C-69/89

1. Sequence of the review 1-2117

2. Extent of the review 1-2118

B — Legal assessment 1-2118

First part — Infringement of essential procedural requirements 1-2118

I — Breach of paragraphs 1 to 3 of Article 2 and of Article 8 of the Council's rules of procedure 1-2118

1. The Commission proposal for the adoption of the contested regulation was

2. With regard to the finding ofinjury 1-2122

* Original language: German.

I-2112

NAKAJIMA v COUNCIL

III — Failure to provide a statement of reasons 1-2123

1. With regard to the calculation of the normal value 1-2123

(bb) Substantive legality 1-2126

(1) Compatibility with Article 2(4) of the Anti-Dumping Code 1-2126

(a) The applicant's arguments 1-2126

(b) Assessment 1-2127

(aa) The Code as a criterion of review 1-2127

(bb) The direct applicability of the Code 1-2127

(bb) Legal assessment of the various arguments 1-2137

(1) The principles of legal certainty and non-retroactivity 1-2137

(2) Absence of reasons 1-2138

I-2113

OPINION OF MR LENZ —CASE C-69/89

2. The question of irregularities vitiating the application of Article 2 (3) (b) (ii) of the new basic regulation 1-2138 (a) Breach of the new basic regulation, the Anti-Dumping Code and a number of general principles 1-2138

V — Injury í" 2153 1. The Community industry (exclusion of the undertakings Mannesmann-Tally and Philips) 1-2154 (a) Volume of OEM imports by Mannesmann-Tally and Philips 1-2154

(b) Identifying OEM imports with market segments 1-2154

(c) Need to have a full range of products and pressure to withdraw from the lower market segment 1-2157 (d) Significance and growth of the lower market segment 1-2157

(e) Conclusion 1-2158 2. Establishment of the actual injury 1-2159

(a) Use of 1983 as the reference year 1-2159 (b) Account of the changes in market shares given in recital 47 of the contested regulation 1-2159

I-2114

(2) Relationship between the fall in prices and the increase of the market shares of the Japanese producers 1-2161

(3) Reasons for the fall in prices 1-2162

(4) The applicant's price increases 1-2162

(bb) Price-undercutting 1-2162

(d) Other relevant economic factors (recital 54 of the contested regu- lation) 1-2163

3. Causal connection between dumping and injury 1-2164

VI — The interest of the Community 1-2166

VII — Amount of the duty 1-2166

Third pan — Conclusion 1-2167

I — Decision on the substance 1-2167

II — Decision as to costs 1-2167

C — Proposed form of order 1-2168

1. T h e applicant in this case is contesting an anti-dumping regulation adopted by the Council. It is Regulation (EEC) N o 3651/88 of 23 November 1988 imposing a definitive anti-dumping duty on imports of 4. One of those changes concerns Article serial-impact dot-matrix printers originating 2(3)(b)(ii) of the regulation (in both in J a p a n . 1 T h e applicant is one of the versions). That provision deals with the manufacturers named in Article 1(2) of that construction of the normal value (the regulation whose goods sold for export to reference value used for determining the Community were subjected to a whether the export prices applied reveal the definitive anti-dumping duty, which in the existence of dumping). Both versions are applicant's case was fixed at 12%. reproduced in full at points 10 and 11 of the Report for the Hearing, and consequently I need here only mention that the applicant claims that the new provision is invalid and that it was incorrectly applied to it in this 2. U n d e r Article 2 of that regulation case. (hereinafter referred to as 'the contested regulation'), the amounts secured by way of provisional anti-dumping duty under Regu- lation (EEC) N o 1418/88 2 were collected at the rates of duty definitively imposed, since in the applicant's case the definitive 5. Among the various alternatives contained duty was lower than the provisional anti- in that provision and which describe dumping duty. Although it is not itself chal- methods by which the selling, general and lenged in the application, Regulation (EEC) administrative expenses (hereinafter referred No 1418/88 (hereinafter referred to as 'the to as 'SGA expenses') as well as the profit regulation imposing the provisional duty') is the subject of numerous references in the margin to be used for the construction of contested regulation. 3 — Council Regulation of 23 July 1984 on protection against dumped or subsidized imports from countries not 1 — OJ 1988 L 317, p. 33. members of the European Economic Community (OJ 2 — Commission Regulation of 17 May 1988 imposing a 1984 L 201, p. 1). provisional anti-dumping duty on imports of serial-impact 4 — Council Regulation on protection against dumped or dot-matrix printers originaung in Japan (OJ 1988 L 130, subsidized imports from countries not members of the p. 12). European Economic Community (OJ 1988 L 209, p. 1).

6. The pleas in law which concern the 9.1. As far as the sequence is concerned, I validity and the actual application of that consider it appropriate to depart from the provision and on which this dispute hinges structure of the application (and the rest inter alia on international law rules on structure consequently used in the anti-dumping measures, and so I must also subsequent pleadings and the Report for the outline those rules. While anti-dumping Hearing). Under that structure a distinction duties are governed by Article VI of the is drawn between two main points — the General Agreement on Tariffs and Trade objection that the new basic regulation is ('the GATT'), a number of the contracting inapplicable and the annulment of the parties to the GATT have laid down in this contested regulation, and to each of them is regard more detailed rules of application in attached a number of pleas in law which adopting the 'Agreement on Implementation correspond to the grounds set out in the of Article VI of the General Agreement on first paragraph of Article 173 of the EEC Tariffs and Trade' 7 (hereinafter referred Treaty. In this Opinion I consider it to be in to — in accordance with Part I of that the interest of clarity to concentrate more agreement—as 'the Anti-Dumping Code'). on the conditions governing the imposition The Community is also a party to this of anti-dumping duties (and, where appro- agreement and it was on its behalf that the priate, the correct determination of the Council approved the Anti-Dumping Code amount of that duty). by a decision of 10 December 1979. 8 According to their preambles, the two basic regulations are founded on Article VI of the GATT and on the Anti-Dumping Code.

of an anti-dumping duty and the amount of adopted that regulation. That proposal that duty. could therefore not have been included in the provisional agenda which the President is required to send to the other members of the Council and to the Commission at least 11.2. As far as the extent of the review is fourteen days before the beginning of the concerned, the Community institutions are meeting, in addition to the documents often required to appraise complex referred to in Article 2(3) and Article 8. economic situations under the provisions applicable to anti-dumping measures. In this case, the judicial review must be limited to the question whether the procedural rules were complied with, the question whether the facts on which the contested decision 13. The Council admits that the was based were correctly determined and Commission proposal had not been available the question whether there was any manifest in all language versions fourteen days before error in the assessment of the facts or any the beginning of the meeting (of 23 misuse of powers.9 November 1988). Apparently it also does not deny that the proposal for the adoption of the contested regulation was not included in the provisional agenda. On the other hand, it does contend, without being B — Legal assessment contradicted, that this item was included in the definitive agenda, in accordance with Article 2(5), which provides that the Council is to adopt the agenda at the First part— Infringement of essential beginning of each meeting. The inclusion of procedural requirements items not appearing on the provisional agenda requires unanimity in the Council. Items thus included may be made subject to a vote. This means that a failure to include I — Breach of paragraphs 1 to 3 of Article 2 an item in the provisional agenda and a and of Article 8 of the Council's rules of failure to comply with the requisite forms procedurel0 and time-limits (paragraphs 1 to 3 of Article 2 and Article 8) are not irregular if the Council unanimously includes the item concerned in the agenda pursuant to Article 2(5). The applicant's argument on this issue 12.7. The applicant claims first of all that must therefore be rejected. paragraphs 1 to 3 of Article 2 and Article 8 of the Council's rules of procedure were not complied with because the Commission proposal for the adoption of the contested regulation was not submitted to the Council until about 18 November 1988, which was 14.2. The applicant also argues that, in view only five days before the Council formally of the length and complexity of the instrument, it is very unlikely that when 9 — See, for example, the judgment in Case 258/84 Nippon Seiko KKv Council[\9S7] ECR 1923, » paragraph 21). voting the Council would have had before it 10 — Rules of procedure adopted bv the Council on 24 July all the language versions as required by 1979 on the basis of Article 5 of the Treaty of 8 April 1965 establishing a single Council and a single Commission of Article 8 of its rules of procedure. The the European Communities (OJ 1979 L 268, p. 1). Council disputes this assertion and points

out that the contested regulation was 18. (a) The applicant's first argument published in the Official Journal on relates to its treatment in the anti-dumping 24 November 1988, only one day after the proceeding concerning electronic type- decision was taken. writers. In view of the particular structure of the applicant, the normal value in that proceeding was determined on the basis of SGA expenses corresponding to it as an undertaking, plus a reasonable profit, and 15. The applicant righdy points out that in this resulted in the termination of the view of the internal nature of the Council's proceeding. " The decision to terminate that working documents it can do no more than proceeding was based on the finding that conjecture about the observance or the applicant's structure differed from that non-observance of the procedural rule in of competing Japanese undertakings. In question. On the other hand, I consider the view of those circumstances, the applicant point made by the Council to be valid. It is argues, the Commission, in order to respect completely out of the question that the the applicant's rights of defence in this contested regulation could have been case, ought to have explained why it published on 24 November without all the had abandoned the criterion of similarity (published) language versions being between the undertaking concerned and available the previous day as proposed texts. other undertakings whose accounting data Since it appears from the statements of the had been taken into consideration. parties that the Commission proposal was the direct object of the one vote taken by the Council, it must be assumed that the draft text voted on corresponded in every respect to the Commission proposal. 19. In this regard I would point out first of all that the only proceeding which concerns us now is that which resulted in the adoption of the contested regulation. The 16. The applicant's arguments concerning possible illegality of the regulation imposing Article 8 of the Council's rules of procedure the provisional duty could affect the legality must therefore be rejected, with the result of the contested regulation only in so far as that the plea in law alleging a breach by the the latter requires the provisional duty to be Council of its own rules of procedure is collected definitively. On this point, entirely unfounded. however, the Court has ruled that a defect in the regulation imposing the provisional duty may lead to the illegality of the regu- lation imposing the definitive duty only in so far as the defect is reflected in the regu- lation imposing the definitive duty. 12 In this I I — Infringement of the rights of the defence context, it must be examined whether it was necessary to set out the reasons for the method applied.

21. I consider it doubtful that internal 24. With regard to the argument put matters such as the legal considerations forward by the applicant in the same which are to form the basis for a dis- connection, to the effect that the new basic cretionary decision should also be included regulation itself infringes its rights of among those requirements. However, this defence on the ground that it deprives it question does not arise in this case because of the opportunity to demonstrate the Article 2(3)(b)(ii) of the new basic regu- particular nature of its structure in contrast lation — published more than three months with the structures of its Japanese competi- prior to the contested regu- tors, this is not in fact a matter concerning lation— expressly provides for the method the rights of the defence but concerns the which was applied to the applicant. Thus, question whether the fact that the Council whatever the legal position under the former was able, in the course of the administrative basic regulation may have been, the new procedure in this case, to adopt the new basic regulation itself provides the expla- version of a provision still in force was nation for the method applied. compatible with the principles of legal certainty and the prohibition of retroactive measures. The applicant takes the view that the new version is more unfavourable to it than the original version and that it was introduced for the purpose of justifying a 22. Whether, in the light of the circum- posteriori the approach adopted under the stances of this case, that method ought to regulation imposing the provisional duty, have been applied is, of course, a quite which would not have been lawful under the separate question. However, the applicant former version. This is a point to which I could have effectively made known its point shall return later. of view on this question before the adoption of the contested regulation by arguing that the conditions governing that method, with which it was familiar from the regulation imposing the provisional duty, had not been 25. It must therefore be concluded that the satisfied (in particular, that the application Commission did not infringe the principle of of that method was unreasonable in the the rights of the defence by failing to inform light of the first two sentences of that provision) or by arguing that the new basic 14 — The applicant's argument on this point is contradictory: the date of 18 November 1988 is taken from its arguments regulation was itself invalid. concerning the alleged infringement of the Council's rules of procedure; at point 12 on page U of the application, however, it is stated that the applicant sent a memorandum 13 — Judgment in Case 85/76 Hoffman-La Roche 6 Co. AG v to the Council on 26 October 1988 concerning that Commiíiion [1979] ECR 461, » paragraph 11. Commission proposal.

the applicant in detail of the reasons why, sponded to undertakings with structures for the purposes of the contested regulation, different from its own. It thus had available it departed from the method applied in the to it all the information necessary to mount anti-dumping proceeding concerning the an effective defence. The individual importation of electronic typewriters. accounting data used for the purposes of weighting, and thus also for the percentages applied, had to be regarded as confidential information within the meaning of Article 8(3) of the new basic regulation 15 and for 26. (b) The applicant also considers its that reason could not be divulged to the rights of defence to have been infringed by applicant. the fact that the Council did not inform it before 20 September 1988 of the names of the undertakings whose accounting data had been taken into consideration for the 28. Inasmuch as in this connection the purpose of determining the SGA expenses applicant also objects that no reply was and profit for the construction of the received to its letter of 2 September 1988 applicant's normal value. The Community requesting information on the method used authorities ought to have explained how, on to determine the SGA expenses and profit the basis of the accounting data of those and on the adjustments made to exclude undertakings, they arrived at the 'weighted from the calculation expenses and profits average' which, according to recital 36 of arising on sales on the domestic market, it the regulation imposing the provisional suffices to point out that under Article duty, was applied to the applicant. As the 7(4)(c)(i)(cc) of the basic regulation (in its applicant did not have that information former and new versions) such requests for during the entire proceeding, it was unable information must be received by the to express its views on those matters and in Commission not later than one month after this way its rights of defence were infringed. publication of the imposition of the provisional anti-dumping duty (in this case, therefore, by 26 June 1988).

From this the applicant must have been able to conclude 15 — See also the judgment in Joined Cases 260/65 and 106/86 TEC ma Otben v COMICI/[1988] ECK 5855, at paragraph that the figures which would be used corre- 20.

criticized in this case, was more un- 31.2. Apart from the questions dealt with favourable for the applicant than the for- above, which concern the construction of mer basic regulation. the normal value, the applicant also contends that its rights of defence were infringed in the determination of the injury. It points out in this connection that, for the period preceding that covered by the inves- tigation, it supplied only overall figures, and only for the years 1984 and 1985 (not for 1983), as no figures for individual printer

conference. I am unable to ascertain from manufacturers, the applicant's rights of the documents what importance is to be defence were infringed. attached to this agreement. However, even if the Commission was here attempting (as the applicant apparently believes) to use delaying tactics in order to postpone discussion to a date after the adoption of the new basic regulation, I would not regard this as an infringement of the rights of the defence. Either the new basic regu- lation is more unfavourable to the applicant, 32. It is certainly undeniable that recital 59 in which case the matter must be examined does indeed mention dumping and thereby from the perspective of legal certainty and apparently also refers to a period beginning the prohibition of retroactive measures. The in 1983 and preceding the period covered applicant's rights of defence will have been by the investigation. On the other hand, it is infringed in this regard only if it had insuf- not disputed that the Community authority, ficient time to submit its arguments, on the over this period, investigated only an injury basis of that regulation, for account to be in the sense that it established that Japanese taken of them when the Council took its imports were having an effect on the decision.

The the applicant from submitting additional applicant has submitted further arguments arguments (at whatever stage) cannot be determined. The applicant's plea in law 16 — I cannot understand how dumping can be established must therefore be rejected. through an evaluation of accounting data of Community producers.

on this point, which I shall also consider. So which led to the termination of the far as the determination of injury is proceeding in so far as the applicant itself concerned, it would appear that this was was concerned.18 Since that method was done on the basis of the study carried abandoned for the purposes of this out by the consultancy firm of proceeding, the Council ought to have Ernst & Whinney, which was submitted by specified the reasons for this change of the Japanese printer manufacturers them- method for determining the normal value selves, and that this study also covers the and how it could avoid discriminatory year 1983. The applicant was also informed, treatment when applying the new method by a Commission letter of 28 September which it had selected. 1988, that this study would be used. The data relating to the applicant itself for the years 1984 and 1985 are included in the questionnaire which it submitted in the course of the administrative proceeding. 34. According to the established case-law of Finally, with regard to the data on indi- the Court, the statement of reasons required vidual European manufacturers, these are by Article 190 of the EEC Treaty must be confidential in nature and for that reason appropriate to the nature of the measure in could not as such be communicated to the question. It must show clearly and applicant. However, it is not disputed that unequivocally the reasoning of the the file opened by the Commission, to Community authority which adopted the which the applicant had access pursuant to contested measure so as to inform the Article 7(4)(a) of both the new and former persons concerned of the justification for basic regulations, contained non- the measure adopted and to enable the confidential summaries. The applicant was Court to exercise its powers of review.19 In thus informed of, or at least had access to, this case, in recital 21 of the contested regu- all the material on which the determination lation the Council referred to Article of injury had been based. There was conse- 2(3)(b)(ii) of the new basic regulation, quently no infringement of its rights of which provides expressly for the method defence. applied in this case. It also addressed the question of discrimination raised by the applicant by pointing out (in the second paragraph in the above recital) that: Ill — Failure to provide a statement of reasons

35. It follows from that passage that the not constitute a failure to provide reasons Council does not regard the particular but would at the most amount to a breach characteristics of the applicant's structure as of the basic regulation (see the second providing any reason for treating it any sentence of Article 4(1]. It is therefore not differently than other exporters, or that possible to agree with the applicant on this those structural differences do not justify point. the view that the situations are funda- mentally different. It is thus evident that the Council is proceeding from a completely different standpoint from that of the Second part — The substantive legality20 of applicant, and that this explains the measure the contested regulation adopted and the method applied. The possi- bility for the Court to exercise its super- visory control is thus ensured; in particular, I — Definition of the (like) products taken the Court is in a position to ascertain whether the Council's position on the into consideration question of discrimination is correct. The plea in law alleging a failure to provide reasons is thus unfounded in so far as it 38. The applicant objects to recital 5 et seq. concerns recitals 21 and 22 of the contested of the contested regulation. In its view, the regulation. group of products falling within the category of 'like products' was not properly defined for the purposes of this anti- dumping proceeding. A distinction ought to 36.2. The second argument relied on, have been drawn between two segments alleging a lack of a statement of reasons for comprising the printers taken into the contested regulation, concerns the issue consideration (lower and upper segments). of injury; in this argument doubt is Those two segments may be distinguished expressed with regard to recital 60 of that according to the intended purpose of the regulation, which, according to the machines, the target customers and the applicant, shows that the Community expected profit. The Council did not draw authority attributed the consequences of any distinction according to segments and imports from third countries other than this, in the opinion of the applicant, Japan to the dumping (by Japanese manu- constitutes an error in the assessment of the facturers). facts.

order to divide the category of printers in sented a substantial amendment and did not question into segments; according to the :orrespond to normal Commission practice. applicant, the Council should none the less have endeavoured to apply one or other of those criteria. It thus admits that there are no generally accepted criteria for making such a division, and this is a view shared by 43. It suffices to note here that the wording the Council. The argument is accordingly in the fourth and thirty-third recitals of the unfounded. new basic regulation presents the resultant textual amendment as a mere clarification of the former basic regulation. 22 The intention of the legislature is thereby made suffi- ciently clear. If the wording of the provision II — Normal value were to go beyond that aim, that might justify a restrictive interpretation or, if that were not possible, an examination to ascertain whether the principle of propor- tionality was observed. I see no failure to 40. /. So far as the arguments relating to the state reasons in this regard. construction of the normal value are concerned, it is first of all necessary to examine the argument which, relying on Article 184 of the EEC Treaty, goes to the applicability of Article 2(3)(b)(ii) of the new 44. The applicant goes on to argue that the basic regulation. Community authorities ought to have explained how the application of the new rule would not discriminate against under- takings such as the applicant. In the case of such undertakings, there would have been 41. (a) In this context, I will first of all added to the actual production costs the examine the applicant's criticism of the expenses and profits of other undertakings, reasons given for that provision and the without any examination as to whether the doubt it casts on its substantive legality latter essentially exhibited similar charac- before passing (at point (b] to its applica- teristics. It would have been necessary to bility in time under Article 19 of the new demonstrate, where appropriate, how that basic regulation. discriminatory effect could be avoided or offset. However, in my view, the legislature is not obliged to provide, for all provisions capable in one way or another of being applied in a discriminatory manner, a 42. (aa) The applicant takes the view that, statement of reasons covering this specific in view of the requirements set out in point. T h e prohibition of discrimination is a Article 190 of the EEC Treaty, insufficient general principle of Community law. In reasons are given in the preamble to the applying every provision of secondary law, new basic regulation 21 for the provision to the Community institutions must do their which objection is taken in the present case. utmost to comply with that principle. If a It considers first of all that the Community provision does not allow this to be done, authority ought to have stated that it was a this does not constitute insufficient new, substantive provision which repre- 22 — Sec the fourth recital: *should be presented clearly and in sufficient detail'; thirty-third recital: 'to define more 21 — Fourth and thirty-third recitals. precisely'.

47. (bb) I now come to the questions relating to the substantive legality of the new basic regulation. •51. In this connection, the applicant takes the view that either Article 2(3)(b)(ii) of the new basic regulation is inconsistent as such with the Anti-Dumping Code if in cases such as this it restricts the discretion of 48. (1) The first breach of Community law Community authorities by limiting it to the alleged by the applicant relates to Article method here applied, or alternatively that 2(4) of the GATT Anti-Dumping Code. 24 — See Commission Decision 86/34/EEC of 12 February 23 — The thirty-third recital in the German version of the regu- 1986 terminating the anti-dumping proceeding concerning lation does not correspond to the versions in the other imports of electronic typewriters manufactured by official languages, in which the recital concludes with the Nakajima All Precision Co. Ltd and originating in Japan words 'or on any other reasonable basis'. (OJ 1986 L 40, p. 29).

I-2126

NAKAJIMA v COUNCIL

the Community authorities retained under Community.26,27 With regard to the Anti- that provision the discretion which they Dumping Code, the Court of Justice would have under the Code, in which event it is appear to have proceeded on the basis of the method chosen in this case which is the same principles in the Cartorobica contrary to the Code. case.28

54. (bb) The question which then arose in 52. (b) Of those two possibilities set out this case is whether the provisions of the by the applicant — breach of the Anti- Anti-Dumping Code are directly applicable Dumping Code by the new basic regulation to individuals — in this case, the or by the method of applying that regu- applicant — which the applicant, but not the lation — it is only the former which is defendant, considers to be the case. susceptible of review under Article 184 of the EEC Treaty.

I-2127

OPINION OF MR LENZ — C A S E C-69/89

action brought against a Commission justiciable. On this point, the Court has decision rejecting a complaint based on ruled, in its judgment in Fediol III,36 that, Regulation (EEC) No 2641/84.3' That for the purpose of establishing the existence regulation provides for measures against of illicit commercial practices, the rules of illicit commercial practices which include all GATT may be interpreted and applied by practices of third countries which, with the Court and thus satisfy that requirement. regard to international trade, are incom- As far as the Anti-Dumping Code is patible with the rules of international law concerned, I have no reservations about (Article 1). Reference is thus made, inter review by the Court in the sense indicated, alia, to the GATT.32 Under Article 3, particularly since the basic regulations (in certain persons and associations may lodge particular the former basic Regulations Nos a written application for the opening of a 3017/79 37 and 2176/84) are based broadly procedure. The Court ruled that the on the wording of the Code. As regards the previous case-law on the direct applicability provision on the constructed normal value, of the GATT did not mean that applicants Article 2(3)(b)(ii) of Regulation No could not rely on the provisions of the 2176/84 and the Anti-Dumping Code are GATT in order to obtain a ruling on almost completely identical as far as the whether conduct objected to in a complaint point at issue here is concerned. constituted an illicit commercial practice.33 The Court held that the regulation entitled applicants to rely on the GATT provisions in their complaint and that consequently they were entitled to request the Court to exercise its powers of review in this 57. (cc) If I do not therefore go into the connection.34 question of the direct applicability of the Anti-Dumping Code, it is because the possi- bility that the new rules may be incom- patible with that Code is most certainly ruled out.

the aim pursued under the Code in the any further since the construction of the construction of the normal value. Two views normal value concerns precisely those cases may be held in this regard. The first would in which the conditions of the reference suggest that the construction of the normal case have not been satisfied. The fact that value serves to define the selling price for a upon the application of the alternative product as it would be if that product were criteria set out in Article 2(4), the main sold in the exporting country or the country criterion (comparison with sales on the of origin. This was how the Court described domestic market) need not necessarily be the purpose of the construction of the regarded as the decisive test is clear from normal value in the cases relating to the the nature of the first alternative criterion. importation of electronic typewriters.38 The According to that criterion, the dumping other view was espoused by the applicants in margin is to be determined by means of a the aforementioned cases. Under that view, comparison with a comparable price of the the constructed normal value is the like product when exported to any third reasonable value of the exported goods. country.

I-2129

OPINION O F MR LENZ —CASE C-69/89

64. This, however, could lead to the inval- mentioned is concerned, this is ensured by idity of the provision in question, even on the final part of the sentence ('or on any the basis of this consideration, only if that other reasonable basis.')40 which thus has a provision required an 'unreasonable' calcu- double function: it is a proviso of reason- lation of the normal value to be made in this ableness for the third method mentioned as case. This, however, is not the case. well as a clause referring back to the basic test laid down in the Code.

40 — My emphasis. 39 — In other official languages, the concept of reasonableness is not repeated here; it is however indicated that such 41 — See Article 16(6)(a) of the Code. figures cannot be used. However, I do not see any 42 — See Vermulst: Anti-dumping Law and Practice in the United difference in this regard. States and the European Communities, 1987, p. 700.

I-2130

NAKAJIMA v COUNCIL

cannot be criticized, particularly with regard determination of the normal value inasmuch to the second method of calculation in point as they are not included in the normal value bere. That provision cannot therefore be and this is calculated according to a regarded as being contrary to Article 2(4) of different method. In which case, the method the Anti-Dumping Code. of comparison objected to by the applicant is likewise not at issue. On the other hand, if those expenses and profits are to be included because this is reasonable, then the considerations set out below apply.

I-2131

OPINION OF MR LENZ —CASE C-69/89

'The foregoing considerations are likewise the exclusion of those persons who purchase grounds for the rejection of TEC's the goods from those producers or argument that the method used by the exporters. institutions is contrary to Article 2(9) of Regulation N o 2176/84, which provides that the normal value and the export price should "normally be compared at the same level of trade, preferably at the ex-factory level'. In fact, it is precisely by taking 73. The applicant takes the view that, in its account of the first sale to an independent case, the expenses and profits were treated purchaser that the normal value at the unequally as regards the normal value and "ex-factory' level can be correctly estab- the export price because in the case of lished where there are production and sales normal value those factors were established arrangements of the kind adopted by Tokyo on the basis of sales at a level of trade Electric Company Limited for the products subsequent to the ex-factory stage it sells on the Japanese market.' 4 5 (ex-distributor) whereas the applicant's export price is an ex-factory price. In this regard, it must be acknowledged that in Article 2(9) and (10) in particular the new basic regulation does not provide for any adjustment in respect of different general 71. I see no reason not to apply those expenses and different profits. considerations to the profit margin to be taken into account for the purposes of calculating the normal value. 46 It may also be assumed that those remarks are applicable mutatis mutandis to the interpre- tation of the Code, which, on the point concerned, is consistent with the former 74. This argument calls for two comments. basic regulation applied in the judgment cited above.

78. In the TEC case, cited above, the Court 76. The fact that the new basic regulation had to address this question once again with does not provide, with regard to such situ- regard to the SGA expenses, and it ations, for adjustments to be made for the summarized its case-law on this point as purposes of the comparison might give rise follows: to the question whether the provisions relating to the comparison (Article 2(9) and (10)) are valid. However, I perceive no argument supporting the invalidity of the provision criticized. 'As regards the argument to the effect that the SGA expenses must be treated in the same way when the normal value is constructed as when the export price is constructed, it need only be pointed out that that argument was clearly rejected in the judgments of the Court of 7 May 1987 (in 77. Secondly, the Court of Justice has on Cases 240/84, 255/84, 256/84, 258/84 and several occasions addressed the question 260/84, concerning an anti-dumping duty whether under the relevant basic regulation on imports of ball-bearings, [1987] ECR (Regulation (EEC) No 3017/79 or N o 1809, 1861, 1899, 1923 and 1975), in which 2176/84) the normal value and the export it is stated that there are three sets of price must be determined according to the distinct rules, each of which must be same methods for the purposes of the complied with separately for the respective comparison. It expressly replied in the purposes of determining the normal value, negative to that question. The Court took establishing the export price and making the the view that the normal value, the export comparison between the two.' 5 1 price and the comparison were each subject to distinct rules 48 and that the various adjustments relating to the export price and the normal value had different purposes and were governed by different conditions. 49 On 79. I have no doubt that that this basis, the Court, with reference to the pronouncement in principle applies in like applicable basic regulations, rejected the manner to the profit included in the normal argument that expenses having no direct value which, as the Court will recall, cannot connection with sales should not be be adjusted under the new basic regulation deducted from the normal value for (or under the former basic regulation — see the enumeration of the adjustment factors in 48 — Sec the judgment in Case 240/84 NTN Toyo Bearing Article 2(9)). Limited and Others v COMBO/ (19871 ECR 1809, at paragraph 13 et seq. .49 — judgments in Case 255/84 Nachi Fujikothi Corporation v 50 — See previous footnote. Council[\987] ECR 1861, at paragraph 31 et seq.; in Case 51 — See also the judgment of lhe same day in Joined Cases 277 258/84 Nippon Seiko KK v Council [1987] ECR 1923, at and 300/85 Canon Inc and Others v Counát [1988] ECR paragraph 43 et seq.; and in Case 260/84 Minebea 5731, at paragraph 37, and that in Joined Cases 273/85 Company Limited v Council (19871 ECR 1975, at and 107/86 Silver Seiko Ltd and Others v Council [1988] paragraph 41 et seq. ECR 5927.

— fair and equitable application of Community law, from the point of view of legal certainty also;

81. With regard to the profits, a comparison between the second and third sentences — respect for vested rights; shows that these do not come under 'other differences affecting price comparability" either. — protection of legitimate expectations; 52 — Opinion in the 7ZCcase, cited above, at p. 5898. 53 — See, for exampie, the judgment in the Minebea case, cited above, at paragraph 42. 54 — See the judgment in the Minebea case, cited above, at paragraph 36. — estoppel,

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85. None of these arguments is thus discriminatory manner in the course of an directed against the validity of the provision anti-dumping proceeding. On the other in question as such. Solely for the purpose hand, a provision of secondary Community of completeness, I shall examine here the law which is capable of being interpreted only point which, if one intended to must, as a general rule, be interpreted interpret the arguments of the applicant within the meaning of higher-ranking differently, could be relevant to the question Community law; only where such an inter of validity, namely the question of equal pretation is impossible is it possible to accept

justified. 56 The use of accounting data method, I am unable therefore to discern relating to the expenses and profits of any breach of the prohibition of discrimi undertakings other than the undertaking in nation. question may be problematic from the point of view of the equal treatment of unequal situations if the undertaking to which that method is applied differs in important respects from the other undertakings considered and from competing under 86. (b) The applicant goes on to put takings which are also the subject of the forward a series of arguments concerning the applicability in time of Article 2(3)(b)(ii) 55 — Judgment in Joined Cases 117/76 and 16/77 Ruckdeschel of the new basic regulation and which are and Another v Hauptzołlamt Hamburg-St.

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92. It could be argued that this hypothesis 89. (1) As far as the first hypothesis is is simply the converse of the first hypothesis. concerned, I believe that it has been refuted However, this is not entirely true. It is not

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party may 'plead' those grounds. The limi- value as such and which are not concerned tation of the review to the grounds pleaded, with the comparison between the normal as it applies to Article 173 of the EEC value and the export price. The arguments Treaty, thus also extends to Article 184 of relating to the second point will be the the Treaty. subject of a separate examination (in section IV).

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conduct is discriminatory and therefore those sales, the normal value of other contrary to the principle of equality. (exported) models of the same category can then be determined. In the German version the term used is not (obviously for this reason) 'gleichartige Ware' but a wider expression CWaren gleicher Art'). In most of the other language versions, this 102. First of all, I can confirm that the difference in relation to 'gleichartige Council was correct in constructing the Ware'(see Article 2(12] is reflected only by normal value (Article 2(3)(b)(ii) of the new the use of the plural; only the Danish and basic regulation), since it is not disputed Italian versions do not make this distinction. that the applicant does not sell printers on the Japanese market, which excludes the possibility of proceeding according to Article 2(3)(a) of that regulation, whilst the choice is left between the alternatives set out in points (i) and (ii) of Article 2(3)(b). 105. In those circumstances, the Council had to check (and in this regard its conduct cannot be subject to criticism) whether the second method objected to by the applicant had to be used. Following the opinion of the 103. It follows from the structure of Article Commission the Council decided that it did. 2(3)(b)(ii) of the new basic regulation that I cannot agree with that view. By so acting, the three methods specifically set out therein the Council infringed the rule set out in must be considered in the sequence Article 2(3)(b)(ii) that the SGA expenses indicated. Only when none of those and profits should be determined on a methods can be applied is recourse to be reasonable basis. had to the general provision providing that expenses and profits must be calculated 'on any other reasonable basis'.

108. In order to explain that proposition, I would like to examine the aforementioned pronouncements of the Court by putting 111. In the Sharp case, 60 the applicant sold them in the context in which they were only very few electronic typewriters on its made. domestic market. However, it apparently sold other products on that domestic market although the Report for the Hearing does not indicate the extent of the volume of such sales. In common with other producers who had brought proceedings against the 109. In the cases concerning imports of regulation introducing a definitive duty electronic typewriters, the Court had t o rule in that case, 6 1 the applicant owned a on three different situations. In the Brother, dependent distribution company. In its case, Canon and Silver Seiko cases, cited above, the SGA expenses and profits were for those models which the exporters sold determined as in the TEC case. on the Japanese market, the normal value was determined according to Article 2(3)(a) and for the other models it was constructed. In the latter case, the SGA expenses were determined by taking account of the costs of the distribution companies dependent on 112. As that survey shows, the degree of the three producers mentioned. Profits were involvement of the aforementioned based on the margins which had been typewriter manufacturers on the Japanese determined in respect of models sold on the market was different — it was much greater domestic market. in the case of Brother, Canon and Silver Seiko and less pronounced in the case of T E C and Sharp. While in the cases of T E C and Sharp, a distribution company was their only sales structure for the Japanese market, Brother, Canon and Silver Seiko also sold 110. In the TEC case, although the electronic typewriters on the Japanese applicant also had a dependent distribution market, even if such sales did not involve all company, it did not distribute electronic the models exported to the Community. typewriters on the Japanese market, either This distinction is also reflected in the through this dependent company or through considerations adopted by the Court in its any other channels. However, a number of other electronic goods which, according to 60 — Judgment in Case 301/85 Sharp Corporation v Coimai [1988] ECR 5813. T E C , also included Office automation 61 — Council Regulation (EEC) No 1698/85 of 19 June 1985 equipment', were sold on the Japanese imposing a definitive anti-dumping duty on imports of electronic typewriters originating in Japan (OJ L 163, p. market. The distribution company sold cash 1--

116. If, however, there are no sales of the 113. It seems appropriate at this point to like product in the ordinary course of trade establish the connection between the on the domestic market of the exporting case-law cited and the meaning and purpose country or country of origin (Article of the construction of the normal value 2(3)(b)(ii) of the new basic regulation), the under the new basic regulation and to choice has to be made between two expand on the considerations into which I subsidiary criteria. Under the first of these have entered elsewhere. (point (i)), the normal value is the comparable price of the like product when exported to any third country. This case is essentially distinguishable from that of Article 2(3)(a) only in so far as the discrimi- nation is not found to exist between the domestic market of the manufacturer or 114. Depending on the facts on the basis of exporter and the export market concerned, which the normal value is determined, the but between that export market and another economic situation is different in each case, export market. In this case, the economic so that the economic justification for the consideration which makes the introduction introduction of anti-dumping duties will of an anti-dumping duty appear justified is also differ from case to case. thus very similar to that in the main case envisaged.

115. Pursuant to the main criterion provided for in Article 2(3)(a) of the new basic regu- 117. I now come to the construction of the lation, the comparable price actually paid or normal value. The applicants in the cases payable in the ordinary course of trade for concerning imports of electronic typewriters the like product intended for consumption took the view, as the Court will recall, that in the exporting country or country of the constructed normal value had to be the origin is higher than the export price. In reasonable value of the exported product. such a case it is clear that the manufacturer From an economic point of view, that

approach does not strike me as being the case covered by that provision. The implausible, for in the course of such an main focus must be on the possibilities for examination it is ascertained whether the the undertaking in question to bring about exporter sells its products on the export at any time the situation in Article 2(3)(a) market at prices which cover all expenses or to prevent the existence of dumping and include a reasonable profit margin. If within the meaning of that provision from the prices are below that threshold, the being found because certain models exporter thus creates for itself an oppor- belonging to a uniform category are not tunity to eliminate from the export market sold on its domestic market, even though it the competitors present on it (without its has the possibility of effecting such sales lower prices being justified in economic (see the third sentence of Article 2(3)(b)(ii) terms). Subsequently, depending on the of the new basic regulation).

bility. In such a case the Community auth- orities must, if they wish to proceed on the basis of this method, await further devel- opments and if necessary introduce an anti- 118. However, for the construction of the dumping duty at a later stage. normal value the Court looks at a situation which would exist if the product were sold on the domestic market of the exporting country. In doing so it seeks to bring the result of the construction of the normal value as close as possible to the normal value under Article 2(3)(a).

By virtue case-law cited is always impossible to follow of the existing structures, those manufac- in such cases. In my opinion, the turers could at any time have placed on the construction of the normal value should market other of the exported models if that follow the scheme set out in Article 2 (3) (a) where the situation in question is similar to 62 — See footnote 104.

123. Such a situation does not correspond to the basic situation envisaged in Article 2(3)(a) of the new basic regulation nor is it in any respect similar to it. If we consider the case with sole regard to that basic 121. In the case of Sharp, there were situation, there appears to be no discrimi- negligible sales of electronic typewriters on nation between the Japanese market and the the domestic market through a distribution Community market or possibility of it being company dependent on the parent company, created in the short term nor is any abuse of and also negligible sales of other products. organizational facilities, concealment or Here again, it would not appear to be circumvention conceivable. fundamentally wrong to determine the normal value as if there had been a sufficient volume of sales of electronic typewriters on the Japanese market, particularly if (on this point, however, the Report for the Hearing sheds no light) the volume of sales of electronic typewriters affected by Sharp itself in Japan was only 124. In this case, Nakajima would suffer slightly below the insignificance threshold. discrimination vis-à-vis the other under- In any event, Sharp could have attempted to takings if it were to be treated in exactly the increase sales through its distribution same manner as those other undertakings; structure. this, as I have already pointed out, would

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126. Nakajima, obviously in response to 128. Finally, by far the largest proportion of the Council's point that the applicant's sales since 1984 relates to mechanical type- arguments have already been refuted by the writers, which are not related to printers Court's decisions on anti-dumping measures either technologically or functionally — a against imports of electronic typewriters, attempted to demonstrate at the hearing, 63 — OJ 1984 L 335, p. 43.

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factor which increases yet further the led to a result more favourable to it, the difficulty in evaluating possible sales of a contested regulation must be annulled to the certain product by drawing certain extent sought. conclusions from sales of another product.

130. It follows from my arguments regarding the sales of typewriters that the 133. Even in this case, the application would third method mentioned cannot be taken have to be upheld without its being into consideration either, so that reference necessary to undertake any separate exam- must be made in the final resort to the ination of the other arguments concerning general clause in Article 2(3)(b)(ii), which the same issue. provides for the normal value to be determined 'on any other reasonable basis'. Under that provision, the normal value was to be calculated on the basis of the actual expenses incurred upon exportation and a 134. In view of that conclusion I could reasonable export profit margin in order conclude my Opinion at this point. For the subsequently to establish, by means of a sake of completeness, however, it is also comparison with the export price, whether necessary to examine the applicant's other that price was a dumping price or not (if it submissions in case the Court should not is not a dumping price, it being econ- share my view. omically reasonable).

135. (b) The applicant also claims in this context that the Council misused its powers 131. Since this was not done and such an (the final ground referred to in the first approach would, according to the paragraph of Article 173 of the EEC undisputed submissions of Nakajima, have Treaty).

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136. Before I examine the arguments 140. Once those principles are applied, the submitted on this issue, I would like briefly possibility of a misuse of powers can be to recall the definition of misuse of powers excluded in this case. under Community law.

138. In my view, the difference between 142. The applicant first of all takes the view those two alternatives lies in the fact that in that the conduct of the Community auth- the first case the Community authority acts orities leads to the conclusion that they did intentionally whereas in the second case it not exercise their discretion. It contends that acts with such a serious degree of the Community authorities ignored the negligence that its action is tantamount to evidence produced by the applicant about its being intentional.66 particular structure. They did not reply to the applicant's letter containing an expla- nation of its special structure or to the applicant's request made in that letter that it explain the method chosen for the calcu- 139. In order to make a submission based lation of the normal value.68 on misuse of powers succeed, the applicant must submit objective, relevant and consistent facts which point to such conduct on the part of the authorities.67 143. First of all, as far as the complaint of a failure to examine evidence is concerned, it 64 — Judgment in Joined Cases 18/65 and 35/65 Gutmann v must be borne in mind that the Community Commission [1966] ECR 103, at p. 117; judgment in Case authorities were already quite familiar with 69/83 Lux v Court o/ Auditors [1984] ECR 2447, at paragraph 30. that structure as a result of the proceeding 65 — Judgment in Case 8/55 Fédération Charbonnière di Beigigueconcerning electronic typewriters. As I have v High Authority [1954 to 1956] ECR 245, at 257; judgment in Joined Cases 3/64 and 4/64 Chambre already pointed out, the Council's error Syndicale de ia Sidérurgie Française and Others v Highdoes not lie in an inaccurate assessment of Authority [1965] ECR 441, at 454. 66 — See Daig, Nichtigkeits- und Untätigkeitsktagen im Recht der Europäischen Gtmeinschafitn, 1985, p. 175. 68 — These contentions refer to the applicant's letter of 2 67 — See footnote 64. September 1988 addressed to the Commission.

'Contrary to all other Japanese firms 146. Finally, with regard to the argument involved in the proceeding concerning elec- that in a letter of 13 February 1989 69 the tronic typewriters from Japan, [Nakajima] Commission based the calculation of the was basically a factory only without a normal value on Article 2(4) of the new conventional sales force or sales structure basic regulation, I would regard the for any of the very limited number of statement in question, which undoubtedly products it manufactured. Nakajima only refers to an irrelevant provision, as a sold to a handful of customers world-wide. manifest drafting error. Moreover, it is entirely unclear what conclusions should be drawn from a Commission letter, sent long after the contested regulation had been adopted, with regard to a misuse of powers It was therefore considered unreasonable to by the Council. It follows from all the apply to Nakajima the same profit margin

69 — Annex K to the application. 70 — Decision 86/34/EEC, cited above at footnote 11.

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as that referred to in Regulation (EEC) No constructing another company's normal 1698/85, which was determined for a firm value unless the two companies are broadly with completely different characteristics. similar. Those findings have not been contradicted by the applicant.'

No other exporter involved in this proceeding for which a profit margin on 150. Finally, according to the applicant, it its domestic sales could be established also follows from the judgment delivered in was structured in a way comparable to the case cited that the Court regards the Nakajima. different treatment accorded to the applicant as acceptable. It refers to paragraph 18 of this judgment, which provides as follows:72

151. In the proceeding in the present case, the Council explained that the method was "With regard to the profit margin finally changed because experience had shown that determined for Nakajima in the the method applied in this case is more Commission's Decision of 12 February appropriate. So far as the judgment in the 1986, the Council emphasizes that, as was TEC case is concerned, the Council takes clearly explained in that decision, Nakajima the view that in that case the Court did not was unlike any of the other companies rule on the method applied to the applicant concerned since it was basically a factory at that time but only on the anti-dumping manufacturing a limited number of products measures adopted in respect of the which were sold to a limited number of applicants in that case. customers and it lacked a conventional sales force or sales structure. One company's 72 — See also the other judgments delivered on 5 October 1988 profit margin cannot be used for in Joined Cases 273/85 and 107/86 Silver Seiko Limited and Others v Comal [1988] ECR 5927, at paragraph 55, and in Case 301/85 Sharp Corporation v Council [1988] 71 — [1985] ECR 5855, at 5865. ECR 5813, at paragraph 22.

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154. (1) First, the applicant contends that 158. The question really only arises if it is there has been an infringement of the assumed that both methods are covered by principle of the protection of vested rights. It the discretion of the Community authorities. is clear from the case-law that such a right Even if this is so, however, the mere fact does exist under Community law. 73 The that in a separate earlier proceeding the Court has also treated the freedom to Community authorities, in the exercise of engage in a trade or profession as a right their discretion, applied the relevant protected in the legal order of the provisions in a certain way or made specific Community. 7 4 comments on this subject in the course of proceedings before the Court does not create a right, as regards the freedom to exercise a trade or profession, to expect 155. However, in that respect I cannot those same authorities (again) to exercise identify any infringement whatever of that their discretion in the same manner in a right in this case. later case. The correctness of this view is confirmed by three points of guidance provided by the case-law. In the first place, the Court made it clear in its judgments in 156. If the Court should follow the view I Hauer and Nold, cited above, that the right have taken in this case with regard to the to exercise a trade or profession must be construction of the normal value, the considered in the light of the social function judgment delivered in the TEC case would of the protected activity. For that reason, then, in principle, also be correct from this rights of this type were in general protected only subject to limits imposed in the public 73 — Judgment in Joined Cases 7/56 and 3/57 Aistra and Others v Common Assembly [1957 and 1958] EC R 39, lt 55; interest. It also appeared to be justified judgment in Case 15/60 Simon v Court of Justice [1961] ECK 115, at 123; judgment in Case 54/77 Herpels v under Community law to impose on those Commission [1978] ECR 585, at paragraph 34 et seq. rights certain restrictions justified by the 74 — Judgment in Case 4/73 Nold v Commission [1974] ECR Community objectives serving the general 491; judgment in Case 44/79 Hauer v Land Rheinland-Pfalz [1979] ECR 3727. good, provided that the rights were not

77 — See the judgments in Case 245/81 Edeka Zentrale AG v Federal Republic of Germany [1982] ECR 2745, at 160. Two other lines of authority bear this paragraph 27; in Case 52/81 Faust v Commission [19821 ECR 3745, at paragraph 27; in Joined Cases 424/85 and out. First, it seems to me that the case-law 425/85 Frico and Others v Voedselooorzienings In- en logically proceeds on the basis that the legal Verkoopbureau [1987] ECR 2755, at paragraph 33; and in Case C-350/88, cited above at footnote 75, at paragraph problems connected with the conduct 33. 78 — See the judgments in Case 260/84 Minehea v Council [1987] ECR 1975, at paragraph 28 et seq.; in Case 258/84 75 — Judgments in Case 230/78 Eridania-Zuccheri/ici Nazionali Nippon Seiko KK v Council [1987] ECR 1923, at ana Another v Minuter JOT Agriculture ana Forestry and Otbtrs [1979] ECR 2749, ai paragraph 22; Bioviltc v paragraph 34; and in Case 256/84 Koyo Seiko Company European Economic Community [1984] ECR 4057, at LimiteJ w Council[l9V] ECR 1899, at paragraph 20. paragraph 23; in Joined Cases 133/85 to 136/85 Rau and 79 — In addition to the judgments cited in footnote 73, see also Others v Bundesanstalt fur landwirtschaftliche Marktordnung the judgments in Joined Cases 42/59 and 49/59 Sulipo/ v [1987] ECR 2289, at paragraph 18; and in Case C-350/88 High Authority [i96i] ECR 53; in Case 14/61 Hoogovens* Delacre and Others v Commission [1990] ECR 1-395, at High Authority [1962] ECR 253; in Case 159/82 Verli- paragraph 34. Wallace v Commission [1983] ECR 2711; and in Case 76 — Judgment in Case 191/82 Fedioii Commission [1983] ECR 253/86 Sociedade Agro-Pecuaria Vicente Nobre LDA v 2913, at paragraph 26; judgment in Case 264/82 Timex Council 1198 8] ECR 2725. Corporation v Council and Commission [1985] ECR 849, at 80 — Judgment in Case 112/77 Täpßrv Commission [1978] ECR paragraph 16. 1019, at paragraph 19.

162. The Council's argument that no gation towards the Community authorities protection can be afforded to the expec- to perform such transactions.83 tation that the previous way of exercising the discretion concerned will be maintained must be accepted in this case. If the Community authorities enjoy a wide margin of discretion, then, according to established 165. The ground of challenge alleging a case-law, 81 the parties concerned are not breach of the principle of the protection of entitled to entertain an expectation that the legitimate expectation cannot therefore be method originally chosen, which may be upheld. changed by the institutions pursuant to their powers, will be maintained.

163. The applicant in the present case here. 84 accordingly cannot rely on Decision 86/34, since the discretion which was exercised in that decision relates to quite different facts in a separate proceeding, and for that reason cannot form the basis for any 168. However, even if that principle, as legitimate expectation as recognized in the defined by Advocate General Warner 85 and case-law cited above. adopted by the applicant, were part of Community law, it could not be said that it has been breached in this case.

This might be possible only 83 — See, in deuil, my Opinion in Joined Cases 63/84 and if the applicant had entered into an obli- 147/84 Firuidtri Commission [1985] ECR 2857, at 2866. 84 — See the judgment in Case 230/81 Luxembourg v European Parliament [1983] ECR 255, at paragraph 22 et seq.; 81 — See footnotes 77 and 78 above. judgment in Case 44/84 Hurd v Jones [1986] ECR 29, at 82 — See the opinion of Advocate General Sir Gordon Slynn in paragraph 57 et seq. Case 108/84 De Santis v Court of Auditort [1985] ECR 85 — Opinion in Joined Cases 63/79 and 64/79 Boizard v 947, at 952. Commission [1980] ECR 2975, at 3002.

III — Export Price 174. Given my view on the determination of the constructed normal value, this ground of challenge is nugatory since for the normal 171. The applicant does not make any value a figure calculated in a completely submission in respect of the determination different manner would have to be used in of the export price. the comparison in any case. If, on the other hand, the determination of the constructed normal value is to be regarded as correct, then this ground of challenge must be IV — Comparison between the normal value dismissed. With regard to this point, and the export price reference may generally be made to my argument regarding the validity of Article 2(3)(b)(ii) of the new basic regulation viewed in the light of Article 2(6) of the Anti-Dumping Code. It remains to be added 172. The applicant considers the comparison that at no stage during the entire adminis- drawn between the normal value and the trative procedure did the applicant request export price to be unlawful for two reasons: any necessary adjustments to be made — a point which, as the Council and Commission have maintained, was not disputed by the applicant during the written 173. /. In the first place, the applicant takes or oral procedure. In the light of Article the view that by the manner in which it 2(9)(b) of the new basic regulation, the applied the new basic regulation the Council question might therefore be asked whether,

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and in which cases, the Council must make applicant merely seeks to have its own adjustments of its own accord or only upon actual expenses included in the normal request. In any event, however, the value, and not the expenses which it would applicant has not adduced any evidence to incur if it were present on the Japanese suggest, in the light of my argument market. As I have explained, this view is concerning the validity of the new version indeed correct but does not as such relate to of Article 2(3)(b)(ii), that adjustments going the comparison between the normal value beyond those which the Council undis- and the export price. putedly made of its own accord were necessary.

176. In reality, this problem does not relate to the comparison between the normal value and the export price, but rather to the determination of the normal value. The V — Injury applicant admits that in the case of O E M sales the comparison was made at the same level of trade. In advancing its argument the

86 — Products sold to independent customers who resell them 179. On this issue too, I submit my views under their own brand names (see recital 27 of the contested regulation). only in the event that the Court decides not

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to uphold the application on the question of 182. That complaint thus refers to the deter- the determination of the normal value. mination of the facts upon the application of the first indent of Article 4(5) of the basic regulation, which provides as follows:

181. (a) The applicant submits first of all that the undertakings Mannesmann-Tally 184. First of all, I consider it important that and Philips ought to have been excluded Article 4(5) of the basic regulation does not from the group of producers within the have regard to the share of the undertakings meaning of Article 4(5) of the basic regu- involved of sales on the Community market lation. In this connection, it cites figures but to 'Community producers as a whole' of from a study carried out by the firm of the relevant product.87 The reason for this Ernst & Whinney Conseil. That study was would appear to be that the economic commissioned by the Committee of disadvantages which may arise in the area of Japanese Printers for the purposes of this the dumped imports (in this instance, the anti-dumping proceeding and deals with Community) are not only a question of the aspects of the question of injury. Those market share of those undertakings whose figures show that the volume of OEM fluctuations are taken into account pursuant imports in relation to own production was to Article 4(2)(c), but also of tax 75.8% for Mannesmann-Tally and 259.27% payments — depending on the extent of for Philips. In view of that very high production (measured in terms of overall percentage of OEM imports, these could no production) — , decongestion of the labour longer be treated as forming a legitimate measure of self-defence on the part of the 87 — We should note in passing that the provisions applied here undertakings concerned, as is asserted in are almost identical in wording to the corresponding recital 41 of the contested regulation. provisions of the Anti-Dumping Code (see Article 4(1), introductory sentence and point (i), of that Code).

186. The figures submitted by the applicant, however, concern only the relationship between sales on the Community market of OEM products and own products. 189. For the reasons mentioned, I see no grounds for doubting the findings of fact which underlie recital 45 of the contested regulation. 187. It is obvious that such a calculation may produce results which are quite different from those obtained by the Council. For not every unit produced will 190. (b) The applicant argues that the facts necessarily be sold and not every sale will as established by the defendant contain necessarily be on the Community market. an additional error inasmuch as the Thus, we know from the Ernst & Whinney OEM imports by the undertakings study, which was submitted by the applicant Mannesmann-Tally and Philips did not, itself, that the undertakings HISI and contrary to what is stated in recital 45, Philips, which are among the three OEM belong in their entirety to the low end of importers, also supply markets other than the market but also belonged in pan to the the Community market.88 Moreover, recital middle-market segment, as those segments 54 of the contested regulation indicates that are defined in the Ernst & Whinney study. that the Community producers' stocks of From this the applicant concludes that the unsold SIDM printers increased more volume of the imports in question was not rapidly between 1983 and 1986 than their relatively low which, according to the sales. case-law, 91 is a precondition for the

89 — A comparison between the Ernst & Whinney study and the figures given in recital 47 of the contested regulation clearly shows that the figures used in this pan of the regu- lation are drawn in their entirety from the 188. The fact that the applicant's argument Ernst & Whinney study and that they relate also to Community producers other than those who are members in this regard is unsound also follows from of Europrint. 90 — See Table V I M of the study. 88 — See the Ernst & Whinney study at p. VII-9 and VII-17. 91 — See the judgment in the TEC cue, at paragraph 47.

inclusion of O E M importers in the 'like product' in the present context; it takes Community industry. the view that any division of the market into segments is arbitrary and aleatory since no generally accepted definition of the segments in question exists. It also points out that, according to the 191. So far as the latter conclusion is Ernst & Whinney study, Philips and concerned, I would reject it immediately Mannesmann-Tally had abandoned their since I cannot see how a possible error in own production in 1984, and that Philips the division of the market into segments can had also abandoned production in the justify the conclusion that there was an middle segment, with the result that, in the error in the determination of the number of light of the reasons given in recital 46, imported units. where reference is made to recitals 63 to 67 of the regulation imposing the provisional duty, medium-segment imports by Philips could not have had any influence on the definition of the Community industry.

This market segment is the most important of the printer market and has recently grown significantly faster than the total market. In addition, the Community producers wished to regain their market shares lost by abandoning their 194. In the light of that argument I think own production in this sector. The volume, that it is undeniable that the imported O E M value and growth of these imports can, products served to complete the range of therefore, not be considered as being products of importers. Ultimately, the disproportionate to their own production argument boils down to the question how levels.' the market can be divided into segments and then how the various imported products are to be classified within that segmentation.

This is a

point which the Council stresses in both the form of O E M products, which means recital 43 and recital 45 of the contested that it leaves it to the importing manu- regulation. It follows that the classification facturer to complete the range of products. as such of OEM products in a specific market segment still does not represent an independent consideration, which, if wrong, could have affected the reply to the question whether only individual or all producers 197. With regard to the pressure to who imported O E M products are to be withdraw from the lower-market segment, I excluded from the Community industry. would refer to my considerations on the significance of the market segmentation in the views outlined by the Council. In any event, it is clear from the Ernst & Whinney study 92 that, contrary to the view expressed by the applicant, the situation of the Olivetti company does not place in question the 195. Consequently, the applicant's argument conclusions drawn by the Council. Having that not all imported O E M products held in 1983 a market share of 5 % of the belonged to the lower-market segment must lower segment Olivetti ceased all sales in be rejected. that segment in 1984; however, it resumed sales in 1985 and obtained a market share of 6 % . In 1986, the absolute sales figure fell by approximately 11 300 units (29%) compared with 1985, despite an expanding market (as is clear from recital 47 of the contested 196. (c) Before I come to the applicant's regulation and from the Ernst & Whinney arguments concerning the importance and study). growth of the lower-market segment, I would first like briefly to examine, in connection with what has already been said, the two arguments set out in the reply to the effect that it is not necessary to have a 198. Those arguments must therefore also complete range of products and that the be rejected. pressure on the three undertakings in question to withdraw from the lower- market segment has not been established. Those arguments do not appear in the application and consequently they were, in 199. (d) The applicant goes on to argue that my opinion, made out of time. They are, the Council inaccurately assessed the however, also unfounded. So far as the situation with regard to the significance and necessity to have a complete range of growth of the lower segment. Contrary to products is concerned, the applicant, in recital 45 of the contested regulation, in response to the arguments advanced by the 1986, according to the Ernst & Whinney Council on this point in recital 43, merely study, the medium sector represented 5 4 . 1 % points out that it itself offers only printers in of all sales, whereas the lower segment the lower segment. T o this point the amounted to only 38.6%. Furthermore, the Council correctly replies that the majority market experienced an overall growth of of European and Japanese producers can 3 8 % between 1985 and 1986, whereas offer a full range of products. The growth in the lower segment came to only applicant's circumstances are indeed special 92 — See Table VII-3 at p. VII-6 of lhe Ernst & Whinney in so far as it sells most of its production in study.

1 7 % , and during the period 1984 to 1986 year to the next. During the same period, the lower segment and the overall market the medium segment showed the opposite each experienced the same rate of growth of trend (both for the whole period and from 88%." one year to the next). The trend from 1985 to 1986 is characterized by the fact that the lower segment grew less than the overall market, whereas the medium segment experienced higher growth, with the result that the market share of the lower segment

Furthermore, the applicant contradicts itself in arguing that, on the one hand, not all imported O E M 201. As far as the growth of the lower- products belong to the lower-market market segment is concerned, it is clear segment but also belong in part to the from the Ernst & Whinney study 94 that, medium segment, while, on the other hand, from 1983 to 1986, the lower and medium it contests the views expressed by the segments increased at rates differing from Council in recital 45 with its assertion that it one year to the next, sometimes more was not the lower segment but the medium rapidly and sometimes more slowly than the segment which grew more rapidly than the overall market, while the upper segment did overall market (between 1985 and 1986 and not at any time during 1984 to 1985 grow between 1984 and 1986).

error. 94 — Table V-2. objection.

203. 2. (a) As far as the determination of the 206. (aa) It takes the view first of all that injury itself is concerned, the applicant first the fact that before the period of investi- of all argues that the year 1983 should not gation the Community manufacturers have been chosen as the reference year for owned undertakings which, for reasons this purpose since it had not been asked concerning only them, decided before April about that year. 1986 to cease production should not have been taken into account. The Community authorities should not have attributed the cessation of production to dumping. Once this correction is made, there is no injury in the individual market segments. 204. On this point I can refer to my comments on the question of the rights of the defence. It remains for me to add that, in my view, the Council quite correctly draws attention to the circumstances 207. This argument relates to the cessation referred to in recital 104 of the regulation of production by the firm Triumph-Adler imposing the provisional duty. According to (gradual cessation between 1984, 1986) and that recital, the exclusive rights belonging to Logabax (complete cessation after 1985). Seiko Epson for the manufacture of printers The figures put forward by the applicant, compatible with IBM personal computers which are taken from the E & W study, came to an end in 1984. Since 1983, the show the trends in the lower, medium and IBM company held a dominant position in upper market segments between 1984 and the Community in respect of personal 1986 without taking account of the two computers. The year 1983 is therefore aforementioned companies. typical of the situation which existed before the opening-up of a substantial part of the market to all competitors (whether from the Community or from non-member countries). Consequently, it is not incorrect 208. Unlike the applicant, I take the view to choose the year 1983 as the starting point that the Council did not commit any error from which to assess subsequent devel- of assessment in this regard. First of all, I opments. Furthermore, this method of consider the applicant's argument eroneous taking as a basis a 'departure period' had from the outset. All the losses in respect of already been used by the Council in Regu- which the lack of relationship with the lation No 1698/85 imposing a definitive imports at issue is not established from the anti-dumping duty on imports of electronic outset may be included in the determination typewriters originating in Japan. 95 of the injury. Everything else is a question of causality, to which I shall later return.

determination of the injury. On the only year in which such imports are contrary, the abandonment of production recorded, the OEM imports and the sales of fits into the overall picture, as it appears own-manufacture printers in the lower from the E & W study. 96 The four segment, taken together, produce a number members of Europrint as well as the other of units lower than sales of own-manu- manufacturers in the Community had to facture printers belonging to this segment in accept a considerable loss of market share 1985. As far as Nixdorf is concerned, between 1983 and 1984. Between 1984 and reference is again made to the argument 1986 the market share of the four members dealt with in recitals 57 and 59 of the of Europrint was maintained at roughly the contested regulation, according to which same level (1983: 14.5%; 1984: 14.2%; various Community undertakings had 1986: 14.8%); this, however, signifies that pursued a niche-market strategy but which they took virtually no part in the new distri- provides no detailed analysis of the bution of market shares which were lost Council's considerations contained in those between 1984 and 1986 by the other manu- recitals. facturers in the Community (market shares in 1984: 7.6%; 1986: 3.6%). Given that context, the fact that when considering the injury incurred the Council treated the abandonment of production by Triumph-Adler and Logabax as part of the overall development cannot be regarded as 211. For all those reasons the applicant's an eroneous factual assessment. submissions on this point must be dismissed.

218. In my view, the figures quoted by the 214. (c) In the applicant's view, the applicant for the years 1984 to 1986 confirm Council's considerations on price trena are in the final analysis the considerations set out by the Council in recital 49 of also factually incorrect. the contested regulation. As far as the relationship between the growth in the lower segment and in the middle segment is concerned, the figures prove that in the lower segment both the price fall and the 215. (aa) First of all, the applicant contends relative increase of the market share of the that the Council was guilty of an error of Japanese manufacturers were greater than in assessment with reference to the fall in the middle segment. In recital 49 of the prices stated to have occurred in recital 49 contested regulation it is not asserted that of the contested regulation. the price fall and the relative increase in the market share of the Japanese manufacturers were proportional. Nor does Article 4(2)(c) of the (new) basic regulation presuppose such a finding; consequently, in finding 216. (1) In so far as the applicant takes the only that the greatest fall in prices was in view that the price falls were less than the segments in which the Japanese manu- indicated, this is due to the fact that the facturers had penetrated the furthest, the applicant did not take 1983 into account in Council did not commit any error of its calculations. I have, however, already assessment. shown that the Council rightly took that year into account in its assessment.

1983/1984 and the period from 1984 to 222. (4) Finally, on the question of the 1986. Between 1983 and 1984 the middle decline in prices, the applicant maintains segment showed the greatest price decline that on average its prices increased between (between 10.4 and 11.1%) and the greatest 1984 and 1986 or, depending on the case, growth rate in the market share of the 1987. Japanese manufacturers, namely 32.6% (lower segment: price decline between 5.4 and 11.3%; increase in the market share of the Japanese manufacturers: 23.1%). In the period between 1984 and 1986 this situation was reversed, both with regard to the price 223. However, the Council correctly points decline and changes in market shares.'7 I out in this regard that during the period would note in passing that in the upper covered by the investigation price under- segment, too, to which the applicant's cutting of 41% was found (see Annex N to objection does not relate, a distinction must the application). Moreover, the applicant's likewise be drawn between different periods calculations relate exclusively to a in order to discern the connection between comparison between the numbers· of units the decline in prices and the increase in the sold and the resultant revenue so that the market share of the Japanese manufacturers. average increase may also arise from a shift in sales towards the more expensive models. Trends between 1985 and 1986 indicated by the questionnaire submitted by the applicant in the administrative procedure also suggest that the applicant's assertion rests more on 220. This ground of challenge must such developments than on the increase in therefore be dismissed. the prices actually calculated. If the aforementioned method of calculation is applied to the figures contained in the ques- tionnaire for that period, a considerable decline in prices results.

ance it only partly offsets the difference imposing the provisional duty. The Council between the ex-factory stage and the retail also correctly points out that the adjustment stage. mentioned in parenthesis in recital 51 is mentioned only by way of example.

225. In the applicant's view, the following 227. Given those considerations, the point also suggests that the Council's 'evidence'advanced by the applicant in assessment was wrong: if one calculates the support of its assertion is not convincing. As Community price from the price under- far as the argument concerning the cutting with which the applicant is charged comparison of cost of prices is concerned, it (41.28%) and deducts the profit (1%) is possible, owing to the circumstances mentioned in recital 70, this results, for a described in recital 70 of the preamble to profit margin of 20% which is that achieved the contested regulation, that this cost was by the applicant, in a cost price for the higher for Community manufacturers than Community product at the ex-factory level for the Japanese manufacturers. It was not which is double that of the applicant's possible for them to maintain the same level product. That assumption can rest only on a of investment for research and rational- comparison at different levels of trade. In ization purposes as the Japanese manufac- the applicant's view, the Council's error is turers owing to the constant fall in profits. also proved by the fact that, given the price margins for normal commercial trans- actions, the ex-factory price and the ex-dealer price (the latter reduced by 25%) differ by about the same margin as the 228. As regards the argument concerning margin of price undercutting of which the the comparison of prices at the various applicant is accused. levels of trade, on the one hand, and the applicant's margin of price undercutting on the other, it is possible that there are parallels here but they are due purely to chance.

statements in recital 54 concerning the In so far as it is established that the imports volume of stocks. from the third countries concerned (Japan) had an injurious effect on the Community industry over a lengthy period of time — even if that period only partly coincides with the period of the investi- 231. The applicant also considers that, gation — and, moreover, it is clear that contrary to what is stated in recital 54, it during the period of the investigation was possible for the Community manufac- dumping and undercutting occurred, it is turers to increase their production capacity, not fundamentally wrong to presume that to reduce costs and to develop new injury is at present being caused to the products. However, it does not explain how Community industry by the dumped the assessment made in recital 54 was imports. In this case, having regard to the incorrect. All those submissions must criteria laid down in Article 4(2) of the basic therefore be rejected. regulation, the increase in the dumped imports can be established only in relation to a short period of time; but the Community authorities may get an idea of the volume of those imports (Article 4(2)(a)). The factors 232. 3. (a) The first set of pleas concerning of prices and price undercutting (Article the causal relationship between the injury 4(2) (b)) can be established without and the dumping relates to the fact that the restriction. As regards the impact on the period covered by the investigation economic sector concerned (Article 4(2)(c)), stretched from April 1986 to March 1987 actual trends (existing even before the whereas the Council's findings concerning period of investigation) or potential trends the injury included the period since 1983. may be taken into account. Subject to the arguments concerning the (other) causes of the trends detrimental to the Community industry between 1983 and 1986, to which I 233. (aa) The applicant points out that shall come shortly, the causal relationship in before 1 April 1986 no dumping can be that regard is demonstrated in the contested assumed to have taken place since the regulation (see recitals 47 to 55). Moreover, period before that date was not part of the the applicant has not contended that there period covered by the investigation. was no dumping or price undercutting before the period of the investigation. For the reasons set out above, the applicant's argument on this point must be rejected.

this regard, the observations made on the periods, the market grew strongly between previous point are also valid. Furthermore, 1983 and 1984. 10 ° That would seem to the applicant does not explain how it takes suggest that between 1983 and 1984 the objection to the defendant's examination of Community manufacturers increased their the injury. capacity to an extent less than the growth in the market. It is not therefore possible to proceed from an assumption that capacity increased disproportionately; this is borne out by the uncontested fact that between 1983 and 1986 the rate of utilization of 236. (b) The applicant's submission whereby capacity remained constant (70%: recital 54 it essentially argues that the Community of the contested regulation). Thirdly, the manufacturers caused injury to themselves fact that the Community manufacturers must also be dealt with as part of the supply not only the Community market but question of causality. Challenging the also other markets must be taken into statements in recitals 54, 55 and 64 of the consideration. 101 contested regulation, it contends that, compared with the growth of the market between 1984 and 1986 (88%), the Community manufacturers increased their capacity disproportionately during the same period (92.7% or — if Philips is left out of account owing to its niche-market strategy—103.2%), contrary to what is 238. It follows that the applicant's stated in points 88 and 89 of Regulation N o submission on this point is not well founded. 1418/88. In doing this, they deprived them- selves of the advantages which they could have obtained from possible economies owing to increased numbers of units. If the Community manufacturers had acted in that prudent fashion, as they are supposed to have done according to recital 89 of the 239. (c) With reference to recital 60 of the regulation imposing the provisional duty, contested regulation, the applicant then they would have been able to invest more in contends that the Community authority research and development owing to those should not have contented itself with the savings. finding that the impact of the OEM imports from third countries other than Japan was limited to a single Member State and became considerable only after the the end of the investigation period. The applicant considers that a close examination of those 237. I have three comments to make with imports would have led to its being accepted regard to that argument. First of all, the that they held a not inconsiderable market applicant has not mentioned the source of share. In breach of Article 4(1) of the basic those figures nor substantiated them in any regulation, the injury arising from those way. Secondly, a different picture emerges imports was wrongly attributed to dumping for the period between 1983 and 1986 by the Japanese importers. examined by the Council. The E & W s t u d y " shows that, compared with other 100 — 1983/1984: 39 % ; 1984/1985: 36 % ; 1985/1986: 38,2 %. 101 — See the E ÍC W study at p. VII-6 (Olivetti); p. VI1-9 99 — Table V-6. (HISI); p. V1I-17 (Philips).

240. However, it is clear from a comparison in recitals 63 to 66 of the contested regu- between the calculation used by the lation. It considers that in arriving at its applicant (for the years 1984 to 1986) and findings concerning the interest of the the table used as a basis for that calcu- Community the Council committed a lation 102 that the applicant, in taking the number of errors of assessment. As far as view that the volume of imports from third most of these points are concerned, which countries was higher than was assumed by relate to the possibilities for the Community the Council, bases that view on imports of manufacturers to make investments, I have printers originating in Japan. On this point, already replied to them in response to the the Council has stated without being contra- submissions concerning injury. The same dicted that those imports are the subject of applies with regard to the significance of the the anti-dumping proceeding in this case, imports of printers of Japanese origin from which is, moreover, confirmed by the title as other third countries. well as Article 1(1) of the contested regu- lation. Furthermore, the table which is mentioned shows that imports of printers having their origin in third countries other than Japan effected between 1983 and 1986 243. It remains to deal with the argument constantly lost market share 103 and the that the anti-dumping measure operated to growth in the numbers of units sold (8% the advantage above all of manufacturers between 1983 and 1986) was lower than the in other third countries. However, this growth achieved by the Japanese manufac- assertion is not substantiated in any detail. turers (290%) and the European manufac- Since between 1983 and 1986 the share of turers (44%). Like all the other submissions the manufacturers in other third countries concerning the causal relationship between constantly fell throughout the common dumping and injury, this submission, too, market whilst the share of the Japanese must be rejected. manufacturers constantly grew, it ought to have been demonstrated how the situation was altered (reversed), particularly in the final months of the period covered by the investigation. However, no evidence or arguments are advanced in this regard. 241. 4. In conclusion, it must be stated that Moreover, there is no evidence to suggest none of the submissions concerning the that the import of products originating in findings as to injury is well founded so that other third countries were dumped, so that the applicant's arguments on this point must protection against penetration by these be rejected in their entirety. manufacturers on the market would not have been appropriate.104

247. I. As far as the substance is concerned, 245. The Commission has, however, pointed it follows from all these considerations that out without being contradicted on this point the contested regulation is defective because that this argument is based on a misunder- the construction of the normal value as standing of the process described in recital regards the SGA expenses and profit is 72. The prices used to determine the price contrary to Article 2(3)(b)(ii) of the new undercutting described in recitals 50 and 51 basic regulation. That regulation must are domestic prices which contain in therefore be annulled to the extent claimed, particular customs duties and charges even though in examining the contested (disregarding the adjustments made to take regulation I have not otherwise identified account of transport costs and differences in any legal defects and in particular the sales channels). Those prices are normally grounds relied upon pursuant to Article 184 relevant factors in the calculation of the of the EEC Treaty for challenging the new (individual) injury threshold defined in basic regulation are not well founded. recital 71. The latter factor is therefore unsuitable for the determination of the anti- dumping duty to be applied since the duty is charged on the net price free-of-frontier at c. i. f. level. The price on which the injury 248. II. As far as the decision on costs is threshold is based must therefore be concerned, which must also cover the adjusted to take this into account. The proceedings in Case C-69/89 R, this is consequence of this calculation for the governed by Article 69 of the Rules of injury threshold is described in recital 72 of Procedure. Since in Case C-69/89 R, the the contested regulation as follows: Commission presented neither written nor oral observations, the burden of the costs incurred as a result of her intervention are to be shared; the applicant and the Commission must each bear their own costs. ' 05

Order the Council to bear the costs of the proceedings in Case C-69/89, with the exception of the interveners' costs which are to be borne by themselves;

Order the applicant to bear the costs of the proceedings in Case C-69/89 R; however, the burden of the costs arising from the Commission's intervention is to be shared equally by the Commission and the applicant.

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