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Toys R Us abused clout, judge rules

An administrative judge has upheld charges that Toys R Us bullied its suppliers to deny Monopoly, Barbie dolls and other popular toys and games to discount warehouse clubs.

Ordering the nation's largest toy store chain to play fair with its competitors, Judge James P. Timony ruled that Toys R Us illegally used its clout to get toy makers to stop selling to warehouse discounters like Price Club, Sam's and BJ's.In the ruling announced Tuesday, Timony found that the company warned toymakers it might stop carrying certain toy lines if the products also were offered to discount stores.

Most toy suppliers agreed to the company's terms because they feared retaliation in the form of less shelf space and less advertising, the judge said.

Timony also noted that by early 1993, Mattel, Hasbro and other major toymakers had stopped offering discount warehouse clubs any products they sold to Toys R Us, while other manufacturers sold only discontinued merchandise or bundled packages to the warehouse clubs. A year later, Toys R Us had 29 percent of all sales of the top 10 toymakers.

The ruling upholds charges filed in a May 1996 complaint by the Federal Trade Commission, which accused the company of using its status to keep prices artificially high and its competitors at a comfortable distance.

A spokeswoman for the Paramus, N.J.-based chain called the ruling disappointing. She said the company would appeal.

"We're confident that when the process reaches its conclusion, the courts will find, based on what the facts clearly show, that Toys R Us has always competed fairly and in the consumers' best interest," Rebecca Caruso said.

In addition to his ruling, Timony barred Toys R Us from entering any agreement that would restrict a manufacturer's sales to toy discount stores. He also prohibited the company from requiring or encouraging suppliers to give information about their sales to other discounters.

Toys R Us also is prohibited for the next five years from refusing to purchase from a manufacturer because of its dealings with discount rivals.

Among other products that Toys R Us tried to keep from discount warehouse clubs are Hollywood Hair Barbie, Mr. Potato Head, Mattel's Barbie Dream House, Hasbro's Puppy Surprise, Fisher Price's nursery monitor and Playtime's Supersaturated squirt gun, the FTC said.

An appeal by Toys R Us would postpone Timony's order from taking effect immediately, said FTC spokeswoman Bonnie Jansen.