The Federal Trade Commission's antitrust probe into dealership management system giants CDK Global Inc. and Reynolds and Reynolds Co. is heating up.
CDK, in a regulatory filing this month, disclosed that it was contacted by the FTC on April 22 with requests to interview certain current and former employees, who were not identified.
The interview requests were revealed more than two years after the FTC started seeking documents related to CDK agreements with Reynolds. Connections between the companies are also being investigated by individual states and are the subject of dealership lawsuits.
The two companies control more than 70 percent of the DMS software market, according to DMS experts and lawsuits by competitors.
"It appears the investigation is intensifying," said Gary Pres- topino, managing director with Barrington Research and an analyst who follows CDK, which is based in Hoffman Estates, Ill. He declined to speculate on any outcomes.
State attorneys general also appear to be probing the relationship between CDK and Reynolds. In the same August regulatory filing, CDK disclosed it also has received document requests from certain state attorneys general. In an earlier filing, CDK said it received a request for documents from the New York State Attorney General's Office on March 12, 2018. The attorney general's office, in response to an inquiry from Automotive News, would not confirm or deny the existence of an investigation.
CDK and Reynolds have been the targets of numerous lawsuits by dealerships, rival DMS companies and vendors alleging CDK and Reynolds have anti-competitive agreements that control who can access and integrate with their systems. Many of the lawsuits date to 2017.
CDK, a publicly traded company, did not respond to questions from Automotive News about the FTC's inquiry, including whether interviews had taken place and with whom, and which state attorneys general are investigating. Reynolds, a private company in Dayton, Ohio, declined to comment.
In its August regulatory filing, CDK said: "Since 2017, the company has engaged in continuing communication with and received subsequent requests from the FTC related to its investigation. The company is responding to the requests and no proceedings have been instituted. The company believes there has not been any conduct by the company or its current or former employees that would be actionable under the antitrust laws in connection with the agreements between the company and Reynolds and Reynolds or otherwise."
In that same filing, CDK said, "We are and expect to continue to be the subject of investigations, inquiries, data requests, actions, and audits from regulatory authorities, particularly in the area of competition."
FTC spokeswoman Betsy Lordan, in an email to Automotive News, said, "In regard to CDK/Reynolds and Reynolds, we have not confirmed the existence of an investigation and we have no comment to make."
Outside the potential New York probe, it's not clear which state attorneys general are looking into matters. In Ohio, the attorney general's office said it would not confirm or deny any investigation into the companies. The attorney general's office for Illinois did not respond to requests for comment.