The US Department of Justice (DoJ) has sued to block Hewlett Packard Enterprise's $14 billion acquisition of Juniper Networks.
The suit filed in California's Northern District Court makes the case that the merger would eliminate competition and result in less choice and higher prices for consumers.
Specifically, the Department of Justice is worried about consolidation within the wireless LAN (WLAN) market, where it says HPE and Juniper are already the second and third largest providers of the technology.
"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," Omeed A. Assefi, Acting Assistant Attorney General at the Justice Department's Antitrust Division, said in a statement on Thursday.
The DoJ argues the merger is a strategic move to eliminate a key competitor in the WLAN market that was eating into HPE's profit margins, pointing to statements made by HPE salespeople and executives prior to the acquisition's announcement.
"Just a month before the proposed acquisition was announced, front-line HPE salespeople were concerned that '[t]he Juniper threat [was] dire' because in dozens of opportunities, Juniper was 'trying to unseat' HPE," a DoJ statement reads. "One former HPE executive reminded his team that 'there are no rules in a street fight' with Juniper and encouraged them to 'kill' Juniper when going head-to-head for sales opportunities."
The suit comes just over a year after HPE announced its intention to acquire Juniper in a deal then valued at $40 per share or about $14 billion.
The deal was expected to effectively double the size of HPE's networking segment. When all was said and done, HPE estimated its networking division would contribute to more than half of its annual operating income.
However, overlap in the companies' businesses, most notably the fact HPE already owned WLAN vendor Aruba, which would conflict with Juniper's Mist division, ultimately attracted the ire of antitrust watchdogs.
While HPE was ultimately able to secure the green light from the UK's Competition Markets Authority and European Commission, it seems the company's efforts to assuage the DoJ's concerns have fallen short. ®
Source: The register