Toys R Us Under Investigation for Price-Fixing Baby Products

October 18, 2009 by Cathy Ribble
Filed under: News

Toys R Us is under investigation by the Federal Trade Commission to determine if the largest toy store chain in the United States improperly acted to keep prices of baby products high.

Investigators are reviewing the company’s Babies R Us division emails with manufacturers concerning pricing agreements with rival retailers for products such as high chairs, strollers, car seats, and breast pumps.

The Wall Street Journal reported yesterday that the chain may be in violation of an 11-year-old FTC order concerning tactics which discourage product discounts and keep prices high. In 1998, an administrative law judge ruled that Toys R Us had illegally exercised its market power with toy makers by threatening to stop selling toys also being sold by discount retailers. Toys R Us then consented to the FTC order which is currently under investigation.

The issue of whether retailers can agree to set minimum retail prices on products has been a hot topic in the business world for years.

Toys R Us has a 60-year history. The company launched its Babies R Us division in 1996, and that division has grown to more than 260 locations. Earlier this year, Toys R Us broadened its internet presence by acquiring e-commerce sites eToys.com, babyuniverse.com, ePregnancy.com, and Toys.com. In May, the company acquired FAO Schwarz and its internet business operating at FAO.com. FAO Schwarz was widely recognized as a symbol of quality and innovation in the world of children’s retailers.

These acquisitions certainly posture the company for major control of toy and baby product markets.