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Letter to the Editor
Wednesday June 6
Akzo Nobel Confirms Justice Department Investigation
"Akzo Nobel confirms that it has received a grand jury subpoena relating to the U.S. Department of Justice's investigations with respect to the automotive refinishes industry," Akzo said in a statement, adding it was cooperating fully with the U.S. government.
Sector peers Sherwin-Williams Co, PPG Industries, and BASF AG said on June 4 they had been subpoenaed by the U.S. Department of Justice, which is investigating allegations of price fixing in the automotive refinishings industry.
The Wall Street Journal has reported that Akzo was also included in the investigation, but Akzo repeatedly declined to give confirmation until Wednesday. Akzo said in February it had taken a provision of 150 million euro ($126.9 million) after tax in 2000 to cover costs of antitrust probes in the United States, Canada and the European Union, but it declined to give details on those investigations.
With eight percent of total world coatings sales, Akzo is the world leader in the sector. Turnover in its coatings unit totalled 5.568 billion euros ($4.70 billion) in 2000, with about 18 percent or one billion euros of that coming from the United States and Canada.
Akzo's coatings performance has lagged its targets for 10 percent sales margins and 25 percent return on investments, posting 2000 figures of 8.2 percent and 20.1 percent, respectively.
In a speech last week to a trade group, Akzo Chairman Cees van Lede said sales growth in mature coatings markets has been very low, mainly following GDP growth, which would probably lead to further consolidation in the sector.
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