Deere & Co. faces mounting legal troubles in antitrust lawsuits
The “Right to Repair” problem has now been brought to the nation’s largest farm equipment manufacturer – Deere & Co. – in the form of a class action lawsuit.
In mid-January a suit was filed on behalf of a North Dakota farmer, Forest River Farms, as lead plaintiff in the case. Filed in the U.S. District Court, Northern District of Illinois (Eastern Division) the case is about the “monopolization of the repair service market for John Deere brand agricultural equipment with onboard central computers known as ‘engine control units’ or ECUs.”
Ever since tractors became the “horsepower” of choice on farms, farmers have had the ability to repair them themselves, or work with an independent repair shop or workman on the farm to get the work done.
The suit alleges that this is no longer the case on tractors with the ECUs because Deere & Co has “deliberately monopolized the market for repair and maintenance services . . . by making crucial software and repair tools inaccessible to farmers and independent repair shops.”
Furthermore, the court filing states, “Deere’s network of highly consolidated independent dealerships is not permitted through their agreements with Deere to provide farmers with access to the same software and repair tools the dealerships have.”
The conclusion is that as a result of shutting out farmers and independent repair shops from accessing the necessary resources they need to repair this equipment with ECUs, Deere has “cornered the market” on these repairs and have “derived supra-competitive profits” from these repair and maintenance services.
Attorneys are asking the courts to “enjoin and dismantle” Deere’s “illegal monopoly” of this John Deere Repair Services Market and that farmers be reimbursed for the amount that they overpaid for such services.
This is an issue that’s been simmering among farmers for years.
Early this month, as initial deliberations on the 2023 Farm Bill began in the House Agricultural Committee the “Right to Repair” issue was quickly mentioned for inclusion in the farm legislation.
Big revenue stream
According to the complaint, “the motive behind restricting access to the software is simple: Deere and its dealerships did not want their revenue stream from service and repair – a far more lucrative business than original equipment sale – to end when the equipment is purchased, as it often did in the past when owners could perform their own repairs or rely on individual repair shops.”
The complaint notes that “Deere’s scheme to prevent independent repairs creates additional revenue for Deere over the entire useful life of every piece of equipment it sells.”
The court filing states that this is to be a class action suit on behalf of Forest River Farms and on behalf of a class of persons and entities that are similarly affected by Deere’s activities. The plaintiff seeks to represent farmers who purchased repair services from Deere and Deere-affiliated dealerships and technicians in the Deere Repair Services Market from January 12, 2018 to the present.
At issue – without access to those essential computer codes and company-authorized repair information, the newer Deere tractors and other equipment with ECUs (including combines) will not operate properly, and may not run at all.
Plaintiffs’ attorneys allege that Deere has systematically denied access to software and information for these newer tractors and other farm machinery and as a result farmers can’t do their own repairs on modern lines of John Deere products. Instead, owners of these John Deere products must rely upon factory-authorized technicians to conduct most repairs.
According to the complaint, the Deere Repair Services Market is a multi-billion market and by monopolizing the software and other technical information, Deere has succeeded in “foreclosing competition” in that market. The complaint alleges several violations of the Sherman (Antitrust) Act.
One of those violations cited in the complaint was that Deere forced consolidation of its dealerships to eliminate inter-brand competition for repair services. Another allegation is that Deere violated the Sherman Act by making arrangements with “co-conspirator” dealerships to not sell software to farmers.
The complaint notes that Deere and its dealerships are “highly motivated to prevent competition” because the company’s profits from repair services are “three to six times” more than those from its sale of original equipment.
The repair conundrum on newer equipment might also explain the skyrocketing prices for older equipment that doesn’t require computer codes to make effective repairs.
According to the complaint, a farmer or non-Deere mechanic may have the necessary parts, knowledge and skill to repair a tractor, but without access to the software, “the repair is not recognized by the ECU, making the repair ineffective and the tractor still unable to function properly.” The allegation is that Deere has made that software available only to Deere dealerships and technicians; and they are not permitted to sell it.
Even if the farmer is able to interpret an “error code” on one of these newer machines and determine what the problem is with the tractor, the complaint alleges, without access to the necessary software, farmers must call the dealership to clear the fault codes on their machine.
The complaint cites costs of $150-$180 per hour for authorized Deere technicians, with additional charges for travel to the disabled tractor and, of course, parts. “Logistically, this is a nightmare for many farmers,” the complaint noted. “When the farmer calls a dealer to perform a repair, the farmer is at the mercy of the dealer’s schedule and must pay whatever the cost is . . . even if the problem could be fixed in 15 minutes” if access to the software were to be made available.
The complaint also cited costly delays to farmers who have to wait for authorized repair technicians during peak times when farmers – and repair technicians – are busiest.
The complaint mentions that in 2016, Deere issued an end-user “License Agreement for John Deere Embedded Software” that forbids customers from “accessing, reverse-engineering or modifying” the software running on its tractors. Deere states it “may terminate the license (to the embedded tractor software) granted under the license agreement” … if the end user violates any material term of the license agreement.
Software still unavailable
One of the things that may have precipitated this lawsuit now is that a trade group representing Deere made a highly publicized promise in 2018 to make the necessary software and tools available by January of 2021, the complaint noted. “Deere has failed to follow through on this promise,” they state.
“In 2021, multiple investigative journalists attempted to determine whether the software was available. The dealerships’ response was that they did not sell the software and that it was only available to licensed dealers,” the complaint also noted.
Plaintiff Forest River Farms owns five John Deere tractors and two John Deere combines. Plaintiffs’ attorneys – who are seeking triple damages from Deere & Co., -- will also represent additional plaintiffs in this recently filed case. The lead law firm representing plaintiffs is the Chicago-based firm of Wexler, Boley & Elgersma, LLP.
Deere & Co., a publicly traded corporation that’s based in Moline, Illinois. (The case number is: 1:22-cv-00188.)
The complaint cited Deere as the largest agricultural machinery company in the world with “appreciable economic power in the U.S. tractor markets.”
The complaint notes that while some farmers own these expensive tractors and combines, others lease the equipment. The leaseholder is often Deere itself, which has become the fifth-largest agricultural lender in the sector.