Justice Department Sues to Block $14 Billion IT Deal

Key Points:

• The U.S. Justice Department is suing to block the $14 billion sale of Juniper Networks to Hewlett Packard Enterprise (HPE).
• The DOJ claims that the deal would reduce competition in the wireless market and lead to a monopoly, citing HPE and Juniper as the second and third-largest providers of enterprise-grade WLAN solutions in the U.S. behind market leader Cisco Systems.
• The deal would give HPE and Cisco control over 70% of the U.S. market, leading to the elimination of "fierce head-to-head competition" between HPE and Juniper.

The United States Department of Justice has filed a lawsuit against HPE and Juniper Networks to block the $14 billion acquisition of Juniper by HPE, citing antitrust concerns. The DOJ claims that the deal would reduce competition in the wireless market, resulting in a monopoly that would harm consumers and businesses.

The agency argues that HPE and Juniper are the second and third-largest providers of enterprise-grade WLAN solutions in the U.S. behind market leader Cisco Systems, and that the combined company would have a significant market share. This would lead to a reduction in innovation and choice, as well as higher prices for consumers.

The DOJ also claims that smaller WLAN vendors would be at a disadvantage, as they lack the resources and scale to compete with the combined entity. The agency notes that while HPE and Juniper are complementary businesses, the deal would lead to a major shift in the market, with the combined company controlling over 70% of the U.S. market.

HPE and Juniper have responded to the lawsuit, stating that the DOJ’s analysis is "fundamentally flawed" and that they will vigorously defend the deal. They argue that the combination of the two companies will provide customers with greater innovation and choice, and strengthen the backbone of U.S. networking infrastructure.

The deal was first announced in January, with HPE citing the acquisition as a key component of its plan to double its networking business. Juniper’s enterprise networking business has been growing rapidly, and the acquisition is seen as a way for HPE to gain access to Juniper’s cloud-based AI technology, including its MIST AI family.

The DOJ’s decision to sue to block the deal is a blow to HPE and Juniper, which had been expected to close the transaction in the coming months. The company’s CEO, Antonio Neri, has stated that the combination of HPE and Juniper will take the network of the future to a new level, and that it will be an essential piece of the puzzle in creating a secure AI-native network solution.

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