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Tuesday, October 22, 2019

FTC lauds CDK's abandoned acquisition of Auto/Mate

By Mark Iandolo | Mar 26, 2018

WASHINGTON (Legal Newsline) — The Federal Trade Commission (FTC) announced March 20 that it had issued an administrative complaint arguing that CDK Global Inc.’s proposed acquisition of Auto/Mate would violate federal antitrust laws and reduce competition in the market for Dealer Management System (DMS) software. Following the issuance of the complaint, CDK and Auto/Mate notified the FTC that they abandoned the acquisition plans.

“[This] announcement from CDK and Auto/Mate that they have decided to abandon their proposed merger is good news for new car dealers across the United States,” Bruce Hoffman, acting director of the Bureau of Competition, said in a statement. “Dealerships will continue to benefit from the disruptive and innovative efforts of Auto/Mate, resulting in improvements to DMS offerings across the industry.”

According to Hoffman, Auto/Mate was gaining opportunity in the market despite its small market share. Because of this Auto/Mate is actually a significant competitor to CDK.

“Despite Auto/Mate’s relatively small market share, it was winning a significant share of opportunities from CDK—a larger share than Auto/Mate’s overall market share might have suggested, showing that Auto/Mate was a strong competitor to CDK,” Hoffman said in the statement. “Moreover, the evidence indicated that Auto/Mate was also a threat to other incumbent DMS providers and, importantly, was poised to become an even more effective competitor in the near future. 

"The commission’s action shows that it will block a proposed merger if a large, established firm seeks to eliminate competition from a small but significant and developing competitor that is delivering substantial competitive benefits in innovation, price and quality.”

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U.S. Federal Trade Commission