States to query 1,000 in PeopleSoft bid

For now, the review process remains broad in its approach and has yet to focus on any one aspect of the companies' software business, according to sources close to the probe. As a result, Oracle and PeopleSoft may find it difficult to craft a targeted defense plan, legal experts say.

Thirty state attorneys general are each handling more than two dozen interviews from which they will write brief summaries to share with each other. Customers interviewed need to have at least $250 million in annual revenue and a minimum of 1,000 employees, said a source close to the investigation.

Questions posed to customers range from why they have chosen to use PeopleSoft, Oracle or J.D. Edwards software to what steps they would take in altering their IT plans should Oracle acquire PeopleSoft. J.D. Edwards' customers and competitors are being questioned because PeopleSoft acquired the company.

"Larger companies are concerned about the functionality with the software if the merger occurs, but smaller companies are more focused on price," the source said.

After the states wrap up their interviews, the attorneys general will review the material for common themes and set their focus accordingly, the source said. No deadline has been set for the various state attorneys general to wrap up the interviews, and industry watchers have suggested it may take months.

"Interviewing 1,000 people is an ambitious goal, even for a deal this size," said a former government antitrust attorney who is now in private practice. "I doubt they'll ultimately reach that goal."

Meanwhile, Oracle and PeopleSoft customers and industry consultants may not be much help in offering the two companies a clear sense of where antitrust attorneys are headed with their review of the buyout bid. A couple of consultants and customers said the questions were wide-ranging and that it was difficult to assess where the potential focus of the review may be.

"It's not unusual for companies involved in antitrust merger reviews to also call customers and ask them what they are telling regulators and what kind of questions they are asking," the antitrust attorney said. "It lets companies know what regulators are hearing, so they can present their arguments and facts in a way that is consistent with their customers but (with the message they want to get across)."

For example, a customer may have told regulators that the merger would be a problem. But when contacted by the company, the customer may later agree under some circumstances the merger would not create difficulties for its business.

"The company can tell regulators that under X and Y, the customer did not think the merger was a problem, or, better yet, the company could ask the customer to write a letter to regulators to explain why X plus Y would not be an issue," the antitrust attorney said.

PeopleSoft has not been proactively calling its customers to find out what questions antitrust regulators have asked, said DeeAnna McPherson, a PeopleSoft spokeswoman. She noted, however, that PeopleSoft has contacted its customers to inform them antitrust regulators may be calling them based on a customer list the company was asked to provide.

"Sometimes they'll ask what to expect," McPherson said. "We let them know the kinds of questions they might expect to hear. Sometimes customers will call us back after they've talked (to regulators)."

Oracle declined to comment.

In addition to the review by state regulators, Canada's Competition Bureau is examining Oracle's buyout proposal for any antitrust issues, the European Commission, the antitrust regulatory body of the EU, is holding talks with Oracle about its buyout bid and the U.S. Department of Justice has issued a second request for more information on the deal.