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(Bloomberg) -- The US Justice Department sued to block Hewlett Packard Enterprise Co.’s $14 billion acquisition of Juniper Networks Inc., arguing the tie-up would harm competition in the market for enterprise wireless equipment used by large companies, universities and hospitals.
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In a complaint filed Thursday in federal court in California, the US said the deal would consolidate the sector from three major players — HPE, Juniper and Cisco Systems Inc. — down to two that would control 70% of the market.
The antitrust suit marks the first brought by the Justice Department under President Donald Trump, an indication the administration may continue an aggressive stance on corporate consolidation pursued by the agency under Biden.
The proposed transaction, “if consummated, would eliminate head-to-head competition that has lowered prices and driven investment in network management software, and it would decrease pressure on HPE to discount and innovate in the future,” the Justice Department said in its complaint.
Shares of HPE and Juniper each fell 2% respectively.
In a joint statement, HPE and Juniper said the Justice Department’s analysis was “fundamentally flawed” and ignores “well capitalized competitors in the U.S.”
“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,” the companies said. “This transaction brings together two complementary networking offerings and will create a networking player with the scope and scale to more effectively compete with global incumbents.”
HPE and Juniper, like bigger rival Cisco, make networking devices such as routers and switches. Networking is the technology that directs the flow of information between devices and across the internet. Both companies supply gear used by businesses and other organizations to provide wireless internet access to people inside their facilities.
Rising competition from Juniper forced HPE to discount its products and develop new features in a campaign to “Beat Mist,” the name of Juniper’s competing product, the Justice Department wrote. Salespeople were trained to better compete with Juniper, and competitive intelligence about Juniper continued to be shared within HPE even after the acquisition was announced, according to the complaint.