Slate - The First Thing a Biden FTC Should Tackle
Daniel Hanley, policy analyst for Open Markets Institute, writes in Slate that a Biden FTC should first tackle right to repair.
Months into the COVID-19 pandemic, industries across the economy are still experiencing critical supply shortages. Hospitals don’t have enough lifesaving equipment. Students are unable to purchase computers that they need to learn in their new virtual environments. Car manufacturers are also facing inventory shortages of vehicles and parts.
One of the primary reasons for these scarcities is the exclusive contracts that force manufacturers, suppliers, and consumers to obtain their goods only from firms dominant in their markets. For instance, Apple requires “authorized” independent repair shops to buy iPhone parts only from Apple’s preapproved exclusive vendors. But it doesn’t have to be this way. The new Biden administration can and should instruct the Federal Trade Commission to use its rule-making authority to ban exclusive agreements by dominant manufacturers.
Manufacturers of all stripes restrict consumers’ ability to repair their products—all in efforts to squeeze more profits and forced purchases from consumers. Some of the most common methods include using software to lock down the system so that only the firm can access it and remedy the issue, and implementing predatory designs such as using copious amounts of glue rather than standardized screws to hold pieces together. (That’s an Apple specialty.) But dominant manufacturers are now increasingly using exclusive dealing agreements to restrict, repair, and perpetuate their monopoly power.
The ability to fix and tinker with one’s rightfully purchased product is fundamental to ownership. Repair has been a recognized right of consumers for more than a century and maintains broad public backing, with almost two-thirds of Americans supporting the right to repair. In the early 20th century, manufacturers purposefully built their products to be repairable. In 1910, car wheels became detachable and enabled owners to change their tires themselves. In the 1940s, the Western Electric Model 500 telephone was purposefully designed to be as durable as possible—many continued to work for decades.
Today, in the spirit of facilitating repair, multiple states have proposed laws that seek to expand a consumer’s right to repair their products. On Election Day, voters in Massachusetts approved a ballot initiative to expand access to wirelessly transmitted (telemetric) car data to independent repair shops—something that might seem small, but is a huge victory. (It’s a blow to Tesla in particular.) However, exclusive agreements require a particular manufacturer, supplier, and consumer to purchase tools, parts, or services exclusively from the dominant firm.
Exclusive agreements operate as a form of vertical integration and expand the control of a dominant firm over weaker suppliers and customers. These restrictive agreements cause consumers to pay inflated prices for parts and services and endure increased wait times for the repair of their products. They also allow manufacturers to restrict the supply of available parts and services for repair.
Read the full article on Slate here.