ImageCast BMD, an electronic ballot marking device made by Election Systems & Software Inc. for people with disabilities. (Newscom)
It may take voting machine manufacturer Election Systems & Software Inc. several months to partly unwind its controversial $5 million deal as required by a settlement with the Justice Department’s Antitrust Division. But at least one customer is already happy with the agreement: The state of Maryland.
On Monday, the Justice Department announced a proposed settlement with ES&S to divest many of the assets, including the software, intellectual property and equipment it bought from rival Diebold Inc. in September. The company also agreed to waive employee non-compete and non-disclosure agreements so the buyer could recruit some of its staff.
Maryland has a particular interest in the case, said John Tennis, an Assistant Attorney General in the antitrust unit of the state’s Attorney General’s office, because the state had planned to purchase a new voting system before the fall 2010 elections.
The bids were due last fall, he said. Six days before the deadline, ES&S announced that it was buying Diebold’s voting machine unit, Premier Election Solutions Inc.
Maryland had received only two bids on the new systems: one was from ES&S and one from Premier. Under Maryland law, those two were the only companies certified to offer voting systems.
Maryland still considered two bids for a little while, Tennis said, but saw that ES&S was selling off large parts of the company it had just acquired.
“We determined that Premier could not perform the bid,” he said, “and we didn’t want to deal with just one bidder.”
ES&S did not directly address the proposed settlement, but said in a statement provided by spokeswoman Kimberly Gurzick that the company has “supported more than 1,000 smooth running election events for former Premier customers.” The company also said in the statement it has “fully cooperated” with the Justice Department to address the “concern among some regarding the structure of our industry.”
Some opponents of the deal privately question whether the settlement can create a viable competitor with Premier’s products without the knowledge of the employees that created and maintained them.
“How do you come in when the intellectual property of the product is tied to specific people who know a whole lot of information and can’t be there?” asked one critic, who spoke on condition of anonymity because negotiations with a buyer are still going on. Â ”Unless they choose to move, that company is at a significant disadvantage to compete.”
But going to court was not a option, Maryland’s Tennis said. “ES&S has been dismantling Premier, so even if a court said you need to divest all of Premier, there was not much left, from what we can tell, to divest,” he said. “IÂ don’t think we could get a remedy as good as the one being accomplished here.”
