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National Auto Dealers Association (NADA) Jul 28, 2021 7 min read

FTC Issues Policy Statement on “Illegal Repair Restrictions”

Across the U.S. economy many aftermarket repair facilities and others have long complained about restrictions on their ability to repair articles, ranging from cell phones to tractors, refrigerators and even automobiles. This so-called “right-to-repair” issue has a complicated and contentious history, but the automotive industry broadly addressed the issue several years ago via an industry-wide agreement (“Memorandum of Understanding” or “MOU”) to provide the information the independent aftermarket needs to repair vehicles. This MOU has worked for many years in the automotive industry, although the aftermarket industry has recently sought to expand access to telematics and other data coming from the vehicle.1

In 2019, the FTC held a public workshop on the broad issue of “right-to-repair” across all industries entitled “Nixing the Fix,” and in May of this year the Commission issued a report to Congress on the Commission's conclusions from that workshop and recommendations from FTC staff (“Report”). Importantly, the Report actually calls out the automotive industry MOU as being an example of successful industry self-regulation on this issue. 

At a public hearing yesterday the FTC voted 5-0 to issue a “Policy Statement on Repair Restrictions Imposed by Manufacturers and Sellers,” which formalizes the recommendations in the Report, and as the Commission states, seeks to “restore Right to Repair for small businesses, workers, consumers, and government entities.”

This FTC action follows President Biden’s recent executive order that directs federal agencies to take a series of actions and encourages the FTC to use its “rulemaking authority” to, among other things, address “unfair anticompetitive restrictions on third-party repair or self-repair of items.”

Both the Report and the Policy Statement address this issue across many industries, not just automotive. Importantly, as noted above, the Report characterizes the automotive industry MOU very favorably. As a result, any action the FTC may take in this area should focus on other industries. That said, advocates for the aftermarket industry have sought, and will likely continue to seek, to use this statement by the Commission to expand access to vehicle and consumer data under the guise of “right-to-repair.” 

The Commission has indicated that it will increase enforcement related to this issue, including the potential for actions under the anti-tying provisions of the Magnuson Moss Act or the FTC’s “UDAP” authority under Section 5 of the FTC Act.  

The bottom line, however, is that there is no legitimate “right-to-repair” concern in the automotive industry. The aftermarket industry continues to hold a majority of the automotive repair market, and access to information needed to repair any vehicle is readily available today. Nonetheless, and despite the fact that the Report clearly notes that the automotive industry has successfully addressed the issue of access and ability to repair automobiles, Regulatory Affairs will continue to work with other industry stakeholders to stress these critical points to the FTC as it further examines these issues.

Local Impact

The issue of Right to Repair has come up in the NH legislature over the past few years and a few bills have been attempted. None have been successful. NHADA and specifically our farm & construction equipment dealers have led educational efforts with legislators against such legislation and the bills have been always defeated. The most recent attempt in 2021 was limited in its scope and only applied to home appliances. Failure to provide certain repair related documentation, parts, and tools would have been a violation of the NH Consumer Protection Act.   

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1 This has led to a great deal of activity at the state level, including numerous recent state “right-to-repair” legislative proposals, a successful ballot initiative in Massachusetts, and subsequent (and active) litigation over that ballot initiative. That activity is critical to understanding this issue in the automotive context, but is largely unrelated to the ability of aftermarket shops to repair vehicles; rather, it is more focused on access to information that would assist in marketing those services. As such, it is outside the scope of this memorandum.