FTC’s Vote Shows Right to Repair’s Bipartisan Face
Five FTC Commissioners - 3 Democrats and 2 Republicans - voiced unanimous support for the right to repair. Their comments say a lot about where the fight is headed.
There are very few issues these days that bring law makers and political appointees across the aisle to join hands. Certainly human tragedies like the Surfside, Florida condominium collapse, or the devastating wildfires in California and Oregon can do it. Though - even then - we find ways to quibble over the causes of the tragedy that ultimately devolve to political and ideological disputes.
That’s why it was so surprising, last week, to see the five-member Commission - split between Democrats and Republicans - come together and speak (mostly) with one voice on a policy matter that is of great importance: the right to repair. It’s all the more impressive because the right to repair pits the interests of consumers and small businesses against those of large manufacturers and corporations. That’s typically the kind of issue that exacerbates familiar divisions between the political left and right in the United States.
But no. The FTC’s vote on Wednesday commits it to “target(ing) repair restrictions that violate antitrust laws enforced by the FTC or the FTC Act’s prohibitions on unfair or deceptive acts or practices,” according to a Commission statement. The Commission is also urging the public to submit complaints of violations of the Magnuson-Moss Warranty Act. Among other things: that law prohibits tying a consumer’s product warranty to the use of a specific service provider or product, unless the FTC has issued a waiver.
Kumbaya, My Commissioner. Kumbaya!
The ruling saw appointees from both sides of the aisle signaling their opposition to exploitive, anti-repair practices. FTC Chair Lina Khan, who was appointed by President Biden as Chair of the Commission, called attention to the findings of the FTC’s own Nixing the Fix report and reporting that have documented “a whole set of practices” that limit repair “including limiting the availability of parts and tools, using exclusionary designs and product decisions that make independent repairs less safe, and making assertions of patent and trademark rights that are unlawfully over-broad.”
“These types of restrictions can significantly raise costs for consumers, stifle innovation, close off business opportunity for independent repair shops, create unnecessary electronic waste, delay timely repairs, and undermine resiliency,” Khan said in a written statement. (PDF)
Commissioner Chopra, another Democratic member appointed by President Trump, called attention to the COVID pandemic in a written statement (PDF) and the ways in which constrained markets for repairs had hampered everything from the availability of life-saving medical equipment to laptops and tablets needed for remote learning.
“The business incentive for makers of equipment and devices is to figure out how they can extract recurring revenue or to induce new purchases, rather than allow families and businesses to reap the benefits of an open and competitive repair market,” he wrote.
“This isn’t just about saving money. When laws go unenforced, we weaken our country by making us less resilient and less able to meet our basic needs.” He also called attention to the disparate impact of repair restrictions on the most economically vulnerable in society. “Unreasonable restrictions on repairs can hit communities of color and rural communities doubly hard, both as consumers and as entrepreneurs.”
“To the extent consumer protection is used as a veneer for eradicating competition in the consumer goods repair market, the FTC must be prepared to step in and act.”
— FTC Commissioner Wilson
It is not too surprising to hear Democratic commissioners voice opinions questioning the ill effects of unchecked corporate power or industry consolidation. What’s more surprising are some of the comments coming from Republican members.
In her remarks prior to the vote, for example, Commissioner Christine Wilson called bulls**t on industry talking points on issues like safety and cyber security.
“To the extent consumer protection is used as a veneer for eradicating competition in the consumer goods repair market, the FTC must be prepared to step in and act,” she said (PDF). That’s a clear shot across the bow to companies that make inflated claims about issues like safety or cyber security. “I support law enforcement efforts to challenge companies that violate laws under our authority, including both our consumer protection and competition authority. I also support coordinating with state
officials – both legislators and enforcers – as well as other policy makers to advance the goal of providing more choice when it comes to repairs,” Wilson said in her comments.
Her Republican colleague, Noah Joshua Phillips also voiced support for the Commission’s ruling on right to repair, which passed 5-0.
According to the FTC’s policy statement (PDF) following the vote, the Commission will be taking a number of actions. In addition to asking the public to report companies that are violating the Magnusson Moss Warrant Act, the Commission will scrutinize repair restrictions for violations of the antitrust laws like the Sherman Act and Section 5 of the Federal Trade Commission Act. Those includes repair restrictions that constitute illegal tying arrangements or monopolistic practices like “refusals to deal, exclusive dealing, or exclusionary design,” the FTC said. (Spoiler alert: there are a lot of those out there.)
The Commission will also be looking at whether repair restrictions and any “material claims” made to consumers constitute unfair acts or practices prohibited by Section 5 of the Federal Trade Commission Act. The Commission said it would use all its enforcement powers and 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.”
Of course, its possible to get carried away with visions of a lasting bi-partisan consensus on anything, including repair. And there’s reason to be skeptical that the high level support offered by Commissioners Wilson and Phillips will translate into support for specific FTC actions when deep disagreements about the need and limits of regulatory intervention remain.
In her comments, for example, Wilson signaled support for repair restrictions when they are deemed necessary to protect intellectual property (IP). “Manufacturers have intellectual property rights that may provide legitimate justification for some repair restrictions,” she wrote. She also signaled opposition to any rulings that would ban “exclusionary design choices” and changes that “exclude competitors or otherwise undermines competition.” Such an approach “would elevate competitors over consumers to protect businesses that do not offer a desired product or service and ultimately would stifle innovation,” she said. In her comments, Wilson suggested that the Commission, courts and Congress should be deferential to companies’ right to innovate and modify their products and offerings as they see fit.
Companies, no doubt, will take note of Wilson’s language. Going forward, expect to hear a lot more arguments about how restrictions are necessary for “innovation” and how opening their products to allow repair violates their IP rights. Expect arguments about how demands for access to software updates, schematics and other data (think: vehicle telematics) are unlawful impositions on their rights to innovate.
Still, the current 3-0 Democratic majority and the leadership of newly appointed Chairwoman Lina Khan make it unlikely that arguments like those will prevail - at least at the FTC. Still, the 5-0 vote and the generally supportive language from both Democratic and Republican Commissioners should be read as a strong endorsement of right to repair and evidence of a growing left/right consensus that concentrations of corporate power in sectors like agriculture, healthcare and consumer electronics need to be reined in.