The new Trump administration in its second week provided an early sign that American companies won’t get a free pass when it comes to big mergers and acquisitions.
It came Thursday when Donald Trump’s antitrust cops at the Justice Department filed a lawsuit seeking to block Hewlett Packard (HPE) from acquiring rival Juniper Networks (JNPR).
“I think that for those who thought that the new administration will be soft on antitrust or soft on mergers, think again,” Alden Abbott, Mercatus Center senior research fellow and former Federal Trade Commission general counsel, told Yahoo Finance.
The DOJ alleged that the $14 billion tie-up of the nation’s second- and third-largest providers of enterprise wireless networking would substantially lessen competition in that market.
“The acquisition, if consummated, would result in two companies — market leader Cisco (CSCO) and HP — controlling well over 70% of the US market and eliminate fierce head-to-head competition,” the DOJ said in its suit.
As of the third quarter 2024, Cisco controlled nearly 42% of the market for enterprise-grade wireless local area networks or WLAN, which includes hardware and software for devices to wirelessly connect within areas like offices and school campuses.
Hewlett Packard and Juniper issued a joint statement that called the DOJ’s legal analysis “fundamentally flawed.” Combining the companies, they said, would be pro-competitive, enhance innovation, and give customers more choice in the networking market.
Mark McCareins, a clinical professor at Northwestern University’s Kellogg School of Management and former antitrust litigator, expects Trump’s antitrust enforcers to stick to more traditional, well-tested legal theories than those used by Biden administration enforcers.
“I think this administration is more concerned about winning,” he said, and “they don’t want to take cases in which they lose, because they’ve got precious resources, and it sends a bad message if it’s a waste of resources.”
Investors cheered Trump’s election in part because they hoped it would mark the end of an aggressive era of antitrust enforcement that featured federal confrontations with some of America’s corporate giants.
But Trump has already dropped several hints that his approach to M&A approvals might also be aggressive, especially when it comes to technology giants.
“Big Tech has run wild for years,” Trump said in a statement on his Truth Social platform announcing his choice of Gail Slater to run the DOJ’s antitrust division.