Trade body backs Oracle over PeopleSoft bid

A trade association has sided with Oracle over its fight to persuade the US courts to allow its $7.7bn bid for rival PeopleSoft.

Oracle's challenge against the anti-competitive charge filed against it in February by the US Department of Justice (DoJ) begins today.

The DoJ has argued that an Oracle-PeopleSoft merger would mean only two rivals - Oracle and SAP - in its particular market, and that this could drive up software prices.

But the Software & Information Industry Association (SIIA), of which Oracle is a member, has said in a report that the DoJ is wrong on two counts.

It disagrees that Oracle and SAP will be the only vendors of significance in the market for accounting and HR management applications if the acquisition is successful. It also disagrees that software prices will rise as a result.

The SIIA said that the DoJ did not take into account the growing number of companies that pay monthly fees to vendors such as Salesforce.com to provide rival software services, or the growing trend of outsourcing payroll or accounts.

It also said that web services would level the playing field to help smaller vendors compete more effectively with larger ones.

The association added that a decision to prevent Oracle from buying PeopleSoft could damage the sector by hampering competition.

"DoJ's assumptions, in fact, appear to create an unworkable framework for promoting effective competition at a time when the software industry is recovering from the information technology spending slowdown, consolidating and changing rapidly," said the SIIA's report.