Comments on the approach and questionnaire of the

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Comments on the approach and questionnaire of the framework study to support Ecodesign measures to improve reparabil ity of products

Brussels, 6 September 2017

DIGITALEUROPE has been contacted in the framework of a study that Deloitte is currently carrying out,together with the Sustainable Europe Research Institute (SERI) and the Institute for EuropeanEnvironmentalPolicy(IEEP),fortheEuropeanCommission(DGEnvironment)withtheobjectivetosupportEcodesignmeasures to improve reparabilityofproducts.Having carefully assessed thequestionnaire,wedecidedtocommentalreadyatthisstageontheapproachofthestudyandthequestionnaireitself.

Atahigh-level,wesuggestareviewoftheapproachtakenalreadyatthispointintime.Asourcommentsandconcernsonapproach,terminologyandthequestionnairewillshow,thequestionnairedoesnotcaterfor thecomplexityandthediversityof therepairsector.Weareconcernedthat theclosedquestionsarenotformulatedinaneutral,open-endedwayandthereforerisknotdeliveringmeaningfulresultsthatcansupportpolicydevelopment.

- The focusof the study is largeand smallwhite goods,brownandgrey goods.With grey goods theconsultants mean ICT equipment. Industry is not using this term and the Cambridge dictionarydefines“greygoods”as "productsthat areboughtin aforeigncountry andsoldmorecheaplythanin the manufacturer's usualdistributionsystem:The biggest problem inbuyinggreygoodsisthelackofsupportandwarranties.”Thetermisconsequentlyinappropriateandwerequesttheuseadifferentterm.

- The questionnaire fails to distinguish between repair underwarranty (legal and commercial) andout-of-warranty period. That is problematic as the sophistication of actors’ approaches vary. Forexample, manufacturers have reverse logistics systems in place for repairs within the warrantyperiod.

- We are concerned that the questionnaire is not neutral: most questions are closed-ended andformulated in away that they preclude a desired answer from stakeholders. The resulting studyrisksnotdoingjusticetoreality.Wewouldcautionanykindofhastyconclusionsdrawnfromitandrecommendthatthequestionnaireberewordedinamoreneutralway.

- Largecompaniesoftheelectronicssectorhaveregionalapproachesandnotcountryspecificones.

Wehavetriedtorespondtothebestofourabilitiestothequestionsthroughthesectionsbelow;andraiseconcernsonindividualquestionsaswellasprovideconcreteinputthatcouldnotbesubmittedinameaningfulwayviathestructuredquestionnaire:


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A. Howwouldyoudescribethestructureoftherepairsectorinyourcountry?

InEuropeamultitudeofverydiverseorganisationsareengaged in repair/refurbishmentand re-useofEEE.They encompass companies/organizations performing repair on used goods as social or commercialenterprises1,refurbishmentcompanies2,platforms/repairfacilitators3andsparepartbrokers.

Electronics producers belong to this broader community of reuse providers. EEE producers are performingrepairsoftheirproductsorhaverepairorganisationscontractedtodosointheirnameinahighlyprofessionalway. This can be under warranty or beyond. The authorised repair centres have a contractually definedrelationwiththeproducerwithregardtoconfidentiality,qualityofserviceandreliability.Thisincludesclearlydefinedexpectationsofthequalityoftheequipmentused,oftherepairprocessesemployedandofthesafetyand EHS requirements related to them. EEE manufacturers generally provide a form of the requestedinformation and tools to their authorised service/repair centres. Such a provision comes with very clearlydefined terms and conditions to be able to safeguard the warranties of repaired products, proprietaryinformationandintellectualproperty,copyright,safety,liability,qualityofserviceandprotectionofthebrand.To thisend, theauthorised repairoperatorsand their techniciansgenerallyhave toobtaincertificationandregulartrainingbythemanufacturersorthirdparties.

Industry has recognized the increasing secondary EEE market by for instance introducing partnerprogrammes.4EEEproducersencourageinterestedpartiestoengageintheseprogrammes.However,obligingproducerstoshareconfidentialinformationandproprietarytoolswithnon-contractuallyboundentitieswouldcreateunacceptableliabilityandIPRissues.

B. Whorepairsinmostofthecasesinyourcountry?Pleaseestimatetheirrespectivemarket

share.This question cannot be answered as posed.Underwarranty (legal and commercial) nearly 100% of therepair is done bymanufacturers or their authorized repair centres,with a sophisticated reverse logisticsorganization inplace.Thesystemmightbedifferentwhen the repair takesplaceoutsideof thewarrantycoverage,wheretheplethoraoftheabovedescribedorganisationsmightbeinvolved.

C. HowwouldyoudescribeingeneraltheavailabilityofsparepartsinyourcountryIt is not clearwhat this question is aiming at;we are assuming this question is looking atavailability ofspareparts to thirdparty serviceswithin thewarrantyperiod.Note thatacross theboard, it is very rare

1 Forexample:VangerowSystemwerkstättensupplyinganetworkof1.000repairworkshopsinGermany;Mazumamobilereceivedbetween50.000and150.000phonespermonth,ofwhichforcanbereused;AfB(Essen),GSD(Munich)andbb-net(Schweinfurt)sellusedPCs,monitors,LaptopsandsmallerITequipment.TheGermancompanyAkkutauschen.despecialisedonreplacementofbatterieshavingcurrently15.000customersworldwide.2 http://www.re-tek.co.uk;https://leapp.nl,https://leapp.de3Forinstancethereare120,000+Sonysparepartsavailableonthissite:http://uk.eetgroup.com/Guides/Sony/.Anycustomercanbuyanypart.Therearepartnumbersanddescriptionsbutnotexplodedviewsandservicemanuals.ifixIT:https://www.ifixit.com

4E.g.MicrosoftAuthorisedRefurbisherProgramm.


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thatmanufacturerswouldimplementdifferentsparepartpoliciescountrytocountry.Producersprovidesupply fornormaloperationsand in-warrantyrepairs,but this isnotopentothegeneraleconomy.Sparepartsareoftenproducedonrequestoraccording topredicteddemand.There isnoexcessstockinthemarketthatintentionallyisnotused.Evenifindustrywouldprovidealistoftoolsandspareparts,thereisnoguaranteeonavailabilityduetothelimitedsupply.Partprocurementandstockisnotforeseen.Theprovisionofsparepartscomeswithariskoffraud.Industrymakestheexperiencethatanumberofblacksheepintherepairmarketdonotrequestsparepartstoservicecustomersbutforre-saleintotheblackandgreymarkets,thusenablingfraudandcounterfeitedproducts.

E. Does the social economy (cooperatives, associations, foundations, social enterprises, etc.)playamajorpartintherepairsectorinyourcountry?

Itisunclearonthebasisofthequestionwhattheconsultantwoulddefineasconstitutingasignificantpartintherepairsector.However,asoutlinedabove,thesocialeconomyisalreadytodaypartoftherepairactivitiespost-warrantyas is thecommercialsector.Somecompaniesdonatetheirused ITproducts tocharitiesaftertheyhavebeenwrittenoff.These socialorganizations repair thedevicesand resell them.Othercompaniesresell the written off devices to commercial refurbishers. Both channels create jobs and have bothenvironmentalandsocialpositiveimpactsthataredifficulttoweighagainstoneanother.

G. Areyouawareofanyindustry-ledinitiativesforincreasedrepair(informationcampaigns,repairdays,etc.)?

Onceaproducthasbeenpurchased, its lifetimecanbeextended through reuse, repair, refurbishmentandremanufacturing - hence avoiding premature wastage. This part of our business is labour-intensive andthereforecontributestotheEU'sjobsandsocialagenda.

Significant elements of the circular economy are already a reality in the ICT sector. Reuse, repair,remanufacturing and refurbishment are flourishing practices. DIGITALEUROPE member companies arecontributingdirectlytodeliveringboththeeconomicandenvironmentalbenefitsofthecirculareconomy.Theconsumersalsobenefitfromsafe,durable,reusableproductsthatareprotectedbywarranties.

InordertoenableDIGITALEUROPEmembercompaniestoexpandthisbusinessandcontributefurthertothecircular economy, the following principles should guide standardization and legislation of the aftersalesmarket:

A)Reuse,repair,refurbishmentandremanufacturingshouldnotbeaddressedunderwastelegislation.

B)Recognisethepotentialofthereuse,repair,refurbishmentandremanufacturingbusinessoftheICTindustrytotheCircularEconomyratherthanhamperitscontributions

1. Ensuresafetyandqualityoftherepairexperienceofconsumersbyrecognisingthetrustedstatusofauthorisedrepairnetworksandrefurbishment/remanufacturingfacilities

2. ProtecttheIPrightsassociatedwiththeinnovativenatureofoursectorevenintheaftersales,maintenanceandrepairmarket,inparticularwithregardtolicenseagreementsandaccesstoproprietaryinformation.


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C) When legislating Ecodesign, set feasible goals, vetted by stakeholders, rather than prescribing designmeasureswhichhavenotbeen thoroughly studied,andcould impedeproduct innovationoraffectproductreliability and functionality. Suchanapproachempowers the industry to continue innovating. It alsoallowsmanufacturerstoassesscarefullythepotentialtrade-offsbetweendurability,reparability,easeofdisassemblyandotherdesignfeatures.

D)Safeguardthe“repairedasproducedprinciple”forspareparts.AsrecognizedinEURoHS,theavailabilityofsparepartsforelectronicsiskeyforallowingtherepair,reuseandupgradesofequipmentalreadyplacedonthemarket.Withoutthisprinciple,equipmentwouldeitherbecomeprematurelyobsolete,oratbest,increasethecostofrepairandupgrades.

E)Avoidnegativesideeffectsoncirculareconomythroughrevisingconsumerpolicy.

- DonotreviseEUlawsothatconsumer(ratherthanthenthetrader)isallowedtochoosetheremedy.Thiswouldresultinasignificantincreaseofelectronicdevicesunnecessarilybeingrefundedorreplacedratherthanrepaired–atacostandlocaljobimpact.

- Guaranteesfortheperiodof2yearsshouldnotberevisited.Currentrulesoffersufficientlevelofconsumerprotection.Forcinglongercommercialguaranteesthroughlegislationmightstiflebothcompetitionandconsumerchoice,whilstincreasingthepricespaidbyallconsumers.

F)Facilitatetheflowsoftheinnermostloopsofthecirculareconomy.a.Donottreatproductsshippedforrepair/refurbishment/remanufacturingaswasteanddonotplacethemundertheblanketofsuspicionofillegalwasteshipment.Thesameappliesforconsumables,componentsandusedpartsofEEEthatarebeingshippedwiththeintentionofreuse.b.Reduceadministrativeburdenfromwasteshipmentregulationforshipmentsofproductsdestinedforfailureanalysis,repair,

Followingourrecommendationswouldensurethatthecosts forrepair, remanufacturingandrefurbishmentwould be reduced. Shipment processes would be sped up.Millions of products would be diverted from apremature death and receive a new life. The transition to a more circular economy, where the value ofproducts,materialsandresourcesismaintainedintheeconomyforaslongaspossible,andthegenerationofwaste minimised, is an essential contribution to the EU's efforts to develop a sustainable, low carbon,resourceefficientandcompetitiveeconomy.

H. Onaverage,howmuchdoesanoutofwarrantyrepaircostincl.sparepart?

It ischallengingtoprovideanonaveragecostgiventhatcompaniescompete inthismarketonthebasisofqualityandcost.Companiesmayaimornottoprovidefairwagesandensuretheirworker’ssafetythroughtrainingandup-to-date,auditedfacilities.Othersmightormightnotbewillingtocompromiseontherepairquality by not using original spare parts, not restoring all functionalities or performing all calibration andfunctionality tests. Additionally, some components aremore difficult to repair ormore costly to replace. Afunctionbuttonhasadifferentsparepartpriceascomparedtoadisplay.


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I. Doyouconsiderthatthesecond-handmarketiswelldevelopedinyourcountry?

DeloitteGlobal predicted (conservatively) for 2016, that approximately 120millionused smartphonesweresoldor traded inbyconsumers,calling it the“$17billionmarketyoumayneverhaveheardof”.5Theusedsmartphonemarketisafast-growingmarket,outperformingtheoverallsmartphonemarketfourtofivetimes.IDCexpectstheglobalmarketforusedsmartphonestogrowto$30bnby2020.6

ThemarketforusedITequipmentisevenlarger.AsGreenAllianceputsit:“Acirculareconomyforconsumerelectronicsisalreadyhere.…thevalueofAppledevicessoldoneBayintheUSin2013wasnearly$2billion.…WRAPestimatedin2013thatthevalueoftwotothreeyearoldlaptopsintheUKwas£720millionandtwotothreeyearoldtabletswereworth£90millionafteranycollectionandrepaircostsweretakenintoaccount.”7The DeloitteMobile Consumer Survey 2016 for 12 European countries found 19% of the participants hadpassedontheirpreviousphonetoafamilymemberorfriendwhenpurchasinganewone.Another10%soldortradedtheoldphonethroughdifferentchannels.8

ForDIGITALEUROPEmembers,thisdoesnotcomeasasurprise.WeknowthatICTequipmentishandeddownseveral timesbefore it becomeswaste. In that sense,digitalB2Cdeviceshavemany lives. They findanewownerthrough:

§ OnlinemarketplaceslikeEbayandAmazon§ Handingthedeviceovertofamilyorfriends§ Donationtocharity§ Trade-intocompanieslikeBrightstar,MazumaandRedeemaswellasOriginalEquipment

Manufacturers(OEM)

http://www.digitaleurope.org/DesktopModules/Bring2mind/DMX/Download.aspx?Command=Core_Download&EntryId=2397&language=en-US&PortalId=0&TabId=353

J.Ingeneral,howdoyouconsidertheattitudeoftheconsumerstowardsrepairactivitiesinyourcountry?Wesuggesttoconductaconsumersurveytoestablishastatisticallyreliable,representativeresponsetothisquestion. In addition, the predefined answers positive equals “muchdemand” and negative “fewdemand”whereasacertainattitudemightnotnecessarily translate intodemandonewayoranother.Demand isnotonlyafunctionofattitude.

5DeloitteGlobalTMTPredictions2016https://www2.deloitte.com/content/dam/Deloitte/global/Documents/Technology-Media-Telecommunications/gx-tmt-prediction-2016-full-report.pdf

6WorldwideMarketforUsedSmartphonesForecasttoGrowto222.6MillionUnitsin2020,AccordingtoIDC,PressRelease21.11.2016,InternationalDataCorporation,https://www.idc.com/getdoc.jsp?containerId=prUS41929916;http://www.idc.com/getdoc.jsp?containerId=US41737016

7GreenAlliance:Acirculareconomyforsmartdevices.

8 Deloitte Global Mobile Consumer Survey, European countries (Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, Netherlands, Norway, Poland, Sweden and UK), May-July 2016. For more details, see Deloitte's Global Mobile Consumer Survey: www.deloitte.com/gmcs


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Ka)Thisisaquestionbestansweredbyconsumersthemselves.Thelengthofarepairisverysubjectiveanddependsontheusecase,somemightwanttowaitandbecompensatedbyatemporaryreplacementunit,someothersmaynotfavourthatoption.Kb) This is a presumption from the author of the questionnaire.We see a significant interest in repair.However, repair versus new purchase as a customer decision point is best researchedwith hardmarketdataratherthenviaanopinion-based‘tendto’question.Kc)Aconsumersurveyseemstobetheonlymeanstoestablishaverifiabledatapoint.Suchasurveycouldleadtoastatementthatx%oftherespondentsdeclaredtomistrustrepairers.However,mistrustdoesnotnecessarilypreventtheuseofarepairer. Itwouldalsobe importanttodifferentiatebetweenauthorised,manufacturer-ledprogramsandindependentthirdpartyrepairservices.Kd)“relativelyhigh”needstobeclearlydefined.Whatpercentagepointisconsidered“high”?Inaddition,we believe different customer segments may make their decision on the basis of different points ofcomparison: e.g. initial purchasing price, residual value at time of repair, price of comparable new


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replacement device, size or importance of component replaced. The question also does not take intoaccountpotentialpricedifferenceduetoquality,guaranteesoffered,customerdatasecuredinadvanceofrepairetc.Kf)Thisquestionneedsbetterdefinitions:whatisconsideredas“tooexpensive”andexpensivetowhom:the service provider or the consumer? In addition, not only the cost of a spare part but also thequalificationandskillnecessarytoreplaceapartneedtobetakenintoaccount.Kg)Thisstatementneedsdifferentiation.Seeabove.Kh)Thisanswerneedsdifferentiation.Weprovideanuanceddescriptionoftherepairsectorabovewhichwehopeismoreinformativethanprovidingasimpleranking.Ki) Service technicians in the IT sectorwork bothwith hardware and softwareandmight be required tohave relatively specialised skills or competences. Potential job applicants best answer whether such anoccupationisofinterestbutmanufacturer-ledprogramsaimtoensurethatboththetrainingopportunitiesandthewagesarefairandinteresting.Kj)“manyproductsarenotdesignedtoberepaired.”Weobjecttothisstatementandrequestitsremoval.Thequestionismisleadingandinsinuatesanegativeintentwithouttakingintoaccountthatmanufacturersroutinely perform repair under legal warranty, proving that the products are repairable. Based on therequirements from the Consumer Sales and Guarantees Directive, Member States have adopted legalguarantee regimes of minimum 2 years. On top of the legal guarantee, consumersmay also be offered acommercialguarantee.That is thecaseformostconsumerelectronicsandelectricalproducts: fromtimetotime,manufacturersmayofferlongercommercialguaranteesalongsidelegalguaranteesinanattempttogaincommercialadvantage.When seeking a remedy for a defective product, the consumer is entitled, under the Consumer Sales andGuaranteesDirective,toarepairorreplacement.Shoulditbedisproportionateorimpossibleforthetradertoprovidesuchremedies,theconsumeristhenentitledtoareductionofthepriceorarefund.Kk)Thisquestionwouldbenefit fromacleardefinitionof “often”and“available towhom”anddoesnottakeintoaccountthenuancesintroducedinourresponsesabove.


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La)Thestatementwouldbenefitfrombeingformulatedmoreopen-ended.Fiveyearsisarbitrarywhereasitcouldhavebeenformulatedas“anextensionofthelegalwarrantyperiod”

Whatismore,theexpectedlifespanofagoodisverydifficultifnotimpossibletocalculate.ICTandconsumerelectronicproductsarecomplexbyvirtueoftheirdesign,componentsandinnovation.Expectedlifespancouldonly be measured against objective criteria based on a “normal” or “average” use. However, there is noindustry definition, no standard and no agreedmeasurementmethod of expected lifespan. Establishing anobjective, reliable, comparable and verifiable tool to assess and determine the life expectancy of a certainproductorproductcategorywouldbechallengingifnotimpossible.

Furthermore, we would like to stress that the life expectancy of a product heavily depends on how theconsumer uses the product and under which conditions. A product’s lifespan varies depending on manyfactors that are beyond themanufacturer’s control: use frequency,maintenance, installation, location. Forinstance,itisimpossibleformanufacturerstosetalifeexpectancywhichtakesintoaccountvariablessuchastheroominwhichthecustomerusesagood(e.g.aTVplacedinthekitchenisexposedtohighertemperaturesandhumiditylevelscomparedtoaTVplacedinthelivingroom).


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Finally, it shouldbenoted that technologicaladvancementand innovationcouldalsohaveaneffecton theperiod of time during which a product continues to function. Even though manufacturers offer softwareupdatestoensurethatcustomersenjoynewfunctionsthatwerenotavailablewhentheproductwasplacedon the market, inevitably a product’s lifespan can be affected in cases where software updates are notsufficienttosupportanewtechnologyorfeaturewhichbecomespopularaftertheproductisplacedonthemarket.We should also bear in mind that today’s hardware cannot be guaranteed to sufficiently supportabsolutelyanyfuturesoftwarerequirementsinthefuture.Forinstance,today’smicroprocessorsmightnotbeable to support Operating Systems which may be required in the future so as to run certain services.Ultimately,obligingmanufacturerstocommittoacertainexpectedlifespanfortheirproductscouldactuallycausemanufacturerstothinktwicebeforeintroducingnewinnovativefeatures,effectivelyslowingdownthepaceoftechnologicalevolution.

-- For more information please contact: Sylvie Feindt, DIGITALEUROPE’s Sustainability Policy Director +32 470 838300 or Sylvie Feindt @digitaleurope.org


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