Federal Judge Lays Out Rules for States Challenging HPE–Juniper Deal

According to Bloomberg, US District Judge Casey Pitts issued an order Wednesday that outlines how a coalition of state attorneys general, led by Colorado, may seek information about the Justice Department’s settlement with the companies. That agreement cleared the way for the merger to move forward despite earlier efforts by federal antitrust enforcers to block it.

The ruling follows a decision last month in which Pitts determined that the states are entitled to probe aspects of the settlement process. The agreement itself became controversial after two Justice Department officials were dismissed for objecting to how HPE pursued the acquisition, per Bloomberg. The states argue that those events raise serious questions about whether the settlement adequately protects competition.

At the center of the dispute is the scope of the Tunney Act, a 1974 law that requires courts to review and approve antitrust settlements reached by the Justice Department. In his latest order, Pitts concluded that the states should receive at least some of the information exchanged during pretrial proceedings after the government sued HPE in January in an attempt to block the Juniper transaction. That lawsuit marked the first antitrust case brought by the new Trump administration.

“That record is undoubtedly relevant because it will help the states evaluate the risks to competition posed by the proposed merger, the degree to which the proposed judgment addresses those risks and the strength of the United States’ underlying case,” Pitts wrote.

Related: Coalition of States Challenges DOJ Over HPE-Juniper Merger Settlement

The judge instructed both sides to submit additional briefing on the issue and said that, if necessary, he would hold an evidentiary hearing from March 23 through March 27 to determine whether the settlement satisfies the Tunney Act’s requirements. The states, the Justice Department, and the companies remain sharply divided over what such a hearing should involve, according to Bloomberg.

State attorneys general are pushing for an expansive review that would resemble a mini-trial, including months of fact-finding. They contend that a deep dive is necessary to uncover what they describe as a potentially corrupt process behind the settlement. The Justice Department and the companies, however, maintain that the court’s role should be limited to assessing whether the settlement itself is in the public interest, not how it was negotiated.

Pitts has previously suggested that much of the government’s internal decision-making may be protected by attorney-client privilege and other confidentiality doctrines that shield enforcement agencies’ deliberations. That view could limit how far the states are able to go in examining the Justice Department’s actions.

Under the settlement reached just days before the case was set to go to trial, HPE is required to divest a small portion of its business known as Instant On and agree to license certain Juniper technologies. The original lawsuit, however, focused on other aspects of the networking market, a discrepancy that has drawn the judge’s attention.

During a November hearing, Pitts appeared skeptical about elements of the agreement, questioning why the divestiture centered on a business that had not been a focal point of the government’s complaint. “I don’t recall reading about Instant On,” Pitts said at the time, noting that he was “very in the weeds” on the case as he prepared for trial. “In that respect, it was interesting to see the settlement.”

Source: Bloomberg