Three states ask to join Oracle antitrust suit

Three more states are seeking to join a class-action lawsuit filed in February that challenges Oracle's proposed hostile takeover of software vendor PeopleSoft.

Officials in Connecticut, Michigan and Ohio have filed an amended complaint with the U.S. District Court in the Northern District of California in San Francisco, asking that they be allowed to join the antitrust lawsuit filed Feb. 26 by the U.S. Department of Justice (DOJ) and seven other states -- Texas, Hawaii, Maryland, Massachusetts, Minnesota, New York and North Dakota.

In a statement Friday, Ohio Attorney General Jim Petro said he seeks to join the antitrust case to ensure a competitive market for businesses and government agencies that purchase financial management and human resources software.

"The proposed acquisition of PeopleSoft by Oracle would substantially lessen competition in this market, and would thus result in higher prices, less innovation and reduced customer support," he said.

Michigan Attorney General Mike Cox agreed, saying in a statement Wednesday that the goal of the antitrust action is fair competition among businesses and a better climate for consumers.

"We're joining this fight to make sure Michigan taxpayers do not have to pay more for goods and services, and to help guarantee a continued, diversified business market," Cox said. "I will fight to make sure that Michigan businesses and consumers aren't at the mercy of those who seek to evade our antitrust laws for their own unjust gain."

Cox said that if the acquisition were successful, the merger would impair competition among businesses, government agencies and other organizations.

Connecticut Attorney General Richard Blumenthal also filed a request to join the antitrust suit, but he could not be reached for comment Monday. Connecticut filed its own antitrust suit against Oracle last year.

Oracle began its takeover pursuit of PeopleSoft last June and has now offered as much as US$9 billion for the company. PeopleSoft continues to reject Oracle's takeover attempts. Oracle's purchase now faces a number of objections on antitrust grounds by the European Union as well as the U.S. DOJ.

Last week, PeopleSoft allowed a customer assurance program to lapse that had offered rebates to potential customers in case the company is acquired by Oracle and its products are discontinued. The program could be restarted, but the takeover seems less likely now, according to a company spokesman.

Now 10 states have launched suits against Oracle's bid, making the takeover's success less likely, wrote analyst Donovan Gow at American Research Technology, in a recent note. While acknowledging Oracle's hostile offer has hurt PeopleSoft's ability to close sales, especially in its education and government verticals, these latest suits should give PeopleSoft's salesforce something to use as "growing evidence that the bid will fail on regulatory grounds," he said. While the takeover attempt may drag on for some time, as more customers and prospects become confident of its failure, PeopleSoft's "fundamentals" will start to turn around, he predicted.

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