U.S. Report Finds Anti-Competitive Repair Restrictions

The U.S. Federal Trade Commission (FTC) issued a report finding that product manufacturers engage in anti-competitive repair restrictions and that there is “scant evidence to support manufacturers’ justifications” for their ongoing practices. FTC found numerous types of restrictions imposed, including adhesives that make parts difficult to replace, limiting the availability of spare parts, and making diagnostic software unavailable.

FTC officials say they’re exploring means for expanding consumers’ repair options that will ensure choice among repair products they purchase and own, including working with Congress on new legislation.

The findings of the U.S. independent agency were contained in a report to Congress based on its July 2019 workshop, “Nixing the Fix: A Workshop on Repair Restrictions.” Congress requested a report from the agency, noting that it was aware of ongoing FTC review of the issue, particularly regarding cell phone and vehicle manufacturers.

In its summary of findings, FTC noted that its concern with repair restrictions dates back forty years to testimony in support of legislation that is now the anti-tying restrictions in Section 102(c) of the Magnuson-Moss Warranty Act. Those provisions do not allow a consumer product warranty to require repair by an Original Equipment Manufacturer (OEM) using OEM parts by prohibiting the conditioning of a warranty on the consumer “using any article or service which is identified by brand name unless the article or service is provided for free, or the warrantor obtains a waiver from the FTC.”

The report said that even when a manufacturer does not require that repairs performed under warranty be performed using OEM parts, manufacturers restrict independent repair and repair by consumers through:
Product designs that complicate or prevent repair;
Unavailability of parts or repair information;
Designs that make independent repair less safe;
Policies or statements that steer consumers to manufacturer repair networks;
Application of patent rights and enforcement of trademarks;
Disparagement of non-OEM parts and independent repair;
Software locks and firmware updates; and
End Use License Agreements.

The full report, “Nixing the Fix: An FTC Report to Congress on Repair Restrictions,” is available here.

Over the next few days, glassBYTEs will provide further examinations of the FTC report with a focus on findings regarding vehicle manufacturers and the effects of repair restrictions on small and minority owned businesses.

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