Industrial paint sector appears to be target of inquiry by China's NDRC

8 June 2017. 

China's National Development and Reform Commission appears to be in the early stages of looking into the sales practices of industrial paint suppliers, sending out questionnaires to companies that focus on such issues as pricing and sales policies, MLex has learned.

A Shanghai-based multinational industrial paint company was recently contacted by the NDRC and its Shanghai branch and asked to cooperate with the inquiry, it is understood.

The company was asked to provide answers to a list of questions regarding its pricing and sales policies in China.

The questions ask about pricing levels, sales contracts, and whether the company imposes any unreasonable trading conditions or engages in any other restrictive conduct, among other issues, according to one source familiar with the matter.

Industrial paints are widely used in the automotive and electronic products sectors, as well as other areas.

It is not immediately clear exactly which companies the NDRC is looking into or what possible violations the regulator is examining.

The inquiry indicates that the regulator is likely looking into vertical-restraint relationships between suppliers and buyers, local legal sources said. The regulator also seems to be interested in possible unreasonable pricing conduct that suppliers are engaging in with distributors.

The inquiry is thought to be still at an early stage, and it is not immediately clear whether it will lead to a full-blown investigation into the sector.

The NDRC has been stepping up enforcement activities in markets for industrial products. Last year, it said its antitrust enforcement priorities included sectors such as industrial materials.

As reported by MLex, the NDRC is said to be probing a possible cartel of companies that supply chemical materials used to make polyvinyl chloride products. PVC is widely used in building construction, in such fixtures as pipes, doors and windows. 

Resale-price maintenance, or RPM, has been a priority of the regulator's antitrust investigations. Since 2013, it has launched a series of high-profile RPM investigations, targeting state-owned liquor companies, as well as the baby formula, eyeglass ware and automobile sectors.

Article 14 of China's Antimonopoly Law prohibits business operators from restricting the minimum resale price for a third party. Under the AML, the regulator can impose a fine of up to 10 percent of a company's sales revenue in the previous year for violations.

	Eliot Gao