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P&G, others agree to $4.2 million settlement for coupon distribution test

September 10, 1997 GMT

BUFFALO, N.Y. (AP) _ Procter & Gamble and 10 other companies are paying $4.2 million to settle charges they violated antitrust laws during a test last year of whether lower prices were a better sales tactic than cost-saving coupons.

New York state Attorney General Dennis Vacco said Wednesday the settlement will be paid to the state which will pass it along to consumers in western New York by issuing $2 discount coupons.

The coupons are to be included in Sunday newspapers in the Rochester, Syracuse and Buffalo areas early next year and can be used to cut the grocery bills for anything except alcohol and tobacco, Vacco said.

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The companies did not admit any wrongdoing.

Vacco launched the investigation following P&G’s no-coupon experiment in western New York last year, in which the company said it would lower prices instead of providing coupons. The company calls coupons inefficient, saying only 2 percent of the millions it distributes are ever redeemed.

The experiment was meant to last 18 months but was cut short after 14. Vacco accused other companies of cooperating with P&G’s experiment, in violation of antitrust law, by reducing or eliminating their own coupons.

Western New York was targeted, investigators said, because consumers in Buffalo, Rochester and Syracuse redeem coupons at a rate twice the national average.

``They ripped off, literally, thousands of upstate shoppers,″ Vacco said.

Cincinnati-based P&G, which has worldwide sales of $35 billion a year, makes such products as Folgers coffee, Tide detergent, Crest toothpaste, and Pampers disposable diapers.

In a statement, the company said it had done nothing more than conduct a routine test ``to see if there were more efficient ways to deliver value to all consumers than by relying just on coupons.″

Other companies joining P&G in the settlement include Clorox Co.; Colgate-Palmolive Co.; Lever Brothers Co.; The Dial Corp.; DowBrands; Fort James Corp.; S.C. Johnson & Son Inc.; Pillsbury Co., Reckitt & Colman Inc. and the Wegmans supermarket chain.