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UK firms get big fines for fixing the prices of toys

Britain's retail competition watchdog on Friday upheld massive fines imposed on two of Britain's biggest stores for fixing the prices of toys, reducing the penalties only slightly.

The Competition Appeal Tribunal ordered catalogue retailer Argos to pay £5 million (US$28.67 million) and department store Littlewoods PLC to pay £4.5 million (US$8.6 million) for agreeing with toy manufacturer Hasbro not to discount the price of its products, including Action Man, Monopoly and Twister.

The two stores had appealed against the original judgment by the Office of Fair Trading two years ago that found them guilty of the price-fixing deal with Hasbro and ordered Argos to pay £17.28 million (US$33.02 million) and Littlewoods £5.37 million (US$10.26 million). Argos bore the brunt of the fine because it is Britain's biggest toy retailer.

The competition tribunal said it reduced the fines "with a view to taking a conservative approach" and the revised penalties were the lowest that could reasonably be justified in the circumstances to meet the gravity of the case and to have an appropriate deterrent effect.

Hasbro, Britain's largest toy manufacturer, escaped a £15.5 million (US$29.63 million) fine at the first hearings because it blew the whistle on the price fixing, which occurred between 1999 and May 2001. Hasbro paid a £4.95 million (US$9.46 million) fine for preventing 10 distributors of its products from selling them below its list price.

"Today's ruling confirms the gravity of price-fixing and that serious penalties providing deterrence are right and fair," Office of Fair Trading (OFT) Chairman John Vickers said.

The OFT pointed out that during the period of the investigation the Monopoly board game cost £17.99 (US$34.39) in both the Argos catalogue and Littlewood's Index catalogue. Following the OFT ruling, the game was sold by Argos for £13.99 (US$26.75) and by Littlewoods for £13.49 (US$25.79).

Argos owner GUS PLC said it was disappointed with Friday's ruling and did not believe the OFT had proved its case.

"Argos continues to maintain vigorously its innocence and will be seeking leave to appeal against what we believe to be an unfair decision,'' GUS said.

Littlewoods, which was fined through its Index catalogue arm, said it would be studying the judgment in detail and exploring all options open to the company.

"The company does not believe it has infringed UK competition law and continues to be disappointed that the Competition Appeal Tribunal did not allow the appeal in full," it said.

GUS shares closed 0.1 percent higher at £0.832 (US$15.91).

Privately owned Littlewoods is not listed.
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