The Justice Department on Thursday moved to block Hewlett Packard Enterprise’s $14 billion acquisition of Juniper Networks, the first deal to be challenged by antitrust enforcers during President Trump’s second term.
In a lawsuit filed in United States District Court for the Northern District of California, the government said the deal “risks substantially lessening competition in a critically important technology market.” The agency said that the deal would end a corporate rivalry in the wireless networking industry that resulted in lower prices for big companies, universities, hospitals and other buyers of complex technology systems.
The suit came as many in corporate America had expected that a lighter touch under Mr. Trump would unleash a wave of deal making after four years of tough scrutiny by regulators under former President Joseph R. Biden Jr. But the attempt this week to stop the tech deal suggests there may be more consistency between the Biden and Trump administrations on antitrust enforcement than some had thought.
Hewlett Packard Enterprise, or HPE, a business software and services company, announced the $14 billion takeover of Juniper last year, with hopes of combining its data centers with Juniper’s networking business to take on giants like Cisco.
Regulators in Britain and the European Union cleared the deal this summer. But the Biden administration’s antitrust enforcers had issued what is known as a “second request” for more information, indicating scrutiny of the transaction.
The suit was brought by Omeed Assefi, tapped by Mr. Trump to be the acting assistant attorney general for the Antitrust Division of the Justice Department. Mr. Trump’s nominee for the top antitrust role, Gail Slater, is not yet confirmed. Ms. Slater previously worked as a policy adviser for Vice President JD Vance and for the National Economic Council during Mr. Trump’s first term. Mr. Vance has at times complimented the efforts of Lina Khan, Mr. Biden’s trustbusting Federal Trade Commission chair, and has criticized big technology companies as “having too much power.”
While some experts had expected Mr. Trump’s antitrust watchdogs to keep a close eye on large social media companies — in line with bipartisan concerns over free speech and censorship — bankers hoped the new administration would be more amenable to deals involving technology companies like HPE that fly more under the radar.
“The threat this merger poses is not theoretical,” Mr. Assefi said in a statement. “Vital industries in our country — including American hospitals and small businesses — rely on wireless networks to complete their missions.”
Competition from Juniper has forced HPE to “discount deeply” and invest in its software, the lawsuit said. A combination of the two, government lawyers contend, would stifle innovation and force the buyers of equipment and services to pay a higher price.
HPE and Juniper are the second- and third-largest players in enterprise-grade networking services in the United States, with a combined share of about a fifth of the market, according to industry estimates. Cisco controls about half of the market.
The deal is also a test of how officials will approach companies that present their deals in terms aligned with Mr. Trump’s “America First” agenda. In a statement, HPE called the Justice Department’s suit “fundamentally flawed” and, among other things, noted that the combined company would create “a compelling, U.S.-based alternative globally to incumbents, fortifying the American ‘core tech’ sector that serves as the backbone of U.S. networking infrastructure.” The deal would also bolster national security, the company added.
“We will vigorously defend against the Department of Justice’s overreaching interpretation of antitrust laws,” the company said.
Regulators heavily scrutinized mergers and acquisitions during the Biden administration, as officials resisted corporate consolidation across the economy. Last year, the F.T.C. stopped the grocery chain Kroger from buying Albertsons over fears it would result in higher food prices, and challenged a merger between Tapestry and Capri, two handbag producers, to promote competition in the “accessible luxury” market. In 2022, the Justice Department blocked the publishing giant Penguin Random House from buying Simon and Schuster.
The agencies were not always successful in court. The F.T.C. tried and failed to block Meta from buying a virtual reality start-up and could not stop Microsoft from buying Activision, the video game publisher. The Justice Department lost a challenge to UnitedHealth Group’s purchase of a company that helps process insurance claims.
Many industry groups accused the regulators of stifling deals that were good for consumers and expressed hope that the next administration would take a different approach. David Zaslav, the chief executive of Warner Bros. Discovery, said in July that the next president should present an “an opportunity for deregulation, so companies can consolidate and do what we need to, to be even better.”
