Attorney General Mayes Opposes $14B HPE/Juniper Networks Merger amid Alleged Corrupt DOJ Approval Process

PHOENIX – Attorney General Kris Mayes today joined a group of attorneys general in opposing the Justice Department’s proposed settlement in the $14 billion HPE/Juniper Networks merger. The coalition of attorneys general also urged the judge overseeing the case to hold a hearing to determine if the merger is in the public interest and whether it was obtained through the kind of influence peddling that federal law intended to prevent.

"These huge corporations have admitted this merger will jack-up prices 14% for consumers-- it's becoming increasingly clear that this deal may have been designed to benefit a small group of well-funded, corrupt individuals and corporations at the expense of American consumers," said Attorney General Mayes. 

In a letter to the Justice Department, the state attorneys general take issue with the department’s approval of the merger and say that the court should “examine the process that led to the Proposed Final Judgment in this case to uncover whether it has been terminally infected by precisely the type of backroom dealing the Tunney Act was intended to prevent.”

The Tunney Act is a post-Watergate law enacted by Congress in 1974 to ensure that antitrust settlements reached by the Justice Department are based on the merits rather than undue influence by powerful corporations and their well-connected lobbyists. Under the law, the Justice Department must seek approval of all antitrust settlements from the courts, and the courts must make independent judgments that a settlement is in the public interest. The attorneys general, which enforce state and federal antitrust laws, argue that publicly available information about the process that led to the HPE/Juniper settlement suggests that the Justice Department has failed to meet that standard in this case. 

According to public reports, the Justice Department trial staff working on the merger case, as well as senior leadership in the Antitrust Division, opposed the HPE settlement. But higher-level political appointees at the department were lobbied by individuals with close ties to the Trump administration. The chief of staff to the U.S. attorney general then allegedly pushed the settlement through over the objections of the Antitrust Division and in a manner that did not address the anticompetitive harms alleged in the government’s complaint. For example, the settlement merely requires HPE to divest a small business line that is largely irrelevant to the litigation. The merger will result in two firms—HPE and Cisco—controlling over 75% of the relevant market and may increase prices by up to 14%, according to the Justice Department’s own court papers. 

Two senior Antitrust Division attorneys appointed by President Trump’s own administration were fired for opposing the settlement. One of the fired attorneys has spoken out publicly against the settlement and called it a “scandal” that represented the “Rule of Lobbyists” over the “Rule of Law.”

The coalition of attorneys general are pressing the court to hold an evidentiary hearing and require discovery into the settlement and the alleged corrupt process that led to it. “And if, upon exposing the Settlement to sunlight, the evidence establishes that it was the product of undue influence, then the Court should reject it as against the public interest,” the letter states.

Attorney General Mayes joined the attorneys general of California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Maine, Maryland, Massachusetts, Michigan, Nevada, New Mexico, New York, North Carolina, Oregon, Rhode Island, Washington, Wisconsin, and the District of Columbia on the letter.

A copy of the letter is available here.