HPE Files Answer to DOJ Complaint on Juniper Acquisition

Hewlett Packard Enterprises (HPE) has responded to the U.S. Department of Justice (DOJ) by filing an answer to the department’s complaint seeking to block HPE’s acquisition of Juniper Networks, a networking products maker.

According to the answer, HPE denies “each and every allegation” that the DOJ has levied against the IT vendor.

Response says blocking the deal would actually hinder competition

“Except for those allegations expressly admitted herein, HPE denies each and every allegation in the complaint,” HPE wrote in its answer. “Except as noted herein, HPE lacks knowledge or information sufficient to form a belief as to the truth of the allegations regarding statements made in internal documents by Juniper Networks, Inc., or any other allegations regarding non-public statements, commercial plans, or intentions of companies other than HPE.”

HPE said that if the DOJ’s action is successful, it would hobble competition with Huawei Technologies, which the organization says the U.S. government has consistently identified as a national security risk. The IT giant also mentioned that the European Commission, UK Competition and Markets Authority, and 11 other jurisdictions worldwide have cleared the transaction.

Further, HPE says that the DOJ complaint “ignores both the extensive benefits that will result from the proposed acquisition and the nature and extent of competition in the wireless networking space.” The company says that the complaint reinforces the status quo and benefits Cisco, which, HPE claims, has dominated wireless networking for decades.

In response to the accusations that the acquisition would substantially weaken the competition in the enterprise-grade WLAN market, HPE said in its answer that HPE and Juniper are two of at least eight competitors with comparable offerings and capabilities fighting against one another and Cisco to win customers every day and that WLAN is not a material motivator for the transaction.

HPE says that rather than harming competition, acquiring Juniper would provide a credible alternative to Cisco and Huawei. Thus, it would enhance competition by providing customers looking for a wireless networking provider with a comprehensive, scaled offering.

“Contrary to the complaint’s assertion, this transaction is not about HPE acquiring a ‘WLAN company,’” HPE writes. “There is not a single HPE board document or public statement to investors about the transaction supporting this assertion. While WLAN is a component of the overall transaction, it is misleading to suggest that HPE is spending roughly $14 billion to acquire Juniper for the purpose of insulating itself from WLAN competition in the United States, particularly when the WLAN solutions that are the focus of the complaint comprise only 11 percent of Juniper’s revenue.”

The CTO of PKA Technologies, Patrick Shelley, concurred with HPE’s answer to the DOJ complaint, saying that the acquisition would, in fact, enhance competition. HPE cited Shelley’s comments to CRN in their response.

“The DOJ missed the boat here… if HPE is able to acquire Juniper Networks, it would drive innovation and force Cisco to stay up to date and current with regard to AI enabled networking,” Shelley said. “I believe the HPE-Juniper deal would actually have created more competition in the networking market.”

DOJ’s original complaint

The Justice Department sued to block HPE’s proposed $14 billion acquisition of Juniper Networks on January 30. The department argued that it would lead to HPE and Cisco controlling more than 70 percent of the U.S. market for networking equipment.

In the DOJ’s initial complaint, they said that allowing the acquisition to occur would substantially weaken the competition in the enterprise-grade WLAN 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 DOJ’s Antitrust Division. “The threat this merger poses is not theoretical. 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.”

HPE announced the proposed acquisition of Juniper Networks in January 2024. The integration of the two companies was set to fortify HPE’s edge-to-cloud strategy, establishing its dominance for AI-driven cloud-native architecture, along with positioning HPE as a leader in secure, unified technology solutions that connect, protect, and analyze data from the edge to the cloud.

The HPE-Juniper saga with the DOJ continues to be an ongoing story in the technology industry. Read more about the DOJ’s lawsuit to block the acquisition.