Meritor files anti-trust lawsuit against Eaton

| Monday, October 09, 2006

ZF Meritor and Meritor Transmission Corp. has filed an antitrust lawsuit against Eaton Corp. in the U. S. District Court for the District of Delaware.

In 1989, Meritor began selling heavy-duty transmissions in competition with Eaton. For a decade, Eaton allegedly engaged in anticompetitive conduct to stunt Meritor’s sales. However, by 1999, Meritor had a 16 percent share of the heavy-duty transmission market, according to the lawsuit.

Meritor partnered with ZF Friedrishshafen AG in 199. Later, the joint venture developed the first fully automated, two-pedal manual transmission.

“The successful launch of this innovative product would increase ZF Meritor’s sales and position,” the lawsuit claimed.

However, Eaton allegedly took a series of exclusionary actions designed to reduce consumer access to ZF Meritor transmissions. Among the actions alleged in the suit was that Eaton officials negotiated de facto exclusive contracts, closing ZF Meritor out of 90 percent of heavy-duty transmission sales.

The companies want the court to prohibit Eaton from engaging in anticompetitive practices in the markets for heavy-duty truck transmissions. They also asked the court to award damages three times as great as the amount of proven financial harm, as authorized by federal antitrust laws.

“It is unfortunate that we have reached this point. We have filed this lawsuit to protect competition, our shareholders, and heavy-duty truck buyers. In a market without competition, innovation languishes, choice evaporates and prices increase,” Chip McClure, chairman, CEO and president of ArvinMeritor, said in a statement.

Eaton released an official statement regarding Meritor’s lawsuit.

“Eaton has competed in a fair and vigorous manner in heavy-duty truck transmissions. Our customers chose to purchase transmissions from Eaton because we provided superior value, innovation and service,” Eaton officials said in the official company statement. “We will not be in a position to consider commenting further until we have read the lawsuit. We expect to vigorously defend our position.”

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