http://online.wsj.com/article/SB124770297357348633.html

Toys 'R' Us Faces Class Action
Suit Alleges Price-Fixing With Manufacturers on Strollers, Other Products


By JOSEPH PEREIRA

A federal judge granted class-action status to a consumer lawsuit that accuses
a
unit of Toys "R" Us Inc. and five manufacturers of conspiring to fix prices on
a
variety of baby goods, including strollers, high chairs, car seats and breast
pumps.

Plaintiffs say prices on more than $500 million in baby products sold by Babies
'R' Us between 2001 and 2006 were controlled by minimum-pricing agreements.
Above, a Toys 'R' Us/Babies 'R' Us store in Elizabeth, N.J.

Defendants in the case had sought to have it dismissed, relying in part on a
2007 U.S. Supreme Court ruling that minimum-pricing agreements between
manufacturers and retailers were no longer inherently illegal, as they had been
treated judicially for decades. The high court said the pacts could be lawful
if
consumer benefits -- such as better service -- outweighed the harm of paying
higher prices.

The baby-goods suit, filed in U.S. District Court in Philadelphia two years
ago,
is unusual because similar price-fixing allegations have been thrown out by
judges in the wake of the Supreme Court decision.

The suit seeks an unspecified amount in compensatory and punitive damages.

In her ruling Wednesday, U.S. District Court Judge Anita Brody said that while
agreements "setting minimum resale prices can have pro-competitive
justifications," the Supreme Court "stated that lower courts must be diligent
in eliminating their anticompetitive uses from the market." Judge Brody also
pointed out that in its decision the Supreme Court warned that minimum pricing
agreements enforced by a "dominant retailer" could also be anticompetitive.

Plaintiffs argued that the Babies "R" Us unit of Toys "R" Us is such a
retailer.
Plaintiffs attorney Elizabeth Fegan said prices on more than $500 million in
baby products sold by Babies "R" Us between 2001 and 2006 were controlled by
minimum pricing agreements.

The other defendants named in the suit include: Maclaren Ltd. of the U.K.;
Italy's Peg Perego SpA; Medela Inc., of Switzerland; Sweden's Baby Bjorn AB;
the Britax Childcare unit of Carlyle Group LLC.

Plaintiffs said Babies "R" Us accounted for between 10% to 50% of the
manufacturers' U.S. sales.

Toys "R" Us, based in Wayne, N.J., declined to comment. Officials at the
manufacturers couldn't be reached.

Greg Gundlach, a marketing professor at the University of North Florida, who
isn't involved with the case, estimates that consumers paid $85 million to $100
million more for the goods in question than they would have without pricing
agreements. Mr. Gundlach said he based his estimate on a U.S. Department of
Justice study in the mid-1970s that found consumers historically have paid
between 19% to 27% more when vertical pricing agreements are implemented.
--
Kathleen Huggins

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