ArvinMeritor seeks injunction against Eaton in transmission battle

TROY, Mich. — The back-and-forth legal tussle between ArvinMeritor and Eaton Corp. over each company’s automated mechanical transmissions has escalated to a higher level and is headed back to court. This time ZF Meritor LLC, a venture between ArvinMeritor and ZF Friedrichshafen AG, and Meritor Transmission Corporation, an ArvinMeritor company, have filed an antitrust lawsuit against Eaton.

The companies are “seeking an injunction prohibiting Eaton from engaging in anticompetitive conduct in the markets for heavy-duty truck transmissions and have asked the court to award treble damages, as authorized by federal antitrust laws,” according to a press release from ArvinMeritor.

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

The lawsuit alleges that Eaton has engaged in anticompetitive 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 alleges that Eaton’s conduct forced ZF Meritor, though still a legal entity, to cease operations.

While that joint venture is no longer active, ArvinMeritor is still making the ZF-designed FreedomLine automated mechanical transmission at its Laurinburg, N.C., facility. In August, Tom Gosnell, former president of the company’s Commercial Vehicle Systems business unit, said the
company would “…place greater emphasis on the sales and marketing of the FreedomLine” while discontinuing the manufacture of Meritor manual transmissions, effective Jan. 2007, “…due to dynamics that have severely limited the company’s addressable markets.”

ArvinMeritor and ZF were cleared by the International Trade Commission earlier this year in a patent infringement suit brought on by Eaton. The latter had claimed that the FreedomLine gearbox infringed on various patents for its competing AutoShift and UltraShift automated transmissions.

But the ITC essentially agreed with ArvinMeritor that the compliant was unjustified, aside from one particular claim within one particular Eaton patent. “[That] pertains to a non-critical aspect of the transmission, which is not integral to its operation,” Gosnell said at the time. “In anticipation of this expected order… ZF redesigned the transmission software to comply with the ruling.”

Eaton’s only comment on the ZF Meritor lawsuit was issued in this prepared statement:

• 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.

• We will not be in a position to consider commenting further until we have read the lawsuit. We expect to vigorously defend our position.

To view a copy of the lawsuit, see www.arvinmeritor.com/faircompetition.

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