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ZF Meritor, LLC v. Eaton Corp.

United States Court of Appeals for the Third Circuit
696 F.3d 254 (2012)


Facts

Eaton Corporation (Eaton) (defendant) was the leading manufacturer of heavy-duty (HD) truck transmissions. Eaton signed long-term agreements with each of the four HD transmission purchasers in North America (purchasers). The agreements provided rebates to the purchasers if they purchased from Eaton a specified percentage of their overall HD transmission needs. Two of the agreements allowed Eaton to terminate if the purchaser did not meet the specified percentage. Additionally, each agreement required the purchaser to publish Eaton as the standard HD transmission offering in its data book, a key reference source for truck buyers. Two of the agreements required the purchasers to remove Eaton’s competitors’ equipment from the purchasers’ data books. Finally, the agreements required the purchasers to offer preferential pricing for Eaton’s transmissions. ZF Meritor, LLC and Meritor Transmission Corporation (collectively, ZF) (plaintiffs) were competitors of Eaton. After Eaton signed the agreements, ZF had a market share of 8 percent. ZF brought an antitrust suit against Eaton alleging that Eaton had used its dominant market position to induce the purchasers into entering de facto exclusive dealing agreements. ZF’s market share further declined after it filed suit, and ZF eventually left the market. After a trial, the jury found in ZF’s favor. The district court denied Eaton’s motion for judgment as a matter of law, and Eaton appealed. On appeal, Eaton did not dispute that it had monopoly power in the relevant market, but it argued that ZF failed to prove anticompetitive conduct because ZF did not show that Eaton had priced its transmissions below its costs.

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Issue

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Holding and Reasoning (Fisher, J.)

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Dissent (Greenberg, J.)

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