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It was more like an appeals court argument than an opening statement Monday, as U.S. District Judge Vaughn Walker drilled a government lawyer fighting Oracle’s attempted takeover of PeopleSoft. Claude Scott Jr., of the Department of Justice antitrust division, spoke for barely five minutes before the judge interrupted him and began poking holes in his case. Scott stayed on the defensive all morning. “Why is the geographic market the United States? Oracle has a presence in Europe; PeopleSoft has a presence in Europe,” Walker said. “They’re different markets,” Scott replied, explaining one of the key underpinnings of the DOJ’s argument — that a merger between the software designers would unlawfully reduce the number of American competitors. Oracle argues that the merger needs to be viewed in the worldwide software market where there are more competitors, and Walker seemed to agree. “How [are the markets] different?” Walker asked, throwing up his hands and looking out into the packed courtroom. The back-and-forth continued for about an hour. Scott tried to stick to his outline, showing pieces of evidence that included enlarged reproductions of Oracle sales documents and portions of videotaped depositions from Oracle executives, in an effort to show that the two companies directly compete. But Walker’s apparent skepticism intruded again and again. After watching a portion of one deposition, the judge indicated he would prefer to let the market sort things out. “That sounds like good old competition. Why should the antitrust department be concerned about that?” Walker said. Near the end of the presentation, Walker even seemed doubtful about what’s to come: “Other than the economist, the evidence that this will allow Oracle to raise prices will be what?” Thomas Barnett, a deputy assistant attorney general with Justice’s antitrust division, downplayed Walker’s questions. “Judges want to test the issues to see what our response would be,” Barnett said. “It does not change what we’re trying to do.” During Walker’s last high-profile antitrust case, over Hearst Corp.’s purchase of the San Francisco Chronicle, the judge crossed swords with the antitrust division. He called the sale “malodorous” and suggested the DOJ was partly to blame for problems with the sale. The antitrust division wrote a letter demanding Walker retract that part of his order, but he refused. The leader of Oracle’s legal team, Daniel Wall of Latham & Watkins, had a much easier time during his opener. Wall also spoke for about an hour, but Walker asked only a handful of questions. In contrast to the cynical comments he directed at Scott — besides throwing up his hands, Walker had furrowed his brow and made other gestures of disbelief — the judge was much more relaxed during Wall’s time at the podium. “The merger is pro-competitive” in a worldwide market, Wall told the judge. The DOJ disagrees, and has alleged that if Redwood City, Calif.-based Oracle Corp. were allowed to absorb PeopleSoft Inc., which is headquartered in Pleasanton, Calif., competition in the customizable business software market would be greatly reduced. And that would mean higher prices, prosecutors argue. Oracle is asking Walker to look at the bigger picture, including how the merger would help Oracle compete against Microsoft Corp., for example. “This is an example of the great game that’s going on,” Wall said. Walker’s verdict will have repercussions outside the business software market. The courtroom was packed with dozens of lawyers and journalists, some filing messages from handheld e-mail computers. The government’s action, U.S. v. Oracle, 04-0807, was filed in February, after a yearlong investigation into Oracle’s hostile takeover bid. The government alleges the merger would violate the Clayton Act, which outlaws monopolistic business practices. Several states joined the DOJ’s suit, including Texas, New York and Michigan, but California opted to stay out. Tom Dresslar, a spokesman for state Attorney General Bill Lockyer, said Lockyer investigated the takeover but decided to leave the prosecution up to the feds. Wall pointed out that two of the states — as well as the DOJ itself — recently purchased software from businesses besides Oracle or PeopleSoft. The trial is expected to last four weeks.

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