Case Info
In the late 1990s and early 2000s, Babies “R” Us allegedly used its dominant market position as the largest specialty retailer of baby products in the United States to negotiate BRU-Manufacturer Agreements in the face of threats to its pricing power by the increasing popularity of “e-commerce.”
The agreements required manufacturers to ensure retailers would charge a minimum resale price for the manufacturers’ products. They also prohibited the retailers from lowering prices for baby products past a certain price floor when selling goods to consumers. By virtue of its power to control prices and exclude competition in the relevant markets, Babies “R” Us allegedly possessed monopoly power in the market for baby products.
Seeger Weiss brought an antitrust lawsuit in 2006 on behalf of consumers who purchased certain baby products from Babies ‘R’ Us after the company allegedly threatened to drop certain popular lines from its stores if their manufacturers didn’t agree to block Internet retailers from offering the same products at lower prices. The complaints, brought by 13 consumers, alleged that the anti-discounting actions constituted illegal vertical price restraints under the Sherman Act.
Babys ‘R’ Us parent company Toys ‘R’ Us settled the case, resulting in a $35.5 million agreement* to resolve plaintiffs’ allegations that Toys ‘R’ Us used its market-leading position to stop manufacturers from selling baby products at lower prices.
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*Prior results do not guarantee or predict a similar outcome with respect to any future matter.