Toy Store Wars Revisited

Thanks to my referral log, I was able to find out that my post on Toy Store Wars was given a right proper hosing by two individuals at Crescat Sententia. Ben Glatstein starts the fun, stating

. . . Interested-Participant is probably unrealistically disappointed in the antitrust laws. Again, I refer readers to Judge Wood's opinion for a more thorough analysis, but I think what Interested-Participant is missing is that exclusive dealings are sometimes good.

It is not clear why Mr. Glatstein referenced the 7th U.S. Circuit Court of Appeals decision presided over by Judge Diane P. Wood (Docket No. 98-4107). The court ruled that vertical agreements with toy manufacturers by Toys "R" Us were illegal and this supports my statement that they seem unfair.

Also, as part of his argument that exclusive dealings are good, Mr. Glatstein believes they eliminate the problem of "free riding," yet Judge Wood's decision discounts free riding as being adequate justification for vertical agreements in the toy business. In fact, in the toy business, it doesn't even exist. All the costs for advertising, inventory storage, and stocking are borne by the manufacturer. So, not only is Mr. Glatstein's argument not supported, the court's ruling is diametrically opposed to it.

Beth Plocharczyk continues the fun by stating that I believe restricted distribution of toys is "insidious." That's not true. I think it violates antitrust laws. Her argument is generally critical of my "market sensibilities," however, her supporting discussion is lacking in that it relies too heavily on her emotional attachment to the products.

In summary, both individuals who criticized my post appear to support collusion between manufacturers and retailers in the toy business. I don't think it's a fair practice and stated so. Additionally, it seems rather discourteous to slam another's writing and not inform that person. A simple comment or email would have been polite.

Lastly, what's missing in all this discussion is that the major point of my piece asked whether it would be prudent for the manufacturers to take action which protects the specialty stores by denying Wal-Mart access to the market. It does not seem to be a wise business decision to anger the 800-pound gorilla of the retail world.