The U.S. Department of Justice wants legal action to block HPE’s acquisition of Juniper Networks. According to the ministry, the proposed acquisition will lead to worse competition.
In a compliant, the Department argues that if the acquisition were to go through, it would be bad for the wireless market. Juniper and HPE Aruba are both active in WLAN (Wireless Local Area Network). Juniper primarily supports data centers and hyperscalers with WLAN technology, while HPE Aruba is big in campus networks. As such, the two companies do serve different types of businesses. So, at first glance, that doesn’t seem like straightforward competition.
However, the Department of Justice also states that an eventual acquisition would actually leave only Cisco as a major player besides HPE. Of Juniper, HPE Aruba and Cisco, the latter, with a market share of around 40 percent, is already currently by far the largest player. Even when Juniper and HPE combine operations, Cisco remains the market leader.
Tip: HPE acquires Juniper: surprising, but makes quite a bit of sense
Forced innovation
“Juniper has also introduced innovative tools that have materially decreased the cost of operating a wireless network for many customers,” the U.S. Department of Justice argues. ” This competitive pressure has forced HPE to discount its offerings and invest in its own innovation.” Because of the current competition, HPE is forced to introduce new features in addition to price reductions, which is an additional reason for the Department to want to stop the acquisition.
According to a statement by HPE and Juniper, the claim that the WLAN market consists of three major players is divorced from reality. Therefore, they are going to challenge legal action. In doing so, they will make the argument that the combination of two complementary parties actually leads to better competition with global market leaders, referring to the battle they can wage against Cisco.
It remains to be seen whether it will actually lead to a lawsuit. In any case, all parties involved have their arguments ready.