Oracle in court to clear PeopleSoft bid

SOFTWARE giant Oracle, which has begun a key legal action in its $7.7bn (£4.2bn) hostile takeover bid for rival business software maker PeopleSoft, has argued that talks between Microsoft and Germany's SAP show a lively competitive sector, big enough to accommodate its proposed deal.

Oracle says the link with PeopleSoft would be a competitive catalyst forcing big players to enter new markets. But the US government argues that, if allowed, it would drive up prices in a sector that is too complicated for new entrants.

Microsoft disclosed secret talks with SAP about a possible merger rather than have them come to light during the Oracle case.

Oracle's lawyers said that, even though those talks did not lead to a deal, they showed a healthy sector. 'This is an example of the competition in the industry,' Dan Wall, Oracle's lead attorney, said in opening remarks at federal court in San Francisco.

SAP, which is dominant in Europe, PeopleSoft and Oracle, the world's second-largest software firm after Microsoft, are the three top providers of business management software in the world. Oracle has always said that Microsoft is edging into the business management software sector and should also be considered a competitor.

But Thomas Barnett of the Department of Justice's antitrust division said outside court: 'Microsoft is not in the market, and if it were, it would be through an acquisition. All the evidence we have shows that Microsoft doesn't have plans anywhere in the foreseeable future to get into this market.'

Oracle's hostile takeover bid, launched just over a year ago, is one of the largest and most contentious in the history of the US technology industry and has been repeatedly rejected by PeopleSoft's directors.

VIACOM chief Sumner Redstone has raised the prospect of a bidding war in the games software market by paying $14m (£7.6m) to lift his personal stake in publisher Midway - best known for its Mortal Kombat franchise - to 74%.

He has bought 26m shares in Midway since November, during which time the price has trebled. Analysts believe Sumner is preparing to take Midway into the Viacom fold.

For an entertainment firm such as Viacom, games publishing is the last piece in its corporate jigsaw. Redstone has all but acknowledged this, but last week balked at the $20bn price tag on industry leader Electronic Arts.