FTC Responds To Right To Repair Subcommittee

WASHINGTON (Jan. 22, 2005) - Despite the differences between some parties, the resolution of the Right to Repair (R2R) for the aftermarket is important. At the Nov. 10, 2005 hearing of the U.S. House Subcommittee on Commerce, Trade and Consumer Protection, Chairman Cliff Stearns (R-FL) closed the meeting by saying she would recommend to Representative Joe Barton (R-TX) that a letter be crafted to the Federal Trade Commission (FTC) to help it create an independent board and a binding dispute mechanism. He also said he was interested in the FTC's response. The audio transcript of the hearing is available online; click here to access it.

On Dec. 5, Stearns and proposed legislation co-sponsor Barton sent the FTC a letter requesting technical assistance from the Agency regarding private negotiations between the parties affected by the proposed legislation. According to FTC Chairperson Deborah Platt Majoras, the FTC was asked to answer the following questions:

* What authority and resources did the FTC need to appoint board members and oversee board governance?

* What criteria did the FTC propose be used to determine the identification, the independence and qualifications for directors of a board?

* If, in the FTC's consideration, the board should be totally independent or have a large majority of independent members?

On Dec. 22, Majoras replied in writing to Chairman Stearns. Her letter is available in its entirety at http://www.motorage.com/ftcletter.pdf. In summary, she addressed each question:

* Citing the FTC's regulatory and statutory framework, she responded that the Agency does not have any current statutory authority to either appoint board members or oversee board governance. Congress would need to pass legislation granting such authority to the FTC. 

She stated that the FTC continues to believe the best resolution to disputes and board makeup is through a self-regulatory body comprised of industry participants, rather than the government. In addition, should the FTC be required to appoint board members, the resources needed to do so would depend on the nature and level of oversight, which would also need the decision of Congress.

* She proposed that in addition to seeking industry input, oversight criteria includes knowledge and experience with the issues, representation for industry participants and public interest groups, and the appointment of independent directors separate from and without an interest in the industry parties on the board. 

* Finally, should Congress give the authority to the FTC to oversee the board, she said the FTC would favor a board comprised of a large majority of independent members, with the remainder made up of an equitable divided number of each party's representatives. She also reiterated that the self-regulatory program would still need a third-party review mechanism.

After the letter was sent, comment from several organizations was sought.

The Automotive Aftermarket Industry Association's (AAIA) Right To Repair sub-organization issued a press release following the FTC letter: "AAIA welcomes the input from the FTC as an independent assessment of why the current process utilized by the National Automotive Service Task Force (NASTF) is not effective in ensuring the availability of service information," said Kathleen Schmatz, President and CEO of the Automotive Aftermarket Industry Association (AAIA). 

Although AAIA is continuing to push for legislation, Schmatz addressed the possibility of a non-legislated resolution by saying, "The associations supporting right to repair have maintained that any non-legislative solution must include a strong commitment regarding tools and service information by the manufacturers that is clear and comprehensive, as well as a strong third-party enforcement component that would ensure that companies keep their commitment." 

The Coalition for Auto Repair Equality (CARE) was also asked for it's comment but did not respond by press time.

Bob Redding, Washington representative of the Automotive Service Association (ASA) stated, "We are pleased that the parts distributor's association is now considering a non-legislative solution. As ASA has stated for some time, the NASTF process is working and continues to improve. We need more groups supporting and participating in the NASTF."

John Cabaniss, director of Environment & Energy for the Association of International Automobile Manufacturers Inc. (AIAM) said, "I agree with the FTC that the public and the interested parties would be best served by having the industry stakeholders decide on the appropriate structure for the NASTF governing board with as little government interference as possible. That said, the advice of agencies such as FTC and EPA could be helpful and instrumental and should be sought. I share the same belief for the continuing work of NASTF; it should be a combined industry stakeholders effort with as little government interference as possible."

He added, "I continue to believe that the make-up of the NASTF governing board should be along the lines of the NASTF planning group which was just established. I agree with FTC that a self-regulatory type program for NASTF is the correct approach, not a mandated legislative government program. The other self-regulatory programs identified by the FTC could be useful models for certain aspects of the NASTF program, or as supporting elements, and should be considered.

(Sources: FTC, AAIA, ASA, AIAM)