McAfee - Expert Witness Demonstrative Exhibit: Nature Of Assignment

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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
Updated August 14, 2015

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