The European Commission has unconditionally approved, under the EU Merger Regulation, the proposed acquisition of Juniper Networks, Inc. (‘Juniper’) by Hewlett Packard Enterprise Company (‘HPE’). The Commission concluded that the operation does not raise competition concerns in the European Economic Area (EEA).
HPE provides IT infrastructure, related software, and cloud solutions. Juniper offers networking, infrastructure, and security solutions.
Commission’s Investigation
The Commission investigated the impact of the transaction on the following markets: (i) the global market for supply of wireless local area network (‘WLAN’) equipment; (ii) the global market for supply of wireless access points (‘WAPs’); (iii) the EEA market for supply of Ethernet campus switches; and (iv) the global market for supply of data center switches.
Based on its market investigation, the Commission determined that the transaction, as notified, would not significantly reduce competition in these markets. In particular, regarding the horizontal overlaps between the companies’ activities in the WLAN equipment, WAPs, and Ethernet campus switches markets, the Commission found that in the EEA:
– The merged entity’s market position would remain moderate.
– The merged entity would continue to face a wide range of competitors, including strong and established players in each of the markets.
– HPE and Juniper are not the closest competitors to each other.
– Customers have some level of buying power, allowing them to react in case of price increases for WLAN equipment and Ethernet campus switches.
Regarding the conglomerate ties between Juniper’s switches and HPE’s activities in the global markets for supply of high-performance computing (‘HPC’) systems and mid-range servers, the Commission concluded that in the EEA the merged entity would not have the ability to engage in anticompetitive bundling or tying practices, as:
– The merged entity would not have a significant degree of market power in the mid-range server supply market or the HPC supply market.
– Customers’ purchasing cycles for each respective product are different and therefore would not allow for an anticompetitive bundling or tying strategy by the merged entity.
– The merged entity would not gain a significant advantage by offering its data center switches as a bundle with HPE servers or HPE’s HPC systems.
– Competitors could replicate and challenge any bundled or tied product.
Therefore, the Commission concluded that the proposed merger would not raise competition concerns in any of the examined markets in the EEA or in any substantial part thereof. Therefore, it approved the transaction without conditions.
Companies and Products
HPE, headquartered in the United States, is a company active in the development and marketing of enterprise information technology for consumers in the EEA and globally. It offers infrastructure products to support customers’ IT systems and related software to automate and simplify IT operations, as well as cloud solutions. HPE’s products include computing, storage, networking, high-performance computing, and artificial intelligence, as well as software.
Juniper, headquartered in the United States, provides networking infrastructure, security, and other related solutions (hardware and software) to customers in various industries in the EEA and globally.
Merger Control and Procedure
The transaction was notified to the Commission on June 27, 2024. The Commission has an obligation to assess mergers and acquisitions involving companies with turnover above certain thresholds (see Article 1 of the EU Merger Regulation) and to prevent concentrations that significantly impede effective competition in the EEA or any substantial part thereof.
The vast majority of notified mergers do not raise competition concerns and are cleared following a routine review. From the moment a transaction is notified, the Commission generally has 25 working days to decide whether to grant approval (Phase I) or to initiate an in-depth investigation (Phase II).
More information will be available on the Commission’s competition website, in the Commission’s public case register under case number M.11457.