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Judge in Authenticom Antitrust Suit Confirms Preliminary Injunction

July 31, 2017

LA CROSSE, Wis. — The federal court judge hearing Authenticom’s antitrust lawsuit against CDK Global and Reynolds and Reynolds declared on Friday that the two DMS providers can’t prevent “Authenticom from using dealer login credentials to provide data integration services for dealers who, as of May 1, 2017, had authorized Authenticom to provide data integration services.”

Judge James Peterson of the U.S. District Court for the Western District of Wisconsin issued the ruling when he entered the final form of his preliminary injunction orders, confirming his prior ruling that CDK and Reynolds must stop blocking Authenticom from providing data services to dealers and vendors.

“This is a stunning victory,” said Authenticom CEO Steve Cottrell. “The court’s preliminary injunction orders allow Authenticom to meet the data integration needs of both dealers and vendors without the threat of Authenticom being blocked by CDK and Reynolds.”

With respect to both dealers and vendors, the court ruled that CDK and Reynolds are prohibited from enforcing “those provisions in its contracts with dealers or vendors that restrict, or have the effect of restricting, any dealer or vendor from obtaining data integration services from Authenticom,” including any provisions that “require, or have the effect of requiring, a software vendor to obtain integration services exclusively from [Reynolds or CDK] for all of that vendor’s applications or all of that vendor’s dealer customers.” 

The Court explained that if CDK and Reynolds could enforce such provisions, that “would effectively prevent Authenticom from providing data integration services to dealers as contemplated under the injunction.” The court also held that CDK and Reynolds “may not retaliate against any dealer or vendor as result of its decision to do business with Authenticom …” 

“Today is another important step forward for Authenticom and the entire automobile industry as a whole,” Cottrell said. “As I said before, we look forward to providing secure, cost-effective, and reliable data integration services to our dealer and vendor customers, finally without the threat of being hindered by CDK’s and Reynolds’s anticompetitive conduct.”

Authenticom’s directors filed suit against CDK and Reynolds on May 1, claiming the data-security measures undertaken by the two DMS providers have threatened its survival by limiting access to data stored in their DMS offerings and may be in violation of the federal anti-monopoly Sherman Act.

On July 17, the data integration provider was granted a preliminary injunction that prevents the two software makers from blocking access to their DMS offerings while the case proceeds. The order called for all three parties to “agree on all terms of the injunctions” or submit “competing proposals” by July 21, effectively creating a framework by which Authenticom can — with dealer authorization — continue to access data entered into CDK and Reynolds’ systems.

On July 21, Reynolds filed a counterclaim accusing Authenticom of hacking into its system without permission to “scrape” and “extract” data, putting “at risk the millions of people whose [personally identifiable information] and other confidential data are jeopardized by ‘hostile’ integrators like Authenticom.”

Both CDK and Reynolds filed notices of appeal of Judge Peterson’s ruling, CDK stating that the preliminary injunction is “not intended to give Authenticom free reign to maximize its business as it sees fit.”

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