[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]
RIGHT TO REPAIR: INDUSTRY DECISIONS
AND LEGISLATIVE OPTIONS
=======================================================================
HEARING
before the
SUBCOMMITTEE ON
COMMERCE, TRADE, AND CONSUMER PROTECTION
of the
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED NINTH CONGRESS
FIRST SESSION
__________
NOVEMBER 10, 2005
__________
Serial No. 109-81
__________
Printed for the use of the Committee on Energy and Commerce
Available via the World Wide Web: http://www.access.gpo.gov/congress/
house
__________
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27-002PDF WASHINGTON : 2005
__________________________________________________________________________________
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------------------------------
COMMITTEE ON ENERGY AND COMMERCE
JOE BARTON, Texas, Chairman
RALPH M. HALL, Texas JOHN D. DINGELL, Michigan
MICHAEL BILIRAKIS, Florida Ranking Member
Vice Chairman HENRY A. WAXMAN, California
FRED UPTON, Michigan EDWARD J. MARKEY, Massachusetts
CLIFF STEARNS, Florida RICK BOUCHER, Virginia
PAUL E. GILLMOR, Ohio EDOLPHUS TOWNS, New York
NATHAN DEAL, Georgia FRANK PALLONE, Jr., New Jersey
ED WHITFIELD, Kentucky SHERROD BROWN, Ohio
CHARLIE NORWOOD, Georgia BART GORDON, Tennessee
BARBARA CUBIN, Wyoming BOBBY L. RUSH, Illinois
JOHN SHIMKUS, Illinois ANNA G. ESHOO, California
HEATHER WILSON, New Mexico BART STUPAK, Michigan
JOHN B. SHADEGG, Arizona ELIOT L. ENGEL, New York
CHARLES W. ``CHIP'' PICKERING, ALBERT R. WYNN, Maryland
Mississippi, Vice Chairman GENE GREEN, Texas
VITO FOSSELLA, New York TED STRICKLAND, Ohio
ROY BLUNT, Missouri DIANA DeGETTE, Colorado
STEVE BUYER, Indiana LOIS CAPPS, California
GEORGE RADANOVICH, California MIKE DOYLE, Pennsylvania
CHARLES F. BASS, New Hampshire TOM ALLEN, Maine
JOSEPH R. PITTS, Pennsylvania JIM DAVIS, Florida
MARY BONO, California JAN SCHAKOWSKY, Illinois
GREG WALDEN, Oregon HILDA L. SOLIS, California
LEE TERRY, Nebraska CHARLES A. GONZALEZ, Texas
MIKE FERGUSON, New Jersey JAY INSLEE, Washington
MIKE ROGERS, Michigan TAMMY BALDWIN, Wisconsin
C.L. ``BUTCH'' OTTER, Idaho MIKE ROSS, Arkansas
SUE MYRICK, North Carolina
JOHN SULLIVAN, Oklahoma
TIM MURPHY, Pennsylvania
MICHAEL C. BURGESS, Texas
MARSHA BLACKBURN, Tennessee
Bud Albright, Staff Director
David Cavicke, Deputy Staff Director and General Counsel
Reid P.F. Stuntz, Minority Staff Director and Chief Counsel
______
Subcommittee on Commerce, Trade, and Consumer Protection
CLIFF STEARNS, Florida, Chairman
FRED UPTON, Michigan JAN SCHAKOWSKY, Illinois
NATHAN DEAL, Georgia Ranking Member
BARBARA CUBIN, Wyoming MIKE ROSS, Arkansas
GEORGE RADANOVICH, California EDWARD J. MARKEY, Massachusetts
CHARLES F. BASS, New Hampshire EDOLPHUS TOWNS, New York
JOSEPH R. PITTS, Pennsylvania SHERROD BROWN, Ohio
MARY BONO, California BOBBY L. RUSH, Illinois
LEE TERRY, Nebraska GENE GREEN, Texas
MIKE FERGUSON, New Jersey TED STRICKLAND, Ohio
MIKE ROGERS, Michigan DIANA DeGETTE, Colorado
C.L. ``BUTCH'' OTTER, Idaho JIM DAVIS, Florida
SUE MYRICK, North Carolina CHARLES A. GONZALEZ, Texas
TIM MURPHY, Pennsylvania TAMMY BALDWIN, Wisconsin
MARSHA BLACKBURN, Tennessee JOHN D. DINGELL, Michigan,
JOE BARTON, Texas, (Ex Officio)
(Ex Officio)
(ii)
C O N T E N T S
__________
Page
Testimony of:
Braziel, Robert, Chief Legislative Counsel, National
Automobile Dealers Association............................. 72
Brotherton, Steve, President, Continental Imports............ 58
Cabaniss, John, Director, Environment and Energy, Association
of International Automobile Manufacturers, Incorporated.... 63
Cole, Steven J., President and CEO, Council of Better
Business Bureaus, Inc...................................... 17
Everett, Bob, Owner, Bayville Auto Care, Incorporated........ 61
Kohm, James A., Associate Director, Bureau of Consumer
Protection, Division of Marketing Practices, Federal Trade
Commission................................................. 14
Lowe, Aaron M., Vice President, Government Affairs,
Automotive Aftermarket Industry Association................ 67
Nielsen, John, Director, AAA Auto Repair Network............. 54
Parde, David, President, Coalition for Auto Repair Equality.. 20
Stanton, Michael J., Vice President, Government and
International Affairs, the Alliance of Automobile
Manufacturers.............................................. 27
Additional material submitted for the record:
Retail Industry Leaders Association, prepared statement of... 91
Tire Industry Association, prepared statement of............. 92
(iii)
RIGHT TO REPAIR: INDUSTRY DECISIONS AND LEGISLATIVE OPTIONS
----------
THURSDAY, NOVEMBER 10, 2005
House of Representatives,
Committee on Energy and Commerce,
Subcommittee on Commerce, Trade,
and Consumer Protection,
Washington, DC.
The subcommittee met, pursuant to notice, at 10:08 a.m., in
room 2123 of the Rayburn House Office Building, Hon. Cliff
Stearns (chairman) presiding.
Members present: Representatives Stearns, Deal, Radanovich,
Bass, Ferguson, Rogers, Myrick, Murphy, Blackburn, Barton (ex
officio), Schakowsky, Towns, Rush, Green, Gonzalez, and Dingell
(ex officio).
Staff present: David Cavicke, general counsel; Chris Leahy,
policy coordinator; Brian McCullough, professional staff; Will
Carty, professional staff; Andy Black, deputy staff director;
Julie Fields, special assistant to deputy staff director,
policy; Terry Lane, press secretary; Billy Harvard, clerk;
Jonathan Cordone, minority counsel; and Jonathan Brater, staff
assistant.
Mr. Stearns. Good morning. The subcommittee will come to
order.
As my colleagues may recall from last year's hearing, the
issue of consumer access to car repair information involves
complex technology. Complex methods of engaging technology
including training and the shared goal of allowing Americans to
take their cars to a mechanic of their choice, including
getting their own hands dirty if they so choose in their own
garage. I believe that all parties involved with this issue
including the independent repair folks, the auto manufacturers,
the parts manufacturers, the dealers, and so on all agree that
access to repair and service information is a consumer right,
and in fact, precluding consumer choice would be detrimental to
all stakeholders.
Without choice, consumers will not buy cars that cannot be
repaired conveniently and for a reasonable amount of money.
Independent dealers and dealer repair operations will have
fewer customers and car makes to service. And parts makers will
sell fewer OEM and aftermarket parts. But even with this market
based reasoning, we still hear claims that information
necessary for the repair and servicing of cars is not readily
available at a reasonable price.
By way of background, the increasingly computerization and
complexity of automotive systems and the resulting need for
more complex information to maintain repair vehicles began with
the Clean Air Act Amendments of 1990. My colleagues, that piece
of legislation required for the first time the installation of
onboard diagnostic or OBMD systems that monitor engine
functions and malfunctions including misfires and loose fuel
filler caps which could have an effect on emissions and air
quality.
Like many good ideas, OBD had the simple goal of cleaner
air but also had the unintended effect of adding complexity to
the repair and service of vehicles because it made inaccurate
information in fault codes related to the OBD computer systems
integral to affected repairs. Recognizing this, the EPA now
requires that the auto manufacturers through their websites
provide to independent repairs shops all information necessary
to repair and service these OBD systems.
A further unintended consequence of OBD is that automotive
computer systems are being used increasingly to monitor
functions other than those related to emissions including
safety and security systems like air bags and ignition keys.
Therefore, the information needed to repair and service these
non-emission systems has become just as critical.
In 2002 to address this additional problem and after some
legislative pressure, the auto manufacturers represented by The
Alliance of Automobile Manufacturers and the Association of
International Automobile Manufacturers agreed voluntarily with
the Association of Automotive Service Association ASA, an
organization representing independent repair technicians to
share non-emissions related information necessary to repair and
service vehicles via websites and utilize the National
Automotive Service Task Force to resolve complaints about
information access. The CARE coalition which also represents
independent repair technicians and aftermarket parts retailers
and manufacturers did not join that agreement in part because
if felt there was no enforcement mechanism.
Now since that time, Chairman Barton, much to his credit,
has attempted to achieve agreement between CARE and the
automakers by continuing to refine H.R. 2048, the Motor Vehicle
Owners' Right to Repair Act which was crafted in part to
reflect the 2002 voluntary agreement with the addition of
finding dispute resolution. In addition last summer, in order
to facilitate the preferred path of a non-legislative approach
to this issue, Chairman Barton and Senator Graham of South
Carolina pushed the auto manufacturers and the CARE camps to
pick a neutral location, a neutral arbiter, lock the doors and
come up with a good faith resolution to this issue finally.
Unfortunately, resolution was not reached.
It is my understanding that the following elements were
substantially agreed upon to. The need for and the basic
information, excuse me, the need for and the basic formulation
of a third party dispute resolution process. Two as part of
that process strengthening and new funding for a better
financed and staffed NASTF. And three, progress on remedies for
the dispute resolution framework including timeframes and
procedures.
It is also my understanding that the following elements
were still contentious. One, the structure and more importantly
the board level of governance of the newly restructured NASTF.
How issues related to information for vehicle security systems
will be addressed. Three, how to handle information that is not
published and distributed to dealers, and finally how penalties
should be calculated.
My colleagues, this issue at bottom is about access and
information, the ability to resolve complaints quickly and with
binding effect and ultimately allowing more consumer choice. I
believe that the 2002 voluntary agreement, Chairman Barton's
Bill and the good faith attempt at a binding agreement have all
these common elements. I also hope victory can be snatched from
the jaws of defeat and a non-legislative solution is ultimately
reached. In my opinion, this is achievable and will eliminate a
great deal of the current problems.
My objective in this hearing is to understand with
precision the scope and nature of the problems, again, what
constitutes acceptable resolution for both parties including
legislative options, and what each party ultimately wants, non-
legislative agreement or legislation. Regrettably, this is not
going to be a pleasant process, too much is at stake. But I do
want to say that I believe both parties have demonstrated good
faith at trying to reach agreement one way or the other.
I thank the witnesses for their testimony. I also
particularly would like to thank Mr. Steve Brotherton who
represents the Automotive Service Association who is visiting
from my home congressional district in Gainesville, Florida and
I welcome him to this au gust committee and with that I would
yield to my ranking member, Ms. Schakowsky.
[The prepared statement of Hon. Cliff Stearns follows:]
Prepared Statement of Hon. Clifford Stearns, Chairman, Subcommittee on
Commerce, Trade, and Consumer Protection
Good morning. As my colleagues may recall from last year's hearing,
the issue of consumer access to car repair information involves complex
technology, complex methods of engaging technology, including training,
and the shared goal of allowing Americans to take their cars to a
mechanic of their choice, including getting their own hands dirty in
their own garage. I believe that all parties involved with this issue,
including the independent repair folks, the auto manufacturers, the
parts manufacturers, the dealers, and so on, all agree that access to
repair and service information is a consumer right and, in fact,
precluding consumer choice would be detrimental to all stakeholders.
Without choice, consumers will not buy cars that can't be repaired
conveniently and for a reasonable cost, independent and dealer repair
operations will have fewer customers and car makes to service, and
parts makers will sell fewer OEM and aftermarket parts. But even with
this market-based reasoning, we still hear claims that information
necessary for the repair and servicing of cars is not readily available
for a reasonable price.
By way of background, the increasing computerization and complexity
of automotive systems and the resulting need for more complex
information to maintain and repair vehicles began with the Clean Air
Act Amendments of 1990. That piece of legislation required, for the
first time, the installation of On-Board Diagnostic or OBD systems that
monitor engine functions and malfunctions, including misfires and loose
fuel filler caps, which could have an effect on emissions and air
quality. Like many good ideas, OBD had the simple goal of cleaner air,
but also had the unintended effect of adding complexity to the repair
and service of vehicles because it made accurate information and fault
codes related to the OBD computer systems integral to effective
repairs. Recognizing this, the EPA now requires that the auto
manufacturers through their websites provide to independent repair
shops all information necessary to repair and service these OBD
systems. A further unintended consequence of OBD is that automotive
computer systems are being used increasingly to monitor functions other
than those related to emissions, including safety and security systems
like air bags and ignition keys. Therefore, the information needed to
repair and service these non-emissions systems has become just as
critical. In 2002, to address this additional problem, and after some
legislative pressure, the auto manufacturers, represented by the
Alliance of Automobile Manufacturers and the Association of
International Automobile Manufacturers, agreed voluntarily with the
Association of Automotive Service Association (ASA), an organization
representing independent repair technicians, to share non-emissions
related information necessary to repair and service vehicles via
websites and utilize the National Automotive Service Task Force (NASTF)
to resolve complaints about information access. The CARE coalition,
which also represents independent repair technicians and aftermarket
parts retailers and manufacturers, did not join that agreement, in
part, because it felt there was no enforcement mechanism.
Since that time, Chairman Barton, much to his credit, has attempted
to achieve agreement between CARE and the automakers by continuing to
refine HR 2048, the ``Motor Vehicle Owners Right to Repair Act,'' which
was crafted, in part, to reflect the 2002 voluntary agreement with the
addition of binding dispute resolution. In addition, last summer, in
order to facilitate the preferred path of a non-legislative approach to
this issue, Chairman Barton and Senator Graham of South Carolina pushed
the auto manufacturer and the CARE camps to pick a neutral location, a
neutral arbiter, lock the doors, and come up with a good faith
resolution to this issue. Unfortunately, resolution was not reached.
It is my understanding that the following elements were
substantially agreed to:
The need for and the basic formulation of a third party dispute
resolution process.
As part of that process, strengthening and new funding for a better
financed and staffed NASTF.
Progress on remedies for the dispute resolution framework, including
time frames and procedures.
It also is my understanding that the following elements were still
contentious:
The structure and, more importantly, the board-level governance of
the newly restructured NASTF.
How issues related to information for vehicle security systems will
be addressed.
How to handle information that is not published and distributed to
dealers.
How penalties should be calculated.
My colleagues, this issue, at bottom, is about access and
information, the ability to resolve complaints quickly and with binding
effect, and ultimately allowing more consumer choice. I believe that
the 2002 voluntary agreement, Chairman Barton's bill, and the good
faith attempt at a binding agreement have those common elements. I also
still hope victory can be snatched from the jaws of defeat and a non-
legislative solution is reached. In my opinion, this is achievable and
will eliminate a great many of the current problems.
My objective in this hearing is to understand with precision the
scope and nature of the problems, what constitutes acceptable
resolution for both parties, including legislative options, and what
each party ultimately wants--non-legislative agreement or legislation.
Regrettably, this is not going to a pleasant process but I do want to
say that I believe both parties have demonstrated good faith at trying
to reach agreement, one way or the other.
I thank the witnesses for their testimony this morning. I'd also
like to thank, in particular, Mr. Steve Brotherton, representing the
Automotive Service Association, who is visiting us from Gainesville,
Florida, located in my home district. Thank you.
Ms. Schakowsky. Thank you, Chairman Stearns, for holding
today's hearing on another important issue to consumers,
whether the choice of where to take their cars for repairs is
their own.
I am glad that we are revisiting the technical challenges
that currently stop consumers from using the shop around the
corner like my own Dack Able and that we are taking another
look at the Motor Vehicle Owners' Right to Repair Act which
will restore their right to choose where they want to take
their business.
Technological developments in car design and maintenance
have made cars safer and more environmentally sound, however,
they have also created new obstacles for consumers and
independent repair shops. Consumers have found that a simple
repair may not be so simple after all. Even getting a diagnosis
is more complicated than it was before and many have found that
they cannot take their cars to the repair shop they have been
using for years.
Repair shops for their part are finding that they must
refer customers to dealers for work they cannot do. It is not
that the mechanics at the shop are not capable but because they
cannot get the information they need or they cannot get the
information they need in a timely fashion to make the necessary
repairs. So unfortunately, many of our neighborhood mechanics
have had to send good business elsewhere.
I believe it is important to protect the trade secrets of
intellectual property of auto manufacturers. The motor vehicle
industry is the largest manufacturer in the country and their
innovations help fuel the economy. However, I believe that
information necessary to diagnose service and repair vehicles
sold in the United States should be disclosed to car owners,
repair shops, and the Federal Trade Commission.
I believe a balance between protecting the rights of
manufacturers and the rights of consumers can be found and that
H.R. 2048 is on the right track toward striking that balance.
Some of the witnesses here today will report that information
sharing is already occurring and that automakers and
independent repair shops have been working together
voluntarily. That cooperation was initiated in large part by
the late Senator Paul Wellstone's prodding and is a positive
change since this issue came to light a few years ago, however,
there is still room for improvement.
And I was glad to hear that from January to October the
stakeholders, many of them witnesses today, did try to work out
an agreement on better information sharing. Despite your
efforts, no accord was reached and consumers are the ones who
will pay for the outstanding dispute. For me, ultimately this
is about the consumer and eliminating any undue burden on him
or her. If the industries involved cannot workout a solution,
then I believe we do need to consider legislation. We do need
to ensure that the information provided to the car owners and
independent repair shops is easily accessible, accurate,
timely, and not priced out of reach.
Again, I look forward to hearing your ideas on these
issues. I hope that we can come to a better understanding of
the impasse so that we can move forward on restoring consumer's
choice when it comes to mechanics who perform work on their
cars.
Thank you.
Mr. Stearns. I thank the gentlelady.
Mr. Ferguson?
Mr. Ferguson. Thank you, Mr. Chairman.
I appreciate you having this hearing on an issue that
really faces probably all of our constituents. I have heard
from many in our district in New Jersey, many of the groups are
represented here today, heard from regular constituents and
business people and others. Their arguments thus far have been
presented in a thoughtful manner, in a reasonable manner, and I
look forward to hearing more about this issue from some of our
witnesses today.
And I think it is important to notice Ms. Schakowsky
mentioned there are a lot of conversations going on. There are
negotiations and hopefully agreements being worked out in terms
of information sharing to try and address what this legislation
would address. Certainly we always feel, many of us always feel
that if industry in the private sector can work together to
come up with solutions to problems that exist, usually it is
better than legislation. And it is certainly my hope that those
negotiations and conversations can continue because generally
it is certainly better when folks in the private sector can
work out differences and problems rather than inviting the
Government to get involved because that invariably raises other
more complex issues.
In particular today, I would like to recognize and welcome
a member of our second panel who is from my home State of New
Jersey, Mr. Bob Everett is the owner of Bayville Auto Care in
Bayville, New Jersey. He is testifying today on behalf of NFIB,
the National Federation of Independent Business. He has been
involved in the auto repair business since 1974, established
his business in Bayville in 1986. He is the immediate past
president of the Alliance of Automotive Service Providers of
New Jersey.
With that, Mr. Chairman, I would yield back.
Mr. Stearns. I thank the gentleman.
The distinguished ranking member of the full committee, Mr.
Dingell is recognized.
Mr. Dingell. Chairman, thank you, good morning.
Mr. Chairman, I am pleased we are holding this hearing
today. H.R. 2048, the Motor Vehicle Owners' Right to Repair Act
of 2005 was reportedly introduced to help small independent
repair shops. It is unfortunate that these kinds of good intent
are often accompanied by some difficulties. I have feared that
the bill may impede the competitiveness of the American
manufacturing industry at a precarious time for the automobile
industry. While the bill represents a clear improvement over
the version we considered in the last Congress, I am still
afraid that this legislation may be in its current form ill-
advised.
The issue, of course, Mr. Chairman is not as simple as it
appears. The publicly stated objectives of the legislation are
vulnerable. Consumers should be able to choose who repairs
their automobiles. It is not, however, the bill's stated
objectives with which I am concerned. It is the means through
which the legislation seeks to achieve the stated objectives
and the consequences whether intended or not that give me great
reason for concern. It is possible to help consumers and to
assist independent repair shops without jeopardizing the rights
of automobile manufacturers and their suppliers or the
competitiveness that is so important to them and to us.
Independent service stations across the Nation have joined
the world's automobile manufacturers to create the National
Automobile Service Task Force. This task force was designed as
the non-legislative means through which the bill's stated
objectives are being achieved. I am told that independent
service stations are now receiving information they need to
prepare all makes and all models of motor vehicles. No one
should expect an undertaking of this magnitude to be perfect
products inception. There will also be errors and there will
always be flaws. The exercise here as in the case of other
difficult problems requires communication, perseverance, and
most importantly the willingness of all stakeholders to succeed
and to work together for the interest of all.
Mr. Chairman, to the extent the effectiveness of this
building remains in doubt, I suggest that we engage in suitable
oversight to discern the facts from their rumor and innuendo
and to encourage all parties involved in the task to work
together more diligently. Certainly this would be consistent
with the traditions of this committee that the findings would
certainly eliminate our legislative process. A thorough
examination of how intellectual property and how international
competitiveness may be affected or may be impaired should also
be a useful exercise by the committee.
Mr. Chairman, again I thank you for holding this hearing. I
appreciate your kindness in recognizing me. I look forward to
hearing from our witnesses and I look forward to working with
you and other interested members to bring about a perfection in
the legislation that would solve of the problems upon which our
people complain.
Thank you, Mr. Chairman.
Mr. Stearns. And I thank the gentleman.
The full chairman of the Energy and Commerce Committee, Mr.
Barton.
Chairman Barton. Thank you, Mr. Chairman for holding this
hearing today.
I have been involved with this issue since August of 2001
for the simple reason I think the driver of the car should
decide who fixes their car. I believe that honest competition
makes for better service and lower prices. It is how good
businesses win customers in America and why bad businesses lose
customers. Right now, there is not much competition in the
repair business for automobiles.
What is at issue here is the way cars and trucks are
repaired today. Computers and other sophisticated diagnostic
equipment make your car more reliable than ever. But they also
mean that even the best shade tree mechanic cannot fix it when
something goes wrong because they do not know what it is that
is going wrong. They need the sophistication of the modern
diagnostic equipment to help them decide what it is that the
problem--what the problem is. That is the way the manufacturers
see it too. When your car breaks, they want you to come to
their name brand dealerships. I understand that. If an
independent garage cannot get the computer code or the other
data that they need to diagnose the problem, the dealership is
your only choice, when your car is under warranty that is
actually the best choice. However, when the car is not under
warranty sometimes maybe it is not the best choice.
Whether a car is foreign or domestic, consumers should be
able to choose where they have the car repaired and whether
they choose after market replacement parts or original
equipment manufacturer parts. Nobody should find themselves
dropping off a car at their neighborhood service station where
they have done business for years and years where they have got
both the mechanics and the tools necessary to fix the car only
to be told that it cannot be fixed there because the mechanic
cannot get the information that he or she needs from the car
company. That is happening now. And the list of who gets heard
goes on and on. The consumer who cannot get their car fixed,
the shop owner who loses business, the mechanic who loses his
job, even the company that makes the tools for the shops that
cannot use them.
I wish the industry parties could sort this out but they
seem absolutely incapable of doing so. The market players that
achieve voluntary agreements always do a better job than
politicians or bureaucrats. I was pleased that the participants
working toward this agreement actually made some progress
during August and September. I was less than pleased, however,
to see that after years and years of discussion they still
could not come to a final resolution. My understanding of those
meetings leads me to believe that the parties will not reach an
agreement soon and maybe not ever. I am tempted and I am
reminded of the ongoing negotiations between the Palestinians
and the Israelis. There may be good intentions on both sides
but they never seem to get the final resolution. So here we are
in this subcommittee today having to do it for them. I do not
doubt the good faith of the parties involved but the fact
remains that they cannot agree.
I appreciate the efforts of automakers especially United
States automakers who have worked very hard to improve the
NASTF process to get information to independent repairers. But
efforts without solutions do not fix broken cars. I have
introduced legislation in previous Congresses to address this
important issue that affects consumers and small businesses.
This Congress has redrafted a legislation to address legitimate
concerns raised by the industry and the Federal Trade
Commission. H.R. 2048, the Motor Vehicle Owners' Right to
Repair Act which I have introduced along with Congressman Towns
and Congressman Issa which now has over 66 cosponsors including
many on this subcommittee. The AAA, the NFIB, the Consumer
Electronics Association, the Retail Industry Leaders
Association, and the Sixty Plus Senior Citizens Coalition all
support this legislation.
My goal is and always has been to put the vehicle owner in
the driver's seat when it comes to choosing where to have their
car repaired. It is not about getting any proprietary
information and this legislation explicitly protects the trade
secrets of the manufacturers. In fact, automakers currently
comply with an EPA rule today that specifically protects trade
secrets when shop work and emission systems is being done. This
framework should also work for non-emissions repair work. My
bill simply requires that manufacturers make the same
information available to both dealers and independent shop
owners.
We all know how dependent we are on our cars. They take us
to work, they take us to school, they take us to Congress, they
take us to the grocery store, they take us to our relative's
house to visit on Sunday. If your car does not work, your life
does not work. You want it fixed and you want it in your
driveway where it is available for your use. There is a good
chance that the person who fixes my car works at a service
station or a small garage, maybe even owns their own operation,
not a big car dealership. And again, I am not opposed to big
car dealerships; they are some of my very best supporters. Why
shouldn't I, the owner of the car, be able to decide which of
my many folks who can work on a car that I can go to the person
that I choose not to the dealership because they are the only
one that has the diagnostic equipment.
Independent shops who have paid for access to information,
who have paid for the diagnostic equipment, who have made the
investment in tools to repair the car, have a right to be able
to use that and get a timely response when a customer comes
into their shop and wants to know what is wrong with their car
and how much it is going to cost to get it fixed. They need
some recourse when the manufacturer for whatever reason simply
will not give them the information or allow them the access to
the codes and things of this sort.
Presently, independent repairs who repair the vehicle are
forced to turn their customers away to the dealerships. I know
that constituents all over the country deserve better than
this. If an enforceable voluntary agreement can be reached,
great. But if not, I think it is time to ask Chairman Stearns,
Ranking Member Schakowsky to move H.R. 2048 and move it sooner
rather than later. Four years is long enough. It is now time to
take legislative action and move this process forward.
With that, Mr. Chairman, I thank you for your willingness
to hold your hearing, Mrs. Schakowsky for the willingness to be
a part of it. I look forward to hearing from the witnesses.
[The prepared statement of Hon. Joe Barton follows:]
Prepared Statement of Hon. Joe Barton, Chairman, Committee on Energy
and Commerce
I want to thank Chairman Stearns for holding this important hearing
today.
I have been involved with this issue since August of 2001, because
I believe that drivers should decide who fixes their cars. I also
believe that honest competition makes for better service and lower
prices. That's how good businesses win customers in America, and why
bad businesses lose them. Right now there's not much competition, and
it shows.
What's at issue here is the way cars and trucks are repaired today.
Computers and other sophisticated equipment make your car more reliable
than ever, but they also mean that even a genius shade-tree mechanic
can't fix it when something goes wrong. The sophistication needed to
repair modern vehicles makes car repair a little like rocket science.
That's the way manufacturers see it, too. When your car breaks,
they want you to come to their brand-name dealerships. And if
independent garages can't get the computer codes and other data they
need to diagnose the problem, the dealership is your only choice.
Whether a car is foreign or domestic, consumers should be able to
choose where they have the vehicle repaired, and whether they choose
after-market replacement parts or Original Equipment Manufacturer
parts. Nobody should find themselves dropping off a car at a
neighborhood service station, where they've got both the mechanics and
the tools necessary to fix that car, only to be told that it can't be
fixed because the mechanic cannot get information from the car company.
That's what happens now, and the list of who it hurts goes on and on--
the consumer who can't get his car fixed, the shop owner who loses
business, the mechanic without a job to do, even the company that makes
tools for shops that can't use them. I'd be happy to let the industry
parties sort this out, but they seem incapable. Market players that
achieve voluntary agreements always do a better job than politicians or
bureaucrats. So I was pleased to see the participants working toward an
agreement during August and September. I was less happy to see that
after years of discussion, they still can't find a way to agree. My
understanding of the meetings leads me to believe the parties will not
reach agreement soon, and maybe not ever. So here we are, doing it for
them. .
I do not doubt the good faith efforts of all parties involved, but
the fact remains that they cannot agree. I appreciate the efforts the
automakers have made to use and improve the NASTF process to get
information to independent repairers. But efforts without solutions
don't fix broken cars.
I introduced legislation in the previous Congress to address this
important issue that affects consumers and small business. This
Congress I redrafted the legislation to address legitimate concerns
raised by industry and the FTC. I have sponsored H.R. 2048, the ``Motor
Vehicle Owners' Right to Repair Act,'' which I introduced along with
Congressman Towns and Congressman Issa and which now has 66 cosponsors,
including many on this Subcommittee. The AAA, NFIB, The Consumer
Electronics Association, The Retail Industry Leaders Association, and
the 60 Plus Senior Citizens support this legislation. I am pleased to
see we will hear from some of them today.
My goal is and has always been to put vehicle owners in the
driver's seat when it comes to choosing where to have their car
repaired. It is not about gaining proprietary information, and so my
legislation explicitly preserves trade secrets. In fact, automakers
currently comply with an EPA rule that specifically protects trade
secrets when shops work on emissions systems. This same framework
should work for non-emissions repair information too and my bill simply
requires that manufacturers make the same information available to both
dealers and independent shops.
We all know how dependent we are on our cars. They take us to work
and back, to school, to the grocery store, to grandma's house for
dinner on Sunday. When my car doesn't work, I need it fixed and back in
my driveway as soon as possible. So do most people.
There's a good chance that the guy who will fix my car works at a
service station or a little garage, not at a big car dealership. Why
shouldn't I be able to go to him, and why shouldn't he be able to
repair my car? Independent shops who have paid for access to
information from manufacturers and have made the investment in tools to
repair the car need a timely response when the information cannot be
accessed. They need some recourse when there are problems such as this.
Presently, independent repairers who could have repaired the vehicle
are forced to turn their customers away to the dealerships. I know my
constituents deserve better than the status quo. If an enforceable
voluntary agreement can be reached before we act, great. But I don't
think American consumers should wait any longer. I have asked Chairman
Stearns to be ready to markup H.R. 2048 or an alternative very soon,
probably in December.
I've been at this for four years now. It can take years to pass a
law, and that's usually a good thing, but it shouldn't take years to
get your car fixed.
Thank you.
Mr. Stearns. And I thank you for your leadership, Mr.
Chairman.
Mr. Gonzalez?
Mr. Gonzalez. Thank you very much, Mr. Chairman and ranking
member for bringing this hearing today.
First of all, I need to tell you at first when this issue
came up back home I met with my repair and parts people, their
association to try to get an idea of the extent or degree of
the problem. And believe it or not, there was even disagreement
among members of the association as to the extent of it. And
what I asked for at that time was give me real life examples of
where you have been stymied and frustrated in gaining the
necessary information to make the necessary repairs. And I
really never received one yet I see out in the audience today
many individuals in the repair business that I think would be
willing to get me out there in the hall and tell me specifics
that they--experiences that they have had.
But the real problem I think comes trying to define what
this issue is really about. At first, I thought it was about
information, getting information so you--the diagnostics and
such. But then it was a debate about well we have to purchase
expensive equipment because of what the manufacturers are
doing. I am not real sure what we can do about that. And then
the last thing was well it really is about parts and in
replacement parts and why we have to use certain parts.
And as we go through this debate though, I think everyone
needs to understand there are certain guiding principles, legal
in nature that we will always have to defer to that are bigger
than this bill, bigger than any industry or individual or
occupation. And some of these things may touch on proprietary
rights. And these are all very serious issues because we can
pass all sorts of laws here but whether they can be challenged
in the courts and we create greater problems. That is the last
thing that we want to do here.
It costs more to operate a motor vehicle today than ever
before just because of what it takes in the way of fuel. And
this committee specifically has attempted to do something about
it and we have not been that successful. The last thing we need
is to add an additional burden to the American consumer of
costing them a lot more to maintain their vehicles. So
hopefully in good faith we will approach this issue and really
find the degree and the nature of the problem and address it.
Again, as specifically as we can again keeping in line with the
guiding principles that should guide us in all propositions of
law and that is we do have the rights of individuals across the
board to be considered.
Again, I thank the chairman and I would yield back the
balance of my time.
Mr. Stearns. I thank the gentleman.
Mr. Murphy?
Mr. Murphy. Thank you, Mr. Chairman.
I welcome this panel today because it helps set some
knowledge on important information, an important issue for us.
The one side holds that manufacturers to invest----
Mr. Stearns. Recess, it is just a recess in the House so go
ahead. Excuse me.
Mr. Murphy. Thank you.
With the manufacturer to invest heavily in the invention
and building of automobile parts and automobiles themselves and
saying they should not be forced to automatically give up their
proprietary inventiveness and the other side saying that
consumers should have options and not to constrain by
monopolies and help lower prices.
The average car has 17 different computer systems that
control brakes, ignition, steering, air bag safety features, et
cetera. Many of us grew up still feeling that we could work on
some cars like we had when we were teenagers. Now we lift the
hood, take a look at it, and close it back down because there
is not much any of us can go do anymore on these cars. We
understand that they are appreciably more complex and require
high technology both to analyze anything going wrong with the
car and also to repair it.
I am pleased that our Chairman, Mr. Barton has introduced
H.R. 2048 in order to even the market's playing field and work
up some solutions. As my colleagues know, the bill requires
that the same services, training information, and tools
available to their franchise dealership are also made available
to independent repair mechanics. Through this process, I think
all of us intend to protect consumer interest, promote the free
market, but we also need to simultaneously protect
manufacturer's rights.
So I am looking forward to hearing more in this particular
hearing and hearing both sides of the issue and hope that we
can come up with a legislative solution to sharpen this bill
that will really benefit both sides fairly but ultimately to
benefit the consumer above all.
I thank the chairman for holding this hearing and I yield
back the balance of my time.
Mr. Stearns. I thank the gentleman.
Mr. Towns?
Mr. Towns. Thank you very much, Mr. Chairman. Let me thank
you and also Ranking Member Schakowsky for having this hearing
today. I think it is important that we begin to have a serious
dialog.
As motor vehicles have become more complex, the servicing
of them has also become a high technology business requiring
skilled trained technicians and a sizable investment in
diagnostic and repair equipment. For independent repairers to
be successful, they need to have access to up to date training
and specialized tools, as well as, service and repair
information.
I became an original cosponsor of this legislation because
I wanted to ensure that the advanced computer technologists
that are making vehicles safely and cleaner do not result in
locking out car owners and independent repairers from being
able to repair and maintain vehicles. Independent repair shops
perform between 70 and 80 percent of most warranty and repair
work. If later model automobiles can only be serviced and
repaired at automobile dealerships, then the ability of
consumers to shop around for the best price and most convenient
service location would be greatly limited.
In addition, I fear that this may result in many small
businesses being crippled by their inability to compete with
franchise dealerships. I have monitored this issue for the past
4 years and I am pleased with how much information has become
available to independent repairers. Since the manufacturers
agreed to provide the same information to the aftermarket that
they provide for their dealers, the amount of information
available on their website has increased greatly. And while I
am sure that some gaps still exist, I am hopeful that
manufacturers will continue to refine their website and
increase their access.
Additionally, Mr. Chairman, I am aware that there have been
negotiations between the members of the Care Coalition and the
automobile manufacturers to resolve an outstanding issue.
Agreement has reached on many of these core issues during these
negotiations that are facilitated by the Better Business
Bureau. However, at the end of these discussions, it is my
understanding that CARE required 50 percent control over the
board of the National Automotive Service Task Force. Due to
CARE's requirement, the negotiation fell apart. I was
disappointed at this outcome and encouraged both sides to
consider options to continue to explore a non-legislative
solution if possible. You do not want the Government to get its
nose under your tent. Please go back to the conference table
and try again.
I applaud both sides for their commitment to provide
consumers with a valuable service and am confident that working
together you can resolve this issue without the need of
legislation. That is my hope. That is my prayer. I look forward
today from hearing from the witnesses. And again, Mr. Chairman,
I would like to thank you and the ranking member for moving
forward with this hearing because I think this dialog needs to
take place and I think it needs to take place now.
Thank you very much and I yield back the balance of my
time.
Mr. Stearns. I thank my colleague.
Mr. Bass?
Mr. Bass. Thank you, Mr. Chairman. I will be very brief.
It is a good hearing and important topic. We need to have
diversity in repair facilities. We need to protect
manufacturers. We need to continue the negotiations that as my
friend from New York has said, are not progressing as they
should. I hope that can come--we can begin that process again.
This is an important issue that needs to be resolved and I
yield back.
Mr. Stearns. The gentleman yields back.
Any one else seek opening statement recognition? If not, we
will go to the first panel.
[Additional statements submitted for the record follow:]
Prepared Statement of Hon. Barbara Cubin, a Representative in Congress
from the State of Wyoming
Thank you, Mr. Chairman.
I'd like to begin by thanking Chairman Stearns for scheduling
today's hearing on the availability of auto repair information. It is
especially timely given the recent negotiations between auto
manufacturers and the aftermarket industry.
With rapidly advancing computer technology, auto systems and the
task of repairing vehicles has become more complex. As such, the
service information developed by manufacturers is necessary not only
for franchised dealers, but also the independent service providers who
work on over 70 percent of cars not under warranty.
In order to ensure the availability of this information, in 2000
the auto industry established the voluntary National Automobile Service
Task Force. Although the Task Force has operated for over five years
now, members of the aftermarket industry still maintain they do not
have affordable access to the information needed to compete in today's
marketplace.
I hope that today's panels will shed light on what industry has
not, to this point, been able to agree upon. Issues include proposed
structural changes to the Task Force, mechanisms for dispute resolution
and enforcement, and vehicle security issues--just to name a few.
Industry self-regulation is certainly the preferable solution in
cases like these. By taking legislative action we run the risk of
disrupting important market forces, which in some cases does more to
impede healthy competition than to foster it. In lieu of a voluntary
industry solution, however, as the committee of jurisdiction over
consumer protection we have an obligation to explore legislative
options.
I thank our panels for joining us today and yield back the balance
of my time.
Prepared Statement of Hon. Tammy Baldwin, a Representative in Congress
from the State of Wisconsin
Thank you Mr. Chairman. I am very pleased that we are having this
hearing today.
I was raised to be frugal and careful with money and I was taught
that fixing and reusing things has value. Over the years, I have
purchased several used cars that have eventually had repair and
maintenance needs. My 1994 Chrysler LeBaron which I use when I am at
home in Wisconsin will soon see the inside of a repair shop.
Fortunately, because it is a 1994 model, I have a choice of repair
options.
My LeBaron may take its final journey to the junkyard soon, and if
I then purchase a new car loaded with the latest technologies, my
repair options could be much more limited due to computer-controlled
technologies in both core and ancillary systems. My local mechanic
(with whom my LeBaron and I now have a close relationship) runs a small
independent local business--Monona Motors. Of course, I hope my
hypothetical new car would be repair free for many years, but if it
weren't and the warranty expired, I want to be able to continue my
relationship with the good folks at Monona Motors. And I would like my
constituents to be able to chose where they go to repair their car.
Competition and choice are the pillars of a strong market economy.
I am pleased that the various stakeholders have been willing to sit
down at the table to try to come to an agreement that will ensure that
independent repair shops and others have access to the information they
need to competently service automobiles. I am disappointed that so far
a comprehensive agreement remains out of reach.
Although I am a cosponsor of Chairman Barton's Right to Repair
legislation, I do understand the very real concerns regarding
intellectual property and safety. It is my hope that we can find ways
to address these concerns while moving forward with either a
comprehensive voluntary agreement or legislation.
Mr. Stearns. Let me welcome James Kohm, Associated Director
Bureau of Consumer Protection, Division of Marketing Practices
of the Federal Trade Commission; Mr. Steven Cole, President and
CEO of Council of Better Business Bureaus; and Mr. David Parde,
President, Coalition for Auto Repair Equality; and Mr. Michael
Stanton, Vice President, Government and International Affairs,
The Alliance of Automobile Manufacturers.
Mr. Kohm, we will start with you with your opening
statement and just pull the mike close to you and turn it on.
Do you know how to turn it on right there? There you go, good.
Thank you, welcome.
STATEMENTS OF JAMES A. KOHM, ASSOCIATE DIRECTOR BUREAU OF
CONSUMER PROTECTION, DIVISION OF MARKETING PRACTICES, FEDERAL
TRADE COMMISSION; STEVEN J. COLE, PRESIDENT AND CEO, COUNCIL OF
BETTER BUSINESS BUREAUS, INC.; DAVID PARDE, PRESIDENT,
COALITION FOR AUTO REPAIR EQUALITY; AND MICHAEL J. STANTON,
VICE PRESIDENT, GOVERNMENT AND INTERNATIONAL AFFAIRS, THE
ALLIANCE OF AUTOMOBILE MANUFACTURERS
Mr. Kohm. Thank you, Mr. Chairman and members of the
subcommittee.
I am James Kohm, the Associated Director of the Division of
Enforcement in the Federal Trade Commission's Bureau of
Consumer Protection. I am pleased to have this opportunity to
discuss our participation in the meetings between automotive
manufacturers and independent repair shops this past summer.
The written testimony submitted today is that of the Federal
Trade Commission. My oral presentation and responses to
questions are my own and do not necessarily reflect the opinion
of any particular commission or the commission as a whole.
Let me begin by thanking this subcommittee for the
opportunity to work with you to resolve the issues before us
today. Last July at the direction of Chairman Barton and
Senator Graham, representatives of the automotive manufacturers
and independent repair shops met for more than 60 hours to try
and reach a voluntarily agreement on how to make information,
training, and tools available to automotive service
professionals. At least one commission staff member attended
all of these meetings. Both sides worked diligently to try to
fashion an appropriate mechanism to address those instances
where the information sharing system had failed. The parties
looked to the NASTF information sharing structure already in
place as a model. Despite these diligent efforts on both sides,
an agreement could not be reached and on September 30, 2005,
the parties concluded negotiations.
Although the commission is disappointed with the results of
these talks, we continue to believe that in the long run a
voluntary self-regulatory approach is the best solution to the
concerns that have been raised. However, if you determine that
legislation is appropriate, we believe that industry
participants are best situated to resolve particular disputes
and, therefore, any legislation should buildupon the progress
the parties made in negotiations this summer.
In conclusion, I would like to thank the subcommittee for
focusing attention on this important consumer protection issue
and for giving the Federal Trade Commission the opportunity to
discuss its role. We look forward to continuing to work with
the subcommittee and I would be happy to answer any questions
that you have.
[The prepared statement of James A. Kohm follows:]
Prepared Statement of James A. Kohm, Associate Director, Division of
Enforcement, Bureau of Consumer Protection, Federal Trade Commission
Mr. Chairman and members of the Subcommittee, I am James A. Kohm,
Associate Director of the Division of Enforcement in the Federal Trade
Commission's Bureau of Consumer Protection.1 I appreciate
this opportunity to discuss the Commission's mission and the
discussions between representatives of the automotive manufacturers and
representatives of independent auto repair facilities.
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\1\ This written statement presents the views of the Federal Trade
Commission. Responses to questions reflect my views and do not
necessarily reflect the views of the Commission or any Commissioner.
---------------------------------------------------------------------------
The Federal Trade Commission (``FTC'' or ``Commission'') is a small
agency with a big mission: to enhance consumer welfare and protect
competition in broad sectors of the economy. The FTC enforces the
Federal Trade Commission Act 2 and other laws that prohibit
business practices that are anticompetitive, deceptive, or unfair to
consumers, and seeks to do so without impeding legitimate business
activity. The FTC also promotes informed consumer choice and public
understanding of the competitive process.
---------------------------------------------------------------------------
\2\ 15 U.S.C. Sec. 45(a).
---------------------------------------------------------------------------
In addition to the FTC Act, the agency has responsibilities under
more than fifty federal laws, including, most recently, the Controlling
the Assault of Non-Solicited Pornography and Marketing Act,3
the Fairness to Contact Lens Consumers Act,4 and the Fair
and Accurate Credit Transactions Act.5 The Commission's work
is critical to protect and strengthen free and fair markets in the
United States and, increasingly, the world. Among the Commission's
accomplishments are the implementation and enforcement of the National
Do-Not-Call Registry, the protection of the availability of lower-cost
prescription drugs, stopping deceptive or abusive lending practices,
attacking unfair or deceptive practices in e-commerce, and the review
of corporate mergers reported to the antitrust agencies under the Hart-
Scott-Rodino premerger notification process.
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\3\ 15 U.S.C. Sec. 7701 and implementing regulations.
\4\ 15 U.S.C. Sec. 7601 and implementing regulations.
\5\ Pub. L. No. 108-159, 117 Stat. 1952 (Dec. 4, 2003), codified at
15 U.S.C. Sec. 1681 et seq.
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Auto repair is undoubtedly an important issue for U.S. consumers.
U.S. consumers spend more than $80 billion annually to repair and
maintain the two hundred million cars currently on the
road.6 Consumers thus have a significant interest in
automobile repair and maintenance markets that operate properly and
efficiently, consistent with safety and other quality standards.
---------------------------------------------------------------------------
\6\ U.S. Census Bureau, Statistical Abstract of the U.S.(2004-
2005).
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For some time, members of this Committee--and especially Chairman
Barton--have considered ways to ensure that independent car repair
facilities and vehicle owners have access to information and tools
needed to diagnose, service, or repair vehicles.
Such access is not as easy or relatively inexpensive as it once
was. For example, the sophisticated technology used in most cars today
can require expensive computerized diagnostic tools to diagnose
problems, as well as knowledge of particular software access or
computer codes. It can be difficult for one independent repair shop to
acquire all of the equipment it may need to repair all makes of cars,
or to easily access all of the information required to make timely
repairs. Generally, the marketplace will provide strong incentives for
automobile manufacturers to ensure their customers have an appropriate
range of repair options because the manufacturers depend on repeat
purchases of their product. With the increasing sophistication of
automobiles, however, independent repair shops have been concerned
about continued access to high tech information and tools.
To address these issues, market participants have taken some
initial steps that provide a foundation upon which to build an
effective self-regulatory mechanism. For example, a group of automotive
trade associations has created an information-sharing structure, the
National Automotive Service Task Force (``NASTF''), to aid in the
provision of timely service information needed by independent repair
facilities. In addition, third-party information providers, such as
ALLDATA and Mitchell, can provide useful services to automobile repair
facilities. The amount of auto repair data available is voluminous and
not always easily accessible. By packaging data for sale, third-party
information providers can allow repair facilities to access necessary
technical information with the speed the marketplace demands.
More recently, legislation has been proposed to address the
provision of information to the aftermarket, that involves relations
among automobile manufacturers, franchised dealers, independent repair
shops, tool manufacturers and sellers, and--most importantly--
consumers.
A VOLUNTARY INDUSTRY SOLUTION
Chairman Barton and Senator Graham urged representatives of the
independent auto repair facilities and automotive manufacturers to try
to reach a voluntary agreement for the provision of service
information. In response, the parties, with the Commission staff's
assistance, chose Steven J. Cole of the Council of Better Business
Bureaus (``CBBB'') as the facilitator. Participants included the
Coalition of Auto Repair Equality (``CARE'') and the Automotive
Aftermarket Industry Association (``AAIA''), the Alliance of Automobile
Manufacturers (``AAM''), the Association of International Automobile
Manufacturers (``AIAM''), the National Automobile Dealers Association
(``NADA'') and the Automotive Service Association (``ASA''). FTC staff
attended all the meetings. The parties began discussions on July 26,
2005 with an expectation that the facilitation would conclude September
1, 2005. Because of the progress the parties made, that deadline
subsequently was extended to September 30, 2005.
Throughout August and September, the parties, the CBBB, and
Commission staff met for more than sixty hours to try to reach an
agreement on what information the auto manufacturers would provide to
independent auto repair facilities and how they could provide that
information in an efficient and affordable manner. In addition, the
parties spent considerable time discussing an appropriate mechanism to
address those instances where the system failed. In formulating a plan,
the parties looked to the information-sharing structure created by
NASTF to provide information, training, and tools to automotive service
professionals. In the course of their discussions at the CBBB, both
sides looked to improve the NASTF structure to streamline the process
and provide the necessary support to technicians who face problems
obtaining information.
Despite hard work by both sides, the parties were unable to come to
an agreement and, on September 30, 2005, concluded negotiations without
a solution.
The parties continued to have difficulties in reaching agreement
regarding such issues as the precise scope of information to be shared,
access to diagnostic tools, and the breadth of industry interests that
should be represented in the conflict-resolution organization. The
Commission is disappointed that the facilitation process was
unsuccessful. Nonetheless, the parties' efforts to reach agreement were
significant and should receive consideration throughout the ongoing
legislative process in which this Committee is engaged.
Although the parties have failed to reach agreement, the parties'
work thus far could provide the basis for a solution to this issue. The
Commission continues to believe that, in the long run, a voluntary,
self-regulatory approach is the best solution to the concerns that have
been raised. If the Congress determines, however, that legislation is
appropriate, the Commission believes it is important that the
resolution of particular disputes be decided and implemented by
industry participants rather than the government. Further, any
governmental intervention in this area requires great care to avoid
unnecessary impact on existing markets. The Commission is concerned
that a mandatory, uniform approach could result in higher costs for
consumers and leave the industry less flexible to address a rapidly
changing marketplace.
Mr. Chairman, members of the Subcommittee, thank you for providing
the Federal Trade Commission the opportunity to appear before this
Subcommittee. We look forward to working with you.
Mr. Stearns. Thank you, Mr. Kohm.
Mr. Kohm. Thank you.
Mr. Stearns. Mr. Cole?
STATEMENT OF STEVEN J. COLE
Mr. Cole. Good morning, Mr. Chairman and members of the
subcommittee.
I am the guy who locked the doors, served lunch, and tried
to get a deal. So I wish I was telling you something different
this morning than I am.
Just by way of introduction, the Council of Better Business
Bureaus is the umbrella organization for all the Better
Business Bureaus across the United States and Canada with
375,000 members.
In July, we were asked by the Federal Trade Commission with
the support of representatives of both the auto manufacturers
and the auto repair industry to serve as a facilitator to try
to reach an agreement in the design of the third party dispute
resolution process to resolve the issues of diagnosis and
repair and service information. I want to say that at the
beginning of the process, the original parties, The Alliance of
Automobile Manufacturers and the Coalition for Auto Repair
Equality agreed to a set of ground rules for the facilitation
and further agreed to grant the facilitator, me, the authority
to make decisions regarding participation and the process and
other procedural issues.
One early decision I made was to allow additional groups to
be represented as named parties in the facilitation, the
Automotive Aftermarket Industry Association, the Association of
International Automobile Manufacturers, NADA, and the
Automotive Services Association. I mention that because the
fact that the issue of who could sit at the table was a
difficult one requiring my decision and was not the result of
consensus revealed much about the difficulties of the task
ahead. A trust between the parties was not at the beginning of
process a readily available commodity. The truth is I am not
convinced in the end we had all the needed parties for the
facilitation. Tool manufacturers were not there, independent
information providers might have been helpful and this is
something to bear in mind for the future.
The group held 10 meetings from its initial session on
August 3 to its final meeting on September 30. Each session
lasted between 4 and 6 hours. And I need to say there was
considerable preparation in advance and work by the parties in
between each of these meetings.
At any facilitation or mediation which is how we approach
this task, the parties trust in the impartiality of the
neutrals and the attendant confidentiality of process is a
vital role in the ultimate success or failure. So I will be
constrained as to the level of detail I may be able to share
with you this morning.
As you know, the parties were not able to reach an
agreement on the full scope of a self regulatory program. This
was not for one of trying on the part of all the participants.
I do have some experience in doing this and I believe that each
party and the experts they brought with them approached this
facilitation in good faith. Their comportment throughout the
process only enhanced my opinion of their commitment. In point
of fact, the parties quickly reached agreement on the utility
of and the basic nature of a third party dispute resolution
process which was my initial understanding of the purpose of
the facilitation in the first place.
There was not a shared understanding of the scope of the
problem to be solved but notwithstanding that the parties did
agree that a progress was possible. They all appeared to
recognize that a third party dispute resolution process by
itself would not provide an adequate solution unless
improvement was made in the two steps that would necessarily
precede a formal third party process. Nearly all the work of
the group was focused on either the first step, how the
manufacturers respond to an initial request for assistance from
repair facilities or the second step, an expedited fact finding
which was decided would be conducted by a restructured and
better funded process through the National Automotive Service
Task Force, NASTF.
I am convinced that a third party dispute resolution
process can work and can be agreed to by the parties once the
issues related to these first two steps are resolved. As the
chairman noted, there was tentative substantial agreement on a
huge number of issues that we dealt with.
The process ultimately was not able to reach resolution on
important but a smaller number of issues. First, how should
NASF be restructured and governed to ensure that all interests
were represented in a balance manner? How tool related issues
should be handled both by NASTF and by the third party
mechanism? And had an agreement been reached, it was the
party's intention to defer these questions to the newly
structured NASTF board which raised the stakes for the
governance issue I just mentioned and Mr. Towns had mentioned
in his opening statement. How or whether possible issues of the
cost of the tools will be handled by NASTF and the third party
if it were alleged that the price of the tool was so high in
relation to the rest of the market that the price made the tool
unavailable as a practical matter.
Fourth, a mutual acceptable method to deal with vehicles
relating to vehicle security. How to provide the aftermarket
industry with the practical ability to obtain necessary
information and codes to complete repairs without compromising
a consumer's security. It seems that only one or a few of the
auto manufacturers are unable to reach agreement on a
methodology but that prevented agreement on this issue.
Fifth, the extent to which a manufacturer supplied
information through telephone hotlines should be required to be
made available to independent repair facilities when it is not
published in writing and sent routinely to all franchise
dealers although it is made available to dealers on an as
needed basis.
And finally, should there be monetary remedies in the third
party dispute resolution process and if so how should they be
calculated and what penalty if any should be assessed if a
manufacturer failed to comply with a mechanism decision.
On behalf of the BBB system, I want to thank the committee
for your attention and especially if you are understanding that
industry self regulation cannot occupy an important place in
the marketplace today and that informal dispute resolution
processes can very effectively compliment the legislative
process.
I would be happy to answer questions, thank you.
[The prepared statement of Steven J. Cole follows:]
Prepared Statement of Steven J. Cole, President and Chief Executive
Officer, Council of Better Business Bureaus, Inc.
Mr. Chairman and members of the Sub-Committee, my name is Steven J.
Cole, and I am the President and Chief Executive Officer of the Council
of Better Business Bureaus, Inc.
The Council of Better Business Bureaus (CBBB) is the umbrella
organization for the nation's Better Business Bureau system, which
consists of 177 local BBB's and branches and 375,000 member businesses
across the United States and Canada. The CBBB is a nonprofit business
membership organization tax exempt under section 501(c)(6) of the
Internal Revenue Code. More than 275 leading edge companies nationwide
belong to the CBBB and provide support for its mission of promoting
ethical business practices through voluntary self-regulation and
consumer and business education.
In 2004, the Better Business Bureau system provided nearly sixty
million instances of services--reliability reports, complaint
processing, educational information and referrals. The CBBB has
significant experience with--and tailored programs serving--the
automotive industry. Thousands of auto dealers and independent repair
facilities are members of local Better Business Bureaus across the
United States, and as such meet BBB standards for ethical business
practices and advertising. During 2004, nearly 2.4 million consumers
contacted the BBB on the Internet or by telephone to obtain BBB reports
on auto-related products and services from members and non-members
alike. At the same time, the BBB system handled more than 72,000
individual consumer complaints involving the automotive industry. In
addition, the CBBB provides warranty dispute resolution services for
more than 30 auto manufacturer brands, serving an additional 28,000
consumers with conciliation, mediation and arbitration services.
In July of this year, I was asked by the Federal Trade Commission,
with the support of representatives of both the auto manufacturers and
the auto repair industry, to serve as a facilitator in an effort to
assist the various groups in designing a third-party dispute resolution
process to resolve issues concerning the provision by auto
manufacturers of diagnostic, repair and service information to vehicle
owners and repair facilities.
The process was tasked with very challenging time constraints. It
was expected that the CBBB would make a report to the Federal Trade
Commission not later than September 1st on the outcome of the
facilitation effort.
At the beginning of the process, the original parties--the Alliance
of Automobile Manufacturers (AAM) and the Coalition for Auto Repair
Equality (CARE)--agreed to a set of ground rules for the facilitation
and further agreed to grant the facilitator the authority to make
decisions regarding participation in the process and other procedural
issues. One early decision I made was to allow additional groups to be
represented as named parties in the facilitation. Those groups were:
the Automotive Aftermarket Industry Association (AAIA), the Association
of International Automobile Manufacturers (AIAM), the National
Automobile Dealers Association (NADA) and the Automotive Service
Association (ASA). The fact that the issue of who could sit at the
table was a difficult one requiring my decision, and was not the result
of consensus, revealed much about the difficulties of the task ahead.
Trust between the parties was not a readily available commodity. Other
individuals joined the facilitation at various points to bring
expertise or other assistance to the process, and one or more observers
from the Federal Trade Commission attended each formal session.
The group held 10 meetings from its initial session on August 3rd
through its final meeting on September 30th. Each session lasted
between four and six hours, with considerable preparation work by the
parties between each session. CBBB provided formal progress reports to
the Federal Trade Commission in letters on September 1st, September
14th and October 3rd.
In any facilitation or mediation, the parties trust in the
impartiality of the neutrals--and the attendant confidentiality of the
process--plays a vital role in the ultimate success or failure of the
facilitation. I am therefore constrained as to the level of detail I
believe I can share with you this morning. I will, however, endeavor to
provide the Sub-Committee with a flavor of the major issues with which
the parties were grappling.
As you undoubtedly know, the parties were not able to reach
agreement on the full scope of a self-regulatory program. I should
note, however, that this was not for want of trying on the part of all
the participants. I believe that each party--and their respective
experts--approached this facilitation in good faith. Their comportment
throughout the process only enhanced my opinion of their commitment.
In point of fact, the parties rather quickly reached agreement on
the need for--and basic nature of--a third-party dispute resolution
process, which was my initial understanding of the purpose of the
facilitation. However, the parties all appeared to recognize that a
third-party dispute resolution process by itself would not provide an
adequate solution unless improvement was made in the two steps that
would necessarily precede a formal third party process. Nearly all the
work of the group was focused on either the first step (how the
manufacturers respond to initial requests for assistance from repair
facilities) or the second step (an expedited ``fact-finding'' which, it
was decided, would be conducted by a restructured and better-funded
process through the National Automotive Service Task Force--NASTF). I
am convinced that a third-party dispute resolution process can work and
can be agreed to by the parties once the issues relating to these first
two steps are resolved.
As my October 3rd letter to the Federal Trade Commission indicated,
the process ultimately was not able to reach resolution of the
following issues:
How should NASTF be restructured and governed to ensure that all
interests were represented in a balanced manner;
How tool-related issues should be handled, both by NASTF and by the
third-party mechanism (had an agreement been reached, it was
the parties' intention to defer these questions to the newly-
restructured NASTF board, raising the stakes for the governance
issue just mentioned);
How or whether possible issues of the cost of a tool would be handled
by NASTF and the third-party if it were to be alleged that the
price of the tool was so high in relation to the rest of the
market that the price made the tool ``unavailable'' as a
practical matter;
A mutually acceptable method to deal with issues relating to vehicle
security (how to provide the aftermarket industry with the
practical ability to obtain necessary information and codes to
complete repairs without compromising the consumer's security).
It seems that only one or a few of the auto manufacturers were
unable to reach agreement on a methodology);
The extent to which manufacturer supplied information through
telephone hotlines should be required to be made available to
independent repair facilities when it is not published in
writing and sent routinely to all franchised dealers, although
it is made available to dealers on an as needed basis; and
Should there be monetary remedies in the third party dispute
resolution process, and if so, how should they be calculated,
and what penalty, if any, should be assessed if a manufacturer
failed to comply with a mechanism decision.
On behalf of the Better Business Bureau system, I want to thank the
Committee for your attention and for your understanding that industry
self-regulation can occupy an important place in the 21st century
marketplace and that informal dispute resolution processes can very
effectively compliment the legislative process.
I am available to answer any questions you may have.
Mr. Stearns. Thank you, Mr. Cole.
Mr. Parde?
STATEMENT OF DAVID PARDE
Mr. Parde. Thank you, Mr. Chairman.
I am David Parde, President of the Coalition for Auto
Repair Equality or CARE. CARE appreciates the opportunity to
appear before you today to discuss H.R. 2048, as well as,
CARE's discussions with the Automobile Industry Association
regarding the self regulatory program.
CARE's members operate businesses at 34,280 locations
throughout the United States. Of these, 15,270 are automobile
maintenance and/or repair facilities where consumers bring
their cars to be worked on by technicians. Our members include
repair shops such as Midas and Jiffy Lube and companies that
sell replacement parts to ``do it yourselfers,'' independent
repair shops that include Advance Auto Parts, O-Reilly Auto
Parts, Auto Zone, CSK, CAR QUEST, and NAPA all companies that
sell parts through retail stores, wholesale distribution, and
also provide repair services through individually owned shops.
In addition, CARE has partnered with the coalition of 49
business groups and associations in support of right to repair.
As you are aware, CARE representatives together with Aaron
Lowe of the Automotive Aftermarket Industry Association and Bob
Everett of the Alliance of Automotive Service Providers met
with representatives from the Alliance AIAM, ASA, and NADA, and
participated in a series of meetings over 2 months this summer.
With the Better Business Bureau as our facilitator and the FTC
staff as observers, we reviewed and discussed numerous
proposals for a self regulatory program designed to resolve
issues or problems relating to the availability to the
aftermarket of automotive diagnostic and repair information,
tools, and capabilities.
In addition to the meetings facilitated by the BBB, we held
two meetings on our own. We twice agreed to extend our imposed
deadlines and exchange numerous communications. We did make
progress toward a workable solution. Most notably for us, the
Alliance and AIM agreed that any program contain an enforcement
component which had proved to be a roadblock in previous
discussion among the parties. Despite what we believe were good
faith efforts, we simply could not agree on certain fundamental
elements that CARE believes are essential for such a program to
be successful.
The program under discussion with the industry associations
would have required automobile manufacturers to commit in
writing to abide by a set of voluntary standards for making
information and tools available to the aftermarket in a similar
manner and to the same extent as such information is made
available to the dealerships. The standards also set out a
process to enforce the commitment made by each company. Under
the program, technicians seeking information or tools to repair
a vehicle but were unable to locate the necessary information
would first be required to contact a representative of NASTF to
obtain assistance. The parties had agreed that NASTF would be
reconstituted and employ trained service technicians and staff
who would act as a buffer between the technician and the
manufacturer to determine if the information was available and
if not to make a recommendation about whether it should be made
available.
In the event the necessary information was not provided in
the NASTF process, the technician could bring the complaint to
an independent third party dispute resolution program. Pursuant
to certain procedures and time constraints, the third party
enforcement entity would render a binding decision regarding
whether the informational dispute should be made available in
accordance with the voluntary standards agreed to by the
manufacturer. Any manufacturer faced with a negative final
decision would be required to provide the information to both
the technician that brought the complaint and to the
aftermarket in general and pay a penalty for non-compliance.
Throughout these discussions, CARE's primary objectives
were to achieve a program that would be effective in quickly
communicating needed information to service technicians in a
fair an impartial manner and incorporating the elements
articulated by the FTC for an acceptable self regulatory
system. It is important to note that our goal is to impose the
same requirement articulated in H.R. 2048 that information
should be provided to the aftermarket in a similar manner and
to the same extent as such information is provided to franchise
dealerships. We made it clear that we were not seeking any
additional information or anything that could be considered a
trade secret. In the proposed new arrangement, NASTF would have
been reorganized as a new organization and would hire
professional staff to assist technicians seeking service,
training, or tool information from an automotive manufacturer.
In previous hearings on the right to repair issue, evidence
was presented regarding NASTF's track record in assisting
technicians seeking information and the reluctance by a
majority of technicians even to contact NASTF in the first
instance. For these reasons, CARE was initially skeptical about
whether NASTF was the appropriate body to quickly resolve
disputes regarding the accessibility of information.
Nonetheless, we were willing to allow NASTF to act as the first
response for service information requests provided that
specific safeguards were put in place to ensure that the newly
reconstitute structure would be successful in implementing the
goals of the self-regulatory program and that the third party
enforcement entity would provide an avenue to either enforce a
NASTF decision or challenge its correctness. The most important
safeguard in our view was the creation of a fair and balanced
board of directors.
We therefore propose that initial funding for the
reconstituted NASTF be equally divided between the aftermarket
industry through CARE and AAIA and the automobile manufacturing
industry through the Alliance and AIAM. We further propose that
NASTF be administered by a governing board compromised of eight
members four of whom would be designees of CARE and AAIA and
four of whom would be the designees of the Alliance and AIAM.
This allocation of membership was to ensure that both the
aftermarket and the manufacture representatives through their
discussions would have equal presence on the board.
Nonetheless, CARE remained open to increasing or decreasing the
size of the board provided that the balance of representation
was equally allocated between the two sides. The proposal also
provided that an executive director and support staff be
employed as the board deemed necessary and that an advisory
committee equally representative of the manufacturing and
aftermarket industries be appointed by the board to assist in
recommending policies to effectuate purposes of the agreement.
In contrast, the Alliance and AIAM objected to the idea
that AFA and NADA which had openly aligned themselves with the
manufacturer associations throughout the discussions be
considered as part of the manufacturer contingent on the board.
They further proposed that the composition of the board be left
open for future discussion. According to the proposal, a
special working group comprised of the four parties of the
manufacturer contingent and CARE and AAIA would direct and
implement all legal and operational steps necessary to
establish NASTF. Not surprisingly, we were concerned about the
lopsided representation on a working group that would be tasked
with setting up NASTF. In addition, were equally concerned that
decisions regarding the governance of NASTF including the
composition of the first board be postponed until some
unspecified date in the future.
Mr. Stearns. I just need you to sum up.
Mr. Parde. Thank you, Mr. Chairman.
I would be happy to answer any questions, thank you.
[The prepared statement of David Parde follows:]
Prepared Statement of David Parde, President, Coalition for Auto Repair
Equality
I. INTRODUCTION
Mr. Chairman and members of the Committee, I am David Parde,
President of the Coalition for Auto Repair Equality or CARE. CARE
appreciates the opportunity to appear before you today to discuss the
right to repair issue, as well as CARE's discussions with automobile
industry representatives regarding a self-regulatory program to address
these problems, and the legislative option presented by H.R. 2048, The
Motor Vehicle Owners' Right to Repair Act of 2005.
The Coalition for Auto Repair Equality is a national, nonprofit
organization representing companies in the $200 billion-a-year, five
million employee automotive aftermarket industry. CARE's members
operate businesses at 34,820 locations throughout the United States. Of
these, 15, 270 are automobile maintenance and/or repair facilities
where consumers often bring their cars to be worked on by automotive
technicians. Our members include repair shops such as Midas and Jiffy
Lube, and companies that sell replacement parts to ``do it
yourselfers'' and independent repair shops, such as Advance Auto Parts,
O'Reilly's Auto Parts, and Auto Zone. Other members include CAR QUEST
and NAPA, companies that sell parts through retail stores and provide
repair services through individually owned, franchised shops.
Because CARE was involved in the discussions regarding a proposed
self-regulatory system, I will first focus on those efforts, and then
provide CARE's views regarding H.R. 2048.
II. INDUSTRY SELF REGULATION
A. Why the Current System is Not Effective
The National Automotive Service Task Force (NASTF) is a loosely
organized, voluntary task force funded by the automobile manufacturers.
It was formed in 2000 purportedly to resolve issues or problems
relating to the availability of diagnostic and repair tools and
information for motor vehicles. Our experience shows that NASTF
operates only as a clearinghouse for complaints from independent repair
facilities. NASTF receives complaints related to the failure of an
automobile manufacturer to make certain information available and then
forwards the complaint to the manufacturer to resolve. Once it receives
a response from the manufacturer, NASTF communicates the response to
the repair facility. It does not apply standards regarding when and how
such complaints should be resolved, and does not attempt to resolve
complaints regarding the availability of information. Moreover, there
is no transparency or accountability built into the NASTF process.
When measured against standards for effective self-regulatory
programs enunciated by the Federal Trade Commission, the NASTF program
receives a failing grade. In fact, in a letter to the Alliance of
Automobile Manufacturers from the FTC (attached as Exhibit A), the
agency staff indicated that industry programs must be backed up by a
system of enforcement, incorporating independent, third-party review.
According to the FTC, such independent review should: (1) be impartial
and objective; (2) be transparent or public; and (3) apply standards
consistently. The FTC letter explains that independent review ensures
that individual companies or other industry members are not the sole
arbiters of whether their practices comply with relevant standards. As
described above, NASTF's review system fails to incorporate even one of
the elements of an effective third-party review system.
In addition, the FTC has long stressed the need for self-regulatory
programs to include some form of sanctions for non-compliance with
codes or standards. Such sanctions may include referral of complaints
to the FTC, as is the case with several different programs sponsored by
various segments of the advertising industry. In fact, the FTC stated
to Congress in a 2000 Report to Congress on Online Profiling that:
[t]he bedrock of any effective self-regulatory or legislative scheme is
enforcement. In a self-regulatory context, this means that nearly all
industry members subject themselves to monitoring for compliance by an
independent third party and to sanctions for non-compliance.'' The
current NASTF system, however, provides no such mechanism for
enforcement.
There is little doubt that these structural inadequacies have
contributed to NASTF's failure to facilitate the disclosure of service
information to aftermarket technicians, as well as the mistrust that
has developed among the vast majority of the aftermarket industry
regarding NASTF's ability to correct the kind of problems described in
the next panel by Mr. Bob Everett, NFIB's representative and the only
service technician to have participated in the discussions regarding
the self-regulatory program.
B. Recent Efforts to Achieve an Effective Self-Regulatory Program
Following the introduction of H.R. 2048, CARE, together with
representatives from the Automotive Aftermarket Industry Association
(AAIA), the Alliance of Automobile Manufacturers (Alliance), the
Association of International Automobile Manufacturers (AIAM), the
Automotive Service Association (ASA), and the National Auto Dealers
Association (NADA), at the request of Chairman Joe Barton and Senator
Lindsey Graham, engaged in a series of discussions this summer over a
two month period in an attempt to develop a voluntary industry self-
regulatory program that would obviate the need for the proposed
legislation. These talks were facilitated by representatives of the
Council of Better Business Bureaus (CBBB) and monitored by the Federal
Trade Commission staff. As you are aware, the talks were concluded
without a final resolution that would ensure the timely disclosure of
automotive repair, diagnostic and tool information to the aftermarket
industry to the same extent such information is made available to
franchised dealerships. Although significant progress had been made
toward developing a workable program with an enforcement component, and
the participants mutually agreed to continue negotiating for an
additional month beyond the initial deadline, the automobile
manufacturer contingent ultimately refused to agree to provisions that
CARE believes are critical elements of a workable program.
The program under discussion would have required automobile
manufacturers to commit in writing to abide by a set of ``voluntary
standards'' for making information and tools available to the
aftermarket in a similar manner and to the same extent as such
information is made available to the dealerships. The standards also
set out a process to enforce the commitment made by each company. Under
the program, technicians seeking information or tools to repair a
vehicle but unable to locate the necessary information would first be
required to contact a representative of NASTF to obtain assistance. The
parties had agreed that NASTF would be reconstituted and employ trained
service technicians who would act as a ``buffer'' between the
technician and the manufacturer to determine if the information was
available, and if not, to make a recommendation about whether it should
be made available.
In the event the necessary information was not provided in
accordance with the time requirements of the proposed NASTF process,
the technician could bring the complaint to an independent, third party
dispute resolution program. Pursuant to certain procedures and time
constraints, the third party enforcement entity would render a
``binding'' decision regarding whether the information in dispute
should be made available in accordance with the voluntary standards
agreed to by the manufacturer. Any manufacturer faced with a negative
final decision would be required to provide the information to both the
technician that brought the complaint and to the aftermarket in
general, and pay a penalty for non-compliance.
Throughout these discussions, CARE's primary objectives were to
achieve a program that would be effective in expeditiously
communicating needed information to service technicians in a fair and
impartial manner, and in incorporating the elements articulated by the
FTC for an acceptable self-regulatory system. It is important to note
that our goal was to impose the same requirement articulated in HR 2048
that information should be provided to the aftermarket in a similar
manner and to the same extent as such information is provided to
franchised dealerships. Although the manufacturer contingent stated
that it agreed in principle with this goal, it ultimately backed away
from this commitment, as demonstrated below.
C. Issues in Dispute
1. NASTF Governance--During the discussions facilitated by the
CBBB, the manufacturers acknowledged some of NASTF's shortcomings, and
had agreed to form a reconstituted organization and hire professional
staff to assist technicians seeking service, training or tool
information from an automotive manufacturer. The new NASTF would have
had the authority to seek the service information on the technician's
behalf and communicate directly with the manufacturer pursuant to a
specified process. In the event the manufacturer failed to provide the
information, the NASTF staff would prepare a written report of its
efforts to resolve the inquiry with the manufacturer and make a
recommendation as to whether the manufacturer should make the
information available to the technician. In the event that either party
disagreed with the recommendation, that party would proceed to have the
dispute resolved by the independent, third party enforcement entity.
In light of NASTF's poor track record, however, CARE was initially
skeptical about whether NASTF was the appropriate body to expeditiously
resolve disputes regarding the accessibility of information.
Nonetheless, we were willing to allow NASTF to act as the first
response for service information requests provided that unambiguous,
specific safeguards were put in place to ensure that the newly
reconstituted structure would be successful in implementing the goals
of the self-regulatory program, and that the third party enforcement
entity would provide an avenue to either enforce a NASTF decision or
challenge its correctness. The most important safeguard, in our view,
was the creation of a fair and balanced Board of Directors of NASTF.
CARE and AAIA therefore proposed that initial funding for the
reconstituted NASTF be equally divided between the aftermarket industry
through CARE and AAIA, and the automobile manufacturing industry
through the Alliance, AIAM, ASA and NADA. We further proposed that
NASTF be administered by a Governing Board comprised of eight members,
four of whom would be designees of CARE and AAIA, and four of whom
would be designees of the Alliance, ASA, NADA and AIAM. This allocation
of membership was to ensure that both the aftermarket and the
manufacturer representatives to the discussions would have equal
presence on the board. Nonetheless, CARE remained open to increasing or
decreasing the size of the board, provided that the balance of
representation was equally allocated between the two sides. The
proposal also provided that an executive director and support staff be
employed as the Board deemed necessary, and that an Advisory Committee,
equally representative of the manufacturing and aftermarket industries,
be appointed by the Governing Board to assist in recommending policies
to effectuate the purposes of the agreement.
In contrast, the manufacturers objected to the idea that ASA and
NADA, which had openly aligned themselves with the manufacturers
throughout the discussions, be considered as part of the manufacturer
contingent on the board. They further proposed that the composition of
the board be left open for future discussion. According to the
proposal, a ``special working group'' comprised of the four parties in
the manufacturer contingent--the Alliance, AIAM, ASA and NADA--and CARE
and AAIA, would ``direct and implement all legal and operational steps
necessary to establish the NASTF . . .'' Not surprisingly, CARE was
concerned about the lopsided representation of the manufacturer
contingent to a working group that would be tasked with setting up
NASTF. In addition, we were equally concerned that decisions regarding
the governance of NASTF, including the composition of the first board,
be postponed until some unspecified date in the future. CARE was
fearful that the new organization would be severely hampered by
disputes over governance issues and wanted to resolve these during the
negotiation process by specifying the procedure for appointing
representatives to the first board. Under the proposal from AAIA and
CARE, once the board was organized, there would be nothing to prevent
the addition of other members that were determined by the board to be
necessary and appropriate to carry out the functions of the reorganized
NASTF. The car companies would not, however, agree to an even division
of the NASTF Board.
2. Tools and Tool Information--CARE also believes it is crucial
that any self-regulatory system require that automobile manufacturers
make their tools and tool information available to the aftermarket.
Nonetheless, the manufacturers would not commit to making available to
the aftermarket tools possessing the same diagnostic and repair
capabilities that are available to dealerships. Without such a
commitment, tools purchased by independent technicians from the
manufacturers may not contain needed capabilities to complete a repair.
In addition, CARE was seeking a commitment that the manufacturers
make available to tool companies the information needed to manufacture
tools containing the same diagnostic and repair capabilities that are
available on dealer tools, subject to reasonable licensing and security
requirements. Independent technicians would otherwise be forced to
purchase required tools only at prices set by the automobile
manufacturers. Given the complexity of this issue, CARE was willing to
finalize at a later time the details of how such information would be
made available and how the agreement would be enforced, provided that
the manufacturers made a commitment to fully release needed tool
information. The manufacturers would not, however, agree to these
terms. In fact, the manufacturers sought to limit any obligation
regarding tool information to information needed to produce only
``diagnostic scan'' tools (a requirement already in the Clean Air Act)
and tire pressure monitoring system diagnostic tools. We believed this
limitation would potentially restrict the aftermarket's ability to
obtain diagnostic and repair capabilities necessary to service new
technologies that may develop in the future.
3. Anti-theft Initialization Information--Many independent repair
shops find it increasingly difficult, if not impossible, to complete
repairs on cars that contain immobilizer systems designed to prevent
the theft of a car. By way of background, it is useful to understand
some of the mechanics of a car's immobilizer. Immobilizer systems
require a ``handshake'' between a chip in the ignition key and a chip
placed on an on-board computer. Unless the handshake occurs, the car
cannot be started. If a vehicle computer that contains the immobilizer
chip is changed, the system must be ``reinitialized'' in order for the
vehicle to be restarted following the repair. Since an immobilizer is
tied into multiple different systems of a vehicle depending on the
manufacturer's design, technicians need access to manufacturer
information about the immobilizer system such that the technician can
diagnose and repair problems related to the immobilizer and can
reinitialize any vehicle system required to start the vehicle following
a repair.
CARE therefore proposed language that would require the
manufacturers to make available anti-theft initialization information
and other information, including any software, necessary for the proper
installation of on-board computers or necessary for the completion of
any repair on vehicles that employ integral vehicle security systems.
CARE was not seeking information to build an immobilizer system; only
the information needed to restart a car following a repair.
Although some manufacturers routinely make this information
available now, the representatives for the Alliance and AIAM indicated
that at least one of its members did not have the ability to provide
this information, and that several manufacturers objected in general to
the requirement that software be provided in connection with any tool.
This was the case notwithstanding that such information is routinely
provided to franchised dealerships.
4. Service Information--Manufacturers maintain ``hotlines'' for
their dealers to call with questions regarding diagnosis and service,
and publish technical service bulletins and manuals to distribute
service information. Although CARE was not seeking an identical
``hotline'' process for making the service information available to the
aftermarket, we were seeking a requirement that service information be
provided to the aftermarket in a similar manner and at the same time it
is provided by a manufacturer to its dealerships. The manufacturers
were unwilling to agree to an equivalency requirement for service
information that is provided through the hotlines but is not yet
communicated in a formal manner to all of their dealerships. This
position is especially troubling to CARE since it indicated an outright
refusal to place the aftermarket on the same footing with franchised
dealerships in regard to access to basic service and repair
information.
5. Cost of Tools and Service Information--Late in the negotiations
we learned that although the manufacturers had agreed in the
``voluntary standards'' to provide information and tools at a
reasonable price, they would not agree to any enforcement of this
commitment. Although antitrust issues could make it difficult for NASTF
to resolve disputes over the reasonableness of the cost of information
or tools, we did not believe these concerns applied equally to an
independent third party dispute resolution organization.
In an effort to address our most serious concerns about the cost of
tools and information, we offered a compromise that would address
situations when such information or tools are offered at a price that
is viewed as predatory, meaning that the price is so high as to make
it, for all intents and purposes, unavailable to the aftermarket. Our
proposed language would have allowed the resolution entity to make a
finding that the information was not made available because it was
offered only at an ``unreasonably prohibitive cost'' to the
aftermarket. We believed that the focus on cost (as opposed to price),
would alleviate anticompetitive concerns, and that use of the phrase
``unreasonably prohibitive'' would limit any inquiry to cases involving
``price gouging'' or the use of price as a barrier to disclosing
information to the aftermarket.
Notwithstanding our attempt at compromise, the manufacturers
indicated that they would not agree to any enforcement of a reasonable
price requirement under any circumstances. In fact, they refused our
offer even if it received a favorable opinion by an independent legal
expert chosen by the CBBB, thus signaling that their objection was
primarily based on so called ``policy'' reasons as opposed to legal
concerns.
6. Penalties--CARE and AAIA initially sought a provision that would
have allowed the third party enforcement entity, upon reaching a final
decision that a manufacturer should have provided information to a
technician but failed to do so, to require the manufacturer to
compensate the technician in an amount equal to three times the profit
he would have earned for the repair. The treble damages approach was an
attempt to compensate the technician for the loss of the repair in
question, and any future work he was likely to have received from the
customer.
The manufacturers objected to treble requirement and ultimately
proposed a single payment of $2,000 as compensation for a successful
challenge against a manufacturer. After much consideration, CARE and
AAIA agreed to this amount, provided that there would be some incentive
to ensure that the award is paid in a timely manner. We therefore
proposed an ``escalation'' clause that would have allowed the
enforcement entity to impose an additional compensation remedy of
$11,000 per day for each day the initial amount remained unpaid
following the due date.
The manufacturers objected to this compromise and offered no
suggestion for bridging the gap in our positions.
III. LEGISLATION IS NEEDED TO ENSURE EQUAL ACCESS TO SERVICE, REPAIR
AND TOOL INFORMATION AND TOOLS
As described above, CARE and AAIA, together with representatives
from the associations representing the automobile manufacturers and
dealers, and ASA, were unsuccessful in reaching a satisfactory self-
regulatory solution that would have met the criteria applied by the FTC
in evaluating such programs. As such, the aftermarket industry is left
with the current NASTF process, which, as discussed previously, is
neither effective nor independent. In light of the current problems
facing aftermarket repair facilities seeking manufacturer information
and tools needed to complete service work and repairs on cars, CARE
strongly supports the passage of H.R. 2048.
H.R. 2048 sets out reasonable and enforceable standards for
mandating the disclosure of information to the aftermarket. It states,
``the same service and training information related to vehicle repair
shall be made available in the same manner and extent as it is made
available to franchised dealerships, and shall include all information
needed to activate all controls that can be activated by a franchised
dealership.'' By linking the disclosure obligation of the manufacturer
to the information that is currently provided to franchised
dealerships, the legislation is carefully crafted to create a level
playing field for service information and avoids trade secret issues.
Indeed, the manufacturer contingent did not raise any concerns about
the disclosure of proprietary information once it understood that CARE
and AAIA were seeking only an equivalency requirement in relation to
franchised dealerships.
CARE also supports the bill's requirement that diagnostic tools and
capabilities related to vehicle repair that are made available to
franchised dealerships also be made available to independent repair
facilities, and to the companies from which they normally purchase
diagnostic tools. This provision will ensure that tool information is
made available to tool companies seeking to manufacture generic tools
and support a competitive market and lower costs for independent repair
facilities seeking to purchase tools.
Finally, CARE supports giving the FTC authority to enforce the
disclosure requirements of the bill. In that the bill's ultimate goal
is to ensure that American consumers have the opportunity to choose
among competing repair facilities for convenient, reliable and
affordable repair of their vehicles, the FTC, as the nation's watch dog
for consumers, is uniquely positioned to promulgate rules to
effectively carry out the bill's mandate. The FTC has both the
expertise and experience to draft rules that ensure that disclosures of
service information are adequate and meet the equivalency test set out
in the legislation.
Thank you for the opportunity to appear today before the
Subcommittee. I would be pleased to respond to any questions you may
have.
Mr. Stearns. And I thank the gentleman.
Mr. Stanton?
STATEMENT OF MICHAEL J. STANTON
Mr. Stanton. Thank you, Mr. Chairman.
Almost 500 million non-warranty service events are
undertaken each year. While we hope that each and every one of
these events go as well as possible, we recognize that with
literally millions of pages of service and repair information
that need to be available, there will be instances where needed
information is not available.
To address these situations in the Year 2000, the National
Automotive Service Task Force or NASTF was created to help
identify and fix any gaps in the availability and accessibility
of automotive service information, service training, diagnostic
tools, and equipment. Working together, the volunteers at NASTF
have implemented web based links to every automakers service
information website. NASTF has improved communications between
automaker engineers and the Equipment and Tool Institute to
ensure that scanned tool information is available to
aftermarket tool manufacturers.
NASTF is currently working with the locksmiths and the
National Insurance Crime Bureau and has established the NASTF
Vehicle Security Committee. This committee is working on the
controversial and highly complex issues of providing
information to automotive security professionals without
compromising vehicle security and customer safety.
Turning to the negotiations, I really would like to thank
the FTC, the Better Business Bureau and the CARE Coalition. It
was a grueling process and I think we are all disappointed that
it did not conclude in a satisfactory non-legislative fix. But
that is what we were about and we did meet in 10 all day
negotiating sessions during the month of August and September.
During the discussions, it was clear that the vast majority of
service information is readily available today.
Our talks eventually focused on a small subset of repair
information used to service and reprogram vehicle security
systems and immobilizers. Due to the sensitive nature of this
type of information, automakers, locksmiths, and independent
repairs are already engaged in identifying and developing
secure methods to share this information with automotive
security professionals.
In addition, the automakers offer the following to further
improve the process of providing service repair information.
One, automakers would continue to make vehicle service
information available to independent service technicians when
they send it to all of their dealers. The outstanding security
issues which was the mobilizers and the keys would be addressed
through the NASTF Vehicle Security Committee. Two, automakers
would continue to make service information tools and tool
information available for non-emission repairs and this was a
big step, consistent with the EPA requirements for emissions
repairs. So we were going to parallel the regulations that
exist on the emission repairs now. Three, and this was above
and beyond what was even in the legislation, automakers would
provide prompt response to their websites inquiries normally
within 24 hours. Four, automakers would agree to formalize and
help fund the NASTF which would then be able to in even greater
degree to provide independent service technicians, assistance
in finding service information, as well as, serve as a clearing
house to resolve repair information and tool access issues. And
five, automakers would participate in a binding dispute
resolution program with enforceable remedies for non-
compliance.
Unfortunately at the very end of the discussions, CARE, a
lobby group funded by large aftermarket parts manufacturing
companies demanded effective control over the governance of the
reconstituted NASTF. CARE's insistence on controlling at least
50 percent of a NASTF governing board would have significantly
diminished the voices of the most important stakeholders in
this issue; repair shops, diagnostic equipment makers,
automakers, and automotive trainers.
This development was particularly unfortunate because many
of the issues that had been agreed to or that were very close
to agreement would have enhanced the ability of independent
service and repair owners to obtain the information and to
resolve potential disputes over such information. In fact, the
agreements reached or nearly reached on these issues addressed
concerns that exceed those contemplated in the legislation
before us.
Although disappointed, the talks could not be completed.
Automakers and others continue to work toward ensuring that all
service and training information necessary for vehicle repair
and maintenance published and made available to dealers is also
available to independents. To ensure that the tool information
necessary to implement the same scan tool functions that
dealers have is made available to diagnostic equipment
manufacturers for inclusion in aftermarket scan tools. And
finally, improving the formalizing the NASTF process that
identifies gaps in service information and assures that these
gaps are quickly remedied.
In conclusion the Alliance believes that this legislation
is not needed to further this process. In fact, attempts to
legislate a Federal overly over the current process may well
undermine the successful resolution of the remaining
outstanding issues.
Thank you, Mr. Chairman.
[The prepared statement of Michael J. Stanton follows:]
Prepared Statement of Michael J. Stanton, Vice President--Government
and International Affairs, The Alliance of Automobile Manufacturers
Thank you for the opportunity to testify before the Commerce, Trade
and Consumer Protection Subcommittee regarding H.R. 2048 the ``Motor
Vehicle Owners' Right to Repair Act of 2005'' and the Council of Better
Business Bureau's facilitated discussions on this issue. I represent
the Alliance of Automobile Manufacturers, (Alliance) a trade
association of 9 car and light-truck manufacturers. Our member
companies include BMW Group, DaimlerChrysler Corporation, Ford Motor
Company, General Motors Corporation, Mazda, Mitsubishi, Porsche, Toyota
Motor North America and Volkswagen of America.
Alliance member companies have more than 600,000 employees in the
United States, with more than 230 manufacturing facilities in 35
states. Overall, a University of Michigan study found that the entire
automobile industry creates more than 6.6 million direct and spin-off
jobs in all 50 states and produces almost $243 billion in payroll
compensation annually.
Historically, about 75 percent of vehicle service and repairs are
performed in non-dealer shops. Automakers view these non-dealer shops
as important players in providing service to their mutual customers,
the driving public. Just as motor vehicles have become more complex,
the servicing of them has also become a high technology business
requiring skilled, trained technicians and a sizeable investment in
diagnostic and repair equipment. For independent repairers to be
successful, they need to have access to up-to-date training information
and specialized tools as well as service and repair information. Today,
all major automakers have websites where independent technicians can
access service information.
Almost 500 million non-warranty service events are undertaken each
year. While we hope that each and every one of these events is as easy
to facilitate as possible, we recognize that with literally millions of
pages of service and repair information that need to be available,
there will be instances where needed information is unavailable. The
automakers try to correct these situations as quickly as possible.
There are situations, however, where access to some desired information
might not actually be reasonable or appropriate--such as the
immobilizers that are part of theft deterrent/security systems.
To address these various situations, in the year 2000, the National
Automobile Service Task Force (NASTF) was created as a not-for-profit,
no-dues task force to facilitate the identification and correction of
gaps in the availability and accessibility of automotive service
information, service training, diagnostic tools and equipment, and
communications for the benefit of automotive service professionals.
NASTF is a voluntary, cooperative partnership between automakers, the
independent aftermarket repair community, the automotive equipment and
tool industry, automotive trainers, locksmiths, suppliers, the
insurance industry, law enforcement, auto dealers and others. The NASTF
inquiry process, which has been highly publicized for several years in
major trade publications like Motor and Motor Age Magazines, has
received fewer than 50 inquiries in the past year about lack of, or
difficulty in, finding information. The NASTF complaint process is well
established at this point, readily accessible on the public internet
(at www.nastf.org) and every complaint and its respective solution is
transparent on the International Automotive Technicians Network, a
well-recognized Internet forum of over 48,000 professional independent
and dealership automobile repair technicians.
Working together, the volunteers at NASTF have implemented web
based links to every automakers service information website with
contact information. NASTF has succeeded in improving communications
between automaker engineering groups and the Equipment & Tool Institute
to ensure that scan tool information is readily available to
aftermarket tool manufacturers. NASTF has reached out to the locksmith
community and the National Insurance Crime Bureau and established the
NASTF Vehicle Security Committee to address the controversial and
highly complex issues surrounding methods to provide information to
automotive security professionals without compromising vehicle security
and customer safety.
Since its inception, automakers and the Automotive Service
Association (ASA), the nation's largest association of independent
repair shops and technicians have invited all other interested parties
to participate in the NASTF voluntary process.
COUNCIL OF BETTER BUSINESS BUREAUS, INC. FACILITATED DISCUSSIONS
At the urging of Senator Graham and Energy and Commerce Committee
Chairman Barton, representatives of the Alliance, the Association of
International Automobile Manufacturers (AIAM), the ASA and the National
Automobile Dealers Association (NADA) met with the Coalition for Auto
Repair Equity (CARE) and the Automotive Aftermarket Industry
Association (AAIA) in facilitated discussions to negotiate a non-
legislative, self-regulatory program to re-enforce access to
information and to establish a process to resolve complaints/disputes
more quickly.
The parties met in 10 all-day negotiating sessions during the
months of August and September; the Council of Better Business Bureaus,
Inc. hosted the meetings. During the discussions it was clear that the
vast majority of service information is readily available today. Our
discussions eventually focused on a small subset of repair information
used to service and reprogram vehicle security systems and
immobilizers. Due to the sensitive nature of this type of information,
automakers, locksmiths and independent repairers are already engaged in
identifying and developing secure methods to share this information
with automotive security professionals. The NASTF Vehicle Security
Committee has been actively working on these complex issues for over a
year.
In addition, automakers offered the following outline of possible
steps to further improve the process of providing service/repair
information:
1. Automakers would continue to make vehicle service information
available to independent service technicians when they send it
to all of their dealers. The outstanding security issues would
be addressed through the NASTF vehicle security committee.
2. Automakers would continue to make service information, tools and
tool information available for non-emissions repairs consistent
with the EPA requirements for emissions repairs.
3. Automakers would provide prompt response to their website inquiries
normally within 24 hours.
4. Automakers would agree to formalize and help fund the NASTF, which
would then be able, to an even greater degree, to provide
independent service technicians assistance in finding service
information as well as serve as a clearing house to resolve
repair information and tool access issues.
5. Automakers would participate in a binding dispute resolution program
with enforceable remedies for non-compliance.
Unfortunately, at the very end of the discussions, CARE -- a lobby
group funded entirely by the larger aftermarket parts manufacturing
companies -- demanded effective control over the governance of the
reconstituted NASTF. CARE's insistence on controlling at least 50
percent of a NASTF governing board would have significantly diminished
the voices of the most important stakeholders in this issue; repair
shops, diagnostic equipment makers, automakers and automotive trainers.
This development was particularly unfortunate because many of the
issues that had been agreed to, or that were very close to agreement,
would have enhanced the ability of independent service and repair
owners to obtain the information and to resolve potential disputes over
such information quickly and efficiently. In fact, agreements reached,
or nearly reached, on these issues addressed concerns that exceed those
contemplated by the legislation the proponents of H.R. 2048 seek to
enact. On September 30, 2005, the discussions ended without reaching
final agreement.
Although disappointed the talks could not be completed, the
automakers, independent repair shops and technicians represented by
ASA, the Equipment and Tool Institute, and automotive trainers continue
to work toward:
Further assurances that all service and training information
necessary for vehicle repair and maintenance published and made
available to dealers is also available to independents.
Further assurances that tool information necessary to implement the
same scan tool functions that dealers have is made available to
diagnostic equipment manufacturers for inclusion in aftermarket
scan tools
Further improvements/formalization of the NASTF process that
identifies gaps in service information and ensures that these
gaps are quickly remedied.
Turning to the text of H.R. 2048, we continue to have concerns
about the need for the legislation. Beyond that, we also have
substantial concerns about the language of the legislation and at
several points its apparent intent.
First, the findings of the legislation are unnecessarily harsh,
factually inaccurate in many cases and unfair to the automakers that
have made significant efforts to provide service information and tools
to all independent automotive service providers. Automakers are
committed to making service information and tools available and have
been doing so for some time. Although important issues were identified
during our negotiations with the CARE Coalition, we did not hear
allegations of any widespread breakdown of the systems established by
automakers to resolve anomalous service information and tool gaps. For
this reason, we strongly take issue with the statements in the
``findings'' section of the bill that concludes that automakers have
systematically engaged in ``a manner that has hindered open
competition.'' Since ``anticompetitive behavior'' is illegal under
federal and state law, branding all automakers with this unfounded
conclusion is both unreasonable and places them at legal risk.
Moreover, the findings address an issue that goes beyond the scope
of the legislation: namely, whether consumers should always be able to
choose between original parts and aftermarket parts for vehicle
repairs. This issue quickly fell off the table during discussions and
is not appropriate for the findings of this bill.
Second, the legislation is not precise in describing the scope of
what is being sought by the proponents of the bill. For example, the
language appears to confuse ``information'' with actual diagnostic
``tools.'' It also appears to override the standard and accepted
practice of providing some service and training information to the
independent service providers by means other than that used to
communicate with dealers. The satellite networks and programs used to
communicate with dealers cover a wide variety of topics and are not
appropriate to be opened to independent repair facilities. However,
hard copies of materials or CD-ROMs of the relevant portions of these
broadcasts are often used to provide the relevant information on
service/repair issues to independent facilities. EPA intentionally
carved out this provision because automakers cannot be expected to
build special delivery infrastructures for the aftermarket that they
build for their franchised dealers. The CARE Coalition has not
otherwise sought access to the satellite-based information delivery
system of the manufacturers, and this legislation should not force
changes in the current practices.
As another example, the text would require making the ``same
diagnostic tools and capabilities related to vehicle repair'' available
to the independent service provider as are available to franchised
dealers. We do not know what is intended by the word ``capabilities''
in this context. It could mean that manufacturers would have to grant
access to their dealer ``hot lines,'' which are used to provide one-on-
one diagnostic help to dealers who call for technical assistance. The
CARE Coalition has assured us that they are not seeking access to these
services, and the language should not leave this issue open.
We also believe that the language is broad enough that it might
interfere with existing contracts between automakers and their
franchised dealers, as well as with contracts automakers have with
fleet purchasers that specify particular provisions regarding obtaining
warranty and other service.
We also strongly object to the language in the bill that says that
failure of a manufacturer to comply is automatically ``an unfair method
of competition and an unfair or deceptive act or practice in or
affecting commerce'' under the Federal Trade Commission Act. While
automakers will always strive to comply with any FTC regulation, minor
discrepancies should not give rise to an automatic pre-determination
that they reflect the very serious charge of being ``an unfair method
of competition and an unfair or deceptive act or practice''. The FTC
has ample authority to decide when a regulatory violation constitutes
``an unfair method of competition'' or ``an unfair or deceptive act or
practice.''
In conclusion, The Alliance, AIAM, ASA and NADA and others continue
to address the remaining service information issues and believe that
legislation is not needed to further this process. In fact, attempts to
legislate a federal overlay over the current process of providing
information and attempting to resolve disputes may well undermine the
successful resolution of the remaining outstanding issues.
Mr. Stearns. I thank you.
And I will start the first set of questions for the first
panel.
Information is power, in this case, horsepower. Mr. Kohm, I
think I would ask you just as general opinion and this would--I
assume this would be the policy of the Federal Trade Commission
that consumer access to deciphering the complex machine, the
automobile machine is that a right? Sort of should the
automotive parts facilities have the rosette of stone to
decipher these complex machines as a right and not an option in
your opinion?
Mr. Kohm. Well Congressman, excuse me----
Mr. Stearns. I just need a yes or no.
Mr. Kohm. I think it is not necessarily a right.
Mr. Stearns. It is not necessarily a right. So a
fundamental question is do these automotive parts have a right
to this information? You do not think they have a right?
Mr. Kohm. That Chairman that----
Mr. Stearns. Because of propriety information, I will help
you out here.
Mr. Kohm. People who sell cars have an interest in
consumers being able to repair those cars or they will not sell
the cars. So that I think the market will allow----
Mr. Stearns. But the car has a warranty let us say for
50,000 or 100,000 so everybody is going to go back to the
dealer. But at that point after 50,000 or 100,000, shouldn't
the consumer be able to go to somebody other than the dealer to
get it fixed?
Mr. Kohm. Well, the consumer has an interest in the
efficient functioning of the market so that they have options
for repairing their cars.
Mr. Stearns. Okay, all right.
Let me say, Mr. Cole, I am pleased to hear that you say
that the negotiations were in good faith. And I mentioned in my
opening statements where you had agreement and where you did
not have agreement. On these issues you mentioned that are
unresolved, which in your opinion would be the most difficult
for the parties to resolve through these negotiations? Just the
one issue you think is the really tough one that you just kept
running up against a hill and you could not get any further.
Mr. Cole. Well, let me answer it this way. I think the most
important issue, I do not know if it is the most difficult but
the most important issue is the governance issue that Mr. Parde
and Mike Stanton----
Mr. Stearns. Okay.
Mr. Cole. But I think there was another issue lurking here
and it is close to your rights question. I believe that below
the surface of the manufacturers have a fear of the
implications of agreement on potential private class actions
which were not the subject of our meetings. But I think lurking
there was a fear of the unknown implication in what they were
doing.
Mr. Stearns. Do you think--I am asking the same question I
asked Mr. Kohm. Do you think consumer's access to this Rosetta
stone to decipher these complex machines is a right? Is an
actual right for the consumer?
Mr. Cole. I think it is important. I do not know that it is
presently articulated anywhere as a legal right and I think it
is by and large being provided now when we are talking around
the margin.
Mr. Stearns. Okay. Well, let me ask Mr. Parde and Mr.
Stanton just quickly on that because I have one more question
before I go.
Mr. Parde, I mean, do consumers have a right to be able to
go to these automotive shops other than the dealers and get
their car repaired?
Mr. Parde. I believe so.
Mr. Stearns. Okay.
Mr. Parde. I think when someone--when you purchase a
vehicle you have the right to the information to repair that
vehicle and you----
Mr. Stearns. Because Mr.--Chairman Barton mentioned it in
his opening statement is this is a right that the automobile--
that once you buy your car, you own the car. It is your--you
would have the right to----
Mr. Parde. I would agree----
Mr. Stearns. [continuing] understand how it operates and
where it goes.
Mr. Parde. I would agree with that.
Mr. Stearns. And Mr. Stanton?
Mr. Stanton. Mr. Chairman, we would disagree that they have
the right to the intellectual property associated with the
vehicle. But it is in our best interest that any consumer, any
vehicle owner can take their vehicle to any shop that they
choose to get it repaired.
Mr. Stearns. Okay. Mr. Parde, Mr. Stanton testified that
only 50 inquiries were received through NASTF last year out of
500 million non-warranty service transactions. This goes to the
heart of the problem. Are we talking about a problem--how big
is this problem? That is the real question. I mean are we
spending these 10 meetings at 4 to 6 hours, you are spending up
to 60 hours in negotiation. How big is the problem? Does CARE
assert that the problem is larger than this? If so, please
comment on the scale of the problem for the committee.
Mr. Parde. We do believe that it is a big problem. We think
that the reason there are not many inquiries to NASTF currently
is that the majority of the aftermarket, the majority of the
technicians do not trust it, do not believe in it. It is an
organization that is overseen by the manufacturers, it is run
by the manufacturers, therefore, most technicians and most
shops simply do not take the time to submit complaints. I think
you have seen a picture----
Mr. Stearns. Okay. I understand.
Mr.--the FTC, Mr. Kohm, how about the complaints were there
from--that went to the FTC? How many complaints did you get?
How big a problem do we have here?
Mr. Kohm. That we have heard as the committee has
indicated, we have heard antidotal evidence that----
Mr. Stearns. Not a lot of serious written complaints?
Mr. Kohm. But we have no objective evidence of how
widespread the problem is.
Mr. Stearns. And Mr. Cole, the Better Business Bureau, what
kind of written complaints and serious complaints did you get?
Mr. Cole. We would not be able to tell from our data base
how many there were but we are not aware presently of a huge
problem.
Mr. Stearns. Okay. With that, the ranking member is
recognized, Ms. Schakowsky.
Ms. Schakowsky. You do though at the Better Business
Bureau, Mr. Cole, get 72,000 complaints related to the auto
industry. Is it that you cannot----
Mr. Cole. Correct.
Ms. Schakowsky. [continuing] segregate out those that deal
with this?
Mr. Cole. We cannot be sure of what proportion of that
72,000 may have been an inability to get a repair because of
the unavailability of information from the manufacturer. I wish
some day I could have improvements in that data base so I could
answer that question.
Ms. Schakowsky. From the consumer point of view in terms of
making complaints, I do not know that I would necessarily know
to do that if Dack Gable said well, you know, you will have to
take this to the dealer.
Mr. Cole. Absolutely, absolutely, I would not be surprised
that a consumer would not complain about that issue. All they
know is they are being referred back to a dealer.
Ms Schakowsky. Right.
Mr. Parde, is there a bottom line issue for you, the 50
percent representation on a governing board on NASTF?
Mr. Parde. We believe there needs to be a fair and even
representation by both sides. You know, we proposed a four,
four in which we would appoint four members and that the
manufacturers would appoint four members and we think that that
is the fair way to go, that the aftermarket would be
represented equally with the manufacturers.
Ms. Schakowsky. One of you testified that there may be more
stakeholders. I happen to think that consumers are a
stakeholder as well, that some way of representing the consumer
interest separate from that of the--representing the
aftermarket or the manufacturers. Would that be something that
you or Mr. Stanton would object to on some sort of a governing
board having consumer representation?
Mr. Stanton. We would welcome that. We want the NASTF
governing board to be broad, to be open to all. It has been in
existence for 5 years. Earlier I guess last month there was a
proposal by the Equipment and Tool Institute that suggested
that there ought to be at least 12 funders of the organization.
And then just last week in Las Vegas the NASTF stakeholders got
together and they unanimously voted to enhance the
organization, so there are lot more stakeholders. Our side,
their side is not an accurate representation when it comes to
NASTF. Our side, their side was an accurate representation
during the facilitated discussions but we do not think this
alliance will hold forever. Everyone is going to have their own
interest over time.
Ms. Schakowsky. Go ahead.
Mr. Cole. We would not be opposed to adding additional
members down the road. This was an initial proposal to get this
organization up and running, get it restructured,
reconstituted, and that is why we wanted the even on both
sides. We would not be opposed to adding additional members. We
never were opposed to that.
Ms. Schakowsky. What if there were strictly an independent
board that were not necessarily funded by stakeholders at all
that were--stood apart from all of the financial interests and
just judged this--was that ever considered in any way?
Mr. Stanton. That was never considered. No it was not but
we have some staff discussions that I think that is an
excellent, possibly and excellent way to break this----
Ms. Schakowsky. And what were the other--one of you also
mentioned that there were some other players. Was it you, Mr.
Cole?
Mr. Cole. I mentioned the tool manufacturers, the
independent information providers that help the independent
facilities so there are other in addition to the consumer
stakeholders that--and a lot of the issues that were being
discussed it was very clear that the parties at the table
really could not come to an agreement on these tool issues
because the tool folks were not there. That is just one good
example.
Ms Schakowsky. Now are we at a dead end here in these
negotiations? The way the negotiations are currently
constituted. And if we wanted to have a non-legislative answer
would we have to create a new table to do that in your view,
Mr. Parde?
Mr. Parde. We want the problem to be solved. I mean we do
not care if that is----
Ms. Schakowsky. I do not mean that to be provocative.
Mr. Parde. Right.
Ms. Schakowsky. Do you think that it--the way that it was
that another 10 hours of 6 days of 10 hour meetings is not
going to resolve this and so do you think that we need to go to
legislation or is there another way that we could create a
table where stakeholders could better resolve the issues?
Mr. Parde. I think that we have had numerous attempts at
negotiations over the last four of 5 years. I think we have
gotten to the point where that we would like to see the
legislation move forward but we are not closing the door on
being able to continue with negotiations at the same time. As I
said, we just want to see the problem solved. If that is a non-
legislative solution, we would accept that. But right now it
appears that the legislative solution is the way to go at this
point.
Ms. Schakowsky. Yes. Mr. Stanton, then I will----
Mr. Stanton. I just want to make the comment that on
subsequent conversations I think that we were very, very close
on all of the remaining issues other than the NASTF board. And
one of the reasons, one of the things we had done was we had
punted to the NASTF board the whole tool and tool information
because quite honestly we ran out of time. And to have any
weighted kind of a board making policy decisions caused us
great concern.
So I think that we still are--I know we are very open to a
non-legislative negotiated solution. I kind of like your idea
of an independent board to get it away from the biases of the
various groups. I would be more than happy to take that back to
our membership.
Ms. Schakowsky. Thank you, Mr. Chairman.
Mr. Stearns. The full chairman of the committee, Mr.
Barton.
Chairman. Barton. Thank you, Chairman Stearns.
I want to ask Mr. Cole who represented the facilitator, did
you personally participate in these negotiations?
Mr. Cole. I was the facilitator.
Chairman Barton. You were the facilitator?
Mr. Cole. Yes, sir.
Chairman Barton. All right, that is good.
Mr. Cole. Maybe yes, maybe no, we do not have a deal.
Chairman Barton. Hey, I have been trying to facilitate for
4 years so----
Mr. Cole. Fair enough.
Chairman Barton. Since I cannot do it, I am not going to
blame you for not being able to do it.
Mr. Cole. I appreciate that.
Chairman Barton. Yes. Your issue No. 1 that you said was
not resolved, how should NASTF be restructured and governed? Is
that this dispute over the board? Is that what that is?
Mr. Cole. Yes, sir, exactly what it is.
Chairman Barton. What is wrong if they do not like four,
four, what is wrong with four, four, one or something like Mrs.
Schakowsky was talking about where we--each side appoints X
number hopefully smaller rather than larger and then there be
an independent that is maybe appointed by the BBB, by your
group as an outside group. Would that work?
Mr. Cole. Let me speak to that and Mr. Parde may have a
different view of this so he may want to speak to it.
When we talk about four, four, it is important to as what
we are talking about, the manufacturers definitely were
agreeing to a balanced board essentially is what that meant.
And there was a dispute as to which--who is in which four. Who
is representing which side and you could understand that
because there were different parts of this industry and I am
not complaining about that but--so everyone is agreeing on
balance but there is a fear of what would the practical matter
of one definition of four, four result in versus a different
definition of four, four.
Chairman Barton. But Mrs. Schakowsky's suggestion that
there be a consumer advocate, I mean, it is certainly possible
to come up with someone or somebody that is truly independent,
somebody from your group.
Mr. Cole. And we would be delighted to serve if asked but
the issue of four/four is not handled by a ninth individual. If
you feel that the four on the other side includes interests
that really should be on the other side of the table, it is
really not four, four. You may view it as a six, two split. And
there is a difference of opinion as who is representing whom
and what interest they really have at stake. So if you feel
aftermarket is on one side and manufacturers are on another but
the manufacturer side includes some of the aftermarket
industry, it is a very--it was not clear to anyone at the table
that we had achieved the balance on that.
If I may with permission just say one additional thing on
the question of is it worth trying some more. I mean only the
parties themselves really know if it is.
Chairman Barton. I will answer that and the answer is no.
Mr. Cole. Okay. Well what I wanted to say is and----
Chairman Barton. We have had at least four different
deadlines over 4 years and they always--it is like the Paris
peace talks. You know, the North Vietnamese are always going to
want to talk more.
Mr. Cole. And we started out with the shape of the table
also so I know exactly what you are saying.
Chairman Barton. But I do not want to be a whiner but
because of the intense urgency of this and feeling we need to
get on with it and get this done, we were given a constraint
that I believe inhibited our chance of reaching----
Mr. Cole Well I--and that was we had a September 1 deadline
with August approaching----
Chairman Barton. You did not just start these negotiations
when you came into it.
Mr. Cole. Excuse me?
Chairman Barton. We did not start these negotiations when
your group came into it.
Mr. Cole. Oh, I fully----
Chairman Barton. We bless you for doing what you have done
but this has been going on for 4 years.
Mr. Cole. I understand.
Chairman Barton. Okay. There have been two Congresses
elected and unelected in that time period. Okay. We have had a
President of the United States elected and reelected in that
time period. I mean it is--I do not think Federal legislation
is the answer to everything but every now and then see it is
the answer to some things. And the individuals involved operate
under good faith but the groups they represent, some of them do
not want an agreement, they just do not. And the only way to
make it happen is in a bipartisan fashion, move a bill, and the
question is, you know, how much discretion to give the FTC and
the outside groups and what the penalties if any should be when
there is not resolution.
I was going to ask you a question about all the six
outstanding issues that are unresolved but I am already down to
30 second so I want to go to Mr. Stanton who has done yeoman's
work representing the manufacturers. My understanding is that
there is not unanimity among the manufacturers in support of
this process. To be simplistic, the domestic manufacturers tend
to be more supportive of the process and the foreign
manufacturers tend to be less supportive. Is that a true
statement or an untrue statement?
Mr. Stanton. Mr. Barton, this was a difficult process even
within each company there were different views and pulling them
all together and representing our association and working with
AIAM. Different companies have different heritages,
backgrounds, customs. This----
Chairman Barton. Well I do not need a long drawn out answer
is it--is your group unified or is it not?
Mr. Stanton. It is unified.
Chairman Barton. It is unified. Every manufacturer was
totally involved in the process and totally supportive. If you
say that, you are not under oath but that----
Mr. Stanton. No.
Chairman Barton. [continuing] strains credibility.
Mr. Stanton. They were all involved and it was tough.
Chairman Barton. Well you can be involved and be against
what is going on.
Mr. Stanton. Well different manufacturers had different
issues especially with the security side of the--and how they
treat key codes and immobilizers and things like that. We all
wanted to get to the same place but some of the management and
some of the companies were not as far as others.
Chairman Barton. All right. I have got to ask Mr. Parde the
same question. Is your group unified? To me it seems more
unified than the manufacturers but that is an observation.
Mr. Parde. Your observation is correct and we are unified.
Chairman Barton. And what is the single biggest issue in
terms of legislation is it an enforcement mechanism? Is that
the most important issue or is there one of these other issues
that is more important?
Mr. Parde. Oversight and enforcement is the most important
issue.
Chairman Barton. My time has expired, Mr. Chairman. Thank
you.
Mr. Stearns. I thank the gentleman.
Mr. Gonzalez?
Mr. Gonzalez. Thank you very much, Mr. Chairman.
The first couple of question and I think it is an
observation, I started off with opening statements about my
experience back home and I see it materializing here. The parts
guys are not necessarily with the repair guys. And aftermarket
guys--what I am saying is what Mr. Cole is saying. If we want
an equal division only because you are an aftermarket person
does not necessarily put you in that particular camp with the
repair guys or the parts guys. There is so much more going on
out there and we are naive as members of this committee to
think we really understand all the nuances.
But Mr. Cole, I do know this. You are a facilitator. My
experience in the legal world was when we would mediate the
closer we got to the trial date, amazing how much we had in the
way of the meeting of the minds. I think where we stand today
is simply everybody out there is the same. What happens if the
House acts? What will we do? What happens in the Senate? We
have got plenty of time; it will all shake out one way or the
other. The solution probably is to fashion a bill that would be
so unacceptable to all sides that it will get you to the
bargaining table. And that is just by way of suggestion. And I
actually believe that is probably what is going to happen as
this thing goes through the House, through the Senate and what
we say the sausage making process.
Now if that is what you all want, that is what you all are
going to end up getting. And I think you are hearing the
Chairman of the whole committee, Mr. Barton saying he is fed
up. And what you will end up getting is a whole lot worse than
what you can do determining your own destiny.
Mr. Kohm, my whole question then goes back we do not want
to go back to a time when warranties were voided if you just
went and had your oil changed somewhere. We want consumer
choice and quality service and maintenance so that we can
operate these things. But what is so strange is that we are
treating the vehicle and its industry and these entities that
are associated with it totally different from all others.
Because I have never heard anyone say just because they buy a
computer, Hewlett Packard or I buy a Zenith TV that I own all
that technology. And if someone wants to repair it because I
own it, I can go to the manufacturer and say I own it,
therefore, I own your patent, trademark, trade secrets. I own
everything that goes with it. Divulge all that to the repair
guy that just has it over in his repair shop. So why is the
automotive industry on the manufacturer's side, the repair
side, maintenance, and aftermarket parts, why do we treat it
differently or am I just wrong that we are treating this
totally differently than we would any other enterprise? What
makes it distinct and different?
Mr. Kohm. Well generally, Congressman, it is not distinct
and different and that is why the commission believes that a
voluntary self regulatory approach is the appropriate approach
to addressing this problem.
Mr. Gonzalez. Okay. Do you foresee that we would have some
legal problems in attempting to mandate and treat this
particular industry separate and apart when basically the laws
will apply equally to all business enterprises?
Mr. Kohm. Congressman, I have not analyzed the legal issues
with patents and copyrights but as a general matter, Congress
could pass laws and we would enforce them.
Mr. Gonzalez. Mr. Cole, I think in one of the responses you
said something to Chairman Stearns question. Does a consumer
have a right, I own the vehicle and such, I would think there
is an implied right to have the necessary information to get my
car fixed or whatever, it seems logical. But you said and I do
not know if this was your quote ``by in large that is being
provided,'' the information or whatever. Did you make that
statement?
Mr. Cole. I did.
Mr. Gonzalez. And what did you mean by that?
Mr. Cole. What I meant is I was articulating what seemed to
be a reasonably shared opinion at the table that the
manufacturers have generally accepted that information to be
provided to independent facilities and by in large was being
provided but the concern was it was not always being provided
and there were presently not effective remedies in CARE's and
others point of view to deal with those situations.
Mr. Gonzalez. And when it is not being provided is it at
the level that would require a legislative fix, the Federal
Government to come in and legislate a fix?
Mr. Cole. I do not feel competent to answer that question.
Mr. Gonzalez. Okay. I yield back the balance of my time.
Mr. Stearns. The gentleman yields back.
Mr. Ferguson? Mr. Ferguson is not here.
Mr. Murphy?
Mr. Murphy. Thank you, Mr. Chairman.
Let me ask some questions of the panel, in particular Mr.
Parde and Mr. Stanton, some questions that we consumers often
times ask. And I would like for your candid responses. First of
all, automobile dealers that are able to do certain repairs, do
they ever subcontract out repairs to local independent
mechanics to do some of the work because they cannot either
they are back up or they do not have the ability to, for
example, body shop work, et cetera. Does that ever happen, Mr.
Stanton?
Mr. Stanton. Yes.
Mr. Murphy. When that happens do the dealers who have
propriety information with regard to the tools or testing
equipment, do they share that with the independent auto repair
people?
Mr. Stanton. Mr. Murphy, our position is is that--and we
made the commitment that independent repair shops would have
the exact same service information that we give to all of the
dealers as well. Under the EPA regulations, we have to make the
same tools available for the aftermarket and diagnostic tools
that we make for the dealer. So I do not think there is a
difference of positioning there.
Mr. Murphy. There is not, okay.
Would you agree with that, Mr. Parde?
Mr. Parde. I am sorry. The question----
Mr. Murphy. With regard to do people with the more
independent mechanics do they feel that they get the diagnostic
equipment, the tools, and the parts readily? For example,
whether they are subcontracting out or they may be the place
that does the body repair work for dealers. Do they get the
information and the tools they need?
Mr. Parde. In some instances yes and other instances no. It
is not--in some cases it is not the same information as the
dealers are getting or the same tools that the dealers are
getting.
Mr. Murphy. And again that directly contradicts what Mr.
Stanton is saying?
Mr. Parde. Yes.
Mr. Murphy. Okay. Another question I have for both of you,
do dealers charge more for repairs? This was something like you
see this on a Seinfeld show and everything else. Someone has--I
mean this is the fear that people have. You know, I want to
have this widget fixed. If I go to my dealer it is going to
cost me X and if I go to somebody else it is going to cost me
Y. Is there a significant difference?
Mr. Parde. Generally it is more expensive to go to a
dealership. It ranges, again it varies and depends on what part
of the country but it could be as much as a difference between
30 and 70 percent.
Mr. Murphy. Mr. Stanton, would you agree?
Mr. Stanton. I do not, no.
Mr. Murphy. And another question the public often times
asks are parts, are tools, are procedures, computer programs
whatever, are they invented with the intent of making it so you
can only go to a dealer to get the work done?
Mr. Stanton. Not from our point of view, no. As a matter of
fact, there is under the EPA regulations we have to make the
tools available and we have already committed to make the
service information available. It is in our best interest that
our customer has a lifetime experience with their vehicle that
is a good experience and that includes giving them the option
to take the vehicle wherever they want to to have it repaired
and repaired well.
Mr. Parde. Currently, the only protection that the consumer
has is on the emissions systems of the car with the EPA
regulations. That came from the Clean Air Act which was passed
in 1990. The rest of the vehicle does not have that same
protection.
Mr. Murphy. So what other parts are you saying do not have
the same protection transmission?
Mr. Parde. Transmission, brakes, airbags, most other
systems on the car do not have the same protection as what you
have on the emissions system of the car.
Mr. Murphy. So for example if someone has an automobile
that might be in an accident and the dealer refers that person
to have their car repaired at another body shop and with that
they need the airbags and the brakes and axel and other things
fixed that may----
Mr. Parde. May not be available, that information may not
be able--be available to that independent service technician.
Mr. Murphy. Mr. Stanton?
Mr. Stanton. We disagree. We made the commitment. We are
not hearing that the information is not available. We have set
up the NASTF process to deal with any information gaps that
there are. We only had 50 inquiries all last year. We do not
think it is an issue.
Mr. Murphy. I mean what I hear from some of my local repair
shops that they do say that they have to really push for this,
sometimes long waits to get information, that it is not an
automatic thing. And of course the consumer is left with extra
days for repair time to have those things done. What could be a
1-day job turns into a 1-week job. Is that your understanding,
Mr. Stanton?
Mr. Stanton. No, it is not. There is a whole market that
has grown up around information, the Alldata's, the Mitchell's
and they even have on their website that they can provide all
the information within 30 days, excuse me, within 30 minutes.
We think that the information is out there.
Mr. Murphy. Again, but Mr. Parde is saying that the issues
about what you are saying EPA requires you to have that
information released it is different, we are talking about
transmissions, brakes, et cetera are not part of that.
Mr. Stanton. It is true they are not part of that but the
manufacturers have all made the commitment, they made it in
writing to the Senate in 2002 saying that they would make the
exact same service information available to the aftermarket
that they make to all their dealers.
Mr. Murphy. And Mr. Parde, a final comment on that?
Mr. Parde. Some do, some do not. There is still huge gaps
in the information and again only the emission systems of the
car have the protection. There is no oversight and enforcement
currently with NASTF. I believe in the last hearing that we had
in this committee, the manufacturers testified that it takes on
average eight to 15 days to get the information.
Mr. Murphy. Thank you.
Thank you, Mr. Chairman.
Mr. Stearns. I thank the gentleman.
Mr. Towns?
Mr. Towns. Thank you very much, Mr. Chairman.
Mr. Kohm, let me start with you. You know, you made a
statement if I understood you clearly, you said we should build
on the success that has been made in the legislation that we
consider. Could you explain that, that is not clear to me.
Mr. Kohm. Absolutely Congressman, what the parties had
worked on, a dispute resolution, excuse me, mechanism through
the NASTF process to quickly and flexibly resolve disputes
about information sharing. And that would provide a model if
the Congress determines that legislation is necessary to
resolve disputes to enact such a process in other words through
legislation that is flexible and that is speedy that responds
to the market rather than an enforcement court based mechanism.
Mr. Towns. All right, thank you very much.
What can we do to get this discussion back on track, right
down the line. Is there anything we can do here short of
passing this legislation? Right down the line start with you
Mr. Stanton and come right down.
Mr. Stanton. You know, during all of this process the
demand has been on the manufacturers to provide and to provide
and to provide. And we set up and we agreed to enforcement
provisions, we agreed to a very quick process to make sure that
the manufacturers had an opportunity to cure and we had a
dispute resolution at the end of it. And then it came to the
governance. And the governance as Mr. Gonzalez said it is not
one side against the other in this. ASA used to be on the CARE
side and NADA as you know is not always on the manufacturer's
side. And the manufacturer is the one that has to do the
giving. So we just wanted to make sure and our proposal was is
that it should be open to everyone. There ought to be a
supermajority that it takes to pass something and we ought to
be able to protect the rights of the minority because this is a
voluntary group that is designed to work together and work
together well and even in our own association we cannot be
effective if we have one of our members that is on the left
side and everybody else is on the right side and we take a
position that does not encompass them so----
Mr. Stearns. Would the gentleman yield on that?
Mr. Towns. Yes, I would be glad to yield to the Chairman.
Mr. Stearns. If I hear you correctly, you are requiring a
supermajority because almost with that you admit that the
people you represent are in the minority and are going to be on
the wrong side so you need a supermajority to override----
Mr. Stanton. Mr. Chairman----
Mr. Stearns. I mean that is just ridiculous.
Mr. Stanton. Mr. Chairman----
Mr. Stearns. I guess I can go to the speaker and say, you
know, my friends on the Democratic side are pretty good, you
know, when they are unified, it makes my life difficult. I want
to supermajority on this committee so that even when I am wrong
I can win. I mean that is just horseradish.
Mr. Stanton. Mr. Chairman, Mr. Barton, the way we view this
is is that some of the groups that would participate in this
other than the Alliance, it would be association run so it is
not like we have 15 automobile manufacturers in there but AAIA,
ASA, the locksmiths, the training technicians would be there,
the service excellence--automotive service excellence groups,
automotive service providers would be involved, ETI, MEMA,
NADA, SA----
Mr. Stearns. But they all, everybody, everybody even the
manufacturers should represent the consumer, the driver, the
person whose vehicle is attempting to be fixed. I mean, I just
do not get it. I do not want to take Mr. Towns time and he is
one of my principal cosponsors on the minority side but to say
you have to have a supermajority on this board I think just is
a non-starter.
Mr. Stanton. Not that you have to have a supermajority but
the----
Mr. Stearns. You just said it.
Mr. Stanton. No, it takes----
Mr. Stearns. You just said it.
Mr. Stanton. [continuing] it takes a supermajority to make
a policy decision so that all the rights of all the voluntary
participants are protected.
Mr. Towns. Let me ask you right down the line real fast and
I will switch the question now. Would a larger board do you
think solve some of these problems? I am just trying to figure
out how you might be able to get back to the table and start
negotiating again. Would a larger board, would that be a
solution to some of the problems?
Mr. Parde. Well we felt with our four, four proposal, I
mean as Mr. Cole stated in his testimony, there is a lot of
mistrust on both sides here and especially in the beginning of
this whole process and that is why we thought a four, four
board would force us basically to work together to try to find
consensus, to find a way to make things happen and that is what
we thought would be the best system. Now is a bigger board
going to make a difference? You know, I do not know. Sometimes
bigger boards bog things down. But we are not opposed to----
Mr. Towns. You are bogged down already.
Mr. Parde. Well we are not even there yet so--but, you
know, adding additional people, we are not opposed to that. We
never have been opposed to that. The original proposal was to
get this organization started and get it moving and get it
going.
Mr. Stearns. Would the gentleman yield just for that
question?
Mr. Towns. I yield.
Mr. Stearns. You might, Mr. Towns ask him maybe to have the
FTC appoint an independent board and ask him--maybe that is a
question we could ask the FTC.
Mr. Towns. Yes.
Mr. Stearns. How about the breakthrough would be that the
FTC would point all the directors and there would be an
independent board.
Mr. Towns. That is a great question, yes.
Mr. Cole. Well Chairman and Congressman it has been
suggested that perhaps a solution to this problem would be if
each side chose a fairly small but equal number and then that
the majority of the board be made up my neutral parties and
that may solve the problem of not having exactly equal sides.
And that seems like a workable solution to me. I think it would
be best if the parties chose people that they thought were
truly neutral.
Mr. Towns. That is not working. Mr. Parde, I would like to
get your answer to that independent board. I would like to hear
your response.
Mr. Parde. I think we would be willing to consider that. I
would have to, you know, talk to our coalition members about
that but I think that is something we would consider.
Mr. Towns. Right. Let me just ask--I know my time has
expired but I am going to just quickly ask this. Does it bother
you that we are trying to get our nose under the tent, right
down the line yes or no?
Mr. Parde. You have already got your nose under the tent
with the emissions part of the car. This would simply be
expanding it to include the whole car at this point.
Mr. Stanton. Yes.
Mr. Towns. It bothers you?
Mr. Stanton. Absolutely.
Mr. Towns. Okay. Mr. Cole?
Mr. Cole. We believe in self regulation.
Mr. Towns. Mr. Kohm?
Mr. Kohm. The commission too believes that the solution to
this problem is self regulation.
Mr. Towns. But, you know, we have been waiting a long time
for you guys to work this out and it has not been worked out. I
mean, let us face it. I mean 4 years is a long time.
I yield back, Mr. Chairman.
Mr. Stearns. The gentleman yields back.
Mr. Rogers?
Mr. Rogers. Thank you, Mr. Chairman.
So it is unanimous we all think we ought not to be here
today? Did I understand that correctly?
I just have a quick question, a couple of questions for Mr.
Parde, if we will. Does the bill's protections for design and
manufacturing trade secrets leave unprotected non-repair
related system operating codes in your opinion?
Mr. Parde. I do not believe so. I mean it does not affect--
we do not need propriety information. We are not looking for
proprietary information. We took--we put a lot of effort into
writing language and putting it into the bill and we even
strengthened it from the last session to this session so we are
not looking for that. We do not need that. We would not know
what to do with it if we had it. We do not manufacture parts. I
do not believe that it leaves anything open, any propriety.
Mr. Rogers. So how would aftermarket manufacturers avoid
triggering warning signals if they do not have operating codes?
Mr. Parde. I am not a technician, Congressman. There will
be others on the next panel which will be coming up that can
probably best answer that.
Mr. Rogers. Right. You would agree though given the
intellectual property protection this is an issue that we need
to be concerned about, would you not? I mean, if I have access
to an operating code, it is very--I am not even sure I would
have to reverse engineer anymore. I would not even need to do
that. I would have all the intellectual property I need.
Mr. Parde. Intellectual property is an important issue and
an important discussion and we feel we have addressed it in the
bill.
Mr. Rogers. But there is that at least gap on operating
codes is there not? How would they--I mean you are going to put
a piece of equipment in there that was going to trigger
warranty--you are going to create more problems than you solve
by if they do not have operating codes, they will in fact set
off these warning signals. I mean that is a real problem, isn't
it?
Mr. Parde. It potentially could be. Again, we have people
on the next panel that will be better to answer that question.
Mr. Rogers. As long as we can agree that is a problem and
that is a debate at least we should have about what
intellectual property is infringed on in this bill, at least
the potential could be. And we want to do this right. We do not
want to take anyone's intellectual property, right?
Mr. Parde. We are only asking for what the dealers are
getting. If the dealers are getting information then it is not
proprietary so that is all we are asking for.
Mr. Rogers. Yes, but if you are you are allowing folks to
use elect parts and some of those parts have these operating
codes, you would have to get the operating code not to set off
the warning signals and if you do that, we--you are asking for
them to give proprietary intellectual property that would in
fact allow an accelerated reverse engineering process.
Mr. Parde. I do not believe that is the case. I mean that
is not what we are looking for. That is not what we are asking
for.
Mr. Rogers. Well at least that is not what you are looking
for then maybe there is some room to fix it but it is
absolutely wide open in this bill and that is why we should be
very careful about trying to introduce a bill and push a
solution to where we are not quite sure there is a problem yet.
But I appreciate where you are coming from. I think we are on
the same sheet of music. I do not think you want to go there. I
certainly do not want to go there. I think it is wide open in
this bill to get there and we ought to be really careful about
how we look at that language.
Mr. Parde. I would agree with that. I mean we again we are
not after proprietary information. If we need to strengthen the
language in the bill to make everybody satisfied or have a
comfort level with it we would be willing to do that.
Mr. Rogers. Thank you, sir.
I would yield back, Mr. Chairman.
Mr. Stearns. The gentleman yields back.
Mr. Green?
Mr. Green. Thank you, Mr. Chairman. I apologize for not
being here earlier. I would like to ask unanimous consent to
place a statement in the record.
Mr. Stearns. So ordered.
Mr. Green. Just from listening in my office briefly in the
hearing, I know there is frustration of a lot of members. And
most of us want to get to the point where, you know, when I buy
a new car, that car is mine except for when I am paying the
notes on it but I ought to be able to take it wherever I want
to to have it fixed. And I know we are trying to split the baby
in half maybe but that is what we are trying to do.
And Mr. Stanton it seems like both sides say that there
would not be a problem with adding members to the board. Would
you think that if we added members that may be brought in as
Mr. Kohm said that it would help with making those decisions?
And I am concerned about supermajorities, too. I know we always
want unanimous support but adding new board members that are
not part of the aftermarket or part of the automobile
manufacturers.
Mr. Stanton. Absolutely, I said--we said earlier we would
take back to our members the idea of a totally independent
board. We definitely would consider that. We would like the
opportunity to consider that an actuality.
Mr. Green. Mr. Parde, what do you think about that? Would
it be more of an independent board instead of having
representatives on both sides on it?
Mr. Parde. I think we would, you know, we would consider
that.
Mr. Green. Do we need to do legislation for that?
Mr. Stanton. No, sir.
Mr. Green. And I am a cosponsor and like the Chairman said,
you know, Congress does not really need to do this if the
industries can sit down and do it. And there is a line you have
to cross. I know that I want to protect patents and innovation,
and everything else but when you sell that product to someone
they also have the freedom, should have the freedom to be able
to come to the dealer or go to whoever. And I think that is
what we are doing and I think if anything you get out of this
hearing, unless the industries can work it out for the benefit
of the consumers in general, then I think you will see this
bill moving and it would be much cheaper if you all sat down
and worked it out among yourselves because I tell my
constituents once Congress gets in, you know, no telling what
will come out. We are the only thing in the world that can make
an elephant out of a giraffe. So there is a good Texas saying
about our country western song about thank God for unanswered
prayers. If--you might want to do this together working it out
because if Congress does it then, you know, you may not like
what--no side may like what we end up with.
So Mr. Chairman, I thank you for the time and thank you for
calling the hearing. I was hoping we would have more success
after the legislation last session and the hearings we had that
we would have a solution that may be non-legislative but if not
I will be glad to continue to co-sponsor and work with Chairman
Barton.
Mr. Stearns. Would the gentleman just yield before your
closing?
Mr. Green. Be glad to.
Mr. Stearns. Mr. Kohm, Mr. Green touched upon this
independent board. If Congress we structured this and asked you
to do it, you could do this, you could set up an independent
board, right? Do you have the resources and the manpower to do
this?
Mr. Kohm. I do not know that we have ever done that before.
We would have--I would have to go back and talk to people at
the FTC and see if we could. I think it would be optimal if the
parties chose those neutral board members so that they all
truly believed they were neutral.
Mr. Stearns. Well it might be helpful for you to start
thinking about it in lieu of legislation and maybe another step
would be for you to propose to us how an independent board
would be structured, you would appoint them, and then we would
come back to you with the instruction to do the same.
Mr. Kohm. We will certainly--I will certainly go back----
Mr. Stearns. Okay. I yield back to the gentleman, Mr. Green
and any additional----
Mr. Green. I yield.
Mr. Stearns. Okay. Mr. Deal is recognized.
Mr. Deal. Thank you, Mr. Chairman.
Mr. Stanton, there have been testimony, there has been
testimony here that certain parts of what you were trying to
negotiate have actually be agreed to. Have those provisions
that were agreed to actually been implemented?
Mr. Stanton. I said in my testimony that to the--there was
a lot that was agreed to that was part of the overall program
but what was agreed to as far as providing service information
is happening today. Regarding tool and tool information, the
vast majority of what was promised there is happening today as
well. The manufacturers made the commitment to do that.
Mr. Deal. Mr. Parde, do you agree with that assessment?
Mr. Parde. No, I do not.
Mr. Deal. What is--from your perception what is, what has
not been implemented that was agreed to in the negotiations?
Mr. Parde. I do not believe any of it has been implemented
that was agreed to in the negotiations at this point.
Mr. Deal. Okay. With regard to the magnitude of the
problem, I believe some testimony was that there had only been
50 inquiries received through NASTF and that there were some
500 million non-warranty service transactions last year. Do you
have any indication, Mr. Parde, as to the magnitude of the
number of problems or instances in which the roadblocks exist
now in trying to get vehicles repaired?
Mr. Parde. That is a tough number to get your hands around
but, you know, we hear consistently about problems on a daily
basis. You know, again going back to the NASTF situation and
why there are so few complaints, we think that is because again
people just do not trust the system, they do not believe in the
system as it exists today. I will give you example of that
going back to 2002 before Senate Committee, the Commerce
Committee on this legislation or similar legislation. ASA who
now is opposed to this legislation but at the time supported
it, testified in that hearing that there were 161,437,500
rejected incidents of non-repair that year while at the same
time NASTF showed less than 100 complaints going on at the same
time. So you have ASA saying over 161 million incidents of non-
repair but NASTF only received 100 complaints.
Mr. Deal. Mr. Stanton, do you want to respond?
Mr. Stanton. Yes, we got into this at length and I think
that is part of the big problem that we are having here is how
big of an issue are we really working with. But as a result of
the EPA regulations, the manufacturers have to create their own
websites and this is another place for technicians to find
independent--or to find service information. And our
manufacturers are not getting the hits on their websites so in
the negotiations I went to one of them that has double digit
market share and they have a grand total of 16 annual
subscriptions, 16 monthly or excuse me, 16 monthly on a daily
basis which goes from 24 to 72 hours, they are averaging about
100 a month. Out of, you know, a half a billion repairs, that
is not much use.
Mr. Parde. Again, I think that goes back to the trust
issue. There is not--some of the websites are hard to navigate
with, some of them are extensive, some of them are hard to get
into. And you have cases where, you know, independent repairs
will find their own way to try to get the information however
they can get it. Some of them are getting a lot of the
information from friends that work at dealerships or under the
table. They are not going to take the time to go onto a website
that may take them quite a while to try to even find the
information.
So again, it is back to the effectiveness of this and how
it works and how it operates. And you do not have a large,
excuse me you do not have a large segment of the aftermarket
industry that supports it right now. There is one organization
out of 49 or actually there are 49 groups that support this
legislation. Out of those 49, 42 of them are after market
groups and one that does not support this legislation and those
groups, you know, are simply not participating at this point.
Mr. Deal. Mr. Kohm, does the FTC have any proposal as to
how to resolve the issue of the scope of the information that
should be made available? Have you come up with any proposal
there?
Mr. Kohm. No, we do not, Congressman.
Mr. Deal. At some point, somebody has got to make that
decision either by agreement or legislatively. Are there
concerns that have not been raised here in the testimony thus
far that--about that scope of information that you would like
to comment on?
Mr. Kohm. No, Congressman, I think through the negotiations
this summer and through the testimony that you have now heard
exactly what we heard this summer. That I think that there is
some considerable agreement on the provision of information,
that there is some considerable disagreement on the provision
of tool information, although the parties were willing to send
that into a NASTF process if they could formulate such a
process that they both agreed on and that seems like a workable
solution.
Mr. Deal. Mr. Chairman, my time has expired.
I would yield back.
Mr. Stearns. The gentleman yields back.
Mr. Rush?
Mr. Rush. Thank you, Mr. Chairman for this hearing. I
really want to comment the response of this legislation for the
outstanding work that needs done on this particular issue.
And as I heard the chairman of the full committee, Mr.
Barton ask his questions and as I heard the response and as
they say my children, young children say sometimes I began to
feel him and I was drawn to or it reminded me rather of my
mother and some of my young days with my mother. Invariably
when I was not doing things to please her, she would always say
a word to the wise should be sufficient. And when I did not
bring good grades home or I was calling in school she would
look at me and with a stern face and very firmly say a word to
the wise should be sufficient. Staying out to late, a word to
the wise should be sufficient. And I did not realize the
meaning of that or I did not take it seriously until I
continued in my ways and the punishment was a consequence or
the firmness was a consequence. I did some things that I did
not want her to do or did not like her doing to me. And I just
think that for this--for those who are here, the automobile
industry, a word to the wise should be sufficient.
I want to also say that there is a--and I do not want to
offend anybody but my colleague from Texas indicated that there
was a song but there is another song that brought--that
brings--that I am reminded of and it is--and again I do not
want to offend anybody but it just keeps reverberating in my
head, you know, it is cheaper to keep her. And I think it is
also would be much cheaper for the industry to handle this
issue themselves without the Congress intervening and without
this committee intervening. It would much, much cheaper for you
and you would have probably a more successful experience with
each other than with the Congress with this committee.
I am concerned about the disparate impact that this may
have on small minority businesses. As you know, a self
regulating model and we talked about the self regulating model
and Mr. Kohm, my question is directed to you. A self regulated
model would be best but I am concerned about the time. The time
is of the essence and my small business constituents cannot
wait for you all to really work this thing out. And so my
question is without an independent board, how can we be assured
that minority owned dealers, minority owned repair shops, and
minority consumers would be adequately protected without having
this independent board to oversee this process?
Mr. Kohm. Well Congressman, the optimal solution we believe
is an approach that is flexible and an approach that allows for
a speedy decision that helps those independent businesses in
the marketplace actually repair cars and that a self-regulatory
model is one that has that flexibility and that would contain
the speed necessary so that repairs could actually get made.
The problem with the court process is it is long, it is
expensive, it is drawn out and does not provide those pieces
that are necessary for small business.
Mr. Rush. Well, Mr. Cole, I think, might be able to address
this. This is regarding an unrelated issue from the matter of
concerns right here but it is something that still is important
to my constituents. And I am getting complaints and I am not
sure if it is warranted or not but I am getting complaints from
my constituents that there are codes that is embedded in the
computers in these, in some of these vehicles that can be
disabled or immobilized to allow these vehicles to be
immobilized if for say late payment or non payment of car
notes. You know in this area of really trying economic times
when someone might fall a month or 2 months behind on their car
notes, are you aware of technology that will allow the lender
or someone to immobilize their car so that an individual cannot
go to work or if they are in an emergency situation need the
car and cannot--how is that emergency--are you aware of any
type of technology that currently exists that will allow a
third party to immobilize a vehicle for non-payments or any
other reason?
Mr. Cole. I do not have any information on that other than
I have read that same--in the media I had seen reference----
Mr. Rush. Is there any witness here who might have any
insight into this technology?
Mr. Stanton. Mr. Rush limited. I think that technology does
exist and generally though it is used for law enforcement and
then it is even used very, very judiciously and obviously you
do not want to stop a moving vehicle but I think the technology
is out there in limited scope.
Mr. Rush. So this, you know, so the complaints does have
some merit in other words that I am getting?
Mr. Stanton. A little bad comes with the good maybe.
Mr. Rush. Okay. All right, Mr. Chairman, I yield back.
Mr. Stearns. Yields back.
Mr. Bass?
Mr. Bass. Thank you, Mr. Chairman.
This is a thorny little issue. I feel like I am moderating
sort of a fistfight here.
Mr. Stearns. I know what you mean.
Mr. Bass. Mr. Stanton, is there anything at all in this
bill that you support?
Mr. Stanton. We do not think that there is a need for
legislation.
Mr. Bass. At all, not anything, we do not need to do a
thing, nothing?
Mr. Stanton. We need to solve the problem of making sure
that all of the information is out there. That the tool
information is there, that the tools are there and we are
working to do that and we think that it is better done on a
voluntary basis cooperatively than it is through legislation.
Mr. Bass. And what makes you think if it is done on a
voluntary basis that anything is going to happen that has not?
It has not worked so far, why is it going to work in the
future?
Mr. Stanton. I think it is working. I do not think there is
any question that from the time of 2000 when the NASTF was
created to 2002 when we made our commitment to the
implementation of the EPA regs that the information is getting
out there.
Mr. Bass. Okay. There is no representative here now from
the repair stations. That is the second panel. Is that correct?
How about the dealers? Is that the second panel also? Okay, we
will defer those questions then because I want to find out what
it means to be a dealer because there are costs associated with
the title of being an authorized dealer and I assume you have
access to special training and people from the manufacturers
come and show you and so you pay, you have a higher overhead
and there are more costs associated with the operation of your
facility and in return for that, you have to charge more per
hour to fix a car but presumably you can boast at least that
you have a better, you offer a more reliable repair service
because you focus only on the specific make. There--Mr. Parde,
is it Parde, is that how you pronounce your last name?
Mr. Parde. Parde.
Mr. Bass. Parde, Mr. Parde, you represent the aftermarket
parts manufacturers, correct, NAPA, that kind of thing?
Mr. Parde. They are not manufacturers. None of our
companies manufacture parts.
Mr. Bass. Okay. And the auto manufacturers are concerned
that you might have access to proprietary drawings and that
sort of thing. Is that correct?
Mr. Parde. I believe that is one of their arguments, yes.
Mr. Bass. And----
Mr. Parde. That is simply not the case. Again----
Mr. Bass. Why is that?
Mr. Parde. Well again, we do not manufacturer the parts, we
sell parts, we also do service on vehicles. We do not make the
parts. We would not know what to do with the information. I
mean we are not after proprietary information. We do not need
it and we have stated so in the bill and we have stated so in
public and we will continue to say so. And if there is, you
know, if the manufacturers wish to work with us on language
that would make them feel better and then be willing to then
support the bill if that language is put in, we would be happy
to do that.
Mr. Bass. When you sell parts, don't you--the parts for a
specific brand name of car, do you have to pay anything to the
manufacturer for--to say it works on a Ford, or a Chevy, or a
Chrysler or it is only if you have the logo of the company on
the part?
Mr. Parde. Any of the parts that we sell at our stores are
manufactured by the same people who manufacture the parts for
the manufacturer. Many of our parts are boxed with the name of
the company or many of our stores offer both what is considered
an original part and a generic part so.
Mr. Bass. Okay. Mr. Stanton, do--I apologize, you may have
answered this already but do repair stations outside of
environmental issues and security issues which we have
discussed, do the repair stations have access to all of the
same software that the dealers do?
Mr. Stanton. Outside of the security issues, yes, and that
was our commitment.
Mr. Bass. And--all right. Amongst other concerns in this
bill, you are worried about on Page 5, Line 6, manufacturer's
disclosure requirements that repair stations have access to the
same diagnostic tools and capabilities. Is that a concern and
what is the nature of that concern?
Mr. Stanton. Well our construct of the bill which is better
than the last Congress still does not solve the intellectual
property issues. The findings are I guess if true, the FTC
would probably already be taking issue with us. It requires the
aftermarket parts be accommodated and then combine that with
the terms of capabilities in Section 3, you end up with the
possibility of someone interpreting the fact that you would
have to provide the information for aftermarket parts used in
vehicles which gets right to the intellectual property issues.
Mr. Bass. Okay. My time has expired. I am not sure I am any
further along this than I was before but it has been helpful,
thanks.
Mr. Stearns. The gentleman yields back.
Ms. Myrick?
Ms. Myrick. Well like others who have already stated, I
would prefer that you all worked this out among yourselves
rather than Congress getting involved because we do complicate
things.
Mr. Stanton. Yes.
Ms. Myrick. And who knows what the end result is going to
be. But when I sit here and listen to what I have heard so far
this morning, you know, Mr. Stanton you say you are giving
everything that they need and of course we know the emissions
information is mandated by EPA and that is on the websites and
so forth. But, you know, if--technically it seems like if you
were giving everything that was needed that we would not be
here today because the other people would not be saying well we
do not have what we need to do the job. So I will listen more
but it concerns me, you know, and Ms. Schakowsky, I know
suggested maybe setting up something different relative to a
panel that could come to some conclusions but I hope you will
seriously consider something like that because in all honesty
it is not always good when Congress gets involved. I mean if we
have to do the job we will. I think you have heard the
frustration of most of the people who have spoken about Joe
saying 4 years this has been going on and we want to get it
solved. I mean, you know, it is kind of like enough is enough.
So the more help you can give independently without us having
to do it, the better off you all are going to be.
Oh, and I yield back.
Mr. Stearns. The gentlelady yields back.
Ms. Blackburn?
Ms. Blackburn. Thank you, Mr. Chairman and I thank all of
you for being here and for your time.
I agree with everybody else. I wish you all could just
agree to get along and work it out yourselves.
Mr. Parde, I do want to talk with you for just a moment.
You just made a statement a few moments ago that we just--
regarding the aftermarket parts and the intellectual property
that is used in those parts. And you said well if we had the
information we would not know what to do with it. And I would
caution you sir, or ask you to use caution there are lots of
people out there that would know exactly what to do with that
information.
Now when I was in the State Senate in Tennessee, I
represented a little place called Spring Hill with a little
plant called Saturn, part of GM. I live in Williamson County,
Tennessee and we expect to have a new constituent called
Nissan. So I will caution you, sir, that in my life as a
marketer and in my private life before coming to Congress, I
did a good bit or work with the retail industry and I saw
intellectual property and piracy and theft decimate an
industry. I represent the world's largest community of
songwriters and it just kills me to see what intellectual
property theft is doing to that industry. Information on the
wrong hands does great damage to the U.S. economy and I would
just ask you, please to be aware of that.
Now with that said, have a tremendous number of shade tree
mechanics and small repair shops that make up my wonderful
district that goes from Nashville to Memphis, Tennessee, Mr.
Stanton do you--we have talked a lot about information and I
question your response on your website with saying you have
only had the 50 inquiries. I think availability, ease of access
to information, those things are very important. And I would
want to know, I want to hear from you if I have a shop in
Summer, Tennessee that is trying to repair a 2005 Mountaineer
are they going to be able to get the information, the tools
easily accessible so that those owners of that vehicle are not
forced to drive to either Jackson or Memphis or Nashville? Are
they guaranteed that they can do that?
Mr. Stanton. There is not a guarantee but if they have a
2005 vehicle it should be covered under warranty and other than
routine service would go back to the dealer anyway. I know we
have had this discussion before and your shade tree mechanics
would encourage that as well. Under the EPA guidelines though
once a vehicle is out in the marketplace for 6 months, all of
the emissions information has to be made available, tools have
to be made available Ms. Blackburn. Okay, all right. I get the
drift.
Mr. Stanton. Okay.
Ms. Blackburn. Thank you, sir.
Watching my time here, Mr. Kohm, looking at this from
consumer protection is there anything that you view as anti-
competitive in the current market or would you foresee with the
growth of technology future anti-competitive behavior if the
current regulations are not changed?
Mr. Kohm. I do not know that I can see to foresee the
future in a rapidly changing market. However this is a market
with a number of competitors and no collusion that we know of.
That seems like an official----
Ms. Blackburn. That is all I want to know.
Mr. Cole, I wish you well. You have a big job. And I
thought it was interesting in your testimony it looks like that
you feel like there was progress on the first and second steps.
Am I correct in that? And the third--so just let me ask you
that.
Mr. Cole. Yes.
Ms. Blackburn. So by saying, making your statement in your
testimony about the first and second steps, I assume that you
believe that there is agreement or resolution that could be
arrived at there.
Mr. Cole. I do, let me clarify. The assignment originally
given was characterized can you help facilitate the creation of
the dispute resolution program. That took very little time to
do. But the parties were smart enough to realize that the NASTF
process and how that was governed was as important and so all
the discussion about the independent board or another kind of
board and all those conversations we have been having are about
a set of issues that were not on the table before.
Ms. Blackburn. Okay. My time has expired. I will just say I
really do honestly believe you all would like to resolve this
yourselves and not have us resolve it for you so I wish you all
well.
Mr. Chairman, I yield back.
Mr. Stearns. The gentlelady yields back. If not, we will
now thank the Panel #1 and ask the members of Panel #2 to come
forward. I thank you folks.
Panel #2 we have John Nielsen, Director AAA Auto Repair
Network; Mr. Steve Brotherton, President of Continental
Imports. He is here on behalf of the automobile, the Automotive
Service Association. Mr. Robert Everett, Owner, Bayville Auto
Care on behalf of the National Federation of Independent
Business; Mr. John Cabaniss, Director, Environmental Energy
Association of International Automobile Manufacturers; Mr.
Aaron Lowe, Vice President, Government Affairs, Automotive
Aftermarket Industry Association; and finally Mr. Robert
Braziel, Chief Legislative Counsel, National Automobile Dealers
Association.
Let me welcome each of you folks here and Mr. Nielsen, we
will start out with your opening statement and just move the
mike close to you and if you do not mind, just turn it on.
STATEMENTS OF JOHN NIELSEN, DIRECTOR, AAA AUTO REPAIR NETWORK;
STEVE BROTHERTON, PRESIDENT, CONTINENTAL IMPORTS; BOB EVERETT,
OWNER, BAYVILLE AUTO CARE, INCORPORATED; JOHN CABANISS,
DIRECTOR, ENVIRONMENT & ENERGY, ASSOCIATION OF INTERNATIONAL
AUTOMOBILE MANUFACTURERS, INCORPORATED; AARON M. LOWE, VICE
PRESIDENT, GOVERNMENT AFFAIRS, AUTOMOTIVE AFTERMARKET INDUSTRY
ASSOCIATION; AND ROBERT BRAZIEL, CHIEF LEGISLATIVE COUNSEL,
NATIONAL AUTOMOBILE DEALERS ASSOCIATION
Mr. Nielsen. Thank you, Mr. Chairman.
I am pleased to be here today on behalf of AAA in support
of H.R. 2048, the Motor Vehicle Owners' Right to Repair Act.
My name is John Nielsen. I am the director of AAA's Auto
Repair Network and my primary responsibility in that role is to
make certain that AAA members are able to locate quality repair
facilities that can quickly and efficiently service their
vehicles at a reasonable and competitive cost. I coordinate the
objective inspection and approval of a network of more than
7,500 repair facilities. These represent both new and non-new
car dealerships. We have independent and aftermarket.
AAA has represented the interests of car owners for over
100 years and currently serves more than 48 million members.
That represents one quarter of U.S. households. We support
Right to Repair as a necessary measure to ensure our members'
safety and their access high quality, convenient, and
competitively priced auto repair.
In supporting this bill, AAA's goal has been to ensure that
manufacturers make service and training information, as well
as, the appropriate diagnostic tools available to any repair
facility not just those franchised dealers. Ideally, this
should occur voluntarily and we were disappointed that the
issues associated with right to repair could not be resolved
through self-regulating programs. Absent that we remain
committed to the need for legislative action.
Our members and many independent repair facilities in AAA's
approved auto repair network continue to tell us of instances
where technicians do not have the information or tools they
need to fix today's vehicles. It is difficult to quantify the
extent of a problem because a customer focused repair shop will
always find a way to take care of their customer and not lose
them forever.
In many cases, the problem is transparent the shop is
taking care of the problem whether they are going to a
dealership and paying under the table for information, whether
they are actually taking the car to the dealership for
information remains transparent to the consumer. But the fact
that the independent technicians have to go through a number of
steps, some of them certainly not what we would consider
normal. It is not in the consumer's best interest.
Problems do persist and customers are denied choice among
quality and qualified repair options. They are inconvenienced
and regrettably some AAA members are left with no choice but to
drive their vehicle long distances for repairs and service.
Consumers are essentially denied something they buy when they
drive their new car off of the lot and that is access to the
data necessary to get their vehicles repaired.
AAA's support for the Right to Repair Bill is based on
three simple yet very important objectives. The first is
consumer choice, the second is vehicle safety, and the third is
the right of car owners to access or have access to the data
generated by their vehicles. Despite some positive steps toward
making more information available to independent repair
facilities much of what is provided is incomplete, difficult to
find, or prohibitively expensive. As a result, instead of
fixing the problems themselves, some repair technicians are
forced to put customers back out on the road searching for a
dealer shop that may not have an available appointment, may not
be nearby, or may not even be opened.
Many of our members prefer to use dealer facilities. In no
way do we say that aftermarket or dealer is a better solution.
But as I say, many of our members choose dealer facilities and
many choose the services offered by independent facilities. AAA
believes our members deserve and need choice to ensure good
quality service and a fair price in auto repair. And this can
only occur if all facilities have access to the same
information and tools.
Technology has made the vehicles we drive smarter. More
than 80 percent of the systems on some cars are monitored or
controlled by a computer. Computers in the car can tell us of
the need of an oil change, trouble with an oxygen sensor, or
problems with brakes, and even if our tire pressure is too low.
And it can do this before there is actually a problem with a
vehicle. It makes sense that the information necessary to
diagnose and repair any of these problems should be available
to all repair technicians both within and outside of the
dealer's network.
These days it is hard to mention this issue without someone
telling you of their own experience with a repair problem. I
would like to present you with a scenario that typifies what we
hear. Imagine traveling on a Saturday afternoon, the dashboard
light comes on in your vehicle and warns you that there is a
malfunctional problem with your antilock braking system. You
stop at the first service station and ask for help. The
technician checks the vehicle and determines the vehicle is not
mechanical but rather is an electrical system that he does not
have access to. The closet dealer for that make of car is 25
miles away. And by the way, it will not open until Monday
morning. Is it safe to keep driving the vehicle on your trip or
should you drive it to the repair shop and wait until Monday.
Or really is it safe to drive at all, should you simply have a
tow truck pick it up and take it to the shop. Can the dealer
service the car Monday or are they booked until midweek?
This situation could just have easily involved supplemental
restraints, electronic traction and stability control, airbags,
et cetera. Each has the potential to compromise the safety of
the vehicle's owner and the vehicle's passengers, as well as,
other motorists. At the same time, the inability of independent
technicians to repair comfort features like climate control may
not create dangerous situations but they can certainly cause
inconvenience for motorists.
AAA believes that when you drive off the lot with your car,
you own more than just the vehicle, you own the information
necessary to have it repaired by a trusted service provider of
your choosing. That is why there is an independent technician
or a dealership. To the extent that the manufacturers contend
that certain information is not available because it should be
considered intellectual property, we need to look no further
than the clear language of H.R. 2048 which states that
manufacturers do not have to disclose any propriety design
information. At the same time, whether it is viewed as
intellectual property or real property, this repair information
is really the property of the car owner.
Simply put, this legislation is about putting common sense
into the repair process, ensuring that consumers get a choice
in repair service whether they choose a dealership or an
independent shop.
I thank you very much for the opportunity to share AAA's
views on this important issue. I would be happy to answer any
questions.
[The prepared statement of John Nielsen follows:]
Prepared Statement of John Nielsen, Director, AAA Auto Repair Network
Thank you, Mr. Chairman and members of the subcommittee. I am
pleased to be here today on behalf of AAA in support of HR 2048, the
Motor Vehicle Owners' Right to Repair Act.
My name is John Nielsen. I am the director of AAA's Auto Repair
Network. My primary responsibility is to make certain AAA members are
able to locate quality facilities that can quickly and efficiently
service their vehicles at reasonable cost. I coordinate the objective
inspection and approval of a network of more than 7500 AAA-approved
repair facilities that are both franchised new car dealerships and
independently-owned repair shops.
AAA has represented the interests of car owners for over 100 years,
and currently serves more than 48 million members' a quarter of all
U.S. households. We support Right to Repair as a necessary measure to
ensure our members' safety, and their access to high quality,
convenient, and competitively priced auto repair.
In supporting this bill, AAA's goal has been to ensure that
manufacturers make service and training information, as well as the
appropriate diagnostic tools, available to any repair facility, not
just those in a franchised dealer network. Ideally, this should occur
voluntarily. We were disappointed that the issues associated with Right
to Repair could not be resolved through a self-regulatory program.
Absent that, we remain committed to the need for a legislative
solution.
Our members and many independent repair facilities in AAA's
approved auto repair network continue to tell us of instances where
technicians do not have the information or tools they need to fix
today's vehicles. It's difficult to quantify the extent of the problem
because a customer-focused repair facility always will find ways to
work around a situation in order to minimize customer frustration. In
many cases the problem is transparent to the consumer. But the fact
that independent technicians frequently have to go through multiple
steps searching for information they need to repair a customer's car is
not in the consumer's best interest.
Problems do persist and consumers are denied choice among qualified
repair options; they are inconvenienced, and regrettably some AAA
members are left with no choice but to drive their vehicle long
distances for repairs. Consumers are essentially denied something they
buy when they drive their new car off the lot--access to the data
necessary to get their vehicle repaired.
AAA's support for the Right to Repair bill is based on three
important objectives: consumer choice, vehicle safety, and the right of
car owners to access the data generated by their vehicle.
Despite some positive steps toward making more information
available to independent repair facilities, much of what is provided is
incomplete, difficult to find, or prohibitively expensive. As a result,
instead of fixing the problem themselves, some repair technicians are
forced to put customers back out on the road searching for a dealer
shop that may not have an available appointment, may not be nearby, or
may not even be open.
Many of our members prefer to use dealer facilities. But, many
choose to use the services of independents. AAA believes our members
deserve and need choice to ensure good quality service and a fair price
in auto repair. This can only occur if all facilities have access to
the same information and tools.
Technology has made the vehicles we drive smarter. More than 80% of
the systems on some cars are monitored or controlled by a computer.
Computers in the car can tell us about the need for an oil change,
trouble with an oxygen sensor, problems with brakes, and even if our
tire pressure is too low--before there is a problem or critical safety
breakdown. It makes sense that the information necessary to diagnose
and repair any of these problems should be available to all repair
technicians, both within and outside of dealers' networks.
These days, it is hard to mention this issue without someone
telling you of their own experience with a repair problem. Here is a
scenario representative of what we hear: Imagine traveling on a
Saturday afternoon. The dashboard light comes on warning of a
malfunction with the antilock brake systems. You stop at the first
service station and ask for help. The technician checks the vehicle and
determines the problem is not mechanical, but rather, is in an
electrical system only the dealer has access to. The closest dealer for
your make of car is 25 miles away and won't open until Monday morning.
Is it safe to keep driving the car on the trip? If not, is it safe to
drive the car to the dealer and wait until Monday, or do you need a tow
truck to pick up the car? Can the dealer service the car Monday, or are
they booked until later in the week?
This situation could just as easily have involved the supplemental
restraint system, or the electronic traction and stability control
system. Each has the potential to compromise the safety of the
vehicle's owner and passengers and other motorists as well. At the same
time, the inability of independent technicians to repair ``comfort
features'' like climate control may not create dangerous situations,
but they can certainly cause inconvenience for motorists.
AAA believes that when you drive off the lot with your car, you own
more than just the vehicle; you own the information necessary to have
it repaired by a trusted service advisor of your choice, whether it is
an independent technician or dealership. To the extent that the
manufacturers contend that certain information is not available because
it should be considered intellectual property, we need to look no
further than the clear language of HR 2048, which states that
manufacturers do not have to disclose any proprietary design
information. At the same time, whether it is viewed as intellectual
property or real property--this repair information is really the
property of the car-buyer.
Simply put, this legislation is about putting common sense into the
repair process, ensuring that consumers get a choice in repair service,
whether they choose a dealership or an independent.
Thank you for the opportunity to share AAA's views on this
important consumer issue. I will be happy to answer any questions at
this time.
Mr. Stearns. Thank you.
Mr. Brotherton, welcome.
STATEMENT OF STEVE BROTHERTON
Mr. Brotherton. Good morning, Chairman Stearns, Members of
the subcommittee, my name is Steve Brotherton.
Mr. Stearns. I just need you to turn your mike on and just
pull it a little bit closer to you if you do not mind. Yes,
perfect.
Mr. Brotherton. Again, my name is Steve Brotherton. I am
the President and owner of Continental Imports in Gainesville,
Florida. I have owned my own repair facility since 1978. We are
a European specialty shop servicing mainly Mercedes and BMW. I
hold a Bachelor of Science from the University of Florida in
Metallurgical Engineering and have served as President of the
Automotive Service Association's local chapter in Gainesville,
Florida. I am a contributing editor for Import Car Magazine and
serve as Vice President of the IAI BMW SP, an internet
technician group for BMW's.
I am here representing the Automotive Service Association,
our national trade association. ASA is the oldest, largest
trade organization in the automotive industry with the
distinction serving only businesses that perform service and
repairs for the motoring public. ASA's Board of Directors is
made up of independent repair shop owners, small business men
and women. I repair automobiles.
ASA has testified before the Congress including this
subcommittee on several occasions regarding the automotive
service information issue. Prior to the fall of 2002, we
believed there was a problem in obtaining service information
from automotive manufacturers. In September 2002, ASA signed a
voluntary agreement with the Automotive Service Manufacturers
asserting the same emissions and non-emissions related service
information, training information, diagnostic tools as provided
franchised new car dealers. The automakers have kept this
commitment in my estimation. Reports from the aftermarket
equipment and tool industry indicate that our industry is
receiving more technical information from automakers than ever
before.
In order to deal with issues that may arise with service,
training, and tool information, the automotive industry
established the National Automotive Service Task Force, NASTF.
This inclusive voluntary organization involves automakers,
independent repair shop owners, technicians, aftermarket
information providers, trainers, aftermarket manufacturers,
distributors and others interested in moving our industry
forward. The NASTF meets twice a year. Committees specializing
in problem solving work throughout the year on issues such as
NFS systems, service information, training, communication and
tool information.
At the NASTF's meeting during the automotive industry week
this past week, participants voted overwhelmingly to set up a
formal structure and hire professional staff for the NASTF.
There were more than 200 attendees at the NASTF meeting. Last
year NASTF received 48 complaints regarding service, training,
and tool information. All 48 complaints were resolved. Please
notes these--I also put two of those complaints. Please note
that these complaints pale in the light of the 451 million
repairs handled by independent repairers each year. Independent
repairs perform 75 percent of automotive repairs. Typically
these repairs occur after the vehicle warranty period has
expired.
ASA participated in the recent Better Business Bureau
meetings arranged by the Federal Trade Commission on service
information. ASA found the meetings productive and was sorely
disappointed when the talks did not result in resolution of the
right to repair debate. ASA believes the October 3, 2005 Better
Business Bureau letter to the FTC is an accurate depiction of
the discussions. ASA agrees that the resolution was possible on
core issues such as strengthening and new funding of the NASTF
process; remedies for a third party dispute resolution
framework; timeframes for problem resolution; and dispute
resolution procedures.
ASA references the restructuring and governance issues as
the primary reason the talks failed. Auto parts distributors
insisted that any NASTF board of directors be comprised of 50
percent parts distributors and 50 percent automakers. This
concerned ASA for several reasons. First, the principle
participants in this debate should be independent repairers and
automotive manufacturers not parts distributors. Second, NASTF
is a voluntary industry organization. No closed facilitation
process should dictate governance standards for any
organization in existence for several years operating
successfully. How frustrating it might be for those industry
leaders toiling in the last several years to resolve industry,
service, training, and tool concerns to learn that their
lawyers, lobbyists, and Government bureaucrats who have not
intended or participated in NASTF have now established a
structure and board of directors for this same organization.
I would advocate this morning that out industry, post Clean
Air Act Amendment of 1990 had a serious service information
problem. At the urging of congressional leaders, we met with
our adversaries, the automakers, and realized we had more in
common than we realized. We agreed on an industry solution
after extensive dialog. Our September 2002 agreement has been
successful. Is it perfect? No. With nearly 500 million vehicle
repairs a year, the NASTF is a necessity for assuring that
information gaps caused by new technology are resolved in an
environment of problem-solving, not regulation and litigation.
ASA believes we have an agreement with the automakers that
is working in today's highly technical environment. The NASTF
is an industry process allowing us to work together in an
environment of problem solving versus regulation and
litigation. Please allow us to continue to move our industry
forward working together. We do not need Federal intervention
in the service information issue. We should know we
successfully repair vehicles every day and are the
beneficiaries of these efforts.
If our voluntary, industry service information process
fails, we will be the first to be asking Congress--we will be
the first to line up asking Congress' help. We see no signs of
failure to date.
Thank you for allowing us to testify again before your
committee.
[The prepared statement of Steve Brotherton follows:]
Prepared Statement of Steve Brotherton, Continental Imports, on Behalf
of Automotive Service Association
Good Afternoon Chairman Stearns, Members of the Subcommittee, my
name is Steve Brotherton. I am the President and owner of Continental
Imports in Gainesville, Florida. I have owned my own repair facility
since 1978. We are a European specialty shop servicing primarily BMW's
and Mercedes. I hold a Bachelor of Science from the University of
Florida in Metallurgic Engineering and have twice served as President
of the Automotive Service Association's (ASA) Local Chapter in
Gainesville, FL. I am a contributing editor for Import Car Magazine and
serve as Vice President of IAI BMW SP an internet technician group for
BMW.
I am here today representing the Automotive Service Association
(ASA), our national trade association. ASA is the oldest and largest
trade organization in the automotive industry with the distinction of
serving only those businesses that perform service and repairs for the
motoring public. ASA's Board of Directors is made up of independent
repair shop owners, small business men and women. I repair automobiles.
This is indicative of my business' mission statement and that of my
trade association.
ASA has testified before the Congress, including this Subcommittee,
on several occasions regarding the automotive service information
issue. Prior to the fall of 2002, we believed there were problems in
obtaining service information from automobile manufacturers. In
September 2002, ASA signed a voluntary agreement with the automobile
manufacturers assuring the same emission and non-emission related
service information, training information and diagnostic tools as
provided franchised new car dealers. The automakers have kept their
commitment. Reports from the aftermarket equipment and tool industry
indicate that our industry is receiving more technical information from
automakers than ever before.
In order to deal with issues that may arise with service, training
and tool information, the automotive industry established the National
Automotive Service Task Force. This inclusive, voluntary organization
involves automakers, independent repair shop owners, technicians,
aftermarket information providers, trainers, aftermarket manufacturers,
distributors and others interested in moving our industry forward. The
NASTF meets twice a year, and committees specializing in problem-
solving work throughout the year on issues such as anti-theft systems,
service information, training, communication and tool information. At
the NASTF's meeting during Automotive Industry Week this past week,
participants voted overwhelmingly to set up a formal structure and hire
professional staff for the NASTF. There were more than 200 attendees at
the NASTF meeting.
Last year, the NASTF received 48 complaints regarding service,
training and tool information. All 48 complaints were resolved. Please
note that these complaints pale in light of the 451 million repairs
handled by independent repairers each year. Independent repairers
perform 75 percent of automotive repairs. Typically these repairs occur
after the vehicle warranty period has expired.
ASA participated in the recent Better Business Bureau (BBB)
meetings, arranged by the Federal Trade Commission (FTC), on service
information. ASA found the meetings productive and was sorely
disappointed when the talks did not result in the resolution of the
Right to Repair debate. ASA believes the October 3, 2005, BBB letter to
the FTC is an accurate depiction of the discussions.
ASA agrees that resolution was possible on core issues such as:
Strengthening and new funding of the NASTF process.
Remedies for a third-party dispute resolution framework.
Time frames for problem resolution.
Dispute resolution procedures.
ASA references the restructuring and governance issue as the
primary reason the talks failed. Auto parts distributors insisted that
any NASTF Board of Directors would be compromised of 50% parts
distributors and 50% automakers. This concerned ASA for several
reasons. First, the principle participants in this debate should be
independent repairers and automobile manufacturers, not parts
distributors. Second, the NASTF is a voluntary, industry organization.
No closed facilitation process should dictate governance standards for
an organization in existence for several years, operating successfully.
How frustrating it might be for those industry leaders toiling for the
last several years to resolve industry service, training and tool
concerns to learn that lawyers, lobbyists and government bureaucrats,
who have not attended or participated in the NASTF, have now
established a structure and Board of Directors for this same
organization. The message would resonate throughout the automotive
repair industry, ``We are the FTC and we are here to help.''
I would advocate this morning that our industry, post Clean Air Act
Amendments of 1990, had a serious service information problem. At the
urging of congressional leaders, we met with our adversaries, the
automakers, and realized we had more in common than we realized. We
agreed on an industry solution after extensive dialogue. Our September
2002 agreement has been successful. Is it perfect? No. With nearly 500
million vehicle repairs a year, the NASTF is a necessity for assuring
that information gaps caused by new technology are resolved in an
environment of problem-solving, not of regulation and litigation.
ASA believes we have an agreement with the automakers that is
working in today's highly technical environment. The NASTF is an
industry process allowing us to work together in an environment of
problem-solving versus regulation and litigation. Please allow us to
continue to move our industry forward, working together. We do not need
federal intervention in the service information issue. We should know,
we successfully repair vehicles everyday and we are the beneficiaries
of these efforts.
If our voluntary, industry service information process fails, we
will be the first in line asking for the Congress' help. We see no
signs of failure to date.
Thank you for allowing us to testify again before your Committee.
Mr. Stearns. Thank you, Mr. Brotherton.
Mr. Everett?
STATEMENT OF BOB EVERETT
Mr. Everett. Good afternoon. Mr. Chairman and members of
the subcommittee, I am Bob Everett, owner of Bayville Auto Care
in Bayville, New Jersey. I am here on behalf of the 600,000
members of the National Federation of Independent Business.
NFIB represents over 24,000 small automotive repair shops like
mine and they strongly support H.R. 2048, the Motor Vehicle
Owners' Right to Repair Act of 2005. When NFIB asked its
members in January of 2003 if automobile manufacturers should
be required to disclose to car buyers and repair shops
information needed to repair or maintain their vehicles, 77
percent of NFIB members said yes.
In addition to the 24,000 NFIB members who own independent
garages, there are many other small business groups that
support H.R. 2048 including the Alliance of Automotive Service
Providers, the service station dealers, the Tire Industry
Association, and the automatic transmission rebuilders.
Together, they and others bring over 30,000 additional small
businesses to the table all in full support of H.R. 2048. I am
also a member of the Automotive Service Association and I feel
that it is important for the subcommittee to know that ASA does
not speak for all repair shop owners. I am one of many ASA
members that disagree with our association's position on this
issue.
I was fortunate to be able to participate in the recent
negotiations at the invitation of CARE and AAIA. It should be
noted that I was the only repair shop owner and technician to
participate in these meetings. There are three issues from
those negotiations which I would like to briefly address.
Opponents to this legislation like to say that NASTF has
eliminated the need for this bill. We disagree. NASTF has
received very few complaints because it has proven to be clumsy
and ineffective. NASTF considers an incident closed once any
response is received by the person that makes the initial
complaint regardless of whether it helps solve the problem. The
industry has recognized the futility of this venture. You have
heard today that NASTF has worked so well that the industry has
decided to formalize the organization with new structure. I
would make the argument that it has not worked which is why it
needs new structure. NASTF's mission does not include oversight
and enforcement and does little to help a technician get his
customer's vehicles fixed in a timely manner.
As in much of this world, most people need to know what is
in it for me. It is perceived that there is nothing in NASTF
for the average technician and the process is extremely
frustrating. Also, the leadership of NASTF is dominated by
opponents of this legislation leading to the organization to be
used extensively in the political arena. This would have to
drastically change for the group to gain credibility. All of
these factors combined to make a perception of NASTF as a waste
of time. Perhaps that is unfair but it is reality. H.R. 2048
will provide the enforcement mechanism needed to fix the
problem.
The issue of tool information was another major sticking
point and it has become very clear in the real world that the
accessibility to diagnostic tools at a reasonable cost is a key
factor. Paying $25 to $100 for a piece of information is
useless if I cannot get the tools needed to make it work. Our
efforts during the negotiations were to have the OEM's agreed
to release information to tool manufacturers needed for them to
develop the appropriate diagnostic tools. We were willing to
let open competition in the marketplace control the prices of
tools for our repair shops and ultimately the cost of related
repairs for the consumer.
Security issues were also a significant area of
disagreement. We are not just talking about making keys for
vehicles. With modern computer technology, all systems are
becoming interrelated. If the vehicle does not start due to a
malfunctioning security system, a repair shop needs access to
determine exactly the cause whether it was from a faulty key,
an ignition switch, security module, or other item.
Furthermore, because of the relationships between various
components in the modern vehicle, security information is
needed to properly make each item recognized or talk to the
other . To put it simply, if the dealer techs need this
information to repair a vehicle and they do, so do we. There
are many ways to ensure security on the modern vehicle and our
industry would be willing to work with the OEM's on solving
this issue, but to date they have not agreed to give us this
information.
H.R. 2048 is based on a consumer's right to repair a
vehicle that he or she purchased and it will ensure that this
right remains as automotive technology continues to evolve.
Enacting this bill into law will be a dual victory for small
business and the consumers they serve each day. Thank you for
the opportunity to testify.
[The prepared statement of Bob Everett follows:]
Prepared Statement of Bob Everett, Owner, Bayville Auto Care, on Behalf
of the National Federation of Independent Business
Mr. Chairman and members of the Subcommittee, I'm Bob Everett,
owner of Bayville Auto Care in Bayville, New Jersey. I'm here on behalf
of the 600,000 members of the National Federation of Independent
Business (NFIB). NFIB represents over 24,000 small automotive repair
shops like mine, and they strongly support H.R. 2048, the Motor Vehicle
Owners Right to Repair Act of 2005. When NFIB asked it members in
January of 2003 if ``automobile manufacturers should be required to
disclose to car buyers and repair shops information needed to repair or
maintain their vehicles,'' 77% of NFIB members said ``yes''.
As a small business owner, I have been involved in the car repair
business since 1974. I established Bayville Auto Care in 1986, and
began my career at a family owned gasoline service station. Currently,
I am the immediate past president of the Alliance of Automotive Service
Providers of New Jersey, an industry trade association representing
over seven thousand service providers nationally. Included among my
many certifications, I received the 2000 NAPA/ASE Certified Automotive
Technician of the Year award, the most prestigious in our industry.
The Motor Vehicle Owners Right to Repair Act attempts to address an
inequity in the car repair market by guaranteeing consumers the right
to choose how and where they have their vehicles repaired. As more and
more of a vehicle's functions are controlled by onboard computers,
independent repair facilities have found it more difficult to obtain
the information necessary to repair their customer's cars. When this
information cannot be obtained from the manufacturers, NFIB members
find themselves in the difficult position of having to tell their
customers they are unable to make repairs and refer them to a local
dealer.
In addition to the 24,000 NFIB members who own independent garages,
there are many other small business groups that support H.R. 2048. The
Automotive Aftermarket Industry Association (AAIA), the Service Station
Dealers (SSDA), the Tire Industry Association (TIA) the Automatic
Transmission Rebuilders (ATRA) and the Automotive Engine Rebuilders
Association (AERA) bring over 30,000 other small businesses to the
table, all in full support of HR 2048. I am also a member of the
Automotive Service Association, and I feel that it is important for the
Subcommittee to know that ASA does not speak for all repair shop
owners.
I was fortunate to be able to participate in the recent
negotiations at the invitation of CARE & AAIA. There are three issues
from those negotiations, which I would like to briefly address. It
should also be noted that I was the only shop owner and technician to
participate in these meetings.
Opponents to this legislation like to say that the National
Automotive Service Task Force (NASTF) has eliminated the need for this
bill. We disagree. NASTF has received very few complaints because it
has proven to be clumsy and ineffective. NASTF considers a complaint
closed once any response, regardless of whether it helps, is received
by the person that makes the initial complaint. The industry has
recognized the futility of this venture. NASTF's mission does not
include oversight and enforcement and does little to help a technician
get his customers vehicle fixed in a timely manner. As in much of this
world, most people need to know ``what's in it for me''. It is
perceived that there is nothing in NASTF for the average technician and
the process is extremely frustrating. The leadership of NASTF is
dominated by opponents of this legislation and this has to change for
the group to gain credibility. All of these factors combine to make the
perception that NASTF is a waste of time. Perhaps that is harsh, but it
is reality. HR 2048 will provide the enforcement mechanism needed to
truly fix the problem.
The issue of tool information was also a major sticking point. It
has become very clear in the real world that the accessibility, at a
reasonable cost, to diagnostic tools is a key factor. Paying $25- $100
for a piece of information is useless if I can not get the tools needed
to make it work. Our efforts during the negotiations were to have the
Original Equipment Manufacturers (OEMs) agree to release the
information to tool manufacturers needed for them develop the
appropriate diagnostic tools. We were willing to let open competition
in the market place control the prices of tools for our shops and,
ultimately, the cost of related repairs for the consumer.
Security issues were also major issues of disagreement. We are not
just talking about making keys for vehicles. With modern computer
technology, all systems are becoming interrelated. If the vehicle does
not start due to a malfunction in the security system, we need access
to determine exactly the cause, whether it is from a faulty key,
ignition switch, security module or other item. Furthermore, because of
the relationships between various components in the modern vehicle,
security information is needed to properly make each item recognize or
``talk'' to the other. To put it simply, if the dealer tech needs the
information to repair a vehicle (and they do), so do we. There are many
ways to insure security on the modern vehicle, and our industry would
be willing to work with the OEMs on solving this issue, but to date
they have not agreed to give us the information.
Restoring competition to the marketplace is good for the consumer
and good for small business. It is very important to note that H.R.
2048 does not require auto manufacturers to disclose any trade secrets
or proprietary information, and NFIB members are not asking for that.
They do, however, insist on level playing field. We are not looking for
a competitive advantage over the manufacturers or dealers--we just want
to be able to serve our customers and run our businesses.
H.R. 2048 is based on a consumers' right to repair a vehicle that
he or she purchased, and will ensure that this right remains as
automotive technology continues to evolve. Enacting this bill into law
would be a dual victory for small business and the consumers they serve
each day. Thank you for the opportunity to testify.
Mr. Stearns. Thank you very much, Mr. Everett.
Mr. Cabaniss?
STATEMENT OF JOHN CABANISS
Mr. Cabaniss. Good morning----
Mr. Stearns. Cabaniss, sorry.
Mr. Cabaniss. That is okay. I have heard--that has been
done a lot worse than that.
Good morning, Mr. Chairman and members of the subcommittee.
I am John Cabaniss and I am speaking today for the Association
of International Automobile Manufacturers. I have been with AIM
for 10 years, prior of that I worked for EPA for 15 years. For
5 years, I have served as the Chairman of the National
Automotive Service Task Force, a voluntary cooperative activity
involving the auto service industry, the equipment and tool
industry, and automakers.
During August and September, AIM participated in the
facilitation meetings hosted by the Better Business Bureaus.
Personally, I attended only the first meeting but I worked
closely with our team throughout the process. I have been
involved in vehicle service issues for over 40 years and
involved in the so called right to repair issue even before
legislation was introduced 5 years ago.
I have testified several times on right to repair
legislation. It was very clear throughout the facilitation
process that the two sides agree on most issues. All parties
are pro consumer choice all parties support the aftermarket
service providers, information providers, the training
providers, and the tool companies. All parties generally agree
the current NASTF process is working effectively. Automakers
already make all service and training information available to
all technicians via the internet at the same time it is
available to dealers. Why do we do this? Because no automaker
wants a reputation for producing vehicles that are difficult to
repair or which can only be serviced at specific sometimes
inconvenient locations.
With all due respect, we believe that proponents of this
bill fail to appreciate this basic built in market incentive
for the dissemination of service and repair information. We
support a cooperative approach that allows all stakeholders to
be involved in developing workable solutions and addressing new
issues that given the face of technological change are certain
to emerge. It may be tempting to think there are only two
principal groups concerned about these issues, automakers on
the one hand and those that are represented by CARE on the
other. In fact, there is a much larger group of stakeholders
involved including tool companies, the independent information
providers, the training providers, technicians, shop owners,
dealers, locksmiths, and so on.
A viable NASTF program which all parties agree should be
the centerpiece of a voluntary solution must be open to all
stakeholders. This is the case today. Automakers already work
with tool companies to facilitate the transfer of tool related
information. Automakers already offer for sale to independent
shops all factory tools available to dealers. Automakers
already work with independent training providers to address any
training issues. Other work in progress includes developing a
way to deal with security related information and addressing
some issues related to collision repairs. If any gaps are
identified, automakers will work within the NASTF process to
address them.
The formalization of NASTF has been under serious
consideration since the April general meeting. NASTF has been
successful for 5 years operating as a group of volunteers
sharing a common mission. But its activities have grown to the
point where some full-time staff support is needed. A proposal
for a 3-year transition period to establish an organization
with a full-time staff and budget was submitted in mid-August.
A special NASTF stakeholder meeting was held in October to
discuss the proposal and at the November 2 general meeting
there was support, a general vote of report called with no
descending votes.
For the record, automakers oppose H.R. 2048 because we
believe legislation is unnecessary and counterproductive. The
types of problems identified by proponents such as the cost of
accessing automaker websites, format differences in websites,
occasional content errors and lack of enforcement are not
issues which will be effectively addressed in regulations. The
current automaker websites and cost structure are based on EPA
regulations. It is unlikely the FTC would conclude any
significant changes are needed. Occasional content errors are
addressed through a process of continuous improvement with or
without regulation. And Federal regulatory and enforcement
processes are laden with procedural steps which do not lend
themselves to addressing problems quickly. The only thing that
further regulation would clearly do is slow down the process
and delay further progress. This outcome benefits no one, not
the service industry, not the automakers, and not consumers.
In conclusion, automakers fully support the NASTF process
and will continue to work cooperatively with the service
industry on any issues. We welcome the support and
participation of all stakeholders to improve and expand this
voluntary process to make it more effective. Bringing
everyone's efforts to bear can only improve our ability to
provide the information, training, and tools needed by the
service industry.
Thank you.
[The prepared statement of John Cabaniss follows:]
Prepared Statement of John Cabaniss, Association of International
Automobile Manufacturers
Thank you for the opportunity to testify before the Subcommittee
regarding vehicle service technology issues. My name is John Cabaniss.
I am the Director for Environment and Energy at the Association of
International Automobile Manufacturers (AIAM), 1 on behalf
of which I am testifying today. I have been in my current job with AIAM
for ten years. Prior to that, I worked in the U.S. Environmental
Protection Agency's (EPA) motor vehicle emissions program for fifteen
years and in the State of Virginia's air pollution control program for
about ten years. I grew up with an automotive trades background. Both
my father and my grandfather were shop owners and technicians for many
years.
---------------------------------------------------------------------------
\1\ The Association of International Automobile Manufacturers
(AIAM) is a trade association representing 14 international motor
vehicle manufacturers, which account for 40 percent of all passenger
cars and 20 percent of all light trucks sold annually in the United
States. AIAM members have invested over $27 billion in U.S.-based
production facilities, have a combined domestic production capacity of
2.8 million vehicles, directly employ 93,000 Americans, and generate an
additional 500,000 U.S. jobs in dealerships and supplier industries
nationwide. AIAM members include Aston Martin, Ferrari, Honda, Hyundai,
Isuzu, Kia, Maserati, Mitsubishi, Nissan, Peugeot, Renault, Subaru,
Suzuki and Toyota. AIAM also represents original equipment suppliers
and other automotive-related trade associations. For more information,
visit our website at www.aiam.org.
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For the past five years, I have had the privilege of serving as the
chairman of the National Automotive Service Task Force (NASTF), a
voluntary, cooperative activity involving the automotive service
industry, the equipment and tool industry, and automakers.2
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\2\ NASTF itself takes no positions on issues.
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The focus of today's hearing is on the discussions between the
proponents of H.R. 2048, represented by the Coalition for Automotive
Repair Equality (CARE) and the Automotive Aftermarket Industry
Association (AAIA), and the opponents of the legislation, represented
by AIAM, the Alliance of Automobile Manufacturers (Alliance), the
Automotive Service Association (ASA), and the National Automobile
Dealers Association (NADA). These discussions were held at the request
of Chairman Barton and Senator Lindsey Graham during August and
September of this year, were facilitated by the Council of Better
Business Bureaus (CBBB), and observed by representatives of the Federal
Trade Commission. The goal was to reach a non-legislative agreement
over the ``right to repair'' issue.
Personally I participated only in the initial meeting of the
facilitation group, but I worked closely with our facilitation team
throughout the process. I have been involved in vehicle service issues
in one way or another for over 40 years. I have been involved
specifically in the ``right to repair'' issue even before legislation
was introduced in Congress five years ago. I have testified several
times before Congressional committees in opposition to the ``right to
repair'' legislation with my most recent testimony being on June 28,
2005 before the House Subcommittee on Workforce, Empowerment, and
Government Programs. That testimony is attached to this statement for
the record of this hearing.
It was very clear throughout the CBBB facilitation process that the
two sides were in agreement on most issues and lacked agreement on very
few.
All parties are pro consumer choice.
All parties support aftermarket service providers.
All parties support independent information providers.
All parties support independent training providers.
All parties support equipment and tool providers.
All parties agree independent shops need open and timely access to
the same information, tools, and training that are available to
dealers.
All parties agree the current voluntary, cooperative NASTF process is
working effectively.
The only significant area of disagreement is that we believe the
current cooperative NASTF process is working and government
intervention is unneeded and counter-productive, while proponents
support legislation and a regulatory program.
Automakers already make all vehicle service and training
information available to independent technicians via the Internet at
the same time it is available to dealers. Why do we do this? Because
very simply no automaker wants to develop a reputation for producing
vehicles that are difficult to repair or which can only be serviced at
specific, sometimes inconvenient, locations. With all due respect, we
believe that proponents of this bill fail to appreciate this basic,
built-in market incentive for the dissemination of service and repair
information.
As I mentioned, we support a cooperative approach that allows ALL
interested stakeholders to be involved in the process of developing
workable solutions to managing and accessing large volumes of
information and addressing new issues that, given the pace of
technological change, are certain to emerge. It may be tempting to
think that there are only two principal groups concerned about these
issues--automakers on the one hand and those represented by CARE on the
other. In fact, there is a much larger number of stakeholders currently
involved in the NASTF process, including tool companies, independent
information providers, training providers, technicians, shop owners,
dealers, locksmiths, and others. A viable NASTF program--which all
parties agreed in the context of the CBBB talks should be the
centerpiece of a voluntary solution--must be open to all stakeholders
and incorporate decision-making procedures that are open and
transparent.
This is the case today. For example, automakers are already working
with the Equipment & Tool Institute (ETI), the trade organization
representing tool companies, through the NASTF Equipment and Tool
Committee to facilitate the transfer of information they use to design
and manufacture generic tools for the aftermarket. In addition,
automakers offer for sale to independent shops all factory tools
available to dealers. Automakers are already working with independent
training providers through the NASTF Training Committee to address any
training issues. Other work in progress includes developing a
methodology for dealing with security related information through the
NASTF Vehicle Security Committee and addressing some issues related to
collision repair information through the NASTF Service Information
Committee. If any gaps are identified in any of these areas, automakers
work within the NASTF process to address them.
The formalization of NASTF as an organization with full-time staff
has been under serious consideration since the April 2005 NASTF general
meeting. While NASTF has been very successful in its first five years
operating as a group of volunteers sharing a common mission, its
activities have grown to the point where some full-time staff support
is needed. A proposal for a three-year transition period to establish a
permanent organization with a full-time staff and budget was submitted
by ETI in mid August. A special NASTF meeting of a wide range of
stakeholders was convened on October 19, 2005, to discuss the ETI
proposal. It was agreed that a follow-up meeting would be scheduled to
sort out details. On November 2, 2005, the semi-annual NASTF general
meeting was held with over 150 participants in attendance. The ETI
proposal was discussed and a general floor vote of support was called
with no dissenting votes. We are currently working with interested
stakeholders to schedule the follow-up meeting in mid December.
For the record, automakers oppose H.R. 2048 because we believe such
legislation is unnecessary and counter-productive.3 The
types of problems identified by proponents of H.R. 2048, such as, the
cost of accessing automakers' websites, format differences in
automakers' websites, occasional content errors in information, and
lack of enforcement are not issues which will be effectively addressed
in regulations by FTC or any other agency. Given that the current
automaker websites and cost structure are based on EPA's emissions
regulations and approved by EPA, there is no reason to believe that the
FTC would conclude that any significant changes are needed. Occasional
content errors need to be and will be addressed through a process of
continuous improvement, with or without regulation. And federal
regulatory and enforcement processes are laden with procedural steps,
which do not lend themselves to addressing problems quickly. As noted
by the FTC in a recent letter to Representative John Dingell, self-
regulatory programs are often the best way to address matters in an
expeditious manner. This is especially true in such a dynamic area as
information technology. The only thing that further federal regulation
under H.R. 2048 would clearly do is slow down the process and delay
further progress while the parties educate the FTC on the issues and
debate the merits of regulatory approaches. This outcome benefits no
one--not the service industry, not the automakers, not consumers.
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\3\ More information on the automakers' position on H.R. 2048 is
available at www.
carfixinfo.org.
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In conclusion, automakers are completely committed to the National
Automotive Service Task Force and to continuing to work cooperatively
with the service industry on service technology issues. We welcome the
support and participation of all parties in the service industry to
improve and expand this voluntary process to make it even more
effective. Bringing everyone's efforts and resources to bear on
producing results, not rhetoric, can only improve our ability to
provide the information, training, and tools needed by the service
industry.
Thank you for the opportunity to address the Subcommittee on this
important issue.
Mr. Stearns. Thank you, Mr. Cabaniss.
Mr. Lowe?
STATEMENT OF AARON M. LOWE
Mr. Lowe. Mr. Chairman, members of the subcommittee, thank
you for the opportunity to testify in support of the Motor
Vehicle Owners' Right to Repair Act.
My name is Aaron Lowe and I am Vice President of Government
Affairs for the Automotive Aftermarket Industry Association.
AAIA is a national trade association with 8,243 member
companies and affiliates representing more than 54,000 vehicle
repair shops and parts stores.
Right to repair legislation introduced this year by
Representative Barton has been revised in two very important
areas. One the revised legislation clarifies that the
aftermarket only needs access to the same information that is
available to the new car dealer. No more and no less. The new
provision ensures that right to repair legislation is
consistent with the trade secret protections provided in the
Clean Air Act and which were crafted by this committee back in
1990 and there has--I point out very little if no problems in
implementation by EPA. So we do not see the proprietary issue
as the major problem or stumbling block to this legislation,
especially the new version.
Second, the bill has been clarified such that it would not
create a new system for service information availability. We do
not believe in new infrastructure for non-emissions related
information or tools within the best interest of the either the
car companies or the aftermarket. There already is a system in
place to make information and tools available that was due both
to the EPA and California regulations. Under these rules, it
would simply extend those requirements to non-emissions related
information and provide enforcement authority to the Federal
Trade Commission.
In fact, the bill is now consistent with the promises that
the car companies have made back in 2002 with one very
important difference. The legislation would be enforceable. The
difference is critical. Dealership profits are no longer driven
by new car sales alone but also parts and service revenue.
Absent legislation or enforceable agreement AAIA is concerned
that car companies will set their promises aside in their drive
to maximize profits in their parts and service operations.
Notwithstanding the above, AAIA and the collation partners
recognize that regulatory intrusion in the market is not always
the best answer and therefore we agreed to meet with the car
companies last July to determine if the non-regulatory solution
could be developed. There were many positive sides of the merge
from these meetings including the willingness by the car
companies to discuss a system whereby their commitments could
be enforced and thereby ensuring that they will make
information, tools, and tool capabilities available to us long
after the legislative battle has faded from memory.
Further, car companies appear willing to discuss
enhancements that would ensure NASTF would be tasked quickly
and effectively resolving service information and tool
disputes. However, for the third party agreement enhanced NASTF
to work, we believe that there needs to be a fair and balanced
management of the organization and each manufacturer must be
willing to enter into a clear and comprehensive agreement as to
what information and tools are going to be made available.
Unfortunately while the broad outlines of an agreement appeared
within reach, critical issues remain unresolved. When
emphasized that while the governance issue was the last issue
that we dealt with, it was not by itself the whole reason that
the negotiations ended.
A key reason of concern to our industry was the need for a
commitment by the manufacturers to make both the tools and the
tool capabilities available to our industry. Advances in
technology demand that independent service center entities have
access to the same diagnostic and repair capabilities that are
available to the dealerships. The car companies would not
commit to ensuring that the tools they sell our industry would
have the same capabilities as those provided to the dealer
franchises.
Similarly, we ant the car companies to make service
information or tool information available to our tool company
suppliers to include the same repair and diagnostic
capabilities that are available to the dealer tools. It was
agreed to in the discussion that this was a very complex issue
and that parties were not at the table. Therefore, we were
willing to leave the details of exactly what would be required
to be made available, how it would be made available, and how
it would be enforced to future negotiations. However, we felt
that it was critical that the car companies agreed to fully
release tool information and that a timeframe be developed for
the details to be worked out. The car companies did not agree
to those terms. In fact, the car companies could not commit to
any enforcement mechanisms providing tool information or making
it available at a reasonable cost.
Further, one of the most difficult and frustrating problems
is the immobilizer issue. While some car companies are making
this information available, the negotiators for the car
companies could not agree to make this information available in
this agreement because some manufacturers refuse to do so.
Another issue that caused considerable concern were that
car companies could not agree on the scope of service
information that was going to be required to be provided. Much
information regarding repairs was made available to the dealers
required hotlines. While we did not request access to the
hotlines themselves, it is important that critical service
information is developed to fix cars that is provided to all
dealers through these hotlines is readily available to
technicians as well.
Finally, the car companies were unwilling to establish a
governance of the new organization as part of the agreement. We
simply felt we do not want to put our industry in a handicap
position regarding the quick and effective organization of
NASTF and could derail the agreement before the first problem
was ever solved.
The halt of the negotiation was a tough decision and one we
did not take lightly. It is important to remember that the
deadline was extended several times and there were--however
following tough weeks of negotiations, we were convinced or
became convinced that right to repair legislation was still
necessary to ensure the independent aftermarket can obtain the
same information and tools that are available to the new car
dealers.
In conclusion, we can only speculate as to the competitive
position that our industry would be in had this committee not
had the foresight to take action and ensure competition with
the inclusion of service information availability provisions in
the Clean Air Act. The small businesses that comprise the
independent aftermarket now ask the committee to take one
additional step to ensure competition for all the vehicle
service with the passage of this legislation.
Thank you for the opportunity to testify.
[The prepared statement of Aaron M. Lowe follows:]
Prepared Statement of Aaron M. Lowe, Vice President, Government
Affairs, Automotive Aftermarket Industry Association
Mr. Chairman and members of the Subcommittee, thank you for the
opportunity to testify in support of the Motor Vehicle Owners Right to
Repair Act of 2005 (HR 2048). My name is Aaron Lowe and I am vice
president of government affairs for the Automotive Aftermarket Industry
Association. AAIA is a national trade association with 8,243 member
companies and affiliates representing more than 54,000 vehicle repair
shops and parts stores.
In the late nineties, the House Energy and Commerce Committee
approved amendments to Clean Air Act legislation that would require car
companies to share all emissions related service information and tools
with the aftermarket that they provide their franchised dealerships.
The amendment became necessary due to provisions in the Act that would
require 1994 and later vehicles be equipped with emission control
computers that monitored and controlled nearly every emissions related
function. This Committee was concerned that unless steps were taken to
ensure competition, car companies would make access to these OBD
systems proprietary, thus increasing the cost to car owners of
maintaining their emissions systems. Similar service information
availability rules were enacted in the State of California in 2000.
Since passage of the Clean Air Act in 1990, these computers have
expanded beyond emissions to now control virtually every vehicle system
on a vehicle including brakes, air bags, suspension and entertainment.
Therefore, while the Clean Air Act service information rules have
helped ensure that our industry can obtain tools and information for
emissions related systems, there is no such requirement for non-
emissions related systems. It is for this reason that the Motor Vehicle
Owners Right to Repair Act was first introduced in 2001--to ensure that
the actions undertaken to preserve competition for car owners on
emissions related repairs, also carry forward for non-emissions related
systems.
Right to Repair legislation introduced this year by Rep. Joe Barton
has been revised in two very important areas. One, the legislation
clarifies that the aftermarket only needs access to the same
information that is available to the new car dealers, no more and no
less. During hearings held last year by this Subcommittee, car
companies charged that the aftermarket parts companies were after their
blue prints in order to make the job of designing and producing
replacement parts less costly. This is not and never was the case with
this bill. Aftermarket parts manufacturers will continue their long
standing tradition of building components that are, as good, or better
than the car company parts that they replace. However in order to
further allay manufacturer fears, the bill now further specifies that
car companies only need to ensure access to the same tools and
information available to the new car dealer, making the Right to Repair
legislation consistent with the Clean Air Act requirements regarding
proprietary information.
Second, the bill is not intended to create a new system for service
information availability. We do not believe that a new infrastructure
for non-emissions related information or tools is in the best interest
of either the car companies or the aftermarket. There already is a
system in place to make information and tools available to our industry
due to both EPA and California regulations for service information
availability. Under these rules, each car company is required to
maintain a web site that contains all of their emissions related
service information. The bill would simply extend these requirements to
non-emissions related information and provide enforcement authority to
the Federal Trade Commission (FTC) should a manufacturer not comply
with the bill's requirements.
In fact, the bill now is consistent with a letter that the car
companies and the Automotive Service Association sent to the Senate
Commerce Committee in 2002. In that letter, the manufacturers promised
to make emissions and non-emissions related information available to
our industry. The one difference between the letter and the legislation
is that the promises made by the manufacturers would now be
enforceable. This difference is critical due to the fact that the
aftermarket and car company service and parts networks are locked in a
major competitive battle for the dollar of the car owner.
Dealership profits are no longer driven by new car sales alone, but
also parts and service revenue. According to the National Automobile
Dealers Association (NADA), even though dealership parts and service
department sales comprise just 11.8 percent of typical dealer's total
sales, it contributes 48 percent of the total operating profit. New car
sales make up 60 percent of total sales, but only contribute 35 percent
of total profit. Absent legislation or an enforceable agreement, AAIA
is concerned that car companies will set their promises aside in their
drive to maximize profits from their parts and service operations.
While our industry does not have a problem competing on a level
playing field for service and repair work, the use of electronics and
computers on late models by the car companies threatens to shift the
playing field and reduce competition in the aftermarket. Small service
facilities and their customers will suffer as a direct result.
Notwithstanding the above, AAIA and its coalition partners
recognize that regulatory intrusion in the market is not always the
best answer and therefore we agreed to meet with the car companies last
July to determine if a non-regulatory solution could be developed.
These negotiations were facilitated by the Better Business Bureau and
monitored by the Federal Trade Commission.
Unfortunately, while there was significant progress and much
positive discussions during the two month long negotiations, these
sessions ended without an agreement that would satisfy both the car
companies and the independent aftermarket. Among the positive signs
that emerged from these meetings was the willingness of the car
companies to discuss a system whereby their commitment could be
enforced and thereby better ensuring that they will continue to make
information, tools and tool capabilities available to us long after
this legislative battle has faded from memory.
Further, over the past year, the aftermarket has expressed strong
concerns that the National Automotive Service Task Force (NASTF), which
was established by the car companies to address service information
issues, was an ineffective organization in resolving information and
tool issues. Our main concern was that absent an enforcement element,
whether government or third party, the organization could not
effectively address a car company's reluctance to provide service
information or tools. Further, the absence of any structure or staff
for the organization meant that it could not quickly and effectively
resolve issues raised by independent shops as evidenced by the
extensive time currently necessary for NASTF to resolve complaints.
These problems led most technicians to forgo the NASTF process and to
take matters into their own hands, using back door methods to obtain
the tools and information they need to serve their customers. During
the negotiations, the car companies appeared willing to discuss the
establishment of an effective organization which, combined with third
party enforcement, could help quickly resolve information issues for
independents.
However for the third party agreement and the enhanced NASTF to
work, AAIA believes that there must be a fair and balanced management
of the organization and each manufacturer must be willing to enter into
a clear and comprehensive agreement as to what information and tools
they are going to make available to independents. Only under these
circumstances would we be able to develop a service information and
tool availability system that would work in practice and obtain the
needed credibility with the industry to ensure it would be used.
Unfortunately, while the broad outlines of an agreement appeared within
reach, critical governance issues and an unwillingness by the
manufacturers to commit to full availability of service information,
tools and tool information led to the break down of the negotiations.
A key issue of concern to our industry was the need for a
commitment by the manufacturers to make both their tools and the tool
capabilities available to the aftermarket. Advances in technology
demand that independent service entities have access to the same
diagnostic and repair capabilities that are available to the new car
dealerships. The car companies would not commit to ensuring that those
tools possessed the same capabilities as those provided to the dealer
franchises. As the Subcommittee heard at its hearing on this subject
last year, in many cases, the tools purchased by independents from the
car company have missing capabilities that often prevent a technician
from completing a repair.
Similarly, we wanted car companies to make available information
needed by tool companies to include the same diagnostic and repair
capabilities that are available on dealer tools. During negotiation on
this area, we made it clear that we were not going to hold the car
companies responsible for whether or how the tool companies used the
capabilities in this instance, but that they would need to commit to
making tool information available under reasonable licensing and
security conditions. It was agreed during the discussion that this was
a very complicated issue and that the parties representing the tool
industry were not at the table. Therefore we were willing to leave the
details of exactly what would be required to be made available, how it
would be made available, and how it would be enforced to future
negotiations. However, we felt that it was critical that, at minimum,
the car companies agreed to fully release tool information and that a
time frame be developed for the details to be worked out. The car
companies could not agree to those terms. In fact the car companies
could not agree to any enforcement mechanism for providing the tool
information or making it available at a reasonable cost.
In addition, the companies would only commit to providing scan tool
information and tire pressure monitoring. This reluctance to move
beyond scan tools could be critical since diagnostic and repair
capabilities may in the future be provided through avenues beyond the
current scan tools and therefore we did not want to limit the future
viability of this agreement by only focusing on current technology.
Further, one of the most critical problems facing independents on a
day-to-day basis is attempting to repair vehicles equipped with
immobilizer systems. These systems help reduce theft by preventing a
car from being started unless a chip on the key makes a handshake with
a chip in the vehicle engine systems. While some car companies are
making this information available, the negotiators for the car
companies could not agree to make mobilizer information available
because some manufacturers are refusing to make it available to
independents. It is imperative that this problem be solved or a system
designed to lock out thieves will lock out repair shops as well. Due to
the fact that many manufactures have successfully been able to provide
access for independents without jeopardizing vehicle security and the
fact that all of the car companies make this capability available to
their dealer, AAIA can only conclude that, given a commitment from the
car companies, that they could develop a secure system whereby an
independent can reinitialize a theft system without being forced to tow
the vehicle to a dealership.
Another issue that caused considerable concerns was that the car
companies could not agree on the scope of the service information that
would be required to be provided under the agreement. The manufacturers
were only willing to make manuals and technical service bulletins
available to our industry. In fact, much information regarding repairs
is made available through their private dealer hotlines. While we are
not demanding access to the actual hotlines, it is important that
critical service information that is developed to fix cars, and which
is provided to all dealers through their hotlines, needs to be readily
available to independent technicians as well.
Finally, the car companies were unwilling to establish the
governance of the new organization as part of the agreement. The
aftermarket had put forward a proposal that would provide for the equal
representation on the original board for the new NASTF with four
members being appointed by the car companies and four by the
aftermarket. Since the governance of this organization was crucial to
whether it succeeded in ensuring that information and tools are made
available, we felt it was critical for the viability of both the
organization and the agreement, that the governance issue be settled in
advance. The car companies wanted to have this issue resolved later
after the agreement was signed. We simply felt this would put our
industry in a handicapped position regarding the quick and effective
organization of NASTF and could derail the agreement before the first
problem was solved.
The halt of the negotiation was a tough decision and one we did not
take lightly. It is important to remember that the deadline for a
settlement was extended three times because we felt that it was
important that we do everything possible to reach an agreement.
However, following weeks of tough negotiations, we are convinced that
Right to Repair legislation is necessary to ensure that the independent
aftermarket can obtain access to the same information and tools that
are available to the new car dealers.
In conclusion, you likely will hear from the manufacturers today
that they are fully committed to making service information available
to our industry and that, in fact, it is in their best interest to do
so in order to promote customer satisfaction. While we agree with that
statement, it is important to remember that in Canada, which has a very
similar aftermarket to the U.S., independent service facilities are
denied access to many of the same service information web sites that
are available to U.S. technicians. Further, when our sister
organization in Canada attempted to organize a voluntary system north
of the border, that request was denied by the associations representing
the Canadian auto manufacturers. Of course, at this point there are no
service information laws or legislation in Canada, a fact that the
aftermarket is attempting to rectify.
We can only speculate as the competitive position that our industry
would be in had this Committee not had the foresight to take action to
ensure competition with the inclusion of service information
availability provisions in the Clean Air Act. The small businesses that
comprise the independent aftermarket now ask the committee to take one
additional step to ensure competition for all vehicle service with the
passage of the Motor Vehicle Owners Right to Repair Act.
Thank you for the opportunity to testify on this important issue. I
am available to answer any questions from the Subcommittee regarding
the legislation or the negotiations.
Mr. Stearns. Thank you.
Mr. Braziel?
STATEMENT OF ROBERT BRAZIEL
Mr. Braziel. Mr. Chairman, members of the subcommittee on
behalf of the National Automobile Dealers Association, I
appreciate the opportunity today to discuss the state of the
automotive maintenance and repair industry. My name is Robert
Braziel and I serve as Chief Legislative Counsel, a post I have
held for the past 6 years.
The National Automobile Dealers Association is the national
trade association that represents 20,000 franchise dealerships
with over 1,000,000 employees, about half of whom work in
dealership service and parts departments. In 2004, franchise
automobile dealers provided 369,125 service stalls, employed
279,150 technicians, and carried a parts inventory valued at
$5.6 billion. Franchise dealerships located throughout the
country and in all your congressional districts have many of
the best trained and best equipped automotive technicians
maintaining, servicing, and repairing today's sophisticated and
complex motor vehicles.
Diagnosing and fixing today's automobiles requires that
shops invest significantly in information, equipment, and
training. Dealerships make such investments because vehicle
manufacturers and the motoring public demand nothing less. In
fact, successful repair facilities in today's world must make
continuing investments in tools, training, and information to
adequate serve their customers.
In addition to performing warranty and other repairs on
their franchise vehicles, franchise dealerships are
increasingly engaged in the service of used vehicles for which
they do not hold a franchise. In that situation, an automobile
dealer stands in the same place as an aftermarket service
provider. Needing to make choices about the kinds and type of
maintenance and repair services they want to pursue based on
the financial investment that may be required.
There have been a number of members who have raised issues
of equivalency of outcome but essentially what we are talking
about is equivalency of access. To get to equivalency of
outcome, you have to make the investments in today's world.
Of the nearly $500,000 million non-warranty service evens
annually, the aftermarket not the franchise dealer performs
roughly 75 percent of the service. The aftermarket has the
ability to maintain that high level because it has access to
all the following, manufacturer specific service information
provided through third party information providers like
Mitchells, Alldata, and Identifix; manufacturer specific
websites containing service information; manufacturer specific
training materials, manufacturer specific diagnostic tools
covering both emission and non-emissions functions; diagnostic
tools developed from tool information provided to toolmakers by
vehicle manufacturers. One point should be made that the
franchise dealer does not obtain that tool information. He uses
the diagnostic tool purchase from the manufacturer.
Motor vehicle manufacturers have an economic interest in
providing this level of access. They want their vehicles
repaired correctly by well equipped and trained service
technicians.
The National Automotive Service Task Force was initiated in
2000 to facilitate the flow of automotive service information,
training information, tools, and tool information to market
participants. Stakeholders in NASTF have developed it into an
effective information clearinghouse that also provides for an
inquiry system in cases where a gap and information is
suspected. As the number of parties have mentioned, there were
48 inquiries out of 500 million service events.
Despite the facts about access and operations of NASTF,
large parts distributors under the coalition for automotive
repair equality along with the Automotive Aftermarket Industry
Association are seeking the Federal Government to take over the
automotive repair industry on the premise that information is
not available or being withheld. Frankly, it remains difficult
for independent service providers to comprehend how a Federal
Government entity without any experience in automotive repair
issues would do a better job than the private sector addressing
these issues.
During August and September of this year, the Better
Business Bureau convened the facilitation. The facilitation was
hamstrung from the beginning by CARE's refusal to even discuss
the nature and scope of the issue we reportedly were trying to
solve. Nevertheless, we did reach agreement on critical areas.
The October 3 letter also noted several issues that were not
resolved. While NADA actively sought resolution of those
issues, CARE's demand for a controlling stake in NASTF's board
prevented any agreement from taking place. No one interested
party, particularly parts distributors should have a
controlling interest in NASTF. Any board of NASTF should be
balanced with all stakeholders including vehicle manufacturers,
service providers, information providers, toolmakers, and
training providers. Notably a CARE controlled NASTF would not
have only diminished the interests of many important
stakeholders but could have raised antitrust concerns.
Given the impasse at the negotiation level, I would like to
speak just a moment to the legislation. And again the
proponents of the legislation have said that they are only
seeking the information and diagnostic tools that the dealer,
franchise dealer has. The manufacturers have made that
commitment since 2002 to provide both the diagnostic tool and
that service information. I believe a careful reading of the
legislation will indicate that the reach goes beyond those two
items.
The National Automobile Dealers Association and its members
continue to believe that the current voluntary and cooperative
private sector effort remains vastly preferable for the
individual service technician. Federal regulation as a number
of members have noted is rarely superior to a private sector
system that stakeholders agree works.
In closing, I would like to emphasize one final point. This
entire issue suffers from the fundamental misperception that
automobile manufacturers unduly favor their franchise
dealerships. That is simply untrue. If it were true,
manufacturers would not have set up openly available websites
for emissions and non-emissions information. If it were true,
manufacturers would not be making available to everyone the
same training materials franchise dealerships must obtain. If
it were true, manufacturers would not be making available to
everyone the same manufacturers specific diagnostic tools they
require their dealerships to purchase. If it were true,
manufacturers would not be providing non-emissions tool
information to third party toolmakers at no charge. If it were
true, the aftermarket providers would not perform 75 percent of
non-warranty repairs.
On behalf of NADA, I appreciate the opportunity to testify
and look forward to your questions.
[The prepared statement of Robert Braziel follows:]
Prepared Statement of Robert Braziel, National Automobile Dealers
Association
INTRODUCTION
On behalf of the National Automobile Dealers Association, I
appreciate the opportunity to discuss the state of the automotive
maintenance and repair industry. My name is Robert Braziel, and I serve
as the Chief Legislative Counsel, a post I have held for the past six
years.
FRANCHISED DEALERS AND AFTERMARKET SERVICE PROVIDERS
The National Automobile Dealers Association (NADA) is the national
trade association that represents 20,000 franchised dealerships with
over one million employees, about half of whom work in dealership
service and parts departments. In 2004, franchised automobile dealers
provided 369,125 service stalls, employed 279,150 technicians, and
carried a parts inventory valued at $5.6 billion. Franchised
dealerships located throughout the country and in all your
congressional districts have many of the best-trained and best-equipped
automotive technicians maintaining, servicing and repairing today's
sophisticated and complex motor vehicles.
Diagnosing and fixing today's automobiles requires that shops
invest significantly in information, equipment, and training.
Dealerships make such investments because vehicle manufacturers and the
motoring public demand nothing less. Automobiles will become even more
complex in the future, requiring even more sophisticated, highly
trained technicians. While diagnostic tools are necessary for repair
work, they alone are not sufficient. Trained technicians must still
analyze the information tools provide and, often through the process of
elimination, pinpoint the exact problem. Tools often help find problems
generally, but technicians solve them. For all these reasons,
successful repair facilities in today's world must make continuing
investments in tools, training and information to adequately serve
their customers.
In addition to performing warranty and other repairs on their
franchised vehicles, franchised dealerships are increasingly engaged in
the service of used vehicles for which they do not hold a franchise. In
that situation, an automobile dealer stands in the same place as an
aftermarket service provider, needing to make choices about the kind
and types of maintenance and repair services they want to pursue based
on the financial investment that may be required. Accordingly,
franchised automobile dealers have a unique perspective to view the
automotive repair industry, both as a franchised dealer and an
aftermarket service provider. Viewed from both perspectives, there is
no question access to the information and tools necessary to service
and repair motor vehicles has never been better if a service provider
is willing to make the requisite investments.
ACCESS IN THE AUTOMOTIVE REPAIR INDUSTRY
Of the nearly 500 million non-warranty service events annually, the
aftermarket performs roughly 75 percent of the service, while
franchised dealers handle the other 25 percent. The aftermarket has the
ability to maintain that high level because it has access to all of the
following:
Manufacturer specific service information provided through third-
party information providers like Mitchells, Alldata, and
Identifix;
Manufacturer specific websites containing service information;
Manufacturer specific training materials;
Manufacturer specific diagnostic tools covering both emissions and
non-emissions functions;
Diagnostic tools developed from tool information provided to
toolmakers by vehicle manufacturers;
Motor vehicle manufacturers have an economic interest in providing
this level of access. Motor vehicle manufacturers want their vehicles
repaired correctly by well-equipped and trained service technicians.
The simple fact is that a frustrated or dissatisfied customer is not
likely to be a repeat buyer.
NASTF
The National Automotive Service Task Force (NASTF) was initiated in
2000 to facilitate the flow of automotive service information, training
information, tools, and tool information to market participants.
Stakeholders in NASTF have developed it into an effective information
clearinghouse that also provides for an inquiry system in cases where a
gap in information is suspected. Of the roughly 500 million non-
warranty service events performed in 2004, NASTF was called upon to
resolve only 48 inquiries. For those doing math, 48 out of 500 million
is .000000096.
Despite the facts about access and the operations of NASTF, large
parts distributors, under the Coalition for Automotive Repair Equality
(CARE) along with the Automotive Aftermarket Industry Association
(AAIA), are seeking a Federal government takeover of the automotive
repair industry on the premise that information is not available or
being withheld. Under the legislation supported by these parts
distributors, but opposed by independent garages of the Automotive
Services Association (ASA), the Federal Trade Commission would engage
in rulemaking to develop a government controlled regime to oversee the
flow of vehicle service, training and tool information. Frankly, it
remains difficult for independent service providers to comprehend how a
Federal government entity without any experience in automotive repair
issues would do a better job than the private sector addressing these
issues. Rather than working to enhance NASTF for the betterment of all
service providers, CARE and AAIA choose instead to pour resources into
legislation that seeks Federal regulation and enforcement.
BETTER BUSINESS BUREAU (BBB) FACILITATION
During August and September of this year, the Better Business
Bureau convened a facilitation with representatives of NADA, ASA, CARE,
AAIA, the Alliance of Automobile Manufacturers (AAM), and the
Association of International Automobile Manufacturers (AIAM). That
facilitation was hamstrung from the beginning by CARE's refusal to even
discuss the nature and scope of the issue we reportedly were trying to
solve. Nevertheless, the BBB's letter of October 3 noted agreement of
the parties on many core issues ``including strengthening and funding
of the NASTF process, rigorous time frames that would need to be
observed, dispute resolution procedures, and many remedies for a third
party dispute resolution framework.''
The October 3 letter also noted several issues that were not
resolved. While NADA actively sought resolution of those issues, CARE's
demand for a controlling stake in NASTF's board prevented any agreement
from taking place. No one interested party, particularly parts
distributors, should have a controlling interest in NASTF. Any board of
NASTF should be balanced with all stakeholders, including vehicle
manufacturers, service providers, information providers, toolmakers,
and training providers. Notably, a CARE controlled NASTF would have not
only diminished the interests of many important stakeholders, it also
could have raised serious antitrust concerns.
LEGISLATION AND REGULATION
Given the current impasse predicated on CARE's demand for control
of NASTF, let me now turn to the legislation before us. I would like to
briefly highlight three important issues for committee members to
consider. The first is that you will be displacing a working private
sector entity made up of market participants and putting the Federal
Trade Commission, which has no automotive repair knowledge or
background, in control of the flow of information through a new
regulatory regime. Second, while recent revisions to the bill struck
previous language explicitly providing for private rights of action for
car owners, NADA continues to be concerned that private rights of
action against automobile manufacturers under state laws will be
encouraged by a number of findings in the bill. Third, we still view
the legislation as requiring disclosure of information beyond that
possessed by a franchised dealer and thus potentially compromising
intellectual property rights. Our view on that issue is reinforced by
the fact that it is large parts distributors, not independent repair
shops, who are the prime proponents of this legislation.
CONCLUSION
Like the independent repairers at the Automotive Services
Association, the National Automobile Dealers Association and its
members continue to believe that the current voluntary and cooperative
private sector effort remains vastly preferable for the individual
service technician than a government command and controlled process.
Federal regulation is rarely superior to a private sector system that
stakeholders agree works.
In closing, I want to emphasize one final point. This entire issue
suffers from the fundamental misperception that automobile
manufacturers unduly favor their franchised dealerships. That is simply
untrue.
If it were true, manufacturers would not have set up openly
available websites for emissions and non-emissions information. If it
were true, manufacturers would not be making available to everyone the
same training materials franchised dealerships must obtain. If it were
true, manufacturers would not be making available to everyone the same
manufacturer specific diagnostic tools they require their dealerships
to purchase.
If it were true, manufacturers would not be providing non-emissions
tool information to third party toolmakers at no charge. If it were
true, aftermarket providers would not perform 75% of non-warranty
repairs.
On behalf of NADA, I appreciate the opportunity to testify and look
forward to your questions.
Mr. Stearns. Thank you.
I will start with my question first. And I think we have on
the second panel two individuals who are actually operating in
the field, Mr. Everett and Mr. Brotherton so these are not part
of the Washington infrastructure. In fact, one of the
individuals can actually vote for me so I have to be careful.
But you both, the two of you are sitting beside to each other
and you are both on the opposite side here so I am going to try
to ask a question.
Now Mr. Everett, you are from Bayville Auto, Bayville, New
Jersey, right?
Mr. Everett. Yes, sir.
Mr. Stearns. Is that close to Atlantic City?
Mr. Everett. We are about 50 miles north of Atlantic City
right on the coast near Tom's River.
Mr. Stearns. Okay. Is business pretty good?
Mr. Everett. It is--my shop is doing okay.
Mr. Stearns. Well let say compare it with 10 years ago. How
was the business 10 years ago?
Mr. Everett. Well my shop for the last 10 years has grown
steadily as it has expanded.
Mr. Stearns. Okay.
Mr. Everett. Although there is definitely new challenges in
our industry now.
Mr. Stearns. So let us say 10 years ago you had 20
employees?
Mr. Everett. I would say 10 years ago it was easier to make
money with the size of the operation at the time. Today it is
much more difficult.
Mr. Stearns. So the profit margin has gone down.
Mr. Everett. Yes.
Mr. Stearns. But the business has gone up so you are
doing----
Mr. Everett. Yes.
Mr. Stearns. [continuing] a bigger volume with less percent
profit?
Mr. Everett. Correct.
Mr. Stearns. Mr. Brotherton, what about you? How long has
your business been in place?
Mr. Brotherton. We have been in business 28 years and our
business sort of stabilized at probably an amount of car
repairs about 10 years ago.
Mr. Stearns. So it is pretty much the same size it has been
for the last 10 years?
Mr. Brotherton. Yes.
Mr. Stearns. Okay. And Mr. Everett is probably in more of a
burgeoning market than you are. I know Gainesville is a
university town that the university is getting bigger but, you
know, industry coming in there has not been very good.
Mr. Brotherton. We are an awful big shop.
Mr. Stearns. Okay.
Mr. Brotherton. We have a 22 bay shop.
Mr. Stearns. Okay, 22 bays. Now Mercedes is a pretty
expensive car to repair, right?
Mr. Brotherton. Yes.
Mr. Stearns. And you said BMW's and Mercedes generally.
Mr. Brotherton. Yes.
Mr. Stearns. And Mr. Everett, what kind of cars do you deal
with?
Mr. Everett. We service all makes and models.
Mr. Stearns. So you will do a Ford, a Chrysler, imports,
Mercedes, you will do them all?
Mr. Everett. Yes. We do not do as many of the high end cars
as maybe in some other areas. They are just not in our market.
Mr. Stearns. If you can tell me, this year, how many
customers do you have to refer to the local dealer, the BMW,
Mercedes, Chevrolet, Ford dealer because you could not get the
necessary information from the manufacturer? Just
approximately.
Mr. Everett. We are a pretty progressive shop.
Mr. Stearns. Okay.
Mr. Everett. We have become very, very good at finding work
around to find a way to take care of our customers as somebody
had indicated before.
Mr. Stearns. You will just do whatever it takes?
Mr. Everett. Yes, and some--well what I do know is that it
costs our customers more time and more money than it should and
it is becoming more and more difficult. I hear that not just in
our own shop but I hear it from a lot of our members.
Mr. Stearns. I know but you might tell me specifically, I
mean here you are testifying on behalf of this kind of bill
that Mr. Chairman Barton has. Can you specifically tell me
where you have actually had to refer people to local dealers?
Can you say I can remember on May 3 I had this Ford I could not
get the part, this Chrysler. I mean, can you give me that kind
of detail or not?
Mr. Everett. Well we have had to on numerous occasions call
outside vendors that specialize in certain areas that have
special connects through backdoors and cars that we should not
have been able to repair, we have been able to because of our
leadership position in our market we have been able to take
advantage of, you know, special arrangements. We should not
have to do that and those arrangements are quickly getting
cutoff so. I certainly know several other shops that just give
up and send it back to the dealer. They are not as diligent
as----
Mr. Stearns. But not your shop?
Mr. Everett. In my shop?
Mr. Stearns. Other dealers you say give up but your shop
does not. You seem like you have been able to overcome this
problem.
Mr. Everett. In my shop, I can think of one Mercedes that
we had to send back to the dealer.
Mr. Stearns. One Mercedes, okay. Mr. Brotherton, yes?
Mr. Brotherton. I know exactly how many I have sent, two.
Mr. Stearns. In this year?
Mr. Brotherton. Yes, one Honda.
Mr. Stearns. Yes.
Mr. Brotherton. And one Audi. The Audi I could have got the
equipment but I have not presented--I have not done that yet
because it is a low volume part of my business. The Honda had a
key issue and----
Mr. Stearns. Can you specify the equipment we are talking
about for the record.
Mr. Brotherton. The Honda, their factory tool does not--
they have removed the immobilizer function, the programming of
keys.
Mr. Stearns. Okay.
Mr. Brotherton. So we had to send a Honda. But I can do
that for Mercedes, I can do that for BMW, I can do every system
on the car for all those instances and I can do it because I
bought the tools because I invested in it, I capitalized my
shop, we have the training----
Mr. Stearns. It occurs to me when you buy these tools, do
you have to buy the tools that Mercedes tells you to buy or can
you buy generic tools?
Mr. Brotherton. I can buy what I want but if I want to do
the job completely then----
Mr. Stearns. You have to buy Mercedes tools.
Mr. Brotherton. [continuing] I have to buy the Mercedes
tools.
Mr. Stearns. Okay. So you have got--your people are all
trained and they use Mercedes tools and you have had no problem
with cooperation from Mercedes in all that?
Mr. Brotherton. We use--regularly I am on line right now
because I was a member of the OEM audit, preliminary audit for
the OEM websites and I am on--I have a half of year from
Mercedes and I have been using it regularly but I was using it
beforehand on a daily basis as necessary.
Mr. Stearns. Okay.
Mr. Brotherton. I have bought over the years volumes of
manuals to work on the cars that I work on. I work on 10 car
lines and I work on two of them real well. I plan on working on
them as well as a dealer does.
Mr. Stearns. Mr. Everett, I think it is in your court here
to make the case. I mean, Mr. Brotherton says there are only
two this year. He has--how many bays did you say you had?
Mr. Brotherton. Twenty-two bays, we have done 10,000
invoices, probably two to three repairs per invoice.
Mr. Stearns. So Mr. Everett now I need those kind of
statistics from you, too if possible. Is that a fair question
for you?
Mr. Everett. Yes, I think that is a fair question. I would
purport that Mr. Brotherton's shop has a little different,
little unique business plan compared to most independent repair
shops.
Mr. Stearns. It is very narrow in----
Mr. Everett. It is very narrow, it is very specialized. It
is much more like a dealer.
Mr. Stearns. Yes.
Mr. Everett. Much more like a dealer scenario so it is
easier for him to spend that extra money or that extra
investment to develop those relationships.
Mr. Stearns. But he is not a dealer. He is not a dealer.
You do not sell new Mercedes or BMW's?
Mr. Brotherton. No.
Mr. Stearns. Okay, go ahead.
Mr. Everett. No, but the model is very similar to a
dealership where it is one or two car lines that he works on on
a regular business.
Mr. Stearns. Okay.
Mr. Everett. On a regular application. In a repair shop
like mine which I feel better, is a better example of most
repair shops in this country, I could not survive on just one
make or model. There is not enough of one particular make or
model in my area.
Mr. Stearns. Yes.
Mr. Everett. The cars that he is working on are higher line
cars so you get more money to repair those in a general aspect.
So the challenges that he faces in his specialized repair shop
are much different than the great majority of repair shops out
there. Those challenges are easier to focus on and maintain
because you are seeing the same cars all the time.
Mr. Stearns. I suspect though you are coming to this
hearing and you are advocating for this bill. You should have
statistics with you specifically from your shop to convince us
that this bill is needed I would say. I mean but I also have a
feeling that you are a good businessman and that you have grown
the shop and that you make the customer happy and you----
Mr. Everett. We fight to do that.
Mr. Stearns. If necessary you will make the parts yourself.
I mean, it looks like you are the type of guy that will do
whatever it takes so----
Mr. Everett. Practically, yes.
Mr. Stearns. [continuing] you might be the average person
in Ocala, Florida or maybe Gainesville is not a----
Mr. Everett. Excuse me.
Mr. Stearns. Go ahead.
Mr. Everett. That is correct. And I would hate to, you
know, of course in any way mislead the subcommittee. We have
been able to find work around. I know that we fight, we have to
fight to do that. We have to fight harder all the time.
Mr. Stearns. Yes.
Mr. Everett. And lots of scars from that. I also hear from
other shops that maybe are not as progressive and they simply
give up and send it back to the dealer.
Mr. Stearns. Yes.
Mr. Everett. And that hurts their business, it hurts their
community, hurts their families that work at those shops right
on down the line. We are very----
Mr. Stearns. Mr. Brotherton says that not only did he get
the tools that Mercedes told him he has had his people trained.
So often times they can, the dealer can give you the
information but if you do not have the people that are trained,
you do not have the tools, you cannot do the job. So it is, you
know, we are talking about just--not just information but the
dealer training and the giving of the tools.
Mr. Everett. That is an excellent point. And the
aftermarket has developed very, very solid training programs.
It is a condition of employment in my shop in writing that my
employees must go to training every single month. We have
become very good at if the information is available, teaching
our guys how to repair these cars. And that is one of the
tricky arguments we have when we talk to our consumers that it
is very easy for them to get the wrong impression that we are
not capable of fixing the cars. That is not the case at all it
is a question of when the information is not available that we
cannot fix it. And that is one of the reasons why we fight so
hard not to send that car back to the dealer. You lose
confidence from your customers. They just think well Bob just
cannot fix my car anymore. That is a very difficult thing.
Mr. Stearns. My time has expired.
Do you have quick question or quick----
Mr. Brotherton. I would like to make a statement that
although I work on a high line of cars. I also work on 10 car
lines. I work on Volkswagens, I work on Hondas, I work on
Jaguars, Volvos, and Saabs. I have a factory tool for all of
those cars. And it was my business decision to buy those tools,
to make information accessible for myself and it is accessible.
It is only a matter of the commitment of the shop. It is
strictly a matter of the commitment of the shop. It is
accessible.
Mr. Stearns. My time has expired.
Ms. Schakowsky?
Ms. Schakowsky. With all due respect to the other
panelists, I want to focus on this as well because I think it
kind of gets to the heart of the matter.
And so Mr. Brotherton, you represent the Automotive Service
Association that you say is the largest of the auto repair
shops. How did you come to the position that you are taking?
Did you survey your members you represent in your view the
majority of small and medium auto repair shops?
Mr. Brotherton. My position happens to be the same as the
ASA position. I am not at the moment in any functional capacity
of ASA. I have a personal experience with this issue because I
was involved with----
Ms. Schakowsky. But let me just say, I am looking at the
statement of Mr. Steve Brotherton, Automotive Service
Association before the U.S. House Energy and Commerce
Committee. Are you not speaking for them?
Mr. Brotherton. I am speaking representing their point of
view.
Ms. Schakowsky. And that is why I am asking how is that
point of view determined?
Mr. Brotherton. My point of view, I mean, the way it was
determined for me was from----
Ms. Schakowsky. No, I am asking how the association--you
are representing an official position of an association that I
know Mr. Everett himself is a member of, right, so I am just
wondering what the process was. I think we have to have
confidence that when you speak for an association that there
was a process to assess that you are accurately representing
the interests of the associations.
Mr. Brotherton. Which point are you making? I----
Ms. Schakowsky. I want to know how, did you survey, were
the members surveyed? I am looking around this room and I
suspect that there are a number of people wearing yes on 2048
badges that are also members of ASA as is Mr. Everett. So I am
just curious.
You told me for example, Mr. Everett that 79 percent of
NFIB or 77 percent of NFIB numbers were surveyed and said that
they supported this legislation.
Mr. Everett. That is correct.
Ms. Schakowsky. Was there a percent of ASA members that you
know that support, that oppose this legislation?
Mr. Everett. And that was directed to me, ma'am?
Ms. Schakowsky. No, I am asking Mr. Brotherton.
Mr. Brotherton. I would imagine that there probably are.
And the ASA, I presume is a representative association. They
elect leaders and----
Ms. Schakowsky. Yes, I would like them to get from ASA that
information.
Mr. Brotherton. I am not----
Ms. Schakowsky. I know. I just thought if I could ask you
to----
Mr. Brotherton. I am a technical expert I know what the
issues are that we are talking----
Ms. Schakowsky. Let me--okay, Mr. Everett you----
Mr. Everett. Yes, I would just like to add to that. Our
coalition actually did a survey of ASA members and according to
the survey we performed at that time, the majority of ASA
members had stated that they had problems with information
access in this particular area. Unfortunately I am not in
agreement with the leadership of our association and the
position they have taken. Although, of course, they questioned
our survey there but we have actually even tried even--I
certainly know ASA never asked me what my opinion was, although
they know now.
Ms. Schakowsky. One of the ways that we are trying to get
at to measure the extent of the problem is the number of times
that a customer has to be turned away and sent back to the
dealer. But what I am getting from you is that that is not the
only way to judge whether or not we have a problem on our hands
and I wondered if you could go into that a little bit more,
what those problems are.
Mr. Everett. I would agree with you there that we--the
better shops, the more aggressive shops, the more well equipped
shops still are very good at using their relationships perhaps
out the backdoor through the loop back at the dealer and
getting some information that is more of a privilege that we
normally would not be able to get. I can tell you that it is
becoming very, very difficult for us to repair the car in a
timely and cost effective manner. And I definitely have had
many instances where they are holding a car over another day or
two or three to get stuff taken care of for my customers. That
has cost them time, it has cost them money. And in a lot of
cases to keep my customer as a businessman, I will end up
eating that extra inconvenience, even lend them a car if I have
to. That I have had many instances over the year and the
problem is getting worse I guess.
I first starting working on this instance, issue I guess
back in 1998. I went to an ASA convention in Detroit, Michigan.
I was invited to a special hearing with Charlie, the man who at
the time was in charge of the information rule with the EPA and
we had the mechanical ops committee from ASA there along with
one of my colleagues that did a presentation about this problem
that we saw coming down the road. This was back in 1998. And at
that point we asked ASA what their position was. They did not
have one at that time. From that point in, they continued, they
developed a position. For a long time they were on our side of
the table. Unfortunately, they cut a deal and switched to the
other side.
Ms. Schakowsky. Let Mr. Brotherton----
Mr. Brotherton. Just to give you an answer to your specific
question. The ASA has a democratically elected board of
directors who unanimously decided to support the automaker
agreement. In a survey that they sent out to members, 99
percent of the respondents supported the agreement.
Ms. Schakowsky. And did the survey go out to all the
members?
Mr. Brotherton. I would presume it was sent to all the
members, that is what they told me, yes.
Ms. Schakowsky. Mr. Everett?
Mr. Everett. Ms. Schakowsky, I was handed the specifics
from the survey that was done. The overwhelming level support
is consistent along the lines of automotive service providers.
Ninety-eight percent supported H.R. 48, Automotive Service
Association members 93 percent, and Automotive Aftermarket
Industry Association members 94 percent, members of the State
automotive retail trade groups 92 percent.
Ms. Schakowsky. This is what survey?
Mr. Everett. This is the survey that our group has done by
the Terrance Group, Lakes, Nell, and Perry Associates, key
findings of the survey of automotive aftermarket retailers.
Ms. Schakowsky. Okay.
Mr. Everett. So it is by in large from 90 percent of the
shops and members of the aftermarket feel there is a problem
with information access.
Ms. Schakowsky. Well we have got a serious discrepancy here
obviously. So Mr. Brotherton are all these people who obviously
tool time off from work and came here and--are they just
inadequate in their--I mean, what--how do we end up with this--
are you denying that these are problems or are you----
Mr. Brotherton. No, it is easy to see I would deny that. I
mean, physically I have got the information to do what I need
to do to fix cars. I have the tools.
Ms. Schakowsky. In a costly and timely way for people who
may not have the kind of business that you have?
Mr. Brotherton. I send my--to give you a figure, there is
50,000 members of the IAPM, that is an internet based
technician group worldwide but most of their members are in the
United States. There is somewhere in the neighborhood of
250,000 certified AFC masters. If you were to take those
relationships with those figures, you would notice that the
ones that are participating in the finding of technical
information are the ones that are able to find the information
to fix cars.
Ms. Schakowsky. So would you recommend to me that I go back
to the auto--the car repair shop owners that met with me in my
district and just tell them, sorry, you do not have a problem.
Mr. Brotherton. They just need to get on the ball. It is--
--
Ms. Schakowsky. So all these guys are just not on the ball?
Okay, all right, I thank you, I yield.
Mr. Stearns. The gentlelady's time has expired.
The chairman of the full committee, Mr. Barton.
Chairman Barton. Thank you, Mr. Chairman.
I want to follow up on Ms. Schakowsky's questions here with
you Mr. Brotherton. You at one time, I think supported
legislation or was a part of a group that did but you have now
changed your position and you are opposing. Is that correct?
Mr. Brotherton. Yes, that is correct.
Chairman Barton. Okay. And you have, you are a repair--do
you own a repair shop or repair vehicles?
Mr. Brotherton. I have what is called a Boss Service
Center.
Chairman Barton. Okay. Have you ever had any trouble
getting any information from specific automobile manufacturers?
Mr. Brotherton. In the late 1990's we had a terrible
problem. It looked like it might be the end of our business but
that has been totally changed by this agreement.
Chairman Barton. All right. Well your website has a
statement on it that--and I want to quote it. I am told this is
verbatim from it. ``You might have to take exception to the
statement of good online sites for VW, Audi, and Porsche. They
sell their information or info in bits and pieces. They are
widely told to not be in compliance with the intent of the
NASTF agreement.'' And it is signed Steve. Is that your
statement or another Steve's statement?
Mr. Brotherton. This sounds like it is not off of my
website. But it is very easily something I could have said.
There are a lot of issues if you put them into perspective. I
did as I stated maybe 30,000 repairs individual repairs this
year and two of them I could not do.
Chairman Barton. Well this is from a Steve Brotherton who
is the owner, technical information specialist of Continental
Imports in Gainesville, Florida or purported to be. So are you
saying that this is an imposter or this is not you?
Mr. Brotherton. What is the issue? I do not deny making
that statement. I believe that Volkswagen and Porsche, Porsche
is not a signer of this agreement. And Volkswagen and Audi both
use a paid for document when you are dealing with information
and I would not agree that they are doing a very good job.
Chairman Barton. Well I am told that they were a signer as
of the 2002 agreement. Is that not true?
Mr. Brotherton. My impression both Volkswagen and Audi
signed but Porsche did not.
Chairman Barton. So the way to say everything is okay is
just have the manufacturers not sign any of these volunteer
agreements and then they can do whatever they want to but the
end result is that your customers or other repair shops
customer's do not get their vehicles repaired at an independent
repair shop. Is that a solution in your opinion?
Mr. Brotherton. The solution is not--that is in effect is
not perfect and it is working tremendously for people that are
doing 90 percent or 99 percent of the repairs. Porsche is a
very limited market.
Chairman Barton. Okay. Well I do not want to browbeat you,
you came here voluntarily and you are trying to do good work
and you have every right to the position that you take so I am
just--it seems kind of interesting that this statement----
Mr. Brotherton. Well I----
Chairman Barton. [continuing] seems to be somewhat at
variance with your written testimony.
Mr. Brotherton. I have taken exception to many of the
problems that exist including the security problems with Honda,
Nissan, Audi, and Volkswagen have made it very difficult and I
cannot do it right now but it is not because it is not
available.
Chairman Barton. Okay. I want to ask a question of, is it
Braziel?
Mr. Braziel. Yes.
Chairman Barton. You are representing the dealers.
Mr. Braziel. Yes, sir.
Chairman Barton. What is their primary concern about this
agreement, volunteer agreement or the legislative solution if
we have to go that route?
Mr. Braziel. I think that as I mentioned in my testimony
that we believe that a voluntary private sector solution is the
best answer.
Chairman Barton. How do you enforce--I do not disagree with
that but how do you enforce it? We cannot even get your group,
not you personally but to agree on representation on this
board. I mean----
Mr. Braziel. Well I think that there is agreement to have a
fair and balanced board. The question is what is that fair and
balanced board? And as a number of people mentioned, this is--
there are many different sides to this debate. And I understand
why manufacturers do not want me on their floor and I
understand why aftermarket providers do not want me on their
floor. So I think we have to find a way that, you know, anybody
who is a stakeholder in the information needs to be
represented. And if could just make one final point on that
issue. It seems to me if you look at everybody around that
table, not the table at the BBB but all the stakeholders, the
only party, everybody other than the manufacturers are the ones
seeking that information. So I do not know that we necessarily
need some type of precise formula to have a 50/50 board because
everybody's position other than the manufacturers and the
manufacturers have the information, everybody else needs the
information.
Chairman Barton. But the dealers and I am not--I have a
good relationship with my dealers in my district in my State so
I am not browbeating the dealers but when a dealer has an issue
on a repair issue or a parts issue, there is a--in almost every
case a rapid response to that issue.
Mr. Braziel. Um-hum.
Chairman Barton. Your dealers have to pay for the equipment
and pay for--I mean it is not a free service but an independent
repair operator does not have it, does not have that leverage,
does not have that, you know, sometimes the system works,
sometimes it does not. But when it does not work, it really
does not work big time and, you know, that is a difference and
I think you would agree with that.
Mr. Braziel. Well I think clearly due to the level of
investments that a dealer makes in a service or training, the
equipment that he is required to do by the manufacturer----
Chairman Barton. But the independent repair shops have to
buy the equipment and pay for the computer program and all.
They are not--it is not coming to them UPS for free, I mean
they are having to----
Mr. Braziel. Absolutely, no question about that but I
thought the intent was to ensure that access and we believe
that access to be good for all markets.
Chairman Barton. I want to ask one more question with the
chair's indulgence. I want to give an antidote. I have a
vehicle, a Ford vehicle that was under warranty and of course
it is always the case just out of warrant I had transmission
problems. So I tool it to my dealer where I live. I have a
personal relationship, a very positive relationship with this
particular dealer. And I took it into the repair operation and
they suggest Mr. Barton, it is a transmission problem. I think
the quote was just to kind of look at it it was going to be
$500 and then once they looked at it it was going to be in the
neighborhood of $2,000 to $3,000 to repair it. And it had been
out of warranty just like months or so I, you know, I said I
cannot afford that. I cannot pay it. I wish I could but I
simply cannot. So I called an independent repair shop in a
different community about 15 miles away who was an expert in
transmission and had a good reputation and I said can you look
at it and they said yes because the car was still drivable. I
said will you charge me anything to look at it? He said no. And
then I told him what the people at the dealership had told me
and he said well I cannot guarantee it but based on that, I
think I can do it for, repair it for $1,000 which is not cheap.
I mean, my God, you know. I just had a baby and $1,000 buys a
lot of Pampers. And so I had told the dealership that I would
let them know because I, you know, I needed to get it repaired.
So I called back out there and said I am going to take it over
to this other community and they are going to work on it over
there but I want to thank you all for taking a look at it and
la-de-da. And then the guy said well what are they going to
charge you? I said, well it is not for certain but he says it
should not be more than $1,000. Well then I am literally
walking out the door to hop in the car to go to the other
community and the dealer himself calls me back. And he says
Joe, I understand la-de-da, yeah, yeah, yeah. He said we will
do it for $1,000.
Now you have to have a competitive alternative. And I am
not saying the initial estimate at the dealership was a bad
estimate. I mean it was--but if it had not been for the
independent repair shop and, you know, that would not have
happened. So all we are trying to do in this whole bill is to
give people the consumers the opportunity to choose and there
are going to be a lot of opportunities when they are going to
choose the dealer. But there are going to be some opportunities
for whatever reason they are not going to and we need to not
end this bill to make that happen.
With that I yield.
Mr. Stearns. The gentleman yields back.
Mr. Deal?
Mr. Deal. Thank you, Mr. Chairman.
We have had a lot things said here today that are very
contradictory as others have observed. But I am going to take
exception to something that was said but probably not intended
in the way that I took it. And that is whether or not
independent service dealerships or dealers are on the ball. The
truth of the matter is that these are true entrepreneurs. They
do not have a supply chain from a manufacturer that guarantees
that the customer is going to come to them. If they are not on
the ball, they are out of business. So I think they are
definitely on the ball. The question is can we make them in a
fair and competitive environment so that nobody is advantaged
or disadvantaged.
There are some phrases that this panel has used which I
think are very good phrases and I want to explore them. Mr.
Braziel you said that the real question is equivalency of
access. And I think most everybody has agreed that is really
the issue, equivalency of access. Other statements that were
made is Mr. Lowe said that we were really talking about two
areas here, that is tools and diagnostic capabilities. Those
were the two big categories. Do we all sort of agree on that?
Okay, let us dissect those two if we might. First of all with
regard to tools, we have heard conflicting statements on the
tools. Mr. Cabaniss says that the tools are already being
offered for sale. Mr. Lowe says that that was part of the
agreement where it broke down was that they were not willing to
make those tools available under the same circumstances.
Let me see if I can unravel the issue about tools first of
all. Mr. Cabaniss, let me start with you and then Mr. Lowe if
you would follows up on that issue.
Mr. Cabaniss. With, excuse me, with respect to tools, the
manufacturers, auto manufacturers currently make all tool
information available for emissions and non-emission functions
available to the tool companies. There are some cases where
licensing agreements are required but in most cases that
information is provided for no charge. It is then up to the
tool companies themselves to decide how they use that
information. They would have to look at their business case and
decide whether they are going to build those functions into the
tools they sell or not. The manufacturers have no control over
how they use that information but it is available.
Now with regard to the facilitative agreement discussions,
our problem with talking about tool and tool information had
nothing to do whatsoever with this availability today or
tomorrow. Our concern was discussing how to deal with tool
information in the context of the BBB discussions was simply
the fact that the tool companies were not at the table and that
if we are going to have discussions that cover how to deal with
tool issues and how to, you know, what problems there may be
with the current system, then it only made sense to us that
tool companies had to be part of those discussions and part of
finding a solution. And so that is the--why we in the
facilitation process resisted the discussions about tools.
Mr. Deal. All right. Mr. Lowe, would you comment?
Mr. Lowe. Sure. There are two issues here and it is
important to understand the distinction. There are tools that
are provided by the car companies to the aftermarkets that are
``the only tools'' and they are sold and they are supposed to
be sold and have the same capabilities. But we were told during
negotiations were that the tool that we get as an aftermarket
is often different than the tool that is sold to the dealer and
that they would not guarantee that they would be the exact
same--have the same capabilities as the tool the dealer got.
They sold it to a distributor who gave it to us and that was
the end of their responsibility and that was unacceptable to
us. There are discontented in some cases for just warranty
administration and that is fine with us. But what we wanted was
a commitment that they were the same repair and diagnostic
capabilities and they were not willing to do that.
The other issue on tools is the capability provided to our
tool manufacturer suppliers so that they can put their
capabilities into the tools. So what we agreed to there was as
Mr. Cabaniss stated correctly that we were--because the tool
companies were not there and because it is a very complicated
issue as to what is available and how it is provided, we were
willing to punt that issue to after the negotiations. However,
we wanted a commitment in the agreement that all diagnostic
capabilities and repair capabilities were going to be made
available to us and that there would be a timeframe set for
when the agreement would be set with the tool companies and
that also did not--was not happening as far as the agreement.
And we could not come to an agreement on that. So that is what
I was referring to in the tool issue. It may be that, you know,
as we were able to get through that we might be able to fix it
but they were being very obtuse about that issue.
Mr. Deal. Mr. Everett, did you want to comment on that?
Mr. Everett. Yes, I would agree with Mr. Lowe. In some
cases there is an aftermarket version of the tool and an OEM
version of the tool. Sometimes they say it is the same but when
we end up getting the tools, we find that they are not always
actually the same. There have been plenty of instances like
that. Like Mr. Lowe said, what we were also looking for was for
them to make the commitment that they would release it to our
aftermarket companies so that we could let the free market, you
know, adjust the cost of the tool. Sometimes these tools are
quite expensive and it is just not economically feasible for a
shop to purchase that tool. We were willing to let our market
and our suppliers work that out.
Mr. Deal. So we need to expand the table even further to
bring the tool manufacturers into this debate and they were not
there.
Mr. Everett. We were willing to bring them in later on, we
just wanted the commitment at the time. We recognized that it
was a very complicated issue.
Mr. Deal. And that still has not been resolved?
Mr. Everett. Correct. They would not make the commitment
and release the information needed for our tools----
Mr. Deal. I would encourage everybody to work on that part
of it.
Mr. Everett. And the other part was they wanted to limit us
to just what is known as scan tools. We see as the industry is
progressing that there are other tools other than what is
commonly referred to as scan tools which basically just hook
into the computer system that is coming down the line. The most
common thing out there right now is some manufacturers require
a different tool to reset tire pressure monitors, as simple as
filling the tire up and re-monitoring the--resetting the PPMS
system on the car. And we could see lots of other tools coming
down the road. If they were not included, we could be right
back here again.
Mr. Deal. It sounds to me like this could be a major part
of the disagreement until it is resolved.
Okay. Let me go to the second part and that was the
diagnostic capability. They obviously have some overlap between
the tools and diagnostic capability. What is the biggest
problem if there is with the diagnostic capabilities or is
there a problem with diagnostic capability being able to be
received by the people who are not at the dealership level.
Mr. Lowe. I think from, you know, we thought diagnostic
tool capabilities were the same that they provide the
information to the tool companies. There was the issue of the
information, definition of service information in that we
thought that the information that comes from the hotlines
needed to be provided to the independent aftermarket if it was
being provided to all their dealers to fix the car. So we were
concerned that the independents could be bypassed if
information was just going through the hotlines to the dealer
facilities then we could not have access to that information.
They were only willing to give us what was printed or what was
on their TFC or a manual.
Mr. Deal. Mr. Braziel, what is your take on that?
Mr. Braziel. I would say this. The issue that we are
getting to is, you know, how much are we going to put into a
dispute resolution system. I think it gets back to your
original point that without the toolmakers there, it becomes
very difficult for these parties to negotiate. With regard to
the hotline, the manufacturers were concerned that that would
lead to untold dispute resolutions over whether something was
told to one single dealer by one dealer tech hotline so they
wanted a bright line of when we publish something to send it to
all our dealers. That is the bright line that we know of that
we are making that available to the aftermarket. I think quite
frankly most of those dealers tech hotline questions are
probably vehicles under warranty and it is not going to be in
the manufacturer's interest once they have a solution to a
problem to withhold that information from their dealers.
Mr. Deal. Mr. Chairman, you have been very gracious and I
am over my time.
I yield back.
Mr. Stearns. I thank the gentleman.
Ms. Blackburn?
Ms. Blackburn. Thank you, Mr. Chairman. And thank you all
for your patience and for hanging with us on this.
Mr. Braziel, I think with you for just a minute. We were
talking in the last panel. I said that about the board
governance.
Mr. Braziel. Um-hum.
Ms. Blackburn. And let me ask you for a moment. Do you see
this as a 50/50 split as to which--I want to hear your comments
on this.
Mr. Braziel. Sure. I made those comments to the chairman a
minute ago. The 50/50 issue just to explain how difficult----
Ms. Blackburn. Let me stop you then because if you made
them to the chairman that is while I was walking back down from
the office and I will get it from the transcript. I do not want
to take my time for that.
Now I want you to tell me, we have talked a little bit
about my district and what I have at this district and Mr.
Everett, I have got a lot of NFIB member shops that are in my
district. So Mr. Braziel, let us say we are out in rural West
Tennessee and we are down in Summer, Tennessee and somebody has
a car and something happens and they cannot get to Jackson or
Memphis and they need to get into one of those shops but there
is not a dealer there that is going to service that particular
car. These folks have driven out of town and bought that car.
So are the diagnostic, the tools, the codes, everything that is
required to service a new car are they available to independent
dealers? Would they be able to get some help? I mean or are
they just going to be stuck and have to have it towed back into
Memphis or Nashville or Jackson to get that car fixed?
Mr. Everett. Well I think I mentioned earlier that, you
know, we have to kind of distinguish between equivalency of
access and equivalency of outcome. And the question is whether
it is accessible. Yes, it is accessible. I think Mr. Brotherton
can speak to that that he has all the information and the tools
that he needs.
Ms. Blackburn. Sounds like it does, 10 lines that he works
on.
Mr. Everett. And so the question really becomes one of
investment. Are you willing to make the, you know, based on the
business model that you are working on----
Ms. Blackburn. So you would see it as a choice issue?
Mr. Everett. Absolutely. And we face the same circumstance
when, you know, we are working on a used vehicle. We are going
to make an independent business decision----
Ms. Blackburn. Okay, great. I am going to go to Mr. Everett
and Mr. Brotherton and Mr. Everett, to you first. The websites
that have been referenced repeatedly today, do you use those
and can you get the information that you need in your shop from
those websites to fix the vehicles that roll in?
Mr. Everett. We have lots of sources for information out
there. The websites are one of the resources.
Ms. Blackburn. Do you use them?
Mr. Everett. We go through services that we contract with
to provide information. I have been on the sites a few times
and looked around and stuff. We count on a third party to
utilize----
Ms. Blackburn. Okay, like Mitchells.
Mr. Everett. Excuse me, utilizes them regularly.
Ms. Blackburn. Okay. Have you heard of providers
complaining about not having access to automaker service
information?
Mr. Everett. Yes, all the time.
Ms. Blackburn. You hear it all the time?
Mr. Everett. Yes, from our members that are forced to for
whatever reason send the vehicles back to the dealer. If it is
too hard, too difficult, too expensive----
Ms. Blackburn. Okay. You are speaking for NFIB. Have you
all logged this? Can you provide us with the number of times
because we heard from Mr. Stanton that on his system there has
only been 50 complaints so is that something that is
quantifiable?
Mr. Everett. The only method that is out there right now
that has attempted to quantify them is the NASTF process. And
as I said in my testimony, it is perceived as just ineffective
and a waste of time. Are members have not been participating in
that. It just does not seem--there is nothing in it for the
technician. They go through it and the idea of a complaint on
NASTF being resolved is simply somebody answers and it does not
matter whether cars actually get fixed or not. It is just a
waste of time in production shop. It is very difficult for
participants to do that.
Ms. Blackburn. Okay. My time is about to expire. Thank you,
I appreciate this. I do hope as we have said earlier with the
previous panel that you all can work this out and we do not
have to do this for you. I do think you would rather work it
out than have us do it and anyone who has an entrepreneurial
bone in their body would rather keep Government from making the
decision for them so I wish you all well.
Mr. Chairman, I yield back.
Mr. Stearns. The gentlelady yields back.
I do not think there is any additional members who would
seek to ask any further questions so I will conclude the
hearing. But I would say to all of you and to audience thank
you for coming and participating, also to those in the back who
are participating and supporting the bill. We appreciate you
coming here too and I know it is a lot of sacrifice for you to
leave your jobs and so forth.
After hearing this, I think I am going to recommend to Mr.
Barton, the Chairman, that somehow we craft a letter to the
Federal Trade Commission to help create an independent board
structure and a binding dispute resolution mechanism that sort
of resolves the fundamental problem. I do not know how you feel
about that but I am going to recommend to Mr. Barton, the
Chairman that he look at that and I will do that only after
talking to the Federal Trade Commission to see if they can put
it in place and how they feel about it and actually working
with the minority and majority and others but it seems to me
after 10 hearings and 4 to 6 hours in these hearings and
hearing some of the disputes that have just come out of this,
that it might be something that all of you would consider as an
independent board structure through the Federal Trade
Commission. With that, the subcommittee is adjourned.
[Whereupon, at 1:35 p.m., the subcommittee was adjourned.]
[Additional material submitted for the record follows:]
Prepared Statement of the Retail Industry Leaders Association
Dear Chairman Stearns: On behalf of the Retail Industry Leaders
Association (RILA), I am writing in support H.R. 2048, the ``Motor
Vehicle Owners' Right to Repair Act.'' This important legislation
improves consumer choices and protects the rights of ordinary Americans
who enjoy performing maintenance on their own automobiles. We
appreciate that you have scheduled today's hearing to consider this
important issue, and urge you to support and schedule a vote on
H.R.2048 in this session of Congress.
The Retail Industry Leaders Association (RILA) represents the
nation's most successful and innovative retailer and supplier
companies--the leaders of the retail industry. Retail is the second
largest industry in the U.S., representing $3.8 trillion in annual
sales and 12 percent of our nation's workforce. RILA member retailers
and suppliers operate 100,000 stores, manufacturing facilities and
distribution centers throughout every congressional district in every
state, as well as internationally. The leadership of its Board of
Directors includes some the world's leading retail companies, including
Best Buy Co., Inc., Wal-Mart Stores, Inc., Target Corp., Michaels
Stores, and other top retailers.
While current automobile technology undoubtedly provides many
benefits to consumers, we understand that the inaccessibility of
information related to those technologies is preventing car owners from
repairing and maintaining their own vehicles. It may also be preventing
them from choosing their own auto mechanic or the parts needed to make
repairs. Currently, only automobile manufacturers and their dealers--
not independent repair shops or owners themselves--have complete access
to all of the information that is needed to make repairs and perform
maintenance.
We believe it is unfair to deny consumers access to information
about the products they purchase. In order to make informed decisions,
consumers ought to be provided with as much information as possible
about the products that they wish to purchase, including information
about the proper care and maintenance of automobiles.
That is why we support H.R. 2048, legislation that would require an
automobile manufacturer to disclose to the vehicle owner--or to the
repair shop that they choose--the information necessary to diagnose,
service, or repair their vehicle. We believe that when a consumer
purchases an automobile, they have a right to expect that they own not
just the vehicle, but also the information necessary to properly
maintain or restore their property.
Several of our retail member companies carry automobile aftermarket
products, including AutoZone, Inc., CSK Auto Corp., PEPBOYS AUTO, as
well as general retailers Wal-Mart Stores Inc., Sears Holdings Corp.,
and others. This legislation would directly benefit millions of
customers who shop at those retailers every year by improving their
ability to perform routine maintenance on their automobiles. Finally,
we also support the bill because it embodies an important principal
embraced by the entire RILA membership--that government policies should
promote free market competition by enhancing consumer choice and
expanding consumer access to price competitive merchandise.
Again, we thank you for holding this important hearing, and ask
that you support passage of H.R. 2048 in this session of Congress. If
you have any questions about this matter, or any other aspect of RILA's
government affairs program, please don't hesitate to contact me.
______
Prepared Statement of the Tire Industry Association
Chairman Sterns, Members of the Subcommittee, on behalf of the
5,300+ members of the Tire Industry Association (TIA), thank you for
the opportunity to submit testimony for the record. This hearing on
``Consumer and Mechanic Access to Industry Information on Car Parts''
is very important to the automotive industry and specifically the tire
industry.
My name is Roy Littlefield and I am the Executive Vice President of
the Tire Industry Association. TIA is an international association
representing all segments of the tire industry, including those that
manufacture, repair, recycle, sell, service or use new or retreaded
tires, and also those suppliers or individuals who furnish equipment,
material or services to the industry. The Tire Industry Association
(TIA) has a history that spans more than 80 years and includes several
name changes. Originally known as the National Tire Dealers &
Retreaders Association (NTDRA), the organization gave birth over the
years to the American Retreaders Association (ARA) and the Tire
Association of North America (TANA). ARA changed its name to the
International Tire & Rubber Association (ITRA) and merged with TANA in
2002 to form the current Tire Industry Association (TIA), which now
represents every interest in the tire industry.
The majority of TIA members are independent tire retailers who also
perform automotive service. Our members have found it increasingly
difficult over the years to service new vehicles due to the limited
``sharing of information'' from the automobile manufacturers. As new
technology develops, this information is not readily disseminated
outside the network of automobile dealers. This is why TIA fully
supports the Vehicle Owner's Right to Repair Act (H.R. 2048). The House
version of the bill has been reintroduced by Representative Joe Barton
(R-TX) and we urge every Member of Congress to support this crucial
legislation.
The Vehicle Owners' Right to Repair Act would mandate that the auto
manufacturers--including all original equipment manufacturers (OEMs)--
provide affordable access of all vehicle service information and tools
to independent repair facilities. Anything available to the auto
manufacturers' franchised dealers would be available to the independent
repair facilities. At this time, the bill could not be more important
to our members.
On April 8, 2005, the National Highway Traffic Safety
Administration (NHTSA) issued its final Tire Pressure Monitoring System
(TPMS) rule. The Transportation Recall Enhancement, Accountability and
Documentation (TREAD) Act passed as a result of the Ford/Firestone
crisis in 2000 included a mandate that all new passenger vehicles be
equipped with a TPMS. According to this regulation, all passenger and
light truck vehicles must be equipped with a TPMS system by September
1, 2007. One of TIA's largest concerns with the latest TPMS ruling is
that the government is ignoring the need of independent tire dealers
and automotive service providers to be given the OEM information
necessary to install, service, maintain, recalibrate and fix these TPMS
systems. Our members will be dealing with these monitoring systems, yet
there are a variety of different companies that manufacture them, and
all are slightly different. TIA members will need information from the
OEMs to figure out each TPMS system and that information is not always
easily accessible or available. The time for passage of the Right to
Repair Act has never been more important to the tire industry or more
critical to our members.
I am aware of the automobile manufacturers' agreement with the
Automotive Service Association (ASA), promising that repair information
and tools would be forthcoming--implying that there is no need for this
bill. TIA, while viewing that agreement as a step in the right
direction, sees no enforcement mechanism in the agreement and therefore
still fully supports the Motor Vehicle Owners' Right to Repair Act. TIA
remains concerned that without the legislation, the auto manufacturers
could back out of this agreement at any time, forcing the industry to
start the battle all over again from the beginning. TIA is also aware
that many of the auto manufacturers are putting service information on
the Internet but we hear from our independent dealer members that the
information is not complete and still very costly. Furthermore, some
auto manufacturers never signed the ASA agreement and therefore feel no
obligation to provide any information to any independent dealers.
The automobile manufacturers that signed the letter of agreement
with ASA oppose passage of the Right to Repair Act. THIS MAKES NO
SENSE! If these manufacturers plan to keep their end of the agreement
and make information accessible and affordable to independent service
providers, this legislation only backs up their commitment to the
automotive service industry. The fact that these manufacturers oppose
this legislation causes me to question their commitment to the
agreement and forces TIA to keep supporting the legislation.
Consumers deserve the right to take their vehicle to their mechanic
of choice. They should not be forced to return to auto dealerships for
service because independent providers do not have access to the tools
and information they need to repair a vehicle. This is another critical
aspect of this legislation.
Last Congress the Right to Repair Act had over 100 bipartisan
cosponsors. There were concerns voiced by the Federal Trade Commission
about the bill and the FTC's role in enforcement. These concerns have
been addressed in H.R. 2048. The Act never intended to force the auto
manufacturers to give away proprietary information or ``trade
secrets''. This point has been clarified in the ``new & improved''
bill. Also, this year's bill clarifies the FTC's involvement with
enforcing the mandate on auto manufacturers.
Recent negotiations between the auto manufacturers and the
aftermarket were held in an attempt to come to a non-legislative
resolution on the right to repair issue. These negotiations have broken
down without a final solution. TIA strongly urges this Subcommittee to
move H.R. 2048 to allow independent repair facilities access to the
information they need to service vehicles.
I urge every member of this Subcommittee to support the Right to
Repair Act by cosponsoring the bill. TIA is committed to seeing this
legislation pushed through Congress for the betterment of businesses
performing automotive repair and to ensure that the tire industry can
service tire pressure monitoring systems during routine maintenance.
If you have any questions about my testimony, please contact me at
800-876-8372 x 108 or [email protected].
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