Voting Machine Merger Faces Antitrust Test

WILMINGTON, Del. (CN) - Election Systems Software's purchase of two Diebold subsidiaries has given it a stranglehold on the electronic voting machine market, a competitor says in a federal antitrust complaint. Election Systems Software will control nearly 70 percent of the market after acquiring Diebold subsidiaries Premier Election Systems and Data Information Management Systems, according to the complaint from Hart Intercivic.

The Sept. 2 acquisition puts ES&S machines into 68.5 percent of the U.S.' 180,000 election precincts, and reduce the number of independent competitors, Hart says.

Hart claims the merger will leave ES& with only three competitors that make and maintain electronic voting machines.

Citing a market concentration gauge called the Herfindahl-Hirschman Index, Hart claims the merger shrink an already highly concentrated market: "Starting from a pre-acquisition position of 3,002 (nearly twice the level indicative to the DOJ and FTC of an already highly concentrated market), the September 2 acquisition by ES&S will result in an increase of more than 20 times the magnitude that raises a presumption that competition substantially will be lessened."

The lengthy product development and certification process for voting machines makes the introduction of new competitors unlikely, Hart says. Product loyalty is forced upon most voting districts because of the high cost of switching vendors, it says. Incompatibility between different vendors' products makes mixing systems technically impractical, Hart adds.

Hart wants the merger enjoined, and damages from ES&S. It is represented by Kurt Heyman with Proctor Heymand and Jonathan Rubin with Patton Boggs.

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