In a 50-page opinion, a federal judge has certified a class action consumer suit that charges Babies "R" Us and several high-end manufacturers illegally conspired to fix prices by squeezing out Internet competitors who had been undercutting the retail giant.
It's one of the few class actions to be certified after recent decisions by the Supreme Court and an appeal courts set more rigorous standards for certifying class actions in price-fixing cases. The case is a companion to an antitrust case filed by BabyAge and BabyClub, two Internet retailers who said their efforts to gain a foothold in the market were squashed by the alleged conspiracy between Babies "R" Us and manufacturers including Britax, Perego, Medela, Maclaren, Kids Line and Baby Bjorn.
The manufacturers allegedly implemented new policies targeting Internet retailers in response to pressure from Babies "R" Us and its parent company, Toys "R" Us.
Plaintiffs attorney Elizabeth Fegan said consumers who bought more than $500 million in strollers, high chairs, car seats, breast pumps and other baby products were overcharged by Babies "R" Us between 2001 and 2006 because of the alleged minimum pricing agreements.
Attorneys for the companies argued that the plaintiffs could not prove their allegations through but U.S. District Court Judge Anita Brody said the plaintiffs have already begun to collect evidence that supports their contention.
"The evidence indicates that BRU pressured the manufacturers to prevent internet discounting, they responded by curtailing specific retailers or implementing distribution policies targeting internet retailers, and this response benefitted BRU but harmed the manufacturers," Brody wrote.
A marketing professor quotedf by The Wall Street Journal said that consumers may have paid as much as $100 million more for the baby products than they would have without the alleged price-fixing agreements. Greg Gundlach of the University of North Florida said he based his estimated on U.S. Justice Department studies.
The court is expected to set a trial date in 2010.