TEXARKANA, Texas — An antitrust lawsuit filed this week in federal court in Texarkana accuses Cisco Systems of using coercive practices to maintain a monopoly in the market for commercial networking equipment and services.
The lawsuit was filed Wednesday on behalf of Dexon Computer Inc. and names Cisco and CDW Corp. as defendants.
The lawsuit accuses Cisco of employing a strategy of fear, uncertainty and doubt, or FUD, to prevent customers from doing business with Cisco’s competitors by claiming that the competitor’s products are counterfeit, unauthorized or infected with malware or spyware.
The complaint alleges that Cisco forces customers to buy hardware it doesn’t need or at higher prices than it could negotiate with a competitor in order to extend the service packages the customer must have. CDW is accused of being a preferred distributor of Cisco, which acts to reinforce Cisco’s alleged monopoly.
According to the complaint, Cisco’s conduct has impacted hospitals, school districts and other entities.
“Cisco’s anti-competitive behavior also impacted a local 911 emergency center in Texas that had purchased network equipment from Dexon. Amid a five-year SmartNet service package that the 911 center had purchased at Cisco, Cisco told the Texas 911 emergency center that it needed to purchase new routers and Ethernet switches from a non-Dexon vendor when the customer checked into their account for a problem. service if he wanted to receive the service he was owed (from Cisco),” the complaint alleges.
The complaint alleges that Cisco, with the help of CDW, uses a FUD-based strategy to exclude competitors and force customers to pay more for products.
The lawsuit charges Cisco with violating the Sherman Act and the Texas Free Enterprise and Antitrust Act and asks the court for an order directing Cisco and CDW to end their “anti-competitive conduct.”
Complaint seeks treble damages, including for lost profits, in an amount to be determined at trial, attorneys’ fees and costs, punitive damages and an order prohibiting similar conduct in the future .
Dexon is represented by Davis of Longview, Texas, and Manatt, Phelps and Phillips of New York. Cisco and CDW did not file responses. The case is pending before U.S. District Judge Robert Schroeder III of the Texarkana Division of the Eastern District of Texas.