2 July 2004 Oracle closed its case yesterday after calling a professor of economics as its final witness, bringing to a close the month-long Oracle-PeopleSoft anticompetitive hearing.

The US Department of Justice (DoJ) is attempting to block Oracle’s $7.7 billion bid to purchase an unyielding PeopleSoft since, the DoJ argues, it would be anticompetitive.

David Teece, a professor at the University of California, yesterday testified that if Oracle, the world’s second largest software company, acquired PeopleSoft, it would bring greater innovation to the software industry.

The merger, said Teece, would allow Oracle to spend more on development and therefore keep prices down to compete with rivals in the business applications and related software markets, including IBM, SAP and especially Microsoft.

Oracle has sought to prove this week that the DoJ is being too narrow in its definition of “the market”.

The DoJ has claimed that there are essentially only three vendors at the high end of the enterprise applications market – SAP, PeopleSoft and Oracle – and that the takeover will therefore adversely affect buyers at the most lucrative end of the software market.

But Oracle has argued that such an analysis is incorrect and does not take into account the competition from third tier vendors such as Lawson Software and, most important of all, the competition that will be posed by Microsoft’s supposed impending entry into the market.

Research analysts believe that if the court does not see the market as big enough to regulate, this will tilt the ruling in Oracle’s favour. Attorneys on both sides have until 20 July to file post-trial briefs and other documents before presenting their closing arguments. Judge Vaughn Walker is expected to issue a ruling around late August.