[Ganesh BL is an Associate at a law firm in Mumbai and Muskaan Ahuja is an Associate at a law firm in Delhi]
The notion of the ‘right to repair’ is simple and effective: an individual purchasing a product must own it completely. Apart from being able to use the product in any way they wish to, consumers must also have the right to modify or repair the product whenever, however, and in whichever manner they want. In purchasing an item, the control of the product is transferred from the seller to the buyer. When contracts of sale do not cede full control of the product to the owner, their legal rights are constrained. Even though legislations allow for individuals to legally repair their products, owners are often prohibited from making repairs themselves or from allowing third-party technicians to do so. This is by way of limitations on access to repair tools, documentation, and firmware.
Consumers spend large sums of money on technology that becomes obsolete within a few years. This, coupled with the fact that it is either unreasonably expensive or impossible to repair defects in these products, forces them to discard their devices and purchase new ones that they would not ordinarily require. Technological giants refuse to publish repair documentation, use mechanisms like proprietary screws to make repairs difficult, and refuse to make their products compatible with third-party products. For instance, most wireless earbuds such as the Apple Air pods or the Samsung Galaxy Buds are impossible to repair without permanently damaging them. Moreover, manufacturers encourage and endorse “planned obsolescence”, a marketing practice wherein devices are strategically produced in a manner that reduces their lifespan and therefore pushes consumers to replace them.
The foundations of the ‘right to repair’ movement lie in the fact that in the absence of competition, manufacturers charge excessive costs for repairs and leave customers with no cheaper self-repair or third-party alternatives, resulting in consumer exploitation. Therefore, there has been a global initiative by governments and anti-trust regulators to recognize the right. While India has statutorily not recognized the right to repair, other jurisdictions have either introduced policies that recognize the right or tabled draft legislation recognizing the same. In this light, this post seeks to analyze the developing ‘right to repair’ discourse within competition law and the digital landscape in India.
The Indian Experience
The ‘right to repair’ is not recognised as a statutory right in India, but certain pronouncements within the antitrust landscape have tacitly recognized the right. The erstwhile Competition Appellate Tribunal (“COMPAT”) in Shamsher Kataria found the practice of restricting and denying access of spare automobile parts to independent repairers of automobiles by way of end user license agreement as anti-competitive. The practice was adopted by the original equipment manufacturers (“OEMs”) of automobiles and automobile components/spare parts to ensure that only the OEMs or licensed vendors could repair automobiles. While COMPAT did not seek to pronounce an overarching recognition of the right to repair, it, however, deemed any restriction under which a dominant enterprise seeks to establish dominance in an adjacent market as an abuse of dominance under sections 4(2)(b) and 4(2)(e) of the Competition Act of India, 2002 (“Act”). The decision affirmed that the restriction imposed by OEMs not only impacts independent repairers but also detrimentally hampers consumer welfare, given that the consumer’s right to receive cost-effective repairs is constrained. However, COMPAT identified certain qualifiers to draw a similar conclusion.
The first qualifier was to assess whether the consumer had made a whole life cost analysis of the impugned product prior to purchasing it. The whole life cost analysis according to COMPAT is where a reasonable and sophisticated customer assesses the whole life cost of a product, including repairs, prior to purchasing it. The ability to assess the whole life cost of a product is hinged on information available in the public domain. If the customer is able to conduct such an analysis based on the information available, then the secondary market for spare parts and primary market for automobiles is viewed as a single market. An analogy of the same would be the market for printers, where a reasonable and knowledgeable customer is expected to foresee the future costs that will arise in the form of purchasing printer cartridges, thereby making the primary market for printers and secondary market for cartridges as one unified market. Therefore, the primary contention of the OEMs was that the primary market for the sale of cars and the secondary market for repairs would form a unified market, as a consumer is expected to make an informed choice having foreseen any future costs that may arise. However, COMPAT opined that in the case of automobiles the primary market and secondary markets do not form a unified market since a consumer cannot assess the whole life cost of automobiles given that the technical know-how of repairing automobiles are inaccessible under the garb of intellectual property (“IP”) protection. The second qualifier was whether the customer would be locked into a market and find no substitutable alternatives following the purchase of the impugned product. If secondary products of an independent manufacturer are not substitutable, the customer will be locked in to only using brand-specific components, which is an abuse of dominance.
Web of Unanswered Questions
While the opinion of COMPAT is welcome as it incepts the notion of the right to repair for all market players, the decision, however, faces certain drawbacks as regards the right to repair. First, in adopting the whole life cost analysis test, COMPAT has failed to provide an explanation to a situation where a customer is deemed to be ‘unsophisticated’ or not ‘knowledgeable’ enough to assess the whole life cost of a product. In doing so, COMPAT does not provide a concrete approach of assessment, only hinging the assessment based on the information available in the public domain.
For example in Trend Electronics, the aggrieved party bought certain laptops in bulk quantity, but the Competition Commission of India (“CCI”) found that the aggrieved party could not conduct a whole life cost analysis of the product in order to conclude that the aftermarket for sale of laptop spare parts would constitute a separate market from the primary market of the sale of laptops. However, given that the consumer bought a large number of laptops, it can be presumed that the customer was able to ascertain the total life cost that it is likely to incur during the life cycle of the laptop. Furthermore, the extent to which information is available in the public domain varies from consumer to consumer. The CCI has failed to consider aspects of information asymmetry and the lack of transparency that may arise as well, given that spare parts, tools, and the know-how to fix a particular device are not easily accessible by all consumers supplemented with the aspect of OEMs denying access under the garb of IP protection.
The approach of the CCI in adjudicating similar cases has also been incongruent, as there have been several contradicting opinions besides the Trend Electronics decision. For example, in Suzuki Motorcycles, the CCI dealt with an allegation of refusal to deal, wherein Suzuki, the OEM for the Suzuki Access scooters, denied customers from engaging independent repairers from repairing the scooters. However, while one would assume a similar standard such as that in Shamsher Kataria would be adopted, the CCI, in contrast, dismissed the claim by virtue of identifying the primary market for the sale of scooters and the secondary market as a separate market, as the consumer was assumed to have conducted a whole-life cost analysis of owning a scooter.
The right to repair in modern digital economies transcends mere brick and motor secondary markets such as auto parts or industrial spare parts. Large technologically driven enterprises now install software that makes it practically impossible for a secondary component manufacturer to repair the device. Several enterprises ensure that in repairing a product from an unauthorized independent repairer, a customer loses the right to claim a warranty or faces other stringent measures. In light of the same, customers are practically locked in into a particular brand with no substitutable components available at a cost-effective price.
There have been initiatives in other jurisdictions; for example, in 2012, Massachusetts passed the Motor Vehicle Owners’ Right to Repair Act, under which automobile manufacturers were required to provide the same service products and diagnostics to buyers or independent third-party mechanics that they earlier provided exclusively to their dealerships. In July 2021, the Federal Trade Commission of the United States was also ordered to remedy unfair anti-competitive practices and to direct tech manufacturers to allow consumers to repair their products, either by themselves or through a third-party agency. Following the order of the FTC, Apple recently announced that consumers will have the right to purchase spare components of Apple products.
In the EU, its current repair laws require spare parts of washing machines, refrigerators, dishwashers, and television screens to be made available by manufacturers for at least ten years after the product has been retired. In July 2021, the United Kingdom introduced a new ‘right to repair’ law, under which manufacturers are legally bound to make spare parts available for consumers and third parties. However, smartphones and laptops do not fall within the ambit of the legislation.
The right to repair is developing as a battle between governments and antitrust watchdogs against OEMs, in order to prevent a situation of planned obsolescence. While the CCI has restricted the right to leverage one’s dominance into a second market, there have been no further initiatives in the form of anti-trust policymaking. Notwithstanding the realm of competition, certain consumer disputes have nevertheless recognised the right to repair. For example, in Tekla Corporation, the Delhi High Court held that there can be no contractual restriction that limits or impede the rights of consumers in using a product following its sale. In Sanjeev Nirwani v HCL, it was observed that even after a warranty period, an OEM is mandated to provide spare parts and consumable items like batteries for the operation of the laptops. Be that as it may, there still is an essentiality in drafting a right to repair legislation in India, given that aftermarkets and secondary markets are virtually unchecked. While the right to repair is vaguely recognized in the traditional auto parts industry, digital markets make it rather tedious to effectively identify and delineate separate markets. A legislation in light of the same will not only ensure that the right to repair is upheld but also strike a balance between the protection of IP and market competition. While the Draft E-Commerce Rule, 2021 seek to highlight the same and bring about a structural change, the implications of Covid-19 have stopped the government from effectively proceeding further.