June 15, 2009, 12:00 AM

Amazon.com settles with Toys ‘R’ Us after years in court

Amazon has settled a long court fight with Toys “R” Us. Amazon will pay $51 million to settle a complaint by Toys “R” Us that alleged Amazon had violated a contract that granted Toysrus.com exclusivity in the toys, games and baby category on Amazon.com.

After five years of litigation, Amazon.com Inc. and Toys “R” Us Inc. have settled their lawsuit.

In a regulatory note Amazon filed Friday with the Securities and Exchange Commission, Amazon, No. 1 in the Internet Retailer Top 500 Guide, will pay Toys “R” Us (No. 39) $51 million to settle a complaint filed by Toys “R” Us in 2004 that alleged Amazon had violated a contract that granted Toysrus.com exclusivity in the toys, games and baby products category on Amazon.com.

“Amazon.com entered into a settlement agreement in its lawsuit with Toys “R” Us and its affiliates with terms that include a one-time payment in the third quarter of 2009,” Amazon says in its regulatory filing. Amazon will make the payment early in the third quarter, but will account for the settlement in its second quarter earnings, Amazon says.

Both Amazon and Toys “R” Us declined comment on the settlement. A New Jersey Superior Court judge ruled in March 2006 that Toys “R” Us could terminate its e-commerce and merchandising agreement with Amazon.com. Since then Toys “R” Us has used GSI Commerce Inc. as its third-party e-commerce provider. GSI and Toys “R” Us recently extended their relationship to include third-party services for eToys.com and BabyUniverse.com, which Toys “R” Us acquired from The Parent Co. for an undisclosed price in February.

Toys “R” Us in May also purchased FAO Schwarz, a multichannel retailer best known for its lavish toy emporium on Fifth Avenue in New York City. Toys “R” Us will operate the FAO Schwarz e-commerce and catalog operations under a separate brand.

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