The Magnuson-Moss Warranty Act protects users from illegal sales tactics
We have heard from some customers and end-users that sales representatives from Original Equipment Manufacturers (OEM) of computer systems, routers or switches have implied or even told their customers that use of third party (non-OEM original) products in the OEM system may cause the manufacturer’s warranty to be voided. It simply isn’t true. This dishonest sales tactic is merely an attempt to coerce customers into purchasing products solely from the OEM, usually at prices much higher than OEM Equivalent Optics and Memory from Equal Optics.
In legal terms, this type of sales tactic is called a “tie-in sales provision.” In general, these tie-in provisions are illegal. They are specifically prohibited in the consumer market by section 102(c) of the Magnuson-Moss Warranty Act of 1975 (15 United States Code section 2302(c)). In the workstation, server and datacenter markets, such tactics can violate sections 1 and 2 of the Sherman Antitrust Act (15 United States Code sections 1 and 2).
From the Supreme Court of the United States:
“The essential characteristic of an invalid tying arrangement lies in the seller’s exploitation of its control over the tying product [here, the computer system] to force the buyer into the purchase of a tied product [here, the memory module sold by the system manufacturer] that the buyer either did not want at all, or might have preferred to purchase elsewhere on different terms. When such “forcing” is present, competition on the merits in the market for the [memory module] is restrained and the Sherman Act is violated.” – Jefferson Parish Hospital District No. 2 v. Hyde, 466 U.S. 2 (1984).
Equal Optics OEM Equivalent products are designed to meet the specific requirements of the system or class of systems into which the module will be installed.
At Equal Optics we believe that customers should be aware of this rarely used sales tactic so they can make informed buying decisions based on quality, compatibility and service instead of fear, uncertainty and doubt (FUD).
What is the Magnuson Moss Act?
The Federal Trade Commission Magnuson-Moss Act protects consumers. This act passed in 1975 states that tie-in sales provisions are not allowed in consumer warranties. Manufacturers cannot require consumers to purchase items or services in order to keep their warranty valid.
Essentially, the act states that a warrantor cannot require the consumer of their product (server, router or switch) to buy an additional product or service (OEM optics or memory) to be used with the original product in order to maintain the original product warranty.
In other words the server manufacturer cannot state that the system warranty is void if non OEM original peripherals are used.
In addition to the Magnuson-Moss Act any manufacturer that conditions its warranty on purchases of its own equipment may violate US antitrust laws.
For more information on the Magnuson-Moss Act