The Productivity Commission's draft report on the Right To Repair offers the following key points
• This report finds that there are barriers to repair for some products and that there is scope to reduce these barriers. The proposed reforms would improve consumers’ right to repair, without the uncertainty and costs associated with more forceful policy interventions.
• A ‘right to repair’ is the ability of consumers to have their products repaired at a competitive price using a repairer of their choice. Realising this aspiration in a practical way involves a range of policies, including consumer and competition law, intellectual property protections, product design and labelling standards, and environmental and resource management.
• Consumers already have considerable rights to have their products repaired, replaced or refunded under guarantees in Australian Consumer Law. These guarantees are comprehensive and generally work well, but they could be improved by:
– the Australian Competition and Consumer Commission (ACCC) providing guidance on the reasonable period of product durability for common household products, so that consumers and manufacturers can better understand when consumer guarantees apply
– providing regulators with alternative dispute resolution processes to assist consumers to resolve their claims, and enabling designated consumer groups to lodge ‘super complaints’ about consumer guarantees, with these fast tracked by the ACCC
– the inclusion of text in manufacturer warranties that prominently states that consumers are not required to use the repairers or spare parts specified by the product’s manufacturer to access their rights to a guarantee under consumer law.
• The Commission is seeking further evidence on other reforms that could help consumers obtain repairs and make more informed purchase choices. These potential reforms involve:
– requiring manufacturers to provide software updates for a reasonable period
– amending copyright laws to enable third party repairers to copy and share repair manuals, and access repair data hidden behind digital locks
– prohibiting manufacturer warranties from being voided if consumers do not use the repairers and spare parts specified by the manufacturer
– developing a product durability or repairability labelling scheme to help consumers identify products that best meet their needs.
• There is also scope to improve the way products are managed when they become ‘e waste’ by amending regulated product stewardship schemes to remove current incentives that focus solely on product recycling, rather than repair and reuse. Global positioning system (GPS) trackers should also be used to improve monitoring of e waste.
• The Commission is seeking evidence on the net benefits of a more extensive right to repair policy through a ‘positive obligation’ that would require manufacturers to provide third party access to repair information and supplies.
– The Commission’s preliminary analysis suggests that restrictions on third party repair supplies could be harming consumers in repair markets for agricultural machinery and mobile phones and tablets. However, the evidence base on the magnitude of repair barriers in these markets is patchy and largely anecdotal, preventing a rigorous assessment of whether additional policies would provide net benefits to the community.
– At a minimum, a review of the policy landscape in the coming years would be warranted, supported by an evaluation of the proposed mandatory scheme for the sharing of motor vehicle service and repair information, once it has been in operation for at least three years.
The Commission notes that
The ‘right to repair’ is a multifaceted policy issue
There are growing concerns in Australia and overseas that repairs of consumer products are becoming progressively more difficult (sometimes impossible), resulting in costly and wasteful outcomes for consumers and broader society. The difficulty of repair, at least in part, reflects growth in the number of products that incorporate sophisticated technology. It is now commonplace for cars, fridges, and even coffee machines to have embedded software in them. These technological advances have provided many benefits to consumers, but can also increase the cost and complexity of repairs. The rise in tech enabled products means that much of the information required to diagnose a fault is digital, embedded into the product itself and held behind ‘digital locks’, requiring passwords or special tools to bypass. Increasing product complexity means that consumers often have to rely on the manufacturer of the product (or their authorised repairer) to fix or maintain their product. Manufacturers are typically the main and sometimes only provider of repairs for their products. This has contributed to widespread concerns that some manufacturers are using their dominant position in repair markets to restrict competition. Many participants made claims of manufacturers refusing to supply independent repairers with the parts, tools and information they need to do repairs. Relatedly, there are concerns that the lifespans of everyday products are becoming unnecessarily short and that products are being discarded prematurely, contributing to wasted resources and the proliferation of ‘e waste’. Some groups also claim that manufacturers are intentionally shortening product life through software updates and design strategies that force consumers into buying new products (‘planned obsolescence’). Such claims are often made with respect to consumer electronics, particularly smart phones. These concerns have led to calls for government to introduce a ‘right to repair’. The ACT Minister for Consumer Affairs, Shane Rattenbury, noted that ‘the right to repair movement has been gaining momentum around the world. Legislative reforms are being introduced and strategies are being prepared.’ Although there is no universal definition of a right to repair (box 1), in essence it is about the ability of consumers to have their products repaired at a competitive price using a repairer of their choice. While on face value this is a desirable objective, it is not immediately clear what government should do to enable such a right. This is because no single policy alone enables a right to repair; a broad range of policies are involved, covering consumer and competition law, intellectual property protections, product design and labelling standards, and environmental and resource management. Implementing or amending policies in any of these areas requires careful consideration, balancing the (sometimes competing) interests of consumers, manufacturers, suppliers and repairers. In weighing up the costs and benefits of potential right to repair reforms, the Commission has been mindful that it is not always preferable or cost effective for consumers to repair their products, or to keep them going for as long as possible. Consumers make choices to repair their products by weighing up the cost and convenience of repair, their preferences for newer products, and concerns about the environmental impacts of their consumption choices. Further, it is not reasonable or efficient to require a manufacturer to support a product for an indefinite amount of time; at some point it becomes prohibitively costly for manufacturers to repair older products. Thus, the inquiry’s focus has been on identifying if there are any unnecessary barriers to repair that are leading to adverse outcomes for the community as a whole, and if so, what policy responses may be needed.
There was no single view of a ‘right to repair’ presented in submissions to this inquiry. Participants most commonly associated a right to repair with: • independent repairers and consumers having access to the necessary parts, information and equipment needed to repair products, including access to embedded software in products • consumers having the choice of repairer, with price competition in the repair market • consumers being able to buy products that are repairable and durable • repair/reuse of products to reduce e waste and encourage the growth of the circular economy. These differing views on what a right to repair entails were reflected in the broad range of policy proposals that were put forward, which included: legal obligations on manufacturers to provide access to repair inputs; strengthening of the consumer guarantees under Australian Consumer Law; changes to intellectual property protections to facilitate sharing of repair information and access to embedded software; introduction of unfair conduct provisions to address behaviours of manufacturers; and use of minimum product standards and labelling. A wide range of reforms have also been connected to right to repair policies around the world. Many of these changes have been concentrated in the United States and the European Union. • In the United States, much of the debate has focused on consumer and competition issues, particularly access to necessary spare parts, tools and information, and the tension this can create with intellectual property rights. The term ‘right to repair’ appears to have originated from legislation in Massachusetts requiring motor vehicle manufacturers to provide access to diagnostic and repair information. An industry agreement then led to nationwide adoption of this approach. Some US states have also proposed broader right to repair legislation for digital products, such as consumer electronics and agricultural machinery. • In Europe, a right to repair is more commonly associated with product design and resource management, and is generally pursued through EU environmental regulations. For example, household appliances are required to have spare parts available to professional repairers for up to ten years, as well as repair and maintenance information. The European Union has also had similar requirements to the Massachusetts ‘right to repair’ law for motor vehicles since 2010. Overall, this draft report finds that there are barriers to repair for some products that policy reforms could reduce. The proposed reforms fall into five broad categories that collectively support consumers to repair their products (where they choose to do so) (figure 1). In some areas, evidence on the materiality of barriers to repair is lacking, so the draft report also contains a number of requests for further information and feedback to inform the final report.
The Commission offers a suite of Draft findings, recommendations and information requests
The Australian repair sector
Draft Finding 2.1 THE AUSTRALIAN REPAIR SECTOR
A consumer’s decision to repair or replace a broken product is principally driven by price. Convenience, product repairability and consumer preferences for up-to-date products can also be important. The repair sector accounts for about one per cent of all business revenue in Australia and has grown modestly over the past decade. • Most repair activity (revenue, number of businesses and workers) comes from industries with more expensive products, such as motor vehicles and machinery, that require regular maintenance and where repair is often more cost-effective than replacement. • There was less activity in repair industries for less expensive products, such as electronics and appliances, where replacement tends to be more attractive. This is likely due to the relatively low and falling prices of these products over time, rapid technological development, and consumer preferences for new and up-to-date products.
Existing consumer rights under consumer law
Draft Finding 3.1 SCOPE TO IMPROVE THE APPLICATION OF CONSUMER GUARANTEES
The Australian Consumer Law provides consumers with considerable legislative rights to obtain a remedy (repair, replacement or refund) for defective products through consumer guarantees. The consumer guarantees are comprehensive and operate reasonably well but there is scope to enhance consumers’ ability to exercise their rights when their product breaks or is faulty — by providing guidance on the expected length of product durability and better processes for resolving claims.
Draft Recommendation 3.1 GUIDANCE ON REASONABLE DURABILITY OF PRODUCTS
The Australian Competition and Consumer Commission (ACCC) should develop and publish estimates of the minimum expected durability for products within major categories of common household products. The estimates would be a guide only to support application of the acceptable quality consumer guarantee in section 54 of the Australian Consumer Law. It could use ranges to take into account lower and higher value products in each category. The ACCC guidance should be developed in consultation with State and Territory consumer law regulators, consumer groups and business groups representing product suppliers and manufacturers, and should be updated over time.
Draft Recommendation 3.2 POWERS FOR REGULATORS TO ENFORCE GUARANTEES
State and Territory Governments should introduce alternative dispute resolution mechanisms to better resolve complaints about the consumer guarantees, such as compulsory conciliation or direction powers (as are used in South Australia and New South Wales). To inform the most effective design and use of any alternative dispute resolution mechanism, appropriate cost-benefit analysis and sufficient regulator resourcing would be required prior to implementation.
Draft Recommendation 3.3 ENABLING A SUPER COMPLAINTS PROCESS
The Australian Government should enable designated consumer groups to lodge ‘super complaints’ on systemic issues associated with access to consumer guarantees, with the complaints to be fast tracked and responded to by the Australian Competition and Consumer Commission (ACCC). The Australian Government should design the super complaints system in consultation with the ACCC, relevant State and Territory regulators and consumer groups. The system should be underpinned by sound operational principles — including criteria for the assignment (or removal) of designated consumer bodies, evidentiary requirements to support a complaint, and the process and time period by which the ACCC should respond.
Info Request 3.1 REPAIR FACILITIES, SPARE PARTS AND SOFTWARE UPDATES
To better understand whether consumers have reasonable access to repair facilities, spare parts and software updates, the Commission is seeking further information on: • whether consumers have faced difficulties accessing spare parts or repair facilities under guarantees when their product breaks or develops a fault, including specific examples of the type and age of the product, and the costs incurred by the consumer • costs and benefits of businesses being required to hold physical spare parts or operate repair facilities for fixed periods of time • whether consumers are experiencing problems using their products due to a software fault or lack of software updates, including specific examples where manufacturers have not addressed the problem because of claims that it is not covered by consumer guarantees • the costs and benefits of requiring that software updates be provided by manufacturers for a reasonable period of time after the product has been purchased.
Competition in repair markets
Draft Finding 4.2 LIMITS ON THIRD-PARTY ACCESS TO REPAIR SUPPLIES
Available evidence does not point to a systemic competition problem in repair markets. However, for some products, anecdotal evidence suggests that manufacturers are limiting third party access to repair supplies (such as spare parts, repair information and tools). While manufacturers often justify these limits as a way to safeguard against risks from poor quality repair (such as to safety and security), these risks can be overstated. The Commission’s preliminary assessment indicates that limits to repair supplies could be leading to consumer harm in some repair markets. • Agricultural machinery — manufacturers have an incentive to limit third-party access to repair supplies to increase repair prices because these markets are large relative to the market for new machinery. Competition in the market for new machinery may be insufficient to compensate consumers through lower product prices. Further, consumers can be exposed to large financial risks if they are unable to access timely repair and face a high cost of switching to alternative products. • Mobile phones and tablets — there is a high concentration of manufacturers in these markets, suggesting competition in the market for new devices may not be strong enough to compensate consumers through lower product prices. Some consumers may also be locked in to using authorised repairers as they cannot easily switch to alternative brands (for example, due to low product compatibility or the loss of content). While any harm may be small per consumer, it could add up to significant harm across the economy.
Info Request 4.1 CONSUMER HARM FROM LIMITS ON ACCESS TO REPAIR SUPPLIES
The Commission is seeking feedback and evidence on its preliminary assessment of consumer harm (chapter 4) in repair markets for agricultural machinery, mobile phones and tablets. In particular: • is there any evidence of systematic differences in quality, safety or security between authorised and third-party repairers? If so, what is the cost to manufacturers (for example, damaged brand reputation, determining the cause of a fault, or other liability issues)? • what is the size of the repair market compared to the primary market? What proportion of repairs are conducted by authorised repairers? • how difficult is it for consumers to estimate the lifecycle costs of these products at the time of purchase? • to what extent are consumers locked in to using authorised repairers (for example, can consumers easily switch to other products or non manufacturer repair supplies)? • is competition in the primary market sufficient to compensate consumers for any harm in the repair market (as indicated by low concentration and/or barriers to entry)? • to what extent are consumers harmed by less choice, high transportation or travel costs, delays, and inconvenience, particularly in regional and remote locations? The Commission is also interested in evidence of where there is substantial consumer harm in other repair markets, including but not limited to medical equipment and high end watches (which were raised as areas of concern by participants to this inquiry) as well as construction machinery.
Draft Finding 4.3 COMPETITION PROVISIONS ARE AVAILABLE TO ADDRESS REPAIR ISSUES
Although infrequently relied upon, there are existing remedies available under Part IV of the Competition and Consumer Act 2010 to address anti-competitive behaviours in repair markets, such as provisions to prevent the misuse of market power, exclusive dealing or anti-competitive agreements. Based on the evidence presented to this inquiry, the Commission does not see a strong case for changes to these provisions to address specific issues in repair markets (such as refusals to deal or tied servicing arrangements), particularly as the remedies have had recent changes that are yet to be fully tested in court.
Info Request 4.2 A POSITIVE OBLIGATION TO PROVIDE ACCESS TO REPAIR SUPPLIES
The Commission is seeking feedback and evidence on the costs and benefits of different approaches to designing and implementing a positive obligation on original equipment manufacturers to provide access to repair supplies to third-party repairers. In particular: • evidence on the effectiveness of positive obligation schemes overseas (such as motor vehicle repair information schemes in the United States and Europe, and spare parts requirements in Europe) • should a positive obligation be applied across all product markets or targeted towards particular product markets? If so, which product markets, and why? • should a positive obligation mandate access to all repair supplies or a subset of repair supplies (such as repair information, spare parts, or diagnostic tools)? • how should a positive obligation be implemented and enforced in practice?
Draft Recommendation 4.1 EVALUATE MOTOR VEHICLE INFORMATION SHARING SCHEME
The Australian Government should evaluate the Motor Vehicle Service and Repair Information Sharing Scheme that is designed to improve access to repair information, once it has been in operation for three years. The evaluation should focus on compliance with the scheme, the costs imposed on manufacturers, the benefits to independent repairers and consumers, and any implementation issues that require changes to the scheme, including consideration of whether the scheme should continue.
Manufacturer warranties and their influence on repair
Draft Finding 4.1 VOIDING WARRANTIES FROM INDEPENDENT REPAIR
Terms within manufacturer warranties that automatically void such warranties if non authorised repairs are undertaken (including ‘warranty void if removed’ stickers) can deter consumers from using third party repair during the warranty period. The Commission found examples of such terms in warranties for mobile phones, gaming consoles, washing machines and high-end watches. Even where these terms do not exist, many consumers appear to be under the mistaken belief that their warranties will be void if they undertake third party repair. They may also not be aware that consumer guarantees (that they are entitled to under the Australian Consumer Law) cannot be displaced by terms in warranties and are not extinguished due to independent repairs.
Draft Recommendation 4.2 ADDITIONAL MANDATORY WARRANTY TEXT
The Australian Government should amend r. 90 of the Competition and Consumer Regulations 2010, to require manufacturer warranties (‘warranties against defect’) on goods to include text (located in a prominent position in the warranty) stating that entitlements to consumer guarantees under the Australian Consumer Law do not require consumers to use authorised repair services or spare parts.
Info Request 4.3 A PROHIBITION ON WARRANTY VOID TERMS
The Commission is considering recommending provisions similar to the Magnuson-Moss Warranty Act in the United States, which prohibit manufacturer warranties from containing terms that require consumers to use authorised repair services or parts to keep their warranty coverage. We are seeking feedback and evidence on the costs and benefits of this approach. In particular: • would manufacturers respond by increasing product prices or making their warranties less generous? Would this latter change have any practical impact on consumers given they are also covered for defects under consumer guarantees? • how could such a prohibition be designed and communicated to ensure that consumers are aware that voiding terms are now prohibited? • how could the prohibition be designed to limit manufacturer liability for damage beyond their control? For example, the Magnuson-Moss Warranty Act permits warranty terms that limit manufacturer liability for damage caused by unauthorised repairs or parts, if they can demonstrate third-party fault. In a similar vein, should terms within end-user license agreements that purport to restrict repair related activities (discouraging third-party repair) also be prohibited? Is a disclosure as proposed under draft recommendation 4.2 sufficient or is a legislative prohibition required?
Intellectual property protections and repair
Draft Finding 5.1 INTELLECTUAL PROPERTY-RELATED BARRIERS TO REPAIR
In Australia, evidence on the extent to which intellectual property protections restrict repair is patchy and largely anecdotal. Notwithstanding this, copyright laws that prevent third-party repairers from accessing repair information (such as repair manuals and diagnostic data) appear to be one of the more significant intellectual property-related barriers to repair.
Draft Finding 5.2 OPTIONS TO IMPROVE ACCESS TO REPAIR INFORMATION
There are two main options to amend intellectual property protections to improve access to repair information. • Amend the Copyright Act 1968 to allow for the reproduction and sharing of repair information, through the introduction of a fair use exception or a repair-specific fair dealing exception. • Amend the Copyright Act 1968 to allow repairers to legally procure tools required to access repair information protected by technological protection measures (TPMs), such as digital locks. This may also require the Australian Government to clarify the scope and intent of the existing (related) exception for circumventing TPMs for the purpose of repair. To reduce the risk of manufacturers using contractual arrangements (such as confidentiality agreements) to ‘override’ the operation of any such reforms, it may also be beneficial to amend the Copyright Act 1968 to prohibit the use of contract terms that restrict repair-related activities otherwise permitted under copyright law.
Info Request 5.1 IMPROVING ACCESS TO REPAIR INFORMATION
The Commission is considering recommending amendments to intellectual property laws to improve access to repair information through the options outlined in draft finding 5.2. It is seeking views on each option, in particular: • whether the proposed reform options will assist repairers in accessing repair information, and therefore facilitate third-party repair • what types of contractual arrangements that could override such reforms are most likely to be of concern • the costs, benefits and risks of pursuing each option.
Product obsolescence and e-waste
Draft Finding 6.1 PREMATURE OBSOLESCENCE IN AUSTRALIA
There is growing community concern in Australia and overseas that product lifespans are becoming unnecessarily short (premature obsolescence), with detrimental impacts on consumers and the environment. Premature obsolescence is unlikely to be a significant problem in Australia. • There is little evidence that manufacturers are intentionally reducing product lifespans. • Consumers often choose to upgrade their products well before they come to the end of their useful life or break. Additional policies to prevent premature product obsolescence (in the form of product standards or expanded consumer protection laws to address planned obsolescence) would be unlikely to have net benefits to the community. Further views and evidence (in response to information request 6.1) will help clarify the potential net benefits of a product labelling scheme in Australia.
Info Request 6.1 PRODUCT LABELLING SCHEME
The Commission is seeking further evidence on the significance of information gaps that might contribute to premature obsolescence, including: • the specific type of information gaps (such as on product repairability, durability, or the environmental impacts of products) that prevent consumers from making informed purchase decisions • the significance of these information gaps (for example, the cost to consumers from obtaining information independently) • evidence that these gaps are undermining the efficient operation of the market (for example, evidence that consumers are systematically overestimating product durability and repairability when making purchase decisions) • whether these information gaps affect specific types of products more than others. The Commission is also seeking input on how government and industry might work together to design a product labelling scheme to maximise the net benefits to consumers and the community.
Draft Finding 7.1 E-WASTE IS A SMALL BUT GROWING WASTE STREAM
Annual e-waste generation is growing relatively quickly (more than doubling by weight between 2009-10 and 2018-19), but is a small share (less than one per cent by weight) of total waste generated in Australia. Information on e-waste is limited, but available data suggests that: • the main sources of e-waste (by weight) over the past decade were tools, washing machines, air conditioners, small domestic appliances (such as adapters, irons and clocks), cooking appliances (such as food processors and grills), and cathode ray tube televisions • solar panels and lithium-ion batteries are expected to generate growing quantities of e-waste over the coming decade. Although e‑waste contains some hazardous materials that can be harmful to the environment and human health, Australia’s landfill management systems and regulations are generally effective in substantially reducing these impacts (particularly in newer and larger landfills).
Draft Recommendation 7.1 IMPROVING THE MANAGEMENT OF E-WASTE
The Australian Government should amend the National Television and Computer Recycling Scheme (NTCRS) to allow e-waste products that have been repaired or reused by co regulatory bodies to be counted towards annual scheme targets. The exact design features that need to be incorporated into the NTCRS to enable reuse options should be determined in consultation with the scheme’s liable parties and co regulatory bodies. The changes should be designed in a way that minimise any adverse incentives, including risks from: • double-counting, where the same products cycle through the scheme without legitimately being reused • unlawful exports for reuse that result in more products in the informal recycling sector, generating worse health and environmental outcomes. Any future co-regulatory or mandatory product stewardship schemes should also include repair and reuse as options within their targets.
Draft Recommendation 7.2 USE OF GPS TRACKERS TO MONITOR E-WASTE EXPORTS
The Australian Government should amend the monitoring arrangements for the National Television and Computer Recycling Scheme so that global positioning system (GPS) trackers can be used to determine the end of life location of e waste collected for recycling as part of the scheme. This should be done using a risk based sampling approach that focuses on the types of products and supply chains that present the highest risk of unlawful exports or disposal of e waste.