HPE plans to "vigorously defend" Juniper Networks deal as DoJ files suit to block acquisition

Hewlett Packard Enterprise (HPE) said it plans to "vigorously defend" a legal challenge by the US Department of Justice (DoJ) that seeks to block the tech giant's acquisition of Juniper Networks.

HPE bid $14 billion to acquire the networking company in January 2024 in a move that would double HPE's networking business and potentially make it a major player in that segment.

Regulators in the UK and EU examined the deal, both signaling their approval in August, making the first such suit by the new US administration a surprise to industry watchers.

The suit filed against HPE suggests that by ending competition between two of the top three networking firms, this could reduce innovation for businesses and limit options.

The complaint specifically centers on wireless local area networks (WLAN), of which HPE and Juniper are the second and third largest suppliers in the US behind Cisco, which the suit suggested holds about a third of the market.

"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 A. Assefi of the Justice Department's Antitrust Division.

"The threat this merger poses is not theoretical," Assefi added.

"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 statement stressed that part of the concern is the fact Juniper has been a "disruptive force" in the WLAN supply market with its Mist product, helping to spark innovation and drive down costs.

"The competitive pressure has forced HPE to discount its offerings and invest in its own innovation," the statement said, pointing to evidence that HPE staff were alarmed about the "threat" of Juniper on their own Aruba business.

HPE and Juniper disagree with DoJ concerns

HPE and Juniper disagree with the DoJ’s assessment, saying in a joint statement that the deal should increase competition, and that the WLAN market was much more robust than just the three major suppliers.

The statement also claimed that one company holds half the market, above the third noted by the DoJ suit, suggesting Cisco is the real dominant player.

HPE also stressed that other regulators — notably the UK and EU, but also in 12 other regions — had examined the deal and found it free of such issues, though Israel has made similar objections to the US.

"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," the company said in a statement.

HPE said it would "vigorously defend" the deal in court rather than settle, with CEO Antonio Neri telling Bloomberg that the DoJ hasn't yet suggested remedies such as divesting Juniper's Mist business — and that might not even be possible.

"We believe the Department of Justice’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," the statement said.

"We will vigorously defend against the Department of Justice’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 US networking infrastructure."