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Terry Goddard Announces Settlement to Restore Competition for Voting Systems

(Phoenix, Ariz. – March 9, 2010)  Arizona Attorney General Terry Goddard today announced an antitrust settlement that will restore competition in the nation’s voting equipment systems market. Other parties to the agreement are eight more State Attorneys General, the U.S. Department of Justice and Elections Systems & Software, Inc. (“ES&S”). 

On September 2, 2009, ES&S, the nation’s largest provider of voting equipment systems, acquired Premier Elections Solutions, Inc., PES Holdings, Inc. (collectively “Premier”), and other Diebold, Inc. subsidiaries.  At the time of its acquisition by ES&S, Premier was the second largest provider of voting equipment systems in the United States.  Absent this antitrust challenge, the combined company, ES&S, would have controlled approximately 80 percent of the voting systems in the country.  Among Arizona’s 15 counties, 14 would have owned the combined company’s voting systems.

According to the complaint accompanying the settlement agreement, ES&S’ acquisition of its closest competitor would reduce ES&S’ incentive to compete as aggressively for bids and to invest in new products, allowing it to increase the price and reduce the quality of the voting equipment systems across the country. The agreement was filed Monday in U.S. District Court, District of Columbia. 

Competition in the voting equipment systems market will be restored by this settlement, which requires ES&S to divest all of the Premier Assets to another company approved by the Department of Justice. The settlement requires ES&S to divest the intellectual property related to the Premier voting equipments systems it purchased, the tooling and fixed assets used to manufacture those systems, and existing inventory and parts for the Premier voting equipment systems.  ES&S must waive all employee non-compete agreements and any contractual terms that would otherwise prevent customers from choosing the acquiring company to service their voting equipment systems.

“Without the divestitures required by the settlement, ES&S would not have had a viable competitor for the foreseeable future,” said Goddard.  “This settlement ensures that Arizona elections officials will have more than one choice when replacing, expanding or servicing their voting equipment systems.”  

The settlement is subject to the Tunney Act, which provides for a period of at least 60 days for public comment before the court can approve it.   

The other settling states include Colorado, Florida, Maine, Maryland, Massachusetts, New Mexico, Tennessee, and Washington.  

ES&S is a Delaware corporation headquartered in Omaha, Neb.  In 2008, ES&S provided 47 percent of the nation’s installed voting equipment systems and had revenues of $149.4 million.  

This case was handled by Assistant Attorney General Nancy Bonnell. Copies of the complaint, final judgment and competitive impact statement are attached.

For further information, contact Molly Edwards at 602-542-8019.