PeopleSoft acquisition under threat from legal action group

Oracle's attempt to acquire PeopleSoft is under attack by a conservative legal action group that is urging federal antitrust regulators to block the deal.

The National Legal and Policy Center (NLPC), a nonprofit group based in Washington DC, has asked the US Department of Justice, which is now reviewing Oracle's hostile $6.3bn bid for the rival software company, to stop the deal, the group said on Tuesday.

According to Kenneth Boehm, chairman of the NLPC, the proposed merger of Oracle and PeopleSoft, the second and third largest makers of business automation applications respectively, "clearly violates federal antitrust laws".

However, even combined, Oracle and PeopleSoft are still smaller than SAP in this market.

The group's letter to the Justice Department said: "This attempted hostile acquisition would significantly reduce competition in large enterprise applications, inflict severe financial damage on PeopleSoft customers who have heavily invested in the company's software applications, and inappropriately pressure the 40 per cent of PeopleSoft customers who use database products from IBM and Microsoft to switch to Oracle."

Oracle's unsolicited bid for PeopleSoft, launched last month, is under review by the Justice Department and by as many as 30 state attorneys general. The antitrust scrutiny grew more intense last month, when the department extended its initial review of the deal with a second request for information.

The state of Connecticut has filed an antitrust suit against Oracle, and PeopleSoft has hired a renowned antitrust lawyer to help it fend off the bid. Oracle maintains that its plans will not harm competition and that they are an inevitable part of a rapidly consolidating industry.

The NLPC, founded in 1991, says it promotes ethics and accountability in government and business. The group distributes a newsletter called Union Corruption Update, which scrutinises organised labour.

Alorie Gilbert writes for News.com