HPE, Juniper Networks Fire Back At DOJ Suit As ‘Fundamentally Flawed,’ Expects To ‘Prevail In Litigation’
'HPE and Juniper remain fully committed to the transaction and believe we will prevail in litigation and close the transaction so we can deliver the benefits of this acquisition to our customers,' said HPE and Juniper in a response to the DOJ complaint.
Hewlett Packard Enterprise and Juniper Networks Thursday blasted the U.S. Department of Justice lawsuit to stop HPE's $14 billion acquisition of Juniper Networks as “fundamentally flawed” and pledged to do battle in the courts to complete the deal.
“HPE and Juniper remain fully committed to the transaction and believe we will prevail in litigation and close the transaction so we can deliver the benefits of this acquisition to our customers,” said HPE and Juniper in a response to the DOJ complaint.
"We believe the Department of Justice’s analysis of this acquisition is fundamentally flawed and we are disappointed in its decision to file a suit attempting to prohibit the closing of the transaction,” the two companies said. “We will vigorously defend against the Department of Justice’s overreaching interpretation of antitrust laws and will demonstrate how this transaction will provide customers with greater innovation and choice, positively change the dynamics in the networking market by enhancing competition, and strengthen the backbone of U.S. networking infrastructure.”
[RELATED: DOJ Challenge To HPE-Juniper Would Derail ‘Formidable’ Cisco Alternative: Partners]
HPE and Juniper claimed that “customers support” the deal and further stated that the DOJ has not provided “any evidence” of customer complaints.
“This transaction will benefit customers who gain a comprehensive AI-driven and cloud-native IT portfolio including the networking architecture necessary to manage and simplify their expanding and increasingly complex connectivity needs,” said HPE and Juniper.
The U.S. Department of Justice filed a suit Thursday in the Northern District of California, alleging the proposed transaction would eliminate “fierce head-to-head competition between the two companies, raise prices, reduce innovation, and diminish choice for scores of American businesses and institutions” in violation of Section 7 of the Clayton Act.
“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 in a press release. “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 and Juniper pointed out that the deal has been approved by antitrust regulators in 14 jurisdictions, including the European Commission and the United Kingdom Competition and Markets Authority, acknowledging the “pro-competitive” aspects of the deal.
“Other than Israel, the U.S. is the only jurisdiction to not have cleared this deal,” said HPE and Juniper.
HPE and Juniper claimed that there is “extensive evidence” that shows the deal is pro-competitive and the product area that is the focus of the DOJ’s suit – Wireless Local Area Network (WLAN) – is characterized by robust competition, with at least eight alternatives to HPE and Juniper.
“The DOJ’s claim that the WLAN market is composed of three primary players is substantially disconnected from market realities,” said HPE and Juniper. “As customers shift to AI and cloud-driven business strategies for secure, unified technology solutions to protect their data, barriers to entry have decreased and expansion and competition for WLAN has intensified. As such, WLAN is an extremely competitive market with a broad set of players, all of whom are fighting for business and winning bids in competitive RFP processes. The transaction will not impede the ability of other WLAN vendors to vigorously compete.
Patrick Shelley, chief technology officer (CTO) at PKA Technologies, a Montvale, N.J. solution provider, said he expects the DOJ lawsuit to cause customers to “second guess” their HPE and Juniper Networks’ strategies.
“This puts the HPE Juniper network road map and strategy into limbo,” he said. “All our customers were asking about what were the potential benefits of the deal. Now they are having to look at what might be the road map and strategies if the HPE Juniper deal is blocked and each of the two companies ends up on their own.”
Shelley said many customers were already holding off on HPE and Juniper network purchases in anticipation of the closing of the deal.
All that said, Shelley said he does not agree with the DOJ analysis that the deal would reduce competition and weaken innovation.
“I think that a combined HPE Juniper would increase competition in the networking market and drive more innovation especially in AI networking,” he said. “I am very disappointed. But I can’t say I’m surprised given there were reports that the DOJ was concerned about the deal."
PKA will continue to work closely with customers to evaluate their networking strategies to deliver the biggest possible technology solutions benefits from all networking vendors including HPE, Juniper, Arista and Cisco.
“We are poised to help our customers navigate this shaky networking landscape,” he said. “Customers count on us to guide them through their IT solutions strategies in the best and worst of times.”
