Office of the
Illinois Attorney General
Kwame Raoul

Chicago – Attorney General Kwame Raoul today joined a coalition of 13 attorneys general in filing a court brief opposing the $14 billion merger settlement between Hewlett Packard Enterprises (HPE) and Juniper Networks (Juniper), the second and third largest providers of wireless networking equipment in the United States.

Last fall, the court overseeing the case permitted the states to intervene in the review of the merger settlement following reports that it was driven by improper influence peddling at the highest levels of the Justice Department (DOJ) by well-connected lobbyists.

“The proposed settlement does not address the concerns we raised in October: that this merger will drastically limit competition to allow the remaining dominant firms in the wireless networking equipment market to raise prices and reduce innovation,” Raoul said. “I will continue to use my authority to enforce state and federal antitrust laws that encourage competition and protect consumers.”

Raoul and the coalition argue in their lawsuit that the merger between HPE and Juniper would harm competition, raise prices and reduce innovation in the market. Furthermore, the merger settlement violates the public interest as a result of the corrupt process at the U.S. Department of Justice that led to the settlement, according to court filings.

In the redacted brief, Raoul and the coalition explain that the DOJ’s antitrust division had a strong case when it originally opposed the HPE/Juniper merger. According to the brief, there was no dispute that the two companies engaged in significant head-to-head competition, and combining the two companies would result in a highly concentrated market, with HPE and Cisco controlling a vast majority of the wireless networking equipment market. The merger was presumptively anticompetitive based on well-established, generally accepted measures of market concentration. In settlement negotiations, the DOJ’s antitrust division pressed for terms that would have addressed the anticompetitive concerns of the merger.

HPE refused, but instead of defending the merger on the merits in court, HPE hired a group of well-connected lobbyists to go over the heads of the antitrust division experts and strike a sweetheart deal that failed to address the merger’s harms at all. Throughout the process, threats were made against the head of the antitrust division, Gail Slater, and her top deputies, who were sidelined from the decisive round of negotiations and eventually ousted from the DOJ. Moreover, the government and HPE withheld information from their statutorily required disclosures about the alternative remedies considered and the full extent of HPE’s lobbying of the executive branch.

This series of events prompted the state coalition to urge the court overseeing the case to reject the settlement under the federal Tunney Act, a post-Watergate law enacted by Congress in 1974 to ensure that antitrust settlements reached by the DOJ are based on the merits rather than undue influence by powerful corporations and their well-connected lobbyists.

Raoul and the coalition are asking the court to reject the settlement because it is not in the public interest due to the corrupt process that led to the settlement, and because it does not address the competitive concerns alleged in the litigation.

Joining Attorney General Raoul on the court filing are the attorneys general of California, Colorado, Connecticut, the District of Columbia, Hawaii, Massachusetts, Minnesota, North Carolina, New York, Oregon, Washington and Wisconsin.