Big Mac's Folly

The Economist, July 1, 1995

AS THE world's biggest fast-food shop, McDonald's has always been a soft target for anybody with a beef about beef--or, indeed, litter, low pay or the destruction of the Amazon. In 1988 the company was the butt of a ferocious campaign in the United States by environmentalists angry about the amount of polystyrene rubbish it created. Now it is bogged down in the longest, most expensive libel trial in British legal history. The defendants are two unemployed environmental campaigners who distributed a pamphlet accusing McDonald's of everything from ravaging the world's rain forests to under-paying staff.

With the trial grinding into its second year, the inventor of the Big Mac has finally realised that it has bitten off more than it can chew. A week before the trial's first anniversary on June 28th, McDonald's senior lawyer requested a meeting with the two defendants, Dave Morris, a former postman, and Helen Steel, a gardener. Accounts of the meeting differ. McDonald's head of communications in Britain, Mike Love, says the company had offered to end the case if the two defendants would retract their libellous statements and promise not to repeat them. He claimed that the offer had been on the table since the trial began, but agreed that McDonald's was no longer insisting on an apology or costs.

But the two defendants, who are having to represent themselves as legal aid is not available in libel, strongly deny this version. "We're not prepared to sit back in silence while they mislead the media," says Miss Steel. She claims that McDonald's was so keen to end the case that it offered to make a payment to a third party as a contribution to the defence's costs. She and her co-defendant told McDonald's that they were not prepared to retract a word.

Quite where this leaves the peace negotiations is unclear. But it is hardly surprising that McDonald's is seeking an escape route. The case has been an expensive public-relations disaster.

Not only has McDonald's often looked as if it is using a whole bag full of double cheeseburgers to squash a small French fry, but some of the evidence on topics such as animal husbandry and subliminal advertising techniques has hurt its "good neighbour" image. Since April, the trial has been hearing evidence from McDonald's managers on its employment practices. During questioning they admitted that in the United States the company paid at or near the official legal minimum, and in Britain annual staff turnover was almost 200%.

At McDonald's annual general meeting in Chicago on May 26th, its chairman and chief executive, Michael Quinlan, was asked whether it was in shareholders' interests to continue the action. He replied that it was "coming to a wrap soon". But how did the company get into such a nightmare? As Michael Skrein, a British libel solicitor, points out: "The big question any company has to ask itself before starting a libel action is: is this going to help my reputation?"

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