Nature of Assignment - Retained by U.S. Department of Justice in Fall 2003
- Asked to evaluate the likely competitive effects of the proposed acquisition of PeopleSoft by Oracle
- Not asked to define relevant markets
Materials Reviewed - Business records, declarations, depositions, and Court Testimony from Oracle, PeopleSoft, and third parties
- Reports prepared by expert witnesses for USDOJ and Oracle
- Relevant economics literature
- Publicly available documents
Primary Analyses Performed - Three primary and independent economic analyses:
- Analysis of Oracle's discount request forms, and sales rep/customer surveys from Oracle and PeopleSoft
- Case Studies
- Summary Statistics
- Regression analyses based on Oracle data
- Auction-based merger simulation
Overview of Conclusions - Merger will increase license and maintenance prices for high-function HRM and FMS software
- Case studies document instances where PeopleSoft competition lowered prices
- Regressions suggest 13% to 26% price increase
- Simulation suggests 5% to 30% price increase
Oracle's Discount Request Forms - The analysis of Oracle's discount request forms show:
- Head-to-head competition between Oracle and PeopleSoft results in lower prices for buyers
- Software vendors become informed about buyer preferences and rival strategies during a procurement competition
- Prices set by software vendors depend on factors other than their own costs, demonstrating the vendors' ability to price discriminate
- Multiple rounds of bidding
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