C-121/86

OPINION OF MR TESAURO — CASE C-121/86

OPINION OF MR ADVOCATE GENERAL TESAURO delivered on 11 July 1989*

Mr President, The legislative background Members of the Court,

2. In a case which raises questions of principle relating to the interpretation of the Community anti-dumping rules, it is 1. The litigation before the Court relating probably useful to give a preliminary to commercial protective measures against account of the provisions contained in the dumped imports is augmented by three new basic Community legislation relevant to this actions seeking, on the one hand (Case case. C-121/86 Anonymos Etaireia Epicheiriseon and Others v Council, and Case C-129/86 Hellenic Republic v Council), the annulment of Decision 86/59/EEC 1 whereby the Council terminated an anti-dumping The subject-matter in question is in fact proceeding without adopting any protective both delicate and complex, because it is not measures and, on the other (Case C-122/86 always easy to ensure that the utilization of Anonymos Etaireia Epicheiriseon and Others commercial protective measures does not v Commission and Council), the restitution result in an unjustified hindrance to inter­ of damage occasioned by the Commission national trade. and the Council as a result of the adoption of the abovementioned decision, of the Council's failure to adopt Proposal COM(83) 341 for a regulation on the impo­ The interests at stake in such a procedure sition of a definitive anti-dumping duty, and are diverse and often opposing but never­ of any other connected act. theless are worthy of protection.

The factors to be taken into consideration are the volume and the prices of the dumped imports, together with the 3. The keystone in the system is the consequent impact on the industry principle laid down in Article 2(1) of the concerned as indicated by actual or basic regulation that an anti-dumping duty potential trends in the relevant economic may be imposed on any dumped product factors such as: production, utilization of whose release for free circulation in the capacity, stocks, sales, market share, prices, Community causes injury. The following profits, return on investment, cash flow and paragraph of that article then stipulates that employment (Article 4(2) (c)). a product is to be considered to have been dumped if its export price to the Community is less than the normal value of a like product. The following provisions relate to the detailed rules for conducting the investi­ gation, for terminating the proceeding, and determine the competences of the After giving a definition and setting out the Commission and the Council respectively. method of calculating the normal value and the export price, as well as the manner in which those two items should be compared, the regulation stipulates in paragraph (12) The investigation is conducted by the of Article 2 that 'like product' means a Commission in cooperation with the product which is identical, i.e. alike in all Member States: it must cover both dumping respects, to the product under and the injury resulting therefrom. The consideration, or, in the absence of such a investigation of dumping is normally to product, another product which has charac­ cover a period of not less than six months teristics closely resembling those of the immediately prior to the initiation of the product under consideration. proceeding (Article 7(4)(c)). During the course of the investigation the Commission is obliged to afford to the complainant and the importers and exporters known to be concerned, as well as the representatives of Article 4(1) then provides that a determi­ the exporting country, the possibility of nation of injury is to be made only if the inspecting all information made available to dumped imports are causing injury through the Commission by the parties involved in the effects of dumping. On the other hand, the investigation, except for internal injury caused, whether wholly or in part, by documents prepared by the authorities of other economic or commercial factors is the Community or its Member States, irrelevant. provided that such information is relevant to

the defence of their interests and not necessary to adopt any protective measure confidential within the meaning of Article 8 and the Advisory Committee provided for and that it is used by the Commission in the by the basic regulation raises no objection, investigation. To that end interested parties the Commission may terminate the must address a written request to the proceeding. In any other case, the Commission indicating the information Commission is to submit to the Council a required (Article 7(4)(a)). report on the outcome of consultations and is to propose that the proceeding should be terminated. In such a case the proceeding is to be considered terminated if within a Article 8(2) of the basic regulation provides period of one month the Council, taking its in its turn that the Community institutions decision by qualified majority, has not are required not to divulge information for decided otherwise (Article 9). which confidential treatment has been requested, without the specific permission of the supplier. If, however, the Commission considers the adoption of a definitive anti-dumping duty Each request for confidential treatment to be necessary, it must submit a proposal to must indicate why the information is that effect to the Council. Article 12(1) confidential and must be accompanied by a provides that: non-confidential summary of the infor­ mation, or a statement of the reasons why the information is not susceptible of such summary. 'Where the facts as finally established show that there is dumping or subsidization during the period under investigation and injury caused thereby, and the interests of The basic regulation also provides for the the Community call for Community inter­ possibility of imposing provisional duties. vention, a definitive anti-dumping or Under the terms of Article 11, where countervailing duty shall be imposed by the preliminary examination shows that Council, acting by qualified majority, on a dumping exists and that there is sufficient proposal submitted by the Commission after evidence of injury and the interest of the consultation.' Community requires action to be taken in order to prevent injury from being caused during the proceeding, the Commission, at the request of a Member State or on its own No provision is made in the basic regulation initiative, is to impose a provisional anti­ for the case where the Council does not dumping duty. achieve the required majority for the approval of a Commission proposal for the adoption of a definitive anti-dumping duty. As to the details of the manner in which an anti-dumping proceeding may be terminated, various options are possible. Finally, as regards the period within which the investigation must be concluded, Article 7(9)(a) provides that it must normally come If at the end of the investigation the to an end within one year of the initiation Commission considers that it is not of the proceeding.

As to injury, the Commission found that Having established the existence of dumping between 1979 and 1980 there had been an and the necessary causal link between the increase of 15% in imports, a reduction of imports in question and the injury sustained 3 % in 1981 and a fresh increase of 17% in by the Community industry, and in order to 1982, together with an increase in the avoid further injury in the course of the market share held by the imported products investigation, the Commission issued on from the two countries under investigation 22 December 1982 Regulation (EEC) No from 26 % in 1979 to 37% in 1982, whilst at 3542/82 4 imposing a provisional anti­ the same time the Community industry's dumping duty (four months) on imports of market share went down from 48 % in 1978 natural dead-burned magnesite having an to 25 % in 1982. MgO content of between 85 and 92 % orig­ inating in the People's Republic of China and in North Korea. In the light of all these considerations, the Commission submitted a proposal on 9 June 1983 to the Council for the adoption of a regulation instituting a definitive anti­ The imposition of the duty was extended dumping duty on the imports in question. for two months by Council Regulation (EEC) No 991/83 of 25 April 1983. 5

3 — OJ 1982, C 162, p 3 The Council, however, after specifically 43 — OJ 1982, L 371, p.25. examining the problem of the comparability 5 — OJ 1983, L 110, p 27 of the products, did not adopt the

OPINION OF MR TESAURO —CASE C-121/86

Commission's proposal and, consequently, in the People's Republic of China and in the provisional duties expired on 30 June North Korea. 1983.

Following the investigation conducted The Court's review during the summer of 1985, the Commission, on the basis of information which it said had come to light during the investigation and which differed from the 5. Before examining the numerous statistical data put forward by the submissions put forward by the applicants, I complainants, found that imports into the think it is necessary to make two obser­ Community from the countries in question vations on the nature and scope of the had gone down from 82 500 tonnes in 1981 review which the Court is required to carry to 61 000 tonnes in 1984; that Community out. production had increased by 110% during the same period; and that the market share held by Community producers had gone up from 15.4% in 1981 to 19.4% in 1984, As is made clear by the Court's case-law in whereas the market share held by products this respect, 7the basic regulation recognizes originating in the People's Republic of the existence of a legitimate interest on the China and North Korea had gone down part of the Community producers in the from 30.4% in 1981 to 19.7% in 1984. adoption of the measures provided for by it, and confers certain specific rights on producers. Accordingly, even though the Community institutions enjoy a wide discre­ Those findings prompted the executive to tionary power in the sector in question, the take the view that the Community industry Court is required to verify whether the was no longer suffering serious injury and Commission has observed the procedural to submit to the Council a proposal for the guarantees afforded to the complainants by termination of the anti-dumping proceeding the basic regulation and whether or not it relating to imports into the Community of has committed manifest errors in its natural dead-burned magnesite originating 7 — See the judgment of the Court of 4 October 1983 in Case 191/82 Fediol v Commission [1983] ECR 2913, 6 — OJ 1985, C 149, p. 2. paragraph 25.

On the contrary, the Court is required to have regard to any procedural flaw which is On that point it should be pointed out that likely to have an effect on the validity of the the wording of Article 12 relating to the decision. adoption of definitive measures and the very rationale of the basic regulation undeniably demonstrate that the Council is authorized to impose protective measures only when 6. The allegations made against the the three prerequisites — the existence of contested decision in Cases C-121/86 and dumping, resultant injury and the Community interest in the adoption of such 8 — See the judgment of 20 March 1985 in Case 264/82 Timex v Council and Commission [1985] ECR 849, paragraph 16 measures — are all fulfilled.

OPINION OF MR TESAURO —CASEC-121/86

This general statement requires, however, to Furthermore, an examination of the relevant be qualified in certain respects. provisions of the basic regulation does not point to the existence of any logical or practical impossibility of verifying one condition independently from another. Although it is indeed true that the three abovementioned conditions are undoubtedly cumulative it is nevertheless the case that there may be a logical link of supposition The finding of dumping and injury are in between them. fact based on different factors which are not necessarily linked.

The Council would not in fact be able to make a correct assessment of the Similarly, Article 7(1)(c) has a scope Community interest in the adoption of different from that contended for by the protective measures without first ascer­ applicants. taining the injury sustained by the Community industry.

As regards, on the other hand, the two It is nevertheless a provision intended to other relevant factors I consider that the enable an investigation to be conducted Community institutions may legitimately rapidly and it in no way implies, contrary to limit their own investigations whenever they the applicants' assertions, an obligation on establish that one or other factor does not the Community institutions, once they have subsist. found that one of the two prerequisites is not fulfilled, to continue the investigation and to reach a definite conclusion with regard to the other prerequisite since a If in fact it appears that certain imports do subsequent investigation of that kind could not occasion significant injury to the not serve any useful purpose. Community industry, there is no ground for verifying whether the imports themselves are taking place at a price lower than the normal value of a like product, since even a Examined from that point of view, the finding that dumping is taking place would contested decision does not appear to me to not alter the final result and the Council be based on an inadequate statement of would not in any event be entitled to adopt reasons or to have been adopted in breach protective measures. of the basic regulation.

EPICHEIRISEON METALLEFTIKON VIOMICHANIKON KAI NAFTILIAKON AND OTHERS v COUNCIL

In view of the affirmation by the Court that the Council may refrain from taking any decision when it is in disagreement with the 'It should be observed that the period 9 mentioned in Article 7(9) of the basic regu­ Commission, the applicants sought at the hearing to place this allegation on a lation is a guide rather than a mandatory different footing by maintaining that the period. This is clear both from the wording Council could refrain from approving the of the provision in question which uses the Commission proposal but not on the ground word "normally", and from the nature of invoked (that the products were not similar) the anti-dumping proceeding itself whose since that assessment falls within the sole progress does not depend solely on the competence of the Commission. efforts of the Community authorities. However, it follows from Article 7(9) that the anti-dumping proceeding must not be extended beyond a reasonable period to be assessed according to the particular circum­ 10 In actual fact, the applicants are thereby stances of each case'. raising a fresh submission of a misuse of powers by the Council, which, they say, exceeded the limits of its discretionary power by intervening in June 1983 in the The proceeding under review by the Court examination of the comparability of the was in fact laborious and its duration of products, in breach of the objective pursued approximately four years constitutes a by the Community provisions. That alle­ record which one may hope will remain gation had been raised by the applicants unbroken in the history of Community anti­ during the written procedure. However, it dumping proceedings. That excessive does not appear to have been made in the 10 — See the judgmentof 12 May 1989 in Case 246/87 Commentale Produkten-Gesellshaft Erhardt-Renken GmbH 9 — See the order of 15 October 1986 in Case 299/85 Tokyo & Co. v Hauptzollamt Munchen-West [1989] ECR 1151, Juki Industrial Council and Commission [1986] ECR 2965 paragraph 8.

The Commission had in fact considered that (c) Period of time taken into consideration for it would be able to conclude the proceeding the purpose of ascertaining injury by the end of June 1983 and to that end had submitted to the Council a proposal for the imposition of a definitive anti-dumping duty on the imports in question. 10. The applicants maintain that the contested decision provides inadequate reasoning for the absence of injury since it merely finds that there was an improvement in the situation of the Community industry The proposal was not, however, adopted by in the reference period running from 1981 the Council, which is why the executive to 1984. seems in fact to have continued and broadened the investigation, as is demon­ strated by the chronological table supplied by the Commission relating to the period The Greek Government emphasizes in between June 1983 and June 1985 (see particular that the failure to take into Annex 3 to the Council's rejoinder in Case consideration the data relating to the years C-121/86). The Commission subsequently prior to 1981, which were however available received from the applicants fresh evidence to the Community institutions, infringed the pointing to the prima-facie existence of very spirit of the basic regulation according dumping and resultant injury caused by to which the Community industry should be Chinese imports. It therefore published on placed in a position to regain the 19 June 1985 a notice concerning the competitive position which it held before continuation of the proceeding which was dumping began. In 1981, in the applicants' terminated in March 1986 by the adoption view, the Community industry had already of the decision which is challenged in these suffered damage and that year was not proceedings. capable of constituting a valid point of departure in order to demonstrate, in the light of the subsequent improvement, that the Community industry had not suffered considerable injury.

years prior to the initiation of the 11. With reference also to the time-span proceeding. used by the Community institutions for the purpose of determining the absence of injury, the applicants allege that the contested decision was adopted in breach of A certain perplexity may be caused in this Article 7(1)(c) of the basic regulation case by the fact that the proceeding lasted pursuant to which the investigation into about four years and that, in the context of dumping is to cover a period of not less the adoption of the contested decision the than six months immediately prior to the period taken into consideration was not initiation of the proceeding. They point out however the four-year period preceding the that the Commission initiated the original notice initiating the preceding in proceeding on 19 June 1985 but in no way June 1982 but the four-year period took into consideration the data for 1985 preceding the notice concerning the which, in their view, are decisive inasmuch continuation of the investigation published as they demonstrate the extent of the injury. in June 1985. The Commission refutes that argument by claiming that the appraisal of the last six months is only for the purpose of ascer­ taining the existence of dumping, and not of It should however be borne in mind that the injury as well. Community institutions enjoy in this respect a certain discretionary power and that the existence of considerable injury must neces­ sarily be ascertained by reference to the I think it is necessary at this point to clarify moment in time when any decision intro­ the scope of the provision to which the ducing protective measures is adopted. applicants are referring.

The Commission's practice of taking account, with regard to injury, of a period 12. The applicants also claim that in deter­ of about four years does not conflict with mining the injury suffered by Greek the wording of the provision and is certainly producers the Commission took into useful for assessing the injury better, consideration and calculated jointly both provided, obviously, that the period of time imports originating in China and those orig­ used also covers the six months immediately inating in North Korea, although it was prior to the initiation of the proceeding. aware that the latter country had in the meantime increased its prices.

EPICHEIRISEON METALLEFTIKON VIOMICHANIKON KAI NAFTILIAKON AND OTHERS v COUNCIL

An examination of the data taken sepa­ from the Commission of 4 February 1986 rately, for example on the basis of the (see Annex 1 to the Council's defence in Commission's working document of 11 Case C-121/86). November 1985 (see Annex 1 to the Greek producers' reply in Case C-121/86), in fact shows that, even if the data in question had been examined separately, the result would During the investigation it appeared in fact not have been different. Therefore, the that the classification of the product under failure to separate the data relating to the one or other of the four existing headings of countries in the statement of reasons the Nimexe code was not always straight­ contained in the contested decision does forward and that the same product was not, on the basis of the data supplied by the sometimes classified under different Commission, in itself amount to a flaw headings. Moreover, the official statistics do capable of affecting the decision's validity. not include imports into Ireland and make no distinction for products whose MgO content is between 85 and 92 % which are the only ones affected by the anti-dumping Nevertheless, to give a definitive reply to proceeding. that question it is essential to ascertain whether, and to what extent, the infor­ mation provided by the Commission can be regarded as reliable for reference purposes. For those reasons the Commission was prompted not to use the data derived from statistics but rather those that it said it had obtained from its own specific investigation. (e) The data used

say, confirm their submissions and in I therefore refer to the defence pleadings particular the unreliability of the data relied submitted by the Commission in Case on. In that connection, they observe in C-122/86. particular that those documents do not contain the data relating to imports from 1982 of natural magnesite originating in North Korea and to imports from the 16. In the face of the objections raised by second quarter of 1983 of the same product the executive, which considers those ques­ originating in China, or at any rate that the tionnaires to be confidential and as such not Commission's non-confidential files do not capable of being included in the files trans­ contain the questionnaires on those aspects mitted to the applicants, in the absence of or any non-confidential summaries, as any justification as to the lack of provided for by Article 8(2)(b) of the basic non-confidential summaries of those ques­ regulation. tionnaires and also in view of the fact that the Commission asserted that it had supplied the applicants during the course of two meetings held on 14 November and 22 December 1985 with all the necessary infor­ mation, the Court requested the Com­ It should also be pointed out that in the mission to provide it with the questionnaires memorandum submitted on 22 November at issue. 1985 to the Commission (see Annex 4 to the applicants' reply in Case C-121/86), the applicants had complained of the fact that the questionnaires in question were The reply was frankly entirely unsatis­ incomplete. factory. The Commission in fact merely transmitted, without giving any expla­ nations, copies of the non-confidential summaries of the questionnaires compiled by the Chinese exporters for the period of In its rejoinder, the Council argues that it time between 1978 and the first quarter of must confine itself to replying to the specific 1983 and certain copies of communications factual and legal arguments relating to it sent by importers of North Korean and expresses no opinion on this point. magnesite containing certain data on imports of that product up to June 1985.

to above, the fact remains that after a reasoning of the decision to be tested, at procedure which lasted for about four years least as regards imports originating in China and subsequent proceedings before the in the second quarter of 1983, 1984 and the Court, it has still not been explained where first five months of 1985, despite formal, the institutions in question obtained the specific and repeated objections and the figures relating to the second quarter of existence of official data supplied by the 1983, 1984 and to the first five months of applicant, I am led to the inescapable 1985, which are to be found in the conclusion that the decision in issue is not preparatory documents and which underlay based on an adequate statement of reasons the contested decision. since the factual circumstances underlying it are not satisfactorily proven. It is scarcely necessary to emphasize that the volume of imports from the countries covered by the I do not here wish to pass judgment on the investigation constitutes an essential and reasons which led the Commission to decide unavoidable element in the context of any not to communicate to the Court the ques­ proposal to the Council in the field of tionnaires requested or, at any rate, a dumping. non-confidential summary of them. Nor do I wish to cast doubt on its assertion, which in fact is a little tautological, contained in the Commission's rejoinder in Case C-122/86 in which it said that those ques­ The remaining allegations tionnaires exist but are contained in confidential files ... since they are confidential.

In that connection it should be stated that exclusive protection of individuals relating the offering of price undertakings does not to the competence of the Commission. necessarily amount to a recognition that According to that reasoning, that institution dumping is taking place the ascertainment is alone empowered to assess the similarity of which remains at all events within the of the products, inasmuch as the investi­ competence of the Community institutions. gation into dumping, which presupposes an assessment of the similarity of products, falls within the competence of the executive by virtue of Article 7(1)(c) of the basic regu­ And it is certainly true that the offer of lation. undertakings dates back to a period preceding the conclusions to which the Council came when adopting the contested decision. That allegation appears to me to be unfounded.

Nevertheless, even if, for the reasons indicated above, that method of proceeding Under Article 12 of the basic regulation the cannot be described as manifestly contra­ Council is to adopt, on a proposal submitted dictory, it undoubtedly represents further by the Commission, definitive protective evidence of the rather convoluted procedure measures. which led to the adoption of the contested decision. Clearly it must base its decision on the investigation conducted by the Commission and must assess the conclusions which the Application of C-122/86 on the restitution executive arrived at. of damage

However, as the Court has had occasion to 18. The allegations made by the Greek 1 state, 2the Council may refrain from taking producers of magnesite in the application any decision if it is in disagreement with the for damages, which seeks to prove the Commission. unlawful conduct of the Community institutions, are to a large extent analogous with those put forward in Case C-121/86 which I have already examined. There is, moreover, no provision in the basic regulation which warrants the view that there are areas of competence in which the Council has no discretionary power but I shall confine myself at this stage to a which are reserved to the exclusive consideration of the submissions which have competence of the executive. not already been examined.

21. Those matters having been clarified, it is now a question of verifying whether the conduct of the Community institutions was The arguments of the applicants are based such as to give rise to a right to damages in rather on the erroneous assumption that favour of the applicants. they have a specific right to the adoption of protective measures and that their right was infringed as a result of the decision to terminate the proceeding. As is clear from my arguments so far, there was, during the course of the proceeding, an infringement by the executive which I will not hesitate to describe as serious, of a superior rule of law intended to protect It should, however, be pointed out with individuals, that is to say in this case the regard to such measures, which are imposed in the interest of the Community (see right of the applicants to be informed of Article 12 of the basic regulation), that the data emerging during the course of the applicants can only claim a legitimate investigation, so that their interests might be interest. properly protected.

In the opinion of the applicant under­ The declaration that the decision in takings, injury has also occurred in this case question is void which the Court may which they equate with the difference possibly be prompted to adopt, far from between the sale price applied in the requiring the institutions concerned to Community and the cost of production of impose an anti-dumping duty, could only be the product in question together with the confined to finding unlawful a decision loss of market share. terminating the proceeding and the institutions in question could perfectly well, with due regard for procedural rules, adopt a similar decision. What, however, seems to be absent from the case before the Court is a direct causal link between the infringement of the aforemen­ tioned provision and the damage which is I am therefore of the opinion that the claim said to have flowed from it. for damages cannot be upheld.