- The Washington Times - Friday, March 5, 2010

The largest voting-machine company in the country bought its biggest competitor six months ago without advance notice and little fanfare. Now the Justice Department is investigating whether to unwind the merger that put a privately held Nebraska company in control of the voting machines in nearly 70 percent of the nation’s precincts.

With midterm elections looming, a coalition of election officials from several states and voter advocate groups is pressing the Justice Department to unscramble the combination of two companies. Critics say the merger could cause foul-ups at the polls on Election Day, and some even characterize it as a national security risk.

Senate Rules Committee Chairman Charles E. Schumer, New York Democrat, has already raised concerns about the purchase, in which Election Systems & Software Inc. (ES&S;) of Omaha, Neb., bought the voting-machine subsidiary of Diebold Inc. of North Canton, Ohio.

“In the voting-systems industry, perhaps more than any other, the failure of the market can affect the public interest in a way that goes to the heart of our democracy,” Mr. Schumer said in a letter urging Attorney General Eric H. Holder Jr. to scrutinize the deal.

The emergence of one megaplayer in the electronic-voting-machine industry may be an unintended consequence of reforms enacted after the presidential election debacle in Florida a decade ago.



Few companies can afford to get into the business owing to the expense of developing the electronic voting safeguards that reformers insisted on in the wake of the confusion and controversy surrounding the final vote tallies for Democrat Al Gore and Republican George W. Bush.

The Justice Department’s antitrust division is doing a post-merger review that could result in the government’s trying to persuade ES&S; to sell off some of its assets or face a court suit to force a sell-off. An announcement could come soon.

ES&S; said it has been cooperating with the division’s review.

“We are committed to exploring potential resolutions that will address any concerns about this transaction, while ensuring that the election-services needs of the jurisdictions we serve will be met,” a company statement said.

Separate from the Obama administration’s review, competing voting-machine firm Hart InterCivic Inc. has sued ES&S;, charging that the company will now supply voting machines in 68.2 percent of the nation’s voting precincts. The New York State Board of Elections urged the Justice Department and the New York state attorney general to intervene in the lawsuit challenging the acquisition.

As a privately held company, ES&S; issues no financial reports. It did not 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.

But the government can always come in after a merger to try to alter any deal it thinks harms competition.

“If you end up with 70 percent of the voting machines and the people rely on them, and if entry into the market is difficult or impossible, it would certainly seem to be a legitimate target for antitrust enforcement,” said Charles “Rick” Rule, a longtime Washington attorney who ran the Justice Department’s antitrust division from 1986 to 1989 during the Reagan administration.

Mr. Schumer’s committee has collected information from opponents and a few proponents of the merger and commissioned a study by the Congressional Research Service. CRS analysts concluded that the merger means ES&S; is now a presence in 90 percent of the states, is the sole supplier for at least 20 and has a market share three or more times that of its closest competitor.

Election failure on a large scale has the potential to destabilize the nation, so ES&S; must divest some of its assets, reduce the scope of election jurisdictions subject to its software and take other steps to offset the threat to national security, a coalition of 19 election experts and groups including Common Cause said in a Feb. 12 letter to the Justice Department’s antitrust division.

On Wednesday, ES&S; defended its performance, saying that since the acquisition in September, the company has supported successful elections in many jurisdictions that previously were customers of the Diebold subsidiary.

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