In a paper it published Friday, the Software & Information Industry Association (SIIA) said the agency's conclusion that the merger would narrow the field to two competitors and result in higher prices is deeply flawed. The trade group warned that a decision against Oracle would wound an already hobbled business sector.
The judge's line of questioning will be
a key indicator of whether he's inclined
to overrule a federal challenge to
Oracle's hostile bid for PeopleSoft.
"DOJ's assumptions, in fact, appear to create an unworkable framework for promoting effective competition at a time when the software industry is recovering from the information technology spending slowdown, consolidating and changing rapidly," the report states.
The antitrust agency filed suit against Oracle in February, charging that the proposed $7.7 billion deal would leave companies only two choices for broad suites of accounting and human resource management applications: Oracle and German rival SAP. Oracle is challenging the suit. The trial is set to begin Monday.
Among the trends the association claims the government missed in its competitive analysis is the increasing popularity of software available by monthly subscription from smaller rivals such as Salesforce.com. Another is a growing inclination among some companies to outsource payroll and other business functions, including the computer systems, the SIIA said.
The Justice Department also overlooks the impact of new technologies on the competitive landscape, including emerging standards called Web services, the SIIA said. These software design standards could help niche companies compete more effectively by making their programs more interoperable, the group argues.
It's not surprising that a trade association would weigh in against government interference in its industry. The SIIA has 600 members, which include Oracle and many other large software firms, although PeopleSoft is notably absent from its membership roster. Oracle General Counsel Daniel Cooperman sits on the organization's board.
However, the SIIA took sides with the Justice Department in the agency's antitrust case against Microsoft, a move that led the software giant toof the group.
A PeopleSoft representative declined to comment directly on the SIIA report but defended the Justice Department's ruling. "We've said all along that the bid is anticompetitive," PeopleSoft spokesman Steve Swasey said.
On the eve of the much-anticipated trial, antitrust experts noted how rarely companies challenge government antitrust suits and that rarer still are precedents in the IT industry.
The most recent was a 2001 case in which SunGard, a disaster-recovery company, won a Justice Department suit that Drinker, Biddle & Reath, a law firm specializing in antitrust matters.its $825 million acquisition of a rival unit of Comdisco. One important difference in that case was that the investigation and litigation proceeded very quickly, because Comdisco was in bankruptcy, said Howard Morse, a partner at
"The government has had a lot more time in this case to understand these markets and build its case," Morse said. "It also has the advantage of having knowledgeable company officials at PeopleSoft who are willing to cooperate."