Federal officials have approved Cox Automotive Inc.'s $4 billion acquisition of Lake Success software maker Dealertrack Technologies Inc. on the condition that the Long Island company follow through on plans to sell some of its programs to avoid a monopoly.
The U.S. Justice Department said on Tuesday that its approval of the merger hinged on Dealertrack, which makes software for auto dealers, closing on a sale it announced in August of its automotive inventory tracking platform, Inventory+, to a California company for $55 million.
Dealertrack and Cox, based in Atlanta, dominate the market for inventory tracking software, accounting for a combined total of 86 percent of sales. Selling Dealertrack's unit to the California company, DealerSocket of San Clemente, Calif., will prevent them controlling too much of the market, officials said.
"The divestiture will ensure that automotive dealerships in the United States continue to benefit from the competition that now exists among inventory management solution providers," Assistant Attorney General Bill Baer said.
Dealertrack and Cox have said they expect to close on the merger this month.