Overview
On November 14, 2023, Cohen Milstein’s Sharon Robertson was appointed Interim Co-Lead Counsel in In Re Axon VieVu Antitrust Litigation, Case No. 3:23-cv-7182, United States District Court for the District of New Jersey.
Plaintiffs, the Mayor and City Council of Baltimore and other municipalities, bring this consolidated antitrust class action for damages and injunctive relief under the federal antitrust laws to redress injuries to market competition caused by Axon Enterprise, Inc. (“Axon”) and Safariland, LLC (“Safariland”) in the markets for body-worn camera (“BWC”) systems and long-range conducted energy weapons (“long-range CEWs”), such as Tasers, including associated equipment and services.
Plaintiffs allege that Axon has unlawfully monopolized the BWC systems and long-range CEW markets through acquiring what was its largest competitor in the BWC systems market, VieVu, from Safariland, and signing decade-long non-compete, market allocation, and no-poach agreements with Safariland to prevent Safariland from challenging its monopolies in ether market.
Case Background
Body-worn cameras are worn by police forces throughout the United States. They have been described as a powerful tool for increasing transparency and accountability in policing and law enforcement. The American Civil Liberties Union has stated that police cameras “have the potential to be a win-win, helping protect the public against police misconduct, and at the same time helping protect police against false accusations of abuse.” Many local governments and agencies around the country have invested significant sums of money—often tens of millions of dollars—to purchase such BWC systems in recent years.
Plaintiffs allege that in May 2018, Axon, already by far the dominant maker and supplier of BWC systems and long-range CEWs, brazenly entrenched its monopoly power in these markets by acquiring VieVu from Safariland (the “Acquisition”). As part of the deal, Axon and Safariland further entered into various related anticompetitive agreements with each other, which, among other things, prohibited Safariland from competing with Axon in these markets for a decade or more. In 2020, the Federal Trade Commission (“FTC”), in a complaint approved by all five of its commissioners, challenged the Acquisition and its related agreements as anticompetitive and unlawful.
Plaintiffs claim that ever since and because of Axon’s anticompetitive acquisition of VieVu, governments and agencies have overpaid substantially for BWC systems and long-range CEWs they have purchased from Axon. They have also been deprived of the added innovation in these markets that would have occurred but for the Acquisition.
The Acquisition eliminated direct and substantial competition between Axon and VieVu, which Axon described as the “#2 competitor” in the BWC systems market, and which had entered into a fierce price war with Axon before the Merger. Plaintiffs claim that the prices Axon charges for BWC systems have shot up astronomically as a result, as shown by Axon’s own reported financials in its SEC filings. These filings show that Axon’s average selling price for BWCs actually declined in 2017, while VieVu was intensely competing with it, even as sales increased. But in 2018, the year of the Acquisition, this average price jumped by 34% to $254.56. It subsequently increased to $290.69 in 2019, $313.09 in 2020, $415.52 in 2021, and $489.80 in 2022—a nearly threefold increase from 2017, as illustrated by the following graph:
Axon’s reported gross margins on BWCs follow a nearly identical trend, increasing every year from 2017 to 2022 (after declining from 2016 to 2017), jumping nearly fourfold over that period.
In addition to increasing prices, Axon limited the availability of VieVu BWC systems to customers and stopped developing new generations of VieVu hardware and software.
Plaintiffs allege that, given Axon’s and VieVu’s market shares at the time of the Acquisition, the Acquisition is presumptively unlawful under the 2010 U.S. Department of Justice and Federal Trade Commission Horizontal Merger Guidelines (“Merger Guidelines”), which provide that mergers resulting in certain levels of market concentration are presumptively unlawful.
Plaintiffs further allege that the Acquisition entrenched Axon’s monopoly power in the long-range CEW market. Before the Acquisition, Axon already controlled approximately 95% of this market with its Taser. With the Acquisition, Axon further cemented that dominance by extracting an agreement from Safariland, a potential competitor in the long-range CEW market, not to compete in that market for 12 years. This agreement allowed Axon to charge higher prices for Tasers than would have been possible under the threat of competition from Safariland.
In June 2020, the FTC settled with Safariland after Axon and Safariland rescinded the noncompete provisions they entered into related to the Acquisition. But the FTC’s administrative action against Axon (which further sought to undo the Acquisition) remained pending while Axon challenged the FTC’s constitutional authority in court. In October of this year, after these private class actions were filed against Axon and Safariland, the FTC dismissed its administrative action against Axon, stating that the delay from Axon’s ongoing constitutional challenge made “a timely resolution” of the FTC’s enforcement action “increasingly unlikely.” In doing so, the FTC stood by its allegations that the Acquisition “create[ed] a monopoly and harm[ed] both police departments and communities who fund them.”
Plaintiffs bring this suit on behalf of themselves and similarly situated purchasers to hold Axon and Safariland accountable for their violations of the antitrust laws.