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UPDATE 1-Police body camera maker Axon sues U.S. Federal Trade Commission amid antitrust probe

Stephen Nellis

amid antitrust probe@ (Adds executive statement, FTC comment request, updates headline to reflect focus of case is body camera market)

Jan 3 (Reuters) - Axon Enterprise Inc 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, which it alleges is biased toward regulators.

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.

An FTC spokeswoman did not immediately return a request for comment Friday.

In its filing, Axon denied the deal was anticompetitive.

"No one should ever face the prospect of a government that can demand to seize your most precious assets without the ability to defend yourself in a fair and impartial court of law," Rick Smith, chief executive of Axon, said in a press statement made after the suit was filed. "If the FTC believes it has a strong case against us, it should prove it in federal court before a neutral judge."

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 an FTC decision can then be appealed to federal appeals court, no new facts or evidence can be introduced, making it harder to overturn the case, 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.

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