Attorney General Rayfield Urges Court to Reject Corrupted $14B Hewlett Packard Enterprises/Juniper Networks Merger Settlement

"When two of the biggest players in wireless networking merge, prices go up and innovation slows down," said Attorney General Rayfield. "Wireless touches everything, from your home internet to the small business down the street."

The merger between HPE and Juniper Networks would harm competition, raise prices, and reduce innovation in the market. Furthermore, the merger settlement violates the public interest because of the corrupt process at the U.S. Department of Justice that led to the settlement, according to public redacted court filings.

Last fall, the court overseeing the case permitted the states to intervene in the review of the merger settlement over reports that it was driven by improper influence peddling at the highest levels of the Justice Department by well-connected lobbyists.

In the redacted brief, the attorneys general explain that the Justice Department's antitrust division had a strong case when it originally opposed the HPE/Juniper merger. There was no dispute that the two companies engaged in significant head-to-head competition. And there was no dispute that combining the two companies would result in a highly concentrated market with HPE and Cisco controlling a vast majority of the wireless networking equipment market. The merger was presumptively anticompetitive based on well-established, generally accepted measures of market concentration.

In settlement negotiations, the antitrust division pressed for terms that would have addressed the anticompetitive concerns of the merger. HPE refused, but instead of defending the merger on the merits in court, HPE hired a group of well-connected lobbyists to go over the heads of the antitrust division and strike a sweetheart deal that failed to address the merger's harms at all.

Throughout the process, threats were made against the head of the antitrust division, Gail Slater, and her top deputies, who were sidelined from the decisive round of negotiations and eventually ousted from the Justice Department. Moreover, the government and HPE withheld information from their statutorily required disclosures about the alternative remedies considered and the full extent of HPE's lobbying of the Executive Branch.

The series of events that led to the HPE/Juniper Networks settlement and its failure to address the merger's harms, prompted the state coalition to urge the court overseeing the case to reject the settlement under the federal Tunney Act. The Tunney Act is a post-Watergate law enacted by Congress in 1974 to ensure that antitrust settlements reached by the Justice Department are based on the merits rather than undue influence by powerful corporations and their well-connected lobbyists.

The states are asking the court to reject the settlement because it is not in the public interest due to the corrupted process that led to the settlement, and because it does not address the competitive concerns alleged by the antitrust division in the litigation.

A hearing is scheduled on March 23 at 10 a.m. PT in the San Jose Division of the U.S. District Court for the Northern District of California.

Joining Attorney General Rayfield on the court filing are the attorneys general of California, Colorado, Connecticut, the District of Columbia, Hawaii, Illinois, Massachusetts, Minnesota, North Carolina, New York, Washington, and Wisconsin.