Right-to-Repair A Deere Goes to Court, Sustainable Beef Hiring American Workers, and other news to ponder from Cape Law Firm

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FTC’s Right-to-Repair Antitrust Suit Against John Deere Moves Forward

The Federal Trade Commission’s (FTC) antitrust lawsuit against John Deere regarding Deere’s control over repairs to its tractors and equipment will not be dismissed, and instead will proceed with discovery following a federal court’s recent ruling denying Deere’s motion for judgment on the pleadings. The FTC’s case, in which it is joined by Arizona, Illinois, Michigan, Minnesota, and Wisconsin, primarily alleges that Deere has monopolized the market for equipment repair services through its dominant market position and has limited access to critical repair tools exclusively to its own network of authorized dealers. According to the Complaint, Deere licenses a software tool called “Service ADVISOR” to its authorized dealers, which can diagnose problems and identify error codes. More importantly, some equipment repairs are impossible to complete without Service ADVISOR. Deere also licenses a watered-down version of its repair software, called “Customer Service ADVISOR,” which is alleged to be an ineffective substitute for fully functional version. By limiting access to its diagnostic and repair tools, Deere is able to charge supracompetitive prices for repairs and parts because there are no alternatives. FTC’s suit alleges these practices violate Section 2 of the Sherman Act, Section 5 of the Federal Trade Commission Act, as well as related provisions of Illinois and Minnesota antitrust laws.

The FTC’s lawsuit comes on the heels of a group of similar antitrust class actions filed by farmers for the same anticompetitive conduct, all of which have been consolidated in the federal court for the Northern District of Illinois. In November 2023, the court rejected Deere’s efforts to dismiss the farmers’ claims. Judge Iain Johnston, who is presiding over the farmer cases and the FTC’s case, provided the following cheeky summary of the dispute:

Today’s farm equipment relies on devices called Electronic Control Units (“ECUs”), essentially “small computers that monitor and control particular functions.” So, what happens when a farmer’s tractors aren’t working right? Once upon a time, the farmer could repair her machines on her own or take them to local technicians (Independent Repair Providers or “IRPs”). But, today, even Spicoli’s old man’s ultimate set of tools couldn’t fix it. Instead, to diagnose and fix problems, the equipment requires an “interactive software” that can communicate with the equipment’s onboard ECUs.
Deere developed such a tool, which it calls “Service ADVISOR.” The software can perform diagnostic tests, identify and clear error codes, and access Deere’s troubleshooting database. The device is “critical” in fully diagnosing problems and completing repairs. Indeed, some repairs—what the Governments call “restricted repairs”—can only be completed with the Service ADVISOR software.
But not everyone gets that Service ADVISOR tool. Deere licenses the product only to its “Authorized Dealers.” These Authorized Dealers sell tractors and parts, and provide repair services. Deere doesn’t sell its equipment directly to farmers. Though not formally related, “Deere appoints dealers to act as its authorized dealers, oversees changes to its dealers’ ownership and business structures, and has contractual rights to terminate any Deere dealer.”
In addition to selling and repairing equipment, the Authorized Dealers also sell replacement parts, including Deere-branded parts, which Deere Dealers are required to “actively and aggressively promote.” These Dealers source “the vast majority” of their parts from Deere. And, in repairing equipment, Dealers rely “almost exclusively” on Deere-branded parts. That’s in contrast to many DIY Farmers and IRPs, who use generic, cheaper alternatives. Deere and its Dealers reap “massive profits” from these sales.

You can read the FTC’s Complaint here.

Sustainable Beef Seeking Sustainable American Workers

The newly opened Sustainable Beef meatpacking plant in North Platte, Nebraska is taking a crack at hiring Americans using some novel approaches in an industry known for exhausting work according to a recent Wall Street Journal article by Scott Calvert, Arian Campo-Flores, and Patrick Thomas. The company hopes to attract local workers with starting pay of $22/hour, health insurance, no night shifts, ergonomic workstations, and individual lockers – amenities typically lacking in packing plants. Sustainable Beef’s operation marks a bold move by area cattlemen and feeders to create an alternative to the Big Four packers which control 85% of U.S. beef – JBS, Tyson, Cargill, and National Beef.

And so begins a big experiment – is it possible for a dedicated group of local ranchers and feeders, along with a workforce of Americans, to compete and remain viable alongside the Big Four mega-packers? Time will tell, but we’re rooting for them.

The Wall Street Journal article can be found here.

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