An Axon police body camera (AP Photo/Ross D. Franklin)
Axon, the maker of Taser stun guns and police body cameras, sued the Federal Trade Commission Friday, claiming it was unfairly targeted by the agency after its acquisition of Vievu, a smaller weapons company. The lawsuit, says Axon CEO Rick Smith, is a bid for Axon to have its “day in court” rather than leave its future to a private FTC procedure he called unconstitutional.
In its 29-page complaint filed in U.S.District Court in Arizona, Axon challenged the Commission’s legal right “to prohibit lawful mergers”. The FTC started to investigate the deal in June 2018, a month after Axon announced its $6 million Vievu acquisition, over possible antitrust concerns, the complaint said. Then on December 23, the FTC told Axon it needed to give up the Vievu assets and grant the future buyer of them access to its licenses.
“The FTC is asking us to share some of the core intellectual property that has created a $4 billion public company,” said Smith. “In terms of proportionality, I’d say it’s $1 billion worth of intellectual property going out the door, as part of a $6 million acquisition,” Smith said. Vievu, founded by a former Axon employee in 2007, had been a direct competitor to Axon. At the time of the acquisition, it was reported that Axon would have 43 of 54 U.S. police department body camera contracts.
On Friday the FTC issued an administrative complaint stating that Axon’s May 2018 acquisition reduced competition, allowing Axon to impose price increases, and that part of the merger agreement barred Vievu’s former parent company Safariland from competing with Axon. A representative declined to comment.
Axon, however, is arguing that the deal isn’t anticompetitive because Vievu was in distress and couldn’t fulfill a multi-year contract with the New York City Police Department Axon will assume. The lawsuit is also asking Arizona federal judges to rule the FTC’s internal administrative trial process unconstitutional, charging that it does not allow for due process before a neutral judge.
Since the investigation began, Axon claims to have spent $1.5 million on legal fees. Axon stock price was down 3.4% by end of day trading.
The FTC’s administrative trial is scheduled to begin on May 19, 2020.