Repair Class Action Against Deere The First Shot In a Long Battle
A class action suit says the Moline, IL company created a monopoly by forcing small dealers out of business and restricting owner- and independent repair of its equipment.
A class action lawsuit filed against agricultural equipment giant John Deere is the first salvo in what might be a years-long legal battle to curb anti-competitive practices in the agricultural equipment sector. But victory for farmers and right to repair proponents is by no means assured, say legal experts consulted by Fight to Repair.
The suit, filed this month, alleges the company is violating U.S. anti-trust law by thwarting the ability of farmers to service and repair their own equipment. The company has also artificially restricted the market for authorized repair through a policy of forcing small, independent John Deere dealerships to consolidate or lose their franchise, the lawsuit alleges.
The suit was filed in Federal court in Chicago by Forest River Farms, a North Dakota farm on behalf of John Deere customers who, it claims, “paid artificially inflated prices for Deere Repair Services” as a result of Deere policies that violate the federal Sherman Anti Trust Act. “Prices in the Repair Services Market exceeded the amount they would have paid if the prices had been determined by a competitive market,” the suit alleges.
Deere: An Illegal Repair Monopoly
Deere has created an illegal monopoly on repair services for its equipment, which the suit says should be “enjoined and dismantled” by the courts. Deere customers should also be reimbursed by Deere for the amount they overpaid for Deere Repair Services.
According to the complaint (PDF), Deere violated Section 1 of the Sherman Act by forcing consolidation of its affiliated Dealerships to eliminate inter-brand competition for Repair Services, according to the complaint. It also violated Section 1 of the Sherman Act through its arrangements with Co-conspirator Dealerships to not sell or make available its Service Advisor Software to farmers and independent repair shops. That software is needed to perform basic diagnosis of problem and also to allow replacement parts to be recognized by the equipment.
Finally, Deere violated Section 1 of the Sherman Act through forcing Forest River Farms and other Class Members to purchase Deere Repair Services from Deere once they were locked in to ownership of an expensive Deere Tractor. “Deere’s tying arrangement between Deere Tractors and Repair Services had both the intent and effect of harming competition in the market for Deere Repair Services,” the complaint reads and is an explicit violation of anti-tying provisions in the Sherman Act. The company used its monopoly to “injure” the purchasers of repair services by “reducing choice and increasing prices in this market to supracompetitive levels,” the complaint reads.
John Deere did not respond to an email request for comment on the antitrust suit.
A Long Legal Road Ahead
The case is the first salvo in what is likely to be a protracted legal battle said Aaron Perzanowski, a professor at Case Western Reserve University School of Law and author of a new book, Right to Repair.
Perzanowski said that enforcement of federal anti-monopoly laws has been in steady decline since the Reagan administration, as courts have narrowed the definition of what constitutes anti-competitive behavior. But Deere’s business practices including its restrictions on third party and farmer repair challenge even those relaxed lines. The company seems aware of the risk of its anti-repair policies. In 2018, Deere was party to an announcement by the Association of Equipment Dealers (AED) of a plan to make diagnostic tools, schematics and other information available to the public as well as a statement of principles intended to put questions about repair restrictions and anti-competitive behavior to rest. However, three years later, the group failed to deliver on those promises, despite repeated claims -absent any proof -that it has made good on them.
A Perfect Storm of Design, Economics and Law
Perzanowski said that Deere is pursuing similar strategies as consumer electronics makers like Apple and Samsung: leveraging product design, economics, and law to discourage or capture repair markets. For example, while the Librarian of Congress has granted an exemption of the federal Digital Millennium Copyright Act for farmers to repair their own equipment, the DMCA’s Section 1201 prohibits the sharing of tools and technology that circumvent Deere’s digital locks, essentially leaving each individual farmer to figure out how to hack their own equipment.
No Slam Dunk on Antitrust
What’s changed is that Deere and other agricultural equipment makers face increasing scrutiny for practices that limit farmers’ ability to repair their equipment by restricting access to software and diagnostic tools needed to diagnose problems. President Biden, in a speech to the American Farm Bureau Federation, said that farmers deserve the right to repair their equipment themselves. “There is finally some momentum for fixing antitrust among the public and policymakers,” wrote Mitch Stoltz a Senior Staff Attorney at the Electronic Frontier Foundation (EFF) in an email.
Despite that, the antitrust suit is no slam dunk.
“Antitrust law has gotten narrower and more technical over the years, and bringing a lawsuit like this takes money and a serious commitment,” Stolz wrote. “It’s not always illegal under the antitrust laws to tie repairs to the original purchase. The plaintiffs will also need to show that consumers overall were harmed by this practice.”
Antitrust cases are “very dependent on the specific facts of a case, particularly economic data and expert testimony,” he wrote. The complaint against Deere doesn’t really break new legal ground, but “that doesn’t mean it will be easy to win,” he said.
In fact, the strongest argument in favor of Deere acting like an illegal monopoly may not be its restrictions on owner repair, but the suit’s contention that the company forced consolidation of its authorized dealerships, thereby limiting competition and increasing the costs of ownership for customers.
“If Deere really did oversee a program of reducing competition among its authorized repairers, that could indicate an antitrust violation. Again, it’s not automatically illegal but the court may find them liable if the plaintiffs can show that farmers generally paid higher prices or got poorer service as a result,” Stoltz wrote.
The Feds are watching
While the anti trust case will likely take years to play out, the impact of the suit may be felt much sooner, experts say. Recent history suggests that monopolies often mend their ways under the spotlight of a federal anti trust investigation. Stoltz notes that Apple relaxed some of its restrictions on app developers’ promotion of external payment channels even before the court reached a decision in Epic Games’ lawsuit in 2021. It is widely believed that theUS government’s antitrust case against Microsoft from 1998-2001 forced the company to take a less aggressive stance against emerging competitors, from Mozilla to Google, lest it provide more fodder to federal antitrust investigators.
In short: Deere may feel pressure to ease up on some of its more egregious, anti-competitive practices even in the absence of a decision on the anti trust case.
“I do think it’s likely that Deere will feel pressure to make concessions of some sort before the lawsuit concludes,” wrote Stoltz. “Whether those concessions are meaningful is another question.”