States prep Oracle-PeopleSoft review

State antitrust attorneys were busy signing confidentiality agreements, which would enable them to share information on Oracle, PeopleSoft and J.D. Edwards among one another and with the U.S. Department of Justice, sources familiar with the situation said. And although the move by no means signals that they will file a lawsuit to block Oracle's bid, it does indicate their level of interest in taking the next step to review the deal--and gives a glimpse into the number of states that could ultimately be party to a concerted action.

"It's obvious they are taking this seriously, and it's not a surprise," Steven Swasey, a PeopleSoft spokesman said. "We believe there are serious antitrust issues involved. Clearly, there are major issues for customers, and it doesn't surprise us that the state attorneys general are taking it seriously."

The confidentially agreements are necessary for companies to feel confident that the sensitive corporate documents and information they are providing to regulators will not be shared with competitors or the public. And for state antitrust regulators, the information will help them determine the next step--be it a formal investigation or a lawsuit to block Oracle's bid.

For example, federal antitrust regulators last week made a second request for information from Oracle. The software company expects to provide such internal documents and information as market share, customers, competition and other sensitive materials, Oracle executives said during their analyst day presentation on Wednesday.

Confidentiality agreements are common in any state attorney general probe, and it is usually the first step taken before a formal investigation is launched, should one occur, said Howard Morse, a former senior official with the Federal Trade Commission's high-tech antitrust division and now a partner with the law firm Drinker Biddle & Reath in Washington, D.C.

"It is important not to confuse process with outcome," Oracle spokesperson Jim Finn said. "The current review process is not surprising given the size and scope of the transaction, the highly fragmented enterprise software marketplace and the fact that PeopleSoft is also proposing its own transaction, which is undergoing regulatory review. We remain optimistic that the Department of Justice will conclude that this transaction is not anticompetitive, and that we will complete the transaction in a timely manner."

Despite the large number of 30 states signing these confidentiality agreements, one source familiar with the situation said "the states have not taken a concerted action."

Florida, Hawaii, Indiana, Massachusetts, California and Texas are just some of the states that have confirmed they are reviewing the Oracle bid.

"We're taking a look at the merger, but we have not launched a formal investigation," said Mark Bennett, Hawaii's attorney general. State laws require his agency to seek approval from the state supreme court in order to pursue formal investigations, he added.

While Florida uses a lot of PeopleSoft software, the state has not yet decided that it will formally investigate, said JoAnn Carrin, a spokeswoman for the Florida attorney general.

Meanwhile, Oregon has officially opened an investigation into the matter, said Jan Margosian, a spokeswoman for the Oregon attorney general. Connecticut filed its lawsuit to block the Oracle merger shortly after it was first announced.

The state attorneys general last month held a routine conference call, in which they discussed the Oracle merger proposal and the need to determine how much PeopleSoft, Oracle and SAP software is used at their respective state agencies and at quasi-government agencies such as universities.

PeopleSoft and J.D. Edwards expect to hear by late Monday whether the Justice Department will issue a second request for information in their merger. Last month, PeopleSoft announced plans to acquire J.D. Edwards, which was followed up a few days later with a hostile bid from Oracle to acquire PeopleSoft.