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U.S. to block Oracle's PeopleSoft bid
Justice Department says proposed takeover would hurt competition in
WASHINGTON (CNN) - Federal antitrust regulators filed suit to block Oracle Corp.'s $9.4 billion bid to buy PeopleSoft Inc. Thursday, saying the proposed merger would reduce competition in the software industry.
"If the merger were allowed to proceed, it would eliminate competition between two of the nation's leading (software) providers ... resulting in higher prices, less innovation and fewer choices" for business and government agencies, the Justice Department statement said in a statement.
"We believe this transaction is anticompetitive -- pure and simple," said Assistant Attorney General R. Hewitt Pate, who oversees the department's antitrust division. "Under any traditional merger analysis this deal substantially lessens competition in an important market."
The civil antitrust lawsuit was filed in U.S. District Court in San Francisco. Attorneys general in Hawaii, Maryland, Massachusetts, Minnesota, New York, North Dakota, and Texas joined the federal government in bringing suit.
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The move came after staff lawyers at the antitrust division had recommended action against the deal.
Oracle said the Justice Department's lawsuit was a misguided move that came after aggressive lobbying by PeopleSoft management.
"It is inconsistent with the overwhelming evidence of intense competition in the markets we serve, and we believe it is without basis in fact or in law," Oracle spokesman Jim Finn said in a one-paragraph statement.
PeopleSoft said Oracle should drop its bid because of the lawsuit, Reuters reported.
Oracle raised its hostile offer for PeopleSoft to $26 a share, or about $9.4 billion, earlier this month.
Shares of Oracle rose about 1 percent in late-afternoon trading on Nasdaq while shares of PeopleSoft sank 2.2 percent.
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