The European Union has unconditionally approved Hewlett Packard Enterprise Co.’s proposed acquisition of Juniper Networks Inc. for $14 billion.
The European Commission, the EU’s executive arm, announced the decision today. The move is not unexpected: Sources told Reuters on Monday that the bloc was gearing up to sign off on the deal.
HPE announced its plans to buy Juniper, one of the industry’s largest network equipment suppliers, in January. The former company estimated at the time that the $14 billion all-cash deal will double its networking business. HPE also expects the acquisition to start boosting its adjusted earnings per share within a year of closing.
The European Commission greenlighted the deal after determining that it won’t significantly reduce market competition in the EAA, European Economic Area. The EAA includes the EU, Iceland, Liechtenstein and Norway. Officials studied the deal’s impact on three parts of the networking market: the data center switch, campus switch and wireless networking segments.
In the data center switch segment, officials focused on the potential antitrust risks of product bundling. HPE is a major supplier of both midrange servers and high-performance servers from which supercomputers are assembled. The European Commission evaluated whether the company could bundle those machines with Juniper’s data center switches to gain an unfair edge over rivals.
Officials concluded that there is no risk of anticompetitive bundling. The rationale is that HPE’s competitors could replicate any bundled offerings it may bring to market. Furthermore, the European Commission determined that the procurement processes through which customers buy the affected servers and switches are “not conducive to allow any anticompetitive tying or bundling.”
The EU also studied the deal’s impact on the campus switch and wireless network equipment markets. Officials determined that HPE will continue facing competition from a significant number of rivals after buying Jumper. Additionally, the EU determined that customers have a “certain level of countervailing buyer power” that would allow them to push back against any price increases HPE might apply to Juniper products.
HPE previously won approval for the deal in Brazil. The company will also have to convince regulators in several other jurisdictions including the U.S., where there is reportedly little indication that the Federal Trade Commission could launch a probe.
In the U.K., the Competition and Markets Authority opened an antitrust inquiry into the acquisition about two months ago. The inquiry could either lead to a regulatory green light or an in-depth antitrust probe known as a Phase 2 investigation. The CMA will publish its decision by Aug. 13.