‘Scant Evidence’ to Justify OEM 3rd-Party Repair Curbs: FTC

Manufacturer repair restrictions have “diluted the effectiveness” of consumer protections in the 1975 Magnuson-Moss Warranty Act (MMWA), steering consumers into manufacturers’ repair networks “or to replace products before the end of their useful lives,” said the FTC’s long-awaited report to Congress on manufacturers’ efforts to inhibit third-party independent repairs. The “Nixing the Fix” report, in which the agency said it will consider “reinvigorated regulatory and law enforcement options” to address the problem, comes just under two years after the agency convened a workshop under the name (see 1907160058). The report was released Thursday with unanimous support from all four commissioners. See our news bulletin here.

The commission found “scant evidence to support manufacturers’ justifications for repair restrictions.” The specific changes that repair advocates seek to address the restrictions, including access to information, manuals, spare parts and tools, “are well supported by comments submitted for the record and testimony provided at the Workshop,” it said.

Though the automotive industry took “important steps to expand consumer choice” on independent repair, “other industries that impose restrictions on repairs have not followed suit,” said the report. In addition to taking actions under its authority to address repair abuses, the FTC “stands ready to work with legislators, either at the state or federal level, to ensure that consumers and independent repair shops have appropriate access to replacement parts, instructions, and diagnostic software,” it said.

The FTC report is "a great step in the right direction,” said iFixit CEO Kyle Wiens. His company flagged attention to the FTC's impending release of the report more than a week ago. The report shows that the FTC "knows that the market has not regulated itself, and is committing to real action," he said. IFixit and other right-to-repair advocates are "glad to see the FTC acknowledge the scope of the problem, and the real harm to consumers," said Wiens. "We’re also happy to see the FTC’s pledge to undertake enforcement and regulatory solutions to repair restrictions, and fully support them in doing so. These actions are long overdue."

CTA, which testified at the workshop in opposition to FTC intervention, is reviewing the report, said a spokesperson. Other tech associations that similarly have fought right-to-repair bills in states didn't respond to questions.

The agency has “a number of authorities it can and should deploy to address repair restrictions and help open repair markets,” including enforcing existing requirements under MMWA, said the report. It also could challenge a manufacturer’s use of a repair restriction as an “unfair practice” under Section 5 of the 1914 FTC Act if the repair restriction causes “substantial injury,” it said. There also may be “specific circumstances” in which the commission could address repair restrictions as antitrust violations, it said.

The agency could also weigh a rulemaking to “declare certain types of repair restrictions illegal,” by revising its MMWA “interpretations” to make clear that certain repair restrictions “could violate the MMWA’s anti-tying provision,” it said. “Such an amendment would put all parties on notice that certain repair restrictions that have the effect of limiting consumer repair choices are illegal.” It conceded that an MMWA reinterpretation would be no “panacea.” The law's anti-tying provision, except under certain available waivers, bars manufacturers from “conditioning warranty coverage on the consumer’s use of an article or service identified by brand, trade, or corporate name, unless the warrantor provides that article or service without charge.”

The agency could also pursue an FTC Act rulemaking to require “a complex assessment of the variety of repair restrictions, their widespread use by multiple industries, the rationale for the restrictions, and the interplay of repair restrictions with statutorily created intellectual property rights,” said the report. Amid worries about the “potential harm to consumers” and the “inefficiency of ex post enforcement,” the agency may decide “it is worth the investment of its energy and attention to pursue rulemakings in this area,” it said.

Right-to-repair laws are on the books in three states, and have been introduced in 20 more in the past few years, said the report. All generally track “model legislation” proposed by the Repair Association to make parts, tools and manuals available to independent repair shops.