Hewlett Packard Enterprise’s (HPE) recent acquisition of Juniper Networks had to slog its way through a prolonged Department of Justice (DOJ) review process, which resulted in that final governmental approval and could spell more opportunities for other deals waiting in the DOJ queue.

The DOJ had earlier this year filed a lawsuit to stop HPE’s $14 billion purchase of Juniper Networks citing concern that HPE and Juniper’s current No. 2 and No. 3 market position in the WLAN market would hurt market choice and innovation. HPE had countered that contention, claiming it was more interested in Juniper’s overall offerings.

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.

Jennifer Rie, senior litigation analyst for antitrust at Bloomberg LP, explained to SDxCentral at that time that the details on the approval agreement showed DOJ concern over its case against HPE.

“I think on both sides, a settlement was probably a smart thing,” Rie said. “The case was a very close call. The DOJ had some points and some aspects of the data available to them that was in their favor, but they also had weak spots. And so it wasn't necessarily a slam dunk for the DOJ, at least based on what we knew going in.”

The uncertainty fed into an all-or-nothing gambit that the DOJ did not want to chance.

“They have the divestiture and a licensing agreement, and it's along the lines of what the Justice Department has said they require in a settlement. They prefer something that's structural over something that's behavioral, and they were able to get that here,” Rie said. “Obviously, if the DOJ lost in court, it would allow the deal to go forward completely in full with no settlement, which, according to the DOJ, could harm the market. … The DOJ can now say ‘this was not a surefire win for us. It wasn't a slam dunk. We had some good points to make, but we also had weaknesses in our evidence. It could have gone either way, and this way we got something rather than getting nothing.’”

New regulatory direction

Rie said that sentiment could provide insight into how the DOJ might react to other pending deals.

“I think there have been some signs in the last couple months from the new antitrust enforcers that were appointed by Trump that they are very much willing to look at these deals and if they do think that the deals are problematic, to work with the companies to resolve them with a remedy,” Rie said.

Rie pointed to several deals that have recently been settled by various government regulatory bodies, including Keysight’s acquisition of Spirent, which the DOJ said would require Keysight to divest some of Spirent’s high-speed Ethernet testing, network security testing, and RF channel emulation businesses.

This would be a significant turnaround from how the government agency under the previous administration approached large-scale mergers and acquisitions.

“That is definitely a big change from the Biden administration, because in that administration, there was more of a prevailing view that if we decide the deal is problematic from an antitrust perspective, it's problematic and we need to just try to stop the deal,” Rie said. “They had the perspective that they just didn't think settlements worked.”

The more recent decisions don’t guarantee an approval, but “if they find a problem, they're going to want a remedy,” Rie added. “But at least it means they're willing to accept remedies, allowing broader deals to get closed.”

Charter’s Cox deal in focus

One of those upcoming cases could include Charter Communications’ pending $34.5 billion purchase of fellow cable operator Cox Communications. That deal, if approved, would create the nation’s largest cable operator with a combined 69.5 million locations passed, surpassing current heavyweight Comcast, which counts just under 64 million locations passed.

Charter President and CEO Chris Winfrey told investors during the company’s most recent earnings call that “assuming regulatory approval ... this deal is good for America.”

Rie noted that review of the proposed deal could prove interesting due to the evolving nature of network connectivity, especially on how government regulators view 5G-based wireless services.

Those 5G-based broadband services are indeed taking a bite out of the cable broadband business. Analysts have noted that all of the current broadband market growth is coming from 5G-powered fixed-wireless access (FWA) services being offered by wireless telecom providers.

“Cable deals for many years now, they've kind of looked at the competitors to bring internet into your home. The broadband competitors to be basically cable, fiber, and satellite,” Rie said. “And now you've got 5G, where you've got the telecoms that say you don't need any of that anymore. You can just get internet access via cellular, via 5G. And so the interesting thing will be whether they consider that to be a competitor too.”