C-174/87

OPINION OF MR MISCHO — CASE C-174/87

OPINION OF MR ADVOCATE GENERAL MISCHO delivered on 13 December 1990 *

Mr President, ECR 1-781), the Court again refers to its 1 Members of the Court, earlier decisions according to which

'a regulation imposing different anti­ 1. The action brought by Ricoh Company dumping duties on a series of traders is of Ltd (hereinafter referred to as 'Ricoh') is direct concern to any one of them only in based on a number of submissions and respect of those provisions which impose on arguments which are to a considerable that trader a specific anti-dumping duty and extent supplementary or similar to those determine the amount thereof, and not in relied on by Canon Inc. in Case C-171/87, respect of those provisions which impose particularly as regards determination of anti-dumping duties on other undertakings' normal value and comparison thereof with (paragraph 12). the export price. I shall thus be able to deal with those matters fairly briefly.

Therefore, Ricoh's main claims for the annulment, in its entirety, of Council Regu­ lation (EEC) No 535/87 of 23 February 2. Furthermore, with respect to the 1987 imposing a definitive anti-dumping submissions concerning the injury, the duty on imports of plain paper photocopiers Community interest and calculation of the 2 originating in Japan (hereinafter referred anti-dumping duty, Ricoh has put forward to as 'the definitive regulation' or 'the arguments which coincide with those of the contested regulation') must be dismissed as applicants in Cases C-175/87 (Matsushita), inadmissible and it is necessary to consider C-176/87 (Konishiroku), C-177/87 (Sanyo) the merits of the subsidiary claims seeking and C-179/87 (Sharp) and which I shall its annulment only in so far as it applies to discuss in detail in the present Opinion. Ricoh.

should order restitution of the anti-dumping they are intended to prove the alleged duties collected must also be declared inad­ illegality of the manner in which the normal missible. value was determined or was compared with the export price, and that some of them are presented as alternatives to others. The reason for this is to be found, on the one hand, in the applicant's view that Article 6. This brings me to the submissions on 2(3)(a) must be read in conjunction with matters of substance which Ricoh makes Article 2(9) (see paragraph 32 of the application) and from the fact that its with a view to the annulment of Regulation criticisms all essentially relate to the No 535/87 in so far as it applies to Ricoh, treatment of certain expenses incurred by its in other words to the extent to which it Japanese subsidiaries — which it wishes imposes on plain paper photocopiers either not to be included in the normal (hereinafter referred to as 'PPCs') manu­ value as determined on the basis of Article factured by Ricoh a definitive anti-dumping 2(3) or else to be deducted from it as duty of 20% and provides for the definitive allowances under Article 2(10)(c). collection of the amounts covered by the provisional anti-dumping duty at the rate of 15.8%, as imposed by Commission Regu­ lation (EEC) No 2640/86 of 21 August 1986 imposing a provisional anti-dumping duty on imports of plain paper photocopiers 9. I shall therefore examine all those originating in Japan 4 (hereinafter referred various submissions together. to as 'the provisional regulation').

12. I would refer first to the principle whereby the methods for calculating normal value and the export price are independent (3) by thus using as the normal value the from each other, as stated in the judgments prices charged by Ricoh's Japanese of the Court of 7 May 1987 in the 'ball­ 6 subsidiaries to the first independent bearings' cases and also to the conse­ purchasers, without then making the quence of that principle, namely that appropriate deductions from those prices, the Council, it is claimed, also incorrectly applied Article 2(7), which may not be applied in such a way as to give results radically different from 'the validity of the comparison provided for those which would have been obtained in Article 2(9) cannot therefore be condi­ if the Council had considered that the tional on calculation of the normal value transfer prices between undertakings, and the export price by identical 7 that is to say between Ricoh and its methods'. sales subsidiaries, could be used as a reference for the purposes of Article 2(3); No argument can therefore be based on the simple fact that certain elements are included in the normal value and not in the (4) by refusing to take account of the export price, in so far as the rules laid down discount granted by Ricoh's subsidiaries for the determination of each of the two for the trade-in of an old PPC, the items were complied with. It also follows Council did not determine the normal that the fact that certain types of expenses value of the new product at the level of were deducted from the export price the 'price actually paid or payable', as constructed in accordance with Article required by Article 2(3)(a); 2(8)(b) is not sufficient to compel the institutions to make similar adjustments to the normal value for the purposes of the

17. As regards the submission that the Council infringed Article 2(3)(a) by not 14. Ricoh's argument that in the present using as the normal value the net prices case the normal value was established at a actually paid by independent customers but 1 level other than the 'ex-factory level, at instead the gross prices, including the which the export price was established, thus discounts granted for the trade-in of an old has no basis. Moreover, since both the PPC, I should point out that I have already normal value and the export price were indicated in my opinion in Case C-171/87 1 established at the 'ex-factory level, it that the grant of a trade-in discount does follows that no adjustment had to be made not involve any real reduction in the sale under Article 2(9) and (10)(c) to take price of the new product but in general account of supposed differences of level of merely reflects the value that the used trade. product represents for the person receiving

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2(10)(c). Moreover, those differences could 9 — In paragraph 48 of its defence, the Council states that the normal value was constructed pursuant to Article give rise, by way of exception, to an 2(3)(b)(ii) and not, as the applicant suggests, Article 2(4) . That difference of opinion seems to me, however, to be adjustment only if they satisfied the general somewhat artificial since the two provisions are related, in condition of bearing a direct relationship to that in the event of Article 2(4) being applied, involving construction of the normal value, the latter is arrived at in the sales under consideration, and expenses accordance with Article 2(3)(b)(ii).

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the exporting country whereas the correctly defined having regard to Article adjustments provided for in Article 2(10)(c) 4(5) of that regulation. are intended to rectify the normal value thus calculated on the basis of objective factors which reflect the particular features of each market, have a varying impact on sales 23. Accordingly, I shall deal with those two conditions and consequently affect price points in the reverse order to that followed comparability. 11" in the Report for the Hearing. Moreover, I can be fairly brief since I have already expressed my views on the concept of like product in my Opinion in Case C-171/87, and in its judgment of 14 March 1990 in B — The injury Case C-156/87 Gestetner v Council and Commission [1990] ECR I-781, the Court has already dealt with a submission alleging an incorrect definition of Community industry.

21. In the observations which it submitted jointly with the applicants in Cases C-175, C-176, C-177 and C-179 / 87 , Ricoh chal¬ 24. Finally, I consider that I can examine in lenges the Council's findings concerning the the same part of this Opinion the other two injury caused to the Community industry by aspects, namely the factors used in deter­ Japanese PPC exports with regard to the mining the injury and the causes thereof, following aspects: the definition of the which are closely linked. Community industry, the concept of like product, the factors on the basis of which the injury was determined and the causal link between the dumped imports and the injury thus determined. 1. Definition of the concept of like product

copiers' — those which can produce up to or 40 copies per minute — and that of machines with a higher copying speed (see pages 11 and 12 of volume II of the application). The impression is also given 'another product which has characteristics that the reasons for which Ricoh wishes to closely resembling those of the product place the threshold at 40 copies per minute under consideration'. are not connected with the physical and technical characteristics of the machines but derive from the finding that it was only in the market for large PPCs that any significant Community industry existed and In any event, Ricoh has still not stated for that Japanese photocopiers predominated what particular reasons relating to the only in the market for small PPCs (see in characteristics of PPCs other than the particular pages 11, 12 and 23 of volume II copying speed it proposes the threshold of of the application). Is it not for the same 40 copies per minute in order to distinguish reason, namely that during the reference between 'small' and 'large' photocopiers. I period there was only limited Community take the view that it is legitimate to consider production of photocopiers producing up to that a machine which does the same work as 30 copies per minute, that is to say those another, even if it does so at a greater belonging either to the category of personal speed, displays characteristics closely photocopiers or to segments la, lb or 2, resembling those of that other machine. that Ricoh does not ask for any distinction to be drawn within that group of categories, even though it states that

Anicie 85 of the EEC Treaty is such as to coated-paper copier; or a slow plain-paper be binding on the Council when the latter copier like the Rank Xerox 660 which gave defines the 'like product' in an anti­ poor quality copies but did use plain paper dumping proceeding, it must be stated that and which had an extensive service network in Decision 88/88/EEC of 22 December to back it up' (see page 11 of volume II of 1987 on joint venture agreements between the application), Olivetti and Canon (Official Journal 1988 L 52, p. 51), cited by Ricoh, the Commission opted neither for total segmen­ tation of the PPC market nor for a division of the market on the basis envisaged in this or that following the appearance of small case by Ricoh. Moreover, whilst it may be photocopiers on the Japanese market, true that the Commission distinguished three representative markets, namely those extending from the personal photocopier up to segment 2, from segment 3 to segment 4 and from segment 4 to segment 6 'instead of (or as well as) buying one huge, respectively, it did not fail to note that that ultra-fast copier situated in a central did 'not preclude a certain interchange- print-shop, a Japanese firm could procure ability between these three segments'. several or many small copiers to be distributed throughout the company's premises' (page 6 of volume II of the application).

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the present case, as is apparent from recital 34. Let me point out straight away that it 41 et seq. of the contested regulation, and clearly follows from that provision that that is what they also did in the Japanese since the like product has been correctly electronic typewriter cases, as is apparent in defined in the present case as including the particular from the judgment of the Court whole range of PPCs, from personal copiers in Canon, cited earlier, in which the Court to those of segment 5, the view expressed by did not question the similarity of the the applicant that the Community industry products concerned, even though there was in the 'small' photocopier category was a wide variety of models and there were limited or indeed virtually non-existent and considerable differences between the that, for that reason among others, no technical characteristics of the various Community manufacturer could properly models (see in particular paragraphs 14 and claim to have suffered injury from imports 66 of the judgment). of 'small' photocopiers from Japan, cannot be regarded as being of decisive importance to the definition of the 'Community industry' and cannot therefore — in any event, not by itself—compel the exclusion of certain manufacturers from that industry. 2. The definition of Community production

33. According to Article 4(3) of the basic 35. The other arguments put forward by regulation, Community industry means Ricoh in support of its claim that Rank Xerox, Oct and Olivetti should not have ' been included in the 'Community industry , which are based on the fact that those Community manufacturers had links with Japanese exporters and themselves effected 'the Community producers as a whole of the imports from Japan, are essentially the same like product or ... those of them whose as those which the Court has already collective output of the products constitutes rejected in its judgment in Gestetner, cited a major proportion of the total Community earlier. production of those products except that:

manufacturers constituting the 'Community or manufactured in the Community from industry" within the meaning of Article 4(5) components or original materials from the of the basic regulation. It is true that it did exporting country or countries in question: so on the basis of the documents before it its purpose is therefore unrelated to the and the oral argument presented to it, that question of defining Community industry. is to say by reference to the previous cases expressly mentioned by the applicant in Gestetner (paragraph 44 of the judgment). But the Court's finding is nevertheless still applicable to the present case. First, the four cases cited by Gestetner are also among those cited by Ricoh. Secondly, what was true in those cases is also true in the other 3. The existence of injury attributable to cases; whenever the institutions excluded or dumping refused to exclude a Community manu­ facturer from the Community industry, they did so in the exercise of the discretion which they enjoy and are required to exercise 'on a case-by-case basis, by reference to all the relevant facts' (paragraph 43 of the Gestetner judgment). (Moreover, the fact must not be overlooked 38. Ricoh challenges the institutions' that in the case of Rank Xerox, we are analysis of the various factors which they talking about a Community company which used in determining the injury and considers has a substantial capital holding in a that the Community industry did not in fact Japanese manufacturer and not about a suffer any injury. It also maintains that the Japanese manufacturer which controls a low level of activity of Community manu­ production subsidiary in the Community.) facturers in the sector of small photocopiers In those circumstances, those other cases was attributable not to imports from Japan likewise cannot constitute evidence of a but to other factors, in particular their own practice which the institutions are bound to initial decision not to undertake the manu­ follow in the future. facture of such photocopiers. It thus chal­ lenges, by reference to the factors adopted by the institutions, the very existence of any injury and, then, arguing that the injury, as determined, was caused by other factors, it denies the existence of any causal link between the dumped imports and the 37. Finally, I consider that Ricoh's alleged injury. reference to Article 13(10) of the basic regulation is entirely irrelevant to this case. In the first place, that provision was not incorporated in the basic regulation until after the contested regulation was adopted, namely by Council Regulation (EEC) No 1761/87 of 22 June 1987 (Official 39. It will be recalled, as the Court pointed Journal 1987 L 167, p. 9), the so-called out in paragraph 49 of its judgment in 'screwdriver' regulation. In the second Canon, cited earlier, that Article 4(1) of the place, Article 13(10) gives authority in basic regulation, which incorporates the certain circumstances for an anti-dumping wording of Article 3 of the GATT Anti- duty to be imposed on products assembled Dumping Code, provides that

'sales and rentals of new machines in the 40. It is clearly apparent from the wording period under review manufactured by the of the latter provision that in this area the Community producers Rank Xerox, Océ, institutions enjoy a wide margin of Olivetti, and Tetras increased from 62 000 discretion, the exercise of which involves units in 1981 to 108 000 units in 1984, a rise often very complex economic analyses. In of 74%'. the first place, Article 4(2) expressly provides that no one or more of the three factors can necessarily give decisive guidance. Secondly, as the Court also pointed out in Canon (paragraph 56), the factors listed in Article 4(2)(c), which must enable the impact which the dumped However, their market share fell from 21% imports have had on the Community in 1981 to 11% in 1985, whereas the share industry to be measured, is merely indicative of the Community market held by machines and the institutions are therefore free to manufactured by Japanese exporters base their judgment only on those factors increased from 70% to 78% in the same which they consider most relevant. period (recital 33). In those circumstances, the institutions were entitled to consider that Japanese imports, which increased by more than 120% between 1981 and 1984, had caused injury to Community manufac­ turers by preventing a more favourable 12 trend in their sales and rentals. 41. The recitals of the contested regulation show that the institutions carried out a 12 — The same point is made in paragraphs 57 and 58 of detailed examination of the factors Canon, supra.

43. With respect to price undercutting, A comparison between the imported models Ricoh has not advanced any argument and the Community models most similar to capable of showing that the institutions' them, based only on prices and excluding findings in that regard were vitiated by a those technical differences, would not manifest error. On the contrary, it relies on therefore have reflected such real price those findings, which appear in particular in difference or difference in commercial value recitals 48 and 49 of the contested regu­ as existed between the various models, lation, to reach the conclusion that the taking account of the fact that Japanese products were not cheaper than those sold by the Community industry but were technically superior. In so doing, Ricoh disregarded the fact, however, that the institutions based their own conclusion to a large extent on a particularly wide­ 'in general a more highly featured model spread form of price undercutting which should be at a higher price by virtue of its manifested itself not in the form of lower additional functions' (see the end of recital prices but in the sale by Japanese exporters 44). of much more sophisticated models at prices which were the same as or slightly lower than those of simpler models sold by Community manufacturers (see in that connection the second paragraph of recital 47 and the end of recital 49). In my 44. The fact that the institutions did not opinion, in the circumstances of the present quantify the exact level of such under­ case, it was not only reasonable but also cutting, because it was impossible for them necessary to take account of price under­ to evaluate the additional features of the cutting of that kind. Indeed, the Council Japanese models (see the fourth indent of explained in recital 44 of the contested recital 49), does not affect their finding as regulation that to its existence. Moreover, that finding seems to me to be sufficient for the purposes of analysing the injury elements, and 'quantification' would be called for only to the extent to which the institutions wished 'Japanese-manufactured models generally to take account of the level of undercutting had more features than competing CECOM in determining the amount of the anti­ models' dumping duty. However, it is apparent from recital 110 of the contested regulation that it was precisely because of the unquantifi- ability of the undercutting found to exist that and that

45. In view of the foregoing, Ricoh likewise 'rental revenues attributable to machines cannot rely on recital 86 of the contested constitute [only] an estimated 35% of regulation, in which the Council denies that Community producers' turnover from the substantial market share held by- machines' Japanese importers was attributable to the technical superiority of their machines 'except in respect of their multiple features' to support their claim that there was no undercutting, merely competition: in the present case the undercutting derives precisely from the selling of such machines and, secondly, that price comparisons were with more 'features' at prices that were no made only between selling prices (see recital higher than those of less highly featured 46 of the contested regulation) and did not machines. As the Council rightly therefore cover machines intended exclu­ emphasises, that practice cannot be regarded sively for rental. as fair competition (see paragraph 128 of its defence).

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'the effect of the dumped or subsidized account of the observations made by certain imports shall be assessed in relation to the interested parties and because Community production of the like product

'this approach is entirely consistent with that adopted for injury calculations relating to In order to evaluate the impact which the Community industry'. Japanese imports had on the Community industry's profitability, the Council was not therefore under any obligation to take account of the latter's profits or losses on sales or rentals of PPCs imported by them It would be, at the very least, unfair if or of products other than the 'like product' Ricoh were allowed to opt for a particular as defined in the proceeding. As we have method for evaluation of its own profits for seen, the like product was defined as construction of normal value and to reject comprising the same method when it came to evaluating the profits of the Community industry for determination of the injury.

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only by reference to production of the like 54. As to Ricoh's assertion that the product, that conclusion is likewise not Community industry did not until a very affected by the fact that the general late stage develop new low-volume situation of Community producers was machines able to compete with the Japanese healthy and their income from other acti­ models, the Council devoted recitals 85 and vities was in the main sufficient to cover the 86 of the contested regulation to that issue. expenses in question. It stated in particular that although internal and technical difficulties within Rank Xerox in developing a new model could justifiably be cited as a major contributory cause to the company's problems in the past, that was no longer the case in and after 1982 and 1983 51. Ricoh is also critical of the fact that the when those problems were resolved and the institutions attributed to low profitability new models were brought onto the market. other difficulties such as, in particular, Since Ricoh confined itself to referring to Community producers' inability to benefit past difficulties, but without producing any from increased economies of scale (see evidence to show that the Council's recital 83 of the contested regulation). In its assessment of those difficulties was view, that insufficiency of economies of incorrect, the Council's refusal to accept scale derived from the fact that, because of them as a cause of injury may be regarded the technical difficulties encountered by as justified. them, the Community producers were late to commence production of small photo­ copiers capable of competing with Japanese products.

'where the facts as finally established show that ... the interests of the Community call for Community intervention ... '. D — Calculation of the anti-dumping duty

58. Ricoh claims that the evaluation of the 61. Ricoh claims that the determination of Community interest by the institutions was the anti-dumping duty at the rate of 20% is distorted by the fact that, first, they contrary to Article 13(3) of the basic regu­ included in the 'Community industr/ lation, by virtue of which the amount of the companies which depended on and profited anti-dumping duty may not exceed what is from imports from Japan and, secondly, necessary in order to remove the injury. they did not take account of the limited However, it does not seem to me that any nature of the Community industry in the of the arguments which it expounds in sector of small photocopiers. But, we have support of that submission can be upheld. just seen that the institutions were justified in including Rank Xerox in the 'Community industr/ and in regarding all PPCs, and not just 'small' photocopiers, as 'like products', and therefore Ricoh's arguments in that 62. Ricoh states in the first place that the regard cannot be upheld. 12% margin considered by the institutions as necessary in order to ensure a reasonable profit or income from the sale of photo­ copiers is excessive in view of the fact that small machines are always sold at a profit 59. Furthermore, Ricoh has not shown that margin lower than that for each of the other by attaching more importance to the areas of photocopier business. interests of Community producers than to those of OEM importers, such as Gestetner and Agfa-Gevaert (see recital 93 of the contested regulation), or by considering that the advantages accruing to the Community 63. However, the Council had already industry from the imposition of anti­ expressed its views on that matter in the dumping duties clearly outweighed any contested regulation, confirming the point negative effects of that decision, in of view of the Commission, which saw

65. Moreover, Ricoh, which limited its arguments to small photocopiers, did not — safeguard their position on the market indicate by what percentage the rate of in the future by permitting them to return on them should be lower than 12% undertake adequate research and devel­ or a fortiori to what extent that lower rate opment expenditure and to promote of return on small photocopiers would have their products, affected the anti-dumping duty imposed, having regard to the method of calculation described in recital 107 of the contested regulation which, as I concluded in my Opinion in Joined Cases 133 and 150/87 — provide for a reasonable rate of return Nashua, was a comprehensive method commensurate with the risk of developing new products and allow for a reasonable return to shareholders' (first paragraph of recital 103). 'based on the cumulative injury caused by a representative percentage ... of all exports to the Community of dumped products by Japanese companies, not on the injury For the institutions it was therefore a caused by each individual exporter' question of ensuring that Community (paragraph 103 of the Opinion — see also producers received sufficient income to the third paragraph of recital 112 of the encourage them to invest in the optimi­ contested regulation). zation and manufacture of photocopiers, so that they were logically able to disregard any profits obtained from the subsequent sale of consumables or, more generally, other areas of photocopier business. It must 66. Ricoh's second argument, namely that also be pointed out that the institutions used the anti-dumping duty was calculated on the that logic in rejecting the complainants' basis of the increase in price judged arguments and refused to allow them a necessary to eliminate price undercutting profit of 18% on the ground that which, in fact, did not exist, fails, as a

Conclusion

Since none of the submissions made by the applicant is, in my opinion, well founded, I propose that the Court dismiss the application in its entirety and order Ricoh to pay the costs, including those of the interveners.

13 — See paragraph 46 of the judgment in Canon, above.

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