Bloomberg Surveillance 6/23/2025
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Bloomberg Surveillance
Jonathan Ferro, Lisa Abramowicz and Annmarie Hordern speak daily with leaders and decision makers from Wall Street to Washington and beyond. No other program better positions investors and executives for the trading day. (Source: Bloomberg)
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Forbes
24 minutes ago
- Forbes
DOJ May Consider Dropping Its HPE-Juniper Networks Merger Challenge
Abigail Slater, US assistant attorney general nominee for US President Donald Trump, during a Senate ... More Judiciary Committee confirmation hearing in Washington, DC, US, on Wednesday, Feb. 12, 2025. Democratic senators pressed President Donald Trump's nominee for Deputy Attorney General, Todd Blanche, on politicization of the Justice Department and recent efforts to gather names of FBI agents who worked on cases related to the Jan. 6, 2021, attack on the US Capitol. Photographer: Daniel Heuer/Bloomberg © 2025 Bloomberg Finance LP The U.S. Department of Justice's challenge to the proposed acquisition of Juniper Networks by HPE signals a concerning trend in merger enforcement that could undermine American economic vitality in a crucial high-tech sector. While regulatory scrutiny of consolidations is vital, a blanket skepticism toward merger activity, particularly one that overlooks significant procompetitive benefits, risks stifling innovation and weakening the very markets it purports to protect. As I have previously discussed, robust merger and acquisition (M&A) activity is indispensable for a dynamic economy, facilitating capital reallocation to higher-valued uses and driving efficiency and innovation. In the fast-evolving landscape of enterprise networking, the proposed HPE-Juniper merger presents a compelling case for its potential to enhance, rather than diminish, competition. Tellingly, the European Commission (EC) recognized as much when it approved the acquisition. The Proposed Merger DOJ alleges that the merger would harm competition by bringing together the second (HPE) and third (Juniper) largest wireless local network providers of wireless local area network (WLAN) in the United States. DOJ stresses that 'this would leave U.S. enterprises facing two companies commanding over 70% of the market: the post-merger HPE and market leader Cisco Systems Inc." Factors Suggesting No Harm To Competition DOJ's complaint ignores a variety of factors strongly suggesting that the merger would not harm competition. It relies primarily on market concentration, which modern antitrust economics views as only the starting point in determining whether a merger might reduce competition. HPE and Juniper point out that DOJ's market definition ignores 'a broad set of players' that are competing for WLAN business as customers shift to AI and cloud-driven strategies. Indeed, the EC found that HPE-Juniper would 'continue to face competition from a wide range of competitors, including strong and established players on each of the markets.' Even accepting DOJ's market definition, Cisco would remain the largest player post-merger. The merged firm would be positioned to intensify beneficial competition with Cisco. As an industry analyst explains, if 'DOJ blocks the HPE-Juniper deal, Cisco stands to gain the most." If the merger goes forward, however, there could likely be increased pressure on all players to innovate and offer better value. DOJ is silent about the 'remaining 30%' of the market. As Scalia Professor John Yun puts it, 'nearly 67% of sales [would] occur outside of a combined HPE-Juniper." The Case for Beneficial Efficiencies The DOJ's narrow focus also risks missing substantial efficiency gains that could accrue to consumers and the broader economy. Combining HPE's extensive enterprise reach and complementary product portfolio with Juniper's cutting-edge, AI-powered Mist platform holds immense promise. This synergy is not merely about eliminating redundancies, but about forging a more integrated and sophisticated product offering. Such a combination could streamline product development, accelerate the deployment of advanced networking solutions, and yield significant cost savings that can be passed on to customers through more competitive pricing or reinvestment in research and development. These are precisely the merger-specific efficiencies, creating a formidable force for innovation, that procompetitive merger analysis should recognize. The Global Dimension The global competitive landscape, particularly the rise of foreign competitors like Huawei, adds another layer of strategic importance to this merger. When considering the broader enterprise networking market, which includes a diverse array of global players, a combined HPE-Juniper likely would create another robust and credible American firm. In an increasingly interconnected and competitive global economy, enhancing American competitiveness in key high-tech sectors is paramount. A stronger, more innovative HPE-Juniper entity would be better positioned to compete globally, not just domestically, thereby bolstering the U.S.'s strategic advantage in critical digital infrastructure. Fostering highly competitive domestic firms capable of driving technological advances and economic growth is particularly significant against a backdrop of intensifying international rivalry. Dismissing these potential gains risks unintended negative consequences for American leadership in a sector vital to national security and prosperity. DOJ Should Consider Withdrawing Its Complaint Applying narrow and economically dated approaches to merger analysis risks stifling the very innovation and economic growth that America needs. DOJ may wish to seriously weigh the EC's pragmatic stance in this case, based on a sophisticated assessment of competition in a dynamic and evolving high-tech market. Continuation of the DOJ case against the HPE-Juniper merger omits consideration of key economic realities. This merger promises not only significant efficiencies and product enhancements, but also the creation of a stronger American competitor poised to challenge market leader Cisco and contend more effectively in the global high-tech arena. A nuanced approach that prioritizes enhanced American competitiveness and innovation, rather than an outdated and simplistic focus centered on the number of market players, is essential for continued economic vitality in this critically important sector. More generally, the Trump Administration's commitment to an 'America First' agenda would be promoted by supporting mergers that enhance the global competitive strength of American firms in key high tech sectors without diminishing domestic competition. Opposing such mergers would seem to be at odds with America First. An interim Antitrust Division head approved the HPE-Juniper challenge a mere 10 days after the January presidential inauguration. Now that they have assumed their posts, Attorney General Pam Bondi and Assistant Attorney General for Antitrust Division Gail Slater may want to consider these factors carefully in refining DOJ merger policy. (Federal Trade Commission Chairman Andrew Ferguson may also wish to take note.) Such a consideration may warrant dropping the merger challenge to the HPE-Juniper merger prior to the July 9 trial date.
Bloomberg
24 minutes ago
- Bloomberg
Compass Sues Zillow as Fight Over Home Listings Heats Up
Residential real estate brokerage Compass Inc. sued Zillow Group Inc., alleging that the home-search website is using 'anticompetitive tactics' with its plan to restrict certain listings. Compass alleges that Zillow 'has retaliated against competitive threats by enacting an exclusionary policy' by banning listings that have been publicly marketed elsewhere first, according to the lawsuit filed Monday in federal court in Manhattan.
Bloomberg
24 minutes ago
- Bloomberg
Senate Readies Tax Bill for Vote as Holdouts Threaten Delay
President Donald Trump's tax-and-spending agenda is nearing a climactic vote in the Senate this week in the wake of air strikes on Iran, which risk embroiling the US in a prolonged Middle East conflict. Trump's $4.2 trillion tax-cut package, partially offset by social safety-net reductions, does not yet have the support it needs to pass the Senate. Fiscal hawks seeking to lower the bill's total price tag are at odds with Republicans worried about cuts to Medicaid health coverage for their constituents and phase-outs to green energy incentives that support jobs in their states.
