Federal judge rules against Reynolds and Reynolds

A federal judge in Wisconsin recently ruled for Authenticom Inc., a company suing Kettering’s Reynolds and Reynolds and CDK Global LLC for access to data integration services for auto dealers.

In the ruling, the federal court granted Authenticom’s motion for a preliminary injunction against Reynolds and CDK.

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The court held that Reynolds and Hoffman Estates, Ill.-based CDK must “cease blocking Authenticom” from providing “data integration services to dealers who authorize Authenticom to provide this service,” Authenticom said in a statement celebrating the ruling.

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“In so ruling, the court held that Authenticom had satisfied each element for granting a preliminary injunction, including demonstrating that CDK and Reynolds have likely violated federal antitrust laws,” Authenticom said in its statement.

The court, in its ruling late last week, gave the parties a week to submit proposed language putting the Court’s ruling into effect.

“The court’s ruling … is an important step forward not only for Authenticom, but for the automotive industry as a whole,” Authenticom Chief Executive Steve Cottrell said in his company’s statement. “Authenticom can now meet the data integration needs of both dealers and vendors without the threat of Authenticom’s dealer-authorized data access being blocked.”

In a statement from a Reynolds spokesman, the company said it was disappointed with the ruling on the preliminary injunction and intends to appeal any injunction once it is issued.

“Reynolds’s longstanding policies to protect the operational integrity and security of its DMS (dealer management system) for its dealership customers are prudent and impressive,” Reynolds said.

“Reynolds continues to believe that unauthorized access to its DMS is unlawful and Reynolds intends to file counterclaims in the litigation to that effect,” the company added.

Authenticom filed an antitrust lawsuit against CDK and Reynolds in federal court in the Western District of Wisconsin in May.

In an earlier lawsuit, Motor Vehicle Software Corp. — a provider of electronic vehicle registration and titling services — also filed an anti-trust lawsuit — this one in federal court in Los Angeles — also against Reynolds and CDK.

Again at issue was the alleged “blocking” of a “third-party” company from participating in Reynolds’ and CDK’s data access programs.

Reynolds spokesman Thomas Schwartz has told this news outlet that Reynolds allows “third parties” like MVSC to obtain data from its automobile dealer management system to get information about dealers, but only if those third parties meet standards and agree to terms that protect dealer data.

A special Reynolds interface for those third parties is designed to give those parties only the information they need, protecting data about other auto dealer customers, Schwartz has said.

In this most recent ruling, Judge James Peterson wrote that Reynolds and CDK are the “main providers of comprehensive software packages called dealer management systems, which are used by virtually all United States car dealers.”

“The case is complicated both factually and legally,” Peterson wrote. “But based on the parties’ written submissions, documentary evidence, and the evidence presented at a two-and-one-half day hearing, the court concludes that Authenticom is entitled to a preliminary injunction.”

In the ruling, the court held that there is sufficient evidence to find “the existence of a per se illegal horizontal conspiracy” between CDK and Reynolds to divide the data integration market and block competitors, Authenticom said in its release.

Authenticom, based in La Crosse, Wisc., is a privately held company which provides data management services for car retailers nationally.

Reynolds, a provider of software and managements products and services for auto dealers, has about 1,300 employees in a County Line Road campus near the Kettering-Beavercreek border.

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