increased demand for computers and supply chain challenges posed by the pandemic had resulted in laptop shortages in school districts around the country.[1] For instance, California has reported the need for 1 million laptops for students and Alabama was waiting on 33,000 student computers.[2] Kinks in the semiconductor supply chain are now posing an additional threat to the supply of new laptops.[3] Reducing barriers to repair may permit older laptops to be refurbished more easily, thereby expanding the supply of available laptops.
The Commission’s concern with repair restrictions[4] dates back more than forty years, to when the Commission’s then-Chairman testified in favor of the anti-tying provision of the Magnuson-Moss Warranty Act (the “MMWA”).[5] The anti-tying provision, Section 102(c) of the MMWA, prohibits a warrantor of a consumer product from conditioning its warranty on the consumer’s using any article or service which is identified by brand name unless the article or service is provided for free or the warrantor obtains a waiver from the Commission. This provision, for example, bars an automobile manufacturer from voiding a warranty if a consumer has scheduled maintenance performed by someone other than the dealer, prohibits a printer manufacturer from conditioning its warranty on the purchaser’s use of the manufacturer’s branded ink, and forbids a smartphone manufacturer from voiding a warranty when a consumer has a new battery installed at a kiosk at the mall. In short, the anti-tying provision bars manufacturers from using access to warranty coverage as a way of obstructing consumers’ ability to have their consumer products maintained or repaired using third-party replacement parts and independent repair shops.[6] As discussed in Section I, below, the Commission has actively enforced the anti-tying provision of MMWA and will continue to address illegal practices in the marketplace.
In the 44 years since the enactment of the MMWA, technological developments have introduced new challenges that warrant a reconsideration of whether the anti-tying provision has
- ↑ Jocelyn Gecker and Michael Liedtke, AP Exclusive: US Faces Back-To-School Laptop Shortage, (Aug. 22, 2020), https://apnews.com/article/01e9302796d749b6aadc35ddc8f4c946.
- ↑ Mackenzie Hawkins, California is short 1 million laptops and hot spots for kids as it prepares online school, Sacamento Bee, (July 22, 2020) https://www.sacbee.com/news/politics-government/capitol-alert/article244418057.html.
- ↑ Hyunjoo Jin, Douglas Busvine, and David Kirton, Analysis: Global chip shortage threatens production of laptops, smartphones and more, Reuters, (Dec. 17, 2020), https://www.reuters.com/article/us-chip-shortage-analysis/analysis-global-chip-shortage-threatens-production-of-laptops-smartphones-and-more-idUSKBN28R0ZL.
- ↑ We use the term “repair restriction” to refer to any practice that has the effect of limiting consumers’ ability to repair products that they own. In using this term, we focus on the impact of practices that limit consumer choice regarding repairs rather than on the intent of manufacturers. Due to this focus, the report does not delve into the subject of “planned obsolescence”—the argument that manufacturers intentionally design products to fail in order to encourage future replacement purchases.
- ↑ Then-Chairman Lewis Engman testified:
This provision addresses the anticompetitive practice which the Commission has opposed in numerous court actions wherein a manufacturer uses a warranty unreasonably to tie his supplementary products or services to the warranted product. This leaves the consumer in the undesirable posture of losing his warranty protection if he purchases the supplementary items from another and perhaps less expensive source—even if he does so in complete ignorance of the warranty’s provisions.
Statement of Hon. Lewis A. Engman, Chairman, Federal Trade Commission, included in H. Rep. No. 93-17, at 58 (1973).
- ↑ Independent repair shops are also referred to as independent service organizations (“ISOs”).
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