C-121/77

JUDGMENT OF 29. 3. 1979 — CASE 121/77

In Case 121/77

NACHI FUJIKOSHI CORPORATION, Tokyo (Japan),

NACHI (DEUTSCHLAND) GMBH, Düsseldorf (Federal Republic of Germany)

and

NACHI (UK) LTD., Birmingham (United Kingdom),

NACHI FUJIKOSHI v COUNCIL

intervener,

APPLICATION for the annulment of Council Regulation (EEC) No 1778/77 of 26 July 1977 concerning the application of the anti-dumping duty on ball-bearings and tapered roller bearings, originating in Japan (Official Journal 1977, L 196, p. 1).

THE COURT

composed of: H. Kutscher, President, J. Mertens de Wilmars and Lord Mackenzie Stuart (Presidents of Chambers), A. M. Donner, P. Pescatore, M. Sørensen, A. O'Keeffe, G. Bosco and A. Touffait, Judges,

Advocate General: J.-P. Warner Registrar: A. Van Houtte

gives the following

Regulation (EEC) No 459/68 of the Commission (Articles 6 and 7). A Council of 5 April 1968 on protection Member State may also alen the against dumping or the granting of Commission (Article 8). If the complaint bounties or subsidies by countries which seems to be serious the Commission, in are not members of the European co-operation with the Member States, commences an examination of the matter Economic Community (Official Journal, English Special Edition 1968 (I), p. 80), which covers both dumping and injury amended by Regulation (EEC) No (Article 10 (1)). The other provisions of Article 10 and those of Article 11 2011/73 of the Council of 24 July 1973 (Official Journal 1973, L 206, p. 3), lays regulate that examination. Article 10 (4) down the detailed rules and the provides that: "The Commission shall procedure for the arrangement of anti­ provide opportunities for the dumping measures. These measures come complainant and the importers and within the jurisdiction of the EEC by exporters known to be concerned ... to see all information that is relevant to the virtue of the transfer of powers carried defence of their interests and not out by the Member States under Article 113 of the Treaty. The EEC system is in confidential within the meaning of conformity with the General Agreement Article 11 and that is used by the Commission in the anti-dumping on Tariffs and Trade Anti-dumping Code (United Nations Treaty Series, investigation". ·1

are unnecessary, the proceedings stand respect of which payment is not claimed terminated. Otherwise the Commission but importers must provide security to submits to the Council forthwith a report that amount, "collection of which shall "on the results of the consultation" be determined by the subsequent decision together with a proposal that the of the Council under Article 17". proceeding be terminated. If the Council Article 17 concerns the lot of the pro­ "acting by a qualified majority, approves visional duty and provides as follows: the proposal ... the proceeding shall stand terminated. It shall likewise stand "1. Where the facts as finally established terminated if within one month the show that there is dumping and Council has taken no decision or made injury, and the interests of the no request by a qualified majority to the Community call for Community intervention, the Commission shall, Commission asking it to resume its exam­ ination of the matter" (Article 14 (1)). after hearing the opinions expressed within the Committee, submit a Article 14 (2) (a) provides as follows: proposal to the Council. Such a "The provisions of the foregoing proposal shall also cover the matters paragraph shall apply where, during set out in paragraph 2. examination of the matter, the exporters 2. (a) The Council shall act by a give a voluntary undertaking to revise qualified majority. Where Article their prices so that the margin of 15 (1) has been applied, the dumping is eliminated or to cease to Council shall decide, subject to export the product in question to the the provisions of Article 15 (2), Community, provided that the what proportion of the amounts Commission, after hearing the opinions secured by way of provisional expressed within the Committee, duty is to be definitively considers this acceptable." collected.

accordance with Article 8 (b) of the exported by Nachi Fujikoshi Cor­ General Agreement on Tariffs and Trade poration and Koyo Seiko Company Ltd. Anti-dumping Code, that the products In the meantime the Commission carried referred to are described indicating the out an investigation at the European name of the supplier. Article 20 (2) (French, British and German) sub­ provides that the only exception to this sidiaries of the Japanese companies rule is where it is impracticable to name during the months from February to all the suppliers. April 1977. Because those subsidiaries Importers who wish to show that were associated with the producer products, although subject to anti­ companies, it based its calculations of the dumping duties, were not dumped, have export prices on the "price at which the the means of administrative appeal imported product is first resold to an (Article 19 (4)). independent buyer" (Article 3 (3)). Because of the great variety of categories (b) Facts of products on the market it adopted for By document of 15 October 1976, the each undertaking a sample of rep­ Committee of the European Bearing resentative products and determined the Manufacturers' Associations, at that time average price. Finally, the prices determined were reduced by fixed per­ without legal personality, whose members were the three German, British centages so as to reconstruct the export price to be adopted for the purpose of and French trade organizations, comparison with domestic prices. submitted a complaint to the Commission concerning dumping by From 18 to 28 April 1977 an Japanese roller bearing manufacturers. investigation was held in Japan at the After consultation with the Member four major producers by a group of States, the Commission decided on 9 experts from the Commission with the collaboration of a chartered accountant, November 1976 to carry out an official an expert from the United Kingdom and anti-dumping investigation. It informed an expert from the Federal Republic of the Japanese mission of this and sent Germany. questionnaires to all the known importers and exporters and published From the end of May until the end of the required notice in the Official June 1977 meetings were held between Journal of 13 November 1976, C 268, the Commission and the Japanese roller p. 2. bearing producers on the possibility of an undertaking as to prices. After four When the replies to the questionnaires weeks of discussion the four major had been received, the European and Japanese producers signed on 20 June Japanese manufacturers met on 18 and 1977 undertakings that they would 19 January 1977 so that each side could increase prices. put its views and arguments to the other. The Commission imposed a provisional anti-dumping duty of 20% on ball­ bearings and tapered roller bearings and parts thereof originating in Japan by Regulation (EEC) No 261/77 of 4 February 1977 (Official Journal 1977, L 34, p. 60), which was extended by Council Regulation (EEC) No 944/77 (Official Journal 1977, L 112, p. 1). However, the percentage was fixed at 10% for the products manufactured and

On 26 July 1977 the Council adopted (c) The subject-matter of the dispute definitive measures by issuing Regulation The applicants have lodged the present (EEC) No 1778/77 concerning the application against Council Regulation application of the anti-dumping duty on (EEC) No 1778/77. They claim that ball-bearings and tapered roller bearings, during the discussions which followed originating in Japan. the entry into force of Regulation (EEC) No 261/77 imposing a provisional anti Article 1 of Regulation (EEC) No

More takings are being evaded, are not being observed or have been withdrawn it must generally, the applicants claim that forthwith, after consulting the Member dumping complained of has not been sufficiently established in law and in States within the advisory committee accordance with the requirements both provided for in Article 12 of Regulation of the rules of the General Agreement on (EEC) No 459/68, convened within a Tariffs and Trade and of the Community period of five days, terminate the rules. suspension of the application of the definitive duty. (d) Procedure In application of Article 17 (2) (a) of The application, dated 7 October 1977, Regulation (EEC) No 459/68, Article 3 was entered in the Court Register on of Regulation No 1778/77 provides as 10 October 1977. On 12 October 1977,

Regulation (EEC) No 1778/77 was published in the Official Journal on Following its application, which was 3 August 1977 (L 196, p. 1). entered on the Court Register on 7 November 1977, the Federation of On the same date the Commission European Bearing Manufacturers' accepted the undertakings given by the Associations (hereinafter referred to as Japanese producers on 20 June 1977. "FEBMA") was allowed, by order of the

admissibility of the application before — Dismiss the applications as examining the substance of the case. The inadmissible and, in the alternative, intervener lodged its observations on the as unfounded; objection of inadmissibility on 16 Fe­ — Order the applicants to pay the costs, bruary 1978 and the applicants lodged their observations on 3 March 1978. including the costs of the intervention. After hearing the report of the Judge- Rapporteur and the views of the Advocate General, the Court decided, by III — Submissions and argu­ order of 12 April 1978, to reserve its ments of the parties. decision on the objection of inadmissibility for the final judgment. Admissibility After hearing the report of the Judge- The applicants state in the application Rapporteur and the views of the that Regulation No 1778/77 must be Advocate General, the Court decided to considered to be a decision within the open the oral procedure without any meaning of the second paragraph of preparatory inquiry. Article 173 of the Treaty. It is of direct However, the Court requested the and individual concern to them, which is parties and the Commission of the confirmed by the fact that the European Communities to answer Commission's investigation was carried certain questions pursuant to Article 21 out exclusively at the premises of the of the Protocol on the Statute of the four above-mentioned Japanese Court of Justice of the EEC. companies and their subsidiaries. In its document on admissibility and in the defence, the Council alleges that II — Conclusions of the parties Regulation No 1778/77 is a legislative measure which cannot be of direct or The applicants claim that the Court individual concern to the applicants as should: required by Article 173. — Declare Council Regulation (EEC) Article 2 of the regulation requires the No 1778/77 of 26 July 1977 null and Commission only to monitor closely the void; observance of the undertakings given by — Order the defendant to pay the costs; the Japanese producers and the import trends and developments on the In the alternative: Community market.

Even Article 3 is not of direct and of its conclusion of the existence of individual concern either to the producer dumping and of material injury. or to importers. It is impossible to know whether Regu­ According to the intervener the lation No 1778/77 was adopted by a applicants do not have a legally qualified majority. Moreover, this regu­ protected interest in bringing an action lation is also vitiated for failure to give a against Articles 1 and 2 of the contested sufficient statement of the reasons upon regulation which contains, so far as they which it was based as regards both the are concerned, only the suspension of finding of the existence of dumping and the duty imposed. as regards that of the existence of material injury. In their observations on the preliminary objection, the applicants, dismissing the Besides, Article 10 (4) of Regulation No arguments of the Council and the 459/68 has been infringed since the intervener, maintain that the application Commission did not give the applicants is admissible. an opportunity to see all information that was relevant to the defence of their In the rejoinder the Council states that interests. the imposition of an anti-dumping duty is neither an individual prohibitive Finally, Regulation No 1778/77 is not in measure nor a penalty comparable to the conformity with the provisions of Article measures adopted under the rules on 3 (3) and (4) of Regulation No 459/68. competition. It is a measure of It presumed that there were links commercial policy aiming to protect between the Japanese exporters and the certain sectors of the Community importers in Europe without producing industry and is therefore of a general evidence of manipulation of prices. This nature. applies in particular as regards the deliveries made by the first applicant to Relying upon the case-law of the Court, the Import Standard Office undertaking it maintains that the applicants cannot in Paris, which is in no way legally a part claim that either the contested measure of the Nachi group. in general of Article 3 thereof is of direct and individual concern to them. By the method adopted for the calcu­ lation of export prices the Commission, Nor may the first applicant be considered followed in this by the Council, failed to directly and individually concerned by take as a reference sales "made as nearly virtue of the undertaking which it has as possible at the same time". given. Since the first applicant had signed an The substance of the case. agreement it could assume that the anti­ dumping procedure would stand According to the applicants, Regulation terminated. It observed that agreement; No 261/77 is null and void for lack of the Council and the Commission competence. Only the Council could therefore violated by the contested have adopted a provisional measure. decision the principle of good faith, Article 15 of Regulation No 459/68 is which applies not only to the private law not in conformity with the principle of of the Member States of the Community the distribution of powers enshrined in but also to public law. the Treaty. Moreover, this regulation is null and void because it contains an insufficient statement of the reasons upon which it is based, since it does not show which factors the Commisson used as the basis

After describing the situation on the need do no more than indicate on the market in ball-bearings and the history one hand the general situation which has of the case the Council states that the led to its adoption and, on the other, the anti-dumping procedure concerns general objectives which it proposes to situations in which, as a general rule, it is achieve. necessary to appraise complex economic As regards the indication that Regulation facts which are contested in fact, whilst No 1778/77 was adopted by a qualified it is necessary to make decisions, either majority the Council states that no provisional or final, within a very short provision requires that this should be period of time. The procedure should be indicated in the measure itself. sufficiently practicable for the bodies concerned, in particular for the As regards the complaints from the point of view of substantive law it is observed Commission, to enable its economic objective ("effectiveness") to be that Regulation No 1778/77 is based not achieved. only on Regulation No 459/68 but also on Article 113 of the Treaty. The duty for the authorities to Consequently, even if the contested regu investigate the facts is limited by the lation is not covered by the provisions of corresponding duty for individuals to co Regulation No 459/68, Article 113 still operate in the investigation, in particular constitutes a sufficient legal basis since where the facts involved are solely the imposition of an anti-dumping duty accessible to the undertakings concerned. constitutes a very important measure It cannot therefore be complained that coming within commercial policy.

takings concerned. The complaint that the Commission did In the circumstances the Commission in not give the applicants the opportunity to see all information that is relevant to fact compared the prices charged on the their defence is unfounded. The domestic market and the export prices on dates which were as close as possible, Commission took into account only infor in the present case the first six months of mation which had been communicated to 1976. The complaint that Article 3 (3) of it by the applicants or by the other under Regulation No 459/68 is not applicable takings concerned and which had not to the applicants and to the relationship been contested by them.

NACHI FUJIKOSHI v COUNCIL

As regards the The investigations of the Commission remainder, it refers to the observations concerning the injury caused by dumping already made on the complaints raised have been exhaustively set out in the against Regulation No 1778/77. Finally, thirteenth to seventeenth recitals of the even if Regulation No 261/77 was invalid it would not follow that Article 3 preamble to the contested regulation, on which the defendant has commented. of Regulation No 1778/77 was also invalid since that article was adopted on The argument of the applicants that the the basis of fresh and more complete signing of an undertaking should examinations of the matter. terminate the procedure cannot be based The intervener supports, in its document, upon the wording of Article 14 (2) (a) of all the arguments of the Council. the basic regulation. As objections had been expressed within the advisory In their reply, the applicants continue to committee against the immediate termin maintain that only the Council may fix a ation of the procedure the Commission provisional anti-dumping duty.

future. 113 of the Treaty may provide a The collection of the securities lodged by sufficient legal basis for the contested the importers under Regulation No regulation regardless of the provisions of 261/77 in no way represents a penalty Regulation No 459/68 is rejected by the but a logical consequence of the applicants as also the interpretation given existence of dumping. A solution other by the Council to Article 1 (2) of the than that contained in Article 3 of the latter regulation. contested regulation would have been quite unfair.

JUDGMENT OF 29. 3. 1979 — CASE 121/77

The applicants also maintain that they by the infringements of procedural were not informed that the Commission requirements during their preparation. intended to reconstruct the export prices Moreover only the full Commission or by the method laid down in Article 3 (3) the Council can decide the definitive of the basic regulation. calculation of the margin of dumping; According to the applicants, the the officials responsible for the defendant itself admits that the investigations are not therefore able or comparison between the export prices empowered to supply any information on and the domestic prices was not carried those calculations. Secondly it is not out by reference to dates which were as customary in matters of customs and tax close as possible. In other respects too law for the authorities to have exhaustive this method was misapplied and preliminary discussions on a draft therefore led to substantial inaccuracies. decision with the persons concerned. Apart from that, the application of that This applies all the more to the present method was not justified as regards both case in which the adoption of a regu­ lation was involved. the relationship between the applicants and more particularly the relationship Moreover the statement of the applicants between the first applicant and the that they contributed in an exemplary Import Standard Office undertaking. On manner to the clarification of the fact is

NACHI FUJIKOSHI v COUNCIL

Decision

1 By application of 7 October 1977, received at the Court Registry on 10 October 1977, the applicants, Nachi Fujikoshi Corporation (hereinafter referred to as "Nachi"), Nachi (Deutschland) GmbH and Nachi (UK) Limited (hereinafter referred to as "the subsidiaries") brought before the Court of Justice under Article 173 of the Treaty an action against the Council for the annulment of Council Regulation (EEC) No 1778/77 of

JUDGMENT OF 29. 3. 1979 — CASE 121/77

26 July 1977 concerning the application of the anti-dumping duty on ball­ bearings and tapered roller bearings, originating in Japan (Official Journal 1977, L 196, p. 1).

2 By application of 7 November 1977 the Federation of European Bearing Manufacturers' Associations (hereinafter referred to as "FEBMA") asked to be allowed to intervene in support of the submissions of the Council, the defendant; this intervention was allowed by order of the Court of 30 November 1977.

NACHI FUJIKOSHI v COUNCIL

The admissibility of the application

4 The Council has raised an objection of inadmissibility claiming that the contested measure is a regulation and that the applicants are therefore not entitled to request annulment of it under the second paragraph of Article 173 of the Treaty. It claims that in the present case this is not a decision adopted in the form of a regulation since Regulation No 1778/77 in fact constitutes a general rule which affects all the products in question originating in Japan and which must, according to Article 19 (1) of Regulation No 459/68 of the Council of 5 April 1968 on protection against dumping or the granting of bounties or subsidies by countries which are not members of the European Economic Community (Official Journal, English Special Edition.1968 (I), p. 80), be adopted in the form of a regulation.

7 Regulation No 1778/77 contains essentially three provisions:

— Article 1 imposes a definitive anti-dumping duty of 15% on the products in question originating in Japan and suspends the application of that duty without prejudice to Article 2;

— Article 2 regulates the monitoring of the undertakings given by the major Japanese producers and empowers the Commission to terminate the suspension of the application of the duty if it finds that these under­ takings are being evaded, not being observed or have been withdrawn;

— Article 3 provides, in respect of the products manufactured by the major producers, for the collection of the amounts secured by way of prov­ isional duty in application of the imposition by previous regulations of a provisional duty.

For the purpose of judging the admissibility of the application, these three articles should be examined separately.

8 It emerges from the two recitals before last in the preamble to Regulation No 1778/77 that Article 1 (2) provides for the suspension of the definitive anti-dumping duty because "the four major Japanese producers have given undertakings to the Commission to revise their future prices". "Whereas, however, it is necessary that the Commission closely monitor the observance of the undertakings and take immediate action if there is any violation or evasion or if the undertakings are withdrawn", it is provided in Article 2 of the regulation that "the Commission shall, in collaboration with the Member States, closely monitor the observance of the undertakings given by the major Japanese ... producers to revise their prices" and that it "shall

11 As regards the admissibility of the application in so far as it is directed against Article 3, that article constitutes a collective decision relating to named addressees. Although the collection of the amounts secured by way of provisional anti-dumping duty is per se of direct concern to any importer who has imported the products in question subject to such duty, the special feature of Article 3 which sets it apart is that it does not concern all importers but only those who have imported the products manufactured by the four major Japanese producers named in that article. The allegation of the Council and the intervener that only implementing measures adopted by the national authorities are of direct concern to the importers and that these importers should therefore, where appropriate, bring the matter before the national courts having jurisdiction disregards the fact that such implementation is purely automatic and, moreover, in pursuance not of intermediate national rules but of Community rules alone.

12 Article 3 of Regulation No 1778/77 is therefore of direct and individual concern to those importers and consequently the applications lodged by the subsidiaries, as importers of Nachi products, are admissible.

13 As a result the application lodged by Nachi against that article is also admissible.

JUDGMENT OF 29. 3. 1979 — CASE 121/77

The substance of the application

14 As regards Articles 1 and 2 of Regulation No 1778/77, the applicants claim in substance, amongst other complaints against the reasoning on which that regulation is based and the procedure which led up to it, that Regulation No 459/68 does not permit the definitive anti-dumping duty to be imposed at the same time as undertakings by the producers concerned to revise prices are accepted.

NACHI FUJIKOSHI v COUNCIL

(b) Where the Commission, acting in accordance with the provisions of the foregoing subparagraph, accepts the undertaking referred to therein, the investigation of injury shall nevertheless be completed if the exporters so desire or if, after hearing the opinions expressed within the Committee, the Commission so decides. If the Commission, after hearing the opinions expressed within the Committee, makes a determi­ nation of no injury, the undertaking given by the exporters shall auto­ matically lapse unless the exporters state that it is not so to lapse.

(c) The fact that exporters do not offer to give such undertakings, or do not accept an invitation made by the Commission to do so, shall in no way be prejudicial to the consideration of the case. However, the Commission shall be free to determine that a threat of injury is more likely to be realized if the dumped imports continue.

(d) Where the Commission finds that the undertaking of exporters is being evaded or no longer observed or has been withdrawn and that, as a result, protective measures might be necessary, it shall forthwith so inform the Member States and shall recommence the examination of the facts in accordance with Article 10.

(e) The provisions of Article 18 (1) shall apply mutatis mutandis to the undertakings given by exporters on the basis of this article. Any modification of such undertakings shall be made in accordance with the procedure laid down in this article."

17 On the other hand, where the procedure of examination of the matter is continued, Article 17 of that regulation provides as follows:

19 It is impossible to accept the argument that in the present case the under­ taking was given only after examination of the matter since the examination of the matter ends only when the Commission submits its proposals to the Council, whilst it is not disputed in the present case that the undertakings were signed on 20 June 1977 before the meeting of the advisory committee provided for in Article 12 (2) of Regulation No 459/68 held on 21 June 1977. Those undertakings were referred to by the Commission in its proposal to the Council of 4 July 1977 and considered to the "acceptable". The same undertakings were, as observed above, referred to by the Council both in the recitals of the preamble to Regulation (EEC) No 1778/77 and in the provisions of that regulation as valid existing undertakings. The fact that the Commission did not notify its acceptance of the undertaking until 3 August 1977 cannot therefore be considered as an indication that that acceptance was made only "subject to" the suspended imposition of a definitive anti­ dumping duty as a penalty.

20 On the contrary, under the above-mentioned Article 14, an undertaking by an exporter to revise his prices leads to termination of the proceeding so that it is impossible to apply Article 17 of Regulation No 459/68. By specifying that termination of the proceeding occurs only if "the Commission, after hearing the opinions expressed within the Committee, considers this acceptable", Article 14 in no way implies that the Commission and, where appropriate, the Council may follow the procedure provided for until the

23 The application is therefore well founded in this respect.

24 As regards the application in so far as it is directed against Article 3 of Regu­ lation No 1778/77, in the circumstances the judgment on Article 3 is the same as that on Articles 1 and 2 of the regulation.

JUDGMENT OF 29. 3. 1979 — CASE 121/77

25 If the result of the undertakings signed by the four major Japanese producers was that, under Article 14 of the basic regulation, the proceeding should have stood terminated, it follows that there was no need to apply Article 17 which empowers the Council to order the collection of the amounts secured by way of provisional duty. The wording of Article 17 shows moreover that such a decision can be adopted only at the same time as the imposition of a definitive anti-dumping duty. It follows in particular that the Commission can propose a decision to collect the amounts secured only if it proposes "Community action", in other words, the introduction of a definitive anti­ dumping duty.

26 This interpretation is confirmed by Article 16 (2) which provides that the Commission must submit a proposal to the Council for Community action at least one month before expiry of the provisional anti-dumping duty. It is also confirmed by the wording of Article 17 (2) (b). In fact, under Article 19 (3) of the basic regulation a provisional anti-dumping duty can be imposed only in so far as a margin of dumping and material injury have been found. This would seem to have been the intention of the Council when it provided in Article 3 of the contested regulation that the amounts secured were to be "definitively collected to the extend that they do not exceed the rate of duty fixed in this regulation", in other words the rate of the definitive anti­ dumping duty whose application had been suspended.

On those grounds,

THE COURT

hereby:

1. Annuls Council Regulation (EEC) No 1778/77 of 26 July 1977 concerning the application of the anti-dumping duty on ball-bearings and tapered roller bearings, originating in Japan;

OPINION OF MR WARNER — CASE 121/77

2. Orders the Council to pay the costs in connexion with the application for the adoption of interim measures and the main action, except for those caused by the intervention;

OPINION OF MR ADVOCATE GENERAL WARNER (see Case 113/77, p. 1212)