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Toys R Us Sues Amazon Over Deal

From Bloomberg News

Toys R Us Inc. sued Amazon.com Inc., claiming the Internet retailer was violating an exclusivity agreement by allowing other merchants to sell toys, games and baby items on its website.

More than 4,000 products, including Monopoly games, Razor-brand scooters and baby strollers are being sold on Amazon.com by other retailers, according to the lawsuit filed in state court in New Jersey.

Toys R Us is seeking an injunction and the return of more than $200 million it has paid Amazon.com under the 10-year agreement.

Toys R Us, the No. 2 U.S. toy seller, claimed its August 2000 agreement with Amazon.com gave it the exclusive rights to sales of toy, game and baby products on the Amazon.com site. At that time, the companies agreed that Amazon.com would run websites carrying both their names and also handle shipping of customer orders.

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“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,” said Amazon.com spokeswoman Patty Smith. She said the allegations made in the lawsuit were without merit.

Toys R Us’ Toyrus.com unit filed the suit after trying to resolve the dispute through mediation, the retailer said.

Shares of Wayne, N.J.-based Toys R Us rose 33 cents to $15.44 on the New York Stock Exchange. Seattle-based Amazon.com rose 46 cents to $41.63 on Nasdaq.

Toys R Us was the first major retailer to enter an alliance with Amazon.com, which has broadened its merchandise selection since starting in 1995 as a Web bookstore.

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In the last four years, Amazon.com has opened its site up to other retailers as it looks for ways to expand offerings while avoiding having to buy and manage inventory on its own.

The toy retailer gave up its right to operate Web stores on its own while getting an agreement for exclusive rights with Amazon.com, according to the lawsuit filed Friday.


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