Arcesium Sues Advent Software Claiming Antitrust Violations

Plaintiff Arcesium LLC has filed a complaint against Advent Software, doing business as SS&C Technologies Holdings, alleging antitrust violations. Arcesium said Advent violated the Sherman Act, the Clayton Act, and New York’s Donnelly Act. Additional claims include breach of contract, tortious interference with contract, tortious interference with prospective economic advantage, unfair competition, and unfair trade practices.

Arcesium and Advent are competitors that “provide middle-and back-office post-trade technology support solutions to asset managers.” The two relevant markets are “the market for software that performs portfolio accounting and related tasks” and “the market for post-trade technology solutions.” The lawsuit “challenges Defendants’ attempts to prevent and destroy competition in this industry.” Advent provides an accounting software called Geneva, which is used by asset managers; Geneva is the leading portfolio accounting software. Arcesium platform provides post-trade solutions, and can be integrated with order management systems and other software and systems.

In 2015, Arcesium and Advent entered into a “Reseller Agreement,” which allowed “Arcesium to resell Geneva by integrating it into the solutions that Arcesium offers its customers. The 2015 Agreement eliminated the need for Arcesium’s customers to negotiate with Defendants for their own licenses to use Geneva.” This allowed Arcesium to offer a “a single integrated solution where Portfolio Accounting Software…was deployed alongside, and seamlessly integrated with, the Arcesium Platform to handle all aspects of the customer’s Post-Trade Task needs.” It also gave “Arcesium robust rights to continue providing Geneva and support for Geneva to its existing customers should the 2015 Agreement expire or be terminated (the ‘Continuation Rights’).”

Arcesium claimed that by the beginning of 2015, Advent became a dominant player in the market. Additionally, the plaintiff said “[d]efendants possess market power and/or monopoly power in the Portfolio Accounting Software market.” Further, Arcesium states that defendants’ goal is “to take over the world” and be “the world’s dominant platform” for “post-trade technology solutions.” As a result, Advent has allegedly “adopted a strategy that seeks to undermine Arcesium’s ability to compete and would destroy Arcesium’s Continuation Rights.”

For example, in October 2019, Advent notified Arcesium that they did not intend to renew the 2015 agreement. “Defendants then engaged in sham negotiations to renew the 2015 Agreement, proposing commercially unreasonable terms that were plainly impossible for Arcesium to accept – including a supracompetitive royalty fee and a provision that would prohibit Arcesium from marketing to current customers of Advent or SS&C.” Additionally, after the agreement expired and the Continuation Rights came into effect, “[d]efendants invented a pretextual claim that Arcesium had acted in violation of its Continuation Rights. Defendants made this pretextual claim just as the critical license rights to Geneva were set to expire for both Arcesium and certain major customers of Arcesium.” Advent also attempted to terminate Arcesium’s Continuation Rights and Arcesium’s rights to support its own customers.

Arcesium claimed that Advent has violated sections 1 and 2 of the Sherman Act. For example, plaintiff stated that “[d]efendants have entered into one or more contracts, combinations, or conspiracies to unreasonably restrain trade, to control prices or exclude competition, and to willfully acquire and maintain monopoly power for Defendants in the markets for Portfolio Accounting Software and Post-Trade Solutions, including through unlawful exclusive dealing arrangements with various customers.” Arcesium stated that Advent has “induced or coerced various customers” to enter into contracts “to unreasonably restrain trade, control prices or exclude competition.” Arcesium added that Advent has created a conditional requirement to use its software, requiring that a cu7stomer does “not engage Arcesium for Post-Trade Solutions.”

The plaintiff alleged that these practices have helped Advent create a monopoly in the relevant markets. Approximately 70 percent of Complex Funds and 60 percent of Fund Administrators use Geneva. Advent has “the power to control prices and exclude competition” because of “their substantial market share and high barriers to entry in the Relevant Markets.” Plaintiff alleges that defendants’ supracompetitive pricing against Arcesium, non-renewal, and termination of their agreement, failure to honor Arcesium’s Continuation Rights, and implementation of new limits on consumers constitutes exclusionary and anticompetitive conduct and caused harm to the plaintiff and others in the market.

Arcesium similarly accused Advent of violating section 3 of the Clayton Act for its “anticompetitive, predatory, and exclusionary behavior” by terminating their 2015 Agreement, failing to honor Arcesium’s Continuation Rights, creating new licensing and renewal limitations, among other anticompetitive conduct in an alleged attempt to exclude competition, maintain their large market share and control prices.

Plaintiff has sought injunctive relief; a declaration that Arcesium is not in breach of the 2015 Agreement; an award for compensatory and punitive damages, disgorgement of profits, attorneys’ fees and costs; an award for treble damages; pre and post judgment interest; and other relief as determined by the court.

The suit is filed in the Southern District of New York. Arcesium is represented by Debevoise & Plimpton.