The Justice Department has blocked Hewlett-Packard Enterprise Co.’s (HPE) proposed $14 billion takeover of a communications rival.
According to a recent report, Juniper Networks Inc. (Juniper) has been the focus of the ongoing saga. HPE and Juniper are two of the biggest providers of enterprise-grade WLAN solutions in the United States.
If the merger were to go ahead, then this would leave only HPE and market leader Cisco Systems Inc. in a two-horse race for the commitment of American consumers.
The Justice Department has argued that the “would eliminate fierce head-to-head competition between the companies, raise prices, reduce innovation, and diminish choice for scores of American businesses and institutions, in violation of Section 7 of the Clayton Act.”
$14 billion Hewlett Packard acquisition blocked
“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 Justice Department’s Antitrust Division.
The complaint was filed in the Northern District of California against HPE, headquartered in Spring, Texas. The company’s WLAN-focused business unit is located in Santa Clara, California.
Juniper, headquartered in Sunnyvale, California, has emerged as an outside player in the network provision market. HPE has reportedly been monitoring the smaller company. They even instructed their staff to compete with Juniper to “beat” them, said the Justice Department report.
HPE was recorded as saying the threat posed by Juniper was “dire.” Senior HPE executives also shared this view, going as far as to say “there are no rules in a street fight” with Juniper and encouraged them to “kill” Juniper when going head-to-head for sales opportunities.”
Acting Assistant Attorney General Assefi concluded, “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.”
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