FTC Approves Toys “R” Us Petition to Modify 1998 Final Order

On April 15, 2014, the FTC approved a petition from Toys “R” Us (“TRU”) to reopen and modify a 1998 final Commission order.

In that order, Toys ‘R’ Us, Inc. v. FTC, 221 F.3d 928 (7th Cir. 2000), TRU was found, among other things, to have used its significant market power to orchestrate a “hub-and-spoke” conspiracy among its suppliers to restrict the supply of toys to certain warehouse clubs that were also potential competitors with TRU.

However, according to TRU, the changed landscape of the toys retail market, with the growth of Walmart and Target, and the emergence of online retailers such as eBay and Amazon, has made some aspects of the 1998 order obsolete. In particular, TRU wants the FTC to set aside three paragraphs in section II, though not the final order’s core prohibition on facilitating or attempting to facilitate unlawful collusion. TRU believes that eliminating these sections would allow it to compete more effectively. These three paragraphs have previously restricted the ability for TRU to enter into certain conditional supply relationships.

The commissioners voted 4-0 to approve the TRU’s petition.