Obsolescence – Between Entrepreneurial Freedom and Need for Regulation

The printer has a malfunction shortly after the warranty expired and has to be replaced, cellphones get slower and slower with every new update or the battery dies after only a brief period of time. The repairability is aggravated because of fixed installed batteries or expensive spare parts.

Many consumers can relate to these kind of problems and also for some politicians, “planned obsolescence“ is more than an urban legend, which has to be addressed politically. The Green party even made it part of their election campaign. They demand a reduction in value added tax on repairs from currently 19% down to 7%, in order to “fight the amount of waste produced by society“. However, it is not easy to prove planned obsolescence, the intended reduction of a product’s life span.

It’s difficult to differentiate between the usual wear and tear of a product and an intention of the producer. Obsolescence can not yet be measured by standardized criteria.

It’s a fact that consumers nowadays tend to replace their electric products more often than a few year ago. The lifetime of household appliances decreased between 2004 and 2013 from 14 to 13 years while the lifetime of notebooks shrunk between 2005 and 2013 from 6 to 5 years, according to a study of the Federal Environmental Office (UBA) in March 2015. This is connected to the popular insinuation that companies have an incentive to lower the lifetime of a product, in order to sell new versions of the product, which are often only slightly modified. Thus the question remains: Is federal regulation needed in order to protect the environment and the consumer?

Brussels at least sees it that way. In 2005 the Ecodesign directive already was put in place, which aimed to increase energy efficiency and improved sustainability. After the first amendment in 2009 there’s now a push towards the next adjustment. The EU-parliament passed a resolution in June and the respective stakeholders are preparing their lobbying campaigns.

In Germany, the issue did not play an important role during the last legislative cycle. After the above-mentioned study by the UBA, it took time until May 2017 to address the topic. The UBA published guidances to shield consumers planned obsolescence. Those suggested for example a minimum lifetime span for products, more consumer information, a mandatory warranty statement, improved repairability and also various strategies to extend the life cycle of a product.

Furthermore, the parties in Germany only addressed this topic to a certain extent. For example, the CDU/CSU is demanding harmonised EU-standards regarding product warranty, but does not support increased interference in the product design. The SPD have shown a stronger position on this subject. The Social-democrats want more transparency for the consumer and ameliorated repairability, however regulations on a minimal lifetime for all products are viewed critically by the SPD. Electric products differ too much in their life cycles and quality and common standards are very difficult to define.

For the Green and the Left, these arguments are not sufficient. They support more regulation and, in contrast to the SPD, demand a general extension of product warranty. The left goes even further and calls for a minimum lifetime of three years for all electric products. Additionally, companies should be obliged to develop products that can be repaired easily and have enough spare parts. Overall, the Greens as well as the Left call for prolonged product life cycles.

FDP and AfD are rather cautious of this subject and both have not developed stand points for this topic. It is to be assumed that both parties refuse company regulation.

Therefore, it is on the Greens to make this issue a matter of subject in the next government coalition. In this case, the demands of a lower value added tax on repairs may just be the first step. However, a participation of the Greens in a next government coalition is still uncertain just weeks before the election.

In the case of both a so-called “Jamaica coalition“ or a coalition consisting of CDU/CSU and the Greens, it will be difficult to enforce government regulation against a traditionally business-friendly CDU/CSU. Whatever wholehearted words the next coalition contract will contain, they will most likely not pass the detailed negotiations in Brussels. A fast solution like a VAT reduction on repairs could serve as a fig leaf for the next federal government.

A resumption of the grand coalition or a coalition consisting of CDU/CSU and FDP would burry the topic on the national level. And in Brussels, Germany would rather slow things down than help establishing a common solution.

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