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Oracle argues takeover case in Europe

Oracle wraps up its two-day hearings before the European Commission, where it argued against European antitrust regulators' objections to its hostile $9.4 billion bid for PeopleSoft.

Oracle wrapped up its two-day hearing before the European Commission, as it attempts to persuade European antitrust regulators to allow its hostile bid for PeopleSoft to move forward.

The European Commission, which issued a statement of objections last month, conducted oral hearings late into the evening on both nights to let Oracle present its case before the Commission's May 11 deadline.

Market leader SAP, which does not object to the acquisition, weighed in on the deal before European antitrust regulators, as did customers, sources said.

"These hearings are usually confidential, but third parties are allowed to speak, providing there are no objections by the company," said a former high-level antitrust regulator with the European Commission. "These (third-party formal interventions) are usually granted, unless the company can prove a compelling reason not to. Also, if a company doesn't let others speak, it undermines their credibility."

SAP wanted to express its views that it disagrees with the regulators' definition of the market, said Herbert Heitmann, an SAP spokesman. He noted SAP does not believe the market can be divided into two segments--large, multinational customers and small users.

"We don't care about the Oracle-PeopleSoft merger, but we do care about the definition of the market," Heitmann said. "Our (software) solutions have the capability to serve both small and large customers."

European regulators, in its statement of objections, cited a number of concerns. The commission noted the takeover would reduce competition, from three to two, in the area of financials and human resources enterprise software for large multinational corporations. It also noted the barrier to entry was high in this particular market, all of which was similar to claims made by the U.S. Department of Justice, which in February announced it would challenge the deal.

If the European Commission rules against the deal and prevails through any appeals, or if the Justice Department prevails in its June 7 trial to block the merger, Oracle will be shut out of closing its $9.4 billion takeover bid.

After the hearing, European Commissioner Mario Monti will issue a draft decision in the coming weeks to be signed by the 15 member states. Once the states respond, the Commission will issue its final draft.

PeopleSoft and Oracle declined to comment on the hearings, citing the confidential nature of the proceedings.