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DOJ firings spark fresh HPE-Juniper deal scrutiny
Reported involvement from intelligence agencies, lobbyists may have helped push the merger through before a planned antitrust trial, causing infighting at the Justice Department.
Democratic senators are pushing for a new review of HPE's approved acquisition of Juniper Networks after the U.S. Department of Justice fired two top antitrust deputies for "insubordination" over the $14 billion deal.
DOJ antitrust deputies Roger Alford and Bill Rinner were fired earlier this week, a Justice Department spokesperson confirmed to Informa TechTarget. Alford worked in the DOJ under the first Trump administration, and Rinner was a top legal advisor to Makan Delrahim, former head of the antitrust division under Trump.
An Axios report citing an anonymous national security official on Wednesday claimed the U.S. intelligence community stepped in just before the merger was set to go to trial this month, persuading the Justice Department to reach a settlement. U.S. officials worried that blocking the merger would give China's Huawei Technologies an advantage over American companies, according to the report.
That intervention, along with reported internal lobbying efforts, created infighting at the DOJ that led to Alford and Rinner being fired, the report said. The alleged infighting would illustrate a divide between antitrust hawks and pro-business forces within the Trump administration.
Firings lead to call for scrutiny
In a statement, DOJ spokesman Gates McGavick denied that backroom dealmaking influenced the settlement. "The department has consistently reiterated that the resolution of this merger was based only on the merits of the transaction," he said.
In response to the controversy, U.S. Sens. Elizabeth Warren (D-Mass.), Amy Klobuchar (D-Minn.), Cory Booker (D-N.J.) and Richard Blumenthal (D-Conn.) wrote to U.S. District Court Judge P. Casey Pitts -- an appointee of former U.S. President Joe Biden -- urging judicial review of the merger.
The senators called for heightened review under the Tunney Act (formally known as the Antitrust Procedures and Penalty Act), a 1974 law that allows courts to hold hearings and take action that could affect the merger. The act was first used in 2019 to review the CVS-Aetna merger. While that merger stood, the proceedings led to new precedents for judicial antitrust scrutiny.
"A settlement to resolve HPE's proposed acquisition of Juniper should not be made on the backs of the American people while enriching well-connected lobbyists," the senators wrote in a letter to Pitts. Trump allies Mike Davis and Arthur Schwartz were lobbying on behalf of HPE, according to filings and several published reports. Schwartz is known to be a friend and confidante of U.S. Vice President JD Vance.
In a statement, HPE said its merger with Juniper would promote competition in the WLAN market. "The transaction was appropriately approved with certain remedies by the U.S. Department of Justice, and it was unconditionally approved by 13 other antitrust regulators around the world," an HPE spokesperson said.
HPE's big win in jeopardy?
Analysts widely saw the June settlement as a big win for HPE, despite caveats of the settlement, which included the company selling off its Instant On business and licensing of Juniper's AIOps for Mist source code. Instant On, which offers a line of wireless access points and switches, is aimed at small and medium-sized businesses.
"It appears that the divestiture does not allay concerns arising from the combination of HPE and Juniper Networks' enterprise-grade products, which would merge two current competitors and create an apparent duopoly," the senators wrote in the letter to the court.
Renewed scrutiny could slow or even jeopardize the merger.
Ron Westfall, an analyst at HyperFrame Research, said the potential new review could prove to be a major setback. "It's not good, overall, as HPE and Juniper teams have already started embarking on integration plans. This has already been scrutinized heavily," he said. "It's not good for the overall wireless LAN industry, let alone the tech industry. I think there's some irony here that there's political pressure here to decide if there were politics involved with the decision."
In the letter to the judge, the senators said the HPE settlement did not address concerns about competition and market consolidation. After the deal, HPE and its closest competitor, Cisco, would hold a 70% WLAN market share.
Notably, a Tunney Act review has never overturned an antitrust settlement.
Shane Snider, a veteran journalist with more than 20 years of experience, covers IT infrastructure at Informa TechTarget.
