UPDATE 3-Toys R Us to pay $1.3 mln for violating FTC order

Tue Mar 29, 2011 2:15pm EDT

* 1998 order had barred chain from asking about discounts

* FTC charged Babies R Us had violated 1998 order

* Toys R Us pleased to have resolved complaint (Adds company comment)

WASHINGTON, March 29 (Reuters) - Toys R Us [TOY.UL] has agreed to pay a $1.3 million penalty for violating a 1998 order that barred it from pushing suppliers to refuse to sell to competitors or from urging limits to those sales, the Federal Trade Commission said on Tuesday.

The FTC said in a complaint that Toys R Us subsidiary, Babies R Us, had asked suppliers what they were charging discounters and complained to them about discounts that other retailers were giving consumers, the FTC said.

The 1998 order had barred Toys R Us from asking about discounts and required it to keep records of communications with suppliers if they related to sales and distribution. The FTC also said that Toys R Us failed to keep those records.

"Although we did not find evidence that Toys R Us entered into agreements with the suppliers that violated the order, the penalty here underscores the importance of parties complying fully with all of their order obligations," said Richard Feinstein, director of the FTC's Bureau of Competition.

Toys R Us spokeswoman Kathleen Waugh said: "We are pleased that this matter is fully resolved and is now behind us."

Industry data issued last month showed that for the first time in a long time, toy stores took market share from mass market discounters in the latest fourth quarter.

Several manufacturers have talked about the growing clout of the world's largest dedicated toy retailer, which has filed to raise up to $800 million through an IPO. [ID:nN16290972]

The retailer was taken private in 2005 by Kohlberg Kravis Roberts & Co [KKR.UL], Bain Capital and shopping center operator Vornado Realty Trust (VNO.N) in a $6.6 billion deal. (Reporting by Diane Bartz with additional reporting by Dhanya Skariachan; Editing by Gerald E. McCormick and Tim Dobbyn)

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