Toy Makers, Retailers Settle Antitrust Case

Attorney General Spitzer today announced a $50 million nationwide antitrust settlement with Toys ‘R’ Us and major toy makers.

The settlement came as a result of a lawsuit filed by New York against Toys ‘R’ Us, Mattel, Little Tikes and Hasbro. The case alleged that Toys ‘R’ Us orchestrated a conspiracy among the three major toy manufacturers to restrict the supply of certain popular toys to warehouse and price clubs in an effort to put the clubs at a competitive disadvantage.

"Although toy makers and sellers like to view themselves as Santa’s helpers, in this case these companies were nothing more than modern-day Scrooges," said Spitzer.

As part of the settlement, New York will receive a total of $2.2 million in toys which will be distributed to needy children over the next three holiday seasons, as well as $850,000 in cash which will be used to provide children with books and other educational materials.

"I’m delighted to announce that thousands of needy children will have happier holiday seasons and thousands more will receive books and other educational materials."

After filing the suit in Federal court, New York was joined by the Attorneys General of 43 other states, the District of Columbia and Puerto Rico.

The complaints alleged that Toys ‘R’ Us used its market power to obtain agreements with toy manufacturers to limit the sale of certain toys to price clubs, or to only sell the toys in combination packs to ensure that consumers could not easily compare prices with those charged by Toys ‘R’ Us.

Some of the toys allegedly blocked from which the warehouse clubs from 1991-98 include Barbie Dream House, Air Pro Hockey, Thunder Strike, 1,2,3 Firehouse Blocks, Deluxe Magnadoodle, as well as Fisher Price Nursery Monitors.

Pursuant to the terms of the settlements, which are still subject to court approval, Toys ‘R’ Us will pay $40.5 million in cash and toys, Mattel, the nation’s largest manufacturer will be $8.2 million in cash and toys, and Little Tikes Company will pay $1.3 million in cash and toys. Hasbro, also a defendant, previously agreed to pay $5.9 million in cash and toys. As part of the settlements, the defendants admit no wrongdoing.

The toys provided as part of the settlements will be distributed to children in all 50 states, Washington, D.C., and Puerto Rico by the U.S. Marine Corp’s ‘Toys for Tots’ program.

The suit was brought by the Attorney General’s Antitrust Bureau and was handled by Assistant Attorneys General Linda Gargiulo and John Ioannou.