## Facts

- The United States (DOJ Antitrust Division) and several states sought to enjoin Oracle’s proposed acquisition of PeopleSoft under § 7 of the Clayton Act.
- Oracle and PeopleSoft were major vendors of enterprise-resource-planning (ERP) software; SAP was another large competitor, alongside smaller suppliers.
- ERP systems included functional “pillars,” including human-resources management (HRM) and financial-management systems (FMS).
- Plaintiffs alleged a narrow product market limited to “high-function” HRM and FMS enterprise-application software sold to large, complex enterprises, and a geographic market limited to the United States.
- Plaintiffs argued the merger would leave Oracle and SAP as the only significant suppliers in that market, enabling coordinated effects (easier coordination) and unilateral effects (Oracle’s ability to raise prices or reduce quality for certain customers).
- The case was tried in a bench trial with extensive economic, industry, customer, and documentary evidence.
- The court issued findings and entered judgment for Oracle, denying the requested injunction.

## Issues

1. Whether plaintiffs proved a relevant product market limited to high-function HRM and FMS enterprise-application software for large enterprises.
2. Whether plaintiffs proved the relevant geographic market was the United States rather than worldwide.
3. Whether, under the proper market definition(s), the acquisition was reasonably likely to substantially lessen competition through coordinated or unilateral effects in violation of Clayton Act § 7.

## Decision

- The court denied injunctive relief and entered judgment for Oracle.
- The court held plaintiffs failed to prove a relevant product market confined to high-function HRM and FMS software.
- The court found the relevant geographic market was worldwide, not limited to the United States.
- The court found plaintiffs’ proof was insufficient to show the merger was reasonably likely to lessen competition substantially under either coordinated-effects or unilateral-effects theories, including any asserted localized unilateral-effects market.

## Legal Principles

- A § 7 plaintiff must show a pending acquisition is reasonably likely to cause anticompetitive effects; certainty of future harm is not required.
- Plaintiffs commonly establish a prima facie § 7 case through market definition and structural evidence (market shares and concentration), which can create a presumption of illegality where concentration is sufficiently high.
- Market-share-based presumptions are rebuttable if market-share statistics provide an inaccurate account of a merger’s probable competitive effects.
- Credible market definition requires evidence of demand substitution and competitive constraints; heterogeneous, heavily negotiated transactions can limit the reliability of generalizing from a small set of customer experiences or bids.
- Unilateral-effects claims require persuasive proof that the merger would allow the merged firm to profitably worsen terms (e.g., raise price) for a meaningful set of customers despite competitive responses and potential entry or expansion.

## Conclusion

The court refused to block Oracle’s acquisition of PeopleSoft because plaintiffs did not carry their burden to define a narrowly concentrated high-function ERP market or to prove that, in the properly defined worldwide market, the transaction was reasonably likely to substantially lessen competition under Clayton Act § 7.


United States v. Oracle Corp., 331 F. Supp. 2d 1098 (N.D. Cal. 2004)