Department's antitrust chief, R. Hewitt Pate, and PeopleSoft's chief executive, Craig Conway. Oracle CEO Larry Ellison, who testified during the trial, didn't attend Tuesday's hearing.

Walker frequently interrupted Tuesday's closing arguments to press Justice Department attorney Claude Scott and Oracle attorney Daniel Wall to offer more support for the positions that the two sides staked out during a month of testimony that concluded July 1.

"He gave each side a good workout," Wall said afterward.

The Justice Department contends Redwood Shores, Calif.-based Oracle should be barred from buying PeopleSoft because the combination would undermine competition in a market sliver that accounts for about $500 million in annual sales of business application software. Analysts have estimated the overall market at anywhere from $20 billion to $40 billion.

Oracle argues the government's market definition is too fuzzy, too narrow, and largely irrelevant, given the rapidly shifting dynamics of the high-tech industry.

Walker's line of questioning Tuesday indicated he is still struggling with the government's market definition--a critical issue in the case. The judge described the definition as "unwieldy and awkward" and at one point asked Scott, "Is this a definition that has ever been used outside this litigation?"

The government's case is built on the premise that only Oracle, PeopleSoft, and Germany-based SAP have the resources to provide the business applications software that automates a range of financial and personnel management jobs for the nation's largest companies.

Scott conceded this market segment might seem imprecise at times, but insisted it covered a distinct group of large U.S. businesses and government agencies whose needs differ from smaller organizations.

"Whether there is a technical, formal definition, the market acts in a way consistent with there being two products and two sets of customers," Scott said.

Walker also seemed troubled by the government's effort to narrow the market definition to large U.S. companies because Oracle, PeopleSoft, and SAP all sell essentially the same software products in Europe, too. "How can this be anything but a global market?" the judge wondered.

Even if the market definition is expanded to include Europe, a combination between Oracle and PeopleSoft would still break antitrust laws, Scott said.

While raising reservations about the government's market definition, Walker also questioned Oracle's motives for buying PeopleSoft, perhaps its fiercest rival in the business-applications software market. "What possible justification could there be for Oracle to spend $7.7 billion (on a PeopleSoft takeover) ... except to obtain market power?" Walker asked Wall.

For more on Oracle's bid for Peoplesoft, see CRN.

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