Unilever Wants P&G to Come Clean on “Corporate Intelligence”

The war for market share in the personal care industry is more fierce than ever. And as any good marketing general knows, in order to win your share of battles, you need the right intelligence regarding your enemy. That said, it should come as no surprise to find out that Procter & Gamble and Unilever have become entangled in a war over the proper use of covert operations to find out more about each other’s hair care activities.

According to an article in Fortune Magazine, Procter & Gamble hired a competitive intelligence company to snoop on Unilever’s hair care projects. But things got out of hand when the hired spies began diving into dumpsters to learn more about Unilever’s activities. Unilever insists the spies also misrepresented themselves to Unilever employees, suggesting they were market analysts, a charge P&G disputes. In any event the two firms have set a deadline of today to settle the matter. If no settlement is reached, Unilever may take P&G to court.

According to Fortune, a source says the spying against Unilever and other competitors began last fall and continued into the spring. The operation was halted earlier this year only after senior P&G officials, including P&G chairman John Pepper, learned about it. Procter & Gamble confirms that it fired three P&G employees “who were directly involved in the project.” After Mr. Pepper and senior managers discovered the spying operation, P&G executives wrote a letter to Unilever outlining the transgressions. Mr. Pepper himself called Unilever Chairman Niall Fitzgerald in an effort to settle the matter.

While corporate spying is not unusual, informing the target of the spying is. By telling Unilever that it had engaged in this activity, P&G was apparently hoping that Unilever would not respond so harshly. “We told on ourselves,” says a P&G spokesperson. P&G invited Unilever officials to interview P&G managers as well as the operatives themselves. But one source says that Unilever has been unhappy about the level of P&G’s cooperation, and that is why the negotiations have dragged on so long. The source adds that P&G at first provided Unilever with two documents regarding its spying activities, and then, after further prodding by Unilever, came up with more than 50 additional documents.

Unilever spent months investigating the matter and completed its review only within the last few days. On Tuesday, August 28, 2001, a source says, P&G chairman John Pepper flew to London with an offer to settle the matter. At that point today’s deadline was set.