Wednesday, June 18, 2003

Antitrust News: Blumenthal Rides Again

Fresh off filing a lawsuit to prevent expansion of the Atlantic Coast Conference, Connecticut Attorney General Richard Blumenthal was first to the courthouse to stop the potential Oracle takeover of PeopleSoft:
SAN FRANCISCO - The State of Connecticut intends to file an antitrust lawsuit against Oracle in a bid to thwart its hostile takeover of PeopleSoft.

The lawsuit, which is expected to be filed in U.S. District Court in Hartford Wednesday, alleges that Oracle's planned takeover would violate state and federal antitrust laws and damage the state's economy.

"Oracle's hostile takeover bid has the potential to cost the state millions of dollars, and is a threat to the progress we have made in recent years in technology improvements," said Connecticut Governor John G. Rowland in a statement.

Oracle surprised the industry earlier this month by announcing a $16 per share offer to take over its business software rival. After swapping lawsuits with PeopleSoft, Oracle today upped its offer to $19.50 per share, or $6.3 billion.

The State of Connecticut has a personal stake in the acquisition. On July 8th, it is supposed to go live with the first stage of a five year, $100 million PeopleSoft installation, and the State Comptroller's Office, which is participating in the lawsuit, is concerned about the effects of an Oracle takeover.

"We're in the middle of a $100 million conversion, and the whole thing will probably be derailed, or at least severely hampered if we had to switch from PeopleSoft to another company," said Steve Jensen, a spokesman for the State's Comptroller Office.
It's one thing for Connecticut, as a consumer, to insist on protecting its private contractual rights with a company that might be subject to a takeover. That's simply responsible business practices. It's quite another thing, however, to interfere with the actions of other businesses on the grounds that you—as the consumer—might not like the outcome of that action. In this context, antitrust laws are basically a license to insert yourself into other people's business affairs at will.

And frankly, given Blumenthal's track record, my guess is that he's seeking publicity and political benefit as the "man who stopped Oracle" more than he's looking to protect his state's financial interests.

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