A US federal judge has established the procedural framework for a coalition of twelve states to legally challenge the Justice Department's controversial approval of Hewlett Packard Enterprise's massive $14 billion purchase of Juniper Networks. The states allege the antitrust settlement was politically influenced.
Judge Pitts Grants States Investigative Power
In an order issued on Wednesday, US District Judge Casey Pitts in San Jose, California, ruled that the state attorneys general, led by Colorado, are entitled to access at least some of the pretrial information exchanged after the DOJ initially sued to block the acquisition in January. This lawsuit was the first antitrust case initiated by the new Trump administration.
Judge Pitts stated that this record is crucial for the states to assess the competitive risks of the merger, evaluate how well the settlement addresses those risks, and understand the strength of the government's original case. This decision builds on his ruling last month allowing the states to seek more information about the settlement, which led to the firing of two DOJ officials who objected to HPE's tactics.
Clash Over the Scope of the Tunney Act
The core dispute revolves around the interpretation of the Tunney Act of 1974, a law requiring court approval of antitrust settlements reached by the Justice Department. The states and the DOJ, along with the companies, are far apart on what the judicial review should entail.
The coalition of states is pushing for an extensive, trial-like fact-finding process lasting months. They argue this is necessary to uncover what they call a corrupt process behind the settlement. Conversely, the government and the companies contend that Judge Pitts should limit his review strictly to the merits of the settlement itself and whether it serves the public interest.
Judge Pitts has directed both sides to submit further legal briefs. He indicated that if he determines an evidence hearing is needed to evaluate the settlement under the Tunney Act, it will be scheduled for March 23-27.
Skepticism Over the Settlement's Terms
The settlement, reached just days before the trial was set to begin, allowed the HPE-Juniper merger to proceed with relatively minor conditions. It requires only a small divestiture of an HPE business unit called Instant On and a commitment to license certain Juniper technology.
During a hearing in November, Judge Pitts appeared skeptical of these terms. He pointedly questioned why the settlement mandated the sale of the Instant On networking business, which was not even mentioned in the original DOJ lawsuit. "I don't recall reading about Instant On," Pitts remarked, noting he was deeply prepared for trial when the settlement was announced. "In that respect, it was interesting to see the settlement."
However, the judge has also previously suggested that much of the internal decision-making process within the DOJ leading to the settlement is likely protected by attorney-client privilege and the government's right to confidential deliberations.
The outcome of this legal challenge is being closely watched, as it could set a precedent for how courts scrutinize future high-stakes antitrust settlements negotiated by the Department of Justice.
