The US Department of Justice (DOJ) has filed a lawsuit to prevent Hewlett Packard Enterprise’s (HPE) proposed $14bn deal to acquire rival Juniper Networks.

HPE agreed to acquire networking gear maker Juniper Networks in an all-cash deal for $40 per share, valuing the latter at about $14bn, in January 2024.  

Filed in the Northern District of California, the DOJ’s lawsuit argues that the merger would eliminate direct competition, drive up prices, stifle innovation, and limit choices for businesses and institutions, violating the Clayton Act.

HPE and Juniper are said to be the second and third largest enterprise-grade WLAN providers in the country.

Juniper has rapidly ascended from a minor player to a top-three WLAN supplier, introducing cost-reducing innovations that have challenged HPE to lower its prices and enhance its own technological offerings.

In response to Juniper’s growth, HPE had initiated a campaign to “beat” Juniper, including mandatory training for its engineers and sales force.

In the filing, the DOJ argues that the acquisition would further consolidate a market already dominated by a few players, leaving US enterprises with only two main options: a merged HPE-Juniper entity and the current market leader, Cisco Systems, collectively controlling over 70% of the market.

US Justice Department Antitrust Division acting assistant attorney general Omeed A Assefi said: “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.

“The threat this merger poses is not theoretical. Vital industries in our country — including American hospitals and small businesses — rely on wireless networks to complete their missions. This proposed merger would significantly reduce competition and weaken innovation, resulting in large segments of the American economy paying more for less from wireless technology providers.”

However, the DOJ’s move is being opposed by HPE and Juniper Networks citing that the proposed deal will drive innovation, strengthen competition, and enhance the country’s national security and the core tech sector.

In a press statement, HPE said: “HPE and Juniper remain fully committed to the transaction and believe we will prevail in litigation and close the transaction so we can deliver the benefits of this acquisition to our customers.”