“We believe this transaction is anticompetitive — pure and simple,” said R. Hewitt Pate, assistant attorney general in charge of the department’s antitrust division.
The department said that if Oracle’s hostile takeover bid succeeded, it would eliminate competition between two of the biggest companies creating software for businesses to manage their human resources and finances. As a result, it said, a combination of the two companies would lead to higher prices, less innovation and fewer software choices for the businesses, government agencies and other organizations.
“Under any traditional merger analysis, this deal substantially lessens competition in an important market,” Mr. Pate said in a statement. “Blocking this deal protects competition that benefits major businesses, as well as government agencies that depend on competition to get the best value for taxpayers dollars.”
The attorneys general of seven states — Hawaii, Maryland, Massachusetts, Minnesota, New York, North Dakota and Texas — joined the Justice Department in pursuing the lawsuit, which is being filed in federal district court in San Francisco. Both companies are based in Northern California.
The lawsuit was not unexpected. Earlier this month, PeopleSoft, which has strenuously resisted the takeover bid, said staff lawyers for the Justice Department had recommended that the department take legal action to block Oracle.
This afternoon, Oracle, which is based in Redwood City, Calif., assailed the Justice Department’s action.
“The Department of Justice decision follows an aggressive lobbying campaign by PeopleSoft management,” Jim Finn, an Oracle spokesman, said in a statement. “It is inconsistent with the overwhelming evidence of intense competition in the markets we serve, and we believe it is without basis in fact or in law.”