WASHINGTON (Legal Newsline)-Two electronic voting machine manufacturers could be barred from merging their operations, under a settlement reached between the firms, state attorneys general and the U.S. Justice Department.

Arizona Attorney General Terry Goddard on Tuesday said that antitrust concerns should preclude Election Systems & Software from purchasing its No. 1 competitor, Premier Election Solutions Inc., a division of Diebold Inc.

Goddard, a Democrat, said the tentative settlement between nine state attorneys general, federal officials and the companies "will restore
competition in the nation's voting equipment systems market."

As a part of the settlement, yet to be approved by a judge, Election Systems & Software will be required to, among other things, divest of some of its assets, including its inventory, related to Premier Election Solutions and waive all non-competition and non-disclosure agreements for all current and former Premier employees.

"This agreement will ensure that our counties can obtain voting machines and the services for their machines at competitive prices from the companies certified by the Secretary of State's Office and any new companies that might come to Colorado," said state Attorney General John Suthers, a Republican.

In September, Election Systems & Software, a Delaware corporation, acquired Premier Elections Solutions and other Diebold Inc. subsidiaries.

Goddard said absent the states' antitrust challenge, the combined company, would have controlled approximately 80 percent of the voting systems in the country.

The merger, he said, would have reduced ES&S' incentive to compete as aggressively for bids and to invest in new products, allowing it to increase the price and reduce the quality of the voting equipment systems across the country.

"Without the divestitures required by the settlement, ES&S would not have had a viable competitor for the foreseeable future," Goddard said.

The agreement was filed Monday in U.S. District Court in the District of Columbia.

The multistate settlement is subject to the Tunney Act, which provides for a period of at least 60 days for public comment before the court can approve it.

States a part of the settlement are: Colorado, Florida, Maine, Maryland, Massachusetts, New Mexico, Tennessee, and Washington.

From Legal Newsline: Reach staff reporter Chris Rizo at chrisrizo@legalnewsline.com.