FTC Response To Axon Due Friday In Ongoing Antitrust Battle

By Heather van Blokland
Published: Thursday, January 23, 2020 - 5:05am
Updated: Thursday, January 23, 2020 - 8:57am

Valley-based body camera maker Axon is awaiting response due Friday, Jan. 24, from the Federal Trade Commission on Axon's latest motion filed in an ongoing antitrust battle with the FTC.

Axon has asked a federal district court to intervene and take power away from the FTC to administer in this case, arguing that the FTC administers proceedings within its own agency, not a court, a system Axon does not accept as fair after the Commission filed its complaint against Axon Jan. 3.

In early January, the FTC said it wanted to break up Axon into two competing firms, challenging Axon’s May 2018 acquisition of Vievu, a competitor company that won a big contract to supply to New York Police Department by deeply discounting the contract price.

The FTC said the combined company is too large to allow for fair competition. But Axon’s founder and CEO Rick Smith said the acquisition doesn’t qualify as antitrust. Axon says the field of competitors have won 55 bids to provide body cameras to agencies with more than 100 officers since the deal. Last year, Motorola acquired competitor WatchGuard for $271 million. However, the FTC disagreed, saying that Axon dominates the body camera market for major metropolitan police departments.

“The company was a failing firm, meaning they were on the edge of insolvency, so it’s my understanding that if you buy a failing firm, by definition, it’s not anti-competitive," Smith said. "When Vievu called us, I remember thinking, 'Wow, it must be a cold day somewhere for them to be calling us because there's no love lost between the companies.' Clearly, we're their last resort," he said.

After the announcement of the FTC complaint on Jan. 3, Axon's stock dropped 11% over the following two-days.

"We bought them largely to get the NYPD contract, even though it was not profitable," he said, adding that over time, he expected the New York addition to the company would become profitable as more Axon products and services were added," Smith said.

Axon filed a lawsuit against the FTC in federal district court after the FTC complaint was filed. The FTC countered ordering Axon to not only absorb Vievu but also to keep that company functioning as an entity including transferring technology, customers and even its own employees as part of a plan to subsidize the cost of keeping the Vievu entity going.

"We ended up ultimately buying Vievu. As we purchased them, we found out the company was losing a million dollars a month. It had run out of bank financing and it was days away from financial collapse," he said.

Axon has since asked a federal court to take the issue out of the FTC’s hands and be placed into federal court for review. Axon is also asking for a federal court to rule the FTC’s actions unconstitutional. 

Axon's stock has since rebounded, and has hit all-time highs during trading this week.

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