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Facing off for the first time before a federal judge, the Department of Justice scored points Wednesday over Oracle Corp. in its campaign to block the company’s acquisition of PeopleSoft Inc. U.S. District Judge Vaughn Walker said in the pretrial conference that the Justice Department is entitled to review so-called customer discount forms, which are generated whenever Oracle offers a price break on its business enterprise software. The antitrust division contends these forms will show that Oracle lowered its prices to compete against PeopleSoft. Oracle, however, refused to produce the bulk of the discount forms during the pre-merger investigation, and it suggested in court filings that the government should have to force their disclosure through discovery. Walker, however, called the discount forms “highly relevant,” which means they will be admissible at trial and should be disclosed. “In view of the expedited trial schedule, it is important that those be produced promptly and without a formal discovery process,” the judge said. Asked after the hearing about the forms, Oracle lawyer Daniel Wall, a partner at Latham & Watkins, said the issue was not resolved because the judge did not issue an order requiring the company to turn over the materials. Walker also appeared to surprise both the Justice Department and Oracle when he set the trial for June 7, two weeks earlier than the parties had suggested. The judge agreed to give each side two weeks to present their case, with the court meeting for full days on Mondays, Wednesdays and Fridays and for at least part of the day on Tuesdays and Thursdays. “I know this is an important case, but the other 440 cases don’t come to a grinding halt simply because of this one,” Walker said. Speaking after the hearing, deputy assistant attorney general Bruce McDonald said the government welcomed the expedited schedule. “This transaction has been hanging over the markets for months and months,” he said. “A faster trial is the best thing for the antitrust division because our goal is to prevent transactions that reduce competition.” While the judge suggested Oracle should turn over the discount forms, the day was not a complete loss for the software firm. Walker said Oracle is entitled to serve the government with a set of preliminary questions to help the company better understand the antitrust division’s arguments. “Plaintiffs are best-served giving information rather than keeping it,” the judge said. It would help the litigation if government answered Oracle’s questions by the end of next week, he said. Wall earlier had complained to the judge that the Justice Department did a poor job in its complaint of explaining its definition of the software market affected by the deal. “This is among the most ambiguous of merger complaints the department has ever filed,” Wall said. “If this isn’t the only merger complaint that does not have market share numbers, it is one of the very few.” After the hearing McDonald defended the antitrust division’s presentation of the software market. “Wall suggested that our market definition was somehow deficient,” he said. “That was wrong.” The judge also appeared to resolve a dispute over how to handle confidential information submitted by 33 companies. The judge said companies would have until Tuesday to object to the court if they did not want two in-house Oracle lawyers working on the case to have access to their materials. That solutions appeared to satisfy both sides. “The court reached a really good compromise,” McDonald said. The antitrust division sued Oracle on Feb. 27, charging that the Redwood Shores, Calif.-based company’s proposed purchase of PeopleSoft would harm competition for enterprise software sold to large corporations. Only three companies — Oracle, PeopleSoft and Germany’s SAP AG — now service this market, the government argues. Oracle has countered that the $9.4 billion acquisition would boost competition by helping it compete against SAP, and it contends that many other software providers compete for business enterprise software contracts. In a March 4 response to the DOJ’s lawsuit, Oracle also said buying PeopleSoft would help it fend off an incursion into the enterprise software market by Microsoft Corp. Microsoft, however, has given the government a sworn statement that it does not intend to enter the big business enterprise software market in the next two years. This could prove a strong card in the DOJ’s efforts to block Oracle’s hostile tender for Pleasanton, Calif.-based PeopleSoft. But the document wouldn’t necessarily affect Oracle’s other major argument, which is that the same enterprise application software is sold to customers of all sizes and thus served by many other providers. Oracle announced its intention to acquire PeopleSoft in June, offering $5.1 billion for the company. Oracle has since twice upped its bid, most recently in February to $9.4 billion, or $26 a share. Copyright �2004 TDD, LLC. All rights reserved.

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