Hewlett Packard’s (HP) US$14 billion (A$22.5 billion) acquisition of networking equipment company Juniper has been blocked by the United States Department of Justice, who said it would stifle competition.
HP and Juniper are the second and third-largest providers of enterprise-grade wireless communication products in the U.S., the Department of Justice said. It argued that the acquisition would lead to a duopoly in the networking equipment sector, with Cisco Systems and HP holding over 70% of the U.S. market.
“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 Omeed A. Assefi, acting Assistant Attorney General of the Department’s antitrust division.
“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,” HP and Juniper said in a joint statement.
“We will vigorously defend against the Department of Justice’s overreaching interpretation of antitrust laws.”
HP said it would buy Juniper in January 2024. The Department of Justice’s complaint alleges that HP decided to do so after competition from Juniper spurred HP to discount its products.
The acquisition has been approved by antitrust regulators in 14 jurisdictions, including the European Union and United Kingdom. The U.S. is the only jurisdiction to attempt to block it.
HP and Juniper’s representatives met with Assefi on Tuesday. The companies also met with the Department of Justice’s antitrust officials in November, who were reportedly considering halting the acquisition at the time.
HP’s share price (NASDAQ: HPQ) fell more than 2% before closing at US$32.80, up from a previous close at $32.61. Its market capitalisation is $30.8 billion.
