Trump 2.0 Antitrust Policy: The First Major Test

In less than two months, the Trump administration has reversed Biden-era policies across nearly every sector of government at breakneck speed. Yet when it comes to the Biden administration’s deconstruction of four decades of bipartisan antitrust policy, we haven’t yet seen the changes one might expect from a Republican administration. Uncertainty about the new administration’s intentions in this arena is sure to have a chilling effect on mergers and acquisitions that could re-invigorate the American economy.

Is this uncertainty lingering simply because it takes longer to steer the ship of government on matters of litigation, rather than on matters of personnel or foreign policy? Or does this non-traditional Republican administration agree with the Biden administration’s rejection of the consumer welfare standard for determining whether a merger should be permitted?

The first major signal came just ten days after President Trump took office, when the Department of Justice sued to block Hewlett Packard Enterprise’s (HPE) $14 billion acquisition of Juniper Networks.

The suit was filed under Biden administration DOJ holdover Omeed A. Assefi, whom President Trump appointed as Acting Assistant Attorney General for the Antitrust Division while Trump nominee Gail Slater awaits senate confirmation.

Mr. Assefi alleged in the complaint that “HPE and Juniper are successful companies. But rather than continue to compete as rivals in the [wireless local area network] WLAN marketplace, they seek to consolidate—increasing concentration in an already concentrated market.” He argued that the deal “would significantly reduce competition and weaken innovation, resulting in large segments of the American economy paying more for less from wireless technology providers.”

The Trump DOJ’s first major new action represents a continuation of the Biden-era view of antitrust enforcement, which tilts against these types of deals. But does it also represent the Trump administration’s position? It may be too soon to tell. But an analysis of the arguments will illustrate the sharp contrast between the Biden approach and the traditional Republican approach. There could be significant implications for consumers of technology, the tech industry, and even national security.

Supporters of the HPE-Juniper deal can point to the DOJ’s own market-share analysis to question whether the deal would increase concentration to antitrust levels, or whether it might even promote competition. Nevertheless, the DOJ abruptly concludes that the deal would lead to all sorts of negative anti-competitive outcomes.

The DOJ alleges that the merger would give HPE an intolerable 33.5% of the WLAN market. It ignores the fact that this would better position the company to compete against market-leading Cisco, which currently holds 36.5% of the market. In fact, some analysts claim that blocking the deal would be anti-competitive, because it would hamper the two smaller challengers from combining to take on Cisco. The DOJ paints the deal as a merger between the number two and three players. But number three Juniper only represents 6.5% of the market.

There’s sometimes a case to be made against consolidation of two of the top three players in a market. But the DOJ’s case doesn’t provide the full picture of the dynamic and quickly evolving WLAN market. Other innovative companies in the space are now actively competing in the 30% of the market not controlled by Cisco or HPE. And cumulatively, more than 65% of the market is outside of the merger that the DOJ is trying to block. Perhaps this explains why both the notoriously strict European Commission and the UK approved the deal last year—these antitrust hawks believe this deal would increase competition.

But there’s also a compelling argument that it’s a fool’s errand to use current market concentration to predict future market-share in order to prevent allegedly anti-competitive mergers, especially in a sector as dynamic as telecom and tech. The natural evolution of the industry that DOJ is seeking to interrupt is perhaps the most dynamic in the world. Quickly advancing technology requires infrastructure that is constantly evolving. From 5G to wireless broadband to the tremendous processing required to harness the value of AI, companies must constantly evolve to meet consumer demand. Blind to this reality, the antitrust hawks would have you believe that Motorola and Blackberry should be anti-competitive juggernauts today.

The DOJ’s action prompted tech analyst and columnist Jeff Kagan to write about a lesson he learned from his work advising then Speaker of the House Newt Gingrich in the 1990s. He explained that the government and the real world “operate on two different clocks” that are not in sync. Speaker Gingrich said that that the government clock moves slowly, is reactionary, and thinks about yesterday. The real world clock is faster, and it operates not only in real-time, but with a future orientation. Kagan says the DOJ opposition to the HPE-Juniper tie-up illustrates this disconnect. He argues that maintaining our leadership in new technology and evolving competition requires a choice: “Either we keep up with these changes and continue to lead, or we will be left behind in the worldwide transformation.”

There’s another critical factor at play—ignored by the Biden team still leading the DOJ Antitrust Division—that should garner the attention of the Trump White House.

There are some who view the Trump administration as less ideological and more transactional than previous Republican administrations. Everything is a deal, as part of a multi-dimensional strategy. If that’s so, the administration should lambast the Biden holdovers for attempting to block the HPE-Juniper deal. The merged U.S. company would be in a better position to compete with China’s Huawei. Huawei—the world’s largest telecom conglomerate—reported $138 billion in revenue in 2020, despite widespread restrictions on the company in the west.

The U.S. should see it as critical to have more than one domestic company competing with Huawei in the global market; currently only Cisco can compete at that level. If Huawei is left to dominate in countries that don’t restrict it, the national security threats that result will make TikTok look like child’s play.

In a 2023 background paper, the Council on Foreign Relations enumerated the multiple national security threats posed by Huawei, including cyber espionage, intellectual property theft, and trade violations—these despite the many restrictions President Trump placed on the company beginning in 2018.

At stake here is more than just whether HPE has the freedom to acquire a relatively small player to help it compete against Cisco and Huawei. Corporate boards, CEOs, investors, the markets at large, as well as our adversaries overseas are watching to see whether President Trump’s approach to deals will look like a continuation of President Biden’s policies. If the White House allows Biden-esque antitrust enforcement to continue, the question will have been answered.