SAP lends supportive letter to Oracle
Published: 09 Mar 2004 08:40 GMT
Software maker SAP plans to come to the defence of rival Oracle and its contested bid to buy PeopleSoft in a letter to the US Justice Department.
SAP spokesman Bill Wohl on Monday confirmed the company's plans to send the antitrust authority a letter. The suit, which the department filed last month, blocks Oracle from buying PeopleSoft. Oracle is challenging the suit and plans to ask the courts for a June trial date. The two companies are SAP's closest competitors in the market for application software designed to streamline business operations for the world's largest corporations.
The Justice Department contends that a $9.4bn (£5.10bn) takeover of PeopleSoft by Oracle would leave just two competitors -- SAP and Oracle -- in that software niche. In such a narrow field of competition, prices would rise and innovation would fall, the suit states. Oracle filed its response to the lawsuit last week, arguing that the merger would not be anticompetitive, as large customers have access to a sizable pool of vendors of human resources and financial business applications.
Several top SAP executives have already complained publicly about the Justice Department's decision, which discounts Microsoft and others as viable competitors to SAP and Oracle.
Wohl said he didn't know when SAP would send its letter or who at SAP would sign it.
SAP has its own interests at stake in the merger battle. The acquisition of PeopleSoft would leave SAP with one less competitor to worry about, a PeopleSoft representative pointed out. "Is anybody really surprised that the No. 1 and No. 3 companies want to have the No. 2 eliminated?" PeopleSoft spokesman Steve Swasey asked.
It's also against SAP's interests for antitrust authorities to single it out as the dominant player in its market, a conclusion that could limit its own expansion plans at some point in the future. A drawn-out conflict between two rivals plays into SAP's hands as well; the German software maker becomes the safe choice in an uncertain competitive climate.
The Justice Department's suit has touched off reactions from another corner of the competitive field. Microsoft has given the department a sworn statement that it has no plans to compete with Oracle in the business applications market during the next two years, according to a Reuters report. Such a statement could hurt Oracle's case, because its argument against the suit is based partly on the contention that Microsoft represents a growing challenge to Oracle's position in the market.
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