Hewlett Packard Enterprise’s (HPE) Juniper acquisition could receive a once-over from a Northern California district judge after a handful of Democratic senators want to look into whether the Department of Justice (DOJ) breached articles of the Tunney Act in approving the $14 billion deal.

Senators Elizabeth Warren, Amy Klobuchar, Cory Booker, and Richard Blumenthal penned a letter to U.S. District Court Judge Casey Pitts asking for a review of HPE’s purchase of Juniper under terms of the Tunney Act.

The letter cited recent reports indicating internal DOJ disagreement with the deal, which the Trump administration is believed to have overruled. The letter also expressed concerns that HPE procured lobbyists tied to President Trump in order to gain approval of the deal.

The Turney Act, passed in late 1974, requires a judicial review of DOJ settlements and a notice and comment period before a consent decree can be approved.

“The consent decree between DOJ and HPE/Juniper Networks requires additional sunlight, and the Tunney Act provides the means through which the public can gain access to information it deserves to know,” the letter notes. “Without transparency, the public cannot have confidence in DOJ’s decisions.”

Jennifer Rie, senior litigation analyst for antitrust at Bloomberg LP, explained to SDxCentral that while internal details of the agreement have not been officially released, signs do point to Gail Slater, assistant attorney general for the DOJ’s antitrust division, having been pressured to sign off on the deal.

“I can't confirm at all that that's exactly what happened, but it sure seems like it because the settlement wasn't signed by the normal people that would usually sign it,” Rie said. “The staff that were involved in the case, that were the ones that drafted it, brought the allegations to begin with.”

Rie explained that it’s common for senators to comment on deals before a final decision is reached, but unusual for them to ask for such reviews after a deal is approved.

“For them to speak up post settlement, to push the judge who now has to review the settlement to ensure that it's in the public interest and sign off on it, to push the judge to take a really close look at that issue and what led to the settlement, that is unusual,” Rie said.

How does the DOJ react?

The kerfuffle has quickly highlighted concerns over how the Trump administration might attempt to influence regulatory decisions.

Rie noted that Slater was asked during her confirmation hearings whether she would be able to be “an independent thinker and not pushed into her position by President Trump.”

“[Assistant attorney general Slater] said something like she didn't expect him to do something like that, she didn't expect to be put in that position generally, and so she wasn't worried about that scenario,” Rie said. “But it seems like that's the exact scenario, and certainly it seems like it could occur again in the future.”

Rie added that based on movements over the past six months that this could reasonably be expected to result in similar scenarios moving forward.

“The broader picture here is that at this point in time, lawyers are essentially advising their clients who have deals pending or getting into deals that they should be hiring lobbyists that are aligned with the administration, aligned with the president,” Rie said.

“I think that's not a very good sign in terms of expectations going forward, and the president, certainly across the board, beyond antitrust, beyond just the DOJ and the [Federal Trade Commission], has exerted his control over the entirety of the administration and various agencies in the executive branch. And so I think we have to go forward with an expectation that if there is a deal, in particular in which the president has an interest and has an interest in pushing forward – whatever that reason is, that he will try to exert control over that decision-making process.”

How we got here

As part of gaining DOJ approval for the deal – and avoiding a pending court date to argue out the terms – HPE agreed to license limited access to Juniper’s AI Ops for Mist source code. This will be done via an auction process with the license to be “perpetual, non-exclusive, and include optional transitional support and personnel transfers to facilitate competition,” the DOJ added.

HPE also agreed to divest its Instant On wireless LAN (WLAN) campus and branch network switching business. This includes all of that unit’s assets, intellectual property, research and development employees, and customer relationships “to a DOJ-approved buyer within 180 days,” the DOJ noted in its settlement.

HPE CEO Antonio Neri explained during a press briefing touting completion of the deal, downplayed what it agreed to give up.

In terms of the Instant On platform, Neri dismissed that HPE platform as “a very new business unit that we built over the last three years or so, is completely separate from the rest of the traditional HPE-Aruba platform, or Aruba Central, and is [an] unique offer targeting the SMB [small-to-mid-sized] segment of the market, and more specifically the ‘s’ of SMB. It’s a very small business for us.”

Neri was slightly less dismissive of the Mist licensing requirement.

“The license is basically the ability for them to acquire the license, and then obviously we will have to support that license, so the intellectual property obviously stays with us, but we have to be able to support that as we go forward,” Neri said of the Mist license code requirement. “But again, it's only the AI operations portion of the Juniper Mist stack.”

Rami Rahim, who was CEO at Juniper and is now president and GM of HPE’s Juniper-infused networking business, also downplayed that licensing impact.

“We have now over 10 years of learning from real-world deployments, and that is extremely difficult, license or not, to replicate that real-world knowledge of working with some of the largest customers around the world in AIOps and full-stack networking is truly an incredible asset,” Rahim said. “This is essentially part of the intellectual property that Juniper and now HPE networking have gained over the years.”

Analysts did concur with that sentiment, noting the loose nature of the DOJ’s requirements.

“When they do that, how well does HPE have to support it or be easy going?” André Kindness, principal analyst for network serving infrastructure and operations at Forrester Research, told SDxCentral in an interview. “So they sell it, but the question is how difficult they make this for companies to buy into?”

Siân Morgan, research director at Dell’Oro Group, also explained in a blog post that acquiring the license is only one step in trying to compete in the market.

“This may present an interesting opportunity for two American companies, but it is only a small piece of a successful enterprise IT strategy,” Morgan wrote. “The formula for competing with Cisco must involve a complete networking portfolio of hardware and software, along with a well-developed channel. A license to Mist source code can only go so far.”

Kindness, who was clear that he did not have any specific legal expertise in the case, did note at the time that the settlement terms indicated the DOJ might not have had a full view of market dynamics.

“I think the Instant On was, in my perception, the Department of Justice didn’t know the product lines that well and how much revenue they bring in … and I'm sure HPE didn’t need to divulge that, and maybe [the DOJ] didn't dig into it, so I think they threw that as chum in the water or making the Department of Justice feel better about that one,” Kindness said. “I think HPE just threw it out there … because it wasn’t big and maybe placated the DOJ, like, ‘hey, we will get rid of some product line.’”

That competitive dynamic was highlighted by recent industry reports that found a combined HPE and Juniper could provide an innovation spark against market heavyweight Cisco.

Gartner placed both HPE and Juniper in the “leaders” category of its latest enterprise wired and WLAN Magic Quadrant report, which was just ahead of Cisco’s “challenger” status; while numbers from IDC showed both HPE and Juniper posted higher growth trends than Cisco in the enterprise WLAN market.

Bloomberg’s Rie did add that there is the potential for the requested judicial review to delay HPE’s integration of Juniper, but she was not aware of any situation where a judge asked to review a DOJ decision had overturned that decision.

“There are examples of the judge during a Tunney Act procedure has asked the DOJ to revisit the settlement and revise it. That has occurred in the past, but I don't know of a case in which the settlement was scuttled altogether,” Rie said.

HPE’s ongoing drama

HPE’s latest drama comes on the heels of the networking giant forming a new board “strategy committee” that was formed under pressure from activist investment firm Elliott Investment Management. The committee was formed from an agreement between Elliott and HPE’s board that included the hiring of industry veteran Robert Calderoni to head the committee, as well as Calderoni joining HPE’s Integration Committee that is working on the Juniper integration.

Elliott’s influence stems from its move earlier this year in taking a substantial stake in HPE, a move that came during uncertainty over HPE gaining government approval to purchase Juniper. Elliott’s investment reportedly included the investment firm sending a letter to HPE’s board asking for the removal of HPE CEO Antonio Neri.

The Elliott agreement also calls for “information-sharing” between HPE and Elliott to foster “an ongoing dialogue,” and also provides Elliott with the ability to appoint a representative to HPE’s board at its discretion.