Toys 'R' Us Fights Price Fixing Allegations on Baby Products
Retailer is alleged to have inflated prices on strollers, breast pumps and more.
Oct. 20, 2009 — -- If you feel as if you're overpaying for strollers, car seats and other baby products, you're not alone. Consumers and online toy retailers suing Toys "R" Us claim that the country's largest toy retailer illegally kept prices high on baby products. As reported in recent days, the Federal Trade Commission is also investigating the issue.
Toys "R" Us says the accusations have no merit. The company said in a written statement to ABCNews.com that it would defend itself vigorously in court and said that it is cooperating fully with the FTC.
An FTC spokesman declined to comment, but attorneys representing both consumers and toy retailers, which filed two lawsuits more than three years ago that have been consolidated into a single case for now, said that they had been contacted by the FTC in recent weeks and asked to provide information on their cases.
"It's very good. It certainly will, I think, bring attention to this issue," Mary Jane Fait, the co-lead attorney of a class action lawsuit against Toys "R" Us and six baby product manufacturers, said of the FTC's involvement.
Court documents say thirteen consumers complain that they paid inflated prices for products at Babies "R" Us, which is owned by Toys "R" Us. The lawsuit alleges that Babies "R" Us was able to push up prices by coercing toy manufacturers to strike agreements with other retailers stipulating that the products -- including strollers, car seats, baby carriers, breast pumps and crib bedding -- would not be sold below a certain minimum price.
In the lawsuit against Toys "R" Us by two online baby retailers, BabyAge.com and the Baby Club of America, the two retailers allege that they ultimately lost business because of the retail giant. They say pressure from baby product manufacturers -- who were themselves under pressure from Babies "R" Us -- stopped BabyAge.com and Baby Club from discounting their merchandise.
The FTC has more than a decade-long history with Toys "R" Us. In the late 1990s, the commission charged that Toys "R" Us secured agreements with toy manufacturers to stop selling certain products to discount warehouse clubs such as Costco. In 1998, the FTC ordered Toys "R" Us to stop engaging in practices to keep prices higher.
Lower Prices at Babies 'R' Us?
Kendall Zylstra, a lawyer representing BabyAge.com and Baby Club, said the FTC told him it was investigating whether Toys "R" Us had violated the 1998 order.
The FTC investigation was first reported by the Wall Street Journal on Saturday.
Zylstra, a Pennsylvania-based partner at the law firm Faruqi & Faruqi, and Fait, a managing partner of the Chicago office of Wolf Haldenstein, told ABCNews.com that they expect their cases to head to court next year.
Fait said that if the class action case is successful, consumers could see lower prices at Babies "R" Us and that Babies "R" Us customers found to have overpaid for products could be awarded damages.
Geoffrey Oliver, a former assistant director responsible for the FTC's anticompetitive practices division, said that it is unusual for the FTC to pursue a matter that's already part of a private lawsuit.
The FTC may be making an exception, in this case, because of the question over whether its own order was violated, said Oliver, now a partner at the law firm Jones Day.
"The FTC views its orders very seriously," he said.