The Wall Street Journal-20080206-Wal-Mart Canada- Lego Pull Apart Over Price Tiff

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Wal-Mart Canada, Lego Pull Apart Over Price Tiff

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Lego and Wal-Mart Canada are refusing to play nice.

Wal-Mart Canada Corp., a unit of retailing giant Wal-Mart Stores Inc., confirmed yesterday that it discontinued its business with Lego Group at the beginning of the year in an apparent tiff prompted by the appreciation of the Canadian dollar.

According to National Bank Financial analyst Benoit Caron, Wal-Mart Canada asked Lego to align its Canadian pricing with that of the U.S. due to changes in the exchange rate, but Lego's response wasn't satisfactory.

Wal-Mart Canada's vice president of corporate affairs, Andrew Pelletier, said the company doesn't discuss details of its business with suppliers, but said in a statement: "We were very clear with all of our suppliers that we would not tolerate unfair pricing for our Canadian customers. In some cases, that led to difficult decisions about the products we would stock."

For three decades, Canadians were accustomed to paying higher list prices for products than U.S. consumers because of the low value of the Canadian dollar. But after the Canadian dollar reached parity with the U.S. currency in the fall, consumers started raising a fuss, prompting the Canadian government to call on retailers to lower prices.

Retailers fought back, putting pressure on suppliers to lower their wholesale prices in order to help pass on the benefits of a stronger Canadian dollar to consumers. Without naming names, retailers said some suppliers were more willing to comply than others.

Officials from Lego weren't available to comment.