CDK Global (NASDAQ:CDK) has agreed to pay $630 million to settle an antitrust lawsuit that accused the company of restricting access to vehicle dealership data and forcing software vendors to overpay for data integration services.
The proposed settlement, filed in federal court in Madison, Wisconsin, is pending judge approval. While CDK denied any wrongdoing, the company decided to resolve the case, bringing an end to litigation that has lasted for several years.
Background of the Lawsuit
CDK Global, owned by Brookfield Business Partners (NYSE:BBU), provides automotive software platforms that help car dealerships manage sales, financing, and service operations.
The lawsuit was filed by AutoLoop and other tech vendors in 2018, alleging that CDK:
- Blocked access to dealer management systems.
- Increased fees vendors had to pay for dealership data.
- Created an unfair monopoly, making it harder for third-party vendors to operate.
In July 2024, a judge certified the case as a class action lawsuit, increasing pressure on CDK. The trial was scheduled for this week, where the vendors were seeking $490 million in damages, which could have been tripled under antitrust law if the jury ruled in their favor.
Details of the Settlement
- Settlement Amount: $630 million
- Beneficiaries: 243 tech vendors that purchased data integration services from CDK or its rival Reynolds & Reynolds (which was not a defendant).
- Legal Fees: AutoLoop’s lawyers at Kellogg, Hansen, Todd, Figel & Frederick plan to request $200 million in legal fees from the settlement.
CDK previously paid $100 million in August 2024 to settle a separate class action filed by U.S. auto dealerships, who claimed they overpaid for dealer management systems due to CDK’s pricing practices.
CDK Global’s Response
CDK Global’s CEO Brian MacDonald stated that the company decided to settle to end long-standing litigation and that the settlement would not impact its business operations.
Impact on BBU
CDK is owned by Brookfield Business Partners (NYSE:BBU), and the settlement may affect investor sentiment. Analysts and investors are closely watching whether this case impacts BBU’s stock performance.
BBU is known for strategic investments in various industries, and despite the $630 million payout, it remains a major player in automotive technology.
For more details, visit the official court records once the judge issues a ruling on the settlement approval.
FAQs
Why did CDK Global agree to the $630M settlement?
CDK settled to resolve antitrust claims and avoid a lengthy trial.
Who is eligible to receive payments from the settlement?
243 software vendors that bought data integration services from CDK or Reynolds & Reynolds.
What was CDK accused of in the lawsuit?
Blocking access to dealership systems and inflating prices for software vendors.
How does this settlement affect Brookfield Business Partners (BBU)?
The financial impact on BBU is unclear, but investors are closely monitoring its stock.
Where can I find more details about the settlement?
Check official court records at www.pacer.gov once the ruling is issued.
