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Letter to the Editor

Justice Department Begins Investigation Into Price Fixing by Five Auto Refinish Paint Companies

WASHINGTON -- Federal antitrust enforcers subpoenaed documents from the world's five largest paint makers as part of a criminal probe into alleged price fixing in the automotive-refinishing industry.

The investigation has been under way since January, and a federal grand jury has been convened to hear evidence. The Justice Department has subpoenaed documents from DuPont Co., Sherwin-Williams Co. and PPG Industries Inc. in the U.S., and two foreign companies, Germany's BASF AG and Akzo Nobel NV of the Netherlands. A Justice Department spokesperson confirmed the existence of the investigation but declined to identify the individual companies.

The Justice Department has at least two dozen price-fixing investigations under way in a variety of industries, and it is unclear whether any charges will result from the auto-refinishing investigation. Each of the paint makers has acknowledged the inquiry and denied wrongdoing.

Following consolidation in the refinishing industry, the five companies under investigation supply most of the paint sold to auto-body shops in the U.S. and overseas. The companies are alleged to have met in Europe five years ago, where they conspired to fix their wholesale prices in the U.S., according to "Hammer and Dolly," a Washington, D.C., trade magazine for the auto body-shop industry, headed by Sheila Loftus, that reported the inquiry.

John Ruch, a spokesman of PPG, of Pittsburgh, said, "The antitrust division has initiated a grand jury investigation to determine whether there has been unlawful conduct affecting the sale of automotive-refinishing products in the U.S. during the last five years." He said all big producers had been subpoenaed. "PPG representatives met with Justice officials and assured them of our full cooperation," he said. "We also undertook our own investigation and have seen nothing that would indicate that any PPG people conducted themselves in an unlawful manner."

BASF, DuPont, of Wilmington, Del., and Sherwin-Williams, of Cleveland, issued similar statements. A spokesman for Akzo Nobel said, "Akzo Nobel is involved in investigations by the antitrust authorities in the U.S., Canada and the European Union into alleged violations of the respective antitrust laws for some products in these jurisdictions."

BASF and Akzo Nobel have both been involved in past price-fixing cases brought by the Justice Department, which has significantly stepped up enforcement against the practice in recent years. Since 1997, the antitrust division has brought in more than $1.7 billion in fines, many of them against international cartels, U.S. officials say.

Publisher's Note: Hints of this investigation of the automotive refinishes companies have wafted into view several times over the past few months, but seemed far removed from reality. The picture of the five giants of the auto refinish marketplace gathering secretly over dinner somewhere to matter-of-factly and agreeably decide on prices does not fit at all the reality we see today. Theirs is an extremely cutthroat relationship, with these paint manufacturers striving ruthlessly for marketshare in the current emphatically flat market.

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