Court Refuses To Pull The Plug On Savant Systems’ Home Automation Suit Against Creston
A suit by a newcomer in the “smart home” automation market – Savant Systems – against the dominant player in the “smart home” automation market – Crestron Electronics – has survived a second motion to dismiss in federal court in Boston.
Savant Systems has accused its much larger competitor of unlawful exclusionary agreements and market monopolization under the Sherman Act, exclusive dealing in violation of the Clayton Act, unfair competition, and violations of state law.
Savant alleges that Crestron is the largest supplier of high-end home automation systems – equipment that controls everything from audio/video and lighting systems to climate and security, and costs from $25,000 to $100,000 to install – with a market share of over 80 percent.
According to Savant, the market is particularly constrained by the fact that automation products are not sold directly to consumers, but through local dealer networks. The vast majority of these dealers – 80 to 90 percent – are Crestron dealers. Savant says Crestron offers discounts to dealers who refuse to carry Savant and penalizes those who do. According to the complaint, Crestron’s misconduct is exemplified by a recent guide telling dealers, “Remember, you can’t be a Crestron dealer and also sell Savant products.”
Savant has alleged that these and other exclusionary activities are designed to restrain competition by precluding Savant’s access to the dealer network and protect Crestron’s monopoly. The suit also alleges that Crestron published false information about Savant, such as “asserting that only Crestron has an exclusive relationship with Apple . . . .” Other allegedly false statements include Crestron’s warning to customers that “when you buy Savant, you buy Savant – a one-room storefront on Cape Cod – not Apple.”
Judge Harrington of the U.S. District Court for the District of Massachusetts rejected Crestron’s arguments in a two-paragraph order, setting the stage for full-blown discovery and inevitable re-examination at summary judgment. The market for programmable home (and commercial) automation technology, currently more than $200 million annually, appears to be growing rapidly.