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The US Justice Department is suing to block Hewlett Packard Enterprises' (HPE) $14 billion deal to acquire Juniper Networks (JNPR), claiming it would harm competition within the enterprise wireless market. The attempted suit marks the first antitrust case of the second Trump administration and raises concerns that the White House may not be as friendly to merger and acquisition (M&A) deals as previously expected.
Mercatus Center senior research fellow and former general counsel for the Federal Trade Commission (FTC) Alden Abbott joins Market Domination with Julie Hyman and Josh Lipton to break down what investors need to know about the antitrust case.
"For those who thought that the new administration would be soft on antitrust or soft on mergers, think again," Abbott says. The former FTC counselor explains that the Justice Department says "the merger is going to create two dominant firms in wireless local area networks" since Cisco Systems (CSCO) and HPE would hold a combined 70% of the market.
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HPE says the DOJ's analysis is "fundamentally flawed." Abbott says he expects HPE to defend the merger against the antitrust allegations by claiming, "We are really bringing together certain new cloud capabilities and AI capabilities that are joining together to improve offerings, and they are going to reject the idea that there would be higher prices or lower qualities to the consumers of local area networks."
He adds that HPE will likely point out that acquiring Juniper Networks will help the company better compete with the market leader Cisco, therefore increasing competition.
"It really turns on whether the court buys the [Justice Department's] market definition," Abbott notes.
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This post was written by Naomi Buchanan.