See the original page here.Of DOW JONES NEWSWIRES TORONTO (Dow Jones)--Wal-Mart Canada Corp. has resolved a pricing spat with LEGO Group (LEG.YY) and fixed a potential conflict of interest that the dispute brought to light. As reported last week, Wal-Mart Canada, a unit of retailing-giant Wal-Mart Stores Inc. (WMT), discontinued its business with the toy-construction icon at the beginning of the year, due to a disagreement over pricing. At the time, Wal-Mart Canada declined to comment on the dispute with LEGO but that, generally, it wouldn''t tolerate "unfair pricing for our Canadian consumers." In a joint statement Thursday, the companies said they have reached a mutual decision to reinstate LEGO products on Wal-Mart Canada''s shelves, but didn''t elaborate. "Specific timelines, assortments, space and category-management responsibilities are being worked out to provide the best value to our mutual customers," the companies said. A spokesman for LEGO said in an e-mail message that details of the resolution are confidential, but confirmed that LEGO didn''t lower its prices in Canada. The decision to pull LEGO products off Wal-Mart shelves was seen as a bonus for LEGO''s primary competitor, MEGA Brands Inc. (MB.T), Montreal, whose MEGA Bloks construction-toy line stood to take over the vast majority of shelf space vacated by LEGO. Indeed, more than 80% of the construction toy aisle at a Wal-Mart store visited this week in Toronto was occupied by MEGA Brands product, with the balance made up by privately held K''NEX Brands. The story doesn''t end there. When the decision to delist LEGO was made, there was a potential conflict involving Wal-Mart Canada''s head of toy buying, veteran retailing executive Don Cameron. Cameron''s daughter, Joanne Baker, was employed at MEGA Brands with responsibility as Wal-Mart''s category manager for all construction toys. Andrew Pelletier, Wal-Mart Canada''s vice-president of corporate affairs, said the decision to discontinue business with LEGO wasn''t the decision of one person at the company, but was a "team decision" made after several meetings between the two companies related to pricing. Pelletier also said that the matter involving Cameron and his daughter "did not originally proceed through appropriate approval channels within the company. Upon the company becoming aware of the situation, we reacted immediately to ensure that the relationship was restructured to be consistent with our company''s policies." Wal-Mart "Took Immediate Steps" To Resolve Situation Pelletier declined to comment on how widely known the relationship between Cameron and Baker was inside Wal-Mart Canada before inquiries were made by Dow Jones Newswires. "We believe it is inappropriate for familymembers of our associates to work directly on Wal-Mart supplier business that involves their relatives. We have taken immediate steps to see that the situation in question does not continue," Pelletier said, adding that Wal-Mart strives to avoid "even the perception of conflict." Pelletier declined to comment on the specifics of how the relationship was restructured. When first contacted, a MEGA Brands spokesman referred questions on the matter to Wal-Mart Canada. Further attempts to reach MEGA Brands for its own comments weren''t successful. Wal-Mart Canada wouldn''t make Cameron available for comment. Wal-Mart''s lengthy statement of ethics says that the appearance of a conflict could be just as damaging to the company''s reputation as an actual conflict. "Situations or transactions that create the appearance or perception that you cannot carry out your duties and responsibilities with integrity and impartiality should be avoided." TheWal-Mart statement of ethics goes on to say that employees have a responsibility to disclose any situation that could create a conflict of interest to their immediate supervisors, who are "encouraged" to bring the matter to the company''s Ethics Office. Jeffrey Gandz, a business professor at the Richard Ivey School of Business, said that, in general, a situation where one relative at a vendor and another at a customer have business dealings with each other, would represent a conflict of interest as they would be in a position to "materially influence each other." That''s why such cases should be disclosed, he said. Gandz said it''s understood in the industry that suppliers and retailers that get "too cozy" can cause material harm to their own employers. "It is of concern to people and should be of concern," he said. Category management, which has its roots in the grocery sector but is now widespread in retail, is a relationship between aretailer and supplier that aims to maximize sales in a certain product category. Typically, the supplier with the highest volume of sales is nominated the category manager, or "captain," within the retailer, and collects data on all brands (competition included) in the category to develop a marketing plan for the product group. The process allows retailers to gain marketing expertise at no cost to them, while giving suppliers a greater say in how to increase sales. The practice isn''t without controversy. Indeed, antitrust authorities in the U.S., Canada, and the U.K. have highlighted category management as a possible source of abusive activity in the marketplace. For instance, the Competition Bureau of Canada wrote in a 2002 bulletin on the Canadian grocery sector that the "exclusionary effect" of category management "is likely to substantially lessen or prevent competition as it reduces the ability of competitors to expand their presence inthe market." The idea behind category management was to make the retailer and supplier partners rather than
-John.
