June 3, 2004, 12:00 AM

Groundbreaking Amazon-Toys R Us deal gets shaken up

ToysRUs.com filed suit against Amazon in Superior Court in New Jersey, charging it violated contract terms that it says give ToysRUs.com exclusivity on products it sells in the toys, games and baby categories on Amazon.

The 2000 agreement that assigned Toys R Us Inc.’s e-commerce operation to Amazon.com Inc. was hailed as a groundbreaker-but today an increasingly competitive and complex online retail environment is taking its toll. Toys R Us online subsidiary ToysRUs.com last month filed suit against Amazon in Superior Court in New Jersey, charging it violated contract terms that it says give ToysRUs.com exclusivity on products it sells in the toys, games and baby categories on Amazon.

According to ToysRUs.com, more than 4,000 items it sells are on offer at Amazon.com from competing retailers. “We are not willing to pay for exclusivity that we are not receiving,” says David J. Schwartz, senior vice president and general counsel for Toys R Us. ToysRUs.com says it’s attempted to resolve the matter outside of the courts, including mediation.

In a statement, Amazon.com called the allegations of ToysRUs.com “without merit,” saying it would not comment further on pending litigation. However, Amazon added: “We are relentlessly focused on increasing selection for customers consistent with our contractual commitments. Among other things, we believe we can have multiple sellers in the toy category, increase selection, and offer products that ToysRUs.com doesn’t have.”

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