Eyes on Australia after EU clears Oracle's PeopleSoft bid

Decisions by a United States court and European Union officials to effectively clear regulatory hurdles from the path of Oracle's proposed US$7.7 billion acquisition of PeopleSoft are poised to persuade Australian competition regulators to green-light the transaction.

Decisions by a United States court and European Union officials to effectively clear regulatory hurdles from the path of Oracle's proposed US$7.7 billion acquisition of PeopleSoft are poised to persuade Australian competition regulators to green-light the transaction.

The EU announced earlier this week that Oracle could proceed with its hostile takeover bid, six weeks after a US District Court judge ruled that the Department of Justice, which brought court action over the move, "ha[s] not proved that a post-merger Oracle would have sufficient market share in the product and geographic markets" to be anti-competitive.

The Australian Competition and Consumer Commission is expected to make a final determination on its stance within two weeks.

ACCC officials are believed to have undertaken extensive consultation with their European and United States counterparts and further work on the competition effects of the merger since chairman Graeme Samuel announced in March this year the had concerns the proposed acquisition would lead to "a substantial lessening of competition in breach of the Trade Practices Act 1974".

Samuel said at the time the regulator would not take any action in light of the consideration of the matter by the US courts. He noted that, of the Australian users of enterprise software application contacted by the ACCC, several had expressed concern that the proposed acquisition could restrict their choices significantly and lowered the level of competition.

However, EU antitrust regulators elected to allow the deal after appearing to weigh issues mulled by their US counterparts when they lost their court action. They determined the enterprise software application market was a worldwide market and, even with the elimination of one of the three largest players through the Oracle acquisition of PeopleSoft, the market would remain competitive. The number one player, SAP, together with companies such as IFS, Intentia, Lawson and QAD, would continue to help ensure a competitive landscape.

The EU said its ruling was backed by heavyweight research into human relations and financial planning and reporting software bids, while observers commended the US District Court judge's ruling as thorough, well-reasoned and "practically appeal-proof".

PeopleSoft has rejected each of Oracle's offers to date, including its latest for US$21 per share.