Amway fights back in court against soap rival

The Detroit News/August 26, 2001
By Pete Waldmeir

Grand Rapids -- If it were a movie, they'd call it Soap Wars III: The Empire Strikes Back.

After six years of battling Procter & Gamble in far-off legal venues like Salt Lake City and Houston, Ada-based Amway Corp. gets P&G on friendly turf in federal court here in October, when the western Michigan company will seek a whopping $1.6 billion in damages from the international retail giant.

Amway's complaint: P&G, the Cincinnati-based company that markets household brands such as Tide, Cheer, Pampers, Charmin and Crest, has conspired to run Amway out of business by harassing distributors with lawsuits and chasing away customers.

This plot has everything from corporate dirty tricks and Internet slander to rumors of satanic worship tied to P&G's discarded man-in-the-moon trademark logo. At stake are billions of dollars in sales, not only in the U.S. and Canada, but in emerging markets like China, India and the Far East, where P&G and Amway are competing for footholds.

The trial that is slated to begin Oct. 9 before Federal Judge Robert Holmes Bell in Grand Rapids will have Amway on offense for the first time after twice successfully defending itself. Some background:

P&G and Amway are not head-to-head competitors on shelves. P&G, with $40 billion in yearly sales, advertises heavily and sells mostly in supermarkets. Amway, a multilevel marketing company, does little advertising and has about 1 million distributors in the U.S. who sell the company's household products directly to consumers for a commission.

For more than two decades, P&G has been fighting totally untrue rumors that its former logo is a satanic symbol and that company officials supported anti-Christian cults. The company has sued individuals for spreading the gossip, with only modest success. In 1995, however, an Amway distributor in Texas repeated the Satan rumor on an Internet site and. While he quickly retracted it, P&G pounced on Amway, seeking millions in damages.

Amway's defense? "Our distributors aren't company employees," explained Mike Mohr, vice-president and general counsel for Amway's parent company, Alticor Inc. "We had nothing to do with spreading the rumor. In fact, when we found out about it, we sent out P&G's own 'truth kit' to help dispel it."

The court battles raged in Texas and Utah, however. And while the defense consistently prevailed, Amway alleges that P&G kept filing lawsuits in an attempt to ruin the company by running up legal fees and scaring off customers and distributors. "So far, we've spent $30 million for lawyers," Mohr explained. "And they keep coming back, trying to pin something on us."

Amway, owned by founders Dick DeVos and Rich VanAndel and their families, originally was low key about the P&G lawsuits, fearing they'd hurt business. But they took the PR offensive when a Grand Rapids federal magistrate ruled last month that P&G internal documents showed that that the company "had determined to target competitors (Amway) for lawsuits involving (Satanic) rumors in order to further its public relations goals."

The $1.6 billion in damages? "Our business dropped 20 percent when P&G began attacking our distributors six years ago," Amway lawyer Mohr said. "That's only a small portion of what we've lost."

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