The U.S. Department of Justice (DoJ) Thursday sued to block Hewlett Packard Enterprise Co.’s (NYSE: HPE) proposed $14 billion all-cash acquisition of rival wireless local area network (WLAN) technology provider Juniper Networks Inc. (NYSE: JNPR) due to concerns about competition for local wireless technology. The antitrust lawsuit marks the first since President Donald Trump took office last week, notes Reuters.
HPE and Juniper are the second- and third- largest providers, respectively, of enterprise-grade WLAN solutions in the United States, according to the DoJ. The complaint, filed in the Northern District of California, alleges that the proposed transaction would “eliminate fierce head-to-head competition between the companies, raise prices, reduce innovation, and diminish choice for scores of American businesses and institutions,” states the DoJ. It says these conditions violate the Clayton Act.
“HPE and Juniper are successful companies. But rather than continue to compete as rivals in the WLAN marketplace, they seek to consolidate — increasing concentration in an already concentrated market,” said Acting Assistant Attorney General Omeed Assefi of the Justice Department’s Antitrust Division. “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.”
The DoJ says WLAN technology — which includes hardware, software, and advanced AI— is critical for the modern workplace. It notes millions of Americans create and share company resources and access the internet from wireless-enabled devices.
As alleged in the complaint, Juniper has been a disruptive force that has grown rapidly from a “minor” player to among the three largest enterprise-grade WLAN suppliers in the U.S., according to the DoJ.
If allowed to proceed, the DoJ says the deal would further consolidate an already highly concentrated market — and leave U.S. enterprises facing two companies commanding over 70 percent of the market: the post-merger HPE and market leader Cisco Systems Inc., which the DoJ calls a “substantial lessening of competition in a critically important technology market.”
The companies say they plan to “vigorously defend the transaction in court.” They call the DoJ’s analysis of the deal “fundamentally flawed,” and say “we are disappointed in its decision to file a suit attempting to prohibit the closing of the transaction.”
HPE and Juniper say they 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,” say HPE and Juniper. “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.”
By Leslie Stimson, Inside Towers Washington Bureau Chief
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