The FTC also enforces antitrust laws that, in some circumstances, could make repair restrictions illegal. In antitrust parlance, repair restrictions concern aftermarkets—markets for parts or services that are used after the initial purchase of a product. Products with aftermarkets are very common. Examples range from simple products like razors and razor blades, to operationally or technically complex products and services like software and software updates.[1] The ways that businesses provide products and services in aftermarkets are similarly diverse, and lead to a range of participants and competitive dynamics in different markets.
With respect to repairs, the relationships between market participants fall into three main models.
- Some manufacturers offer repair services for their products themselves, or through a network of affiliates, as the only authorized means of repair.
- In other instances, an original equipment manufacturer (OEM) has no presence in the sale of aftermarket parts or service. In those cases, independent service organizations (ISOs) sometimes provide repair and maintenance services for the products of various manufacturers. In addition, consumers may be able to purchase replacement parts in an aftermarket, perhaps to perform repairs themselves.
- Some OEMs participate in aftermarket service markets in competition with independent repair shops. Where that is the case, a manufacturer may steer aftermarket work toward its own services.
Several scenarios described in this report involve business decisions made by the manufacturer that may restrict repair options by consumers or ISOs and make it difficult or impossible for ISOs to compete in aftermarkets. Tying exists when the sale of one product (the tying product) is conditioned on the purchase of a second product (the tied product) from the same firm.[2] Tying is illegal where the effect is to impair competition and harm consumers in the market for either the tying product or the tied product. For example, an illegal tying claim might allege that a manufacturer unlawfully tied the availability of parts to the purchase of its repair service.
Other scenarios describe different types of conduct that may harm competition when adopted by a firm with market power. For instance, a manufacturer with market power that has refused to provide consumers or aftermarket service providers with key inputs (such as parts, manuals, or diagnostic software and tools) may be subject to antitrust liability for maintaining its monopoly, if the effect of such conduct is to harm competition.[3] Similarly, a manufacturer that
- ↑ These products and practices involve “a multitude of industries and hundreds of billions of dollars of sales.” Joseph P. Bauer, Antitrust Implications of Aftermarkets, 52 Antitrust Bull. 31, 31 (2007).
- ↑ See N. Pac. Ry. Co. v. United States, 356 U.S. 1, 5–6 (1958).
- ↑ Eastman Kodak Co. v. Image Technical Services, Inc., 504 U.S. 451 (1992) (allowing to proceed beyond summary judgment plaintiffs’ monopolization and attempt to monopolize claims alleging Kodak refused to sell parts for its copies and micrographic equipment to owners that obtained service from ISOs).
imply that a product warranty will be voided if the product is opened or modified by anyone other than the manufacturer or its agent” which “create a chilling effect because just lifting tape damages it and becomes evidence of tamper….”); Automotive Oil Change Association empirical research (“AOCA empirical research”) at 13–14.
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