Cox Must Divest Dealertrack's Inventory Management Solution, DOJ Says
September 30, 2015
WASHINGTON, D.C. — The Department of Justice filed a civil antitrust lawsuit Tuesday to block Cox Automotive’s proposed acquisition of Dealertrack Technologies. According to the regulator, Cox must divest Dealertrack’s dealership inventory management solution business in order to move forward with the transaction.
“Cox’s proposed acquisition of Dealertrack would have allowed Cox to become the dominant inventory management solution provider in the United States,” said Assistant Attorney General Bill Baer of the Antitrust Division in a press release. “The divestiture will ensure that automotive dealerships in the United States continue to benefit from the competition that now exists among inventory management solution providers.”
According to the DOJ’s Antitrust Division, Cox and Dealertrack are the two leading inventory management solution providers, and Cox’s acquisition of Dealertrack would increase its market share from 60% to 86%. On the same day the DOJ filed the civil antitrust lawsuit, it also filed a proposed settlement that, if approved by the court, would resolve the competitive concerns alleged in the lawsuit.
The proposed consent decree requires Cox to divest Dealertrack’s inventory management solutions business to DealerSocket or another approved buyer. DealerSocket entered into a definitive agreement with Dealertrack in August, under which DealerSocket will acquire Dealertrack’s Inventory+ business for approximately $55 million in an all-cash transaction.
The proposed consent decree also requires Cox to enable the continuing exchange of data and content between the divested inventory management solutions business and other data sources, Internet sites and automotive solutions that Cox will control. Additionally, Cox must undertake various obligations to prevent it from using Dealertrack’s interest in Chrome Data Solutions LP, a company that compiles and licenses vehicle information data for use in inventory systems and other automated solutions and services for the automotive industry.