Toys ‘R’ Us May Face Antitrust Suit Ftc Looks Into Company’s Buying Practices

Toys ‘R’ Us, the nation’s largest toy retailer, is promising a vigorous fight against any action federal trade officials may bring against its buying practices.

Staff members of the Federal Trade Commission have suggested that antitrust charges be brought against Toys ‘R’ Us amid complaints that the company has pressured manufacturers not to sell toys to rival retailers, particularly discount stores, The Wall Street Journal reported Tuesday.

The report prompted an angry response from Toys ‘R’ Us chief executive officer Michael Goldstein, who said the company had cooperated fully with the FTC’s review of its practices.

“We are frankly astounded that the FTC would bring a case against Toys ‘R’ Us, especially after the commission has acknowledged that our toy buying practices are well within the law,” Goldstein said.

FTC spokeswoman Bonnie Jansen declined to comment on the report. The five-member commission is scheduled to meet Wednesday morning.

The FTC launched an investigation of the toy industry two years ago to determine how the practices of makers and retailers could keep prices artificially high, the Journal reported.

One of those complaining about Toys ‘R’ Us to the agency is Price-Costco Inc., a warehouse shopping club based in Issaquah, Wash., the newspaper said.

Goldstein said Toys ‘R’ Us invests millions of dollars every year to develop and promote toys, but that warehouse clubs come along a few weeks before Christmas, without having made a similar investment, to choose the few hottest-selling items to sell at or below cost to attract shoppers.

“Given that behavior, and Toys ‘R’ Us’ contribution to the industry, we have told manufacturers that we reserve our unquestionable right to refuse to carry the same items as warehouse clubs,” Goldstein said.

“This is central to our ability to compete - supposedly the ultimate goal of FTC policy,” he added. “We are disappointed that the FTC, after presumably fully understanding the issue, may bring this matter to trial.

“If they do, we will have to take our position to the courthouse where we are confident we will prevail,” Goldstein said.

Paramus, N.J.-based Toys ‘R’ Us accounts for more than one-fifth of the $19-billion-a-year U.S. retail toy business. It operates more than 1,000 Toys ‘R’ Us toys stores worldwide