By Jerri-Lynn Scofield, who has worked as a securities lawyer and a derivatives trader. She is currently writing a book about textile artisans.
The Federal Trade Commission (FTC) on Wednesday voted 5-0 to issue a policy statement outlining a new enforcement policy for right to repair restrictions.
This initiative comes as no surprise. In May, the FTC published a report , Nixing the Fix: an FTC Report to Congress on Repair Initiatives discussing the issue (see Big Tech Goes All In to Thwart Right to Repair Initiatives). And earlier this month, as part of a broader executive order to promote competition, President Joe Biden directed the FTC to address restrictions that thwart consumer efforts to repair products they own (see Steve Wozniak Endorses the Right to Repair).
The policy statement explained the FTC’s basis and rationale for the new policy:
Restricting consumers and businesses from choosing how they repair products can substantially increase the total cost of repairs, generate harmful electronic waste, and unnecessarily increase wait times for repairs. In contrast, 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.
In 2019, the Commission convened a workshop on “Nixing the Fix” and sought input from consumers, independent businesses, manufacturers, and others. Through this work, the Commission uncovered evidence that manufacturers and sellers may, without reasonable justification, be restricting competition for repair services in numerous ways, including: imposing physical restrictions (e.g., the use of adhesives); limiting the availability of parts, manuals, diagnostic software, and tools to manufacturers’ authorized repair networks; using designs that make independent repairs less safe; limiting the availability of telematics information (i.e., information on the operation and status of a vehicle that is collected by a system contained in the vehicle and wirelessly relayed to a central location, often the manufacturer or dealer of the vehicle); asserting patent rights and enforcement of trademarks in an unlawful, overbroad manner; disparaging non-OEM parts and independent repair; using unjustified software locks, digital rights management, and technical protection measures; and imposing restrictive end user license agreements.
The Commission’s report on repair restrictions explores and discusses a number of these issues and describes the hardships repair restrictions create for families and businesses. The Commission is concerned that this burden is borne more heavily by underserved communities, including communities of color and lower-income Americans. The pandemic exacerbated these effects as consumers relied more heavily on technology than ever before [Jerri-Lynn here: citations omitted].
Noting that “unlawful repair restrictions have generally not been an enforcement priority for a number of years,” the policy statement succinctly outlined the legal steps the FTC will take to enforce the right to repair. These rely on existing statutory authority, including antitrust laws, the Magnuson-Moss Warranty Act, and Section 5 of the Federal Trade Commission Act.
First, the Commission urges the public to submit complaints and provide other information to aid in greater enforcement of the Magnuson-Moss Warranty Act and its implementing regulations. While current law does not provide for civil penalties or redress, the Commission will consider filing suit against violators of the Magnuson-Moss Warranty Act to seek appropriate injunctive relief. The Commission will also closely monitor private litigation to determine whether the Commission may wish to investigate a pattern of unfair or deceptive acts or practices or file an amicus brief. Further, the Commission will explore rulemaking, as appropriate.
Second, the Commission will scrutinize repair restrictions for violations of the antitrust laws. For example, certain repair restrictions may constitute tying arrangements or monopolistic practices—such as refusals to deal, exclusive dealing, or exclusionary design—that violate the Sherman Act. Violations of the Sherman Act also violate the prohibition on unfair methods of competition codified in Section 5 of the Federal Trade Commission Act.
Third, the Commission will assess whether repair restrictions constitute unfair acts or practices, which are also prohibited by Section 5 of the Federal Trade Commission Act. In addition, the Commission will analyze any material claims made to purchasers and users to ascertain whether there are any prohibited deceptive acts or practices, in violation of Section 5 of the Federal Trade Commission Act.
Finally, the Commission will bring an interdisciplinary approach to this issue, using resources and expertise from throughout the agency to combat unlawful repair restrictions. The FTC will also closely coordinate with state law enforcement and policymakers to ensure compliance and to update existing law and regulation to advance the goal of open repair markets [Jerri-Lynn here: citations omitted].
Note that FTC promise to work with states on both enforcement and on drafting state right to repair laws. The right to repair movement has been steadily advancing at the state level, with 27 states considering such laws so far this year, according to a press release issued by U.S. PIRG, a public interest group that has spearheaded many of these initiatives. FTC support will help galvanise these efforts. Once one state passes such a measure, manufacturers may “voluntarily” extend the protections countrywide – as happened when Massachusetts passed an auto right to repair provision in 2013 (see Right to Repair Redux: Massachusetts Ballot Questions).
Bravo FTC. I hope this is just the first of many pro-consumer policies that will emerge from an active, energized agency under the leadership of new chair Lina Khan (see Biden Taps Lina Khan to Chair the FTC). Enforcement of the right to repair was an issue teed up and ready to be implemented, due to previous preparatory work done before Khan’s appointment. The new policy statement enjoys the unanimous support of all five FTC commissioners.