The final witnesses have been called in the US government's case to block Oracle's hostile $7.7 billion bid for rival PeopleSoft, ending a month-long trial that has revealed much about the mechanics of the enterprise software industry.

Lawyers for the two sides are scheduled to reassemble in court on 20 July to deliver closing arguments. The case will then be in the hands of Judge Vaughn Walker, who is expected to decide the matter in August or September.

The Department of Justice (DoJ) has argued that the acquisition of PeopleSoft would stifle competition in the market for high-end human resources and financial management applications, resulting in higher prices and less spending on product development. Oracle countered that it needs to acquire PeopleSoft to survive in a cutthroat market where there are many players, and to fend off giants SAP and Microsoft.

PeopleSoft CEO Craig Conway, who has been fighting Oracle's bid vigorously, sent a reassuring e-mail to his employees on Friday, saying he is confident that Judge Walker won't allow Oracle to swallow PeopleSoft. "We believe that the Department of Justice presented a very strong case," he wrote.

The trial, which featured testimony from customers, experts and most of the large applications vendors, laid bare some of the backroom dealings that characterise the software market. None of them quite matched the bombshell dropped by Oracle on the first day, that Microsoft had been in merger talks with Germany's SAP.

The proceedings also highlighted the fierce discount battles that take place among vendors to woo new customers. Keith Block, an executive vice president at Oracle, explained in a deposition how different levels of executives at the company can authorize discounts of up to 100 percent to win deals. Block himself can offer discounts up to 70 percent off of Oracle's list prices, he testified.

Kenneth Elzinga, an economist and anti-trust expert from the University of Virginia, testified for the DoJ. He reviewed hundreds of Oracle sales memos and found that competition with PeopleSoft provided a major incentive for Oracle to drop prices, bolstering the DoJ's case.

Microsoft also found itself on the witness stand. Doug Burgum, head of its Business Solutions division, testified on behalf of the DoJ that the Redmond, Washington-based company has no intention of competing with Oracle and SAP at the high end of the applications market. However, Oracle pointed to Microsoft's merger talks with SAP as evidence that it is serious about moving up the food chain and could stake out a place there any time.

What the evidence showed is an extremely competitive industry, said Patrick Walravens, managing director and senior analyst at San Francisco investment bank JMP Securities. "I think it is close, but I think Oracle has the better side of the argument," he said. "The DoJ has the burden of proof, and in my mind there is some real doubt as to whether they presented a well-defined market where this merger would substantially increase the pricing power of Oracle."

The level of discounts given to customers is telling, Walravens said. "This is an industry that is under tremendous pressure. Customers are very sophisticated and know they have a lot of leverage over the vendors."

Joshua Greenbaum, principal at Enterprise Applications Consulting, agreed. "I've always felt that the DoJ did not have a case, and I feel that they have failed to convince me during the trial," he said.

Microsoft's bid for SAP and the revelation that it considered bailing out PeopleSoft after Oracle made its offer are proof of the dynamics in the market, Greenbaum said. Oracle's long list of acquisition targets and the disclosure that IBM considered making investments in other software vendors also point to a vibrant and competitive market, he said. "All this talk about mergers and acquisitions really brought home to me that even if this is what the market looks like today, tomorrow it could be different," said Greenbaum.

Regardless of the outcome in San Francisco, Oracle must still convince PeopleSoft shareholders to vote in favour of the merger, something only a small percentage of them have done so far. The company has also had to sue PeopleSoft in a Delaware court to overturn a "poison pill" measure protecting against a hostile takeover.

Additionally, the European Commission is investigating the merger and has asked for more information from Oracle following a hearing that took place in March. Regulators in Europe have expressed similar concerns about the deal to their counterparts in the US.