Signed in August 2000, the agreement gives exclusive rights in the toy, game and baby products categories on the Amazon.com site to Toysrus.com, according to the company. The contract is due to last until 2010.
On the strength of the agreement, Toysrus.com stopped selling products through its own site, and is paying a high price for the privilege – $50 million a year for the ten year duration of the contract, according to the New York Times.
But according to David Schwartz, Senior Vice President and General Counsel for Toys "R" Us:
"As of May 17, 2004 there were more than 4,000 products in exclusive categories being offered through competitive retailers on the Amazon.com platform. This violates the letter and spirit of our agreement. We would be happy to compete with other vendors in these categories, but we are not willing to pay for exclusivity that we are not receiving."
"We expect Amazon.com to respect its contract with us and to support our position especially since we pay a very high fee to maintain this exclusivity," he added.
The company also has problems with the use of Google's paid search listings, linking to rival toy-sellers, which may be found on certain Amazon.com pages, reports the New York Times.
Amazon.com takes a different view of the contract. According to Reuters, Amazon.com spokeswoman Patty Smith explained: "We believe we can have multiple sellers in the toy category to increase selection and to offer products that [Toys R Us] doesn't have."
"We are relentlessly focused on increasing selection for customers," she added.
Attempts to settle the dispute amicably, including third party mediation, failed last week, said Toysrus.com. The suit was filed on Friday, claiming damages and an injunction.
