Carfax is not playing on a level field, a new lawsuit claims.Consulting a Carfax report has become an intrinsic part of the car-buying process, but the owners of 120 dealerships claim the vehicle history reporting company cheated in order to achieve its dominant position in the industry.
A lawsuit filed in federal court on Tuesday claims that Carfax monopolized the vehicle reporting industry by using anti-competitive practices and violating antitrust laws. The suit, which was filed in the U.S. District Court for the Southern District of New York, is seeking $50 million in damages.
The suit takes issue with some of Carfax's exclusive business deals. For example, of the 40 automakers with a certified pre-owned program in the United States, 37 require dealers to provide a Carfax report. Moreover, car shopping Web sites Autotrader.com and Cars.com only allow dealers to post history reports from Carfax.
The suit also claims Carfax provides "cash or noncash marketing support" to automakers as well as Autotrader.com and Cars.com.
There are ten firms currently approved to provide vehicle history reports, including Carfax's main competitor, Experian Automotive's AutoCheck.
Carfax declined to comment on the suit, but the company has previously stated that dealers are free to choose their vehicle history report provider.
"We have to prove over and over again that the Carfax vehicle history report is the vehicle history report of excellence," Larry Gamache, a Carfax spokesman, told Automotive News in December. "And if we don't do that, our partners are free to choose alternatives."
As many as 50 more dealers could join the lawsuit.