The suit, filed in the United States District Court for the Western District of Wisconsin, also asked for the court to levy penalties three times the damages amount. This additional amount is prescribed for breaking state and federal antitrust laws.
This would put the potential penalty at $US600 million ($A780 million).
The suit alleges that “CDK and its non-party co-conspirator The Reynolds and Reynolds Company have committed significant antitrust violations and inflicted widespread harm on automotive dealers, vendors of software products and services, and the automotive industry as a whole”.
The lawsuit alleges that CDK and Reynolds have conspired to:
(i) eliminate competition for integration to dealer data, and
(ii) seize control over dealer and third-party data.
In addition, the suit alleges that “CDK and Reynolds have imposed enormously inflated data integration fees, reaping financial windfalls from their unlawful conspiracy to the detriment of both dealers and vendors”.
It said that “CDK has placed artificial restrictions on dealer and third-party data in order to tilt the table in favor of CDK’s own products and services, leaving competing solutions, including those offered by Cox Automotive, at an unfair disadvantage”.
The suit says: “Specifically, CDK and Reynolds have conspired to eliminate competition for providing integration with dealer data – an extremely valuable asset that belongs to dealers, but over which CDK and Reynolds have seized control.
“Where there was once a robust market for providing data integration services, CDK and Reynolds – through their coordinated conduct – have destroyed that competition.
“Where CDK and Reynolds once themselves competed in that market, they have now entered into a written covenant not to compete.
“Moreover, where CDK and Reynolds once offered data integration services on a level-playing field, they now place artificial and anticompetitive restrictions on dealer data in order to maintain their dominance over the Dealer Management Systems (DMS) market, favor their own products and services, and injure competing products and services such as those offered by Cox Automotive.
“The resulting harm to vendors and dealers has been immense,” the suit says.
“Vendors like Cox Automotive are direct targets of CDK’s and Reynolds’ conspiracy for a simple reason: CDK and Reynolds offer products and services that compete with Cox Automotive’s solutions.
“That is, CDK and its co-conspirator Reynolds are seeking not only to destroy and impair competition for data integration services, but, even more directly, they are seeking to impair and destroy competition for the products and services that vendors offer, and upon which dealers rely.
“By eliminating competition for data integration services, CDK and Reynolds have seized control over dealer data. They have thwarted dealers’ ability to control access to and the usage of the dealers’ own data, with no lawful or legitimate purpose.
“The only purposes are anticompetitive: to eliminate competition for integration services and injure competing solution providers like Cox Automotive. The result is that the competitive playing field is not only uneven, but, as CDK itself has described it in internal presentations to its executive team, ‘tilted’ in the extreme in favor of CDK.
Cox claimed: “CDK and Reynolds entered into their illegal conspiracy – a conspiracy that eliminated competition for data integration services and imposed myriad restrictions on vendor access to and use of dealer data – for multiple anticompetitive reasons.
“First, the conspiracy is an effort to protect their duopoly in the market for DMS’ and ensure that the DMS remains central to dealers, choking off the natural progression of dealer operations to more efficient and less expensive vendor software solutions.
“Second, having eliminated competition for providing access to dealer data, CDK and Reynolds have imposed enormously inflated fees for access to and use of that data, reaping financial windfalls to the detriment of both dealers and vendors.
“These enormously ‘bloated’ fees – as one court has described them – injure vendors like Cox Automotive not only because they must pay them, but also because the fees make vendors’ products and services less attractive to dealers because those dealers must ultimately bear much of the added costs.
“CDK’s and Reynolds’ own competing products and services, by contrast, do not have to pay integration fees, bloated or otherwise.
“Finally, as noted above, CDK and Reynolds conspired to control data integration so they could place artificial restrictions on vendors’ access to and use of dealer data in order to ‘tilt the table’ in favor of CDK’s and Reynolds’ own solutions, leaving competing products and services (like those offered by Cox Automotive) at a disadvantage.
“The damage to the automotive industry has been immense, with the damage to Cox Automotive alone from its antitrust claims exceeding $200 million – before the automatic trebling provided for by the nation’s antitrust laws.
“Cox Automotive brings this action to recover those damages, enjoin CDK’s illegal
conduct, and stave off further harm to vendors, dealers, and other participants in
the automotive industry.
“The industry and market can no longer endure such abuses. Cox Automotive also brings this action to recover damages for CDK’s unlawful conduct aimed specifically at Cox Automotive,” the court papers said.”
By John Mellor
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