6 days ago
US toymaker MGA criticised by UK court for 'retaliatory' action against startup
LONDON, June 16 (Reuters) - U.S. toy supplier MGA Entertainment abused its dominant position to try to block a new market rival by threatening to withdraw its own popular L.O.L. Surprise! dolls from British retailers, London's High Court found on Monday after a bitter legal battle.
California-based MGA – which is a major supplier of toys to U.S. firms Walmart (WMT.N), opens new tab and Target (TGT.N), opens new tab and also owns the Bratz dolls brand – was sued in 2020 by startup Cabo Concepts.
Cabo alleged MGA stifled the launch of Cabo's Worldeez range by asserting that the toys' globe packaging was an imitation of MGA's L.O.L. Surprise! and threatening to withhold supplies of L.O.L. Surprise! to retailers that stocked the Worldeez globe.
The Worldeez toy ultimately failed and was discontinued in 2018, prompting Cabo to sue MGA, seeking up to 90 million pounds ($122 million) in damages for lost profits.
Judge Kelyn Bacon on Monday rejected Cabo's argument that it would have traded profitably but for MGA's conduct, saying in a written ruling that "Cabo's claim for damages therefore fails".
The judge did, however, find that MGA had abused its dominant position by making threats to withdraw the supply of L.O.L. Surprise! dolls, "reinforced by threats of litigation and disparaging claims that Worldeez was a 'knock off'".
Bacon also said that MGA made "unjustified threats of patent infringement proceedings" to major retailers Toys 'R' Us, The Entertainer and Smyths.
MGA took "retaliatory anti-competitive action" against Cabo in an attempt to "stifle legitimate competition by exercising its market power to cut off the main retail outlets", she added.
MGA did not immediately respond to a request for comment outside U.S. office hours. Cabo could not be reached for comment.
