FTC “Nixing The Fix” Report

FTC “Nixing The Fix” Report

The debate around repair restrictions illustrates the limitations of MMWA’s anti-tying provision in repair markets. While the anti-tying provision gives consumers the right to make repairs on their own or through an independent repair shop without voiding a product’s warranty, repair restrictions have made it difficult for consumers to exercise this right. Although manufacturers have offered numerous explanations for their repair restrictions, the majority are not supported by the record.

• How manufacturers may limit repairs by consumers and repair shops, and how those limitations may increase costs, limit choice, and impact consumers’ rights under the Magnuson-Moss Warranty Act
  • The statute is remedial and is intended to protect consumers from deceptive warranty practices
    Consumer products are not required to have warranties, but if one is given, it must comply with the Magnuson-Moss Act.
  • Defines definitions and disclosure standards
  • Bars manufacturers from using access to warranty coverage as a way of obstructing consumers’ ability to have their consumer products maintained or repaired using third-party replacement parts and independent repair shops.
• A manufacturer with market power that has refused to provide consumers or aftermarket service providers with key inputs (such as parts, manuals, or diagnostic software and tools) may be subject to antitrust liability for maintaining its monopoly, if the effect of such conduct is to harm competition
  • What ismarket power?
  • A manufacturer that has succeeded in limiting the availability of parts through explicit or de facto exclusive dealing contracts with preferred service providers may be charged with using such contracts to maintain a monopoly
• Repair Restrictions
  • Physical
    • Right to repair advocates argue that consumers care about repairability, in addition to aesthetic design, but do not have the necessary information at the point of sale to purchase products that are repairable
    • iFixit has a repair index for devices
    • Should manufacturers disclose how “repairable” the device is?
    • Reports indicate that consumers would rather have a long lasting device over a “sexy” device.
  • Restrictions on parts, repair manuals, software, tools
  • Designs making repair unsafe
    • manufacturers provided no data to support their argument that injuries are tied to repairs performed by consumers or independent repair shops.
  • Telematics
  • Quality of Service of the Repair Process
    • Dealerships suck in terms of service
    • Mainly covers safety and “proper repairs”
      • Microsoft battery/screw thermal event
      • Microsoft noted that off specification power supply units, which do not meet Microsoft’s quality standards, caused at least 12 “serious overheating incidents” resulting in device damage
    • Right to Repair advocates state that OEMs do this to themselves by not providing proper documentation on repair practices
  • Application of patent rights / Trademarks
  • Disparagement of non-OEM parts
  • Software locks
  • EULAs
  • Liability and Reputational Harm
    • Initial press coverage of failures of consumer devices seldom, if ever, attempts to determine whether the device had been repaired by an independent service provider or refurbished with parts that did not meet OEM standards
    • Follow-up coverage may ultimately identify inferior third-party repairs and parts as the culprit, but this is likely to do little to overcome the initial impression made on consumers
    • Right to repair advocates that manufacturers are creating liability for themselves by withholding information from third parties on how to fix products
      OEMs routinely throw aftermarket suppliers under the bus even if they are the “OEM” part already.
      • Takata Air Bags
    • Manufacturers provided no empirical evidence to support their concerns about reputational harm or potential liability resulting from faulty third party repairs.
• Talking points for right to repair
  • Timing of Repairs
  • Price of repairs
  • Environmental Harm
  • Small Businesses and Employment
• What can the FTC actually do?
  • Revise its Interpretations of the MMWA to
  • Make clear that certain repair restrictions could violate the MMWA
  • Is this like the ATF “reinterpreting the laws”?
  • Self-regulation
    • While industry self-regulation can be beneficial, the broad range of industries and products involved would make it a challenge to create and implement a single self-regulatory scheme. And, aside from the auto industry, no other manufacturing sectors have successfully created and implemented one
      Legislation that implements
  • Could require a manufacturer to make available to individuals and independent repair shops those parts that the manufacturer provides to its authorized repair network, the EU prescribes the types of parts and time period during which the parts must be made available
  • Transparency of Repairability by OEMs/Industry