A special unit has reportedly been sent to investigate an intensified price war triggered by rivalry between domestic and foreign chain-store operators in southern China. The news came shortly after the State Economic and Trade Commission said it intended to formulate rules to tackle 'blind' expansion of chain stores. Senior officials have raised concerns over the price-cutting strategy by chain-store operators at outlets in Guangdong province, according to Guangzhou-based Web site Qianlong.com. The State Development Planning Commission had sent a team to the province to investigate the issue, the Web site said. The commission was unavailable for comment yesterday. China Resources Vanguard Department Store chief operating officer He Zhidong yesterday said that he was not aware of any central government investigation. But he said it was normal practice for operators to offer incentives to accelerate sales. China Resources Vanguard is one major operator using aggressive price-cutting to grab market share in southern China's brutally competitive retail sector. In September, Vanguard and ParknShop sold roast chicken at 80 fen (about 75 HK cents] each at their Guangzhou stores. Within the last week Vanguard intensified its price cutting, selling fish at one yuan each and a water-heater at 98 yuan, according to Qianlong.com. Vanguard upped its price incentives as United States-based N-Mart sold cans of Coca-Cola for 10 fen at its newly opened Guangzhou store. Other new domestic players such as Jiaying and Lide also joined the fray. Industry participants had argued that the price war represented healthy competition but academic economists said a continuous decline in retailers' profit margins would have damaging long-term consequences. Xu Yinzhou, deputy dean of Guangdong Business College, was quoted by the Web site as saying that the move would put pressure on suppliers and eventually damage their profitability. It had been reported that some large-scale retailers not only had asked suppliers to pay excessive fees for the right to sell their products in chain-store outlets but also delayed payments to suppliers.