Case: 3:17-cv-00318-jdp Document #: 4 Filed: 05/01/17 Page 1 of 96
`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE WESTERN DISTRICT OF WISCONSIN
`
`
`
`AUTHENTICOM, INC.
`
`
`
`
`
`CDK GLOBAL, LLC; and THE REYNOLDS
`AND REYNOLDS COMPANY
`
`
`
`
`
`
`vs.
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`Case No. 17-cv-318
`
`
`Jury Trial Demanded
`
`Redacted Version
`
`Plaintiff,
`
`Defendants.
`
`COMPLAINT
`
`
`
`
`
`
`

`

`Case: 3:17-cv-00318-jdp Document #: 4 Filed: 05/01/17 Page 2 of 96
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`TABLE OF CONTENTS
`
`Page
`
`INTRODUCTION ...........................................................................................................................1 
`
`PARTIES .........................................................................................................................................1 
`
`JURISDICTION AND VENUE ......................................................................................................9 
`
`FACTUAL ALLEGATIONS ........................................................................................................10 
`
`I. 
`
`The Relevant Product Markets...............................................................................10 
`
`A. 
`
`The DMS Market .......................................................................................10 
`
`1. 
`
`2. 
`
`CDK and Reynolds Dominate the DMS Market ...........................11 
`
`CDK and Reynolds Maintain Their Market Dominance by
`Exercising Overwhelming Leverage over Dealerships ..................12 
`
`B. 
`
`The Dealer Data Integration Market ..........................................................15 
`
`1. 
`
`2. 
`
`3. 
`
`4. 
`
`5. 
`
`It Is Essential that Application Providers Be Able to Obtain
`Dealer Data Stored on the DMS ....................................................16 
`
`Dealer Data Integrators Provide Dealer Data to Vendors ..............17 
`
`Dealers Own Their Data Stored on the DMS ................................21 
`
`Dealers Have the Right to Control Who Has Access to
`Their Data ......................................................................................22 
`
`Participants in the Dealer Data Integration Market .......................25 
`
`a. 
`
`b. 
`
`c. 
`
`d. 
`
`Authenticom .......................................................................26 
`
`CDK ...................................................................................29 
`
`i. 
`
`ii. 
`
`Digital Motorworks and IntegraLink .....................30 
`
`CDK Third Party Access Program .........................32 
`
`Reynolds Certified Interface Program ...............................34 
`
`The Remaining Data Integration Providers Have
`Been Driven from the Market by CDK and
`Reynolds ............................................................................36 
`
`
`
`

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`Case: 3:17-cv-00318-jdp Document #: 4 Filed: 05/01/17 Page 3 of 96
`
`C. 
`
`The Single-Brand Aftermarkets for Dealer Data Integration
`Services ......................................................................................................37 
`
`II. 
`
`CDK and Reynolds Have Illegally Agreed To Eliminate Competition in
`the Dealer Data Integration Market and the Single-Brand Aftermarkets ..............39 
`
`A. 
`
`B. 
`
`The Facts of the Agreement Are Straightforward ......................................39 
`
`The Purpose of the Agreement Is to Capture Monopoly Profits ...............41 
`
`1. 
`
`2. 
`
`CDK and Reynolds Are Protecting Their DMS Duopoly .............41 
`
`CDK and Reynolds Are Protecting Their Dealer Data
`Integration Monopolies ..................................................................42 
`
`III. 
`
`The Evidence of Defendants’ Agreement to Eliminate Competition in the
`Dealer Data Integration Market and the Single-Brand Aftermarkets Is
`Overwhelming........................................................................................................45 
`
`A. 
`
`CDK and Reynolds Entered into a Per Se Illegal Written
`Agreement Dividing the Dealer Data Integration Market and
`Single-Brand Aftermarkets ........................................................................45 
`
`1. 
`
`2. 
`
`3. 
`
`The Agreement Contains Specific Provisions Dividing the
`Dealer Data Integration Market .....................................................46 
`
`The Agreement Required Coordination in Transitioning
`Vendor Clients from CDK to Reynolds .........................................46 
`
`CDK and Reynolds Implemented the Agreement .........................48 
`
`B. 
`
`CDK and Reynolds Require Dealers and Vendors to Enter into
`Exclusive Dealing Arrangements That Are Patently
`Anticompetitive..........................................................................................50 
`
`1. 
`
`Defendants’ DMS Contracts with Dealers Grant
`Defendants an Exclusive Right to Access the Dealers’ Data ........51 
`
`a. 
`
`b. 
`
`The Dealer Exclusive Dealing Terms ................................51 
`
`CDK and Reynolds Vigorously Enforce the Dealer
`Exclusive Dealing Provisions ............................................52 
`
`2. 
`
`Defendants’ Contracts with Vendors Grant Defendants an
`Exclusive Right to Provide Data to Vendors .................................53 
`
`a. 
`
`The Vendor Exclusive Dealing Terms ...............................54 
`
`ii
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`

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`b. 
`
`c. 
`
`Defendants’ Vendor Contracts Contain Price
`Secrecy Provisions That Prohibit Vendors from
`Informing Dealers About the Data Fees ............................55 
`
`CDK and Reynolds Vigorously Enforce the Vendor
`Exclusive Dealing and Price Secrecy Provisions...............57 
`
`3. 
`
`The Dealer and Vendor Exclusive Dealing and Price
`Secrecy Provisions Are Anticompetitive .......................................58 
`
`C. 
`
`Defendants Are Engaged in a Coordinated Campaign to Block
`Authenticom’s Access to Dealer Data and Thereby Destroy Its
`Business .....................................................................................................59 
`
`1. 
`
`2. 
`
`3. 
`
`4. 
`
`Defendants Have Admitted That They Have Agreed to
`Restrict Access and Block Authenticom........................................60 
`
`Defendants’ Employees Are Working In Concert to
`Coordinate the Blocking of Authenticom ......................................61 
`
`Defendants Tried to Coerce Authenticom to Exit the Dealer
`Data Integration Market .................................................................61 
`
`Defendants Are Blocking Authenticom’s Ability to Provide
`Dealer Data Integration Services ...................................................62 
`
`a. 
`
`b. 
`
`c. 
`
`d. 
`
`e. 
`
`f. 
`
`CDK and Reynolds Have Disabled Authenticom’s
`Usernames En Masse .........................................................63 
`
`Dealers Have Protested to CDK and Reynolds and
`Demanded That They Stop Blocking Authenticom ...........64 
`
`Dealers Have Set Up New Usernames for
`Authenticom, but Those Have Been Quickly
`Blocked by CDK and Reynolds Too .................................66 
`
`CDK and Reynolds Have Refused To Give
`Credence to the Dealers’ Objections ..................................67 
`
`CDK and Reynolds Are Proactively Contacting
`Dealers Served by Authenticom to Pressure Them
`to Have Their Vendors Switch to the RCI and 3PA
`Programs ............................................................................67 
`
`CDK and Reynolds Have Spread False Information
`About Authenticom’s Security as Part of Their
`Marketing Push ..................................................................68 
`
`iii
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`

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`Case: 3:17-cv-00318-jdp Document #: 4 Filed: 05/01/17 Page 5 of 96
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`g. 
`
`Authenticom Is Losing Its Customers – and
`Therefore Its Business – Because of Defendants’
`Actions ...............................................................................70 
`
`IV. 
`
`Defendants’ Actions Have Harmed Competition ..................................................71 
`
`A. 
`
`Defendants’ Anticompetitive Conduct Has Resulted in Massive
`Price Increases in the Dealer Data Integration Market ..............................72 
`
`1. 
`
`2. 
`
`3. 
`
`4. 
`
`CDK and Reynolds Have Imposed Massive Price Increases
`As Compared to What Authenticom Charged ...............................72 
`
`CDK and Reynolds Have Dramatically Increased the Prices
`for Their Own Data Integration Services .......................................73 
`
`The Evidence of CDK’s and Reynolds’ Price Increases Is
`Overwhelming................................................................................74 
`
`CDK and Reynolds Continue to Charge Dealers Escalating
`Fees for DMS Services ..................................................................75 
`
`B. 
`
`Defendants’ Anticompetitive Conduct Has Harmed Competition in
`Many Other Ways ......................................................................................76 
`
`Authenticom Has Suffered Antitrust Injury ...........................................................78 
`
`Defendants’ Anticompetitive Conduct Has No Pro-Competitive
`Justification ............................................................................................................79 
`
`V. 
`
`VI. 
`
`FIRST CAUSE OF ACTION: HORIZONTAL CONSPIRACY IN VIOLATION OF
`SECTION 1 OF THE SHERMAN ACT ...........................................................................82 
`
`SECOND CAUSE OF ACTION: EXCLUSIVE DEALING PROVISIONS IN
`VIOLATION OF SECTION 1 OF THE SHERMAN ACT ..............................................84 
`
`THIRD CAUSE OF ACTION: ILLEGAL TYING IN VIOLATION OF SECTION 1 OF
`THE SHERMAN ACT ......................................................................................................86 
`
`FOURTH CAUSE OF ACTION: MONOPOLIZATION OF THE DEALER DATA
`INTEGRATION AFTERMARKETS IN VIOLATION OF SECTION 2 OF THE
`SHERMAN ACT ...............................................................................................................87 
`
`FIFTH CAUSE OF ACTION: TORTIOUS INTERFERENCE ....................................................88 
`
`JURY DEMAND ...........................................................................................................................89 
`
`PRAYER FOR RELIEF ................................................................................................................89 
`
`
`
`iv
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`

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`Case: 3:17-cv-00318-jdp Document #: 4 Filed: 05/01/17 Page 6 of 96
`
`INTRODUCTION
`
`1.
`
`Plaintiff Authenticom, Inc. (“Authenticom”) brings this action to remedy and put
`
`a stop to ongoing antitrust violations being committed by Defendants CDK Global, LLC
`
`(“CDK”) and The Reynolds and Reynolds Company (“Reynolds”). As alleged herein, and
`
`supported by voluminous evidence even prior to any discovery, CDK and Reynolds entered into
`
`an express horizontal agreement to exclude competition in the market for dealer data integration
`
`services, which are critical to the proper functioning of the retail automotive industry. They also
`
`imposed unlawful exclusive dealing provisions to reinforce their unlawful horizontal agreement.
`
`Authenticom – Defendants’ last remaining competitor in the dealer data integration market – has
`
`been crippled by Defendants’ unlawful conduct and will soon be out of business if that conduct
`
`is not promptly enjoined. This case is thus critical not only to Authenticom – whose existence as
`
`an ongoing concern hangs in the balance – but also to automobile dealers and the suppliers of
`
`essential services to those dealers.
`
`2.
`
`Dealers’ data is the lifeline of the automotive industry. In the course of their
`
`operations, automobile dealerships generate important data, including vehicle and parts
`
`inventory, customer name and contact information, completed and pending sales, vehicle
`
`financing and insurance information, and much more. Dealers authorize third-party application
`
`providers (commonly referred to in the industry as “vendors”) to access their data so that the
`
`vendors can provide the dealers with essential services, such as inventory management, customer
`
`relationship management, and electronic vehicle registration and titling. Dealer data integration
`
`providers such as Authenticom transform the dealers’ raw data into a usable form appropriate to
`
`the particular services each vendor provides to the dealer. Vendors depend on and cannot
`
`provide their services without access to a dealer’s data.
`
`
`
`

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`3.
`
`Dealers enter their data into a database within their Dealer Management System
`
`(“DMS”). The DMS is the mission-critical enterprise software that manages nearly every
`
`function of a dealer’s business. Defendants CDK and Reynolds are by far the two giants of the
`
`DMS market, controlling approximately 75 percent of the United States market by number of
`
`dealers, and approximately 90 percent when measured by vehicles sold. CDK and Reynolds
`
`have enormous leverage over dealers. Not only is it deeply disruptive and expensive for a dealer
`
`to switch DMS providers (switching takes up to a year of preparation and training), but CDK and
`
`Reynolds use their market power to compel dealers to submit to long-term contracts of between
`
`five and seven years in length. As a result, CDK and Reynolds have maintained their duopoly
`
`for over three decades. No competitor has been able to touch them – even Microsoft has failed.
`
`4.
`
`CDK and Reynolds also provide dealer data integration services – separate and
`
`apart from their DMS services – in direct competition with Authenticom.
`
`5.
`
`For over a decade, all DMS providers – including CDK and Reynolds –
`
`recognized that dealers have the right to grant data access to the integrator of their choice.
`
`Everyone agreed – and still agree to this day – that dealers own their data. Reynolds has publicly
`
`declared: “The data belongs to the dealers. We all agree on that.” CDK likewise states that it
`
`“has always understood that dealerships own their data and enjoy having choices on how best to
`
`share and utilize that data with others.” When dealers and vendors had a choice of which
`
`integrator to use, the integration market flourished. Over a dozen integrators provided secure,
`
`reliable, and cost-effective access to dealer data. With that access, vendors innovated and
`
`created numerous new software applications to help dealerships sell and service cars.
`
`6.
`
`In 2007, after Reynolds was privately acquired by Bob Brockman, Reynolds
`
`changed its position. Reynolds started to block data integrators – including Authenticom and
`
`2
`
`

`

`Case: 3:17-cv-00318-jdp Document #: 4 Filed: 05/01/17 Page 8 of 96
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`CDK – from accessing dealer data on the Reynolds DMS by disabling the integrator’s dealer-
`
`created login credentials. CDK, like the rest of the automobile industry, criticized Reynolds’
`
`reversal. Steve Anenen, CDK’s CEO, publicly reaffirmed that dealers using the CDK DMS had
`
`the right to grant data integrators access to the dealers’ own data. “We’re not going to prohibit
`
`that or get in the way of that,” he told an industry publication. “I think we’ve stated pretty
`
`emphatically, we really believe the dealer owns the data. I don’t know how you can ever make
`
`the opinion that the data is yours to govern and to preclude others from having access to it, when
`
`in fact it’s really the data belonging to the dealer. As long as they grant permission, how would
`
`you ever go against that wish? I don’t understand that.”
`
`7.
`
`Over the next eight years, CDK continued to take that position. In fact, CDK’s
`
`own data integration business extracted data for Reynolds dealers even though Reynolds tried to
`
`block CDK from doing so. Mr. Brockman of Reynolds was asked about the fact that CDK “will
`
`not prohibit dealers from providing their vendors with a user ID and password to extract data.”
`
`Mr. Brockman responded: “I don’t understand [CDK’s] position. Other than to be obstinate,
`
`than to be opposite, I can’t imagine from a business standpoint that that’s truly their position.
`
`And frankly it would be my opinion that after awhile they probably change that position.” In
`
`February 2015 – when CDK made an about face and entered into an illegal agreement with
`
`Reynolds to restrict access to dealer data – Mr. Brockman got his wish.
`
`8.
`
`Specifically, in February 2015, CDK and Reynolds entered into an agreement to
`
`eliminate competition in the dealer data integration market. First, they agreed not to compete
`
`with each other. Effective February 18, 2015, CDK and Reynolds entered into a formal written
`
`contract whereby Defendants agreed that CDK would stop providing integration services for
`
`dealers using the Reynolds DMS, ceding that ground exclusively to Reynolds. Moreover, the
`
`3
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`

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`Case: 3:17-cv-00318-jdp Document #: 4 Filed: 05/01/17 Page 9 of 96
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`written agreement provided for coordination between the Defendants to transition vendors from
`
`CDK to Reynolds. On March 2, 2015, CDK sent a letter to its vendor clients – i.e., the ones for
`
`whom CDK had pulled data from the Reynolds DMS – announcing that the vendors “will be
`
`provided with a roadmap to transition” to the Reynolds integration product, which is what
`
`happened over the next months.
`
`9.
`
`Having agreed not to compete with each other in the integration market, CDK and
`
`Reynolds next took steps to eliminate their remaining competitors. CDK and Reynolds took
`
`numerous steps to obstruct dealer data integration providers such as Authenticom from obtaining
`
`access to dealers’ data, including, for example, by disabling the login credentials to the DMS
`
`system created by dealers to provide authorized access to independent integrators. Defendants
`
`also bought several integrators off, sued others, and drove the rest from the market. Defendants
`
`have succeeded in eliminating all competition in the data integration market except Authenticom.
`
`10.
`
`Defendants have now turned their sights on driving out Authenticom, the last
`
`competitor remaining in the market. Senior CDK and Reynolds executives have admitted to
`
`entering into an agreement to destroy Authenticom. On April 3, 2016, at an industry convention,
`
`Dan McCray (CDK’s Vice President of Product Management) approached Steve Cottrell
`
`(Authenticom’s owner and CEO) and said that they should “take a walk.” Mr. McCray led Mr.
`
`Cottrell off the convention floor and down a service ramp to a secluded area. Mr. McCray then
`
`confirmed the existence of the illegal agreement, stating that CDK and Reynolds had agreed to
`
`“lock you and the other third parties out.” In reference to a prior offer by CDK to acquire
`
`Authenticom’s business for $15 million, Mr. McCray confirmed the illegal agreement again,
`
`stating that the number was so low because Authenticom’s “book of Reynolds business is
`
`worthless to us because of the agreement between CDK and Reynolds.” Mr. McCray then said,
`
`4
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`

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`Case: 3:17-cv-00318-jdp Document #: 4 Filed: 05/01/17 Page 10 of 96
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`“For god’s sake, you have built a great little business, get something for it before it is destroyed
`
`otherwise I will f***ing destroy it.” Top Reynolds executives have delivered the same message.
`
`11.
`
`In furtherance of their agreement to eliminate competition in the data integration
`
`market, both CDK and Reynolds have also imposed a series of exclusive dealing provisions
`
`designed to foreclose competition by Authenticom. CDK and Reynolds have imposed terms in
`
`their DMS contracts with dealers providing that dealers cannot provide access to their data to
`
`anyone else, including Authenticom. Likewise, CDK and Reynolds have imposed terms in their
`
`vendor contracts that vendors that use CDK or Reynolds data integration services cannot obtain
`
`such services from any other provider, including Authenticom. These exclusive dealing
`
`provisions mean that any vendor that must do business with CDK or Reynolds cannot also
`
`contract with Authenticom to provide data integration services. Compounding this market
`
`foreclosure, these exclusive terms last for up to seven years in the case of the dealer contracts,
`
`and purportedly forever in the case of CDK’s vendor contract. That is, even if the vendor were
`
`no longer to use CDK for data integration services, it would still be barred – forever – from
`
`obtaining data from any CDK dealer from any other source.
`
`12.
`
`On several occasions Defendants sought to persuade Authenticom to abandon
`
`competition in the dealer data integration market. But having failed to convince Authenticom to
`
`exit the data integration market on its own, CDK and Reynolds have waged an all-out assault on
`
`Authenticom by intensifying their blocking activities. Dealers have demanded that CDK and
`
`Reynolds stop blocking Authenticom, but to no avail. The plight of a Nebraska Ford dealer is
`
`typical. In December 2016, after CDK disabled Authenticom’s login credentials, the dealer
`
`protested to CDK: “You do not have our authorization to disable user accounts. It is my data and
`
`I decide who has access to it.” CDK responded that it in fact had the right to control access.
`
`5
`
`

`

`Case: 3:17-cv-00318-jdp Document #: 4 Filed: 05/01/17 Page 11 of 96
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`Incensed, the dealer responded: “We own the data, CDK doesn’t.” But there was nothing the
`
`dealer could do.
`
`13.
`
`Defendants’ unlawful conduct has decimated Authenticom’s business.
`
`Authenticom once provided integration services for more than 15,000 dealers (out of
`
`approximately 17,000 franchised dealers nationwide) and hundreds of vendors. In July 2, 2015,
`
`Authenticom had the honor of being singled out by President Barack Obama in a speech in La
`
`Crosse, Wisconsin. “In 2002, [Steve Cottrell] started a small business out of his house to help
`
`manage data for car companies and dealerships,” the President recounted. He noted that
`
`Authenticom’s business was booming and that its “business model was right.” “So this business
`
`that began in Steve’s son’s old bedroom,” the President explained, “is now one of America’s
`
`fastest growing private companies based in a restored historic building right in downtown La
`
`Crosse.” Now, almost two years later, as a result of Defendants’ actions, Authenticom’s
`
`business is cash flow insolvent and on the verge of collapse.
`
`14.
`
`Defendants’ conduct has harmed not only Authenticom but the market as a whole.
`
`Despite the fact that dealers and vendors prefer Authenticom’s better-priced and higher-quality
`
`integration services, vendors have had no choice but to leave Authenticom for Defendants’
`
`integration products. “It is with reluctance,” one large vendor wrote to Authenticom, “that I
`
`write this email to confirm that we will be transitioning our CDK dealership clients from
`
`[Authenticom] to CDK.” The vendor explained that “[t]his move was solely the result of CDK’s
`
`aggressive and recurring disablement of our data access credentials . . . . Being forced to do
`
`business with CDK is distressing.” Vendors could not sustain the business disruptions caused by
`
`Defendants’ blocking, and Authenticom hemorrhaged customers.
`
`6
`
`

`

`Case: 3:17-cv-00318-jdp Document #: 4 Filed: 05/01/17 Page 12 of 96
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`15.
`
`The anticompetitive harm associated with Defendants’ conduct is evidenced by
`
`the resulting increase in prices for dealer data integration services. Authenticom charges vendors
`
`approximately $50 per month per dealership connection. Other independent data integrators
`
`charged similar rates when they were still in business, as did CDK before it entered into its
`
`agreement with Reynolds. Since the unlawful 2015 agreement, CDK and Reynolds have
`
`charged vendors on average $300 per month for the same services, and other vendors as much as
`
`$800 per month.
`
`16.
`
`Defendants’ only justification for their elimination of competition in the
`
`integration market is “data security.” But that justification is pretextual. Authenticom has never
`
`had a data breach; its security protections and protocols meet or exceed the highest federal
`
`standards; if there was ever a security incident (and there never has been one), Authenticom has
`
`agreed to indemnify dealers, backing up that promise with a $20 million dollar cyber liability
`
`insurance policy. At bottom, it is the dealer’s choice to evaluate the security protections of data
`
`integrators, and select the one that meets their standards. “This is just a means of revenue
`
`generation for CDK,” one Florida dealer wrote. “Let me, the client, worry about my data
`
`security by using a vendor such as [Authenticom]. It should be my choice on how I want to
`
`secure my data, not CDK’s.” The choice of which data integrator to use belongs to the dealer.
`
`As CDK’s CEO once stated, as “long as [dealers] grant permission, how would you ever go
`
`against that wish?”
`
`17.
`
`Authenticom brings this action to restore competition in the market and choice to
`
`dealers and vendors. As described in detail herein, Defendants’ horizontal conspiracy to
`
`eliminate competition is a per se violation of Section 1 of the Sherman Act, see infra Count I;
`
`their exclusive dealing arrangements with vendors and dealers are patently anticompetitive and
`
`7
`
`

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`Case: 3:17-cv-00318-jdp Document #: 4 Filed: 05/01/17 Page 13 of 96
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`unlawful under Section 1 of the Sherman Act, see infra Count II; the illegal tying of their
`
`integration service to their DMS service is unlawful under Section 1 of the Sherman Act, see
`
`infra Count III; their monopolization of their respective Dealer Data Integration aftermarkets is
`
`unlawful under Section 2 of the Sherman Act, see infra Count IV; and their tortious interference
`
`with Authenticom’s contracts with dealers and vendors violates Wisconsin state law, see infra
`
`Count V.
`
`18.
`
`Authenticom seeks to recover the damages it has suffered as a result of
`
`Defendants’ violations of federal antitrust laws and Wisconsin tort law. In addition,
`
`Authenticom also seeks an injunction (1) enjoining Defendants from blocking independent data
`
`integrators from serving dealers and vendors; (2) enjoining the enforcement of Defendants’
`
`exclusive dealing provisions with dealers and vendors; and (3) releasing vendors from the multi-
`
`year terms in their contracts with Defendants so that vendors (and dealers) can select a data
`
`integrator of their choice.
`
`PARTIES
`
`19.
`
`Formed in 2002, Plaintiff Authenticom is a privately-held Wisconsin corporation
`
`with its corporate headquarters and principal place of business at 400 Main Street, La Crosse,
`
`Wisconsin 54601.
`
`20.
`
`Defendant CDK is a publicly traded Delaware corporation with its corporate
`
`headquarters and principal place of business at 1950 Hassell Road, Hoffman Estates, Illinois
`
`60169. CDK provides Dealer Management System (“DMS”) software and services to
`
`automobile dealerships throughout the United States, including in Wisconsin, and has more than
`
`$2 billion in annual revenues. CDK competes with Authenticom in providing data integration
`
`services. In 2014, CDK was spun off from ADP, LLC, and is now an independent, publicly
`
`8
`
`

`

`Case: 3:17-cv-00318-jdp Document #: 4 Filed: 05/01/17 Page 14 of 96
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`traded company in which ADP retains no ownership interest. Prior to the spin-off, CDK was
`
`referred to as ADP Dealer Services (collectively, referred to herein as “CDK”).
`
`21.
`
`Defendant Reynolds is an Ohio corporation with its corporate headquarters and
`
`principal place of business at One Reynolds Way, Kettering, Ohio 45430. Like CDK, Reynolds
`
`provides DMS software and services to automobile dealerships throughout the United States,
`
`including in Wisconsin. Reynolds also competes with Authenticom in providing data integration
`
`services. Though formerly a publicly traded company, Reynolds was acquired by Bob
`
`Brockman in 2006.
`
`JURISDICTION AND VENUE
`
`22.
`
`This action arises under Sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1 and
`
`2; Sections 4 and 16 of the Clayton Act, 15 U.S.C. §§ 15 and 26; and Wisconsin state law.
`
`23.
`
`This Court has jurisdiction over the federal claims pursuant to 28 U.S.C. §§ 1331
`
`and 1337 and Sections 4 and 16 of the Clayton Act, 15 U.S.C. §§ 15 and 26. This Court has
`
`supplemental jurisdiction over the state law claim pursuant to 28 U.S.C. § 1367 because it is so
`
`closely related to the federal claims that they form part of the same case or controversy.
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`24.
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`This Court has personal jurisdiction over Defendants because they have engaged
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`in the unlawful acts described in this Complaint with the foreseeable or intended effect of
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`causing substantial economic harm to Authenticom in Wisconsin. This lawsuit arises from and
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`relates to Defendants’ Wisconsin activities – including their unlawful conspiracy and attempts to
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`block Authenticom’s access to the DMS platforms of hundreds Wisconsin automobile
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`dealerships served by Authenticom. Moreover, Defendants purposefully availed themselves of
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`the privilege of doing business in Wisconsin through the widespread promotion, sale, marketing,
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`and distribution of their products and services in the state.
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`Case: 3:17-cv-00318-jdp Document #: 4 Filed: 05/01/17 Page 15 of 96
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`25.
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`Venue is proper in this District pursuant to Sections 4, 12, and 16 of the Clayton
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`Act, 15 U.S.C. §§ 15, 22, and 26, and 28 U.S.C. § 1391(b), (c), and (d). Defendants are
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`registered to do business, transacted business, were found, and had agents in the District; a
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`substantial part of the events giving rise to Authenticom’s claims arose in the District; and a
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`substantial portion of the affected interstate trade and commerce described herein has been
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`carried out in the District.
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`26.
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`As described throughout the Complaint, Defendants’ unlawful conduct has
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`substantially affected interstate commerce by harming competition, increasing prices, reducing
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`quality, and limiting output, to the detriment of Authenticom, dealers, and application providers
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`throughout the nation. See, e.g., infra Parts IV, V.
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`FACTUAL ALLEGATIONS
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`I.
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`The Relevant Product Markets
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`27.
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`The relevant product markets for Authenticom’s claims are: (1) the DMS Market
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`in the United States; and (2) the Dealer Data Integration Market in the United States, with the
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`single-brand aftermarkets of (i) the CDK Dealer Data Integration Market and (ii) the Reynolds
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`Dealer Data Integration Market.
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`A.
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`28.
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`The DMS Market
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`Dealer Management System software is enterprise software designed specifically
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`for retail automotive dealerships. The software manages virtually every aspect of a dealer’s
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`business. The DMS has been analogized to the central nervous system of a car dealership.
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`Specifically, DMS software handles and integrates the critical business functions of a car
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`dealership, including sales, financing, inventory management (both vehicle and parts), repair and
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`service, accounting, payroll, human resources, marketing, and more. In short, DMS software is
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`the mission-critical software that enables dealerships to run their operations and function as a
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`Case: 3:17-cv-00318-jdp Document #: 4 Filed: 05/01/17 Page 16 of 96
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`business. Industry publications describe the DMS as “the center of a dealer’s entire retail
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`management platform. It’s impossible to operate without it.”
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`29.
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`Critically, the DMS is also the place where a dealer’s own data is stored, such as
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`its inventory, customer, sales, and service information. In this way, the DMS also operates as a
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`database. The physical storage of the data typically takes place either onsite at the dealership (on
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`servers owned by the dealer or the DMS provider), offsite at private data centers operated by the
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`DMS provider, or with cloud-based data storage companies.
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`30.
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`A dealer only has one DMS provider at a time. It would be functionally
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`impossible for a dealership to operate with two separate DMS platforms – DMS providers have
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`completely different and incompatible operating software for their respective systems.
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`31.
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`DMS providers license and sell their software and services to automobile dealers
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`pursuant to written contracts of between five and seven years in length.
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`32.
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`The DMS market is comprised of those providers that sell and market DMS
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`services to automobile dealerships in the United States. The relevant geographical market is the
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`DMS market is the United States. There is public and industry recognition of the DMS market.
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`There are no reasonable substitutes for the enterprise software and services provided by DMS
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`providers to retail automotive dealerships.
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`1.
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`CDK and Reynolds Dominate the DMS Market
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`