Amazon to pay $51 million to settle Toys 'R' Us suit

Amazon.com must pay Toys "R" Us $51 million to settle a lawsuit filed by the toy retailer in May 2004.

Back then, Toys "R" Us sued Amazon for violating the terms of the 10-year partnership the companies forged in 2000. Toys "R" Us claimed Amazon violated the agreement by allowing other vendors to market toys and baby products on its site.

On Friday, Amazon said in a document filed with the Securities and Exchange Commission that the money must be paid in the third quarter of 2009 and that the sum was "unanticipated."

The Web's largest retailer said that Toys "R" Us has agreed to dismiss all claims and counterclaims.

Not long after Toys "R" Us filed its original claim, Amazon filed a counterclaim as well as an official request to terminate the partnership.

The retailer asked for $750 million in damages and claimed the toy retailer failed to meet its end of their bargain. Toys "R" Us, according to Amazon, was unable to meet demand for top-selling toys, games, and baby products, especially during the holidays.

In 2006, the court entered a decision favoring Toys "R" Us that terminated the contract.

The two companies joined forces during the dot-com era, after Toys "R" Us stumbled badly trying to build an online franchise. The toy giant turned to Amazon, agreeing to pay the retailer a $200 million premium for exclusive rights to sell toys and baby items through its site.

A spokeswoman for Toys "R" Us declined to comment.

Imran Khan, a J.P. Morgan analyst, lowered his second quarter forecast for Amazon but said "We do not see the settlement as representing anything other than a one-time item," Khan wrote in a note sent Friday afternoon. "We believe Amazon's continued market share gains justify the stock's premium valuation."

[usarioclave1]

I think this stems from the agreement years ago when amazon was running the toysrus.com domain.

http://www.msnbc.msn.com/id/11641703/

[professionaladventurer]

I remember year 2000 x-mas. I know folks who were charged by Amazon for TRU goods have STILL have not gotten them.

[sanenazok]

wow, you remember a shopping experience snafu about 9 years ago. I would have moved on with my life but that's just me.

[tech_crazy]

I personally was not affected by this. But I guess that just because some folks remember doesn't necessarily mean they have not moved on. When Cyberrebate closed shop somewhere around 2000, I lost about $500 in rebates that were due to me! I have moved on but will forever remember it.

[sanenazok]

@tech: so hopefully you learned not to give a company fistfulls of money without something of equal value in return. Do you bring up cyberrebate all the time? I would think people you know would be sick of hearing about it. Also in hindsight it makes you look not too tech savvy.

If someone didn't get their 2000 order yet, the matter better be resolved by now and there's no point to bring it up. It's just sour grapes.

[hankthedwarf]

@sanenazok Do you enjoy being an *******? It sure seems like it.

[Mergatroid Mania]

sanenazok: You must have a pretty poor memory then. Those who ignore history are doomed to repeat it.

[sanenazok]

It's OK to learn from something without bringing it up all the time. Geez.

[faceless128]

i always remember the bad experiences. it's the good ones i have trouble remembering.

[pj-mckay]

A deal is a deal.

If Amazon had no contract to abide to, they wouldn't be paying $51 million this summer. Not receiving your $10 worth of goods 5 years ago is irrellevant... if they had a case to terminate their involvement they should have done it properly.

Isn't it amazing how the big guys fall foul of the laws they're only to keen to exploit when it suits them. Toys'r'us had the clout to fight and win, regardless of whether they were the architects of the problem.

[gmhendo]

$51 million, $200 million, $750 million are the numbers in the claims and counter claims. The legal costs are probably on top of that. So box on guys.

But next time you go into Toys R Us, or buy off Amazon, be mindful that you are paying for these games. These guys make anti-competitive deals that force higher prices, and then go for an expensive divorce that again smacks the consumers.

Look for a better deal America!

Amazon already phases me with their freight charges, and I just won't buy from Toys ever again.