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Incentive Today: Don and Shell end Smart row

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 Incentive Today: Don and Shell end Smart row

July-August 1999

After a bitter six year legal battle with Shell UK John Donovan has abandoned his claim against Shell UK. Donovan alleged that Shell stole his ideas for the Shell Smart loyalty scheme and initiated court proceedings in 1993.

Both parties issued a joint statement saying, “John Donovan has abandoned his claim against Shell in relation to the Shell’s Smart loyalty scheme. He has acknowledged that these claims are without foundation and should not have been brought.

“Mr Donovan has also withdrawn all allegations of impropriety made against Shell and its employees in connection with these proceedings and has agreed not to repeat them in any manner whatsoever.”

Both parties are bound by confidentiality clauses and have made no further comment on the dramatic turnaround just three days before the court hearing.

Speculation in the industry suggests that the sudden capitulation points to the possibility of a merger between Shell and another major petrol brand.

The oil industry is going through a period of major mergers with BP-Amoco-Mobil, Total-Fina and Esso-Mobil, all recent examples.

One ex-Shell employee said, “This has been an on-going saga for so long now, one could reasonably assume that the action had become a fly in the ointment for any potential deal. From the language of the statements it does seem that Shell has wanted to draw a line under this action and secure the future of Smart. This could now pave the way for a merger, and Texaco would be the likely candidate.”

The recent fluctuations in the oil price and the need to rationalise and cut costs across major markets has led oil giants into increasingly ambitious partnerships.

Currently Total/Fina is pursuing French giant Elf which itself has long been seeking a partner for its UK operation. Shell and Texaco are currently the only majors without partners. In the US, the two companies have been downstream partners for a number of years.

Shell’s proposed merger with Texaco was halted last year. Uncertainty over the long-term legal ownership of the Smart concept would certainly be a barrier to such a deal.

Link to Original Article

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