Toys “R” Us Violates FTC Agreement and Pays $1.3M Fine

May 03, 2011

Toys “R” Us will be paying a $1.3 million penalty to the Federal Trade Commission on allegations that the company violated a 1998 order that stopped it from keeping toy prices high and limiting choice for consumers in violation of the federal antitrust laws. In the case leading up to the order, the FTC discovered that Toys “R” Us, seeing warehouse clubs offering  much lower prices, extracted agreements with toy manufacturers to stop selling the same toys to warehouse clubs and other discounters that Toys “R” Us was receiving.

Under the 1998 order, Toys “R” Us was supposed to stop asking its suppliers to limit the toys sold to discounters or stop selling them altogether, and it was also barred from requesting information from suppliers about sales to any toy discounter.  However, according to the FTC, between 1999 and 2010, the company’s subsidiary Babies “R” Us violated the 1998 order. Although the FTC didn’t find evidence that Babies “R” Us explicitly entered into prohibited agreements with suppliers, the FTC alleges that it still violated the order by complaining to manufacturers about supplying their baby products to discounters that sold them at lower prices. Additionally, the FTC claims that the company asked suppliers about its sales to discounters and didn’t keep records of its communication with the suppliers.

This appears to be another case of a defendants doing indirectly what it could not do directly.  Apparently, the FTC is having no part of it.

Source: Toys “R” Us Pays FTC Fine

Photo Credit: Mooganic

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