May 4, 2017 — Fighting for its survival, Authenticom is seeking an expedited briefing and hearing schedule as part of its antitrust lawsuit against CDK Global and Reynolds and Reynolds.
In the next few days, Authenticom will file a motion for a preliminary injunction asking the judge to issue a temporary ruling that would force CDK and Reynolds to allow the Wisconsin-based tech firm access to their dealer management systems. Doing so will allow Authenticom to continue providing services to its vendor clients.
The two links below provide more information about the two antitrust lawsuits filed against CDK and Reynolds and Reynolds:
According to the motion asking for an expedited hearing, Authenticom is asking for an evidentiary hearing on June 12, 2017 to argue for the preliminary injunction.
The lawsuit, which was filed in United District Court in the Western District of Wisconsin, highlights the tenuous position Authenticom is in, whose survival is down to several weeks.
The company was generating approximately $20 million in annual revenue in 2014. The suit alleges that, since 2015, Authenticom’s EBITDA profits have declined more than 77% due to the antitrust actions taken by CDK and Reynolds. At its peak, Authenticom was providing data integration services to 15,000 car dealers.
The company has an $11 million principal payment due to BMO Harris Bank due July 16.. The loan payment originally was due April 16, but BMO provided Authenticom with a 90-day forbearance.
There are a couple of intriguing industry-related implications if Authenticom secures a temporary injunction.
First, is what will the impact be on CDK Global? It is a publicly-traded company and at what point does Wall Street get nervous? Which may already be happening.
On May 2, the day The Banks Report broke the news about Authenticom’s lawsuit, CDK’s stock dropped from $65.05 to $61.51 this afternoon. Whether that is due to the fact a second antitrust lawsuit has been filed against CDK or due to its earnings call on May 2, is debatable.
Second, look for other vendors to possibly jump on board the antitrust bandwagon this year if Authenticom wins a temporary injunction.
Authenticom is being represented by Washington D.C.-based law firm Kellogg, Hansen, Todd, Figel & Frederick — the same firm representing MVSC in the first lawsuit. The firm has won the two largest antitrust settlements in history, both at more than $1 billion. It is considered by many to be one of the leading antitrust firms in the U.S. Neil Gorsuch, recently appointed to the U.S. Supreme Court was once a partner at the firm.
To read the lawsuit, click Authenticom_Antitrust_Rey_CDK.
For more TBR analysis of the data access controversy: