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Oracle-Peoplesoft merger will boost competition - SAP

Counter-intuitive testimony

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An senior SAP executive has testified that a merger between Oracle and Peoplesoft would increase competition in the enterprise software market. Combined with Microsoft's evident expansion into the sector, the testimony could strengthen Oracle's case in its fight with the Department of Justice, which moved to block the buy earlier this year.

Giving evidence at the month-long trial over the DoJ's attempt to block Oracle from buying Peoplesoft, Richard Knowles, vice president of SAP in North America, stated that if Oracle was a larger player, the market would be more competitive as SAP would have to fight hard to maintain its position. If Oracle did merge with Peoplesoft, the combined entity would hold a 38 per cent market share.

If Oracle can show conclusively that Microsoft does intend to move into the space, this would give it a strong argument to show that the sector is about to get more competitive, and that its merger with Peoplesoft would not give it an unfair advantage.

SAP currently hold a 34 per cent market share, making in the largest player in the sector. However, the company has been increasingly concerned about Microsoft's ambitions in the Enterprise software space, the FT reports.

Microsoft had said it was not interested in the big enterprise companies SAP sells to, a position the DoJ was happy to accept. Nevertheless, an internal SAP study showed the Redmond-based company was gaining ground in the sector. A memo went out at SAP calling for immediate containment of Microsoft's activities. It said: "The Microsoft warning signs should be taken very seriously because Microsoft is venturing out into SAP territory." ®

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