Toys R Us Inc. sued Amazon.com Inc., claiming the world's top Internet retailer is violating an exclusivity agreement by allowing other merchants to sell toys, games and baby items on its Web site.
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 Passaic County, N.J., Superior Court. 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 Web sites carrying both their names and handle shipping of customer orders.
"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 are without merit.
Toys R Us's Toyrus.com unit filed the suit after trying to resolve the dispute through two days of nonbinding mediation, the retailer said in a statement.
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. In the past four years, Amazon.com has opened its site 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.
"It's a major concern to us because it hits within categories that are very important to us," said Greg Ahearn, vice president and general manager of Toysrus.com, in an interview. Months of talks between the two companies have included Toys R Us chief executive John H. Eyler Jr. and Amazon.com chief executive Jeffrey P. Bezos, he said.
Amazon.com also should be stopped from implementing new software that retailers could use to list items automatically on the Internet retailer's Web site, including those that violate the exclusivity arrangement, the lawsuit said.