By Brad Friedman on 3/8/2010 6:02PM  

DOJ TO REQUIRE ES&S TO SELL OFF ASSETS FROM DIEBOLD MERGER CITING ANTI-TRUST CONCERNS

The Department of Justice's Anti-trust division has determined that the purchase of Premier Election Solutions, Diebold Inc.'s recently renamed e-voting division, by Election Systems & Software, Inc. (ES&S), has resulted in a voting machine monopoly. The DoJ and nine states that have joined in a lawsuit are suing to require ES&S to divest of the assets gained in the bargain-basement priced purchase of Diebold's e-voting outfit last September.

The merger with Diebold/Premier, ES&S's second largest competitor, had given ES&S, a private corporation which already controlled some 50% of U.S. elections with its electronic voting systems, a full 70% control of the votes cast in this country. The acquisition had been opposed by election integrity organizations, Hart Intercivic (a much smaller Austin-based competitor), the New York Times' editorial board, and U.S. Sen. Chuck Schumer (D-NY) in his capacity as chairman of the Senate Rules Committee, and was being investigated by 14 different states along with the DoJ's anti-trust division...

A settlement has been struck, pending approval by a federal judge, between the DOJ, nine states, and ES&S requiring that the private company find a DoJ-approved purchaser of the Diebold/Premier assets. Prior to the $5 million sale to ES&S, Diebold had been searching for a buyer for a number of years, even as it faced investigations by the SEC and the DoJ, share-holder class action suits, and a number of legal battles with states and country jurisdictions around the country after voting systems were found to have failed or in violation of federal and state standards. Diebold purchased the election division from Global Election Systems in 2002 for the price of $25 million.

The proposed settlement, signed by the DoJ, ES&S, and representatives of state attorneys general in Arizona, Colorado, Florida, Maine, Maryland, Massachusetts, New Mexico, Tennessee, and Washington has been posted here [PDF].

An AP report on the potential lawsuit by the DoJ last week noted that "As a privately held company, ES&S issues no financial reports. It didn't tell the Justice Department about the Diebold deal because the transaction wasn't big enough to trigger the federal law that requires the government to be informed of big mergers before they are completed."

The article added that a Congressional Research Service report found the merger had given ES&S "a presence in 90 percent of the states" making it the "sole source" for election systems in "at least 20," given them "a market share three or more times that of its closest competitor."

AP's coverage of today's news can be found here.

The DoJ-ordered unwinding of the merger, however, will do little to ensure the accuracy or ability of citizens to oversee their own elections run on unobservable, easily manipulated, oft-failed electronic voting systems which use secret software made by private corporations to count votes in our public elections.

Just one recent example of the dangers of easily manipulated e-voting systems made by ES&S, Diebold, and others can be found in the current federal trial, now ongoing in Clay County, KY, of six top election officials who are alleged, as we reported last week, to have manipulated election results by flipping votes on ES&S voting machines, without the knowledge of voters, as part of a decades-long election rigging scheme.

UPDATE: The DoJ's announcement of the requirement and proposed settlement is now posted here...