Canada weighs in on Oracle's takeover bid

The investigation by Canada's Competition Bureau is not a surprise, given the size of the $7.25 billion buyout proposal and Oracle's large presence in Canada--it has 13 offices and more than 1,000 employees. But it means that the software maker has to get approval from yet another regulatory agency. It already faces examination from the U.S. Department of Justice, a large group of state attorneys general and the European Union.

"When we become aware of a transaction like this, we commence our work like we have done in this particular case," said Robert Lancop, assistant deputy commissioner in the Competition Bureau's mergers branch.

Canada's antitrust bureau automatically reviews mergers if the combined companies will have sales equivalent to at least $400 million in imports, exports or within Canada, and if the merger price comes to at least 50 million Canadian dollars (about $35.9 million), Lancop said. He noted that there may be other circumstances that may warrant an antitrust review of a merger, even if it falls below those trigger points.

Oracle Corporation Canada, an Oracle subsidiary established in 1984 and based in Ontario, generated $226 million in revenue at the end of fiscal 2003, according to filings with the U.S. Securities and Exchange Commission. The Canadian division accounted for 2.8 percent of Oracle's total revenues at the end of its fiscal year, which concluded May 31.

"This was anticipated, as we have been in discussions with local authorities," said Deborah Lilienthal, an Oracle spokeswoman. "We are cooperating fully and hope this comes to a speedy resolution."

As for other countries that are investigating Oracle's bid for PeopleSoft, Lilienthal declined to elaborate other than to say: "We are making all appropriate antitrust filings."

PeopleSoft, meanwhile, said it had just become aware of the Canadian antitrust investigation.

"This is the first I've heard of it," said PeopleSoft spokesman Steve Swasey, "but I'm not surprised...We're looking at integrating J.D. Edwards, and that is where our focus is."

PeopleSoft's June announcement of its plans to acquire J.D. Edwards prompted Oracle to issue its hostile bid for PeopleSoft.

Canadian antitrust regulators began their inquiry into Oracle's hostile bid shortly after the software company announced its plans in June to acquire competitor PeopleSoft in a hostile bid.

As the Canadian Competition Bureau reviews the Oracle merger proposal, it remains in contact with antitrust regulators from other countries, Lancop said. He added that Canada's antitrust review process is similar to that of the U.S. Justice Department, which is also investigating the Oracle bid.

"Our process is much like the process in the United States or EU. But our dealings are more frequent with American authorities, because our two countries touch." Lancop said. "Our process may actually be more similar to the U.S. process in assessing whether a merger will result in a lessening of competition."

Once a company has filed a pre-merger notification with Canadian antitrust regulators, the merging parties have to wait either 14 days for a response from bureau officials if a short form is used or 42 days if a long form is submitted. Oracle has the option to choose either form.

Companies that move forward in closing a deal before the pre-notification has been dealt with face criminal charges and a fine of up to $50,000, Lancop said.

"Since we view this as a criminal matter, the companies take this very seriously," Lancop said.

The state attorneys general from 30 U.S. states are also reviewing Oracle's bid for PeopleSoft.

And the European Commission, the E.U. regulatory body that handles antitrust matters, and Oracle are in preliminary talks about its buyout proposal, said Tilman Lueder, a spokesman for the commission's competition department. Once Oracle formally files its paperwork, or first filing, with the commission, European antitrust regulators will have one month to either clear the deal or launch a more in-depth probe. A second investigative round would then be completed within four months, Lueder said.

Some antitrust attorneys say the international coordination of reviewing large merger deals is growing.

"When there are substantial transactions proposed by companies, we have seen a proliferation of merger reviews by governments around the world," said Howard Morse, a former senior official with the Federal Trade Commission's high-tech antitrust division and now a partner with law firm Drinker Biddle & Reath in Washington, D.C. "These governments, however, cooperate, and it's not surprising to ultimately see these other governments follow the U.S. lead."