HPE-Juniper Deal Still Under Fire by States After DOJ Approval
(Bloomberg) — A federal judge laid out the ground rules for how a dozen states can file legal challenges to the Justice Department’s approval of Hewlett Packard Enterprise’s $14 billion acquisition of Juniper Networks over claims that the deal is politically tainted.
The order issued Wednesday sets the stage for a group of state attorneys general, led by Colorado, to investigate what led federal antitrust enforcers to reach an agreement with the companies that allowed the merger to move forward.
U.S. District Judge Casey Pitts in San Jose, California, ruled last month that states can seek more information about the controversial agreement; This led to the dismissal of two Justice Department officials who objected to the tactics HPE used to close the acquisition. But the two sides differ over the scope of the Tunney Act, a 1974 law that requires court approval of the Justice Department’s antitrust settlements.
In Wednesday’s order, Pitts wrote that states are entitled to at least some of the pretrial information sharing that occurred after the Justice Department sued HPE in January to block its acquisition of Juniper, the first antitrust lawsuit filed by the new Trump administration.
“This record is undoubtedly relevant because it will help states evaluate the risks to competition posed by the proposed merger, the extent to which the proposed decision addresses those risks, and the strength of the United States’ underlying case,” he wrote.
Pitts directed both parties to file further briefings and said that if he concludes that an evidentiary hearing is necessary to determine whether the agreement is appropriate under the Tunney Act, the hearing will be held March 23-27. The states were a long way from the Justice Department and the companies about what this hearing would entail.
The states were demanding a kind of mini-trial, with a months-long information-gathering process they say is necessary to uncover the alleged corrupt process that led to the deal. Meanwhile, the government and companies say Pitts should only examine the merits of the deal and whether it is in the public interest.
Pitts has previously stated that much of the process behind the deal is likely protected by attorney-client privilege and the government’s ability to make confidential decisions.
The deal, which the Justice Department reached days before the hearing and allowing the deal to close, calls for only a small divestiture of one of HPE’s businesses, known as Instant On, and a commitment to license certain Juniper technology.
However much attention Pitts places on the government’s internal deliberations, he seemed somewhat skeptical about the merits of the agreement at the November hearing. He questioned why it required HPE to sell its Instant On networking business, which was not the subject of the original lawsuit.
“I don’t remember reading anything about Instant On,” Pitts said at the time, noting that he was “very into weed” as the case was being decided as he was preparing for trial. “It was interesting to see the agreement from that perspective.”
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