On July 21, 2021, the Federal Trade Commission announced increased scrutiny on purported restrictions of consumers’ “right to repair.” The statement, approved unanimously by the Commissioners, comes on the heels of the FTC’s “Nixing the Fix” report released to Congress earlier this year. That report asserted that some manufacturers use “anticompetitive practices” to limit the ability of consumers and independent repair shops to fix and maintain products. According to the FTC, those limitations “may increase costs, limit choices, and impact consumers’ rights under the Magnuson-Moss Warranty Act.”
The FTC’s policy statement outlines four areas of emphasis to “combat these practices.” First, the FTC will step up enforcement of the Magnuson-Moss Warranty Act. As part of this, the FTC will “closely monitor” private litigation to look for patterns of unfair or deceptive practices and potentially explore additional rulemaking. Second, the FTC will scrutinize repair restrictions that constitute “tying arrangements or monopolistic practices” in violation of the Sherman Act and Section 5 of the Federal Trade Commission Act. Third, the FTC will scrutinize repair restrictions which constitute “unfair acts or practices” also in violation of Section 5. Finally, the FTC will “coordinate with state law enforcement and policymakers to ensure compliance and to update existing law and regulations.”
Ensuring compliance with state laws and regulations has become increasingly complicated and contentious for manufacturers as state legislators, regulators, and the public increasingly focus on the right to repair. In Massachusetts, voters passed a right to repair law in the fall of 2020 that gives independent auto mechanics access to a vehicle’s internal tracking data and diagnostic information. Car manufacturers are now fighting enforcement of the law in federal court, arguing that the law is preempted by federal safety standards and would require manufacturers to turn over proprietary data and copyrighted material. A decision in that case is expected in August.
Nationally, 27 states saw right to repair legislation introduced during 2021 legislative sessions. Some bills were limited to particular applications, such as agricultural equipment, but others applied broadly to consumer devices. Three states have gone even further, requiring that manufacturers ensure that consumers not only have the right to repair, but also make available the parts to do so.
The FTC’s decision to step up its own scrutiny of repair restrictions under existing federal consumer protection and antitrust laws will add another layer to the statutory and regulatory web faced by manufacturers concerned that right to repair laws would force the divulgence of internal data and proprietary specifications. Manufacturers and sellers should review their warranty provisions to ensure compliance with federal law and be mindful of new right to repair and replacement part statutes and regulations at the state level.