Oracle judge vows 'tougher line' on testimony

SAN FRANCISCO--As the first week of testimony wound down, the federal judge overseeing the Justice Department's case to block Oracle's hostile bid for PeopleSoft was still grappling with the key issue of market definition.

Judge Vaughn Walker took an active role Thursday in asking questions of the two witnesses who testified during the high-profile case, taking place in U.S. District Court here. They included a former executive at J.D. Edwards, which PeopleSoft acquired just as Oracle launched its surprise bid, and a senior vice president at systems integrator BearingPoint.

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Walker also displayed impatience with third-party witnesses who were quick to black out portions of their testimony and related documents that they deemed "highly confidential."

"I was surprised by the extent of information that was redacted, especially when much of it was generic," Walker said. "When we have such claims of confidentiality, how can I assess the credibility of the witness?"

The judge said he would be skeptical about documents and testimony that had been redacted.

"It seems we have incentives in place to reward confidentiality and don't punish it. What can we do to create an incentive to avoid it?" he asked attorneys for Oracle and the Justice Department. "I will take a much tougher line on accepting any more redacted information from this point forward. You, or a third party, will have to show good cause for any redactions...like a specific showing of commercial harm."

At issue in Thursday's testimony was whether the business applications software market can be defined by smaller players and large enterprise vendors. Oracle seeks a broad definition that does not differentiate between the two, while the Justice Department wants a narrow definition that would include only Oracle, PeopleSoft and SAP. That would go down to two players if Oracle and PeopleSoft are allowed to merge.

For his eventual ruling on a market definition, Walker is expected to give greatest emphasis to competition, pricing and innovation.

"In trying to discern between the midmarket and (enterprise) market, is there anything you can do to help me discern between the two markets? That would be helpful," said Judge Walker, who expects the trial to conclude in about three weeks.

Richard Allen, former chief financial officer for J.D. Edwards, described the midtier market as comprising companies more interested in integrated software suites, because they require less work for the customer's limited IT staff.

"A midmarket customer also tends to be in one industry, whereas an (enterprise) customer may be involved in multiple industries," Allen said.

During cross-examination, Oracle attorney Tom Rosch suggested J.D. Edwards was capable of moving into the enterprise market but had abandoned those efforts in the 1990s because it believed the arena was already saturated during the Y2K preperations.

Following Allen, the Justice Department called on Perry Keating, senior vice president of global enterprise solutions for system integrator BearingPoint. Keating emphasized that the majority of enterprise customers that his company deals with tend to select PeopleSoft, Oracle or SAP, with Lawson Software a distant fourth.

On Wednesday, the Justice Department used testimony from Verizon, a PeopleSoft customer, and computing giant IBM to bolster its argument that there's not enough significant competition in Oracle's market to allow it to swallow PeopleSoft.

A day earlier, Oracle used PeopleSoft analyses of competitive pressures to argue that two smaller players, Lawson and American Management Systems (AMS), were a significant part of the market.