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Voting machine merger under review

Some say potential risk is big problem

WASHINGTON — The largest voting machine company in the country bought its biggest competitor six months ago without advance 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 and a battle for control of Congress under way, 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.

The emergence of one megaplayer in the electronic voting machine industry might 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 because of the expense of developing the electronic voting safeguards that reformers insisted on.

Senate Rules Committee Chairman Chuck Schumer, D-N.Y., has raised concerns about the purchase, in which Election Systems & Software of Omaha, Neb., bought the voting machine subsidiary of Diebold of North Canton, Ohio.

ES&S is the company that supplied the touch screen voting machines Butler County now uses for elections.

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.

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

Separate from Justice's review, competing voting machine firm Hart InterCivic sued ES&S, alleging 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 attorney general to intervene in the lawsuit challenging the acquisition.

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

On Capitol Hill, Schumer's committee has collected information from opponents and a few proponents of the merger and commissioned an analysis by the Congressional Research Service. CRS's conclusion: The merger means ES&S has a presence in 90 percent of the states, is the sole source 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 increased threat to national security, a coalition of 19 election experts and groups including Common Cause said in a Feb. 12 letter to Justice's antitrust division.

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