Truck component makers Meritor and Eaton have reached a settlement agreement relating to an antitrust lawsuit filed in 2006.

Under the terms of the agreement, Eaton has agreed to pay $500 million to ZF Meritor, a joint venture between a Meritor subsidiary and ZF Friedrichshafen AG, and Meritor Transmission. Meritor will receive net proceeds of $209 million.  ZF Meritor and Meritor Transmission have agreed to dismiss all pending antitrust litigation with Eaton. 

The settlement agreement is subject to ZF Friedrichshafen AG corporate approval, which is expected to occur in early July. Meritor expects to receive proceeds from the settlement on or about July 15.

In 2009 a U.S. District Court jury has ruled in favor of ZF Meritor and Meritor Transmission in the companies' antitrust lawsuit against Eaton. The court concluded that Eaton engaged in exclusionary and anticompetitive conduct in the sale and marketing for heavy-duty truck transmissions. In 2006, ZF Meritor and Meritor Transmission filed an antitrust lawsuit against Eaton, accusing its competitor of engaging in anticompetitive conduct.

"We have reached an agreement with Eaton that we believe is in the best interests of the company and our shareholders. We'll use these proceeds to accelerate our efforts to achieve our balance sheet goals under our M2016 plan," said Meritor's Chairman and CEO, Ike Evans. "This is an important outcome for Meritor that delivers significant benefits to the company, our shareholders and our customers.  We are successfully putting this lawsuit behind us as we continue to execute on our plan to drive value for all shareholders."

"It is in the best interests of Eaton shareholders to settle this matter," said Alexander M. Cutler, Eaton chairman and chief executive officer. "The settlement results in a permanent resolution of the matter and removes the uncertainty of a trial and a lengthy appeal process."

Meritor said it has determined that it will use the $209 million of net proceeds from the settlement to pre-fund the next three years of mandatory pension contributions in its United States and United Kingdom pension plans, "consistent with the company's efforts to de-risk its pension obligations and continue to strengthen its balance sheet."

"With the proceeds from the Eaton lawsuit deployed to pre-fund pension contributions, the company now expects to achieve this target in the second half of calendar year 2015," Meritor said in a statement.