Toy giant accused of pricing scam
POPULAR children's toys appear to be at the centre of a price-fixing scam, say Government watchdogs. The Office of Fair Trading said it has evidence of a cartel involving manufacturer Hasbro, 10 distributors and leading retailers Argos and Littlewoods.
It did not give any precise details of the merchandise involved. But it appears to run across Hasbro's entire range - which spans children's favourites such as Furby, Star Wars, Action Man, Sindy, Monopoly, Scrabble, Subbuteo and Poo-Chi.
The US toy giant now faces fines of up to 10% of its UK turnover - as much as £30m - under tough new anti-cartel powers given to the OFT. Hasbro, which designs, manufactures and markets toys and electronic games worldwide, controls around 18% of the UK market, worth £1.75bn a year.
The OFT has not spelt out how the price-fixing is said to have operated. But Hasbro apparently arranged with distributors to supply only shops that would sell products at a recommended figure. There appear to have been arrangements with Argos and Littlewoods that they would not sell popular toys below a set figure, to ensure they did not undercut other stores.
The OFT said there is clear evidence of price-fixing and it has given the companies the opportunity to prove their innocence. A spokesman said: 'A final decision will be made in three to four months. If they are found in breach of the rules, the Competition Act provides for a maximum fine of 10% of turnover for up to three years.'
Argos - part of GUS - and Littlewoods are apparently seen as equal partners in the alleged collusion on prices, along with 10 small UK distributors.
The OFT investigation is understood to have been launched in May last year, following a complaint from an independent retailer who had been cut out of the distribution loop by Hasbro. The inquiry initially focused on the exclusive sale of a particular range of toys through a limited number of retailers. It then expanded and investigators found evidence of a much wider scam.
Hasbro changed most of its top UK management earlier this year. On Tuesday, the firm did not deny what it admits are serious charges. It said: 'It should be noted that these are only proposed decisions and no final decisions have been taken by the OFT. We do not think it is appropriate for us to comment on the specific details of our response, but we are treating these issues seriously and working closely with the OFT.
'We are concerned by the points the OFT has raised. Price-fixing is strictly against our code of conduct and we strive to ensure our staff know exactly what they can and can not do.'
An Argos spokesman said: 'We will be vigorously defending our position. We will respond to the allegations in due course.'
Littlewoods said it had held an internal investigation and found no evidence to support the OFT's claims: 'Littlewoods does not believe it has infringed UK competition law.'
