IPG files suit over PepsiCo account shift

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The agency holding companies that work with Coca-Cola Co. and PepsiCo have been drawn into an ugly battle that underscores the fierce rivalry between the cola giants.

Interpublic Group of Cos. and its True North Communications and Foote, Cone & Belding Worldwide units filed a complaint Oct. 1 in the Circuit Court of Cook County, Ill., against former FCB Chicago CEO Brian Williams, Omnicom Group and its DDB Worldwide unit. The suit-which follows PepsiCo's decision to move $350 million in business from FCB and award it to Omnicom agencies-alleges breach of fiduciary duties, breach of contract and tortious interference with contract and business relations.

FCB also filed for a temporary restraining order and preliminary and permanent injunction against Mr. Williams and Omnicom/DDB to block them from poaching FCB Chicago's clients or employees. A decision on that filing was imminent at press time.

The complaint claims Mr. Williams worked with Omnicom and DDB "to solicit other key FCB Chicago employees to depart FCB Chicago and [assisted] Omnicom and DDB to move a key client away from FCB Chicago to DDB." The complaint notes that Mr. Williams had signed confidentiality and non-solicitation agreements that prohibited him from working with any FCB Chicago clients or employees for a year after his departure.

Mr. Williams resigned from FCB Sept. 27. His intent is to join DDB, which plans to set up a separate agency to handle PepsiCo's Quaker Oats accounts, including Gatorade.

Interpublic, which already works closely with Coca-Cola, is in line to pick up more business from that company in the wake of PepsiCo's move. The agency realignments have been in the works for weeks, and the marketers have tried to keep specifics under tight wraps.

While some marketers have been loosening conflict policies in response to consolidation, the Coca-Cola/PepsiCo rivalry remains bitter. Agency executives said it often boils over and influences the business decisions of both. Interpublic, which gained the PepsiCo business last summer with the purchase of True North, has tried hard to keep ties to both companies. PepsiCo ultimately could not live under the same roof as its chief competitor.

A PepsiCo spokesman declined to comment on the complaint. "If there is a suit between Interpublic and Omnicom, we consider it a matter between those two entities," he said.

Mr. Williams' resignation letter, according to the complaint, included the statement: "The opportunity to become CEO of an independent agency within the DDB/Omnicom world is too compelling for me to pass up." It adds, "I have discussed my plans with three FCB employees identified by Quaker/Pepsi as key to continued service of their accounts, but beyond that I have not talked to anyone at FCB or other FCB clients per the terms of my non-solicitation agreement."

The three executives Mr. Williams referred to in his resignation letter were Martin Sherrod, who managed the Quaker brands, John Fraser, who led Gatorade, and Jonathan Harries, the senior creative on the brands, according to the suit. Messrs. Sherrod and Fraser resigned Sept. 27. Mr. Harries remained with FCB and was promoted to worldwide creative director-chairman of the Chicago office.

The complaint against Omnicom illustrates how heated the rivalry between the leading global holding companies has become. The legal action could disrupt Omnicom's plan for servicing the Quaker Oats business. And one industry executive noted that deep-pocketed holding companies sometimes file such suits in part to discourage future employee defections.

Up to two-thirds of the Quaker/Gatorade creative and account teams, including planners and production executives, have been contacted to work at the new agency, according to insiders. Two VP-creative directors, Geoff Edwards and Colin Costello, are said to have resigned from FCB, according to insiders. Both men declined to comment. "There have been no resignations from our creative department," said an FCB spokeswoman via e-mail. "That is not true."

All parties involved in the suit either declined to comment or did not return calls.

Contributing: Hillary Chura, Richard Linnett, Lisa Sanders and Rich Thomaselli

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