Procter & Gamble vs Unilever: A Case of Corporate Espionage



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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.....

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