Toys "R" Us, Inc. v. Federal Trade Commission
United States Court of Appeals for the Seventh Circuit
221 F.3d 928 (2000)
As warehouse clubs gained toy-market share and manufacturers sought to reduce dependence on Toys R Us (defendant), Toys R Us entered individual vertical agreements in 1992 restricting manufacturers' toy distribution to warehouse clubs in exchange for preferential treatment, and its merchandising president told manufacturers that others were similarly agreeing to boycott the clubs; the FTC (plaintiff) found this facilitated an unlawful horizontal boycott among competing manufacturers and entered an order against Toys R Us, which argued the vertical agreements merely protected against warehouse clubs free-riding on its retail services.
Whether a retailer in a vertical relationship with multiple manufacturers violates antitrust law by coordinating a horizontal conspiracy among those manufacturers to exclude the retailer's competitors.