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Authenticom CEO Claims “Stunning Victory” in Antitrust Suit

August 7, 2017 0 Comments

Steve Cottrell, CEO of the La Crosse, Wisconsin-based data solutions company Authenticom, today announced that his company obtained a “stunning victory” after a federal judge ruled that rival companies CDK Global and Reynolds & Reynolds had to stop practices Cottrell said were meant to drive Authenticom out of business.

Judge James Peterson, of Madison, made the ruling on Friday, July 28, as he entered the final form of his preliminary injunction in the antitrust suit against CDK and Reynolds.


Peterson’s ruling on Friday confirmed his July 17 ruling that the two rival companies had to stop blocking Authenticom “from providing data services to dealers and vendors” (La Crosse Tribune).

The preliminary injunction was a step in the antitrust suit Cottrell filed against CDK and Reynolds on May 1. Peterson ruled that CDK and Reynolds “must not prevent Authenticom from using dealer login credentials to provide data integration services for dealers.”

Authenticom, a third-party data integrator linking car dealers with software vendors, created a “niche” for itself with computer programs to integrate data from car dealers including sales figures, inventory tallies, and parts and service reminders for over 15,000 dealerships across the U.S. It was founded by Cottrell in 2002 to provide car dealerships with data to help them manage their businesses.

Friday’s ruling blocks CDK and Reynolds from “enforcing contract provisions” that restrict dealers and vendors from doing business with Authenticom (La Crosse Tribune). Judge Peterson added that CDK and Reynolds could not retaliate against those dealers and vendors who decided to sign up with Authenticom.

According to Cottrell, the ruling “is another important step forward for Authenticom and the entire automobile industry as a whole.”

“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 Reynold’s anticompetitive conduct,” said Cottrell.

The suit also alleges that the two corporations colluded in an “illegal plot” that cost Authenticom millions of dollars and “pushed it to the brink of insolvency” by trying to block Authenticom’s access to data.

The collusion sent Authenticom’s profits down 77.22 percent between the third quarter of 2015 and the first quarter of 2017, according to the suit. Additionally, Authenticom was unable to pay a tax-related obligation ($1.17 million) due on April 18, and some financial institutions rejected the company’s requests for financing, “citing doubts about Authenticom’s continued viability because of Defendants’ actions.”

Amidst the financial blows, Cottrell managed to preserve all of his nearly 110 employees’ jobs.

Reynolds, whose officers could not be reached for comment on Saturday, filed a countersuit against Authenticom on July 21 labeling the defendant a “hostile integrator” and accusing the company of hacking Reynolds’s systems to “scrape” data and “jeopardizing private information of millions of people.”

Judge Peterson explained his preliminary injunction against Reynolds, saying he was “not at all persuaded by Reynolds’s conclusory statements about the effort it would take to set up user credentials for Authenticom.”

CDK issued a statement conveying its intent to appeal and saying that the preliminary injunction is “not intended to give Authenticom free reign to maximize its business as it sees fit.”

The statement continued, “Rather, it is limited in scope and provides for a number of protections against the data integrity and security issues that would be created by allowing Authenticom unfettered access to our systems. However, we strongly believe that preventing hostile access is the best way to preserve the integrity of our systems and the security of our customers’ data.”

An appeal would be “in line” with CDK’s promise to “continue to defend ourselves vigorously against Authenticom’s meritless complaint.”

Currently, the Authenticom suit is headed toward a jury trial that Cottrell requested.

CDK, a publicly-traded corporation, provides car dealerships with DMS software and services, pulling in over $2 billion in annual revenues. Reynolds is a private software corporation headquartered in Dayton, Ohio.

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