Summary of the brief presented to the Office of Consumer Protection on the durability and reparability of goods

I. Comments on the guaranteed availability of repair parts and services

The Office’s proposal seems to fall under the debate raised by the “Right to Repair” campaigns conducted in various jurisdictions.^{Footnote 2}

These “Right to Repair” campaigns are calling for legislative and regulatory amendments that would make it easier for repairers, other than those who belong the device manufacturer’s repair network, to repair devices, especially electronic devices.^{Footnote 3}

The question of repairing consumer goods raises issues of competition that are at the heart of the debate at the national and international level.^{Footnote 4}

This question puts into perspective the interests of different stakeholders, including consumers, repair industry players, manufacturers and merchants.

The Bureau is of the opinion that depending on the way this measure is worded, it could promote competition between repair industry players and be beneficial for the consumer.

The comments on the suggested measures involve the nature of the goods targeted by the suggested measure, the parts covered by the availability guarantee, and the beneficiaries of the guarantee.

1. Comments on the nature of the goods targeted by the measure

The Bureau encourages the Office’s proposal to expand the availability guarantee to include goods other than those covered by a contract under section 39 of the CPA.

In fact, repair services involve a wide variety of goods that are ubiquitous in consumers’ lives. In Quebec from 2014 to 2018, repair services saw consistent growth in revenue, totalling approximately $3 billion in 2018.^{Footnote 5}

Across the country, in 2018 the repair industry generated revenue of almost CDN$14 billion.^{Footnote 6} Separately, the computer and electronic device repair industry generated more than CDN$2 billion; 14.2% of this revenue stemmed from services provided to individuals and households.^{Footnote 7}

As for expanding the goods covered by this measure beyond those targeted by the type of contract in section 39 of the CPA, the Bureau recommended using a process^{Footnote 8} that would allow for the adoption of a flexible definition based on objective criteria established on the basis of the best available data.

Due to its flexibility, the definition of goods covered by the guarantee should take into account the increasing complexity of consumer goods^{Footnote 9} and should be able to be adapted to future technological developments.^{Footnote 10}

2. Comments on parts covered by the availability guarantee

The Bureau is of the opinion that the availability guarantee should cover those parts that allow for consumer goods to be repaired safety while respecting the rights of stakeholders, including intellectual property rights.^{Footnote 11}

Right to repair campaigns are built around the realization that, because goods are becoming more and more technical and complex, repairing them requires access to tools and information that are often availably only to manufacturers and their repair networks.^{Footnote 12}

In this context, the measure should define all the parts covered by the availability guarantee, so that it includes all of the diagnostic tools, manuals and replacement parts required to diagnose and repair goods (repair parts).

On this point, the case of the automobile repair industry^{Footnote 13} shows the importance of, on the one hand, providing access to repair parts and, on the other hand, paying close attention to the arguments raised to justify the industry’s refusal to share these parts.

In 2009, the National Automotive Trade Association (NATA)^{Footnote 14} established the Agreement Respecting the Canadian Automotive Service Information Standard^{Footnote 15} with the Association of International Automobile Manufacturers of Canada (AIAMC) and the Canadian Vehicle Manufacturers’ Association (CVMA). This agreement, which entered into force in Canada in 2010, is intended to ensure that independent repairers have access to the relevant information as well as the diagnostic tools and training information required to maintain and repair vehicles.

Similar agreements applicable to the automobile industry are in force in various jurisdictions.

In Australia, a study conducted by the Australian competition authority showed that the agreement currently in force is also intended to help independent repairers benefit from access to relevant information, including technical information and diagnostic tools.^{Footnote 16} In accordance with the voluntary commitments contained in the agreement, certain manufacturers are making it easier for independent repairers to access the relevant information. However, this access is often limited, especially when manufacturers refuse to grant access for security reasons.^{Footnote 17} Likewise, independent repairers’ access to replacement parts from the manufacturer is limited for security reasons and to protect intellectual property.^{Footnote 18}

These observations should be read with caution.

A legislative or regulatory intervention to ensure that repair parts are shared could help remove obstacles for independent repairers. It could also help independent repairers create healthy competition for manufacturer-affiliated repairers.^{Footnote 19}

This competition between providers could benefit the consumer thanks to greater choice in repair services and more competitive prices.

Without access to repair parts held by the manufacturer and made available to manufacturer-affiliated repairers, independent repairers are limited in the services that they can provide to consumers.^{Footnote 20}

Furthermore, if exceptions could be made to sharing repair parts, it would be preferable to limit these exceptions, based on the best available data, to cases where the manufacturer can show proof that there is a real security risk or that it is protecting intellectual property.

Lastly, it would also be preferable for this access to be granted in a timely fashion. The Federal Trade Commission (FTC) workshop found that consumers benefit from independent repair services, among other things due to the proximity and speed of these services.^{Footnote 21}

Therefore, it would be preferable for independent repairers to be able to maintain this advantage in the context of accessing repair parts.

3. Comments on beneficiaries of the availability guarantee

The aforementioned FTC workshop found that manufacturer opposition to the right to repair campaign is based mainly on the issue of identifying people who could have secure access to repair parts, i.e. professional repairers, manufacturer-affiliated repairers, the consumer or independent repairers.^{Footnote 22}

The Bureau recommends that any person designated by the consumer, including independent repairers,^{Footnote 23} be granted this access as needed, when the consumer asks the manufacturer to do so.

As indicated above, granting this access to independent repairers could increase their chances of competing with manufacturer-affiliated repairers, and could be beneficial for the consumer.

In fact, the repair industry in Canada and Quebec consists mostly of micro- and small businesses. In 2016, the industry included 79,918 businesses across Canada, including 18,525 in the province of Quebec. Of these, 62.5 % were micro-businesses with fewer than five employees, 37.2% were small businesses, and 0.2% were medium-sized businesses.^{Footnote 24}

Restricting access to repair parts to professional repairers or a certain category of repairers could also limit the consumer’s choice. Based on the requirements to qualify for access to repair parts, this could be an obstacle to the expansion of micro- and small businesses that are unable to qualify.

II. Comments on the minimum functional length of life of a household appliance

From a competition point of view, the more informed the consumer is, the more likely they are to make an informed decision when choosing one product over another. There is abundant literature highlighting the vendor’s privileged position in terms of access to relevant information about a good for sale. This literature can help better understand the consumer’s behaviour when this information is not disclosed in a timely fashion.^{Footnote 25}

For this reason, the Bureau encourages measures that promote better access to information on certain relevant aspects of goods for which businesses could be competitive. The Bureau points to the relevance of when the information is disclosed, i.e. before the good is purchased and remains accessible to the consumer at all times.

Furthermore, the Bureau recommends implementing mechanisms to ensure that the relevant information given to the consumer is complete, correct and easy to understand.

Comments on the proposed measures concern how to determine the minimum functional length of life of a good and the choice of goods covered by the measure.

1. Comments on how to determine the minimum length of life

The Competition Act contains certain provisions prohibiting misrepresentations, including false or misleading statements about a good’s length of life.^{Footnote 26}

Paragraph 74.01(1)(b) of the Act prohibits making representations to the public in any way whatsoever on the performance, effectiveness, or length of life of a product that are not based on an adequate and proper test thereof.^{Footnote 27}

In light of the provisions of the Act, the Bureau recommends that the CPA specify that a determination of the minimum functional length of life of a product must be based on an adequate and proper test thereof.

Furthermore, the Bureau notes that the Act does not define the expression “adequate and proper test” in order to preserve a certain amount of flexibility in an increasingly complex and highly technical domain. However, it goes without saying that the test should be carried out before making any representation to the public.^{Footnote 28}

These comments also apply to the definition of minimum functional length of life, which should take into consideration the requirements of the Act concerning adequate and proper testing.

2. Comments on goods targeted by the proposed measure

As for choosing which goods to target, the Bureau recommends that these goods are goods other than those covered under section 182 of the CPA in the definition of household appliance.^{Footnote 29}

In its current version, the definition of household appliance in section 182 of the CPA is closely linked to the repair scheme in sections 183 to 187 of the CPA.^{Footnote 30} However, information about a good’s minimum length of life could be relevant for the consumer beyond the context of repairing these goods.

The Commissioner is of the opinion that the information should concern goods that are important for consumers, based on objective criteria according to the best available data, regardless of whether these goods are qualified as household appliances within the meaning of section 182.

Furthermore, the choice of goods should take into account the increasing importance of new information technology devices, including possible developments in smart device technology.

Footnotes

Footnote 1

These comments and recommendations are largely based on the process developed by the Office for public decision-makers, which is intended to reduce the possible negative consequences of regulation on competition.

See Competition Bureau publication Balancing regulation and competition.

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Footnote 2

Catie Keck, Right to Repair Is Less Complicated and More Important Than You Might Think; Maxime Johnson, Pour le droit à la réparation des appareils électroniques (in French only).

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Footnote 3

Lisa Xing, Why a non-profit is pressing for 'right to repair' legislation in Canada; Shruti Shekar, Seventy-five percent of Canadians would support ‘Right to Repair’ legislation: OpenMedia poll

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Footnote 4

In 2017, the Organisation for Economic Co-operation and Development (the OECD) deliberated on the subject of competition issues in aftermarkets, including goods maintenance and repair services. OECD, Competition issues in aftermarkets.

The same year, the Australian competition authority completed a market study of the automobile industry, which revealed competition issues especially in relation to access to tools, replacement parts, and the information required to perform repair work. New car retailing industry market study.

Likewise, earlier this year the Federal Trade Commission organized a workshop to try to better understand the issue of repair restrictions. Nixing the Fix: A Workshop on Repair Restrictions.

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Footnote 5

Statistics Canada. Table 36-10-0402-01 Gross domestic product (GDP) at basic prices, by industry, provinces and territories (x 1,000,000)

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Footnote 6

Idem.

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Footnote 7

IBISWorld, Industry Report 81121CA Electronic & Computer Repair Services in Canada, May 2019, page 20.

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Footnote 8

See Competition Bureau publication Balancing regulation and competition.

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Footnote 9

For example, the report cited above from the Australian competition authority mentions the complexity of new models of automobiles as one reason why independent repairers have difficulty competing or are unable to compete with manufacturer-affiliated repairers, as relevant information and tools are not shared. See note above, 11, page 94.

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Footnote 10

As an illustration of how the increasing complexity of consumer goods has been taken into account in right to repair initiatives, see the initiative in the state of Minnesota. The definition of Digital electronic equipment in the bill includes a wide variety of goods, i.e. any product that depends for its functioning, in whole or in part, on digital electronics embedded in or attached to the product. Minnesota HF1138, Digital fair repair.

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Footnote 11

Protection of intellectual property rights is a key factor in the development of new technologies, artistic expression, and knowledge dissemination, which are essential to knowledge-based economies. The Bureau is of the opinion that because intellectual property has become a valuable asset for ensuring business profitability and growth, it is possible that it might lead to anti-competitive practices. See Competition Bureau publication Intellectual Property Enforcement Guidelines.

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Footnote 12

Above, notes 9 and 10.

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Footnote 13

This reference is in no way a statement on the validity, correctness or relevance of the agreement currently in force in the automobile industry.

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Footnote 14

The NATA is a national association bringing together various associations whose members are active in the Canadian repair and maintenance industry.

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Footnote 15

An Agreement Respecting The Canadian Automotive Service Information Standard.
National Automotive Trades Association, Canadian Automotive Service Information Standard Enhancing Consumer Choice, Background and Key Information.

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Footnote 16

The Agreement on Access to Service and Repair Information for Motor Vehicles was reached in 2014.

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Footnote 17

In addition to manufacturers’ refusals, there are also delays before the relevant information and tools are made available to independent repairers. In addition, this information is often incomplete or unusable.
ACCC market study, above, note 11, pages 120ff.

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Footnote 18

Idem, pages 135ff.

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Footnote 19

For example, see, among others, Alex Shprintsen 'Complete control': Apple accused of overpricing, restricting device repairs. Adam Minter, U.S. Farmers Are Being Bled by the Tractor Monopoly. ACC market study, above, note 11, pages 127ff.

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Footnote 20

Accessing replacement parts is one of the challenges encountered when working as a repairer, particularly for independent repairers. IBISWorld Industry Report 81121CA Electronic & Computer Repair Services in Canada, May 2019.

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Footnote 21

Aforementioned workshop, above, note 11.

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Footnote 22

Aforementioned workshop, above, note 11.

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Footnote 23

Certain initiatives from industry stakeholders show that it is possible to give independent repairers access to relevant parts. However, they are limited to certain brands. Stephen Nellis, Apple to supply parts to independent repair shops for first time.

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Footnote 24

Statistics Canada data for 2016 – Repair and Maintenance - 811.

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Footnote 25

This literature explains in greater detail the concept of information asymmetry, which is a situation in which not all market participants have the same information. The concept of information asymmetry was originally developed by the economist George A. Akerlof. “The market for "lemons": Quality uncertainty and the market mechanism” The Quarterly Journal of Economics 84(3):488–500; 1970.

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Footnote 26

Section 74.01 et seq. of the Competition Act (R.S.C. (1985), c. C-34).

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Footnote 27

Competition Bureau, Performance representations not based on adequate and proper tests.

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Footnote 28

Idem.

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Footnote 29

Paragraph 182(c) of the CPA defines “household appliance” as a kitchen range, a refrigerator, a freezer, a dishwasher, a microwave oven, a clothes washer, a clothes dryer, an audio device, an audio-video device, a computer and its peripheral equipment, an air conditioner, a dehumidifier, a heat pump or any other appliance determined by regulation.

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Footnote 30

Only the household appliances defined in section 182 of the CPA can be repaired according to the provisions of sections 183 to 187 of the CPA. Furthermore, section 79 of the Regulation respecting the application of the Consumer Protection Act (CQLR c P-40.1, r 3) states that work whose total cost including shipping, the price of parts and the cost of labour does not exceed $50 does not constitute a repair within the meaning of paragraph (c) of section 182 of the Act.

During preliminary work to adopt the repair scheme provisions, in 1978 and then in 2006, the Quebec legislature made strategic choices about which goods would be included in the definition of household appliance. Among other considerations, this involved creating an exhaustive list to which the repair scheme would apply.

In 1978, rather than an exhaustive list of 70 items, the choice was made to include in the law what seemed, at the time, to represent major investments by the consumer on the one hand, and, on the other hand, to be basic household appliances on the other. In 2006, when the definition was updated to meet the new reality for consumers, the importance of listing goods was highlighted. The lack of a definition would make the CPA less precise, so that businesses carrying out these repairs would not know which specific goods were covered by the repair scheme.

Journal des débats Commission des consommateurs, coopératives et institutions financières, vol. 20 (December 7, 1978), no 219, p. 8951-8952 (in French only). Journal des débats Commission des institutions, vol. 39, no 37 (December 8, 2006), p. 11-14 (in French only).

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