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Twisting antitrust law?

In response to the report by Alorie Gilbert, "SAP takes Oracle's side in DOJ battle":

Good story, but one element of this case was overlooked: The Department of Justice is using a new and unproven interpretation of antitrust law to support its contention that the Oracle-PeopleSoft combination is anticompetitive.

Essentially, the Justice Department is asserting that the market for enterprise applications consists of thousands of "markets of one," in which the competitive landscape is limited to the scope of competitors a prospective enterprise buyer would consider when making an enterprise resource planning or customer relationship management purchase. That's why the department says prices would rise--because its interpretation of the market deliberately reduces the number of competitors when looked at on a deal-by-deal basis.

Shai Agassi's comments reflect a broad industry view that there is robust competition in the enterprise market, and the Justice Department's interpretation excludes most market players. I'm not going to speak for Agassi, but almost everyone I know who has looked at the department's strategy finds a lot of discomfort in it, which is why we generally believe that the government is misguided.

The story here isn't about Oracle and PeopleSoft but rather about how the Justice Department is attempting to extend its reach into the technology industry, following a long series of legal draws in other cases. It's hard for them to be successful with the traditional interpretations of the Sherman Act. Therefore, they are looking to redefine what markets are in order to tilt the odds in their favor.

I don't think that anyone is rallying for Larry Ellison's side because they think he is right; rather, because if the Justice Department is successful in this case, life could get difficult for any significant market player to complete a large merger or acquisition in this the technology industry.

Jeff Nolan
Palo Alto, Calif.