HPE $14B Juniper acquisition, Tunney Act hearing analysis

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Overview

On March 23, 2026, the U.S. District Court for the Northern District of California held a rare Tunney Act hearing in United States v. Hewlett Packard Enterprise Co. and Juniper Networks, Inc. to evaluate a proposed settlement between the Department of Justice (“DOJ”) and Hewlett Packard Enterprise (“HPE”) concerning HPE’s $14 billion acquisition of Juniper Networks. State attorneys general intervened to oppose the settlement—an uncommon development in Tunney Act proceedings, which are typically uncontested and subject to limited judicial scrutiny. The hearing underscored the questions the Court is confronting, in particular the scope of its role in evaluating DOJ-negotiated remedies.

Procedural Posture

The United States filed suit on January 30, 2025, seeking to block the acquisition under Section 7 of the Clayton Act on the ground that the transaction would substantially lessen competition in the market for enterprise-grade wireless local area network (“WLAN”) solutions. The parties later reached a settlement, and on June 27, 2025, the United States filed a proposed Final Judgment along with a Competitive Impact Statement describing the alleged competitive harm and the proposed remedies.

The Tunney Act requires a 60-day public comment period for the proposed settlement. After receiving comments, the United States submitted a response and an amended proposed Final Judgment. A coalition of twelve states and the District of Columbia, led by Colorado, then moved to intervene, asserting that the remedies were inadequate and raising questions about the settlement process based on public reporting surrounding the settlement that it was the result of improper lobbying. The Court granted the states intervention for the limited purpose of assisting in its Tunney Act review. The court permitted targeted discovery on issues relevant to its “public interest” determination under the Tunney Act, specifically those related to the adequacy of the proposed remedies and, to the extent such issues bear on that determination, aspects of the settlement process.

The United States subsequently moved for entry of the Final Judgment, maintaining that the settlement satisfies the Tunney Act and that no evidentiary hearing is required. The states also requested an evidentiary hearing pursuant to the Tunney Act, which permits courts to exercise discretion in determining whether such proceedings are necessary, but the Court declined that request. The Court instead held a Tunney Act hearing on March 23, 2026.

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Proposed Relief and Parties’ Positions

The proposed Final Judgment requires two primary forms of relief: licensing Juniper’s Mist AI Ops source code to one or more third parties and divestiture of HPE’s “Instant On” business. DOJ characterized these as “two complementary structural remedies” designed to address the competitive harms alleged in the complaint.

DOJ maintains that these remedies preserve competition by enabling rivals to access the technology and assets necessary to compete in the enterprise-grade WLAN market. It also emphasizes that the Tunney Act requires a limited inquiry, under which the court must determine whether the settlement “falls within the reaches of the public interest,” rather than assess if it represents the best possible outcome.

HPE similarly characterizes the remedies as meaningful and operational. It contends that the Instant On divestiture transfers a functioning business, including products, customer relationships, and personnel, while the licensing provision provides access to the core technology underlying Juniper’s competitive position, along with transitional support to facilitate its use.

The intervening states challenge both the adequacy of these remedies and the process surrounding the settlement. They contend that the divestiture does not meaningfully replace the competitive pressure eliminated by the merger and that the licensing arrangement is too uncertain to function as a substitute for direct rivalry. They also raise concerns about the circumstances surrounding the settlement, pointing to allegations that the Antitrust Division was sidelined and that outside influences may have played a role in shaping the agreement.

The Hearing

The hearing focused on several core questions:

1. How much deference should the court give to DOJ’s settlement determination?
2. Do the licensing and divestiture provisions sufficiently replace the competition lost in the enterprise-grade WLAN market through the merger?
3. Are alleged irregularities in the settlement process relevant to the court’s evaluation?
4. Is the existing record sufficient, or is additional factual development necessary? In addressing these questions, the Court evaluated whether the proposed remedies would effectively preserve competition or instead depend on uncertain future outcomes. It also considered whether the existing record is sufficient for evaluation or whether additional proceedings are needed.

DOJ’s argument

DOJ addressed the adequacy of both the licensing and divestiture remedies in response to the Court’s questions. At the outset, the Court pressed whether granting access to the Mist AI Ops source code would realistically allow a third party to compete in a manner comparable to Juniper. DOJ responded that the license provides a meaningful head start by giving the licensee access to the core technology at issue, along with transitional support, including engineers, sales personnel, and operational know-how necessary to deploy and commercialize the product.

The Court then turned to the divestiture of the Instant On business, questioning whether it was sufficient given its position in an adjacent segment of the enterprise WLAN market. DOJ acknowledged that the final divestiture differed from the remedy originally sought, describing it as a “compromise,” but maintained that it could still introduce competition either through an existing competitor or through expansion by a firm entering from a related market.

Beyond the specific remedies, the Court pressed DOJ on the governing legal standard, asking whether the Tunney Act permits approval of a settlement so long as it is “better than nothing,” even if it may be inadequate in fully restoring competition. The Court also asked whether DOJ could identify prior mergers that had been allowed to proceed subject to remedies that ultimately proved successful in preserving competition. DOJ rejected a more searching inquiry, emphasizing that the Tunney Act requires only that the settlement fall within the bounds of the public interest and that the Court should not second-guess the government’s predictive judgments about remedy effectiveness.

The Court further explored whether considerations outside the written settlement should factor into its review, including whether alleged national security concerns not reflected in the record should be considered and whether the success or failure of prior merger remedies should inform its evaluation. DOJ responded that such considerations fall outside the scope of Tunney Act review and maintained that the existing record provides a sufficient basis for evaluation.

Finally, DOJ emphasized that both remedies are being implemented through an ongoing auction process and argued that prompt entry of the Final Judgment would allow those assets to be transferred to competitors more quickly, enabling them to begin competing in the relevant market without delay.

HPE’s argument

Following DOJ’s presentation, HPE defended the remedies as concrete and capable of restoring competition. HPE emphasized that the divestiture of the Instant On business transfers a fully operational business unit, including products, customer relationships, contracts, and more than 100 employees, “essentially hand[ing] a WLAN competitor full campus and branch networking business” rather than building a competing platform from scratch.

Turning to the licensing provision, HPE stressed that the Mist AI Ops source code was central to the government’s theory of harm, describing it as the “secret sauce” underlying Juniper’s competitive differentiation. HPE argued that the license directly addresses that concern by granting broad access to the underlying technology, together with the personnel and support needed to make effective use of it.

The Court then directed similar questions to HPE regarding both the legal standard and the practical effectiveness of the remedies. It asked whether approval under the Tunney Act could rest on a determination that the settlement is preferable to no remedy at all, and whether HPE could point to prior merger remedies that had successfully preserved competition. HPE maintained that the proposed remedies are not merely theoretical but operational, emphasizing the immediacy of implementation and the transfer of both assets and capabilities.

In response to further questioning, the Court asked why the source code was being transferred to a third party and then licensed back to HPE, rather than simply licensed to a competitor. HPE explained that a complete divestiture was not feasible because the underlying intellectual property is integrated across multiple products within its networking business. Licensing, in its view, provided a practical mechanism to grant meaningful access to the relevant technology without disrupting the broader product ecosystem.

States’ Argument

In contrast, the intervening states argued that DOJ is not entitled to ordinary deference because the settlement process lacked “the hallmarks of regularity and principled decision-making.” They further asserted that, even under a deferential standard, the proposed remedies fail to address the anticompetitive harms arising from the merger. The states focused on the structural presumption arising from market concentration, arguing that the merger is presumptively anticompetitive, and that any adequate remedy must restore competition at a structural level. In their view, neither component of the proposed remedy satisfies that requirement.

Building on that position, the states emphasized that the Instant On business represents only a minimal share of the relevant market—approximately “one-tenth of 1 percent”—and therefore cannot meaningfully replace the competitive constraint lost through the merger. They also stressed that Juniper had been “by far the fastest-growing firm in the market” in the years leading up to the merger, and that no other firm had managed to exceed a 5 percent share of the relevant market, underscoring the difficulty of replicating its competitive role. Against that backdrop, the states argued that licensing the Mist AI Ops source code does not recreate the kind of head-to-head competition that existed prior to the transaction and is therefore insufficient to restore the market structure altered by the merger.

With respect to the settlement process, the states argued that discovery revealed irregularities that undermine confidence in the agreement and warrant closer judicial scrutiny. The Court pressed the states to clarify “what’s wrong with” HPE’s position that it had exercised its right to petition the government by elevating its advocacy within DOJ. In response, the states argued that discovery revealed conduct beyond ordinary advocacy. They contended that HPE leveraged individuals with significant political influence who exerted pressure on DOJ decision-makers and made direct threats to the positions of Antitrust Division personnel. The states further asserted that the settlement process issues, combined with the limited nature of the remedies, support the need for further factual development before entry of judgment.

In closing, the states warned that approving the settlement would “send a message to the marketplace that any merger can get through so long as you hire the right influential so-called ‘advisors’ who know how to pull the right levels of power in Washington.” This argument underscored their broader concern that both the substance of the remedies and the process by which they were reached fall short of what the Tunney Act requires.

Why This Proceeding Is Distinct

The states’ objections provide a framework for challenging DOJ-negotiated merger settlements and raise broader questions about the extent to which courts may scrutinize DOJ’s determination that a settlement serves the public interest. Although Tunney Act proceedings have been rare and typically limited, the statute’s language nonetheless equips courts with meaningful tools to conduct a more searching review of the adequacy of a proposed settlement.

Conclusion

The Court has not yet ruled on whether the proposed Final Judgment satisfies the Tunney Act, though it acknowledged the sensitivity of timing. Its decision will determine whether the settlement proceeds as negotiated or is subject to further scrutiny and may clarify the scope of judicial review in contested Tunney Act proceedings.

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Endnotes

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Author

Kennedy Harmon

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View Bio →

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Author

Kennedy Harmon

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Committees

This content was produced by:

• State Enforcement Committee

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