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FTC votes to make 'right to repair' a priority, drops 1995 merger policy

Stock MarketsJul 21, 2021 04:12PM ET
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© Reuters. FILE PHOTO: Signage is seen at the Federal Trade Commission headquarters in Washington, D.C., U.S., August 29, 2020. REUTERS/Andrew Kelly/File Photo

WASHINGTON (Reuters) -The U.S Federal Trade Commission voted 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 often discourage repairs by third parties that can 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 U.S. Chamber of Commerce vehemently objected to the way the meeting was conducted. Sean Heather, a chamber vice president, said the agency's new open meetings "have embraced a vote now, discuss policy later approach that ignores public input, making the entire process anything but transparent and above board."

The FTC's commissioners voted along party lines to rescind a 1995 policy statement regarding prior approval of mergers. With the statement rescinded, a company that had been stopped from proceeding with one merger must give prior notice to the FTC if it is contemplating a similar transaction.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 deal without spending months to investigate the new deal.

Commissioner Christine Wilson, a Republican, said there was no evidence to support scrapping the 1995 policy statement.

Commissioner Rebecca Slaughter, a Democrat, said FTC staff spent a lot of time and resources looking at "clearly anti-competitive" mergers. "I think a lot about the deterrent effect that we need to be sending," she said.

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.

FTC votes to make 'right to repair' a priority, drops 1995 merger policy
 

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