* Z.F. Meritor made claims on heavy truck transmissions
* Eaton appealed to Supreme Court
By Lawrence Hurley and Diane Bartz
WASHINGTON, April 29 The U.S. Supreme Court on
Monday left intact a jury verdict against electrical and
hydraulic systems maker Eaton Corp Plc by declining to
hear the company's appeal of antitrust claims made by a rival
over the sale of heavy-truck transmissions.
Z.F. Meritor, a joint venture of Meritor Inc,
indirect subsidiary Meritor Transmission Corp and Z.F.
Friedrichshafen AG, had said Eaton violated antitrust
laws by giving loyalty discounts in the form of rebates to truck
makers who bought more than a certain percentage of parts from
In its claims, Z.F. Meritor focused on long-term
arrangements Eaton had with four truck manufacturers in North
America: Freightliner, International Truck and Engine Corp,
PACCAR Inc and Volvo Group.
The agreements also required the manufacturers to price
Eaton's transmissions more favorably than Meritor's when both
options were made available to purchasers.
"Although we understand that very few petitions are granted
by the Supreme Court, we are disappointed that the court decided
not to review our appeal," Eaton said in an emailed statement.
Meritor said it was pleased with the Supreme Court's refusal
to take up the case.
Companies with big market shares may reconsider rebates and
other efforts to keep customers when new rivals emerge.
"Monopolists may become more wary of engaging in loyalty
discounts in response to entry competition," said Steven Salop,
law and economics professor at Georgetown University Law Center.
Only companies with huge market shares are likely to be
affected by the Supreme Court's decision to refuse to take the
case, said John Briggs, an antitrust expert with the firm Axinn
Veltrop Harkrider LLP.
"This is not a pressing issue except for a small set of
companies," said Briggs. "I don't believe the market had any
meaningful expectation that this would be granted."
A jury in Delaware federal court ruled against Eaton. A
three-judge panel of the 3rd U.S. Circuit Court of Appeals in
Philadelphia upheld the finding on a 2-1 vote.
Eaton sought Supreme Court review, arguing that Meritor had
failed to show the deals led to the products being sold below
cost, a key way of establishing antitrust liability.
Judge Morton Greenberg, the dissenting 3rd Circuit judge,
wrote in his opinion that Meritor had neither alleged nor proved
that Eaton engaged in below-cost pricing.
Meritor said it was not required to make that claim in order
to prove that Eaton was violating antitrust laws.
Meritor's stock rose 8 percent to $4.87 and shares of Eaton
were 4 percent higher at $61.05. Eaton earlier reported a
better-than-expected 28 percent rise in operating profit
The case is Eaton Corp v. Z.F. Meritor, U.S. Supreme Court,