Taser maker Axon sues U.S. Federal Trade Commission amid antitrust probe

[January 03, 2020]  By Stephen Nellis

(Reuters) - Axon Enterprise Inc <AAXN.O> on Friday sued the U.S. Federal Trade Commission in a bid to have potential antitrust litigation heard in a federal district court and not in an internal FTC process that it alleges is biased toward regulators.

The headquarters for Axon Enterprise Inc, formerly Taser International, is seen in Scottsdale, Aizona, U.S., May 17, 2017. REUTERS/Ricardo Arduengo

Axon, the manufacturer of Taser stun guns and body camera systems for police departments, has been the target of FTC scrutiny since 2018, when the regulator requested information from the Arizona-based company about its acquisition of Vievu.

Vievu was a smaller player in the market for body cameras and online storage and management of the footage they generate.

In the complaint filed on Friday in U.S. District Court in Arizona, Axon said it complied with regulators' requests for 18 months at a cost of $1.5 million in legal fees.

Last month, Axon alleges, FTC officials told the company it would have to unwind its Vievu acquisition by divesting the assets and offering patent licenses to any potential acquirer.

Axon alleged that in a December 2019 face-to-face meeting with its attorney, the FTC threatened to start an internal administrative law proceeding this month to unwind the Vievu deal if Axon would not agree to the settlement.

In its filing, Axon denied the deal was anticompetitive and asked for the matter to be heard in a federal court.

"Axon is eager to prove its case in any federal court in this country," the company wrote.

The FTC can choose to file antitrust actions either in federal district courts as a lawsuit or pursue them in an internal administrative law procedure.

Axon alleges that FTC's internal administrative proceedings are unfair because they can only be appealed to the full FTC commission, which Axon argued has sided with administrative law judges 100% of the time in the past two decades.

While the outcome of the FTC's decision can then be appealed to federal appeals court, no new facts or evidence can be introduced, making it harder to overturn the cases, Axon argued.

Axon is also asking a federal judge to declare the FTC's administrative law process unconstitutional because it can take away a company's intellectual property without a hearing before a neutral judge.

The company is also asking the judge to declare the FTC's structure unconstitutional because its commissioners exercise law enforcement powers but cannot be removed by the U.S. president at will.

(Reporting by Stephen Nellis in San Francisco; Editing by Himani Sarkar)

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