DOJ Wants to Stop HPE's Juniper Networks Acquisition with LawsuitDOJ Wants to Stop HPE's Juniper Networks Acquisition with Lawsuit

The U.S. Department of Justice (DOJ) hopes to derail HPE’s proposed $14 billion acquisition of Juniper Networks.

The DOJ has sued to block the purchase. Filed in the U.S. District Court for the Northern District of California, the complaint alleges the acquisition would eliminate “fierce” head-to-head competition between the companies. The two companies are rival WLAN technology providers.

The complaint also alleges the acquisition would raise prices, reduce innovation and diminish choice for many American businesses and institutions, in violation of Section 7 of the Clayton Act.

HPE and Juniper Networks oppose the DOJ’s lawsuit.

“HPE and Juniper are successful companies,” said Acting Assistant Attorney General Omeed Assefi of the DOJ’s antitrust division. “But rather than continue to compete as rivals in the WLAN marketplace, they seek to consolidate — increasing concentration in an already concentrated market. The threat this merger poses is not theoretical. Vital industries in our country − including American hospitals and small businesses − rely on wireless networks to complete their missions. This proposed merger would significantly reduce competition and weaken innovation, resulting in large segments of the American economy paying more for less from wireless technology providers.”

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Juniper Networks ‘Disruptive’ Force in WLAN

Juniper Networks has been a “disruptive” force that has grown rapidly from a minor player to among the three largest enterprise-grade WLAN suppliers in the United States, according to the DOJ’s complaint. It has also introduced innovative tools that have decreased the cost of operating a wireless network for many customers.

This competitive pressure has “forced” HPE to discount its offerings and invest in its own innovation, according to the DOJ. In addition, HPE launched a campaign to “beat” Juniper Networks when competing for contracts.

The proposed acquisition would leave U. S. enterprises facing two companies commanding over 70% of the market, according to the DOJ. Those two would be post-merger HPE and market leader Cisco.

“This substantial lessening competition in a critically important technology market poses the precise threat that the Clayton Act was enacted to prevent,” it said.

HPE, Juniper Networks Respond

HPE and Juniper Networks issued the following statement in opposition to the DOJ’s action:

“We believe the DOJ’s analysis of this acquisition is fundamentally flawed and we are disappointed in its decision to file a suit attempting to prohibit the closing of the transaction. We will vigorously defend against the DOJ’s overreaching interpretation of antitrust laws and will demonstrate how this transaction will provide customers with greater innovation and choice, positively change the dynamics in the networking market by enhancing competition, and strengthen the backbone of U.S. networking infrastructure. Consistent with the conclusions reached by all other major antitrust regulators who have reviewed the deal, this transaction brings together two complementary networking offerings and will create a networking player with the scope and scale to more effectively compete with global incumbents. This proposed acquisition will provide customers of all sizes with a modern, secure network built with AI and for AI to ensure a better user and operator experience, and will create more competition, not less.”

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