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Heavy Duty Truck Transmission Antitrust Suit Picks Up Speed In Delaware

Posted  October 20, 2011

Federal Judge Sue L. Robinson in the District of Delaware has given the go-ahead to a suit alleging truck manufacturers conspired to create and maintain a monopoly with supracompetitive prices in the market for heavy duty truck transmissions.

Judge Robinson has denied the defendants’ motion to dismiss the complaint in Wallach v. Eaton Corp.

The class action, brought by Mark S. Wallach, the bankruptcy trustee for Performance Transportation Services Inc., and Tauro Bros. Trucking Co., alleged that defendants conspired to create and maintain Eaton’s monopoly in violation of Sections 1 and 2 of the Sherman Act and Section 3 of the Clayton Act.  Defendant Eaton is a manufacturer of heavy duty truck transmissions.  The other named defendants are original equipment manufacturers (OEMs) that purchase transmissions.  It is alleged that all defendants shared in the increased profits earned by Eaton.

The complaint alleges that in response to both a downturn in the market for heavy duty trucks and increased sales by Eaton’s competitor, ZF Meritor, the OEMs and Eaton conspired to remove ZF Meritor from the transmission market.

The alleged monopolization was enacted through the use of long term agreements.  Under these agreements, Eaton gave discounts and rebates to the co-defendants in exchange for their purchasing of transmissions exclusively from Eaton.  The agreements were allegedly de facto exclusive dealing contracts that forced ZF Meritor to leave the market for heavy duty truck transmissions.  According to the complaint, this enabled Eaton to charge higher prices to OEMs that were not members of the conspiracy.

Ruling that there was sufficient evidence to suggest both a conspiracy and the maintenance of increased prices, Judge Robinson ruled that the Sherman Act claims should proceed, though she dismissed the Clayton Act claim.

This litigation follows a suit in front of Judge Robinson in which ZF Meritor successfully proved antitrust violations by Eaton.  However, no damages were awarded in that case.

Tagged in: Antitrust Litigation, Monopolization,