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What’s the fix? A wave of ‘right to repair’ initiatives sweeps the US and Europe
22/11/2021

Apple this week announced a significant policy change in launching ‘Self Service Repair,’ making Apple parts, tools, and manuals available to individual consumers for the first time (starting with iPhones 12 and 13). It is an important development in a policy debate that has been quietly playing out around the world regarding how manufacturers control the maintenance of their products once in consumers’ hands. 

A so-called ‘right to repair’ movement has sought to challenge many post-sale ('aftermarket') restrictions on when and how users and third-party repairers can fix consumer goods. While the proposals have been gaining momentum with policymakers on both sides of the Atlantic, they often face opposition from manufacturers. These critics argue that removing controls on repair and allowing broad access to key information raises significant concerns, including risks for product safety or integrity as well as infringements on manufacturer’s IP rights. The debate is not limited to consumer electronics such as smartphones, but extends to a range of products from consumer appliances to automotive and farming equipment. 

A dual-track approach has emerged with a focus on both antitrust enforcement and legislative measures for more targeted regulation of aftermarkets. While competition authorities have pledged closer scrutiny of aftermarket repair restrictions under traditional antitrust laws, there are significant limitations in the scope of conduct that is covered by this framework. As a result, more targeted regulation has been proposed to set explicit rules on common repair restrictions and to require manufacturers to make certain resources more widely available. With recent reforms in Europe having already introduced a ‘right to repair’ for household appliances, a broader range of tech products is increasingly in the regulatory crosshairs. Apple’s announcement this week might be an indication that the tide is shifting.

Can antitrust give consumers a ‘right to repair’? 

For right to repair advocates, the policy position is straightforward: if you own a product, you should be able to fix it yourself (or choose the repairer). This is familiar territory for competition law, with a well-trodden path of competition enforcers targeting aftermarket repair restrictions (particularly tying / bundling requirements and refusal to supply third parties, e.g., the Haladjian case).

Indeed, prohibitions of restrictions in aftermarkets (particularly re spare parts) have long been a key part of rules governing vertical agreements under EU competition law. For example, restrictions which impede spare part manufacturers from selling those parts are considered ‘hardcore infringements’. Indirect restrictions are also prohibited (e.g., where a supplier may not supply the technical information, software or special equipment that a customer needs to actually use the spare parts). More subtle restrictions (in competition jargon often referred to as “constructive” refusals to supply) may also raise antitrust concerns. This may, for example, occur when a manufacturer gives unclear or contradicting repair instructions, hinders the smooth access to and operation of (online) tools and software or only provides access on onerous terms.

Yet recent competition enforcement in this area has been limited and is likely to be resource intensive. A key substantive issue in any enforcement case would also be whether the complexity of modern technology products could justify restrictions. Manufacturers claim repairability must be balanced against safety and privacy concerns. The argument is that a broad right to repair may risk the integrity of products that rely on proprietary software and sensitive data. For example, cybersecurity may be compromised by broad access to repair systems that collect sensitive consumer usage data. As systems become more sophisticated, a right to repair may also create safety hazards (e.g., if braking and navigation systems are repaired incorrectly). Manufacturers would have to substantiate such claims with hard evidence to provide a valid defence in any antitrust enforcement action (in the form of what competition lawyers call an “objective justification”).

Can the FTC be the repairman that the Biden administration is looking for? 

As the new administration in the U.S. seeks to refocus antitrust policy on social welfare concerns and address what they see as a historical pattern of underenforcement, right to repair initiatives have been taken up as part of proposals for expanding enforcement initiatives and administrative rulemaking. 

This spring, the FTC’s released its ‘Nixing the Fix’ report on the findings of a two-year market study commission by Congress on repair restrictions in mobile device and automotive markets. The report considered a broad range of issues including:

  • implementing design restrictions based on physical controls (e.g., product features or technical controls – including digital rights and software – that prevent independent technicians from safely disassembling products);
  • restricting the availability of parts, repair manuals, effective tools, and diagnostic software; and
  • steering repair services through telematics systems collecting diagnostic data, discrediting independent providers, or preventing the use of independent providers through end user licence conditions.

Although it found that some of these elements could reduce competition in aftermarkets, the report cited “scant evidence to support manufacturers’ justifications for repair restrictions”. The report outlined a set of policy measures that could be used to increase competition. 

Noting practical limitations on enforcement, the FTC noted that this conduct could be targeted in some cases through its existing authority to enforce the Magnuson Moss Warranty Act (covering certain warranty restrictions on use of unauthorised repair services, potential tying claims restricting access to aftermarket parts or services, or monopolisation claims related to exclusive dealing arrangements or refusals to supply). The report also highlighted the potential for FTC administrative rulemaking that could create clearer rules to support enforcement of specific practices. 

Since the release of the report, the administration has further signalled that these topics would be a policy priority for enforcement and rulemaking in the coming year. In July 2021, the FTC announced an enforcement initiative targeting aftermarket restrictions. President Biden signed an executive order calling on the FTC to increase enforcement of repair restrictions and use its rulemaking authority to “limit powerful equipment manufactures from restricting people’s ability to use independent repair shops or DIY repairs.” The order focused on increasingly high-tech farm equipment markets as part of its policy focus on small farmers. 

So, can (and will) regulation fill the gap?

Faced with the uncertainty and delays of traditional enforcement (and learning lessons from the wider regulatory crackdown on tech), policymakers are instead turning to new legislation to directly regulate a right to repair for products. 

The U.S. is not lacking for legislative initiatives. Since 1975, the Magnuson Moss Warranty Act prohibited manufacturers from conditioning warranty coverage on a consumer’s use of authorised parts or suppliers, unless provided free of charge or subject to an FTC waiver. More recently, proposals to enable access to tools, parts, and documentation have been put forward at both the federal and state level. In June 2021, at federal level, a ‘Fair Repair Act’ bill was introduced in the House of Representatives. With a focus on consumer tech, it would require original digital electronic equipment manufacturers to make diagnostic, maintenance, and repair equipment available to independent repairers. Similar targeted bills have been appearing in state legislatures. However, although most U.S. states have considered some form of right to repair legislation over the last few years, such bills have generally been unsuccessful and it is unclear whether the Fair Repair Act has brighter prospects. 

Perhaps unsurprisingly, it is in Europe that right to repair regulation looks most likely to become a reality. Yet, rather than improving competition, it is the pursuit of sustainability objectives and a ‘circular economy’ that is shaping policy. In fact, the EU has already created a right to repair and recycle for household appliances as part of the Ecodesign legislative package. This requires manufacturers to make available (a) spare parts for up to seven or ten years, and (b) repair and maintenance information for professional repairers. The UK has also introduced a ‘right to repair’ law in 2021, to stay aligned with the EU, and similarly imposes ‘reparability’ obligations for household appliances.

However, the EU appears poised to go further. Spurred on by the European Parliament (which has called for an express and broad right to repair for European consumers), the European Commission has made right to repair legislation a key initiative for 2022. 

This EU-level trend is complemented by developments within Member States. In particular, France obliges electronic products to have a reparability index and prohibits any technique, including software, that prevents an appliance being repaired or reconditioned by non-approved suppliers.

What’s next?

So far, consumers’ right to repair is still relatively limited. In the U.S., legislative protection is limited and antitrust enforcement remains slow and challenging. Even in Europe, where a limited right to repair has come into effect, the scope remains narrow (most notably, it still excludes consumer electronics – which are both a significant source of expense for consumers and a major drive of e-waste). Yet, contrasting prospects for regulatory reform mean the divergence is likely to grow.

In the U.S., right to repair campaigns will likely continue to gain in visibility. Despite apparent support from the Biden administration, however, it is not clear whether the Fair Repair Act and its state-level siblings will gain more traction in 2022 than they have to date. The ultimate impact remains to be seen.

By contrast, the European Commission has announced plans to expand a right to repair to cover smartphones, tablets and laptops – regulatory proposals that would go beyond the historical antitrust enforcement focus on more traditional consumer goods (e.g., cars and appliances). If these reforms materialise, they would represent a significant shift in approach and would be likely to drive far-changing both in Europe and, given the EU’s regulatory sway, beyond.

Related : Linklaters LLP (Luxembourg)

[+ http://www.linklaters.com]


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