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Coupon issuers get clipped
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September 10, 1997: 11:50 a.m. ET
Consumer product makers settle suit over cutting coupons for $4.2 million
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NEW YORK (CNNfn) - Ten major consumer product manufacturers, including Procter & Gamble Co., tried to redeem themselves by agreeing to pay $4.2 million to settle a suit alleging they conspired to deny coupons to western New York state consumers.
New York State Attorney General Dennis C. Vacco said the money will be returned to consumers through special refund coupons printed in Sunday newspapers in Syracuse, Rochester and Buffalo.
The $2 coupons can be used on any purchase of grocery products, except alcohol or tobacco, at supermarkets or retailers.
The companies didn't admit wrongdoing in the settlement.
The antitrust suit arose from Procter & Gamble's February 1996 announcement of an experiment to clip the number of coupons it offered western New York consumers, saying it would pass its savings on marketing costs to consumers. The experiment was to last 8 weeks.
Others participating in the experiment included Clorox Co., Colgate-Palmolive Co., Conopco Inc., Dial Corp., DowBrands, L.P., James River Paper Co., Inc., S.C. Johnson & Son, Inc., Pillsbury Co.and Reckitt & Colman Inc. Supermarket chain Wegmans Food Markets, Inc. also was part of the plan.
However, Vacco alleged that the companies raised antitrust issues by banding together. When the companies were approached about a possible lawsuit, many backed off of the plan to cut coupons from their advertising.
New York officials pursued the case even after coupons were resumed. "They must be held accountable for injury done to consumers while they withheld coupons," Vacco said.
Outcry from consumers forced P&G's hand and it reinstated coupons in ads, though the company initially said it would challenge the charges.
P&G said it was trying to put the issue behind it by agreeing to the settlement and hoped to "avoid protracted litigation that would be very costly to us and highly distracting to our organization."
The settlement was filed along with the lawsuit in the U.S. District Court in Buffalo Wednesday and will require approval of that court.
-- Randy Schultz
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