C-75/92

OPINION OF MR LENZ — CASE C-75/92

OPINION OF ADVOCATE GENERAL LENZ delivered on 16 March 1994 *

Mr President, liability company which was formed in Members of the Court, Hong Kong in 1987 and is based there. In its reply responding to the defence, the appli- cant provided more precise particulars about the ownership of the shares in the company.

A — Introduction

According to those particulars, two of the shares are owned by natural persons from Hong Kong. The remaining 49 998 shares are 1. The present proceedings relate to an held by a company incorporated under Chi- action brought under Article 173 of the EC nese law, Gao Yao (hereinafter referred to as Treaty against Council Regulation (EEC) 'Gao Yao (China)'). Gao Yao (China) is a N o 3433/91 of 25 November 1991 imposing joint venture in which two companies are . a definitive anti-dumping duty on imports of each 50% shareholders, namely Gao Yao gas-fuelled, non-refillable pocket flint light- Xian Hua Fa Factory of Machinery Guang ers originating in Japan, the People's Repub- Dong Sheng, a company incorporated under lic of China, the Republic of Korea and Chinese law, and Mikosa Trading Company Thailand and definitively collecting the pro- Ltd ('Mikosa'), a company incorporated visional anti-dumping duty. ' under Hong Kong law. Mikosa belongs to four natural persons, who are citizens of Hong Kong; two of them (owning 20% and 34% respectively of Mikosa's capital) are the same natural persons who have already been mentioned as owning two of the shares The identity of the applicant in the applicant company.

5. O n 25 May 1990, Gao Yao sent its In order to appreciate the background to the answers to the questionnaire to the Commis- proceedings, it seems to me to be not with- sion. The name stated as being that of the out significance that, according to the Com- undertaking was 'Gao Yao (HK) Hua Fa mission's findings, two manufacturers — Industrial Co., Ltd' and its address was given BIC SA and Swedish Match SA — account as 'Guangdong Province, Zhaoqing City, for the major proportion of Community Gao Yao County, Jing Dao, People's Repub- production of the products at issue. 2 lic of China'. It was further stated that the undertaking had a 'Sales Office & Corre- spondent Office' in Hong Kong. The note- 2 — See paragraph 3 of Commission Regulation (EEC) N o 1386/91 of 23 May 1991 imposing a provisional anti- dumping duty on imports of gas-fuelled, non-refillable pocket flint lijghters originating in Japan, the People's Republic of China, the Republic of Korea and Thailand 3 — OJ 1988 L 209, p. 1. (OJ 1991 L 133, p. 20). 4 — The notice was published in OJ 1990 C 89, p. 3.

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paper used was headed 'Gao Yao (HK) Hua 7. On 1 March, the China Association's law- Fa Industrial Co., Ltd'. At the foot, the yers informed the Commission that the deci- words 'Sales Office' (together with an sion to use Thailand as an analogue country address in Hong Kong) were printed on the for the purposes of calculating the normal left and on the right the word 'Factory' value was contrary to Article 2(6) of Regula- (together with the aforementioned address in tion N o 2423/88, 6 and urged that the normal China). value be calculated on the basis of the price on the domestic market in Hong Kong.

'While there are other gas-fuelled pocket lighters on the market (piezo lighters) their technical characteristics are quite different 9. In a fax message sent to the Commission from the abovementioned product. There- on 23 April 1991, the China Association's fore, they are not covered by the product lawyers asserted once again that the normal which is the subject of the present proce- value with regard to the applicant should be dure.' 9 calculated, not on the basis of Article 2(5) of Regulation N o 2423/88 (using Thailand as an analogue country), but in accordance with Article 2(6). It stated that 'Gao Yao (HK) Hua Fa Ind. Co.' produced in China through its affiliate company incorporated under Chinese law 'Gao Yao (HK) Hua Fa 11. With regard to the determination of the Ind. Co.'. Consequently, the goods origi- normal value, as far as is relevant for present nated in China, but were exported from purposes the Commission stated as follows: Hong Kong.

'In order to establish normal value for the People's Republic of China, the Commission — Reguktion (EEC) No 1386/91 had to take account of the fact that this country does not have a market economy and the Commission therefore had to base its determinations on the normal value in a market economy country. ...' 10

10. On 23 May 1991, the Commission adopted Regulation (EEC) N o 1386/91, The Commission then gave reasons for its which imposed a provisional 17.8% anti- decision to use Thailand as an analogue mar- dumping duty on imports originating in the ket for the purposes of establishing the nor- People's Republic of China. 7 The Commis- mal value. Although no provision was men- sion stated in that regulation that the proce- dure related to gas-fuelled, non-refillable

In paragraph 31, it is stated that, on the basis of the information received from the compa- nies investigated, imports from Japan, the People's Republic of China and Thailand increased from 11.3 million pieces in 1986 to 13. That which is stated with regard to pro- 92.4 million pieces in 1989. In the case of duction, capacity, capacity utilization and imports from China alone, the rise was stocks is so important as to warrant being from 0 in 1986 to 6.1 million in 1989. quoted in full:

In paragraph 32, the Commission says that the figures provided for the Republic of '(36) In this respect, the Commission found Korea did not show accurately the actual that the production of the Community Korean presence in the market since only industry decreased between 1986 and 1989.

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If an index of 100 was taken in 1986 produc- This development represents a decrease in tion was 97 in 1989. market share from 78.4% in 1986 to 60.5% in 1989 (70.6% in 1987, 65.3% in 1988).'

Capacity increased between 1986 and 1989. Using 100 as an index for 1986 capacity 15. In paragraph 39, it is stated that the was 114 in 1989. prices of Community producers showed a steady downward trend between 1986 and 1989. In addition, the financial results of the Community industry worsened 'between 1986 and 1989'.

utilization, sales volume and market share, 19. In its reply of 14 August 1991 to that prices, profits and employment. document, the applicant objected that the Commission had not given reasons for that view, and further insisted that Article 2(6) was applicable. It confirmed this in a fax message sent to the Commission on 7 November 1991.

17. O n 19 June 1991, a hearing was held at which the applicant argued once again that the normal value should be calculated in its case on the basis of Article 2(6) of Regula- In a fax message sent on 12 November 1991, tion N o 2423/88. In its Memorandum of the Commission observed with regard to Defence submitted to the hearing, the appli- that argument that it 'confirmed' that the cant relied, inter alia, on the assertion that its products were merely transhipped through lighters were not merely transhipped Hong Kong and that therefore Article 2(5) through Hong Kong, but also sold in large was applicable. quantities in that territory.

In a fax message sent to the Commission on 13 November 1991, the applicant con- tested that view.

18. O n 2 August 1991, the Commission pro- vided the applicant with the 'essential facts and considerations' on the basis of which it intend to recommend that the Council — Regulation (EEC) No 3433/91 impose a definitive anti-dumping duty on imports from China.

20. O n 25 November 1991, the Council adopted the regulation contested by the applicant. The Commission had submitted the proposal for that regulation to the Coun- In that document, the Commission also con- cil on 28 October 1991. sidered the argument that the normal value should be calculated in accordance with Article 2(6) of Regulation N o 2423/88. It took the view that, in cases where the prod- uct under consideration is produced in a non-market economy country, Article 2(5) 21. Paragraph 10 of that regulation rejects should be applied. Gao Yao's submission, based on Article 2(6),

11 — The only difference between the final version and the Com- mission's proposal is that the latter refers to the 'basic reg- 25. The defendant claims that the application ulation' whereas the passage quoted cites the reference number of the regulation. should be dismissed as inadmissible and, in

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the alternative, as unfounded, and that the make one preliminary observation of a gen- applicant should be ordered to pay the costs. eral nature. The contested Council Regula- tion — as will be seen — is sufficiently open to criticism. The applicant has set out in its submissions a large number of factors which, in its view, mean that the regulation is unlawful. But it has not left it at this; it has also discussed those factors from all possible 26. The Commission of the European Com- legal angles. For instance, it has dealt with munities and the Federation Européenne des the complaint that the Council should have Fabriquants de Briquets ('the Federation') applied Article 2(6) (and not Article 2(5)) of intervened in support of the defendant. Regulation N o 2423/88 inter alia from the points of view of the principle audi alteram partem, insufficient statement of reasons, infringement of Community law and dis- crimination. To use a musical metaphor, a B — Opinion theme with variations springs to mind.

Preliminary observation

I do not regard this approach as appropriate. As the Council has rightly argued, it results not only in needless repetition, but also, at times, in manifestly groundless arguments. It would have been more sensible for the appli- 27. Imports into the Community from cant to have confined itself to the essential China have increasingly frequently been the points, expanding on them as appropriate at subject of anti-dumping proceedings in the hearing. recent years. 12 However, the present case seems to be the first in which judicial pro- ceedings have been brought against the imposition of an anti-dumping duty on imports from China. Admissibility

31. In this connection, the Council takes the view that, in the case of a State without a The first approach could be described as market economy, only that State itself or a 'formal'. The anti-dumping duty imposed by body entrusted by that State with carrying the contested regulation is charged on the out trade is empowered to challenge a Com- goods produced by the manufacturer — Gao munity regulation imposing anti-dumping Yao (China). The applicant is to be regarded duties. The Commission concurred with this merely as a middleman established in a coun- view. At the hearing, it expressed the view try which is covered neither by the investiga- that Gao Yao (China) was not entitled to tion nor by the contested regulation. The bring an action under Article 173 as it was regulation is therefore not of direct and indi- not individually concerned. vidual concern to Gao Yao (HK) and hence the latter has no locus standi.

The second approach could be termed 'eco- 32. None of these arguments convince me. nomic'. If the companies Gao Yao (HK) and To my mind, the question of the admissibil- Gao Yao (China) are regarded as an eco- ity of the application is instead to be tackled nomic entity, only the whole of that entity from the point of view of the applicant's could have locus standi. Since the action was relationship with the manufacturing com- brought only by one of the two companies, pany in China and from that of its function it must be considered inadmissible. within the Gao Yao group.

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13 — See section 8, above. 15 — Here, too, the Court was concerned with calculating nor- 14 — The applicant's representatives seem to have based them- mal value. selves on the fact, not only that two of the applicant's 16 — Judgments in Case 250/85 Brother v Council [1988] shares are held by citizens of Hong Kong, but also that E C R 5683, paragraph 16, in Case C-175/87 Matsushita v a 50% interest in Gao Yao (China) — which holds the rest Council [1992] ECR 1-1409, paragraph 12, and in Case of the shares in Gao Yao (HK) — is owned by Hong Kong C-104/90 Matsushita v Council [1993] ECR 1-4981, para- citizens. graph 9.

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legal person may institute proceedings 'Gao Yao Co. Hong Kong'; in paragraph 21 against a decision which, although in the a rate of duty is set for 'Gao Yao Co., Peo- form of a regulation, is of direct and individ- ple's Republic of China'. ual concern to that person.

17 — Judgment in Case C-358/89 Extramet Industrie v Council [1991] ECR 1-2501, paragraph 15, which contains extensive references to earlier case-law; cf. also the Opinion of Mr 18 — Cf., for instance, the circumstances underlying the judg- Advocate General Jacobs in that case, [1991] ECR 2507, ment in Joined Cases 294/86 and 77/87 Technointorg v at 2510 et seq. Commission and Coundl [1988] ECR 6077.

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38. In my view, no particular importance should be attached to the fact that the appli­ cant is a company which is based in Hong Kong, an area which is not affected by the anti-dumping proceeding. The Court's case- law on actions brought by importers linked 39. The Council's objection that, during the anti-dumping proceeding, the applicant was involved only as a sales office or — as the 19 — See paragraph 22 of Regulation N o 1386/91 and para­ Council's representative maintained at the graph 12 of Regulation N o 3433/91, in which the Council confirmed that calculation. 20 — Cf. Case C-175/87 Matsushita v Council (cited in footnote 16). 21 — Judgment in Case C-104/90 Matsushita v Council (cited in 22 — See, for example, the judgment in Case 118/77 ĪSO v Coun­ footnote 16). cil [1979] E C R 1277.

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40. Since the application in this case should 41. The applicant claims that the Council therefore be regarded as admissible simply and the Commission, contrary to Article 7(4) on the basis of the case-law, it is, in my opin- of Regulation N o 2423/88, failed to inform it ion, unnecessary to go into the applicant's of the essential facts and considerations on argument that the application is admissible the basis of which the definitive duty was simply on account of its participation in the imposed and the provisional duty collected. anti-dumping proceeding. The question It refers to three areas alleged to be affected whether participation in the anti-dumping by this defect: the calculation of the normal proceeding is as such sufficient in itself to value on the basis of Article 2(6) of Regula- entitle the undertaking concerned to bring tion N o 2423/88, the question of the like proceedings under Article 173 is notoriously nature of the products and the relationship controversial. Some time ago, the Court of cause and effect between the injury to the answered that question in the negative in the Community industry and the alleged dump- judgment in Alusuisse. 23 As I have already ing practices. stated, that question does not need to be

24 — For further discussions, see, for instance, Anthony Arnull, Challenging EC anti-dumping regulations: The problem of 23 — Judgment in Case 307/81 Alusuisse [1982] ECR 3463, para- admissibility [1992] ECLR, 73, at 76 et seq. graph 13. 25 — Cited in footnote 17, at 2520 et seq.

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Calculation of the normal value According to that provision, the basis for calculating the normal value is to be the price at which the like product of a market- economy third country is actually sold or the constructed value of the like product in a market-economy third country. If neither of those methods provides an adequate basis, the price actually paid or payable in the 43. I shall first consider the question of the Community, duly adjusted, if necessary, to basis for calculating the normal value in the include a reasonable profit margin, is to be case of the applicant. The relevant provisions used. of Regulation N o 2423/88 need briefly to be called to mind. According to Article 2(2) of the regulation, a product is to be considered to have been dumped if its export price to the Community is less than the normal value of the like product. Paragraphs 3 to 7 of Arti- cle 2 are concerned with the question as to what the normal value is to be considered It is clear that the People's Republic of to be. China is a 'non-market economy country' within the meaning of Article 2(5). 28

26 — Judgment in Case C-69/88 Nakajima v Council [1991] ECR 1-2069, paragraph 108. 27 — Judgment in Case C-49/88 Al-Jubail Fertilizer v Council 28 — Cf. the Opinion of Mr Advocate General Van Gerven in [1991] ECR 1-3187, paragraph 17. Case C-16/90 Nolle [1991] ECR 1-5172, paragraph 13.

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44. Article 2(6) of the regulation reads as The Commission went on the say that, in follows: any case, it gave the applicant the opportu- nity to put forward 'concrete arguments' against the selection of Thailand as an ana- logue country; however, the applicant did not take up that opportunity.

45. In the fax message of 2 August 1991 to which I have already referred, the Commis- sion mentioned that Gao Yao argued that the normal value should be calculated on the basis of Article 2(6) of the regulation. Fol- lowing this, the fax message (which was drawn up in English) reads as follows: The applicant seems to have been informed of this for the first time in the Commission's fax message of 12 November 1991. The wording ('confirms') creates the impression that the Commission had give notice of this before. The applicant contests this. Since the Community institutions would have had to prove that the information in question was 'The Commission services examined this actually communicated 29 and no evidence to request and took the view that in cases where the product under consideration is produced in a non-market economy country 29 — Cf. the judgment in Al-Jubail (cited in footnote 27), para- Article 2(5) of the basic regulation applies.' graph 20.

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that effect was produced, it must be assumed Be that as it may, the fact remains that the that the applicant's account is correct. If I am contested regulation follows the Commis- not mistaken, the Council does not seriously sion's proposal of 28 October 1991 word for maintain that such prior communication word in the passage in question. As the took place. Commission's representative explained at the hearing, that proposal embodies the Com- mission's final reasoning ('raisonnement final'). It cannot be seen how a hearing after that time could, in the material circum- stances, have helped to secure the applicant's right to a fair hearing.

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those conditions. However, it did not know 52. The view first mentioned, according to — and this is what, in my view, it turns on which Article 2(5) is a lex specialis for — that the Commission took a different imports of products originating in a country view about this and that the Council would which does not have a market economy, has base itself on that view. apparently determined the Commission's attitude in these proceedings over a long period. It is discernible already in the notice of initiation of the anti-dumping proceed- ing. 30 It is clearly expressed in Regulation N o 1386/91 31 and in the Commission's fax message of 2 August 1991. 32

51. I must admit that I find the Council's arguments on this matter somewhat confus- 53. The Commission and — following the ing and contradictory. On the one hand, it Commission's proposal — the Council seem maintains that Article 2(5) constitutes a lex ultimately to have come to recognize this specialis, which therefore takes precedence view. However, the reasoning set out in para- over Article 2(6). On the other hand, the graph 10 of the contested regulation is defendant takes the view that Article 2(5) extremely unclear. In that paragraph, the and (6) are not mutually exclusive; rather, the application of Article 2(6) inevitably means in this case that the normal value has to be calculated on the basis of the actual prices in 30 — See the end of section 4, above. the country of origin and that, since that 31 — Cf. section 11, above. 32 — See section 45, above. country — the People's Republic of China 33 — See in this connection Beseler, J. F./Wdliams, A. N.: Anti- — is a non-market economy, in the final Dumping and Anti-Subsidy Law: The European Communi- ties, London, 1986, p. 73; Boudant, J.: L'antidumping com- analysis Article 2(5) has to be applied. munautaire, Paris 1991, p. 73 et seq.

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54. But Article 2(5) becomes applicable (via Article 2(6)) only if the price on the domestic 55. From that which has been stated so far, it market of the country of origin is used as the appears that the statement contained in para- basis. However, Article 2(6) provides graph 10 of the contested regulation is an expressly for two different bases for calculat- essential consideration which should have ing the normal value — the price on the been brought to the applicant's notice and domestic market of the country of origin or on which the applicant should have been the price on the domestic market of the given an opportunity to state its views. Since country of export. The second sentence of this was not done, I consider that there was the provision identifies several situations in an infringement of the applicant's right to a which the price on the domestic market of fair hearing on which the application suc- the country of origin might be appropriate. ceeds.

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The like nature of the product and the causal — Defective statement of reasons connection between the dumping and the injury

57. These issues do not, however, need to be gone into more closely in this connection. It appears from that which the applicant has 59. As the Court has consistently held, the stated that it is not complaining that it was statement of reasons required by Article 190 not heard by the Community institutions on of the EC Treaty must disclose in a clear and the relevant facts and considerations. Instead unequivocal fashion the reasoning followed it maintains that the objections which it by the Community authority which adopted raised in the course of the proceeding were the measure in question in such a way as to not taken into account or were not properly make the persons concerned aware of the taken into account by the Commission and reasons for the measure and to enable the the Council. In the result, therefore, it is Court to exercise its supervisory jurisdic- complaining that the Community institu- tion. 34 tions wrongly applied the substantive law or failed to fulfil their duty to give reasons for the legal measure at issue. It is not a question 34 — Cf. the recent judgment in Case C-171/87 Canon v Council of a possible infringement of the rights of the [1992] ECR 1-1237, paragraph 55. See also my Opinion in Case C-69/89 Nakajima v Council [1991] ECR 1-2112, defence. paragraph 34.

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The question as to the figures used that the Council nevertheless adopted it. 39 Moreover, in the present proceedings the Council has not denied that piezo lighters were not covered by the anti-dumping pro- ceeding or the contested regulation.

61. According to the paragraph 11 of Com- mission Regulation N o 1386/91, piezo light- ers are not covered by the anti-dumping pro- ceeding at issue. 37 Although the contested Council regulation does not expressly con- firm this definition of the products covered 63. The Commission explains in that para- by the proceeding, 38 there can be no doubt graph that it used those figures for Korea because the figures provided by the Korean exporter did not appear to it to be represen- 35 — As regards this term, see section 10, above. In the applica- tative. It has not explained, however, why it tion, the applicant claimed that the figures used by the Community institutions also covered lighters with a higher based the 'rise in market share held by the content of gas than the lighters manufactured by Gao Yao, dumped imports' on the Eurostat data. The which were therefore not comparable. In paragraph 34 of Regulation N o 1386/91, the Commission states, however, Eurostat data also covered products which that, in order to assure a fair comparison, it took into account in the price undercutting exercise only lighters with were not covered by the anti-dumping inves- a similar content of gas. This is confirmed by the Council in tigation. The use of such data obviously paragraph 13 of the contested regulation. The applicant seems no longer to wish to persist with this aspect of its requires justification. N o such justification is complaint in tne reply. In view of what I shall have to say later with regard to the inclusion of piezo lighters, this aspect probably, in any event, has no separate role to play. 36 — See section 6.1 of that memorandum. 37 — See section 10, above. 39 — My view is probably confirmed by paragraph 1 of the con- 38 — Cf. paragraph 5 of the contested regulation. tested regulation.

65. The first argument stands up only at first glance. Naturally, the rise in exports from China to the EC shown in Regulation N o 1386/91 (from 0 million pieces in 1986 to 6.1 million in 1989) seems less substantial if it is viewed against the background of total imports including imports of piezo lighters. 67. This, however, is far from bringing the However, it must be observed that in exam- remarkable aspects of this case to an end. In ining causation the Community institutions section 108 of its defence, the Council states analysed the effects of the dumped imports that piezo lighters are covered only by the cumulatively. 41 Consequently, the Commu- figures for consumption and market shares; nity institutions based themselves on aggre- all other figures relate solely to the relevant gate imports from all the countries con- product. In the first place, this is not easy to cerned (Japan, China, Thailand and Korea) understand, since in paragraph 32 of Regula- tion N o 1386/91 — and it is only here, according to the wording, that Eurostat data 40 — See in particular the second subparagraph of paragraph 41 were used — mention is made only of of Regulation No 1386/91. imports (or sales) and market shares, but not 41 — Paragraph 44 of Regulation No 1386/91, confirmed in para- graph 15 of the contested regulation. of consumption. The picture is different

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according to section 84 of the defence, since pieces in 1989 (for a market share of 60.5%), there it is stated that the figures for trends in consumption figures of 317.6 million pieces consumption, sales and market shares include in 1986 and of 440.5 million pieces in 1989 piezo lighters. can be worked out. This comes gratifyingly close to the figures given in paragraph 30.

Other matters A comparison shows that — in so far as is verifiable — the figures given in para- graph 3 8 4 5 of Regulation N o 1386/91 for Community producers' sales must also have been calculated on this basis. If those sales came to 249.0 million pieces in 1986 (for a 69. As far as the remaining aspects are con- market share of 78.4%) and to 266.5 million cerned in which the applicant considers the statement of reasons to be defective, I am unable to subscribe to its view. 42 — O n this basis, a figure for consumption of 321.8 million aeces can be calculated for 1986 and a figure of 435.6 mil- f ion pieces for 1989. 43 — See section 12, above. 44 — The figures would in that case have to be lower (and not higher). Moreover, comparison with the figures set out in paragraph 31 of the regulation shows that imports of piezo lighters from the countries concerned must have been much higher (more than £50 million in 1989 at least). As far as the calcuhtion of the normal value 45 — See section 14, above. is concerned, the Council states in para-

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70. The fact that the Community institu- tions, contrary to the applicant's request, refused to exclude it from the anti-dumping proceeding on account of its small market share also does not constitute a defect in the statement of reasons. In the first place, the view underlying the applicant's request does Also as regards the question of simiUrity, the not appear to me to be well-founded. 4S necessary particulars are to be found in the Moreover, there can be no requirement for contested regulation. In paragraph 5 of that the institutions to go into all of an undertak- regulation, the Council confirms the Com- ing's arguments in their regulations. mission's findings to the effect that the light- ers made by manufacturers from the coun- tries investigated and those made by Community manufacturers are alike. The Council has rightly pointed out that the question of product comparability is also rel- evant in determining the analogue country under Article 2(5) of Regulation N o 2423/88. It need not be considered here whether the applicant made its complaint in this regard in Lastly, it cannot be regarded as a defect in time. In any event, sufficient reasons are the statement of reasons that the Council did given by the Community institutions for not discuss imports from third countries in the choice of Thailand as the analogue the contested regulation. O n the one hand, country. 47 that claim on the part of the applicant is not correct, since the contested regulation does

46 — See section 54, above. 47 — See paragraphs 18 to 21 of Regulation N o 1386/91. 48 — See section 84, below.

in fact refer (in paragraph 15) to the — The question of the substantive legality of corresponding statements in Regulation the contested regulation N o 1386/91 where this question is dis- cussed. 49 On the other, the applicant's claim that imports from third countries not cov- ered by the investigation increased in the period in question from 46.6 million to 73.1 million pieces, that is to say, by 57%, cannot be squared with the figures used by Infringement of GATT provisions the institutions in their regulations. If those figures are used as the basis, imports from third countries 50 amounted to 33.1 million pieces in 1986, whilst they declined in 1989 to 20.8 million pieces. This corresponds to the figures given by the defendant in sec- tion 79 of the defence. 71. The applicant claims that the contested regulation conflicts with Article 2(3) of the GATT Anti-Dumping Code as respects the calculation of the normal value. That provi- sion accords, as far as its substance is con- cerned, largely with Article 2(6) of Regula- tion N o 2423/88. However, unlike the Community provision, Article 2(3) of the Anti-Dumping Code states that in the cases which it covers the normal value should 'normally' ('normalement') be calculated on the basis of the price on the domestic market As far as the last-mentioned point is con- of the country of export. cerned, it should however be pointed out that the figures used by the Community institutions — and hence also the figures for imports from countries not covered by the anti-dumping investigation — also include piezo lighters, which were not covered by the proceeding. The use of such figures for imports from third countries is therefore 72. In my view, however, Article 2(6) and subject to the same reservations which I have the relevant provision of the Anti-Dumping already discussed in connection with the Code are largely in accord with each other in determination of the figures for imports the final analysis, despite this difference. For from the countries covered by the investiga- cases where 'the product is merely tran- tion. 51 shipped through the country of export, where such products are not produced in the country of export or where no comparable price for it exists in the country of export', 49 — Cf. paragraph 48 of Regulation N o 1386/91. both provisions stipulate that the normal 50 — In each case, consumption less sales by EC manufacturers and imports from Korea, Japan, China and Thailand price may be determined on the basis of the (for 1989, for example, 439.8 million -266.5 million -152.5 price in the country of origin. In that million = 20.8 million pieces). 51 — See section 60 et seq., above. respect, reference can therefore be made to

Infringement of Article 2(6) of Regulation However, the applicant maintains that, of the N o 2423/88 6.1 million lighters manufactured by Gao Yao which came onto the Community mar- ket in 1989, only something less than 4.61 million pieces were exported by it directly to the Community. The remainder 74. The applicant accuses the Council of (approximately 25% of the total quantity) having infringed Article 2(6) of Regulation was sold to independent trading companies in Hong Kong, which then proceeded to export them to the Community. The Com- munity institutions should have determined 52 — See section 74 et seq., below. the prices calculated by those trading compa- 53 — See the judgment in Nakajima, cited in footnote 26, para- graph 29. nies for sales in the Community and then

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worked out an average. The Council s merely transhipped through Hong Kong responds to this by stating that those prices and that the direct exports were thus to be could not be taken into account, since they regarded as being representative for the pur- were not known. As direct sales accounted poses of determining the normal value. for 88% of aggregate sales, it was possible to regard them as being representative.

76. Consequently, the Council was entitled to take the view that in this case the normal In the rejoinder, 54 the Council stated that value should be determined under Arti- the difference between the applicant's figures cle 2(6) of Regulation N o 2423/88 on the and the Council's are attributable to a math- basis of the price in the country of origin. ematical error on the part of the applicant. Since the country of origin was China and This seems to plausible to me at first sight. hence a non-market economy country, an As the applicant itself has not given particu- analogue country had to be determined in lars as to how it calculated its own figures accordance with Article 2(5). (differing from those of the Council) and also has not contested the figures given by the Council in the rejoinder, 55 it should in my view be assumed that the Council's view is correct.

inter alia on the ground that the product in Council quite rightly points out that it was question was not manufactured in Hong the China Association and the applicant Kong. Manifestly, in this way it sought to itself — each of them represented by the rely in the alternative on one of the other applicant's lawyers — which proposed that two situations mentioned in Article 2(6) of Thailand should be taken as the analogue Regulation N o 2423/88. That consideration country. The applicant's attempts to describe was not used in the contested regulation; and Thailand as unsuited for comparison pur- the applicant does not seem to have been poses in reliance on differences in gross given the necessary opportunity to state its domestic product (between Thailand and views on it. For that reason, the Council China) are not convincing. That is not a could not in any event rely on it. Further- decisive factor. In addition, the applicant has more, neither has it been proved that the not succeeded in refuting the considerations Council's claim is correct; indeed the Coun- which guided the Community institutions in cil's representative conceded at the hearing determining the analogue country. 5 7 that the product in question was produced in Hong Kong at the time of the anti-dumping investigation (although manufacture was on the point of disappearing).

— Like nature of the products

Determination of the analogue country in accordance with Article 2(5)

It seems to me to be neither appropriate nor even feasible to discuss in detail all the par- ticulars mentioned by the applicant. The Commission and the Council must necessar- 82. I consider that this is convincing. In fact, ily be allowed a certain discretion in deciding it probably is not of key importance for the whether products are comparable. To my consumer whether a lighter produces 1 200 mind, the only significant fact which might or 3 000 ignitions. Such lighters are mass- cast doubt in this case on the comparability produced articles which are not particularly of the products is the different number of expensive and are therefore purchased with- ignitions. Whilst the Federation seems in its out thorough inspection. Since in addition — observations to deny the existence of such a as I know from my own experience — a fea- difference, when it states that the EC prod- ture of such products seems to be that they uct produced only 1 200 ignitions, the con- are never to hand precisely when they are tested regulation and Regulation N o 1386/91 needed, in practice a new lighter is often pur- assume that the products manufactured in chased before the old one has been used up. the EC are superior to the lighters imported Consequently, what is decisive, in my view, from East Asia in point of the number of is that the lighters manufactured by the EC ignitions produced; hence that claim on the manufacturers and those made by Gao Yao part of the Federation cannot be taken into and others are in competition with each account. other. The significance of this for the ques- tion of comparability is recognized in the Court's case-law. 59 Contrary to that which the applicant maintains, there can be no doubt that such a competitive relationship exists between the products of the EC man- ufacturers and those of manufacturers from the countries which were investigated. The Council has stated that the Commission relied, inter alia, on the fact that consumers 59 — Cf. the judgments in Technointorg, cited in footnote 18, paragraphs 37, 38 and 39, in Case C-l 76/87 Konishiroku v Council [1992] ECR 1-1493, paragraph 11 et seq., and in 58 — See paragraphs 12 and 13 of the regulation, which are con- Case C-177/87 Sanyo Electric v Council [1992] ECR firmed by paragraph 5 of the contested regulation. 1-1535, paragraph 11 et seq.

60 — Paragraph 34 of Regulation No 1386/91, confirmed by paragraph 13 of the contested regulation. 61 — Cf. paragraph 35 of Regulation No 1386/91.

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It is true that those figures did incorporate Council confirmed those findings in the con- data for piezo lighters, a manner of proceed- tested regulation. 63 ing which I have already discussed exten- sively. However, if those figures are taken as the basis, it is unquestionably clear that they were actually favourable to the applicant in this context: its share of imports of lighters from China (which apparently does not manufacture piezo lighters) to the whole of 88. I shall first consider the question of the EC market (including the market in prices. According to the Commission's fig- piezo lighters) came to 2.2% and its share ures, prices of the products investigated fell would doubtless have been higher if the fig- by 28% between 1986 and 1989. Community ures had referred only to the products cov- manufacturers endeavoured to match these ered by the present proceedings. prices; the prices which they obtained deteri- orated — taking 1986 prices as the yardstick — to 96% in 1987, 88% in 1988 and 86% in 1989.

86. As far as imports from third countries are concerned, there is no need for me to go fur- ther into the applicant's complaint. As I have already said, the share of the Community Without calling in question the relevance of market taken by such imports — again on these figures, it should perhaps be observed the basis of the figures used by the Commu- that there is nothing unusual about falling nity institutions — has declined and not, as prices in a highly competitive sector. It the applicant claims, risen. would be interesting to know how prices of the necessary raw materials (particularly gas) moved over that period. Since the applicant does not seem to have made any complaint in that respect, however, that question need not be considered here.

imprecise that it is hard to be of any use. O n Commission's figures the bulk of the decline the one hand, it leaves the question open as in the number of persons employed occurred to how profits moved in detail. The wording in the very years over which the restructur- used would not even rule out the possibility ing operation was carried out (1986/1987). that profits fell in one year only (say, from 1986 to 1987) and then rose again. O n the other hand, the institutions' statement is of dubious value even if — as one may well assume — it is intended to mean that profits fell year-on-year in the period in question. According to the Commission, one of the two Community manufacturers undertook a restructuring operation in 1986 and 1987. 91. It is perhaps appropriate at this juncture Apparently, this resulted not only in job cuts to pause briefly in order to point out that the but also in a marked increase in capacity. 64 Community institutions' examination of The applicant rightly points out that such a injury to the Community industry 'must process entails costs, which are usually take account of a whole series of factors, and spread over several years. In the rejoinder, no single factor can in itself be decisive'. 65 It the Council conceded that the investments is also undeniable that the institutions have a made were depreciated in the usual way. It is 'wide discretion' when evaluating complex therefore hard to understand the Commu- economic situations, in particular when nity institutions' having left the effects of determining injury in an anti-dumping pro- that process on profits out of account. ceeding. 66 One might therefore be inclined to leave out of account the shortcomings described up to now with regard to the determination of injury. The following con- siderations show that such a lenient approach would be absolutely inappropriate in this case.

94. At the hearing, the Commission repre- sentative admitted in reply to a question put by myself that it could not properly explain this inconsistency. It is significant that in the 93. The treatment of the EC manufacturers' rejoinder the Council passed over in silence production and capacity utilization by the the applicant's complaints in this connection, Community institutions is also inexplicable. merely confining itself to correcting an error First, it is claimed that the EC manufactur- on the part of the applicant, which it had ers' production declined between 1986 apparently already corrected itself. 70 and 1989 and, taking 1986 figures as the yardstick, amounted to only 97% in 1989. It is claimed that capacity utilization also dete- riorated. If 1986 is again taken as the base year and if the increase in capacity which has taken place in the meantime is left out of account, capacity utilization in 1989 amounted to 97% (of the figure for 1986). From what I have stated so far, it should already be clear that what is involved here is a manifest error which is most probably attributable to a calculation error. I can rely in support of this proposition on a document submitted by the Council.

In the annex to the rejoinder, the Council it appear desirable quite generally to investi- submitted a document intended to provide gate very thoroughly the Community insti- information about consumption in the Com- tutions' activities in the sphere of anti- munity, the growth of imports and the dumping law whenever actions are brought. effects on the Community industry. It is It will have to be trusted that the Court of apparently an internal working document First Instance, which will have jurisdiction listing the figures referred to in the regula- over such cases in future, will show the same tion. Against each of the figures for produc- diligence as it has exhibited to date in exam- tion and capacity utilization appears, in addi- ining competition-law cases. tion to a reference to the place in which the figures are to be found in Regulation N o 1386/91, the word 'error'. There is then in every case a new line showing other fig- ures for 1989; on the right of those figures appears the word 'real'.

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tested regulation nevertheless exhibited a mined with regard to this point, it might be 'certain consistency'. For my part, I would considered that the contested regulation is refer to what I have observed above. vitiated by a defective statement of reasons 72 rather than by a substantive error. It is diffi- cult to draw the demarcation Une in this area. Since, however, I consider that the defects found did not deprive the applicant of the chance properly to exercise its right to bring proceedings under Article 173 of the EC The only observation which stands up to any Treaty, it appears more appropriate to me to examination after all that is that relating to assume that there was a substantive error. 73 the decline in the EC manufacturers' share of the Community market from 78.4% (1986) to 60.5% (1989). However, the imposition of anti-dumping duties cannot be based on that fact alone, especially since those data are based on figures which include products not covered by the investigation and must there- — The issue of discrimination fore be regarded as unreliable. 71

That argument is mistaken. The contested regulation was adopted by the Council, as provided in Regulation N o 2423/88.

— Infringement of the principles of sound administration

— Misuse of powers

101. The applicant claims that there has been an infringement of the principles of sound administration in so far as the Community 103. Lastly, the applicant claims that the institutions did not respond to all the argu- Community institutions misused their pow- ments and facts which it put forward and the ers within the meaning of Article 173 of the Commission did not notify an essential con- EC Treaty. The Council was not guided by sideration to the Council. These are obvi- the interest of the Community but by a ously issues which belong in the realm of the desire to protect a Community industry infringement of the rights of the defence and which did not require protection. of the duty to provide a statement of rea- sons, and I have already discussed them under those heads.

In view of the foregoing considerations, such a suspicion cannot be dismissed completely out of hand. However, it must be pointed — Lack of competence out that, according to the case-law, it has to be shown 'on the basis of objective, relevant and conclusive evidence' that the measure in question was adopted in order to achieve purposes other than those for which it was intended. 74 The applicant has not adduced such evidence. 102. The applicant further relies on the fact that, under Article 12(1) of Regulation N o 2423/88, the Council is competent to 74 — See the judgment in Nakajima, cited in footnote 26, para- impose the definitive anti-dumping duty. It graph 134.

— o r d e r the C o u n c i l t o p a y the costs, w i t h the exception of those of the inter- veners, w h i c h s h o u l d bear their o w n costs.

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