FTC Probes Deere for Potential Anti-Competitive Repair Practices

The US Federal Trade Commission (FTC) is investigating farm equipment manufacturer Deere & Co. (DE.N) over its repair policies, according to a filing made public on Thursday. The probe, which began in September 2021, is focused on whether Deere’s restrictions on repair access for its equipment violate antitrust or consumer protection laws.

According to the filing, the FTC is scrutinizing Deere’s limitations on both hardware and software repairs, which regulators have suggested may undermine consumers’ “right to repair” the products they purchase. The investigation came to light through a petition filed by Hargrove & Associates Inc., a data analytics firm, which sought to block an FTC subpoena related to the case.

FTC Targets Deere Over Repair Restrictions

As reported by Reuters, the FTC sent a request for information to Hargrove & Associates in August as part of its ongoing investigation. The agency is probing whether Deere engaged in what it described as “unfair, deceptive, anticompetitive, collusive, coercive, predatory, exploitative or exclusionary acts” in relation to the repair of agricultural equipment. Hargrove, which processes data for the Association of Equipment Manufacturers (AEM), sought to limit the scope of the data it must provide to the FTC, emphasizing that neither it nor AEM is a target of the probe.

Deere’s restrictive repair practices have long been a point of contention, particularly in relation to the increasing complexity of modern farm equipment, which relies heavily on software for diagnostics and repairs. Farmers have expressed frustration over the limited access to diagnostic tools, making it harder for them to repair their own equipment and forcing them to rely on authorized dealerships.

Deere’s Stock Takes a Hit Amid Investigation

Following the news of the investigation, Deere’s stock fell by as much as 3.1%, its largest drop since August. Deere, the largest provider of large tractors in the U.S., has not yet responded to the investigation or made any public comment. Similarly, the FTC declined to issue a statement regarding the ongoing probe.

Right to Repair Movement Gains Traction

The right to repair movement, which aims to make it easier and cheaper for consumers to fix their own products, has gained momentum in recent years. The FTC has been actively addressing companies with restrictive repair policies. In 2022, the agency reached settlements with Harley-Davidson Inc. and Westinghouse Outdoor Power Equipment over warranty terms that limited repairs.

In July 2021, President Joe Biden signed an executive order in support of right to repair initiatives, which has led some tech giants, including Microsoft and Apple, to ease restrictions on repair access. Deere itself made a move earlier this year, signing an agreement with the American Farm Bureau Federation in January 2023. This agreement promised that the company would provide farmers and independent repair shops with access to the diagnostic tools needed for equipment repairs. However, critics argue that the agreement still falls short of providing full repair freedom.

Growing Political and Regulatory Pressure

The FTC’s probe follows mounting pressure from lawmakers and advocacy groups calling for more transparency and fairness in the repair of agricultural equipment. In July 2023, FTC Chair Lina Khan highlighted the agency’s efforts to tackle illegal repair restrictions, particularly those affecting farmers. Though she did not name specific companies, the complaints from the agricultural sector have been growing louder.

Additionally, Massachusetts Senator Elizabeth Warren has taken aim at Deere, writing to the company last week, accusing it of undermining its recent right-to-repair commitments. Warren’s letter signals that the regulatory scrutiny Deere is facing could extend beyond the FTC’s investigation.

Source: Reuters