ATLANTA — Add Cox Automotive to the growing list of tech vendors and dealers alleging that CDK and Reynolds and Reynolds Co. conspired to eliminate competition for data integration services and seize control over dealer and third-party data.
On Monday, Cox Automotive and its subsidiaries filed suit in the U.S. District Court for the Western District of Wisconsin against CDK Global for “ongoing antitrust and unlawful competition violations,” alleging that damages from its antitrust claims exceed $200. While Reynolds wasn’t named as a defendant in the suit, the DMS provider is listed as a “non-party co-conspirator.”
“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 firm’s lawsuit reads, in part. “The industry and market can no longer endure such abuses. Cox also brings this action to recover damages for CDK’s unlawful conduct aimed specifically at Cox Automotive.”
The suit alleges that CDK and Reynolds reaped financial windfalls by imposing “enormously inflated data integration fees.” It also claims the two firms placed artificial restrictions on dealer 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.”
CDK and Reynolds are named in three class action suits filed this year by dealers and two lawsuits filed by tech vendors. CDK is also named in a lawsuit filed by CRMSuite, while Reynolds is being sued by Motor vehicle Software Corp. Both lawsuits were also filed this year.
According to Cox Automotive’s suit, CDK and Reynolds entered into three written agreements in February 2015 in which they promised not to compete in providing data integration services, and, “in their capacity as providers of proprietary applications and services, not to use the services of independent integration service providers to obtain data from the other’s DMS. The agreement, according to the suit, was designed to block independent integrators’ access to their DMS customers’ data in an effort to drive those firms out of the market.
“Shortly after entering into the Data Exchange Agreement, CDK began ‘renegotiating’ its contracts with vendors for [third-party access] (actually, canceling existing contracts and forcing vendors like Cox Automotive to sign new contracts,” the lawsuit states, in part. “Consistent with its decision to close its DMS, CDK imposed exclusive dealing provisions that required vendors to use [its third-party access program] to integrate with data on CDK DMSs for all of their products and services. CDK also took the new position that … its existing contracts with dealers prohibited allowing data integrators to access CDK DMSs.”
In July 2015, according to the lawsuit, CDK presented Cox Automotive with new vendor contracts it would require, agreements Cox claimed imposed massive price increases for data integration and contained price-secrecy provisions preventing Cox from telling its dealers how much it paid to integrate with their data on CDK DMSs.
After Cox balked at the new agreements, CDK representatives promised that “as a first mover and the largest vendor,” Cox would receive “best pricing” if it signed up as a charter participant of CDK’s revamped third-party access program. What Cox Automotive didn’t know during those negotiations, according to the lawsuit, is that Reynolds had been receiving the same access for free since February 2015.
“Had Cox Automotive known that CDK had lied about the pricing provision, it would not have agreed to enter into the new 3PA Managed Interface Agreement on the terms contained therein,” the lawsuit states, in part. “CDK had fraudulently induced Cox Automotive to enter into the new 3PA contact.”
Cox alleges that CDK’s non-compete agreement with Reynolds violated the federal anti-monopoly Sherman Act, and that its “secret price discounts” to Reynolds violated California’s Unfair Trade Practices Act. The company is also suing CDK for breach of contract.