U.S. opens probe of Diebold unit sale: report

The deal was too small to require government approval at the time, but it gave ES&S a 70 percent share of the voting machine market, the newspaper said.

However, now the Justice Department could file a lawsuit to unwind the deal and New York Democratic Senator Chuck Schumer was planning to hold hearings on the matter next month, the paper said, citing a source with direct knowledge of the process who was not identified.

Diebold spokesman Michael Jacobsen said in an email that the company was cooperating with the Justice Department review of the sale. A department spokeswoman declined to comment and ES&S could not be reached.

Critics are concerned ES&S will raise prices on voting machines and have little incentive to improve their products, making it harder for states and cities to run efficient elections, the newspaper said.

On September 1, Diebold, known for its automated teller machines, sold its U.S. voting machine business, which represented almost 3 percent of the company's 2008 revenue, to ES&S for $5 million in cash plus future cash payments.

(Reporting by Ben Klayman; Editing by Eric Beech)