Oracle Witness Disputes Price Theory

Oracle Corp.’s proposed takeover of PeopleSoft Inc. won’t raise software prices because large companies have the power to negotiate discounts, a witness said Tuesday at a trial to determine whether Oracle can pursue its $7.7-billion hostile bid for PeopleSoft.

Tom Campbell, dean of UC Berkeley’s business school, disputed U.S. Justice Department arguments that Oracle, the third-largest supplier of business application software, would raise prices for integrated financial and human resources software if it buys No. 2-ranked PeopleSoft.

“That simply is not true because of the negotiations,” said Campbell, Oracle’s second witness at the 2-week-old trial in San Francisco.

Redwood City, Calif.-based Oracle used Campbell’s testimony to support its claim that large corporations can threaten to keep existing software or use other tactics to negotiate better prices.

Campbell’s testimony contrasted with that of executives from PeopleSoft customers such as DaimlerChrysler and Verizon Communications Inc., who said they were concerned that prices would increase if the two companies merged.

“You recognize that it is plausible for customers to expect their prices will go up,” Craig Conrath, a Justice Department attorney, said to Campbell.

“I cannot make such a prediction. I don’t believe antitrust economic theory can make that prediction,” said Campbell, a former Republican congressman from California.