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FTC Votes to Prioritize Consumers’ Right to Repair Products (1)

July 21, 2021, 6:26 PM; Updated: July 21, 2021, 8:24 PM

The FTC unanimously approved a new policy to prioritize enforcement against manufacturers that make it difficult for consumers to fix products on their own or use a third-party repair shop.

The new policy calls on the public to submit violations of the Magnuson-Moss Warranty Act. The law prohibits manufacturers from imposing certain conditions—such as requiring consumers to buy their own brand equipment or after-purchase maintenance services—in providing warranty coverage. The agency would consider filing suit against violators or investigating patterns of problematic behavior, according to the policy.

The FTC also will target repair restrictions “that violate antitrust laws or the FTC Act prohibiting unfair or deceptive acts or practices,” Federal Trade Commission Chair Lina Khan said at a meeting Wednesday. .

“While efforts by dominant firms to restrict repair markets are not new, technology and more prevalent use of software created fresh opportunities for companies to limit independent repair,” Khan said.

The consensus vote comes after President Joe Biden asked the FTC to crack down on repair restrictions—particularly those impacting farmers—in his sweeping July executive order encouraging greater competition.

Opponents of repair restrictions argue they increase costs and limit a consumer’s choice of repair to the original manufacturer.

“Providing more choice in repairs can lead to lower costs, reduce e-waste by extending the useful lifespan of products, enable more timely repairs, and provide economic opportunities for entrepreneurs and local businesses,” the new policy statement said.

Repairs now often require “specialized tools, difficult-to-obtain parts, and access to proprietary diagnostic software,” according to a May FTC report to Congress. The restrictions are especially problematic among mobile phone and car manufacturers, it said.

The restrictions especially burden lower-income communities and communities of color, which are more smartphone-dependent and who own more small repair shops, the report said.

‘Misguided Solution’

Manufacturers contend the restrictions are meant to protect their intellectual property rights and prevent shoddy repairs. Right to repair is “a misguided solution in search of a problem that simply does not exist,” the National Association of Manufacturers wrote in its comment letter to the FTC ahead of the Wednesday meeting.

NAM argued loosening repair restrictions would endanger consumers.

Consumers and third-party shops have sufficient information to maintain and repair their products, NAM said. The only information not available to them is coding that is proprietary and not related to repairs, or that is needed to maintain government-mandated safety and compliance standards, the group said.

“Put simply, farmers and other purchasers have not reported experiencing the significant barriers to equipment maintenance and repair that would necessitate drastic regulatory action to implement Right to Repair,” NAM’s comment letter said.

Commissioner Christine Wilson, a Republican on the five-member panel, acknowledged manufacturers’ IP rights “foster innovation by protecting investment in research and development.” The FTC will further consider IP issues in right to repair, she said.

The commission needs to take action beyond ramping up enforcement, such as assisting state and federal policymakers in crafting right to repair laws, Commissioner Rohit Chopra said in a separate statement.

The FTC should also work with other agencies to reform procurement policies that subject government buyers to repair restrictions, he said. Additionally, Chopra said the agency needs to engage with independent repair shops to solicit complaint about manufacturers and improve the user experience on reportfraud.ftc.gov.

The FTC also voted Wednesday to strengthen pre-merger notifications for certain companies that have been subject to consent decrees from previous deals.

The agency’s panel also voted to maintain rules on including care instructions on clothing.

(Updated with additional reporting throughout.)

To contact the reporter on this story: Claire Hao at chao@bloombergindustry.com

To contact the editors responsible for this story: Laura D. Francis at lfrancis@bloomberglaw.com; Roger Yu at ryu@bloomberglaw.com

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