Aftermarket

Federal Judge Orders Truck Transmission Antitrust Case to Proceed

October 13, 2011

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Plaintiffs cleared another hurdle in their antitrust lawsuit against truck manufacturers -- Wallach v. Eaton Corp -- when a Delaware federal judge ruled that claims alleging the trucking giants conspired to create a monopoly should stand.


The class action lawsuit was filed by the trustee for Performance Transportation Services Inc., the second-largest transporter of new vehicles and light trucks in North America before its bankruptcy in 2007.

The lawsuit charged that Daimler Trucks North America LLC, Mack Trucks Inc., Peterbilt Motors Co. and Volvo Trucks North America conspired to create a monopoly and used exclusionary contracts to maintain a monopoly by Eaton Corp. in the market for transmissions used in large trucks. The lawsuit charged that conspiracy violates the Sherman Antitrust Act and Clayton Act.

U.S. District Judge Sue L. Robinson recently ruled that all claims under the Sherman Act should proceed. Defendants had filed motions to dismiss the complaint.

The judge ruled that there is sufficient evidence to suggest that the trucking manufacturers conspired with Eaton to form and continue the illegal scheme to put Eaton's competitors out of business and raise prices for truck purchasers. The effect of the agreements was to expand Eaton's monopoly and permit "all defendants to share in the profits resulting from this monopoly," the judge said.

The evidence shows that Eaton gave discounts and rebates to the trucking manufacturers in exchange for their agreement to exclusively use Eaton's transmissions, Robinson said. "The allegations suggest that each party needed to fully participate in order for the conspiracy to succeed," the judge ruled.

The plaintiffs contend the conspiracy resulted in higher prices and less innovation in the trucks they purchased.

The case will next move to the discovery phase, where plaintiffs will have to prove the merits of their case. Much of the current action appears to be based on the ZF Meritor case, in which Judge Robinson recently rejected Meritor's damages case in its entirety and entered a final judgment of $0 damages. Both sides are appealing that decision.

Speaking for Eaton, James W. Parks, manager of business communications, said, "Eaton believes that it has, at all times, competed fairly and lawfully, and consistent with company policy, will not comment further on pending litigation."

Similar Action in Kansas

In October 2010, a class action complaint was filed in the U.S. Court for the District of Kansas on behalf of a nationwide class of Class 8 truck purchasers alleged that Eaton cut deals with truck makers to keep other transmission makers out of the market, particularly ZF Meritor, which was forced out of the market.

ZF Meritor is a joint venture of ArvinMeritor and ZF Friedrichshafen AG formed in 1999. Although ZF Meritor still exists as a legal entity, ArvinMeritor has said it was forced to stop selling transmissions because of Eaton's actions.

Because of this, the suit claims, truck buyers paid more than they would have if there had been serious competition.

A year earlier, a jury determined that Eaton's exclusivity agreements with the OEMs "constituted a contract, combination, or conspiracy that unreasonably restrained trade," the complaint notes, in the case ZF Meritor LLC and Meritor Transmission Corporation v. Eaton Corporation. ArvinMeritor prevailed in that action.

For more information about the case, visit www.cohenmilstein.com

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