TEXARKANA, Texas — An antitrust lawsuit filed this week in Texarkana federal court accuses Cisco Systems of using coercive practices to maintain a monopoly in the commercial networking equipment and services market.
The suit was filed Wednesday on behalf of Dexon Computer Inc. and names Cisco and CDW Corp. as defendants.
The suit accuses Cisco of employing a strategy of fear, uncertainty and doubt, or FUD, to keep customers from doing business with Cisco’s competitors through allegedly false claims that the competitor’s products are bootleg, unauthorized or infected with malware or spyware.
The complaint alleges that Cisco forces customers to buy equipment it doesn’t need or at higher prices than it could negotiate with a competitor in order to extend service packages the customer must have. CDW is accused of being a favored distributor of Cisco’s, which acts to further Cisco’s alleged monopoly.
According to the complaint, Cisco’s conduct has made an impact on hospitals, school districts and other entities.
“Cisco’s anticompetitive conduct also impacted a local Texas emergency 911-center which had purchased networking equipment from Dexon. In the midst of a five-year SmartNet service package the 911-center had purchased from Cisco, Cisco told the Texas emergency 911-center it needed to purchase new routers and Ethernet switches from a non-Dexon vendor when the customer checked on its account for purposes of a service issue if it wanted to receive the service it was due (from Cisco),” the complaint alleges.
The complaint alleges Cisco, with the help of CDW, uses a FUD-based strategy to shut out competitors and force customers to pay more for products.
The complaint accuses Cisco of violating the Sherman Act and the Texas Free Enterprise and Antitrust Act and asks the court for an order directing Cisco and CDW to stop their “anticompetitive conduct.”
The complaint asks for treble damages, including for lost profits, in an amount to be determined at trial, attorney fees and costs, punitive damages and an order restraining similar conduct in the future.
Dexon is represented by the Davis Firm of Longview, Texas, and Manatt, Phelps and Phillips of New York. Cisco and CDW have not filed responses. The case is pending before U.S. District Judge Robert Schroeder III in the Texarkana Division of the Eastern District of Texas.