[House Hearing, 117 Congress]
[From the U.S. Government Publishing Office]


               RIGHT TO REPAIR: LEGISLATIVE AND BUDGETARY 
               SOLUTIONS TO UNFAIR RESTRICTIONS ON REPAIR

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                                HEARING

                               BEFORE THE

                           COMMITTEE ON RULES
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED SEVENTEENTH CONGRESS

                             SECOND SESSION
                               __________

                     WEDNESDAY, SEPTEMBER 21, 2022

                               __________
                               
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                    Available via http://govinfo.gov                
            Printed for the use of the Committee on Rules
                                                
                              __________

                    U.S. GOVERNMENT PUBLISHING OFFICE                    
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                           COMMITTEE ON RULES

               JAMES P. McGOVERN, Massachusetts, Chairman
NORMA J. TORRES, California          TOM COLE, Oklahoma
ED PERLMUTTER, Colorado                Ranking Republican
JAMIE RASKIN, Maryland               MICHAEL C. BURGESS, Texas
MARY GAY SCANLON, Pennsylvania       GUY RESCHENTHALER, Pennsylvania
JOSEPH D. MORELLE, New York          MICHELLE FISCHBACH, Minnesota
MARK DeSAULNIER, California
DEBORAH K. ROSS, North Carolina
JOE NEGUSE, Colorado
                       Don Sisson, Staff Director
             Kelly Dixon Chambers, Minority Staff Director
                                 ------                                

             Subcommittee on Legislative and Budget Process

                        JOSEPH D. MORELLE, Chair
MARY GAY SCANLON, Pennsylvania       MICHAEL C. BURGESS, Texas
DEBORAH K. ROSS, North Carolina        Ranking Republican
JOE NEGUSE, Colorado                 TOM COLE, Oklahoma
JAMES P. McGOVERN, Massachusetts
                                 ------                                

          Subcommittee on Rules and Organization of the House

                   NORMA J. TORRES, California, Chair
ED PERLMUTTER, Colorado              GUY RESCHENTHALER, Pennsylvania
  Vice Chair                           Ranking Republican
MARY GAY SCANLON, Pennsylvania       TOM COLE, Oklahoma
JOSEPH D. MORELLE, New York
JAMES P. McGOVERN, Massachusetts
                                 ------                                

                  Subcommittee on Expedited Procedures

                     JAMIE RASKIN, Maryland, Chair
DEBORAH K. ROSS, North Carolina      MICHELLE FISCHBACH, Minnesota
  Vice Chair                           Ranking Republican
NORMA J. TORRES, California          TOM COLE, Oklahoma
MARK DeSAULNIER, California
JAMES P. McGOVERN, Massachusetts
                            
                            C O N T E N T S

                              ----------                              

                           September 21, 2022

Opening Statements:
                                                                   Page
    Hon. Joseph D. Morelle, a Representative in Congress from the 
      State of New York and Chairman of the Subcommittee on 
      Legislative and Budget Process.............................     1
    Hon. Michael C. Burgess, a Representative in Congress from 
      the State of Texas and Ranking Member of the Subcommittee 
      on Legislative and Budget Process..........................     3
Witness Testimony:
    Mr. Nathan Proctor, Senior Campaign Director, Right to 
      Repair, U.S. PIRG (Public Interest Research Group).........     5
        Prepared Statement.......................................     8
    Dr. Lauren Williams, Sr. Associate Director of National 
      Affairs, New York Farm Bureau..............................    12
        Prepared Statement.......................................    14
    Mr. Sandeep Vaheesan, Legal Director, Open Markets Institute.    17
        Prepared Statement.......................................    20
Additional Material Submitted for the Record:
    Letter from Mr. Carl E Gierisch, Jr., Gierisch Brothers Motor 
      Co. Ltd., dated September 21, 2022.........................    42
    Letter from Mr. Drew Campbell, dated September 21, 2022......    44
    Letter from Ms. Kathleen Burke and Ms. Meredith Rose, Public 
      Knowledge, dated September 21, 2022........................    47
    Letter from Mr. Rob Larew, National Farmers Union, dated 
      September 21, 2022.........................................    49
    Letter from Mr. Garrick Francis, Alliance for Automotive 
      Innovation, dated September 21, 2022.......................    53
    Letter from Ms. Lisa Foshee, Auto Care Association, dated 
      September 26, 2022.........................................    55
    Letter from Mr. Gay Gordon-Byrne, repair.org, dated September 
      19, 2022...................................................    57
    Letter from Mr. Paul McCarthy, Automotive Aftermarket 
      Suppliers Association, dated September 20, 2022............    62
    Letter from Mr. Chris Netram, National Association of 
      Manufacturers, dated September 21, 2022....................    65
    Curriculum Vitae and Truth in Testimony Forms for Witnesses 
      Testifying Before the Committee............................    67

 
    RIGHT TO REPAIR: LEGISLATIVE AND BUDGETARY SOLUTIONS TO UNFAIR 
                         RESTRICTIONS ON REPAIR

                              ----------                              


                     WEDNESDAY, SEPTEMBER 21, 2022

                  House of Representatives,
    Subcommittee on Legislative and Budget Process,
                                        Committee on Rules,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 10:00 a.m., in 
Room H-313, The Capitol, Hon. Joe Morelle [chairman of the 
subcommittee] presiding.
    Present: Representatives Morelle, McGovern, and Burgess.
    Mr. Morelle. The Subcommittee on Legislative and Budget 
Process of the Committee on Rules will come to order.
    I want to welcome our witnesses and thank them for being 
here today. And I would also like to thank my colleagues on the 
Rules Committee for joining us as well, Dr. Burgess, ranking 
member; of course, the chairman of the Rules Committee, my dear 
friend, Chairman McGovern from Massachusetts.
    Today's hearing will focus on a simple concept: the 
consumer's right to repair. The fundamental idea that if you 
own something, you own all of it, including the right to repair 
it. It is a right many people watching at home might think they 
currently enjoy. Sadly, they are sorely mistaken.
    Manufacturers often used to make repair parts, tools, and 
information available for consumers and independent repair 
shops to fix their own appliances--TVs, cameras, other 
products. However, today's increased reliance on software for 
these types of products has made it easier for companies to 
restrict access to the tools and other basic repair materials 
needed for third parties to fix digital equipment.
    In fact, there is a clear incentive to do so. Repairs of 
digital equipment are now often intentionally limited by the 
manufacturer, with companies requiring consumers to pay for 
repair services through either their own repair division or a 
manufacturer-authorized vendor. These practices by 
manufacturers essentially create a monopoly on repair services, 
with fewer options for consumers, leading to significantly 
higher repair prices than the free market would otherwise 
provide.
    Importantly, another result of this dynamic is that 
consumers are driven to purchase new digital equipment more 
frequently instead of repairing old equipment, resulting in a 
significant increase in electronic waste, which has now become 
the fastest growing waste stream in the world.
    This problem first came to my attention many years ago when 
I had the privilege of serving in the New York State Assembly. 
Earlier this year, I was pleased to see that legislation I had 
originally authored passed both houses in the New York State 
Legislature, placing New York on the precipice of being the 
first State in the country to enact robust protections for 
consumers against unfair repair restrictions.
    I hope to see the legislation signed into law in the near 
future, but the issue is really best addressed, in my view, at 
the Federal level to avoid a patchwork of different rules and 
regulations for each of the 50 States.
    So I look forward to hearing from today's witnesses about 
the broad impact that repair restrictions have on a variety of 
different aspects of American life, including family budgets, 
the vibrancy of small business and entrepreneurs across the 
country, farmers and the agricultural community, and better 
sustainability practices to protect our environment.
    Today's hearing will explore actions that Congress can take 
to allow individuals the right to choose how they repair their 
own digital equipment, ensuring that companies who unfairly 
restrict the right to repair are held accountable. Those 
potential actions include ensuring that the Federal Trade 
Commission has both the necessary authority and resources to 
protect consumers from such anticompetitive behavior.
    In May of 2021, the FTC released a landmark report that had 
been required by Congress, and it detailed the extent to which 
these restrictions hurt consumers and potential considerations 
for Congress to consider. The report states that although the 
FTC does have some authority to protect consumers from product 
warranties that restrict repair options, they said, quote, 
``Technological developments have introduced new challenges 
that warrant a reconsideration,'' end quote, of whether that 
existing authority is sufficient.
    The report also pushed back on industry claims that current 
repair restrictions are justified in the interest of 
maintaining device integrity and preventing reputational harm, 
determining that there was scant evidence to support these 
claims.
    The administration has recognized the importance of the 
right to repair as well, including President Biden's executive 
order on promoting competition in the American economy issued 
last year. The order asked the FTC to exercise its existing 
authority to protect consumers from anticompetitive repair 
restrictions.
    Since then, the FTC has brought actions against several 
companies, claiming those companies imposed illegal conditions 
on their products' warranties by including terms that declared 
the warranty void if a consumer used a third party to repair 
their products. So I applaud the FTC for their increased focus 
on the issue and encourage them to continue using the tools 
that are available to them to protect the right to repair.
    Although there have been a few different legislative 
proposals introduced this Congress, including both the 
implications of repair restrictions on copyright law and the 
auto sector, the goal of this hearing will be to focus on 
determining whether the FTC has adequate resources and 
enforcement authority to protect consumers from repair 
restrictions on consumer products and agricultural equipment.
    Last summer, I was proud to introduce the Fair Repair Act, 
which is broadly focused on enhancing FTC authority. The bill 
would require OEMs to make diagnostic and repair information, 
parts, and tools available to third-party repairers and owners 
on fair and reasonable terms, helping consumers and repair 
shops avoid unnecessary and costly delays while also reducing 
waste.
    I recognize the importance of protecting trade secrets and 
other intellectual property rights, and the bill allows the FTC 
to better guard against anticompetitive conduct without 
damaging existing protections of such proprietary information.
    So I look forward to the discussion today, which I hope 
will produce a constructive dialogue on how we can work 
together to make technology repairs more accessible and 
affordable for items from cell phones to laptops to farm 
equipment, giving individuals the ability to choose how they 
want to repair their own property, which, again, I repeat, was 
something that consumers for decades and decades and decades 
have held as a right.
    So, with that, the chair now recognizes a good friend, the 
ranking member, Dr. Burgess, for any opening comments he wishes 
to make.
    Dr. Burgess. Well, and I thank the chair.
    I am a little bit mystified as to why we are here in the 
Rules Committee doing a hearing on something that logically 
would belong in one of the committees of jurisdiction, one of 
the authorizing committees, Small Business, Financial Services, 
Energy and Commerce, that has the jurisdiction over the Federal 
Trade Commission.
    But I am grateful to our witnesses for being here with us 
today. Thank you for allowing us to hear your insights and your 
expertise and to work with the committee while we work through 
this issue.
    I will tell the chairman, I have constituents who are 
firmly on both sides of this issue, so I recognize the 
importance. I am just a little perplexed as to why it is in the 
Rules Committee as sort of original Rules jurisdiction.
    Constructive to acknowledge from the outset the contents 
and the nuance that surrounds the right of repair issue. As 
Chairman Morelle knows well, the debate concerning the right to 
repair legislation can trace its origins back to disagreements 
between car manufacturers and independent automobile mechanics.
    The issue has grown much more complex since that initial 
debate. Items such as iPhones and personal laptops have become 
ubiquitous. Now that these products are owned by large segments 
of the American population, the need for access to parts to 
keep these devices in working order has indeed become critical.
    Chairman Morelle, you and I are both aware of the debate 
surrounding the right to repair that has been around for easily 
over a decade's time. In 2013, Massachusetts became the first 
State to sign the right of repair legislation into law. 
Subsequently, Massachusetts has set into motion a flurry of 
legislative activity. Currently, 19 States are actively 
considering right to repair legislation.
    Proponents for stronger consumer protections argue that, 
once an individual has purchased a product, it is well within 
their rights to seek out the cheapest and most efficient form 
of repair. However, when the products consumers have purchased 
need repair, consumers are unable to find independent--and 
consumers are unable to find independent repair businesses who 
will facilitate these repair, it becomes difficult. Right to 
repair advocates argue that manufacturers have made it 
difficult to purchase parts required to repair the products 
that they have bought.
    Incidentally, I have just very recently heard from some 
automobile dealers that that is--they take issue with that. 
They believe it is not the case. They believe they make those 
parts available on a timely basis; it is more supply chain 
issues that are causing the problems now than it is the dealers 
themselves.
    Conversely, manufacturers argue, and not without merit, 
that if they are compelled to provide parts and sensitive 
technical information regarding their products, that their 
intellectual property will be jeopardized and the competitors 
will be able to reverse-engineer those products.
    It is my hope that in our discussion today, we will not 
only explore the arguments and merits of this type of 
legislation, but also arguments that present compelling 
evidence that certain pillars of our dynamic digital economy 
could be adversely affected by this legislation that skews too 
far in either direction.
    I believe this legislation is a beneficial starting point 
for discussions as to how to harmonize the needs of individual 
consumers and safeguarding American companies' intellectual 
property.
    Mr. Chairman, in closing, I find it interesting that the 
right to repair debate does not divide itself deeply along 
partisan lines. The right to repair often forges consensus 
between Republicans and Democrats who may not be able to agree 
on much else. I hope our discussion today concerning this piece 
of legislation will demonstrate the perspective to various 
stakeholders who could be affected by this issue.
    And, Mr. Chairman, before I yield back, let me just ask 
unanimous consent to insert into the record a letter from Carl 
Gierisch, Jr., who is the current mayor of Roanoke, Texas, and 
the owner of Roanoke Auto Supply, who sends a letter to me in 
favor of right to repair legislation. And I also have a 
statement for the record from Mr. Drew Campbell, who aligns 
himself more with automobile manufacturers and dealers.
    So I would ask that both of these letters be made part of 
the record.
    Mr. Morelle. Without objection.
    [The information follows:]
    Dr. Burgess. And I will yield back.
    Mr. Morelle. Thank you. Thank you to the ranking member for 
his very thoughtful and I think really well-reasoned opening 
that sort of does talk about the balance between all these 
issues and how it is our responsibility to try to strike the 
right balance when it comes to public policy. So I thank him 
very much for his opening comments.
    Now, I would like to introduce our witnesses, if I may.
    First, we have Nathan Proctor, who is senior director of 
the campaign for the right to repair at U.S. Public Interest 
Research Group, where he works to pass legislation that will 
prevent companies from blocking consumers' ability to fix their 
own electronics. Mr. Proctor has been with PIRG since 2005.
    We are also joined by Lauren Williams, who is the associate 
director of national affairs at the New York Farm Bureau, which 
is the largest general farm and agricultural organization in 
New York State. Ms. Williams is responsible for directing and 
coordinating the Bureau's Federal advocacy efforts, including 
working with the New York Congressional Delegation and Federal 
agencies on a wide range of farm and agricultural legislative 
and regulatory issues.
    And then, finally, remotely, we are joined by Mr. Sandeep 
Vaheesan, who is the legal director of the Open Markets 
Institute, where he leads the organization's legal advocacy and 
research work. Mr. Vaheesan works on a range of antimonopoly 
topics, including antitrust law's role in promoting fair 
competition. 2015 to 2018, he served as a regulations counsel 
at the Consumer Financial Protection Bureau and, before that, 
worked at the American Antitrust Institute.
    So to the witnesses, thank you again for joining us.
    Mr. Proctor, you are recognized for your testimony, sir.

  STATEMENTS OF MR. NATHAN PROCTOR, SENIOR CAMPAIGN DIRECTOR, 
 RIGHT TO REPAIR, U.S. PIRG (PUBLIC INTEREST RESEARCH GROUP); 
    MS. LAUREN WILLIAMS, SR. ASSOCIATE DIRECTOR OF NATIONAL 
AFFAIRS, NEW YORK FARM BUREAU; AND MR. SANDEEP VAHEESAN, LEGAL 
                DIRECTOR, OPEN MARKETS INSTITUTE

                  STATEMENT OF NATHAN PROCTOR

    Mr. Proctor. Thank you very much, Chair Morelle, Ranking 
Member Burgess, Chair McGovern. My name, as was just said, is 
Nathan Proctor. The PIRG network is mostly State-level advocacy 
groups that work all over the country, and we have been behind 
right to repair efforts in dozens of States. We have also 
issued some 13 reports on right to repair and related topics, 
so I could definitely talk your ear off about this, as Owen 
probably and your other staff perhaps can attest. But I think 
what we are talking about is pretty simple. It boils down to a 
pretty simple idea, which is manufacturers have a clear 
incentive to control the repair process, and they do so.
    When the only one who can fix something is a manufacturer 
or their authorized representative, they control the cost of 
that repair or they can choose to push an upgrade and to force 
you to buy a new product. A look at how the repair process 
actually works, I think, will elucidate how this is 
accomplished. And then, finally, I will talk a little bit about 
why this matters.
    So the first part of repair process is figuring out what is 
wrong. In most of our modern devices, there is a lot of 
embedded information that the product actually knows why it is 
failing, right. Your phone probably knows why it is shutting 
off periodically. But it doesn't tell that information to you, 
the product owner. You actually have to plug in a proprietary, 
you know, dealership-controlled diagnostic tool to get the 
phone to report what it is experiencing. And sometimes you get 
some version of the diagnostic information, but it is like a 
light version that is incomplete, and so you can't fix the 
problem without more information.
    Once you diagnose the problem, then you need to go and buy 
some spare parts. And I will--you know, to Mr. Burgess' point 
that some--for many industries, parts are not the core of the 
issue. But for a lot of other industries, especially around 
consumer products, it is very much the core of the issue.
    If your control board in your Sony television was to break, 
where would you get that part if Sony didn't want to sell it to 
you? Where could you possibly buy a control board for that 
particular TV, right? They control the parts, and they can 
charge whatever they want for that part. They usually can price 
it to push you to buy a new product.
    And, finally, and the most perniciously, sometimes after 
you fix the product, you need to authenticate or calibrate so 
that it becomes fully operational. Like when you install a 
printer, you have to put up printer drivers so that the 
computer and the printer can communicate.
    Imagine if you had to pay Epson to fly a dealer to your 
house to install your printer driver. This is essentially what 
farmers are experiencing, where there is a dealer software tool 
without which it is impossible to complete the repair, and it 
is not just the software.
    Sometimes it is just the calibration settings. Like a 
farmer from Oklahoma told us, he replaced the hydraulic 
injectors on his equipment. He was unable to get the 
calibration settings for those injectors. The dealer would not 
tell him what those settings would be, and it is just basic 
technical information needed for repair.
    So repair restrictions are ubiquitous, as we have 
discussed, and it has a big impact. And I will talk about a 
couple of different areas.
    First is the cost, right? Our research has shown that 
consumers could save about $330 a year if they were to repair 
instead of replace products. That is $40 billion across the 
U.S. economy. That is a lot of money when costs are high and 
budgets are tight.
    The second is that it increases the digital divide. It 
removes used products that could be low entry points to get a 
working computer with access to the internet. The FTC noted in 
their Nixing the Fix report that the higher cost of repairs, 
quote, fall disproportionately, burden Americans in financial 
distress and communities of color and lower-income communities.
    So the third thing is that it hurts small businesses. I 
can't tell you how often small, independent repair shops will 
tell me, Apple could flip a switch, push an update at any 
moment and make screen repair impossible because of the 
software in the phone.
    Can you imagine having to hire staff and sign a lease 
knowing that the most high-volume part of your business could 
be shut off at any moment? We need to protect these businesses 
so that they can thrive and grow.
    And, finally, electronic waste is the fastest growing part 
of our waste stream. Disposable electronics are incompatible 
with a livable planet. A single cell phone takes about 122 
pounds of carbon to make, and if we used our cell phones for 1 
year longer on average as Americans, it would have the same 
climate benefits of taking 636,000 cars off the road.
    So I believe there is a better way we can empower repair, 
remove these barriers. People can fix stuff, save money, 
protect the environment. And I don't think this issue will go 
away until Americans have that right.
    So thank you very much.
    [The statement of Mr. Proctor follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Morelle. Perfect. Thank you, Mr. Proctor.
    Ms. Williams.

                  STATEMENT OF LAUREN WILLIAMS

    Ms. Williams. Thank you to the Committee on Rules and the 
subcommittee Chairman Morelle, Ranking Member Burgess, and 
other members of the committee for having me here today.
    As was stated, my name is Lauren Williams, and I get the 
pleasure of working on behalf of 15,000 farmers across New York 
State on a whole host of issues. And we are affiliated with the 
American Farm Bureau Federation, which represents farmers all 
across the country.
    And, you know, New York and this country is home to a lot 
of diversity of agricultural production, you know, and one of 
the key components of making sure that food gets to consumers' 
tables is the farm equipment and the technologies that are able 
to plant, harvest, and produce, you know, quality goods and 
foods to consumers.
    And it is really critical that the, you know, pieces of 
equipment ensure that farmers can operate smoothly and 
efficiently. However, the timely repair and maintenance of 
equipment is really critical to ensuring that farmers don't 
have to face unnecessary breakdowns. And it is really key that 
farmers have the option to repair their own equipment, get it 
fixed at a dealership of their choice, or go to an independent 
repair shop.
    And, you know, equipment is a major financial investment 
for farmers. And, you know, if they don't have the freedom to 
choose who they can go to, that makes an impact to their 
budget. And when we talk about equipment, just want to frame it 
in the form of, you know, it is a tractor, a planter, 
harvester, robotic milking system, or, you know, other produce-
handling type of, you know, infrastructure.
    And, you know, as Congress considers to address right to 
repair, you know, we think it is really critical to understand 
that, you know, it does have a really big impact on farmers. 
Based on feedback that we have received from farmers, you know, 
sometimes a dealership that may be the only authorized facility 
to repair equipment can be, you know, far away, whether it is, 
you know, over an hour, or they just don't have the technicians 
during the busy time of the year to send that out.
    And this has only been exacerbated by the supply chain 
delays that we have seen, the availability of labor, and the 
consolidation of equipment dealerships. That continues to be a 
big thing we hear from our farmers.
    You know, farmers have also hired their own repair 
technicians, because as they get larger in operation, it just 
makes sense to have somebody on their farm to, you know, handle 
that repair. So--and that repair staff shouldn't be blocked 
from doing repairs. You know, it is more economically viable to 
go down that route.
    And so, you know, farmers are more dependent on technology, 
you know, as we continue to see advancements, you know, through 
the uses of computers or GPSs in farm equipment. It is really 
critical that farmers have access to documentation, parts, 
digital components, onboard diagnostic and software tools 
needed to make repairs on equipment that they have purchased.
    And as part of, you know, our farm bureau organization, we 
get direct feedback that sets our policy as an organization, 
and based on what the feedback we have received is, you know, 
farmers really want the ability to make arrangements to fairly 
purchase repair and diagnostic information and repair tools 
from, you know, manufacturers. And so this allows the OEMs, or 
original equipment manufacturers, to still capture the value of 
their product, but also so they can--farmers can get their 
product repaired in a timely manner.
    And so the other key component is making sure that any of 
that information is available to all ages, models, and years of 
equipment in use. And so we have also expressed the desire of, 
you know, maybe we can do MOUs with repair with dealerships. 
But, you know, sometimes the legislative can help--efforts can 
help nudge that along, which is really important.
    And, you know, we have seen some OEMs make commitments to 
releasing their information, but I think we still have a long 
ways to go to make sure that that goes into place. And I would 
say, you know, what I think sometimes, you know, dealerships 
like to say, well, they are going to do--make changes to 
emissions or safety things, and that is not what we are 
advocating for. So I want to make sure that is clear there, 
that we want, you know, good things that enables farmers to 
keep rolling, you know, and not have to face shutdowns due to 
repair or, you know, slowdowns.
    So thank you again for this opportunity, and, you know, 
right to repair is critical for our farmers.
    [The statement of Ms. Williams follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Morelle. Thank you very much.
    And now we have, remotely, Mr. Vaheesan. Welcome, and the 
floor is yours.

                 STATEMENT OF SANDEEP VAHEESAN

    Mr. Vaheesan. Thank you, Chairman Morelle, Ranking Member 
Burgess, the other members of the subcommittee, for the 
opportunity to participate in today's hearing.
    My name is Sandeep Vaheesan. I am the legal director at the 
Open Markets Institute, an antimonopoly research and advocacy 
organization.
    Manufacturers of goods, ranging from automobiles to 
tractors to ventilators, have tried to monopolize markets for 
repair, commonly known as aftermarkets. The motivations are not 
hard to divine. The public spends tens of billions of dollars 
on repairs and maintenance every year. The profits and profit 
margins on parts and service are substantial and sometimes even 
higher than on the sale of original equipment.
    Original equipment manufacturers, or OEMs, such as Apple, 
Ford, and John Deere, employ a variety of unfair competitive 
tactics to lock up parts and service markets and lock in their 
customers. They restrict the availability of parts and tools, 
including manuals for independent technicians, and prevent 
competitive manufacturing of these items through the assertion 
of patents and trademarks. OEMs design products and----
    Mr. Morelle. I am sorry to--if I could interrupt for one 
second.
    I don't know if there is a way to increase the volume, but 
it is difficult to hear your comments. I don't know if you can 
do it on your end. I am not sure what we can do technologically 
here, but it was--it is difficult to hear. I am following along 
in your written testimony, but if there is a way to----
    Mr. Vaheesan. Oh, okay. Sure. Let me try to hold the 
microphone closer.
    Mr. McGovern. That is better.
    Mr. Morelle. That is better. Much better. Thank you.
    Mr. Vaheesan. Okay, great.
    Sorry. Let me--OEMs design products that thwart independent 
repairs too, using everything from unusual screws to software 
to prevent and deter customers from servicing their products 
where they want. For example, on one occasion, when users 
updated to the latest iOS, Apple disabled iPhones that had 
installed third-party parts.
    Two other methods of restricting the right to repair are 
worth noting. Manufacturers condition warranty coverage on the 
use of branded parts and service, which generally violates the 
Magnuson-Moss Warranty Act that Congress passed in 1975. U.S. 
PIRG found that, out of 50 surveyed home appliance 
manufacturers, 45, or 90 percent, indicated they voided 
warranties in the event of unauthorized repairs.
    OEMs also disparage the safety and quality of independent 
parts and service, despite typically having no basis for doing 
so. Indeed, in a 2021 report, the Federal Trade Commission 
found that OEMs provide little or no substantiating evidence 
for these claims against independent rivals.
    So what are the consequences of aftermarket monopolization? 
First, it subverts common notions of ownership. OEMs prevent 
car owners from making routine repairs in their garages, 
computer aficionados from upgrading their machines at home, and 
millions of others from patronizing independent service 
centers.
    Owners of appliances, electronic devices, farm equipment, 
and vehicles are made captive to manufacturers and their 
network of service providers and have no option but to pay 
their inflated prices. The economic effects are especially 
severe for lower-income households who may have little 
financial cushion to pay, for instance, overcharges on car 
repairs, while also covering their rent and meeting other 
financial obligations.
    In some cases, the dearth of independent repair options can 
force people to delay essential service. In rural and other 
less densely populated places of the country, many OEMs do not 
have a service presence. This can compel farmers to wait 
extended times to repair tractors, combines, and other 
equipment, which is something they cannot afford during harvest 
season and other critical points in the agricultural calendar.
    In healthcare, delayed repairs on life-supporting equipment 
can have dire consequences. Without functioning ventilators, 
hospitals may be unable to treat seriously ill COVID-19 
patients in their community.
    Due to higher prices for parts and service, many consumers 
may opt not to repair damaged or wornout products at all. The 
ubiquity of broken smartphone screens is an illustration. More 
than 60 percent of Americans with broken phone screens do not 
get them fixed.
    Monopolization of aftermarkets also closes off an important 
entrepreneurial path for many Americans. Manufacturers deny 
aspiring businesspeople the freedom to establish their own 
service centers for repair of cars or to set up a kiosk at the 
mall to fix smartphones. These business opportunities may be 
especially valuable for people of color, who frequently face 
discrimination and exclusion in labor markets.
    Aftermarket monopolization also has damaging effects on the 
environment. By substantially raising the cost of repairs, 
manufacturers can effectively force many customers to purchase 
new products instead of repairing what they have. This means 
reduced longevity for appliances, cars, and smartphones, and 
greater production of replacement items. Reduced effective 
longevity for these products translates to more waste into 
landfills and increased greenhouse gas emissions and natural 
resource extraction.
    Electronic waste, or e-waste, is especially harmful. 
Millions of computers, phones, and televisions are sent to 
landfills in the United States, and especially countries in the 
global south every year. This waste can contaminate groundwater 
used for drinking and agricultural purposes and, when 
incinerated, can cause cancer and other serious illness.
    Congress must restore and protect Americans' right to 
repair their cars, farm equipment, and smartphones, just to 
name a few examples.
    Chairman Morelle's Fair Repair Act would be a major advance 
and ensure the wide availability of parts and tools on fair and 
reasonable terms. Through such measures, Congress can end 
manufacturers' ongoing monopolization of aftermarkets. The 
benefits of such legislative action include restoration of the 
rights traditionally associated with product ownership, lower 
priced and more timely repairs, more entrepreneurial 
opportunities, and a cleaner environment.
    And without a captive customer base for parts and service 
and an easy source of revenues and profits, OEMs may have a 
stronger incentive to design, manufacture, and market high-
quality appliances, electronics, equipment, and vehicles.
    Thank you for the opportunity to testify at today's 
hearing. I look forward to your questions.
    [The statement of Mr. Vaheesan follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Morelle. Thank you very much, Mr. Vaheesan.
    I am going to just ask a couple of questions, and I am 
going to reserve the right to come back and ask more, but I do 
want to give my colleagues the opportunity to ask questions if 
they have so--so if that is all right, I will proceed that way.
    So I wanted to--Mr. Proctor, if I might start with you. I 
mentioned in my opening comments that manufacturers used to 
make repair parts, tools, and information like schematic 
diagrams pretty accessible to consumers and independent repair 
shops.
    Could you just sort of describe what has happened now with 
the increased reliance on digital technology and how that has, 
both in subtle ways and not subtle ways, really changed access 
to the necessary repair materials over the last--in particular, 
the last couple of decades?
    Mr. Proctor. Yeah, it is a great question. I think that 
there is--there is two ways to answer this. The first is, the 
regulatory environment has changed as the technology has 
changed. So if you go back, and you are an auto maker in 1985, 
and you wanted to make a car that no one could fix, the 
technology--you could do it. You could put a padlock on the 
hood, but I don't think that would be tolerated by the--you 
know, I think somebody would step in and stop that.
    And, now, it is actually a lot easier to accomplish that 
same feat. You can do it with software. And, also, nobody is 
stopping them from doing it, right? I heard a story the other 
day from somebody who knocked a sideview mirror off their car. 
They put another side mirror on. The car detected that it was 
a--you know, a foreign part, like it was a new part. The serial 
numbers didn't match, and it refused to start. Like, this is 
the--and this is trivial technologically to do. But it is also 
a product of what the government and what consumers are letting 
these companies do.
    And so I think both things need to change, right? We need 
to design things to be fixable. And then, when I think 
companies cross the line, there needs to be a consequence. They 
need to be drawn back so that we can use the technology in our 
lives.
    Mr. Morelle. You raise an interesting point, because what 
you are really describing is this technological handshake that 
happens. And you can see it even with printers. So I have a 
printer--a home printer, which it is interesting. The fact that 
you can use third-party cartridges has really created much more 
competition in the marketplace. You can even get them refilled 
or what they call recharging a cartridge.
    But when I do that, my printer, obviously because it isn't 
able to complete the handshake with the OEM-brand cartridge, 
will--it knows that there is a cartridge that is not--even 
though the cartridge might work perfectly fine--I mean, it is 
just filled with ink. It is--I don't know how complicated that 
is. I certainly couldn't do it, but I don't think it is 
technologically all that much of a marvel. But that handshake 
is unable to be completed. So it knows that I haven't used its 
brand cartridge.
    So that is what you are talking about, is really--and more 
and more sensors and more built-in software for consumer goods 
of all kinds is now going to be ubiquitous. It is already 
ubiquitous. And that really does allow and affect an inability, 
then, to make those repairs, in some cases. In some cases, it 
just notifies you and tells you you have been a bad consumer 
because you haven't bought their particular product.
    But when you think about it--and I think you would agree 
that that kind of--that inability to have that competition 
really makes also the OEM less interested in consumer 
innovations, right, if you don't have competition in the 
marketplace. So I often think of--it is like the old days when 
you had the razor. You didn't have to buy the blade necessarily 
from the manufacturer. People could just, you know--now, that 
is not a repair issue, but it is effectively the same kind of 
thing. Now, could you imagine an electronic sensor that tells 
you you are not using the right blades, so, therefore, you 
can't use the razor anymore? I don't know how they would stop 
that, but----
    Mr. Proctor. Yeah. I wanted to make one comment on that, 
because I think it is an important point, which is sometimes 
the aftermarket produces higher-quality parts than the original 
manufacturer. Like, the first time I repaired the battery in my 
iPhone 6, it doubled the life of the battery of the phone, 
because somebody figured out how to make a better battery that 
fit that form factor.
    And there is no reason to think that some company couldn't 
make a way better printer ink that doesn't run as much and is 
che--you know, so it is not just that, oh, the manufacturer has 
like this pristine, perfect technology, and everybody else is 
just competing for a piece of that. Sometimes there really--
they are improvements, and that--and we should allow that 
innovation to occur that--I mean, there is a huge history of 
that in car culture. Like, that is how a lot of our cool car 
technologies came about, because tinkerers actually added to 
the product and car companies learned from them.
    Mr. Morelle. Well, there is no question. I think if you 
think about sort of the whole notion of capitalism is this 
ability to compete, and competition typically has two benefits. 
One is innovation, and two is downward pressure on price. So if 
you remove that leverage in a sense, economic leverage, you 
have really now subjected the consumer to higher prices for 
supplies and other things or replacement parts.
    If I could, Ms. Williams, in the FTC's report to Congress 
on right to repair in May of 2021, which I referenced earlier, 
the Commission studied the impact of repair restrictions on 
farmers.
    By the way, I will just note parenthetically, the number 
one industry in the State of New York is agriculture. I am sure 
you know that, and I don't think most people think of New York 
as an agricultural State, but it is in both dairy and crops. 
And so I appreciate all the work you do.
    But, in one instance, as it related to restrictions on 
farmers, it was found that a farmer in Kansas had to wait 32 
days for repairs on agricultural equipment, which ultimately 
resulted in a loss of tens of thousands of dollars in revenue. 
It is cited in the report.
    And you discussed that failure to repair farm equipment can 
be detrimental without swift legislative solutions.
    I just--you know, if you could talk about that, because I 
think people tend to think of, oh, it is harvesting season, so 
you have got, depending on where you are in the country and 
what you are harvesting, 2 months, 3 months. But weather 
doesn't allow you to harvest every day during that season. So 
you may have a relatively short window in a year, and if your 
harvester or other equipment that you need is unavailable, can 
you just talk a little bit about that and the impact on yield?
    Ms. Williams. Yeah. Thank you for that question. And I 
think that raises a really good point, is, you know, when 
farmers are ready to harvest or plant, you know, it is a matter 
of hours or days that they need to get that accomplished. And 
so if their equipment breaks down and they are waiting for a 
dealership to come out and repair, and that dealership is also 
dealing with, you know, other farms in the area that may be 
also facing, you know, repair needs, it could be, you know, 
outside of that window of prime harvest season.
    So not only is that impacting your overall time to get a 
crop in, you know, it impacts your--you know, your revenue as a 
farm and your ability to sell, you know, a product to market, 
because if it is no longer a quality good, that market may say, 
hey, we are not interested anymore. And now you have lost out 
on that revenue.
    So, you know, each farm, you know, is different in what 
that revenue may look like, but it is, you know, a key, you 
know, thing to highlight that there is lost revenue potential 
there.
    Mr. Morelle. I will--I will just note, I was--not too long 
ago, I had a--probably a moderate sized farm in my district, 
and the farmer wanted to show me his robotic milking machines 
and what they are doing. It is fascinating stuff. But while I 
was there, I--he pointed to a piece of equipment that related 
to his crops, and he said--so I asked him about it. And he 
said, This is a--I have been waiting and waiting and waiting 
for months now for someone to come repair this piece of 
equipment, which I need, and it is just sitting idle. It is 
costing me--it was--it is pretty expensive. I don't know that 
there is any inexpensive farm equipment anymore, so--but he was 
just--used it as a practical demonstration of the challenges he 
faced because he couldn't get someone to come in and repair the 
equipment.
    Ms. Williams. Yeah. And I think, you know--and this is all 
part of, you know, the wider, you know, issues that I think 
farmers are running into. Yes, some of it is supply chain, but 
if you don't have, you know, a dealership that is willing to 
come out in a timely manner, that slows you down. And like you 
said, it can cost you, you know, thousands of dollars over 
those days or months that they are unable to get those repairs.
    And I think, you know, it is not just harvest season, but 
as you were talking about a robotic milking system, you know, 
those cows need to be milked twice or three times a day. So if 
you can't get in a company that has--is the only availability 
to fix that robotic milking system, you know, you are shut down 
and not able to, you know--you know, milk your cows or, you 
know, just do everyday things that you should be able to do.
    Mr. Morelle. Yeah. Let me ask you, Mr. Vaheesan, a 
question. And I do want to allow Dr. Burgess opportunity, and 
then I will come back, and I have additional things I would 
like to ask.
    But, in your testimony, you highlighted some of the recent 
actions taken by the FTC using their powers under the Magnuson-
Moss Act--it was in your testimony--which protects consumers 
from illegal conditions related to repair being placed on 
product warranties.
    Can you just expand on the role of the strong enforcement 
by the FTC to protect the right to repair, and whether it be 
providing additional resources or rulemaking authority, what 
more Congress might be able to do to help the FTC in this area?
    Mr. Vaheesan. Thank you for that question, Chairman. So the 
Magnuson-Moss enforcement activity of the FTC is a very 
positive start.
    Mr. Morelle. I am going to ask--I am sorry. I am going to 
continue to ask you to speak up if you can. I apologize, but 
the audio here is not great.
    Mr. Vaheesan. Yes. I will certainly speak up.
    So this past few months, the FTC has brought three 
Magnuson-Moss cases, and the FTC should continue its 
enforcement activity in this area because many OEMs flout the 
law. I noted in my testimony that U.S. PIRG found that, out of 
50 surveyed home appliance manufacturers, 45 openly disregard 
Magnuson-Moss. So deterrence will require vigorous FTC 
enforcement of this particular statute.
    But the FTC should do more and has legal authority to do 
more specifically to prohibit unfair methods of competition as 
well as unfair or deceptive acts or practices. So these are its 
antitrust and consumer protection powers, respectively.
    So there are two things it can do. So, first, it can 
challenge refusals by OEMs to sell parts and tools to 
independent repair shops as an unfair method of competition. 
Second, it can challenge false claims made about independent 
parts and service, whether it is about their safety, 
reliability, or overall quality.
    So neither OEMs nor authorized businesses should be 
permitted to compete through deceptive marketing, and that is 
unfortunately what some OEMs are doing at present. But Congress 
can help the FTC carry out its consumer protection and 
antitrust missions.
    First, the FTC has a lot to do but, unfortunately, has far 
fewer staff than it did in 1979, and obviously the economy as 
well as the population of the United States have grown 
significantly during that time.
    Second, Congress should bolster the FTC's remedial powers. 
In a decision last year called AMG Capital Management v. FTC, 
the Supreme Court stripped the FTC of the power to obtain 
restitution and other monetary relief in competition cases. So, 
right now, at least against first-time violators of FTC 
competition law, the FTC can only seek an order telling that 
company, go forth and sin no more. That, as you might guess, 
provides insufficient deterrence against lawbreaking.
    But, thankfully, Congress has a good model to follow when 
it comes to agency remedial power. It can emulate what it did 
in the Dodd-Frank Act when it gave the CFPB expansive monetary 
relief powers so that CFPB can seek refunds of money, 
restitution, disgorgement of compensation for unjust 
enrichment, payment of damages or other monetary relief, and 
civil money penalties. So I hope Congress seriously considers 
granting the FTC comparable powers.
    Mr. Morelle. Terrific. Thank you.
    I am now going to reserve some time for further questions, 
but I am happy to turn to my colleague, Dr. Burgess.
    Dr. Burgess. And I thank the chairman.
    So, Mr. Chairman, let me ask you. I mean, this is--I was 
given a bill that you have introduced on right to repair. Is 
this a legislative hearing on that bill?
    Mr. Morelle. This is a subcommittee on legislative and 
budget implications, and I think, in the bill, it references 
the Rules Committee and empowers us to be able to hold a 
hearing on what kinds of things around right to repair can be 
done legislatively and budgetly to help consumers.
    Dr. Burgess. So let me just ask our witnesses: Are you 
familiar with the legislation that Mr. Morelle has introduced?
    Which bill is it? H.R. 4006.
    Ms. Williams. The Fair Repair Act, yes.
    Dr. Burgess. So do you have an opinion as to whether or not 
this legislation would be helpful for the things that are being 
talked about before the Rules Committee today?
    Yes. Speak, sir, if you would, Mr. Proctor.
    Mr. Proctor. Thank you, Dr. Burgess. Yes. I do strongly 
support----
    Dr. Burgess. Okay.
    Mr. Proctor [continuing]. That as a remedy. And I do think 
that----
    Dr. Burgess. Fair answer.
    Mr. Proctor. Okay.
    Dr. Burgess. Ms. Williams, let me ask you.
    Ms. Williams. Yes. We do think--we have supported the bill, 
and we do think it is a good avenue to address right to repair.
    Dr. Burgess. Okay. And our remote witness? Were you able to 
hear the question?
    Mr. Vaheesan. Yes, I heard the question, and I do support 
the bill and believe it would help restore Americans' right to 
repair.
    Dr. Burgess. So help me here, because, in reading the bill, 
section 4, rules of constructions, limitations, and 
nonapplication, if you are familiar with that, and it goes 
through some things about the security functions are not 
excluded. Okay. Fair enough.
    Trade secrets protection. Okay. Fair enough.
    Section 4, nonapplication to motor vehicles or motor 
vehicle repair manufacturers: Nothing in this Act shall apply 
to a motor vehicle repair manufacturer, a manufacturer of a 
motor vehicle equipment, or a motor vehicle dealer acting in 
that capacity.
    I guess the question I have back to you, since you feel 
that this legislation is consistent with the goals of this 
hearing, it seems like that excludes a big chunk of what you 
are trying to include. Am I correct in that?
    Mr. Proctor. That is correct. And would you like me to 
expand on that? Thank you.
    Dr. Burgess. I wish you would, because I don't understand 
it.
    Mr. Proctor. So Chairman Morelle mentioned that, in 2012, 
Massachusetts passed the Fair Repair Act, which passes both on 
the ballot and then through the legislative--it actually passed 
the ballot 86 to 14, which is a higher percentage than actually 
people in Massachusetts who own cars. And it was to create 
parity around access to digital diagnostic tools, because that 
was becoming an issue.
    And now there is other issues with car repair, which is why 
there are two other bills actually in this Congress right now, 
one by Representative Darrell Issa, called the SMART Act, which 
has to do with the ways in which manufacturers are increasingly 
using design patterns to prevent aftermarket competition for 
parts. And then there is a bill by Representative Bobby Rush of 
Illinois, called the REPAIR Act, which expands access to 
digital diagnostics, including things that are over the 
airwaves.
    So as technology is improving and getting more developed, 
there is new techniques to restrict repair, and there have been 
new bills. This bill would essentially bring other kinds of 
technology up to the point where cars are, you know, circa 19--
or 2012. So cars are a little bit ahead, but there are still 
issues, and then other kinds of technology do not have as much 
protection as cars.
    Dr. Burgess. So let me ask you a question. Saturday 
mornings I am frequently driving around the district from point 
A to point B. There is a 5-hour car show on one of my local 
radio stations, and I usually have that tuned in on those hours 
on Saturday morning when I am traveling around the district. 
The reason I do that is because I have found that most of the 
cities that I represent, constituents from those cities will 
call into this car show with questions.
    And one of the issues that has come up that is a burning 
issue apparently locally are the issues surrounding the use of 
software in automobiles and the fact that the software is not 
owned by the automobile owner but owned by the software 
company. And, you know, fair enough. We need to have that 
discussion, and people need to understand.
    I think, when I buy a car, I buy the car--the spark plugs, 
the fuel line, and, yes, the little items on the screen. But 
apparently that is not always the case anymore, and there are 
separate licensing agreements with the software that--just, 
quite frankly, I don't know that owners--automobile owners are 
as aware of that as perhaps they should be. I don't know if we 
as automobile owners are as aware of the data collected by our 
automobiles that may be--even if it is still wholly contained 
within the vehicle, at some point may be subpoenaed, or there 
may be writs and what not. I am not a legal person, but it is 
certainly discoverable information in the case of an automobile 
accident.
    So, I mean, there is a lot of aspects to this that I think 
need to be explored. I am just not sure that the Rules 
Committee is the place to do that. Again, we have committees of 
jurisdiction that cover small business, that cover financial 
services, that cover even the Federal Trade Commission. As I 
mentioned, the Energy and Commerce Committee has jurisdiction 
over the Federal Trade Commission. So I just think it might be 
useful to explore this on a broader footing than the--than we 
are doing today.
    I think the--and one of the things that worries me is, as, 
you know, you hear the comments surrounding those types of 
activities, is the--we may get to a point where you don't own a 
car anymore. You may just buy a license to operate the car, 
basically lease the car and lease the software. And maybe that 
is a good thing. Maybe it is not. I am old school. I always 
think owning the nuts and bolts that you purchased in an 
automobile is a good thing.
    But we may be--and even legislation like this and the other 
legislative products that were mentioned may be driving us, no 
pun intended, in a direction that would be lease only; we would 
not be--we would not be able to own our own vehicles. And, in a 
free society, I don't know that that is a good thing.
    In many ways, the freedom that we have derived from our 
love affair with the automobile has made this country what it 
is, and I remember George Will wrote on this several years ago 
about the freedom to--freedom to drive is the reason that 
people value living in a free society.
    So I just offer that out there, because we know some things 
are changing in the industry. We know some things are going to 
look vastly different 10 years from now than they do today. But 
I--while I appreciate the issues that are being brought up 
today--and I do want to stress I have constituents and 
supporters who are on--strongly on both sides of this issue, 
we----
    Mr. Morelle. May I interrupt for just one second before 
Jennifer leaves to wish her a happy birthday? We want to make 
sure that I--I would sing to you, but I would not want to ruin 
your day, but I understand it is your birthday, and I want to 
join with all your friends in wishing you a happy birthday.
    Ms. Belair. Thank you.
    Mr. Morelle. Sorry, Mr.--that is the only reason I would 
interrupt you, Dr. Burgess.
    Dr. Burgess. Fair enough. If you are not going to sing, 
then I will yield back.
    Mr. Morelle. Well, I do--look, I appreciate it very much.
    First of all, you know, our goal in the drafting of the 
bill, which is--this is not a legislative hearing on the bill, 
but was really to start to take a more narrow view, but to 
directly confront the issues related to digital equipment.
    I certainly think you make great points about whether or 
not the expansion of that bill or the work of the Congress to 
look at automotive, because I think there are clearly parallels 
here, so I--I take that all as very positive, and I think that 
is a part of the discussion that ought to go on.
    And, frankly, again, this is sort of directed at--because 
the subcommittee has responsibility for recommending 
legislative and budgetary things that we ought to be thinking 
about and the FTC's role, while clearly not exclusively under 
our jurisdiction, legislative and budget is the subcommittee's 
charge.
    But I very much think that the conversation will expand, 
because the principles will, I think we would all agree, 
probably hold no matter what the digital thing is. And I think, 
actually--and I would be happy to have any--any other witnesses 
comment on this, but--and I was thinking this, and what Dr. 
Burgess said further prompted it.
    So if I--just to be devil's advocate, there is a couple of 
things that OEMs might say about this. First of all, the 
question of--well, let me ask it this way: If you were an OEM 
and you are building something, and you are sort of trying to 
figure out what is my profit going to be here, what is the cost 
of building this, what am I doing, you may anticipate, okay, 
there is X amount of revenue I am going to derive on the sale 
of the good itself, so the phone. But I am sort of calculating 
in here what I think I can get in return per unit on service 
costs, right?
    And so could they make an argument or would they make an 
argument that, if you don't allow us sort of the exclusivity to 
provide the repairs and do service on it, or if you don't allow 
me to have a relatively short period of ownership and then 
forcing this planned obsolescence, that my revenues won't be 
sufficient and now I will have to raise the cost of goods?
    So I am just--you know, I suspect that is probably part of 
the argument, that that is a way to have a longer tail on 
revenues other than the sale of the good itself, and I just 
wonder if anyone wants to comment on that. Yeah.
    Mr. Proctor. I am happy to comment on that. Sandeep might 
also have thoughts.
    I mean, I think it goes back to Dr. Burgess' comment. Like, 
you can own a car but then, also, you are leasing the car. I 
believe in truth in advertising. If you are going to sell 
somebody something, sell it to them. If you are going to lease 
something to somebody, lease it to them. If you tether their 
future purchases to a secret agreement that you baked into the 
technology that they don't know about, that is deceptive, and 
we should stop that. They should be required to, I mean, at a 
minimum, disclose that.
    But it is also--in antitrust law, that is a tying 
arrangement, and that is supposed to be enforced against, but 
these are just ubiquitous, right? I mean, the thing we are 
discussing with cars, this is essentially--these tethering, you 
know, technologies to force you to buy services from them, they 
should just be honest with you. They should honor the doctrine 
of the sale, or they should lease it to you.
    And so I do think that that is a really important aspect to 
this. And if they were to charge you more, at least you would 
know what you were getting. You wouldn't be--you wouldn't be 
like, oh, I am buying this thing because it is a low-cost 
thing, and then it turns out the headlight goes out and you had 
to pay $1,600 to get them to put the new headlight in, and you 
didn't know that they had this gotcha--I mean, you brought up 
razor blades and printer cartridges, which are, like, this is 
the experience people have. Oh, this printer is only 40 bucks, 
and the ink is 75, right? So we want companies to compete in 
commerce. We don't want them to deceive people in the process.
    Mr. Morelle. I wonder, Ms. Williams or Sandeep, if you have 
any additional comments related to that question?
    Mr. Vaheesan. Sure. So a couple of thoughts. So I think 
Nathan is absolutely right, we want companies to be forthright 
with customers. It is better to have them charge more upfront 
than they hide service and parts fees that are unknown and, 
frankly, unknowable when someone purchases a car, for example. 
You don't know how often the car will break down. You don't 
know exactly how much different parts and services will cost. 
It is better for manufacturers to be truthful and tell them. 
You know, shift the cost toward the list price and away from 
parts and service.
    But even apart from that, I think there is a reason to 
believe that the cost shifting might not actually be as 
significant as some of the OEMs claim. And the main reason is, 
when people are shopping for a car, for example, there is 
competition among different manufacturers. So Honda competes 
against Toyota. They both compete against Ford, GM, and Kia. So 
there is price competition at the upfront level among different 
brands, whether it is cars or the farm equipment or 
smartphones.
    But once someone has purchased one of these items, they are 
captive. So if I purchase a Honda and I need servicing on it, I 
have to take it to a Honda dealership. I cannot take it to a 
Ford dealership, because they don't have the necessary parts 
and tools, and increasingly cannot take it to an independent 
dealer either because the OEMs are withholding the necessary 
items from them.
    So to the extent costs are shifted to the product market, 
you know, I think there is good reason to believe that 
competition will discipline OEMs' ability to raise prices.
    Mr. Morelle. Is--I am not sure. Did you have anything to 
add on that, Ms. Williams?
    Ms. Williams. And I will just add and kind of going off 
what, you know, the other witnesses have said, just, you know, 
I think OEMs would be surprised maybe by how many independent 
repair shops or, you know, farmers or other, you know, 
individuals would be interested in purchasing that technology. 
And maybe if there is an additional revenue stream for them, 
you know, if they are able to make their technologies more 
available.
    Mr. Morelle. Yeah, you raise an interesting point. I have 
thought about, you know, over the years, while I am thinking 
this through. So there are OEMs that have authorized dealers 
and repair shops. And I have often thought, if you really 
wanted to extend that to consumers, you would allow any third-
party repair shop, if they met standards that you just make 
available, to say, okay, as long as you meet these standards, 
you are an authorized dealer, but they also don't do that or 
rarely do that.
    So even the degree to which they have authorized dealers 
who might be third party, they are very tightly constrained, 
and that is intended, again, I think, to make sure that they 
corner the ability to have those products available.
    It was interesting, in Dr. Burgess' comments, you know, 
talking about sort of the--you know, he used automotive, but it 
would apply, it seems to me, to anything in terms of leasing 
versus owning, right? So I suppose you could say, if you were a 
even home-office printer company or if you were a farm 
equipment manufacturer, you could say, look, we don't sell 
anything. We are just going to lease it. You really can't buy 
the piece of equipment. You can lease it from us.
    They don't do that. I am sort of curious, because that sort 
of seems more in line. Then you could make a decision as a 
consumer, do I want to lease it and pay the lease price every 
year, whatever the rental is, but all the obligations for 
service would be on the OEM or the lessor? But that doesn't 
happen.
    Is that a growing trend? Is that something that--or is 
there a real reason why they don't want to be leasing and they 
do want to sell, but they just want to have both their cake and 
eat it too?
    And I will start with Mr. Proctor.
    Mr. Proctor. I just want to make a quick comment. They are 
doing both at the same time. They are selling it to you and 
charging you rents on it.
    Mr. Morelle. Right.
    Mr. Proctor. And so why would they want to stop that? That 
is the gravy train, right. I think they will keep doing that 
until we stop them. So I don't know what is better----
    Mr. Morelle. So do you expect--so let me ask you a 
question. Could you see a time in the future where if we really 
stepped in as the Federal Government and said, okay, you may 
not do this. So as long as it doesn't affect intellectual 
property and patents, you are going to be required to provide 
diagnostic tools, diagnostic software codes, and you are going 
to be--we are going to require that anyone who holds out a 
shingle is going to have access to that equipment, is going to 
be able to go directly to consumers.
    Do you suspect if that happens that then they will stop 
selling products and move more to leasing? Which, I guess, a 
lease would be a fairer way of doing it. It would be a more 
honest and transparent way of doing it. I am not sure consumers 
would like that. They may opt not to do business with a printer 
company that is only leasing the printer or, you know, a 
harvester or some other type of equipment. I just wonder if 
that is a possibility.
    Mr. Proctor. They could choose to run their business within 
the bounds of the law in any way they want. I think that, you 
know, Dr. Burgess' comments about wanting to own things, I 
think most people are wired that way. So I think that what they 
would see is people actually want to own the products that they 
buy, and they would rather buy something than to be tethered to 
some company and to need their constant approval and to think 
that--you know.
    So some--I think some items people could operate that way, 
but, like, I think these companies would love to move to a 
constant guaranteed revenue model, but I just don't know if 
consumers are going to go for it. And if other competitors are 
going to sell it to you and you would feel more secure in that, 
I think that they are going to have a hard time convincing 
everyone to give up the idea of ownership across the board.
    Mr. Morelle. Yeah, my guess is that you are right, that 
they want the advantages of both, and I think you are right, 
too, that consumers are going to want to buy things. I think if 
you are a farmer, you want to buy equipment and hopefully not 
just use it for the lease term of 5 years, but if you are 
making a significant investment, you probably have equipment 
that you could use for 25, 30 years without having a 
replacement cost.
    But any comment on that, Ms. Williams?
    Ms. Williams. Yeah. I would tend to agree, you know, 
farmers make, you know, their decisions. Some, you know, may 
choose to keep, you know, or purchase equipment and keep it for 
a year or 2 and just like to turn over equipment, you know, 
more. But others, that is a long-term investment where, you 
know, you have that tractor for 20, 30 years, and you want--
when you buy it, you want the rights to do whatever you need to 
do to make sure it works for your operation. So I think, you 
know, it comes down to consumer choice and what they want from 
the market or what they want from OEMs.
    Mr. Morelle. Yeah. I also think, not only can you own it, 
can you repair it, you can also sell it. So I am sure there is 
some people that want to buy it because they figure there is a 
resale value inherited there.
    And I apologize, Mr. Vaheesan, did you have any comment on 
that?
    Mr. Vaheesan. Yes, Chairman. I think you and Dr. Burgess 
raised a critical point here, that there has been a dangerous 
blurring of the line between products and services. Twenty, 
certainly 30 years ago, people knew what fell in the service 
category, what fell in the product category. And now, many OEMs 
are, as you said, trying to have their cake and eat it too, 
where they present something as a sale, I purchase a car and 
drive it off the lot, think it is mine. But functionally, in 
many ways it resembles a lease where they have a captive 
service relationship with the manufacturer.
    And if OEMs want to lease products, that is fine. That is a 
good option for many people. But they should be truthful and 
honest about it instead of trying to disguise a sale as a 
functional lease.
    Mr. Morelle. So thank you for that. Let me stay with you 
for a follow-up question on an item you raised in your 
testimony. You talked about the different ways companies are 
restricting repairs for consumers.
    As an expert on competition, can you speak further on what 
these practices do to the market, so in a larger way what this 
is doing to markets?
    Mr. Vaheesan. Sure. So aftermarket monopolization affects 
us as consumers, and that is maybe the way we can all relate to 
it most easily, but the harms are not restricted to customers. 
Through some of the practices I describe in my testimony, 
refusal to sell parts and tools, disparaging independent shops 
and parts makers, they are excluding businesses from the 
marketplace.
    So they are suppressing an important and a channel for 
entrepreneurial activity for many people. Or to put it more 
concretely, some of these unfair practices by OEMs mean fewer 
neighborhood mechanic shops and fewer kiosks at the mall to fix 
cars and smartphones at a reasonable price respectively.
    So they are really choking off business creation 
opportunities for many Americans. And traditionally, these were 
very attractive business opportunities because it required, you 
know, some important technical know-how but often only modest 
capital to start a repair shop service and an assorted array of 
durable goods. So the effects on consumers are real, but the 
adverse effects on small businesses and small business 
formation is significant and important too.
    Mr. Morelle. Yeah. You also mentioned the impact this has 
on highlighting or exacerbating inequality. Could you just 
comment, relative to underserved areas and rural communities in 
particular, how stronger enforcement can help mitigate those 
inequities?
    Mr. Vaheesan. Sure. So we have seen decades of 
disinvestment from rural areas and, traditionally, the creation 
of independent repair shops and technical service centers have 
been an especially important path for entrepreneurs in rural 
areas. And through aftermarket monopolization, OEMs have 
further contributed and compounded the economic, political, and 
social ails facing rural areas because they have cut off an 
important way that rural Americans can start businesses, 
support themselves, and generate tax revenues for their local 
communities.
    Mr. Morelle. Ms. Williams, when I talk to people about this 
issue--and I have been, as I said, involved with it for a 
number of years--they think, understandably, about cell phones, 
they think about laptops, they think about--you know, frankly, 
now, because everything has digital equipment, so your oven, 
your microwave, I mean, all of those consumer electronics. But 
I think people don't fully appreciate, maybe if you could just 
expand on the use of digital equipment in farming, particularly 
as technology has become more and more important around yield, 
around land use. Could you just talk a little bit about that?
    Ms. Williams. Yeah. So, you know, in recent years, we have 
seen a lot more investment in precision agriculture, a lot more 
technology advancement in tractors or other farm equipment 
where, you know, computers are some of the basis of that 
tractor, that equipment, and it is helping, you know, keep 
things straight, you know, when they are planting corn or other 
crops or just, you know, giving feedback to the farmer on 
yields or, you know, how to moderate, you know, fertilizer 
application rates.
    So farmers are getting all this data, but I think, you 
know, as we add more technology to tractors and equipment, it 
sets, you know, more abilities for if, you know, a sensor fails 
or if something is just not right and it all feeds back to the 
computer, sometimes when that happens it can stop the equipment 
from operating, and, you know, you need to contact a technician 
to what could be a simple repair or is just something like a 
part needs to be replaced, but the computer says, no, it can't 
function. That just feeds back into it.
    So, you know, as we increasingly see reliance on, you know, 
more technologically advanced farm equipment, you know, this 
issue is going to continue to be pressing, especially as we 
need, you know, further folks to be able to have the knowledge 
to repair that. You know, it is not just going in with your 
tools anymore; it is having to hook up to the computer and 
diagnose what the issue is and having the capability to fix it.
    Mr. Morelle. I am just sort of smiling to myself as you 
were mentioning that. My father was a pipefitter, and 
throughout his life he would repair things, both at the house--
and I don't know how he repaired half the things he did. But we 
still find things that he did around, and it is kind of like, 
wow, that thing broke and then he fixed it and he fixed it this 
way. But I am sure if there was a digital piece to it, he would 
have been at a loss. He was really a mechanic at heart and 
would always figure out how to do things, but in the analog 
world not in the digital world.
    But, Mr. Proctor, if you could just comment. We do hear 
arguments from the OEMs saying that the restrictions they put 
in place are important for product integrity, safety, or just 
for the reputation of the product. I just wonder if you might 
respond to those claims.
    Mr. Proctor. Yeah. I think there is two thoughts I have. 
The first is, you know, the FTC went through a lot of this 
evidence from--manufacturers tried to present these arguments. 
I think if you want to go through the evidentiary record, like 
the FTC did for 2 years, you come to the conclusion, oh, 
actually, there is no real proof to any of this.
    The other piece is that they sold the equipment and you are 
the owner now. So they can't say, you know, the way you are 
handling this equipment reflects badly on us as a brand. It is 
like, well, you sold it. Don't sell it if you don't want me to 
own it. So I think, to me, that just comes back to the idea of 
ownership.
    Mr. Morelle. Yeah. And just to change gears a little bit. 
You mentioned in your testimony the impact of repair 
restrictions on the environment, and obviously this is 
critical, particularly given where we are in the world on 
climate crisis and the impact of all these things. So could you 
just elaborate on the harm caused by increased electronic 
waste?
    And I know, for instance, when I dispose of a flat screen 
TV or a computer, I have to go to a specialized place to bring 
it. I am not sure that every consumer is as, you know, 
thoughtful about how to do it. But can you just talk about that 
in terms of the harm of these electronic goods ending up in the 
waste stream?
    Mr. Proctor. Yeah. Like, 70 percent of the toxic heavy 
metals going into our landfills come from our electronics. You 
know, you think about what it is, it is plastic and flame 
retardants and lead and other heavy metals, cadmium, all 
mingled together, right. It is very difficult to separate them 
out.
    And really, it is really valuable stuff, right. So I 
remember Sonos, which is a company that makes Bluetooth radios, 
they had a thing where they let you put it in recycle mode if 
you wanted to--it basically destroyed the speaker in exchange 
for like a credit on buying a new one. And I talked to a 
recycler about that, and he laughed. He was like, how much do 
you think a Sonos speaker is worth to me? Like, how much--if 
you just take the weight of plastic and copper out of that 
thing and the magnet, maybe 3 cents, but it is worth like $150 
bucks as a speaker.
    So it is really important to make the electronic waste 
system work that they can use as much of the electronics as 
they possibly can. That drives the, like, profitability of that 
industry, and the more that they can reuse stuff, that means 
less manufacturing. The manufacturing of new electronics is a 
huge part of this issue, right. We are blowing up mountains and 
creating giant radioactive acidic lakes of doom in, you know, 
Mongolia to get the rare earth metals for our smartphones, and 
we should be using them for a long time. That is a huge 
ecological investment. And it helps the whole industry operate 
if they can reuse those electronics when they come to those 
electronic waste facilities.
    Mr. Morelle. Before I close, Dr. Burgess, did you have any 
further questions to ask of the witnesses?
    Dr. Burgess. I probably have said more than I should. I am 
just----
    Mr. Morelle. Well, we are going to be going through in 
excruciating detail everything you have said word by word.
    Dr. Burgess. I am concerned about the issue of the funding 
of this activity through fines. With the Consumer Financial 
Protection Bureau we had this argument round and round and 
round. The Constitution was very clear that no activity should 
happen without the express appropriation from Congress, and 
using the fines to pay for the enforcement just seems, to me, 
going down a road that I would not recommended. But beyond 
that, I don't have any further comment, and I will yield back.
    Mr. Morelle. Thank you, sir.
    I would just ask our witnesses, is there anything that you 
feel you want to add to this conversation that you haven't had 
a chance to say? Mr. Proctor.
    Mr. Proctor. Let me just say thank you for having this 
hearing, and thank you for being such a leader on the topic. We 
do hope that we can continue having these conversations up 
here. Like I said in my testimony, I don't think these issues 
are going to go away, especially, you know, for folks like the 
farming--the farmers out there who really need access to 
repair.
    Mr. Morelle. Ms. Williams.
    Ms. Williams. I will just echo that, you know, thank you 
for having us. And, you know, this issue, you know, as others 
have said, continues to be, you know, top of mind and just 
becomes more and more complicated as equipment gets more and 
more sophisticated. And at some point we are going to have to 
find answers. And, you know, hopefully we can reach, you know, 
agreements that works for everybody and just make sure that, 
you know, consumers have a choice when they, you know, buy 
their products at different methods or where they get it 
repaired as well.
    Mr. Morelle. Very good.
    Mr. Vaheesan.
    Mr. Vaheesan. Yes, Chairman. Thank you for the opportunity 
to testify at today's hearing. I think Congress has a special 
and important opportunity to restore Americans' right to 
repair, promote the businesses of new enterprises, even 
encourage OEMs to make higher quality, more durable products, 
and maybe, perhaps most critically, protect the environment 
from further degradation.
    Mr. Morelle. Well, very good. I want to--before I close, 
and I certainly want to thank everyone for participating, but I 
do have a number of statements, as Dr. Burgess had done 
earlier, to have added without--for unanimous consent to submit 
to the record comments from Public Knowledge; testimony from 
the National Farmers Union; testimony submitted for the 
Alliance for Automotive Innovation; comments by Auto Care 
Association, Repair.Org, and the Automotive Aftermarket 
Suppliers Association.
    Without objection, I will submit those all for the record 
as well.
    [The information follows:]
    Mr. Morelle. But, again, I thank the witnesses very much 
for joining us, for your continued work on what I think is a 
really important issue and important space for consumers and 
for small businesses, entrepreneurs, and for the United States 
generally and the country.
    And I want to thank Dr. Burgess for being here, for 
participating and offering thoughtful comments, and I look 
forward to our continued discussion on this important issue.
    With that, the hearing is closed.
    [Whereupon, at 11:15 a.m., the subcommittee was adjourned.]
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