Comparative claims rise: P&G pushes NAD, not courts for disputes

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Hit with false-advertising lawsuits from four competitors in the past year, Procter & Gamble Co. Chairman-CEO A.G. Lafley is calling on other CEOs to channel more disputes to the National Advertising Division of the Council of Better Business Bureaus.

"I can't talk about the specifics," Mr. Lafley said last week prior to P&G's annual meeting, "but there are a number of us who are going to be supporting using the NAD and handling advertising claims where advertising claims ought to be handled."

P&G was sued for false advertising most recently by Georgia-Pacific Corp., alleging comparisons in ads of P&G's Bounty to Georgia-Pacific's Brawny are misleading. P&G was ordered by a U.S. District Court in New York last month to modify ads for Prilosec OTC following a suit by a joint venture of Johnson & Johnson and Merck & Co. It was also on the losing end of recent judgments in suits brought by Playtex Products and Kimberly-Clark Corp.

undermining credibility

"From a consumer standpoint, I think [the increased number of lawsuits] begins to undermine the industry's credibility," Mr. Lafley said. "I would hypothesize [the increase is because] we are coming out with as much or more innovation than we have in a long time. ... And perhaps what's going on is if there's not a product response, [competitors] find another way to compete....It's a shame."

"Ideally, NAD is a good forum ," said a Kimberly-Clark spokesman. "However, when advertising crosses the line-disparaging a company's product or grossly misleading the consuming public-NAD may be inadequate because of the time it takes to go through the resolution process."

"As we have demonstrated in the past, we're certainly open to using the NAD," said a Georgia-Pacific spokeswoman. "We have done so successfully in the past and we anticipate doing so in the future."

The recent mini-rash of ad lawsuits also includes Energizer Holdings' Schick unit last month suing to bar Gillette Co. from using its long-running "The Best A Man Can Get" ads. Schick contends its own recently launched Quattro is just as good.

Increased use of courts over NAD in the household and personal care industry may be off trend. The NAD's annual case load has been running 25% higher over the past four years compared with 1997 and 1998, while false-advertising decisions in federal court over the year ended Oct. 15 were about 25% lower than the average of the previous four years.

NAD is cheaper, faster and avoids potentially disruptive discovery, said Jeff Edelstein, partner with Hall Dickler Kent Goldstein & Wood. But he said court may be better when plaintiffs seek damages, access to defendants' documents or a restraining order.

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