Monday, June 16, 2003

Antitrust News: The PeopleSoft Rorschach Test

PeopleSoft, a software company recently targeted for a possible hostile takeover by Oracle, took out a full page advertisement in today's Wall Street Journal to explain that their Board rejected Oracle's offer, among other reasons, because such a merger might not pass antitrust merger. The operative word is "might," as there's hardly a consensus as to whether PeopleSoft-Oracle pose all that grave a threat to "competition":
According to academics and antitrust attorneys, Oracle's $5.1 billion tender offer for PeopleSoft could indeed trigger a lengthy review in the U.S. and Europe, as PeopleSoft's board argued Thursday morning when it rejected the $16- a-share bid.

But these experts found little in the prospective combination that would lead regulators to block the combination of the two software makers.

Antitrust examiners look at whether a merger will bring higher prices to customers or restrict choice and the ability of new competitors to enter a business. Many experts agree the extensive news coverage of Oracle's tender offer will leave regulators with little choice but to conduct a thorough inspection.

"In some sense, (PeopleSoft) might be making a self-fulfilling prophesy," says Andy Klevorn, a partner and antitrust attorney at Eimer Stahl Klevorn & Stolberg, referring to company's claim of a lengthy process. Regulators "will take a good look at this given the level of publicity."
In other words, like all antitrust cases, everything is subject to the whim of federal regulators. Since there's no objective way to determine whether a merger is "anticompetitive," you're essentially gambling when you submit your merger review paperwork to the FTC and DOJ. That alone should tell you why antitrust laws need to be abolished immediately.

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