JUNE 1996 · VOLUME 17 · NUMBER 6
N A M E S I N T H E N E W S
JUNE 1996 · VOLUME 17 · NUMBER 6
N A M E S I N T H E N E W S
TOYS 'R' US, the nation's largest toy retailer, has used its power to keep toy prices high and reduce toy outlet choices for consumers, the Federal Trade Commission (FTC) charged in May.
The FTC alleged that Toys 'R' Us extracted agreements from toy manufacturers to stop selling certain toys to warehouse clubs, or to put the toys into more expensive combination packages, so consumers could not obtain lower-priced toys from the clubs, or compare prices easily. Toys 'R' Us feared that it would lose sales to the clubs, and that consumers would draw unfavorable comparisons between the clubs and its own prices that could undercut its reputation for everyday lower prices.
"In fact, Toys 'R' Us does not have the lowest retail prices among national toy retailers," says William J. Baer, director of the FTC's Bureau of Competition. "By impeding the growth of the clubs as deep-discounting toy outlets, Toys 'R' Us has succeeded in keeping consumer prices higher than they otherwise would have been.
Toys 'R' Us, based in Paramus, New Jersey, has 600 stores located throughout the United States and another 300 stores in foreign countries. Its 1995 sales totalled $9.4 billion.
The company promised to "vigorously contest" the FTC's charges, claiming it had done nothing illegal.
"Given the combined impact of the practices of the warehouse clubs, our own contribution to the industry and the intensity of the competition in our marketplace, we reserve our unquestionable right to refuse to carry the same items as warehouse clubs,'' Chief Executive Michael Goldstein said in a statement.
The FTC is seeking an order that would prohibit the toy company's allegedly anti-competitive practices.
Death at Cargill
A WHOLLY-OWNED SUBSIDIARY of the agribusiness giant Cargill, Inc, Ladish Malting Company, Inc., of Jefferson, Wisconsin, was slapped with a one-count indictment by a Madison, Wisconsin federal grand jury in May in connection with a 1993 workplace death.
The indictment charges that Ladish failed to comply with requirements set forth in the Occupational Safety and Health Act of 1970.
According to the indictment, Ladish failed to properly maintain a fire escape door and an adjoining platform in an area of its grain handling complex.
In May 1993, Vernon Langhoff, a Ladish employee, stepped onto the platform, which gave way. Langhoff fell more than 100 feet to his death.
In May 1994, state officials charged Ladish with reckless homicide, a felony, in connection with the death of Langhoff. Ladish entered a plea of not guilty to the charge. The case is scheduled for trial in January 1997.
Peggy A. Lautenschlager, the U.S. Attorney in Madison, says she could not comment on the case. But Judith Schultz, the assistant Attorney General in charge of the state's reckless homicide prosecution, says that there was strong community pressure to bring criminal charges.
Combined state and federal criminal prosecutions in worker death cases are extremely rare.
In a prepared statement, Cargill said it "deeply regrets" the death of Langhoff "and the sorrow it caused his family, friends, and co-workers."
"We wish the U.S. Attorney had chosen not to bring the charge," Cargill said. "We believe Ladish will be found innocent of that charge."
Fleet Discrimination
A MORTGAGE COMPANY subsidiary of Fleet Financial Group will pay $4 million for allegedly charging African Americans and Hispanics higher prices for home mortgage loans than comparably qualified whites, under an agreement reached with the U.S. Justice Department.
Federal officials alleged that two branches of the Fleet Mortgage Corp. engaged in a pattern of discrimination in the pricing of home mortgage loans. The two branches, situated in Westbury, New York, and Woodbridge, New Jersey, allegedly violated the Fair Housing Act and the Equal Credit Opportunity Act.
"Loans should be based on risk, not race," says Assistant Attorney General for Civil Rights Deval Patrick.
Under the agreement, Fleet will establish a $3.8 million fund to compensate approximately 600 victims; spend $200,000 for community outreach; implement a new monitoring and oversight system; and continue recently adopted policies to ensure fair pricing without regard to race or national origin.
The suit claimed the mortgage company charged African Americans and Hispanics higher interest rates or up-front fees -- often called "overages" -- for home mortgage loans than similarly situated white borrowers.
Patrick said that an "overage" generally refers to the price paid by the borrower in excess of any minimum price set by a financial institution. He said that loan officers of many companies have the discretion to charge rates and fees higher than the minimum; any amount obtained above the minimum price is an "overage." Loan officers typically receive some or all of the excess price that they charge. It is not commonly known that such mortgage prices are negotiable.
Under the settlement, the bank will compensate those minority borrowers who the parties agree paid higher rates for loans between August 1993 and June 1994. Victims will be compensated up to $15,000 each, depending on the amount of the overage paid.
-- Russell Mokhiber