The US Department of Justice (DOJ) has filed a lawsuit in an effort to block Hewlett Packard Enterprise's (HPE) $14 billion acquisition of Juniper Networks.

In its complaint filed yesterday (January 30), the DOJ argues that the planned acquisition poses a threat to competition for enterprise Wireless Local Area Network (WLAN) used by large companies, universities, and hospitals.

It further claims that the deal would consolidate the sector from three big players – HPE, Juniper, and Cisco, down to two, which would control 70 percent of the market.

HPE announced an agreement to acquire network gear maker Juniper Networks last January, a move that received the backing of both companies' boards. Months later the UK's Competition and Markets Authority (CMA) also approved the deal.

However, the US has taken a different stance on the deal, with the antitrust lawsuit the first to be filed under President Donald Trump's administration.

"If consummated, [the deal] would eliminate head-to-head competition that has lowered prices and driven investment in network management software, and it would decrease pressure on HPE to discount and innovate in the future,” argues the DOJ in its filing.

The DOJ notes that HPE has identified Juniper as a "competitive threat."

Founded in 1996 and based in Sunnyvale, California, the New York-listed Juniper provides networking products, including routers, switches, network management software, network security products, and software-defined networking technology.

It was the company's acquisition of independent networking startup, Mist Systems, in 2019 that made HPE sit up and take notice, says the DOJ. Mist operates a portfolio of wireless access points and campus switches managed by a network management platform called Mist.

Because of Mist's success, HPE was forced to discount its products and invest in advanced software products and features as part of a multifaceted campaign to “Beat Mist.”

The DOJ claims that HPE failed in its campaign to "Beat Mist," leading it to acquire the company instead.

"Fundamentally flawed"

In response to the filing, HPE and Juniper issued a joint statement opposing the lawsuit.

“We believe the Department of Justice’s analysis of this acquisition is fundamentally flawed and we are disappointed in its decision to file a suit attempting to prohibit the closing of the transaction," said the two companies in a statement.

"We will vigorously defend against the Department of Justice’s overreaching interpretation of antitrust laws and will demonstrate how this transaction will provide customers with greater innovation and choice, positively change the dynamics in the networking market by enhancing competition, and strengthen the backbone of US networking infrastructure."

HPE and Juniper hit back at some of the claims put forward by the DOJ, notably its claim that the WLAN market is composed of three primary players, which they claim to be "substantially disconnected from market realities."

Instead, the two argue that AI and cloud have driven competition for WLAN across a broad set of players, "all of whom are fighting for business and winning bids in competitive RFP processes."

The duo pointed to the fact that the deal has been approved by antitrust regulators in 14 jurisdictions, including by the European Commission. Other than Israel, the US is the only jurisdiction not to have cleared the deal, it adds.