29 March 2004 The European Commission (EC), fresh from its dramatic ruling against Microsoft, is set to meet Oracle to discuss its objections to the database and enterprise applications company’s hostile takeover bid for PeopleSoft.

The EC is understood to have invited Oracle to a private two-day hearing beginning on Wednesday where the software company will be given the opportunity to make its case and answer specific EC concerns.

The EC set out those objections to the proposed acquisition in a letter to Oracle earlier this month.

The Commission, which is due to make its final judgement by 11 May 2004, is expected to oppose the deal primarily on the grounds that the number of major suppliers of high-end enterprise applications software would be reduced from three to two, leaving only Oracle and SAP.

The US Department of Justice (DoJ) has already ruled against the merger on such grounds. Oracle plans to fight the judgement in the courts, arguing that the DoJ’s definition of the market is too narrow and that Microsoft will eventually emerge as a significant competitor to both SAP and Oracle alongside scores of mid-market vendors such as Intentia, Epicor, SSA and Sage.

All the same, observers say the long odds that the EC will approve the Oracle-PeopleSoft merger have lengthened even further in recent days.

That is because Brussels, already under intense pressure from the US over its Microsoft ruling, will be keen politically to take the same view to the DoJ over the Oracle-PeopleSoft deal, say analysts.

The EC imposed a record fine of €497 million on Microsoft last week, told it to open up key product interfaces to competitors and ordered it to unbundle its Media Player package from Windows.

The decision provoked anger among congressmen and senators in Washington who are worried about the impact on the high-tech jobs market. It also led the DoJ to express regret over the “divergence” from the terms of its own anti-trust settlement with the software giant.

Since the ruling, Mario Monti, the EC’s Competition Commissioner, has reportedly been in contact with his counterpart in the US, Hewitt Pate, in an attempt to avert a possible trade dispute.

Some reports, while unconfirmed, suggest a softening of Monti’s stance in response to the intense US pressure.

One area of potential compromise, say the reports, is over the scope of the EC’s requirement that Microsoft share information about its Windows interfaces with server vendors such as Sun Microsystems.

Since the EC published its ruling on 24 March, Microsoft has expressed dismay that its earlier offer to settle the case was rejected.