His predecessor at the US Department of Justice took on Bill Gates and Microsoft. Now, Hewitt Pate is crossing swords with another software multibillionaire, Larry Ellison of Oracle.
Pate, the antitrust chief at the Department of Justice, is responsible for overseeing the government's attempt to block Oracle's hostile takeover bid for competitor PeopleSoft. The government's lawsuit, filed in mid-February, argues that such a deal would be anticompetitive and violate antitrust laws. Oracle dismisses the charges and is pressing ahead with its plans.
The case again brings the Justice Department into conflict with one of the bellwether names of the software business. In 1998, the government filed an antitrust lawsuit against Microsoft when Joel Klein was running the antitrust department.
Although the circumstances surrounding the PeopleSoft dispute are different, the contest promises to make for great theatre. It also thrusts Pate on to centre stage. The 41-year-old lawyer graduated first in his class at the University of Virginia Law School and specialised in antitrust while in private practice. He joined the Justice Department in 2001 and became head of its antitrust division last June.
In his first one-on-one interview since the filing, Pate spoke to ZDNet UK's sister site CNET News.com about the upcoming court battle and antitrust law's role in the high-technology business.
Q: Why would it be so bad to have Oracle, an American company, acquire PeopleSoft to take on this German company, SAP?
A: I think that your question is based on a premise that is outside of what we do in antitrust law. It is one of the major points we make to our European colleagues -- and others -- that legitimate antitrust is not about defending national champions or trying to promote US companies at the expense of foreign companies. It is about looking at the entire picture -- a global one, given SAP's role -- and determining whether customers will get the benefit of competition. I don't mean to say that any particular foreign enforcement agency has adopted the view of trying to be a cheerleader for the companies within their jurisdiction. I think that this is just a fundamental premise of modern antitrust; that it would not be legitimate to try to use antitrust law to promote particular companies at the expense of other companies.
Some industry analysts were surprised that you discounted Microsoft as a potential competitor. How can you be so sure that they won't make a timely entry into the market for larger enterprises?
I'm not aware of anyone who has investigated the question more thoroughly than we have. It's not our view that software markets remain static and that over time, the competitive landscape won't change. But it is our job, under the antitrust laws, to be concerned with whether there will be a new competitive entry within -- as we put it, on a timely, likely and sufficient basis -- to replace competition. Obviously, our conclusion here was that whether it is Microsoft (or any other competitor) -- that it was not going to happen in a way that alleviated the anticompetitive effects of the merger.
