Mr. Pepper Informed Unilever of the Misdeeds and Personally Called the Unilever Chairman to Settle the Matter.

According to Competitive Intelligence Magazine; John Pepper, the chairman of Procter & Gamble, told a group that competitive intelligence was "of singular importance" to a consumer-products company and that P&G had shifted "from collecting, analyzing and disseminating information, to acquiring and using knowledge to create winning strategies. Despite these strong words, Mr. Pepper was apparently alarmed to hear that competitive intelligence sleuths hired by P&G had obtained some documents from its European-based rival, Unilever, through questionable means. At least one person sorted through the trash bins at Unilever's Chicago office, a practice known as "dumpster diving." After learning how P&G's competitor intelligence had been obtained, Mr. Pepper informed Unilever of the misdeeds and personally called the Unilever chairman to settle the matter.

In the highly competitive business of shampoo and other hair-care products, information about new lines, launch dates/ pricing, advertising plans and production figures is carefully guarded. Like many companies, P&G attempts to gather all publicly available information about its competitors' activities for what the company calls"competitive analysis." Competitive-analysis executives at P&G contracted with an outside firm, which in turn hired several subcontractors to investigate competitors. A budget estimated at $3 million was allotted to the project, which began in the fall of 2000. The operation was run out of a safe house> called the "Ranch," located in P&G's home town of Cincinnati, Ohio. Among the secrets gained from dumpster diving in Chicago were detailed plans for a product launch in February. In addition to dumpster diving, which P'&C admitted, Unilever believed that some rogue operators also misrepresented themselves to competitors in efforts to gain access, a charge that P&G denies.

Although R&C claims that nothing illegal was done, the dumpster diving violated the company's own code of ethic s and its policies for c competitive intelligence contractors. The ethics code of the Society of competitive Intelligence Professionals also prohibits dumpster diving when the bins are on private property. In April 2001, when the company becomes aware that the spying operation had spun out of control, three executives overseeing the project were fired, Mr. Pepper then contacted Unilever with full disclosure and a promise not to use any of the information gained. P&G had, in effect, blown the whistle on itself, Mr. Pepper hoped perhaps that this gesture would put the matter to rest, However, Unilever had just begun to seek a settlement.

In the ensuing negotiations, Unilever proposed that P&G compensate Unilever between $10 million and $20 million for possible losses incurred from the unethical acquisition of information. In addition,

...