Network Firewalls, Network Access Control , Network Performance Monitoring & Diagnostics , Regulation

DOJ Moves to Block HPE's $14B Juniper Buy, Citing Antitrust

U.S. officials sued to block Hewlett Packard Enterprise's proposed $14 billion acquisition of Juniper Networks, arguing it would reduce competition, raise prices and stifle innovation.

See Also: Gartner 2024 Magic Quadrant: Enterprise Wired and Wireless LAN Infrastructure

The U.S. Department of Justice said the deal would eliminate direct competition between two of the top three providers of enterprise wireless networking solutions in the country, resulting in fewer choices for businesses and institutions. The 21-page lawsuit filed Thursday claims eliminating Juniper as a disruptive competitor would consolidate more than 70% of the wireless networking market under HPE and Cisco.

"Vital industries in our country - including American hospitals and small businesses - rely on wireless networks to complete their missions," said Acting Assistant Attorney General Omeed A. Assefi. "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."

HPE's stock fell $0.46 - or 2.17% - to $21.18 per share Thursday, which is the lowest the company's stock has traded since Dec. 19, 2024. Juniper's stock, meanwhile, dropped $0.77 - or 2.19% - to $34.38 per share Thursday, which is the lowest the company's stock has traded since the HPE acquisition agreement was announced in January 2024 (see: HPE to Buy Juniper for $14B to Boost AI and Networking).

Why the Justice Department Wants to Stop the HPE-Juniper Deal

HPE and Juniper said they strongly oppose the lawsuit and plan to defend the transaction in court, asserting that the merger would enhance competition rather than stifle it. They argue that the Justice Department's view of the wireless networking market is flawed, stating that there are at least eight viable competitors in addition to HPE and Juniper.

"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," HPE and Juniper said in a statement.

Although wireless networking is the biggest area of overlap between HPE and Juniper, both companies also have a footprint in cybersecurity. HPE began offering single-vendor SASE to customers following its $412 million buy of Axis Security in March 2023, while Juniper in early 2023 debuted SSE capabilities that help customers consistently apply zero trust policies in the cloud regardless of the user or device (see: HPE Buys SSE Firm Axis Security to Obtain Single-Vendor SASE).

The Justice Department is arguing that the deal violates Section 7 of the Clayton Antitrust Act, which prohibits mergers or acquisitions that substantially lessen competition or create a monopoly. A measure of market concentration used by the Justice Department in antitrust cases would increase well above the legal threshold if the HPE-Juniper deal proceeds, making the acquisition presumptively unlawful.

HPE and Juniper have been fierce rivals in the wireless networking market, the Justice Department said, with Juniper's aggressive pricing and AI-driven innovations forcing HPE to discount its tools and improve its network management capabilities. The complaint showed evidence from HPE's internal emails where leaders viewed Juniper as a major threat and launched strategies to "kill Mist" - Juniper's WLAN tool.

The Justice Department argued that eliminating Juniper would reduce competitive pricing and slow innovation in key sectors relying on wireless networking such as hospitals, universities, government institutions and businesses. Customers would face higher prices and fewer innovative solutions as HPE would have less pressure to innovate without Juniper's competition, the Justice Department said.

Why HPE, Juniper Believe the Acquisition Should Proceed

On the other side, HPE and Juniper said the Justice Department misrepresents the wireless networking market, arguing there are at least eight competitors in the space that actively bid for large enterprise contracts. In addition, HPE and Juniper said many businesses solicit bids from at least five companies, demonstrating a highly competitive marketplace.

The European Commission, U.K.'s Competition and Markets Authority and 12 other jurisdictions already approved the HPE-Juniper deal without restrictions, suggesting the Justice Department's concerns aren't shared globally. The Justice Department's outlier stance could weaken its case if other regulators found no substantial competition concerns.

HPE and Juniper said the deal fuels greater innovation around AI-driven and cloud-managed networking solutions, with the combined company's increased investment in R&D fueling advanced AI-enhanced networking. HPE pointed out that several well-capitalized competitors in the U.S. hold market shares comparable to Juniper, with one - Cisco - holding more than 50% market share.

The companies claim the acquisition will fortify the U.S. "core tech" sector, strengthening domestic networking infrastructure amid growing concerns over Chinese tech dominance. The combined entity could better compete globally, HPE and Juniper said, particularly as the industry moves toward 6G and quantum-secure communications.

If the Justice Department convinces the court that the acquisition would significant harm competition, the court might block the deal outright, forcing HPE to either abandon or restructure the deal. In that scenario, Cisco would remain the dominant player in wireless networking, while Juniper would continue to be a disruptor around AI-powered networking.

If HPE successfully argues that competition won't diminish, the court could allow the deal, with HPE possibly offering behavioral remedies such as keeping certain pricing strategies or product lines independent. A combined HPE-Juniper would be the strongest Cisco competitor in wireless networking and might make it tough for other smaller players to compete, leading to further industry consolidation.

Alternatively, the Justice Department and HPE could negotiate a settlement allowing the acquisition to proceed with restrictions intended to limit competitive harm such as HPE divesting certain assets or maintaining pricing agreements for several years, or an agreement could be reached in which HPE buys only a portion of Juniper's business, with other parts of the organization remaining independent.