P&G's Spinoff of Beauty Brands to Coty Leaves Grey With a Conflict

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Now that Procter & Gamble Co. has divested a big chunk of its beauty business to Coty, the deal appears to leave WPP's Grey in the middle of a somewhat uncomfortable conflict.

Grey continues to handle P&G's Pantene hair care, and also handles the CoverGirl, Clairol, Wella retail and some fragrance brands that went to Coty under a spinoff-merger transaction completed today.

While there's relatively little competitive overlap between the P&G brands Coty has gotten and the Pantene brand P&G is keeping, there is some. P&G's Pantene and Coty's Wella and Clairol all sell shampoo and conditioner, the latter technically only through professional and salon channels, though diversion means they sometimes end up on shelves of the same retailers carrying Pantene.

It's enough proximity to trigger a conflict under P&G's policy, which generally prohibits businesses that compete with or potentially could compete with P&G brands from being handled within the same agency network, though in some cases it's possible to segment the work in different offices of the same agency. With both businesses being global, the latter may be difficult.

"We've been in discussions with the agencies for the past several months on how to work through the conflicts, and we're confident we'll be able to achieve the needed separation for competitive considerations," a P&G spokeswoman said in a statement. She added that P&G doesn't expect an immediate change and will "work with the agencies over the course of several additional months on any actions needed to ensure a smooth transition."

It's less clear if the deal creates any conflict issues under Coty policy. A spokeswoman for Coty said in an email: "We intend to work closely with Grey following the completion of the merger to address any potential conflict, ensure respect of appropriate business conduct principles and ensure a smooth transition."

A spokesman for Grey referred calls to P&G and Coty.

The media side was less complicated. Publicis Groupe's Starcom Mediavest Group retained the North American media business of the P&G brands heading to Coty following P&G's review last year, though the rest of the P&G business went to other agencies. And Publicis' ZenithOptimedia Group also won a Coty global media review last year. Last month, Publicis Groupe announced the Coty business would be consolidated with Zenith globally.

Coty also has an in-house digital and content agency, Beamly, acquired last year, but there's no indication it plans to shift any creative work there from Grey. While the former P&G brands have changed hands, there are familiar faces running the business at Coty too, including longtime P&G executive Esi Eggleston Bracey, named president-Coty consumer beauty last year.