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Tractors for auction in California circa 2011. Photo courtesy of iStock.

Legal Action From All Sides Threaten to Break Farm Equipment Repair Monopolies

John Deere faces new challenges to its tight grip on repair. A recent class-action lawsuit [[link removed]] accuses the leading agriculture equipment manufacturer of monopolizing repair markets for its products to raise prices and profits. By engineering software locks in increasingly computerized tractors and restricting access to key digital repair tools to a shrinking number of approved dealerships, Deere forced farmers to fix their equipment within the corporation’s walled garden, driving up prices and wait times, the suit alleges.

Deere isn’t the only corporation to rely on proprietary software or perverse engineering to corner repair of its products. Other agricultural equipment manufacturers as well as home appliance, medical device, and personal electronics makers increasingly restrict repair [[link removed]]. This summer the Federal Trade Commission (FTC) put equipment-makers on notice by unanimously voting [[link removed]] to ramp up antitrust enforcement against such illegal repair restrictions.

Lawmakers are also stepping in. Sen. Jon Tester (D-Mont.) introduced a bill [[link removed]] Tuesday that would require agricultural equipment manufacturers to make any software, parts, tools, or documentation required to diagnose, maintain, or repair equipment available for farmers and independent repair shops. “I’ve seen the unfair practices of equipment manufacturers make it harder and harder for folks to work on their tractors themselves—forcing them to go to an authorized mechanic and pay an arm and a leg for necessary repairs,” Tester said in a statement [[link removed]] announcing the bill. Prior to this Senate bill, 27 states had introduced [[link removed]] similar right-to-repair bills — some agriculture-focused and some not — but none have passed.

Farmer and consumer groups praised Tester’s proposal, and advocates are hopeful that between these federal and state laws, lawsuits, and FTC scrutiny, Deere and other manufacturers will, by force or by choice, free farmers to repair their equipment as they see fit. According to a recent survey [[link removed]] of 74 farmers across 14 states conducted by the U.S. Public Interest Research Group (U.S. PIRG) and the National Farmers Union, 95% of those farmers supported right to repair. “It’s clear that this is something that the public wants,” says Kevin O’Reilly, right to repair campaign director for U.S. PIRG. “I think as long as this pressure continues to build, which I have every reason to believe that it will, this is going to cross the finish line and farmers are finally going to be able to fix their stuff.” (Disclosure: The Open Markets Institute endorsed Tester’s bill.)

The same survey by U.S. PIRG and the Farmers Union found that 77% of surveyed farmers had opted to buy older equipment because it’s easier to repair [[link removed]]. This is largely due to the software and computerized controls built into modern farm equipment. When glitches and breaks happen, farmers increasingly face inscrutable error codes that often require special software to diagnose — software that until recently only authorized dealer technicians had access to. Some error codes even trigger farm equipment into “ limp mode [[link removed]],” rendering it useless until diagnosed and fixed. Encrypted firmware in agriculture equipment can also get in the way of replacing or pairing new parts, once again forcing farmers to call up an authorized tech just to pair the new equipment.

For farmers operating on tight windows of opportunity to plant or harvest their crops, these repair roadblocks not only raise their costs but create dangerous delays. For instance, according to Civil Eats [[link removed]] the president of the Montana Farmers Union, Walter Schweitzer, had a tractor break down in his rush to bale dry hay before a rain. But his equipment dealer said he couldn’t buy, rent, or borrow diagnostic software to figure out the problem. An authorized technician took over a month to repair the tractor; Schweitzer was lucky enough to rely on a backup tractor to finish baling, but many farmers aren’t so lucky. “Waiting for the dealer isn’t always an option,” Montana farmer Doug Crabtree said in a statement [[link removed]] on Tester’s bill. “We may be several hours drive from the dealer service technician, or the tech may be another several hours in the other direction. We have to be able to do our own repairs.”

Repair restrictions aggravate farmers but bring in millions for manufacturers. One analyst found that Deere dealerships’ margins on repairs are five times larger [[link removed]] than margins on selling new equipment. A recent class-action suit against Deere claims the corporation’s repair services business is three to six times more profitable than its new equipment sales.

The suit argues that Deere violated antitrust laws to reap this ill-gotten profit. Specifically, it alleges that Deere forced buyers of one product (equipment) to also buy a related product (repair service), violating antitrust prohibitions on tying. It also alleges that Deere illegally monopolized repair markets by restricting access to critical software. The case also asserts that Deere further limited customer options by intentionally consolidating its dealership network. In 1996 there were approximately 3,400 Deere dealerships, according to the complaint, by 2021 there were only 1,544 and of those, 91% were owned by a “Big Dealer” that ran five or more locations. As such, farmers have fewer locations to bring equipment for repair and fewer dealer owners to play off one another for better pricing. “Deere benefits not only from forcing farmers to purchase Deere Repair Services from Deere Dealerships, but also from forcing farmers to buy these Repair Services in a market that Deere has painstakingly groomed to be less competitive,” the complaint argues.

Equipment manufacturers and their representatives claim that restricted access to source code and other repair software is important for safety and to prevent farmers from tampering with equipment to avoid emissions requirements, for example. But after hosting a workshop on right to repair and soliciting viewpoints from customers and manufacturers alike, the FTC put out a report [[link removed]] in May 2021 concluding there is “scant evidence to support manufacturers’ justifications for repair restrictions.”

Manufacturers also claim select repair tools and software have already been made widely available. For instance, the Equipment Dealers Association, which represents most major agriculture manufacturers, committed to [[link removed]] making manuals, product guides, and diagnostic software available to purchase by 2021. But investigations by U.S. PIRG and Vice [[link removed]] found barriers to buying this software: The organizations called 21 dealerships across at least seven states asking to buy diagnostic software, and 19 said they didn’t sell it. Of the two that offered help or follow-up contacts, at least one ended in a dead end.

O’Reilly, who conducted one of these investigations in early 2021, said that farm equipment manufacturers have since made efforts to make repair software more available. But with reported subscription prices ranging from $2,500 to $8,500 per year, according to O’Reilly and the lawsuit, the service can be prohibitively expensive, costing tens of thousands of dollars over the equipment’s lifetime. Plus, O’Reilly says the software is not comprehensive. “By buying the software tools that are available, you’re still not getting access to fix everything on your tractor; there are still certain repairs that the farmer will have to go back to the Deere dealership in order to fix,” O’Reilly explains.

This is where bills such as Sen. Tester’s come in, to mandate that farm equipment manufacturers make “commonly available” key tools, schematics, and software that allow farmers and independent repair shops full access to diagnose and authorize repairs or new parts. At times this could still mean charging farmers for tools, but at a reasonable price, which the bill defines as the “lowest actual cost” that manufacturers charge to their dealerships. It also defines fair terms for providing tools that “do not impose … any substantial obligation to use or any restriction,” such as requiring manufacturer authorization or internet access.

Willie Cade [[link removed]]— a Nebraska Farm Bureau member, repair advocate, and grandson of a John Deere engineer — is both encouraged to see legal action on multiple fronts and argues lawsuits, state laws, federal laws, and agency action are all vital to break repair monopolies. “You have to have each one of them, you can’t create laws that people just ignore,” Cade says. “Manufacturers like John Deere are going to fight tooth and nail … so we need laws in states, we need the FTC working, we need U.S. Senate law.”

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What We're Reading

JBS agreed to pay $52 million to settle a lawsuit accusing beef processors of conspiring to restrict cattle supplies to boost profits. Major packers have recently reached settlements in poultry and pork price-fixing cases [[link removed]], but this marks the first settlement in a beef case. ( Reuters [[link removed]])

The House oversight committee sent letters to meatpackers Tyson Foods, JBS, National Beef, and Seaboard in an investigation into recent meat price hikes. ( Press Release [[link removed]])

The California State Assembly passed a law that would create a council of fast food workers and business representatives to set wage and labor standards across the industry. ( The Counter [[link removed]])

A new study finds that labor market concentration exacerbates poor economic outcomes in rural areas dependent on extractive natural resource industries, such as oil, mining, or timber. ( Rural Sociology [[link removed]])

About the Open Markets Institute

The Open Markets Institute promotes political, industrial, economic, and environmental resilience. We do so by documenting and clarifying the dangers of extreme consolidation, and by fostering discussions of ways to reestablish America’s political economy on a more stable and fair foundation.

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Written by Claire Kelloway

Edited by LaRonda Peterson

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