Shortly before the scheduled start of trial, the U.S. Department of Justice (“DOJ”), Antitrust Division (“Division”) reached a settlement with Hewlett Packard Enterprise (“HPE”) and Juniper Networks (“Juniper”) that allows their $14 billion merger to proceed. The settlement, described by the agency as “novel,” requires divestiture of an HPE business line to a preapproved buyer and at least one license of certain Juniper technology to one or more licensees that must be approved by the Division.
For the third time in a month, the new administration has approved a structural remedy in order to address the potential anticompetitive effects of a merger.
The Transaction
HPE offers products in a number of technology markets, including general-purpose servers, cloud storage, and finance. The company also sells networking products, including wireless access points and campus switches, under the HPE Aruba Networking brand and its legacy on-premises network management solution, Airwave. Juniper provides a range of networking products, including wireless access points, wired switches, and network management software under the Mist brand.
After the merger, HPE and Juniper’s aggregate market share would be only approximately 22–26 percent, below the 2023 Merger Guidelines’ 30 percent market share threshold for presumption of a merger’s illegality. However, the Division also alleged that the parties’ largest competitor has an approximate 48 percent market share and that at least seven other competitors each have market shares of only between 1 percent and 10 percent for commercial or enterprise-grade wireless networking solutions. The transaction would result in two firms controlling over 70 percent of the relevant market, with a significant gap between post-closing HPE and the next largest competitor in the market, allegedly making it easier for the two largest companies to reach and sustain a consensus on price, features, and reliability.
Though the transaction was cleared by fourteen foreign antitrust authorities, the Division sued to block the merger in January 2025 over concerns about competition for local wireless networking technology. According to the agency’s complaint, there were three primary theories of harm: (1) loss of head-to-head competition between the merging parties’ Aruba and Mist brands, causing prices to increase; (2) elimination of a disruptive force in the industry that has introduced tools to significantly lower the cost of wireless networks; and (3) increased risk of coordination among the remaining vendors.
The European Commission’s public findings regarding the transaction’s impact in the European Economic Area are in stark contrast with the Division’s allegations. Recent statements by HPE’s CEO might, however, explain the divergence; he has said that the transaction would facilitate the firm’s ability to better compete outside the United States, where more competitors with higher market shares participate in the market.
The Remedies
The divestiture and technology license(s) required by the settlement are intended to eliminate the alleged anticompetitive effects of the acquisition by strengthening one or more existing competitors or facilitating entry of a new competitor for enterprise-grade wireless local area network (“WLAN”) solutions.
- HPE must divest its global “Instant On” campus and branch WLAN business, including all assets, intellectual property, R&D personnel, and customer relationships within 180 days.
- The parties must also hold an auction for a perpetual, worldwide, nonexclusive license to Juniper’s AI Ops for Mist source code. The license will include optional transitional support “on reasonable commercial terms” and personnel transfers.
The settlement also assures that any winning licensee will have the right to any improvements to and derivatives of the licensed technology and the right to grant rights of use to the technology to its end users and service providers as reasonably needed. If the auction results in multiple bids exceeding $8 million, Juniper will be required to license to at least one additional bidder. This novel approach by the Justice Department reflects a commitment to solving unique challenges in mergers.
While not routine, license remedies have been used previously. For example, in 2017, the Federal Trade Commission (“FTC”) accepted a license remedy for it challenge to a pharmaceutical company’s acquisition of the US rights to the drug Synacthen. The FTC alleged there that the acquisition would prevent the development of a US competitor to the buyer’s monopoly. In another instance, a licensing remedy was approved in a post-consummation merger challenge.
A licensing remedy alone, however, would likely have been insufficient here. The divestiture of a business is an important component to the settlement with HPE and Juniper. Parties considering transactions should not assume that a license alone will resolve agency concerns. According to public reporting, the settlement was not supported by Division staff but was instead approved by leadership of the DOJ. Even assuming an antitrust enforcement divide within the administration, it is at least clear that there is a willingness to resolve merger challenges in advance of trial as was the case here and in advance of complaint in two other recent transactions. This shift in approach should be taken into consideration when assessing the enforcement risk of potential transactions, when designing agency clearance strategies, and when negotiating antitrust risk-shifting provisions in purchase agreements.
