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 chof360 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.
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Trump criticized Big Tech companies for "stifling competition" and using market power to crack down on the rights of Americans and “Little Tech."
"I was proud to fight these abuses in my First Term, and our Department of Justice’s antitrust team will continue that work under Gail’s leadership," Trump added.
It was Trump’s first administration that initially sued Google (GOOG, GOOGL) over antitrust concerns, which led to a ruling by a district court judge last August that the tech giant illegally monopolized the search engine market.
The DOJ last year asked a judge to consider breaking up the company in a separate phase of the trial that won't wrap up until sometime in 2025.
It was also during Trump’s first administration that the Federal Trade Commission (FTC) sought to unwind Meta’s (META) acquisitions of Instagram and WhatsApp in a case set for trial in April.
Another case that began during Trump's first administration was an antitrust investigation into Apple (APPL), leading the Biden administration last year to sue the iPhone maker over alleged monopolistic practices.
In Hewlett Packard’s case, McCareins said, Trump’s enforcers were likely comfortable with the existing work on the case, which would have been conducted primarily by Biden’s DOJ. He added that defining the WLAN market was "bulletproof."
"This has been in the hopper," McCareins said. "Everybody likes to think this is all a political thing, but these are folks who have pursued enforcement of merger laws under a variety of different administrations."
Abbott and McCareins said they expect Trump’s DOJ and FTC to keep up pressure on suspected anticompetitive deals.
"Where the market is pretty well defined, and you're going from four firms to three, or in this case, three to two, they're going to challenge," McCareins said.
Trump's "merger policy is going to be tough. A pass is not being given," Abbott said.
Alexis Keenan is a legal reporter for chof360 Finance. Follow Alexis on X @alexiskweed.
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