US states step up review of Oracle's takeover bid

Justice Department to examine confidential documents ahead of possible investigation

Around 30 US states are ramping up their review of Oracle's $6.3bn hostile bid for PeopleSoft amid increasing antitrust concerns. US state antitrust attorney generals are signing confidentiality agreements, which would enable them to share information on Oracle, PeopleSoft and JD Edwards between each other and with the US Department of Justice (DoJ), according to sources familiar with the situation. Although the move by no means signals they will file a lawsuit to block Oracle's bid, it does indicate their level of interest in reviewing the deal - and gives a glimpse into the number of states that could ultimately be party to a concerted action. Steven Swasey, a PeopleSoft spokesman, said: "It's obvious they are taking this seriously, and it's not a surprise. We believe there are serious antitrust issues involved. Clearly, there are major issues for customers, and it doesn't surprise us that the state attorneys general are taking it seriously." The confidentially agreements are necessary for companies to feel confident that the sensitive corporate documents and information they are providing to regulators will not be shared with competitors or the public. And for state antitrust regulators, the information will help them determine the next step - be it a formal investigation or a lawsuit to block Oracle's bid. Federal antitrust regulators last week made a second request for information from Oracle. The software company expects to provide such internal documents and information as market share, customers, competition and other sensitive materials, Oracle executives said during an analyst presentation earlier in the week. Confidentiality agreements are common in any state attorney general probe, and it is usually the first step taken before a formal investigation is launched, should one occur, said Howard Morse, a former senior official with the Federal Trade Commission's high-tech antitrust division and now a partner with the law firm Drinker Biddle & Reath in Washington DC. Jim Finn, spokesman for Oracle, said: "It is important not to confuse process with outcome. The current review process is not surprising given the size and scope of the transaction, the highly fragmented enterprise software marketplace and the fact that PeopleSoft is also proposing its own transaction, which is undergoing regulatory review. We remain optimistic that the DoJ will conclude that this transaction is not anticompetitive, and that we will complete the transaction in a timely manner." Despite the large number of states signing these confidentiality agreements, one source familiar with the situation said "the states have not taken a concerted action." Florida, Hawaii, Indiana, Massachusetts, California and Texas are just some of the states that have confirmed they are reviewing the Oracle bid. Mark Bennett, Hawaii's attorney general, said: "We're taking a look at the merger, but we have not launched a formal investigation." State laws require his agency to seek approval from the state supreme court in order to pursue formal investigations, he explained. While Florida uses a lot of PeopleSoft software, the state has not yet decided that it will formally investigate, said JoAnn Carrin, a spokeswoman for the Florida attorney general. But Oregon has officially opened an investigation into the matter, according to Jan Margosian, a spokeswoman for the Oregon attorney general. Connecticut filed its lawsuit to block the Oracle merger shortly after it was first announced. The state attorneys general last month held a routine conference call, in which they discussed the Oracle merger proposal and the need to determine how much PeopleSoft, Oracle and SAP software is used at their respective state agencies and at quasi-government agencies such as universities. PeopleSoft and JD Edwards expect to hear by late Monday whether the Justice Department will issue a second request for information in their merger. Last month, PeopleSoft announced plans to acquire JD Edwards, which was followed up a few days later with a hostile bid from Oracle to acquire PeopleSoft. Dawn Kawamoto writes for CNET News.com