C-56/85

The Provisional Duty Regulation imposed a By an application lodged on 29 August 1985 provisional anti-dumping duty of 43.7% on Brother sought the suspension of the electronic typewriters made in Japan by Definitive Duty Regulation (Case Brother Industries Ltd. 250/85 R). The application was dismissed by an Order of the President of the Court of 18 October 1985, which reserved the costs of the interim proceedings ([1985] By an application lodged on 25 February ECR 3459). 1985, Brother Industries Ltd along with seven of its EEC subsidiaries brought an action against the Commission for the annulment of the Provisional Duty Regu­ lation and damages (Case 56/85). By its Reply in Case 250/85, lodged on 26 March 1986, Brother withdrew its damages claims both in that case and in Case 56/85. By a letter dated 8 April 1986, Brother also The Definitive Duty Regulation of 19 June specified that the annulment claim in Case 1985 imposed a definitive duty of 21 % and 250/85 was not directed against the

OPINION OF SIR GORDON SLYNN — CASE 56/85

Commission. These steps amounted to a Definitive Duty Regulation, not at the rate total withdrawal of Case 250/85 as far as of 43.7% provisionally set, and any brought against the Commission. Therefore, difference fell to be refunded pursuant to by an Order of 16 May 1986, the Court Article 11 (7) of the Basic Regulation. Any removed Case 250/85 from the register of parts of the Provisional Duty Regulation the Court in so far as brought against the thus incorporated in the Definitive Duty Commission and ordered Brother to pay the Regulation in my opinion fall to be chal­ Commission's costs as defendant, including lenged in an action brought against the those relating to the proceedings for interim latter, and Brother has done so in Case measures. 250/85. Any parts of the Provisional Duty Regulation not so confirmed have lapsed and there is no longer anything left to annul.

BROTHER v COMMISSION

Nakajima by Article 1 (2) of the Provisional I — Normal value Duty Regulation. However, that step has been reversed and replaced by a series of other measures, which are set out in my Opinion in TEC. It is, in my view, wrong to Under the heading of normal value, Brother assert that the legal situation regarding argues as follows: Nakajima has been created by the Provisional Duty Regulation.

1. Article 2 (3) of the Basic Regulation -was infringed because the Community auth­ If any independent effect could be orities compared prices on markets where attributed to the Provisional Duty Regu­ supply and demand were completely lation after 19 June 1985 then clearly a different, so that no fair comparison of court ruling would have point. Equally, if prices was possible. That argument falls to Brother could show some loss or injury be rejected for the reasons given in my resulting from the Provisional Duty Regu­ Opinion in TEC. Small sales or non-existent lation alone (e. g. interest lost on amounts sales on the domestic market cannot be used secured by way of provisional duty which as a reason to evade the effect of the Basic were subsequently reimbursed) then a ruling Regulation. Effective protection against to that effect might be possible, though it dumping is particularly necessary where, as seems to me that it would be difficult to here, the product concerned is manu­ establish any damage reparable under factured mainly for export. Article 215 of the EEC Treaty and, in any event, Brother has withdrawn its damages claim in Case 56/85.

3. Article 2 (3) (b) of the Basic Regulation to assert, as does Recital 15 to the was infringed because the normal value of Definitive Duty Regulation, that con­ most of the models exported by the struction of normal value under Article applicant was calculated on the basis of the 2 (3) (b) (ii) of the Basic Regulation is resale price charged by its associated designed to lead to a normal value as if sales distributor in Japan. The electronic typew­ on the domestic market had taken place. riters of Brother Industries Ltd are Since the normal value based on actual distributed on the Japanese market through domestic price was, in my view, correctly a sales company, Brother Sales Ltd. Brother based on the sale prices of Brother Sales Industries Ltd holds only about 15 % of the Ltd, an analogous approach was in my share capital of Brother Sales Ltd (although opinion correct where normal value was the Court has not been informed about constructed, and the present argument falls other ways in which control might be to be dismissed. exercised over the sales company, such as voting rights, shared directors or staff, indirect shareholdings, contractual links or simple economic pressure). Nevertheless, in my opinion, it is plainly an associated company within the meaning of Article 5. The margin of profit (71.18%) included 2 (7) of the Basic Regulation, so that the in the normal value of the three Brother Community institutions were entitled to models for which normal value was disregard sales from Brother Industries Ltd constructed was excessively high and was to Brother Sales Ltd and to base the normal wrongly determined, which constitutes an value for those models sold in sufficient infringement of Article 2 (3) (b) (ii) of the quantities on the Japanese market on the Basic Regulation and a misuse of powers. price charged on the first arm's-length sale, By dividing the general sales expenses i. e. the sales of Brother Sales Ltd. For those incurred in Japan by Brother Sales Ltd not models I consider that normal value was by the volume of its sales in Japan but by lawfully based on the actual domestic sale the volume of sales for the whole Brother price of Brother Sales Ltd, and this group worldwide (sales which have nothing argument fails. to do with Brother Sales Ltd), the Council necessarily underestimated the general expenses of Brother Sales Ltd (to the point of reducing them almost to nil) and, by the same token, overestimated its profit in Japan.

proof of any misuse of powers and that alle­ entitled to disregard the profit figure gation must be rejected. However, that resulting for the European subsidiary and error makes no difference to the figure use instead a 'reasonable profit margin' established for the constructed normal based on what an independent importer value. The profit margin and the SGA would have obtained in the same situation. expenses result from the same data and are In my opinion, the approach followed by linked; if one goes up, the other goes down. the Community institutions was in This is stated in Brother's own argument: if accordance with Article 2 (8) (b) of the the profit has been overestimated, it is Basic Regulation and this argument fails. because the SGA expenses were under­ estimated. Accordingly, if the profit margin is decreased to correct the error complained of, the SGA expenses will have to be increased correspondingly, and the final figure for the constructed normal value of 7. In breach of Article 2 (8) (b) of the the Brother models concerned will be no Basic Regulation the cost of credit granted different. Accordingly, this argument cannot to the buyer was taken into account twice: provide any ground for the annulment of once as a finance charge and once by the Regulation. deducting it from the resale price. This point was conceded by the Community institutions, and a correction to the calcu­ lations was made in the course of proceedings which reduced the dumping margin by 1.5%. The margin of dumping II — Export price found for Brother was 33.6%, the injury 21.9%, and the lower of the two — the injury figure — determined the rate of duty (21%). Therefore the correction made in the dumping margin had no effect on the Under the heading of export price, Brother rate of duty, and in my view there subsists argues as follows: no irregularity which could provide grounds for annulling the regulation.

13. The method of calculating the injury was unreasonable; the comparison was made between prices and costs; and the 10. In the further alternative, Article rights of the defence were infringed. In my 2 (10) (c) of the Basic Regulation was view, for the reasons given in my Opinions infringed by the Community authorities' in TEC and Canon, the use of target prices refusal to deduct from the resale prices to establish the extent of the injury was charged by Brother Sales Ltd a percentage lawful. In my view the comparison was in respect of general expenses at least equal plainly made between prices and prices, to the percentage of general expenses contrary to Brother's assertion; and as incurred by the Brother subsidiaries in the regards the information given to Brother in EEC . that connection, I consider that the Community authorities gave Brother all the information requested which they could consistently with the requirements of 11. The principles of equality and confidentiality under the Basic Regulation. non-discrimination were infringed inasmuch as the stage at which an exporter operates on his home market and on the EEC market has a preponderant effect on the existence and the level of the dumping margin. 14. The determination of injury involved unreasonable calculations of allowances for different models and discrimination between exporters. In my view, for the reasons given in my Opinion in Canon, the use of a figure 12. In breach of the principle of legal at the mid-point between the evaluations certainty, the lack of clarity and the vari­ made by the exporters and those made by ations in the Community authorities' anti­ the Community industry, as described in dumping practice make it completely Recital 34 to the Definitive Duty Regu­ impossible for Brother, even in theory, to lation, has not been shown to be unlawful. adjust the prices of its exports to the EEC Brother suggests that because Olivetti so as to avoid dumping. concluded a cooperation agreement with Toshiba, TEC's parent company, on 14 May 1985, TEC or Olivetti or both might have submitted misleading evaluations; but In my view all of these arguments it says itself that it has no knowledge of concerning comparison fall to be rejected whether they actually did so. There is for the reasons given in my Opinions in plainly no evidence to support this alle­ TEC and Canon. gation, which must therefore be dismissed.

16. Finally, Brother argues that the Therefore, in my view Case 250/85 falls to assessment of the Community's interests for be dismissed in its entirety. The Council and the purposes of Article 12 of the Basic Cetma are entitled to their costs of the Regulation was incomplete, because the action including those relating to the anti-dumping duty on Japanese producers proceedings for interim measures, which will benefit the American exporter IBM they have claimed. The Commission has rather than the Community industry and already been awarded its costs as defendant, because, if any sales can be realized at the including those relating to the proceedings high prices incorporating the anti-dumping for interim measures, by the Order of 16 duty, they will have an undesirable infla­ May 1986. It is now entitled to its costs tionary effect on the Community. incurred as intervener in the present case.

OPINION OF SIR GORDON SLYNN — CASE 56/85

Conclusion

Accordingly, in my opinion,

— Case 56/85 should be dismissed, either as having no purpose or for the same reasons mutatis mutandis as those which lead to the dismissal of Case 250/85, and Brother ordered to pay the Commission's costs of that action, and

— Case 250/85 should be dismissed and Brother ordered to pay the costs of the Council and of Cetma, including those relating to the proceedings for interim measures, and the costs of the Commission as intervener.