TEXT OF INTERVIEW
Bill Radke: The Canadian toy maker Mega Brands has agreed to pay a million-dollar civil penalty in connection with a defective magnetic toy blamed in the death of a child. L.A. Times business columnist David Lazarus is here. David, what was the safety problem with this toy called Magnetix?
David Lazarus: Magnets were becoming dislodged from the magnetic sets as early as 2004, according to federal regulators. And magnets pose an especial danger to little kids, because when the magnet gets into the system — first of all if there’s multiple magnets. they can join together in various parts of the body and start doing damage there. Also, a magnet is known to just simply start shredding apart the intestines. So this is an extremely dangerous thing, and in fact that’s what happened in 2005, shortly before Thanksgiving, when a 22-month-old toddler in suburban Seattle was known to have swallowed a Magnetix magnet and shortly thereafter passed away.
Radke: Now this toy was originally made by another company, Rose Art Industries. Mega Brands says when it bought that company, it had no way of knowing the toy was defective.
Lazarus: Let’s not throw them . . . what sort of onus is on an acquiring company during a merger of this sort to try to perform the due diligence necessary to find out what it needs to know? It turns out that if Mega Brands had wanted to go to the Consumer Products Safety Commission and say hey, we’re buying Rose Art, we’d love to know more about it — you can’t do that. The Consumer Products Safety Commission says a company, even a consumer, cannot call up and run a search of its huge database of safety information. Instead, requests would have to be filed under the Freedom of Information Act, which is a process that can take months, and that’s why the Safety Commission says, you know, that’s why we don’t see a lot of companies doing this during the due diligence process.
Radke: This sounds easily fixable, David. What happens next?
Lazarus: I’ve talked to insiders on the agency, and they say they’re hoping a new chairperson will come in, kick the dust off the tires, shake things up a bit, and if nothing else, seek the legislation necessary to bring this agency into the 21st century and use all the information technology available to make this data available quickly and efficiently.
Radke: L.A. Times business columnist David Lazarus. Thanks.
Lazarus: It’s always a pleasure.