The dynamics of the Local Group and its environment provide a unique c
hallenge to cosmological models. The velocity field within 5h(-1) Mpc
of the Local Group (LG) is extremely ''cold''. The deviation from a pu
re Hubble flow, characterized by the observed radial peculiar velocity
dispersion, is measured to be similar to 60 km s(-1). We compare the
local velocity field with similarly defined regions extracted from N-b
ody simulations of Universes dominated by cold dark matter (CDM). This
test is able to strongly discriminate between models that have differ
ent mean mass densities. We find that neither the Ohm=1 (SCDM) nor Ohm
=0.3 (OCDM) cold dark matter models can produce a single candidate Loc
al Group that is embedded in a region with such small peculiar velocit
ies. For these models, we measure velocities dispersion between 300-70
0 km s(-1) and 150-300 km s(-1), respectively, more than twice the obs
erved value. Although both CDM models fail to produce environments sim
ilar to those of our Local Group on a scale of a few Mpc, they can giv
e rise to many binary systems that have similar orbital properties as
the Milky Way-Andromeda system. The local, gravitationally induced bia
s of halos in the CDM ''Local Group'' environment, if defined within a
sphere of 10 Mpc around each Local Group is similar to 1.5, independe
nt of Ohm. No biasing scheme could reconcile the measured velocity dis
persions around Local Groups with the observed one. Identification of
binary systems using a halo finder (named Skid(7)) based on a local de
nsity maxima search instead of a simple linking algorithm, gives a muc
h more complete sample. We show that a standard ''friend-of-friends''
algorithm would miss about 40% of the LG candidates present in the sim
ulations. (C) 1997 Elsevier Science B.V.