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FSPA moves forward with motion for preliminary injunction against Diebold

March 16, 2005

ALBUQUERQUE, New Mexico - The Financial & Security Products Association is moving forward with a motion for a preliminary injunction against Diebold Inc. because it says the manufacturer has failed to end certain business practices that prevent third-party maintenance companies from purchasing spare ATM parts or diagnostic software/information from Diebold.

"We have decided to proceed with the injunction motion because Diebold has made it impossible for independent third-party maintenance companies to successfully compete for ATM service contracts," said John Vrabec, executive director of the Financial & Security Products Association.

Previously, according to the Financial & Security Products Association complaint, Diebold's policies permitted third-party maintenance companies to service Diebold-brand ATMs and provided third-party companies with access to the manufacturer's parts and documentation. Third-party maintenance companies were also able to acquire items needed for repair through the secondary market or by certain "hold harmless" agreements that Diebold offered its customers.

But, according to the complaint, filed on behalf of the FSPA by its legal counsel, Ronald Katz of Manatt, Phelps & Phillips LLP of Palo Alto, Calif., Diebold "is now requiring that its installed base of customers desiring an upgrade purchase new ATM keyboards and encryption software only from Diebold. Diebold is also requiring that a Diebold technician perform the installation. They are also withholding diagnostic codes embedded in their software that takes away third-party servicers' ability to diagnose malfunctions."

"FSPA strongly believes that financial institutions and all ATM owners should have the right to select the service vendor of their choice without fear that the manufacturer will withhold parts sales, documentation and diagnostic access," Vrabec said. "Prior to the Triple DES mandate and Diebold's policy changes, financial institutions and other ATM owners were able to choose and utilize an independent third-party service company that would give them competent service and at a competitive price."

According to Vrabec, third-party service companies service approximately 50,000 ATMs in the United States. "If financial institutions lose that capability, it will add substantial costs for them and for their customers," he said.

FSPA through its legal counsel will ask the court to render a preliminary injunction against Diebold as quickly as possible.

"We will be asking the court to preserve the status quo of competition," Katz said. "FSPA is requesting preliminary relief because by the time of a full trial a year or more from now, FSPA might not have any members left because of Diebold's anti-trust violations."

Read related story from our archive:
Trade association files anti-trust complaint against Diebold

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