Schumer Asks DOJ Review of ESS-Premier Merger

Justice Dept. Review of Vote-machines Sale Sought

The Associated Press   9.14.09

NORTH CANTON, Ohio — Sen. Charles Schumer on Monday asked the Justice Department to review Diebold Inc.'s sale of its U.S. voting-machine business to a bigger competitor, saying he is concerned it could have an adverse impact on American voting.

Diebold, of North Canton, earlier this month announced the sale of its Allen, Texas-based subsidiary Premier Election Solutions Inc. to Election Systems&Software Inc. of Omaha, Neb.

Schumer, chairman of the Senate Rules and Administration Committee, said the sale would give one company control over three-quarters of the U.S. market for voting systems.

"Since this industry provides a product vital to American governance, I am asking that the (Justice Department's) antitrust division examine this acquisition carefully to make sure there is no anticompetitive impact on election officials, states or voters," the New York Democrat said in a letter to Attorney General Eric Holder.

Schumer said a 2003 Congressional Research Service report raised concerns about the consolidation of voting systems.

"The report indicates that having a diversity of voting systems in our country may decrease the likelihood of widespread election fraud," Schumer said.

The Justice Department declined to comment.

Diebold spokesman Mike Jacobson said the transaction is closed and referred questions to ES&S. ES&S spokesman Ken Fields said the transaction will result in stable service and sustainable support for upcoming elections.

ES&S Buys Premier (Diebold) Election Systems, for Near-Monopoly in U.S. Vote Count

Diebold Exits US Voting-Machine Business

By Veronica Dagher, Dow Jones Newswires, September 03, 2009
Diebold Inc. (DBD) has sold its money-losing U.S. election-systems business, just seven years after acquiring it amid hopes of rising demand for voting technology upgrades in the wake of the 2000 presidential election fiasco.

Diebold, whose main business is making automated teller machines, said Thursday it sold the voting-machine unit to privately held Election Systems & Software Inc. for $5 million, about one-fifth of what it paid in 2002.

"There were assumptions we made in that space that didn't materialize," Diebold spokesman Mike Jacobsen said, referring to the fact U.S. municipalities didn't adopt standardized voting systems.

'Diebold has agreed to sell its elections systems business
for $5 million in cash plus future cash payments
representing 70% of any cash collected on the outstanding U.S. election systems business accounts . . .
As a result of this transaction, Diebold expects to recognize a pre-tax loss in the range of $45 million to $55 million'

--from Diebold Press Release, 09.03.09
Problems with paper ballots in the presidential election in 2000, which delayed the final tally and generated concerns about the legitimacy of the outcome, sparked calls for improved election systems. A federal law was passed in 2002 to provide states $2.32 billion to make required voting-technology upgrades, and industry watchers had expected standardization to follow.

Standardization - in which all voting districts would use machines built to the same specifications - would have cut down on costs of customization, but guidelines were never finalized.

Diebold, which was the industry's biggest maker of electronic voting machines heading into the 2004 presidential election, was in the spotlight as concerns increased about the reliability and security of the electronic systems.
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