December 11, 2017 — This afternoon, Cox Automotive and several of its subsidiaries filed a $200 million lawsuit against CDK Global alleging ongoing antitrust and unlawful competition. The suit is the latest in a series of legal actions taken against CDK and Reynolds and Reynolds since February this year by competitors and dealers complaining about the data integration practices of both companies.
In 2014, The Banks Report predicted the battle over data access would go nuclear and this lawsuit is the big one. According to the lawsuit, which was filed in The United States District Court for the Western District of Wisconsin, “CDK and its non-party co-conspirator The Reynolds and Reynolds Company (“Reynolds”) 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. Specifically, 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.”
Reynolds is not party to today’s lawsuit. We suspect it’s likely due to certain contractual obligations regarding arbitration that Reynolds is rumored to have in place for its Reynolds Certification (RCI) program. But it will likely be served with a similar suit sometime early next year.
In January 2016, Cox and CDK signed a data integration agreement, which Cox claims in the suit that CDK “fraudulently induced” CDK to enter into the contract when it had a previous agreement to offer similar services to Reynolds for free.
That January 2016 agreement is now in shambles.
Cox also claims the two dealer management system companies “have imposed enormously inflated data integration fees, reaping financial windfalls from their unlawful conspiracy to the detriment of both dealers and vendors.” Meanwhile, CDK has also “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.”
Cox says the damages alone from the antitrust actions exceed $200 million. This is before the automatic trebling of damages required by the U.S. antitrust law — making this a potential $600 million lawsuit.
Kellogg, Hansen, Todd, Figel & Frederick, P.L.L.C., of Washington, D.C., the same law firm representing Authenticom and Motor Vehicle Software Corporation in their separate lawsuits is representing Cox. The suit was also filed in the same district and with the same judge that is handling the Authenticom case.
Other legal actions or lawsuits taken against CDK Global and/or Reynolds this year include:
- Hoover Automotive vs. CDK & Reynolds (class action in also Western District of Wisconsin)
- Teterboro Chrysler Dodge Jeep Ram vs. CDK & Reynolds (class action in New Jersey)
- Hartley Buick GMC vs. Reynolds and CDK (class action in Northern District Illinois)
- Superior Integrated Solutions vs. Reynolds and Reynolds
- CRMSuite vs. CDK Global
- Motor Vehicle Software Corporation (MVSC) vs. Reynolds and CDK
- Authenticom vs. Reynolds and CDK
- Federal Trade Commission investigation of both Reynolds and CDK
Stay tuned to TBR for updates on this story including statements from Reynolds and CDK.
The complaint is available at: https://www.coxautoinc.com/wp-content/uploads/2017/12/Cox-Automotive-Complaint-Filed.pdf