Toys `R’ Us Finds Itself Under Antitrust Scrutiny–Again

By Jennifer Forsyth
The trust busters have set their sights on Toys `R’ Us, saying the retailer may have violated an 11-year-old FTC order to abstain from anticompetitive tactics, according to this story published in WSJ over the weekend. And the investigations appear to be aided in part by at least two law firms that have been pursuing the matter in civil court.
The Wayne, N.J.-based Toys `R’ Us consented to the decree in 1998, after an administrative law judge ruled that the retailer illegally wielded its marketing power to strong-arm toy makers into boycotting Costco and other discount warehouse clubs by threatening to stop selling any toys also being sold by the clubs.
This time, the spotlight is on the company’s Babies `R’ Us unit. The FTC is looking into whether the company tried to fix the prices of baby products. WSJ’s Joseph Pereira writes:
One set of email exchanges filed in a class action case appears to show Babies `R’ Us urging the Britax Childcare Unit of Carlyle Group LLC to get Target Corp. to raise prices. The subject field in the email exchanges said: “Target has not raised prices.”
“Did Target commit to you when they will raise their prices?” Cesar Garcia, director of merchandising at Babies `R’ Us, allegedly asked in an email dated Jan. 6, 2006.
A few days later, emails indicated that Target had agreed to honor the manufacturer’s suggested retail price.
And now the part that caught the LB’s eye: The FTC has requested documents from Faruqi & Faruqi LLP and Hagens Berman Sobol Shapiro LLP that are litigating cases alleging price fixing by Babies `R’ Us in federal court in Philadelphia. Kendall Zylstra, a Faruqi attorney representing two online retailers said he had been contacted by the FTC pursant to the investigation. Elizabeth Fegan, a Hagens Berman attorney representing a group of consumers also confirmed being contacted by the FTC in the probe. Here’s a story from Consumer Affairs when it was certified as a class action.