In mid-2009, a class action lawsuit was launched against Babies “R” Us, a division of Toys “R” Us, as well as five manufacturers from whom Babies “R” Us purchased baby products for resale in its stores. The suit alleges that Babies “R” Us and the supplying manufacturers conspired to fix prices on several products including strollers, high chairs, and car seats. The suit claims that between 2001 and 2006 over $500 million in merchandise produced by the five manufacturers and sold by Babies “R” Us was controlled by minimum pricing agreements. These sales amounted to between 10 to 50 percent of the five manufacturers’ sales in the U.S. The lawsuit claims that the minimum pricing agreement was anticompetitive and resulted in consumers paying millions of dollars more for these baby products than they would have in the absence of such an agreement. Discuss the possible strategic channel management advantages for both Babies “R” Us and the supplying manufacturers as a result of this price maintenance agreement versus the possible negative effects of the agreement on consumer welfare from a macro perspective.

  • CreatedJuly 14, 2015
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