Context on the FTC and state settlement with Deere
The U.S. Federal Trade Commission, five states and Deere said on July 8 they had agreed to settle an antitrust lawsuit against the farm equipment manufacturer that provides customers and independent repair providers the same resources, including diagnostic software, available to the company's authorized dealers for the next 10 years, under supervision.
FTC Bureau of Competition Director Daniel Guarnera said the agreement “will help lower costs for American farmers” and that the agency would keep “fighting against anticompetitive restrictions on American consumers' right to repair.”
Deere said it was “good news for our customers and for the future of how Deere equipment is supported.” The settlement requires approval of a federal judge.
Deere’s clout extends to repairs, as well. It only allows authorized dealers to work on its equipment, preventing owners and independent mechanics from accessing the necessary tools and software. The company, led by John May, agreed last week to end the blockage, without admitting liability after denying accusations of anticompetitive behavior.
Both sides extol the pact’s benefits, but holes remain. Outsiders must be given fix-it capabilities on “fair and reasonable terms,” leaving much open to interpretation, despite guidelines spelled out in other cases. It’s not clear, for example, whether Deere could charge independent shops more than its own network. Any “future repair resources” only need be released broadly once half of authorized U.S. dealers get them first, a recipe for gamesmanship.
Breakingviews column argues Deere settlement leaves too much room for dispute
Trustbusters will reap what they have sowed. The U.S. Federal Trade Commission and five states led by Democratic governors settled a lawsuit against Deere alleging that the tractor maker used monopolistic power to restrict farmers from fixing their machines. Like most such deals, this one is in danger of wilting, too.
The $160 billion company’s U.S. agricultural dominance is evident in its stock performance and valuation. Deere’s total shareholder return over the past decade, at 750%, more than doubled that of the S&P 500 Index. It also trades at 27 times expected earnings over the next 12 months, a premium to rivals, according to Visible Alpha.
Column cites other settlements as warnings and says cleaner remedies were possible
Plans that count on vigilant oversight often struggle to make things right. Compliance monitors help, but high-profile disputes have chewed up time and money while the offending acts persist. Concert venue operator Live Nation “repeatedly” violated terms of a 2010 deal that allowed it to merge with Ticketmaster, according to the Department of Justice. Likewise, poultry processor Wayne-Sanderson Farms agreed to stop sharing employee wage information with consultants such as Agri Stats, but kept doing so, the DOJ said last year. The FTC has spent nearly 15 years trying to enforce a privacy-related settlement with Facebook.
Such issues led to a policy backlash that prompted the previous two presidential administrations to significantly curb the use of finicky deals promising good behavior. Their return gives cause for concern. When the National Farmers Union now cheering the latest accord urged the FTC to investigate, it accused Deere of misleading customers about repair policy changes in 2018. The agency could have pushed for a cleaner solution, like having the company make diagnostic technology freely available and including any costs in its machine prices. Instead, this antitrust problem is destined to be another perennial.
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