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DOJ Auto Refinish Probe Update

Published on 2002-03-27. Author : SpecialChem

Yesterday, the media started covering an ongoing DOJ investigation of automotive paint manufacturers that was begun earlier this year by the requesting of information to recommend action to a grand jury convened to investigate an alleged infraction. In January, the Department of Justice started investigating five major paint manufacturers for price-fixing in the automotive refinishing industry.

The antitrust division of the Justice Department has subpoenaed documents from Sherwin-Williams, DuPont Co. and PPG Industries Inc., BASF in Germany and Akzo Nobel NV in the Netherlands. All of these companies at this point have denied any wrongdoing.

The investigation has been under way since January, and a federal grand jury has been convened to hear evidence, according to a report in the Wall Street Journal.

The five companies sell most of the paint purchased by auto-body shops in the United States, Europe, and Latin America -- primarily through owned and non-owned distributors. According to the most recent company annual reports, BASF chalks up about 25% of its coatings sales to auto refinish, whereas Akzo claims about 12%. Anti-trust action is not foreign to BASF, in 1999 they paid a $225 million fine imposed by the DOJ as the result of a vitamin price fixing investigation.

Auto paint sales counted for $493 million to Sherwin Williams last year - primarily auto refinish products. This accounts for slightly less than 9% of the company's total sales. The company makes auto refinish materials at their Richmond, Kentucky plant. In 2000, S-W bought Scott-Warren in Italy, who is also a producer of auto refinish coatings for the European market.

John Ruch, representative of PPG Industries told PaintandCoatings.com today that his company had cooperated with the DOJ's information request when it was originally made, and has no additional information as to the status of the investigation.

After the Department of Justice has examined the materials requested, they will recommend action to the grand jury, which will either act to indict any or all parties, or will rule insufficient evidence for further action.


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