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OEM repair relationships questioned in Right to Repair inquiry

OEM repair relationships questioned in Right to Repair inquiry

Comes as the costs and benefits of a right to repair in Australia are assessed

Credit: 58105075 © Igor Zakharevich | Dreamstime.com

The Productivity Commission’s 'Right to Repair' inquiry has highlighted the behaviour of original equipment manufacturers (OEM) and repairers, flagging potential issues with existing laws.

As outlined in the Commission’s issues paper for the inquiry, the government has set out to assess the costs and benefits of a right to repair products in Australia and the impact that regulation or policy changes could have on market offerings for repair services and replacement products. 

Within the paper, the behaviour of manufacturers, and whether their actions support or harm consumers, was identified as a key issue. 

“The Commission is seeking to determine whether competition in the primary market is sufficient to offset the effects of any OEM control in the repair market, including considering the impact of switching costs, lock‑in and information limitations on consumer decision making," the paper noted. 

Repair markets, the paper outlined, are mostly influenced by OEMs, which typically operate either their own maintenance and repair arm or contract a network of authorised repairers. 

In contrast to these repairers are independent firms, which do not have financial or contractual relationships with OEMs. 

“Consumer groups and regulators in Australia and overseas have also raised concerns that some OEMs are using their dominant position in repair markets to engage in practices that hinder competition and harm consumers," the paper noted. 

“In practice, however, it is not always clear whether OEM conduct substantially affects competition in repair markets or imposes costs on consumers.”  

The Commission also mentioned that there are remedies available under existing legislation — the Competition and Consumer Act 2010 (CCA) — for anti-competitive contracts, misuse of market power and exclusive dealing. 

However, it conceded that the CCA's application on the repair market is not entirely comprehensive. 

“In principle, these provisions cover competition issues in repair markets, although their application in repair markets is challenging and requires demonstration that the conduct has the purpose, effect or likely effect of substantially lessening competition,” the paper stated. 

“Under the CCA, exclusive dealing only occurs when one party in a trade imposes restrictions on the other’s freedom to choose with whom, in what, or where they deal, and the conduct has the purpose, effect or likely effect of substantially lessening competition.  

“Similarly, the CCA only prohibits contracts and arrangements if they have the purpose, effect or likely effect of substantially lessening competition. And a firm is only engaged in a ‘misuse of market power’ if it has substantial market power — normally interpreted to include power in both the primary market for the original product and the secondary (repair) market — and its conduct has the purpose, effect or likely effect of substantially lessening competition.” 

While the inquiry is not geared to investigate the competitive natures of any specific repair markets in detail, it is open to finding out more information for specific products. 

This could encompass smartphones and computers, with the paper referring to numerous instances for these products. 

One such case included the Australian Federal Court ordering Apple to pay $9 million in penalties in 2018 for refusing to provide customers for a remedy to a software fault if their devices had gone through independent repairs. 

Another case saw Toshiba in 2011 sending a cease and desist letter to a hobbyist repairer to remove laptop service manuals from his website under claims of copyright infringement, as the OEM does not make its laptop service documentation publicly available. 

The Commission is currently seeking feedback on the issues paper, with initial submissions due by 1 February 2021. Following this, a draft report is expected to be released four months later in June, with the final report due by October. 


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