Oracle: DOJ Decision May Be Flawed

When it sued to block Oracle's proposed hostile acquisition of PeopleSoft on Feb. 26, the U.S. Department of Justice asserted that the two companies, plus SAP, are the "only" ones that compete to develop and sell HR and related software for large enterprises. Really?

Some analysts, not to mention other enterprise software companies, say that point of view is just plain wrong. "It's a myopic view of the market," says Albert Pang, an analyst at IDC. "What really bothers me is that the DOJ should look at the five to seven year horizon to see if there are any external forces to change the market dynamics. They shouldn't be concerned about what's happening today."

Oracle says the DOJ's argument is wrong and is suing the DOJ to get the decision overturned. Bank of America Securities, for one, is on record saying they believe the Oracle's argument against the DOJ has merit.

It's true that Oracle, PeopleSoft and SAP are the largest business applications companies. SAP has about 20% of the market, more than double that of PeopleSoft and Oracle. The rest of the market is fragmented among dozens of players, some of whom do provide competition that the DOJ may be overlooking.

One of these is Lawson Software, which develops HR and financial software for the healthcare, retail and public sector industries, and had sales of $344 million in fiscal 2003, ended in May.

"We are an alternative to Oracle, SAP and PeopleSoft," says Lawson chief executive Jay Coughlan. "The question is how [the DOJ] is sizing the market. Did they look at the top 500 accounts in the country, or just the manufacturing sector?"

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