July 21, 2021
WASHINGTON (Reuters) – The U.S Federal Trade Commission voted on Wednesday to make it a priority to address the issue of manufacturers pushing consumers to use licensed dealers to repair items ranging from smartphones to farm equipment, a practice that critics call anti-competitive.
The five commissioners, three Democrats and two Republicans, voted unanimously to approve the policy statement.
“The FTC has a range of tools it can use to root out unlawful repair restrictions and today’s policy statement would commit us to move forward on this issue with new vigor,” FTC Chair Lina Khan said at an unusual open hearing, the second held by the agency this month.
Commissioner Noah Phillips, a Republican, supported the step. “While there are repair restrictions that are legitimate, whether it’s smartphones or tractors, I absolutely agree that there are many unwarranted restrictions that make it (repairs) excessively difficult and expensive,” he said.
The vote followed an agency report released in May that found that manufacturers use various ways to discourage repairs by third parties that often charge consumers less than dealers. These include disparaging spare parts not made by the manufacturer, and license agreements.
The issue was one of dozens spelled out in an executive order that the Biden White House put out this month.
The FTC’s commissioners will vote next on whether to rescind a 1995 policy statement. If rescinded, a company that had been stopped from proceeding with one merger must give prior notice to the FTC if it is contemplating a similar transaction. The FTC could then stop the new transaction without spending months to investigate the new deal.
The FTC also voted unanimously to keep a rule requiring clothing manufacturers to spell out how their clothing should be cared for but indicated that it would update it.
(Reporting by Diane Bartz; Editing by Richard Chang)