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FTC v Toys "R" US
This is an update of a prior discussion. When the FTC took on Toys
"R" US (TRU) for coercing Hasbro from selling to the price clubs, a
perceptive list member pointed out that this didn't make sense since
Hasbro would lose a lot of profits by foregoing price club sales and that
it was implausible that a 20% oligopolist like TRU could browbeat a huge
monopolist like Hasbro. At that time, I suggested that TRU must be
returning the favor by keeping products competitive with Hasbro off its
Our reaction has now been corroborated by the FTC, as
shown in the following citations from the Judge's Initial Decision:
"178. Verrechia (HasbroÂ’s CEO) had complained to TRU that it
selling knock-offs of HasbrosÂ’ merchandise and "that was
one of the things he hoped to gain in return." (i.e.
in return for not selling to the price clubs.)
180. The effort by Hasbro to seek concessions from
TRU, including knock-offs is corroborated
in a Hasbro documentÂ…
n227. Mr. Goldstein, vice-chairman and CEO of TRU,
testified that respondent providesÂ…services for
knock-off toys. (Imitations)."
The judge calls this Quid pro Quo. The QPQ factor explains
why "mere" number of competitors (e.g. 10 competitors will give you more
competition than 5 and 2 or 3 or 4 won't give you much competition at
all) are important in antitrust as Adam Smith and his faithful student
Chuck Mueller have been saying all along.
Incidentally 1: What are "knock-offs". Why they are legal
products which a first-comer hates because they provide competition.
Incidentally 2: Anti-Monopoly has disappeared from the
shelves of TRU and the other mass merchants and Hasbro calls it a
"knock-off", never mind that the object of the "knock-off" was stolen
from the public domain and inventors and Anti-Monopoly is a patented
innovation over Monopoly.
Incidentally 3: Given what appears in the Initital
Decision, why isn't the FTC going after Hasbro? Does it think that
Hasbro is a poor, victimized giant or does it buy the idea it mentions,
i.e. that Hasbro is only a 10 to 14% monopolist in some giant toy and
game market. If the later, it must have been brainwashed by cluster
Merry Christmas and a Happy New Year