Posted on: Friday, February 27, 2004

Lawsuit blocks PeopleSoft takeover

By Jon Swartz and Jayne O'Donnell
USA Today

The Justice Department filed a lawsuit yesterday to block Oracle's $9.4 billion hostile takeover bid for software rival PeopleSoft, dealing a lethal blow to one of tech's biggest proposed mergers.

The lawsuit, filed in U.S. District Court in San Francisco, said the takeover would hamper competition in the $20 billion market for software sold to large businesses, leading to higher prices, less innovation and fewer choices for consumers.

"Simple common sense review of the evidence shows this would be bad for competition," Hewitt Pate, assistant attorney general in charge of the antitrust division, said yesterday.

Attorneys general from Hawai'i, Maryland, Massachusetts, Minnesota, New York, North Dakota and Texas joined the lawsuit.

"I'm relieved and feel vindicated," PeopleSoft CEO Craig Conway said. "It's time to compete in the market rather than Oracle pursue this effort to harm us."

Oracle spokesman Jim Finn called the decision "without basis in fact or in law." Last month, Oracle CEO Larry Ellison said he would suggest that the company's board challenge the lawsuit to save the transaction.