Judge tells Oracle to provide discounting details

A federal judge told Oracle Corp. on Wednesday that it must provide the U.S. Department of Justice (DOJ) with information about discounts it has provided to customers, which could serve as evidence in the DOJ’s suit to block Oracle’s takeover of PeopleSoft Inc.

The judge also set a trial date of June 7 for the case, and set aside two weeks for each side to present its case. The parties had both been seeking a trial date of June 21.

The DOJ charged earlier this week that Oracle had withheld “discount forms” during the agency’s investigation into the antitrust implications of the merger. The forms would be among the most direct evidence that the presence of PeopleSoft in the enterprise applications market directly affects the prices and features of Oracle’s software, according to the DOJ.

Speaking at a case management conference Wednesday morning at the U.S. District Court for the Northern District of California, Judge Vaughn Walker agreed with the DOJ’s assertion that the documents could be material to the case.

“If I understand the nature of those forms correctly, it would seem to me that those forms would likely lead to the discovery of admissible evidence,” he said. Oracle and the DOJ were ordered to solve the problem of how many forms Oracle should provide and when it should provide them.

Oracle counsel Daniel Wall argued in court that the DOJ’s request for discount forms is too broad because it would include information about Oracle’s customers in the midmarket, which he said is not relevant to this case. DOJ Trial Attorney Claude Scott said information about the midmarket is also critical, because it helps to show how competition works across different markets.

Judge Walker also instructed the DOJ for its part to provide Oracle with answers to a list of questions the software vendor has asked. By asking these questions, or “interrogatories” in legalese, Oracle hopes to get details of the DOJ’s case that are not disclosed in the government’s complaint. The DOJ had proposed limits to the number of questions Oracle can ask.

The judge also decided that the DOJ should tell Oracle which witnesses it intends to call for trial so that Oracle can better prepare its defense. The DOJ had offered to provide a list or organizations that may have information it could use at trial, but had declined to name specific witnesses it may call or even the organizations they could come from.

Oracle and the DOJ were also at odds over the confidentiality of information provided to the DOJ by 33 third parties, including Oracle competitors and customers. The DOJ wanted Oracle’s in-house lawyers barred from accessing that information, but the judge decided instead that those third parties must appeal to the court if they want specific information to be kept confidential.

The DOJ filed a lawsuit last month to block Oracle’s hostile takeover bid for rival PeopleSoft. Combining the two companies would stifle competition in the enterprise software market, according to the DOJ. The DOJ sees Oracle, PeopleSoft and SAP AG as the only companies that sell enterprise applications meeting the needs of large organizations.

Oracle has countered that customers can turn to several vendors for their software, and argues that the DOJ has failed to define a relevant “high end” market.

A follow up case management telephone conference was scheduled for March 19, and a third pretrial conference at the San Francisco District Court on April 16.

“This transaction has been hanging over this market for months and we want to see it resolved quickly,” said Bruce McDonald, deputy assistant attorney general in the DOJ’s antitrust division, speaking after the hearing. “The faster the trial schedule, the better it is for the antitrust division.”

Oracle launched its hostile bid for PeopleSoft in June last year. The all-cash offer has been raised twice and is now valued at US$9.4 billion. Oracle is offering US$26 per PeopleSoft share, a price higher than PeopleSoft’s shares have traded at in the past 52 weeks.

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