ZF Meritor and Meritor Transmission Corp. have filed an antitrust lawsuit against Eaton Corp. seeking an injunction prohibiting Eaton from engaging in anticompetitive conduct and asking treble monetary damages.
The lawsuit alleges that Eaton offered truck manufacturers “lucrative rebates and share penetration incentives” in an attempt to divert purchasers of ZF Meritor transmissions to Eaton transmissions. It also alleges that Eaton threatened one or more OEMs with price retaliation if they purchased ZF Meritor transmissions and that it required truck manufacturers to exclude ZF Meritor transmissions from their sale materials and/or penalize customers with higher prices or other punitive measures if they specified ZF Meritor transmissions.
The end result, according to the lawsuit, was to harm competition in the markets by “limiting consumer choice, eliminating competitive checks in pricing and suppressing innovation.” 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 says it has been forced to stop selling transmissions because of Eaton’s actions.
“It is unfortunate that we have reached this point,” said ArvinMeritor Chairman, CEO and President Chip McClure. “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.”
“Eaton has competed in a fair and vigorous manner in heavy duty truck transmissions,” the company said in a statement issued just after the suit was filed. “Our customers chose to purchase transmissions from Eaton because we provided superior value, innovation and service.” At the time Eaton had no comment on specifics of the lawsuit but said it expects to vigorously defend its position.
The suit makes no mention of the long-simmering patent battle between the two companies. That goes back to 1997 when Eaton filed suit against ArvinMeritor’s predecessor, Rockwell International, charging that its Synchro Shift (ESS) transmission – offered prior to ZF Meritor’s FreedomLine system -- infringed on Eaton patents. Eaton initially won that case but a Federal Appeals Court overturned the decision. Last year the International Trade Commission, acting on a complaint brought by Eaton, issued a limited exclusion order blocking the importation of the FreedomLine because it infringed on an Eaton patent; but the commission later OK’d U.S. sales of a redesigned FreedomLine.
ArvinMeritor says their antitrust suit is similar but not related to a lawsuit filed last month by Freightliner LLC charging General Motors with “predatory and discriminatory” activities related to the sale of heavy duty automatic transmissions. In that case, Freightliner alleges that GM, through its Allison Transmission division, is leveraging its “monopoly” status in niche markets such as diesel-powered buses, recreational vehicles and walk-in vans, to squeeze out new competitors and boost its share in other markets, such as heavy duty on-highway trucks. Freightliner subsidiary Thomas Built Buses is a plaintiff in the suit.
According to ArvinMeritor, Eaton’s current share of the market for transmissions in Class 8 linehaul trucks is around 95 percent. Meritor once held a 22 percent share but that has dwindled to approximately 4 percent. Meritor, it says, now markets only a small number of automated manuals and 10-speed manuals and will exit the manual market next year.
The lawsuit alleges that Eaton offered truck manufacturers “lucrative rebates and share penetration incentives” in an attempt to divert purchasers of ZF Meritor transmissions to Eaton transmissions. It also alleges that Eaton threatened one or more OEMs with price retaliation if they purchased ZF Meritor transmissions and that it required truck manufacturers to exclude ZF Meritor transmissions from their sale materials and/or penalize customers with higher prices or other punitive measures if they specified ZF Meritor transmissions.
The end result, according to the lawsuit, was to harm competition in the markets by “limiting consumer choice, eliminating competitive checks in pricing and suppressing innovation.” 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 says it has been forced to stop selling transmissions because of Eaton’s actions.
“It is unfortunate that we have reached this point,” said ArvinMeritor Chairman, CEO and President Chip McClure. “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.”
“Eaton has competed in a fair and vigorous manner in heavy duty truck transmissions,” the company said in a statement issued just after the suit was filed. “Our customers chose to purchase transmissions from Eaton because we provided superior value, innovation and service.” At the time Eaton had no comment on specifics of the lawsuit but said it expects to vigorously defend its position.
The suit makes no mention of the long-simmering patent battle between the two companies. That goes back to 1997 when Eaton filed suit against ArvinMeritor’s predecessor, Rockwell International, charging that its Synchro Shift (ESS) transmission – offered prior to ZF Meritor’s FreedomLine system -- infringed on Eaton patents. Eaton initially won that case but a Federal Appeals Court overturned the decision. Last year the International Trade Commission, acting on a complaint brought by Eaton, issued a limited exclusion order blocking the importation of the FreedomLine because it infringed on an Eaton patent; but the commission later OK’d U.S. sales of a redesigned FreedomLine.
ArvinMeritor says their antitrust suit is similar but not related to a lawsuit filed last month by Freightliner LLC charging General Motors with “predatory and discriminatory” activities related to the sale of heavy duty automatic transmissions. In that case, Freightliner alleges that GM, through its Allison Transmission division, is leveraging its “monopoly” status in niche markets such as diesel-powered buses, recreational vehicles and walk-in vans, to squeeze out new competitors and boost its share in other markets, such as heavy duty on-highway trucks. Freightliner subsidiary Thomas Built Buses is a plaintiff in the suit.
According to ArvinMeritor, Eaton’s current share of the market for transmissions in Class 8 linehaul trucks is around 95 percent. Meritor once held a 22 percent share but that has dwindled to approximately 4 percent. Meritor, it says, now markets only a small number of automated manuals and 10-speed manuals and will exit the manual market next year.
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