In August, Mattel won an exception to new testing requirements that Congress imposed in 2008 after several toy recalls. (See "Dangerous Toys, Strange Bedfellows," June.) Six of the recalls that sparked the push for more regulation involved Chinese toys made by Mattel or its subsidiary Fisher Price.
Small toymakers were blindsided by expensive third-party testing and labeling requirements in the Consumer Product Safety Improvement Act. The law treats domestic companies producing small batches of toys, clothes, or jewelry for kids using low-risk materials such as wood and cotton as though they were indistinguishable from massive plastic importers like Mattel. Testing can cost hundreds or even thousands of dollars per toy model, and many small producers fear enforcement of the law would put them out of business. The Consumer Product Safety Commission, charged with enforcing the law, has extended piecemeal stays of execution for used books, bikes, and other items. The agency also allowed a one-year grace period before it started enforcing the testing rules.
While most small toymakers had no idea the law was coming down the pike until it was too late, Mattel spent $1 million lobbying for a provision permitting companies to test their toys in their own government-approved, "firewalled" labs. As luck would have it, Mattel already operates several of its own toy testing labs, including ones in Mexico, China, Malaysia, Indonesia, and California. Mattel received approval to test its own toys in those labs at the end of August, just as the grace period ended and its smaller competitors had to start using third-party testers.
So a law aimed at checking Mattel's risky behavior left all the other players in the toy market worse off. Meanwhile, Mattel now enjoys a cost advantage on testing and a new government-sponsored barrier to competition.