The U.S. Justice Department is suing to block Hewlett Packard Enterprise's $14 billion acquisition of networking technology vendor Juniper Networks.
The DOJ lawsuit, filed Jan. 30 in the Northern District of California, alleged that the acquisition would eliminate competition, increase customer prices and violate Section 7 of the Clayton Antitrust Act. The DOJ stated that HPE and Juniper are the second- and third-largest networking vendors in the U.S., respectively.
"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 Omeed Assefi, acting assistant attorney general of the Justice Department's antitrust division, in a statement.
The two vendors fired back in a separate press release, calling the DOJ's analysis "fundamentally flawed."
Market disconnect
HPE and Juniper stated that the DOJ's analysis of the WLAN market "is substantially disconnected from market realities." They noted that the transaction has been approved by antitrust regulators in 14 jurisdictions, including the European Commission and the U.K.'s Competition and Markets Authority, and said they've yet to see customer complaints regarding the consolidation.
Putting these two together, they're still much smaller than Cisco.
Jim FreyPrincipal analyst, Enterprise Strategy Group
Even if the two companies did combine, the total share of the WLAN market under HPE's control would still be significantly smaller than Cisco Systems, according to Jim Frey, principal analyst at Enterprise Strategy Group, now part of Omdia.
"Putting these two together, they're still much smaller than Cisco," he said. "It's consolidation, but this new entity would be better to counter [Cisco] than either could do independently right now."
HPE first announced its plan to acquire Juniper Networks in January 2024. The move would double HPE's networking business, with current Juniper CEO Rami Rahim leading the operation and reporting to HPE CEO Antonio Neri.
HPE's Aruba networking technology brand competes with Juniper's Mist AI software and switches. Networking technology analysts anticipated HPE to incorporate Juniper hardware and software into its Aruba line, increasing the diversity of offerings available and making HPE more competitive against Cisco. The companies stated that they plan to fight the lawsuit.
Compared with other recent technology acquisitions, Frey said the Juniper acquisition hasn't drawn much outcry or concern from customers of either company. The purchase removes a rival for HPE and adds AI technology to the HPE stack that it previously lacked.
"HPE didn't really have a good AI story, and Juniper did. Aruba was feeling some competitive pain versus Juniper," he said. "It shouldn't be the only reason to buy them, but it's a valid reason amongst many."
Cisco, Juniper and HPE are the largest networking vendors by market share in the U.S., but far more competition exists globally, Frey said. The HPE-Juniper consolidation could give other vendors a chance to gain market share domestically.
"As you reduce the number of people at the top, you increase the airtime for other vendors," he said. "Outside the U.S., it's a much more active and competitive environment."
Tim McCarthy is a news writer for Informa TechTarget covering cloud and data storage.
