Toys R Us sues Amazon.com

Monday, May 24th, 2004 3:12PM CDT

Category: Site News
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NEW YORK (Reuters) - Toys R Us Inc. (NYSE:TOY - news), the No. 2 toy seller, said on Monday its online arm, Toysrus.com, filed a lawsuit charging that Amazon.com Inc. (Nasdaq:AMZN - news) violated Toys R Us' exclusive rights to sell toys, games and baby products on the Amazon Web site.

According to Toys R Us, its contract with the Web retailer states that Toysrus.com is the only authorized seller of toy and game and baby products on the Amazon.com platform through 2010. When the deal was signed in August 2000, Toysrus.com stopped selling products through its own site to move to Amazon.com.

"We expect Amazon.com to respect its contract with us and to support our position, especially, since we pay a very high fee to maintain this exclusivity," said David Schwartz, general counsel for Toys R Us, which is based in Wayne, New Jersey. "We would be happy to compete with other vendors in these categories, but we are not willing to pay for exclusivity that we are not receiving."

Schwartz said that as of May 17 there were more than 4,000 products in exclusive categories being offered through competitive retailers on the Amazon.com platform, violating the agreement.

Seattle's Amazon said it believes the suit is without merit.

"We are relentlessly focused on increasing selection for customers," said Amazon spokeswoman Patty Smith. "We believe we can have multiple sellers in the toy category to increase selection and to offer products that (Toys R Us) doesn't have."

The company declined to comment further, citing pending litigation.

Shares of Toys R Us edged up 25 cents, or 1.65 percent, to $15.36 on the New York Stock Exchange (news - web sites) on Monday afternoon. Amazon rose 53 cents, or 1.3 percent, at $41.70 on Nasdaq.

Other related links:

Yahoo! News - "Toys R us Online Unit Sues Amazon.com"

USA Today - "Toysrus.com sues Amazon.com for allowing others to sell toys"

Credit(s): Glen Steven Colen, Reuters / Yahoo! News