PROBE OF POSSIBLE COUPON COLLUSION CONTINUES

JENNIFER L. BALJKO

NEW YORK -- New York State Attorney General Dennis C. Vacco said his office is still a "long way" from determining if collusion occurred in Procter & Gamble's coupon elimination test in upstate New York.

Speaking at the New York State Food Merchants Association's annual forum here, Vacco said documents are still being gathered from the 11 retailer and manufacturer companies subpoenaed in the probe, announced last month. All have been cooperative during the investigation, he said.

Besides Cincinnati-based P&G, subpoenaed companies include Wegmans Food Markets, Rochester, N.Y.; P&C Food Markets, Syracuse, N.Y.; Tops Markets, Buffalo, N.Y.; Kimberly-Clark Corp., Dallas, and Clorox Co., Oakland, Calif. Vacco brought up the P&G coupon investigation when discussing government's role in business. He said he believes government should be a "casual bystander" regarding business decisions but there are times when it must step in -- such as in the coupon probe.

"My role here is to create a level playing field without the heavy thumb of government. We should not be involved in strictly business decisions. But where there is a prospect that business decisions have violated the law and when I start seeing complaints from consumers and industry players that there might be some unlawful activity in the marketplace, then I have an obligation to ensure that the balance in the marketplace is not being affected," Vacco explained.

"It is my hope that the conclusion we arrive at is that the marketplace is working properly and that no player in the marketplace, at least in the context of the marketplace upstate, has an unfair competitive advantage being gained that is breaking the law."

At the conference, called "Threats '96: The Dynamics of Our Industry's Future," food trade association executives urged retail, wholesale and manufacturer attendees to join forces in tackling the changing industry climate.

"In a 1906 copy of our constitution's bylaws, one of the essential provisions of this association was 'to promote harmonious relations among manufacturers, wholesalers and retailers in order that food products may be placed in the hands of the consumer at the lowest possible costs.' That is the environment we are working toward today," said John Block, president and chief executive officer of Food Distributors International, Falls Church, Va. "Efficient Consumer Response has been consistent with that objective, but you can't do all of this," Block added. "You don't have the staff to do it all at once. You don't have the money to do everything ECR is asking you to do. You have to start asking each other questions like what practices will affect my savings and which way will better bring profitability to my company."

Partnerships can help address several industry challenges, including unsaleables, invoice accuracy, category management and government regulations, executives said.

Unsaleables almost is a "forgotten problem," said C. Manly Molpus, president and chief executive officer of the Grocery Manufacturers of America, Washington. "In an era that promotes supplier-distribution partnering, unsaleables is an industry problem. It is a $1.4 billion-a-year hurdle, a key area where all supply chain participants can work together," he said.

"If we look at the best practices and put a real focus on the practices, we can discover a benchmark for the unsaleables problem. We need to take the best product activities and put them in place to deal with this problem."

The industry also must find ways to improve invoicing, Molpus added. Pointing to a study sponsored by GMA and the National Food Brokers Association, Reston, Va., he said about 43% of all invoices contain incorrect information. "Until invoice accuracy becomes a way of life for our business, it will be very difficult to have the kind of relationship we would all like to have with each other," he said.

Robert Schwarze, NFBA president and chief executive officer, said devising an effective category management system will help retailers expedite their ECR plan, which will ultimately benefit consumers. "With all the store [construction] and all of the formats and everything else going on, there is not going to be enough consumers to satisfy the needs of all the retail outlets. It makes a lot of sense to me that if you are really going to make it, you have to be very good [at your business]," he said.

"Category management is the heart and soul of the ECR initiative. There are a lot of people working on it and almost everyone has a long way to go."

Thomas Zaucha, president and chief executive officer of the National Grocers Association, pointed to this year's presidential and congressional elections as an event that could reshape the current business environment.

"The major threat to the industry's future and to your individual company rests in the results of this year's election," Zaucha said. "Will we re-elect a Congress that will pursue a regulatory reform agenda, or will we return to a Washington of the last three decades with more spending, more regulations and a greater emphasis on labor organizations' agenda?"

More industry participation is needed for worker safety, welfare and labor reform, he noted. "We've got to get involved in the process."