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Microsoft move undermines Oracle bid

A sworn statement from the software giant strengthens the Justice Department's hand as it tries to block Oracle's bid to buy rival PeopleSoft.

Executives at Microsoft have given U.S. antitrust authorities a sworn statement that could help the government's effort to block Oracle's bid to buy PeopleSoft, attorneys familiar with the case said.

Microsoft's statement to the Justice Department undercuts one of Oracle's central arguments in defense of the $9.4 billion deal--that the two companies will soon face competition from Microsoft for a crucial part of their business.

The department filed suit Feb. 27 to block Oracle's bid for PeopleSoft, saying it would be anticompetitive. Oracle has dismissed such concerns as unwarranted, citing among other things an imminent competitive threat from Microsoft, the world's largest software company.

But in the statement given to investigators, a representative of Microsoft says the company has no plans during the next two years to move into the market at issue--software sold to large business customers to manage things like finances, human resources and sales forces, the sources said.

"Microsoft has been deposed and said they will not enter this space (soon)," one source said.

Representatives of Microsoft and the Justice Department both declined to comment on what the company has told investigators. A representative for Oracle declined to comment.

Microsoft's role in the Oracle-PeopleSoft case is the latest twist in a long struggle between two bitter rivals.

Oracle was one of a group of technology companies that lobbied hard for the Justice Department to bring its landmark antitrust case against Microsoft and is now urging European regulators to crack down on company.

A federal appeals court ultimately found Microsoft liable for using illegal tactics to maintain its monopoly in personal computer operating systems. It reached a settlement with the Justice Department in November 2001.

The European Commission is in the final stages of another antitrust investigation and is expected to decide within a matter of weeks what sanctions, if any, to impose.

Now it's Oracle that could get tripped up in court.

Whether or not Redmond, Washington-based Microsoft will be competing in the market cited by the government will be an important question during the upcoming trial.

"To the extent that's a market, and Microsoft would find it difficult to enter relatively quickly, that would be very compelling testimony for the government," said Robert Doyle, an antitrust lawyer with the firm Sheppard, Mullin, Richter & Hampton.

Story Copyright  © 2004 Reuters Limited.  All rights reserved.