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ZF Mentor sues Eaton alleging misuse of power
Page 18
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ZF MFRITOR, the joint venture formed in 1999 by ArvinMeritors Monitor Transmission Corporation and ZF Friedrichshafen AG, has filed an antitrust lawsuit in the US against rival transmission manufacturer Eaton Corporation.
The action alleges: "Eaton has engaged in anti-competitive conduct that has harmed competition in the markets for heavy-duty truck transmissions by limiting consumer choice, eliminating competitive checks on pricing and suppressing innovation." The lawsuit also claims that Eaton's
conduct forced ZF Monitor, though still a legal entity today, to cease operations.
ZF Mentor claims that after the joint venture was formed, Eaton responded with "a series of exclusionary actions designed to reduce consumer access to ZF Mentor transmissions".
ZF Mentor alleges that Eaton used its dominant position to induce all heavy-duty truck manufacturers to enter into de facto exclusive dealing contracts", accounting for 90% of heavy-duty transmission sales.
As an example, ZF Mentor claims Eaton dislodged its supply agreement with Fneightliner in 2000 by guaranteeing "millions in annual rebates and other incentives" if Freightliner bought 92% of its transmissions from Eaton.
ZF Mentor's shares at Freightliner and sister truck firm Sterling were about 23% and 17% respectively in the fourth quarter of 2000. By the fourth quarter of 2005, this had fallen to 4% and 3%.
Eaton says the lawsuit is "baseless and without merit'.