The suit being filed in the US District Court at Hartford, Connecticut, alleged the takeover would flout state and federal antitrust laws, and harm the US economy, consumers and competition, they said.

Connecticut Attorney General Richard Blumenthal said he would bring together opponents.

"We are assembling a powerful coalition of states and other consumers that will suffer the same unacceptable costs if this unlawful, anti-competitive takeover is permitted," he said in a statement.

"The costs are huge and intolerable in money, time, human capital and system reliability now and going forward, for our consumers and economy," Blumenthal said.

"The takeover would cripple competition, threatening higher prices and lower quality, and cause terrible waste in the human and financial investments already made," he said.

Oracle was threatening to force its products on consumers by illegally seizing a key rival and thus amassing market dominance, he charged.

Connecticut's decision was announced hours after Oracle said it was boosting its hostile bid for rival PeopleSoft by 1.2 billion dollars to 6.3 billion dollars.

Oracle also announced it would sue PeopleSoft, accusing the board of failing to act in the shareholders' best interest, and demanding it remove a "poison pill" obstructing the acquisition.

"In filing this lawsuit today, Connecticut is taking the necessary steps to protect our taxpayers," Connecticut Governor John Rowland said.

"Oracle's hostile takeover bid has the potential to cost the state millions of dollars and is a threat to the progress we have made in recent years in technology improvements," he said.

SPACE.WIRE