n another case rounding out the roster of lawsuits alleging antitrust violations, the Financial & Security Products Association (FSPA) announced on Feb. 28, 2005 that it intends to pursue further legal action against Diebold Inc.

FSPA will move forward in its action against Diebold to end its "predatory practices." Following weeks of talks between the two organizations to settle issues alleged in FSPA's antitrust complaint against the ATM manufacturer, filed in U.S District Court in October 2004, FSPA filed a motion for an injuction.

The motion could speed up a decision over whether Diebold has prevented third-party ATM maintenance companies from purchasing parts and software from the company to service Diebold ATMs.

The timeliness of the matter is critical, FSPA said, because the deadline for compliance with Triple DES (3DES) mandates are upon ATM owners and operators: April 1, 2005, for upgrades or for requesting extensions through Dec. 31, 2005.

FSPA asserts that Diebold has made it impossible for independent companies to procure the necessary parts and software in order to service Diebold ATMs owned or operated by their clients.

It's a frustrating situation for independents, FSPA said, because banks, financial institutions and ATM owners must comply with the mandatory 3DES upgrades. FSPA said that Diebold has used this opportunity to employ password-protected diagnostics that make it impossible for independent maintenance providers to service the machines.

Until recently, Diebold permitted independent companies to service its ATMs for customers and allowed them access to the manufacturer's parts and documentation through "hold harmless" agreements.

The problem started when retrofits for the installed base of hardware began, according to John Vrabec, FSPA's Executive Director. In January 2004, customers with Diebold machines began to inquire about purchasing the necessary parts for the upgrades.

Since the implementation of the 3DES mandate, however, Diebold allows only company personnel to supply and install the upgrade kits, Vrabec said. The company began password-protecting the software and using other methods to prevent rogue maintenance.

FSPA asserts Diebold's business practices "lock out" the independent third party maintenance companies and prevent them from competing for ATM service contracts.

In a prepared statement regarding FSPA allegations, Diebold "reaffirms its long-standing policy of accommodating customer choices for ATM services."

The company acknowledged there is confusion in the marketplace, but said that it does work to offer its customers choices in alternate service providers and access to licensed diagnostic software and other parts.

FSPA is a non-profit association with 305 members representing independent technicians and companies that supply related services products for ATMs, POS, security and cash dispensing equipment, and vehicle fleet management.

FSPA members are also large companies that supply dealers and contractors; its membership includes companies in the United States and seven other countries.

"The issue is free enterprise," Vrabec said. "It's also multiple choices and sources for our dealers to find products and services they can resell to their customers."

The real concern for FSPA and its membership, he said, are the far-reaching implications of these types of business practices. "The critical nature of this intellectual property issue goes beyond ATMs.

"Our members service video, vault and drive-up equipment and everything is becoming software-based; mechanical products are becoming PC-controlled.

"If this isn't rectified favorably, it could affect all the products our members service five or six years down the [line]."

"Over the past few years, there does seem to be more blatant disregard for antitrust laws, particularly in our industry," said Kevin McLaughlin, Chief Executive Officer of Advent Inc. and FSPA member.

"Until now, it's been overlooked and has reached such a critical point it's affecting peoples' abilities to earn a living.

"Diebold has used this opportunity to employ password-protected diagnostics and there's no provision there for independent maintenance providers," he said.