Oracle discounts revealed in court

Depends how much competition there is...


Oracle was in court yesterday trying to overturn the Department of Justice decision that it can't buy PeopleSoft.

But video evidence from Oracle exec Keith Block revealed that the database giant is prepared to cut prices by as much as 70 per cent - because of competition from other vendors. The DoJ is opposed to the deal because it believes it will reduce enterprise software providers from three to two. According to the DoJ, Oracle, PeopleSoft and SAP are the only players in this market.

Block said Oracle never discusses price until it is sure it can offer the customer what it wants.

Block also said Oracle was planning a stripped-down version of its software to sell to medium-sized businesses. Government lawyers said this undermined Oracle's claims that there is no difference between selling to large and medium businesses.

The court also heard evidence from Richard Bergquist, PeopleSoft's chief technology officer, who testified that Oracle and SAP are the main competition it sees for big customers. But Oracle lawyers introduced PeopleSoft documents which named Lawson Software as a serious threat. Bergquist also admitted that there was no clear definition of what the market was or the kind of customers they were going after.

He told the court he believed Microsoft would enter the market for enterprise software in 2006 or later. Microsoft yesterday said that it held talks on a possible takeover of SAP late last year.

Oracle first made its hostile bid for PeopleSoft in June 2003 with an offer to shareholders of $5.1bn. This was rejected by the PeopleSoft board. In November 2003 the EC announced it was to investigate the proposed deal. In February 2004 Oracle raised its offer to $9.4bn but was again rejected by the board. The Department of Justice then filed a civil anti-trust suit to try and scupper the deal. Even if Oracle convinces the court in the US still has to satisfy European regulators that the deal is good news for consumers. ®

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