The Department of Justice’s antitrust intervention in Keysight Technologies’ $1.3 billion acquisition of Spirent Communications reveals a more assertive regulatory approach to technology sector consolidations. The settlement announced Tuesday requires significant divestments before the deal can proceed, highlighting growing concerns about market concentration in specialized tech testing markets.
According to DOJ filings, Santa Rosa-based Keysight must sell off Spirent’s positioning, navigation, and timing (PNT) simulation business to preserve competition. This business segment provides critical testing solutions for satellite navigation systems used in defense, automotive, and telecommunications applications.
“Without these required divestitures, the acquisition would eliminate competition between the only two significant providers of PNT simulation systems in the United States,” said Principal Deputy Assistant Attorney General Doha Mekki of the Justice Department’s Antitrust Division. “The proposed settlement preserves competition that benefits American businesses and taxpayers.”
Industry analysts note this intervention follows a pattern of heightened scrutiny under the Biden administration. The Federal Trade Commission and DOJ have challenged or imposed conditions on numerous tech-sector deals over the past three years, reflecting concerns about innovation barriers and price impacts.
Morgan Stanley analysts wrote in a client note obtained by Epochedge that the divestiture requirement “represents a manageable concession that shouldn’t materially impact the strategic rationale behind the acquisition.” They estimate the divested business generates approximately $50 million in annual revenue.
The PNT simulation market may seem specialized, but it’s increasingly crucial as technologies like autonomous vehicles, precision agriculture, and defense systems rely on accurate GPS and other navigation systems. Before the divestiture requirement, the combined company would have controlled over 80% of this market, according to court documents.
Keysight, which spun off from Agilent Technologies in 2014, has pursued an aggressive acquisition strategy to expand its testing and measurement portfolio. The company reported $5.5 billion in revenue for fiscal 2023, with about 14,000 employees worldwide. Spirent, headquartered in the UK, specializes in testing for communications networks and connected devices.
“We respect the Department’s review process and are pleased to have reached this resolution,” said Satish Dhanasekaran, Keysight’s President and CEO, in a statement. “The agreement allows us to move forward with bringing together complementary strengths while addressing regulatory concerns.”
The settlement requires Keysight to divest Spirent’s PNT business to a DOJ-approved buyer capable of maintaining competitive intensity in the market. Until the divestiture completes, Keysight must maintain the business as a separate, competitive entity.
Former DOJ antitrust attorney Rebecca Haw Allensworth, now teaching at Vanderbilt Law School, told me this case reflects a broader shift in antitrust enforcement. “The agencies are looking more skeptically at claims of efficiencies and more carefully at potential competitive harms in specialized markets that might have flown under the radar in previous administrations,” she explained.
Financial markets appeared to take the news in stride. Keysight’s shares traded slightly higher following the announcement, suggesting investors view the required remedies as manageable. The deal, first announced in April, is now expected to close by year-end, pending additional regulatory approvals in other jurisdictions.
The California-based measurement company will still gain Spirent’s substantial capabilities in cybersecurity testing, cloud performance evaluation, and 5G network assurance. These segments align with Keysight’s existing portfolio and support its strategy to expand in high-growth areas like cybersecurity and wireless communications testing.
Industry consolidation has been accelerating across the test and measurement sector. Competitors like Rohde & Schwarz, Anritsu, and National Instruments (recently acquired by Emerson Electric) have all been expanding their capabilities through acquisitions or internal development.
For customers in aerospace, defense, and telecommunications sectors, the DOJ’s intervention may help maintain competitive pricing and continued innovation. Government contractors and commercial enterprises rely on these testing systems to ensure navigation components perform reliably under various conditions, including signal interference or degradation.
The acquisition represents part of a larger trend of American technology companies acquiring European tech firms, often bringing specialized capabilities under broader corporate umbrellas. Such cross-border deals face increasingly complex regulatory hurdles, with authorities in the U.S., EU, UK, and China all potentially reviewing major transactions.
As technology testing becomes more critical across industries, expect continued regulatory scrutiny of deals that could reduce competition in specialized but essential technology markets. For Keysight, the path forward now includes executing a successful divestiture while integrating Spirent’s remaining operations into its global measurement business.
