ST. PAUL, Minn. - RDO Equipment and John Deere Construction Equipment have been ordered to proceed to arbitration after a hearing on RDO's lawsuit that Deere violated a Minnesota law by taking steps to terminate its dealership agreements with RDO.

The suit, filed in Minnesota state court in July, sought unspecified monetary damages and a ruling that the Deere unit does not have the right to end the agreement under the state's Heavy and Utility Equipment Manufacturers and Dealers Act.

The suit alleged that Deere's actions are based on a strategy to own or control a significant portion of its distribution channel. Deere & Co. and Credit Suisse First Boston last year formed Nortrax, a joint venture to consolidate the Deere dealer network. Nortrax acquired Neff's dealership business for $91 million in November.

RDO said it received written notice from Deere in June that it would terminate RDO's right to sell Deere construction, utility and forestry equipment in the Burnsville, Minn., and Phoenix markets, effective June 21, 2001. Deere said RDO had violated certain provisions of the agreement, according to RDO.

RDO Equipment, based in Fargo, N.D., sold its Arizona-based RDO Rentals division to United Rental this year, planning to continue the company's expansion, RDO is looking at additional cities and facilities for startups.