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FTC Report Makes Big Impact

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A report submitted to Congress by the Federal Trade Commission seeks to address some crucial roadblocks that independent repairers have when working with the newest vehicles.

Called “Nixing the Fix: An FTC Report to Congress on Repair Restrictions,” the report follows hearings and testimony about the tug of war between OEMs (and affiliated dealer service centers) and independent repair and maintenance facilities. The report sought to identify potentially unfair practices and suggest paths forward.

The Automotive Oil Change Association was involved in the development of this report and has been working on similar issues for years. In a podcast interview with NOLN, AOCA policy director Joanna Johnson said that it’s a big step to have this federal agency back up the policy work of aftermarket organizations.

“This is history of the industry important,” Johnson said.

Other trade groups, like the Auto Care Association and the Motor and Equipment Manufacturers Association, praised the report and its findings, which included that OEMs showed no evidence “to suggest that independent repair shops are more or less likely than authorized repair shops to compromise or misuse customer data.”

On July 1, a coalition of organizations including the AOCA sent a letter to FTC Chair Lina Khan expressing support for the report and its findings.

“The report highlights the barriers that face consumers when they seek independent repairs, including from independent motor vehicle service facilities, for the products they own,” the letter says.


Key Findings

The headline for aftermarket groups was that the report found no credibility in OEMs’ justifications for restricting repair and maintenance access.

The report leaned heavily on the Magnuson Moss Warranty Act, which is a consumer protection law meant to inform customers about their warranty rights. Specifically, the FTC sought to identify how effective the tie-in sales provision of the act has been in practice.

“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,” the report says.

Through research, Johnson had documented cases like Hyundai-Kia technical service bulletins that attributed symptoms like engine knock to an aftermarket oil filter and directed service centers to replace the filter with an OEM model at the customer’s expense.

“One of the big factors in proving that is if the automaker engages in prohibited tie-in sales of brand products or services,” Johnson says.

The report also outlined tactics used by OEMs to limit competition, including complex product designs, unavailability of parts and information, tactics to steer customers to preferred service centers, disparagement of non-OEM parts, and more.

The report also highlighted the new frontier of repair and maintenance information, which overlaps with the Right to Repair movement.


Telematics

Access to telematics has been a top concern for aftermarket repairers and installers. These groups worry that OEMs are creating separate, proprietary data streams that will give dealer service centers an advantage in acquiring repair and maintenance customers.

The FTC report quoted commentary it received from parts distributor LKQ Corp.:

“Information and advertisements sent by the vehicle manufacturer can appear on the information display[, and f]ollowing an accident, vehicle manufacturers can steer the consumer, perhaps unwittingly and at the time when they are most vulnerable, to a dealership or loyal repair facility,” the report says.

One of the simplest cases of this tactic is one that the AOCA has been following for years. An oil life monitor system on a vehicle might give a dashboard alert to the driver that doesn’t appear to give him or her a choice—”Maintenance required. Visit your dealer.”

 Technological barriers for independent facilities can also include software locks that block anyone but a dealer service center from accessing crucial vehicle systems.


Moving Forward

Groups like AOCA are hoping that this FTC report will spark interest to increase enforcement of anti-competitive tactics and provide plenty of notice to consumers about their rights under warranty laws.

According to the letter sent to the FTC, trade groups are also asking for the agency to work with the National Highway Transportation Safety Administration to track complaints made at that level. That way, any enforcement by the FTC can be backed up by consumer complaint information about repair denials or warranty issues.

Some of the most interesting movements will be at the data access level. Aftermarket groups hope that this report will help progress in Right to Repair policymaking, breaking vehicle data free from OEM silos.

“Access to mechanical vehicle data is critical to ensuring that independent shops can provide repairs and maintenance for vehicles. Therefore, if the current control of data by OEMs is left unchecked, they will be the gatekeepers for in-vehicle data, ultimately determining whether a competitive marketplace continues to exist to the point of rendering the MMWA irrelevant,” the letter says.


Editor's note: In the time since reporting this story, the FTC agreed to meet with independent aftermarket groups to discuss next steps. After that meeting, the FTC announced new enforcement practices. Read about that move here.

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