CHAPTER 15 - SMART LOYALTY CONSORTIUM

In 1996 a “Project Rainbow” consortium was initiated by Dr Chris Fay with the help of Maurice Saatchi (now Lord Saatchi) with the intention of launching a Shell led multibrand loyalty scheme. The members of the consortium including Shell and Sainsbury’s put £50,000 each into a pool to cover development costs for what evolved into the Shell SMART scheme.  Basically a consortium of retailers in non-competitive trades would all distribute a common promotional currency, thus allowing consumers to collect loyalty points much faster than in a scheme run by a single retailer.

We had no legal grounds for bringing an action against Shell until the SMART scheme was actually launched in March 1997 in Scotland (by that time Sainsbury’s had pulled out of the consortium to launch its own loyalty card scheme). Immediately after the launch we wrote to Dr Fay pointing out that the scheme was based on the concept that we had disclosed to Andrew Lazenby between May and November 1992. Dr Fay replied saying that he would leave matters entirely to his lawyers. It was clear from the tone and content of his letter that he was less than amused.

Shell used a different firm of solicitors to represent them this time round, namely D J Freeman, one of the top solicitor firms in London.  To keep our costs down, John often dealt directly with them. The first letters came from Laurence Harris. When the correspondence apparently got too hot for him to handle, it was taken over by the senior partner, Colin Joseph.   

D J Freeman initially stated that the Smart concept stemmed from proposals put to Shell by other parties. They claimed exactly the opposite some months later – that none of the relevant proposals were adopted by Shell.  

To avoid issuing a High Court Writ, it was agreed that Shell would in effect take the SMART claim up to the “discovery” stage, by assembling evidence and interviewing witnesses.  We agreed to this arrangement because it meant that a legal battle might be avoided. The advantage for Shell was that it avoided publicity that could have damaged Shell’s plans to expand the SMART scheme by recruiting other brands. 

In mid May 1997, John met Sir John Jennings (and Mark Moody-Stuart) at the entrance door of the Queen Elizabeth Centre when he arrived to attend the 1997 AGM of Shell Transport and Trading Company Plc. Sir John immediately recognised him, shook his hand and started discussing the multibrand claim. Moody-Stuart strode into the hall while they engaged in friendly and constructive conversation. Sir John offered to arrange for John to meet with Dr Fay to discuss the matter.  Sir John was exceptionally kind and fair, as he always was when we had discussions with him. My son explained that after supplying Shell with relevant documents, we had agreed to delay issuing proceedings in return for Shell supplying a report and the discovery documents. The matter was left on that basis. Unfortunately, by the time that Shell UK had provided the report and we had responded, Sir John had retired from his post as Chairman of Shell Transport And Trading Company Plc. 

The documents that we assembled confirmed that the Don Marketing multibrand loyalty concept was devised in response to a specific brief from Shell; that the brief stemmed from research carried out by us; that Shell took an option on our concept, and that we were the first company to invite a retailer (Sainsbury’s) to become a points issuing partner in a Shell led multibrand loyalty card scheme.  Much to our surprise Shell supplied a report but did not initially supply any discovery documents. They had to be prised from them. 

As we anticipated Andrew Lazenby had played the key role during the formative years of the SMART project. He was involved in Project Onyx (a loyalty scheme project) from March 1992 and subsequently became head of the project. He then led Project Hercules (The SMART project) from its inception through to 1994. Early in January 1993, Andrew had briefed Option One (the agency with whom he had a special relationship) to produce a scheme that replicated our proposals. He had even contacted Sainsbury’s, who subsequently became an investing partner in the Shell led Rainbow Consortium project. 

As part of our response to the report and the related documents, we had supplied Shell with an expert opinion from Professor Steve Worthington, probably the worlds leading authority on loyalty schemes. He had concluded after reading all of the background information that our idea had laid the foundation stones for the Shell SMART multi-partner scheme.  We also supplied a legal opinion from Dr Mary Vitoria QC that we had a strongly arguable claim, which had good prospects of success. Despite all of the evidence and the opinions in our favour, Shell steadfastly refused to put the claim to mediation or to try to negotiate a settlement.

On 9th April 1998, my son issued a High Court Writ in his own name against Shell UK Limited in respect of the Smart scheme. He did this after much deliberation about how we could avoid a further Security for Costs Application by Shell. Our solicitor Richard Woodman had the brainwave of transferring the rights from the company to John, as a Security for Costs application can only be made against a company not an individual. Mary Vitoria, who drafted the necessary legal documents, fully endorsed Richard Woodman’s brilliant idea.

The Writ claimed that the SMART loyalty scheme operated by Shell in the UK and in several other Countries was based on a proposal that Don Marketing disclosed to Andrew Lazenby in strictest confidence. The claim was also brought on moral grounds in view of the flagrant breaches by Mr Lazenby of the core principles of honesty, integrity, trust and openness proclaimed in the Statement of General Business Principles published by Royal Dutch/Shell. 

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