Procter & Gamble vs Unilever: A Case of Corporate Espionage

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Case Details:

Case Code : BECG036
Case Length : 16 Pages
Period : 2001 - 2004
Pub. Date : 2004
Teaching Note :Not Available
Organization : Procter & Gamble, Unilever
Industry : FMCG's
Countries : USA

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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"Everyone does competitive intelligence work, but we were shocked at the levels to which they (P&G) went."

- Unilever Spokesperson, in September 2001.1

"None of the information that was gathered in this (spying) operation was ever used by P&G or will ever be used. It was an unfortunate situation. We certainly regret that it occurred. We have acted responsibly and promptly to protect Unilever's interests."

- P&G Spokeswoman, in September 2001.2

"Yes, P&G took the right position in approaching Unilever about this (espionage) activity. But to say the P&G-Unilever event should never have happened is overly simplistic."

- Leonard Fuld, President, Fuld & Co., a Cambridge-based competitive intelligence firm, in September 2001.3

A Shocking Revelation

In August 2001, Fortune magazine reported that the leading global consumer goods giant Procter & Gamble (P&G) had been engaged in an illegal corporate espionage program against its archrival, Unilever (See Exhibits I and II for brief profiles of these companies).

Agents appointed by P&G were alleged to have misrepresented themselves as market analysts and used various other methods to collect information about Unilever's hair care business. Soon after, P&G admitted that the information collection episode had indeed taken place, but without the knowledge of the top management. However, the company firmly refuted Fortune's claim that its agents misrepresented themselves as market analysts to acquire information. P&G claimed that it had not indulged in any illegal activities; it added that these activities were against its strict business policies and guidelines. P&G also stated that this was the reason it had approached Unilever of its own accord in April 2001 with details of the entire issue.

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The two companies started negotiations to settle the issue amicably. Reportedly, Unilever stated that if a settlement agreement was not signed by the end of August 2001, it would initiate legal proceedings against P&G. The news of P&G's voluntary admission of indulging in corporate espionage against Unilever took industry observers by surprise.

Many analysts felt that P&G had done the right thing. William Steele, Analyst, Banc of America Securities felt that it was not surprising that such an incident had occurred in the intensely competitive hair care business in the US and stated that despite being legally questionable, P&G's disclosure was noteworthy. He said, "I think being straightforward is always the prudent thing to do. I would have expected no less from the senior management of Procter."4 Analysts also felt that by voluntarily admitting its mistake, the company was trying to control the damage to its public image. P&G hoped that the honest admission would reduce the impact of Unilever's response to the incident (as compared to Unilever discovering P&G's misdeeds by itself).

Procter & Gamble vs Unilever: A Case of Corporate Espionage - Next Page>>

1] "Shampoo Giants Tell Spies to Wash and Go,", September 01, 2001.

2] "P&G Comes Clean on Spying Operation," Fortune, August 30, 2001.

3] "Competitive Intelligence Guru Fuld: Media Confuses Dumpster Diving With Competitive Intelligence," Business Wire, September, 06, 2001.

4] "Taking high road may help P&p;G,", September 01, 2001.


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