C-26/96

3. Between 21 July 1988 and 31 October 1989 Rotexchemie imported a total of 667 000 kg of potassium permanganate, CN 5. Following the rejection of its complaint, code 2841 60 00 0100, for release into free Rotexchemie appealed to the Finanzgericht circulation. In the 30 declarations which it Hamburg, claiming that Regulation No 1531/88, pursuant to which the post- clearance collection of the anti-dumping * Original language: Spanish. duties had been effected, was void. While 1 — OJ 1988 L 138, p. 1. it admitted that the imported potassium

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adoption of Regulation (EEC) No 2495/86, imposed a provisional anti-dumping duty on which imposed a provisional anti-dumping imports of potassium permanganate originat­ duty on those imports. By Decision ing in China, including that produced and/or 3 86/589/EEC the Commission accepted the exported by Sinochem. At the same time, the undertakings on prices given by the Chinese Commission initiated a new anti-dumping undertaking Sinochem and the Czechoslova- procedure, which led to the adoption of kian and German producers. Accordingly, Regulation No 1531/88, the validity of 4 Regulation (EEC) No 3661/86 imposed a which is challenged in the present case, mak­ definitive anti-dumping duty only on ing definitive the provisional anti-dumping imports of potassium permanganate originat­ duty imposed on imports from the People's ing in China, with the exception of those Republic of China. exported by Sinochem.

11. In December 1992 the Commission pub­ 6 lished a notice concerning the expiry of the anti-dumping duty applicable to imports of potassium permanganate originating in China. The Community producers lodged a 10. In 1987 the Community industry pro­ request for a review and the Commission vided the Commission with evidence that initiated a new procedure, which led to the the Chinese undertaking Sinochem had failed 7 adoption of Regulation (EC) No 2819/94 to comply with its undertakings and that it imposing a new definitive anti-dumping duty had exported potassium permanganate to on imports of potassium permanganate origi­ France and Spain at extremely low prices. nating in the People's Republic of China. After verifying that information, the Commission, by Regulation No 360/88, 5

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Regulation (EEC) No 2535/89, 8of a provi­ the potassium permanganate imported from sional anti-dumping duty which was made China. The other three grounds relied on by definitive by Regulation (EEC) No 385/90 Rotexchemie, namely the determination of and which expired in 1995. Similarly, the the injury to the Community industry, the Commission initiated in 1990 an investiga­ absence of Community interest and the tion into imports of potassium permanganate amount of the anti-dumping duty, it consid­ from the Soviet Union, in the context of ers, do not affect the validity of the regu­ which a provisional anti-dumping duty was lation. imposed by Regulation (EEC) No 10 1537/90; the procedure was closed by 1 Decision 91/24/EEC. 1

8 — Commission Regulation (EEC) No 2535/89 of 2 August 1989 imposing a provisional anti-dumping duty on imports of potassium permanganate originating in Czechoslovakia (OJ 1989 L 245, p. 5). 9 — Council Regulation (EEC) No 385/90 of 12 February 1990 I shall now go on to examine individually imposing a definitive anti-dumping duty on imports of each of those grounds which might affect the potassium permanganate originating in Czechoslovakia and definitively collecting the provisional anti-dumping duty validity of Regulation No 1531/88, although imposed on those imports (OJ 1990 L 42, p. 1). 10 — Commission Regulation (EEC) No 1537/90 of 28 May 1990 imposing a provisional anti-dumping duty on imports of potassium permanganate originating in the USSR (OJ 1990 L 145, p. 9). 12 — Joined Cases 103/77 and 105/77 Royal Scholten-Honig v 11 — Commission Decision 91/24/EEC of 11 January 1991 ter- Intervention Board for Agricultural Produce [1978] ECR minating the anti-dumping proceeding concerning imports 2037, paragraphs 16 and 17, and Case C-323/88 Sermes v of potassium permanganate originating in the USSR (OJ Directeur des Services des Douanes de Strasbourg [1990] 1991 L 14, p. 56). ECR I-3027, paragraph 13.

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I shall devote special attention to the one be determined in an appropriate and not which is the source of major doubts for the unreasonable manner on the basis of one of national court. the following criteria:

Determination of the normal value (a) the price at which the like product of a market economy third country is actu­ ally sold:

17. Once normal value has been determined, within the discretion enjoyed by the institu­ the export price is established; then the two tions in analysing complex economic situa­ are compared, making any adjustments nec­ tions'. essary to ensure that the comparison is accu­ rate. This comparison gives, where appropri­ ate, the dumping margin, defined in Article 2(13)(a) of the basic regulation as 'the amount by which the normal value exceeds the export price'. However, it has also held that the exercise of that discretion is not excluded from judicial review, although such review must be limited to verifying whether the relevant procedural rules have been complied with, whether the facts on which the choice is based have been accurately stated and whether there has been a manifest error of appraisal or a misuse of powers. That means, as regards the choice of reference country, that the Court will verify whether the institutions neglected to take account of essential factors for the purpose of establishing the appropriate nature of the 18. According to the case-law of the Court, country chosen and whether the information the aim of the basic regulation is to prevent contained in the documents in the case was account being taken of prices and costs in considered with all the care required for the non-market economy countries, which are view to be taken that the normal value was 14 not the normal result of market forces. determined in an appropriate and not unrea­ The use of a market economy reference sonable manner. 7 1

14 — Case C-16/90 Nolle v Hauptzollamt Bremen-Freihafen [1991] ECR I-5163, paragraph 10, and Joined Cases C-305/86 and C-160/87 Neotype Techmashexport v Com- mission and Council [1990] ECR I-2945. 16 — Nolle v HauptzoUamt Bremen-Freihafen, cited above, para- graph 11. See also Case T-164/94 Ferchimex v Council 15 — The problems associated with the use of the 'market [1995] ECR II-2681, paragraph 66. economy reference country' rule in calculating the normal value of goods imported from planned economy countries, 17 — Nolle v HauptzoUamt Bremen-Freihafen, cited above, para- and their possible solutions, are examined in depth by graphs 12 and 13, and Ferchimex v Council, cited above, López-Turado Romero de la Cruz, C , in El control jurisdic- paragraph 67. cional de la actividad comunitaria en materia de dumping y 18 — Nolle v Hauptzollamt Bremen-Freihafen, cited above, para- de subvención, University of Granada Press, Granada, 1993, graphs 14 to 29, and Ferchimex v Council, cited above, p. 162 et seq. paragraph 68.

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comparable volume and comparable methods on by the Commission in those regulations, of production, conditions of access to raw the following deserve particular mention: materials comparable with those in the coun­ try of export concerned and price conditions whose structure obeys market economy 19 rules.

19 — Sec, inter alia, Hermine, M.-A., Dumping en droit commu- nautaire. Éléments constitutifs, Jurisclasseur Europe, vol. 2311, p. 7 et seq.; Van Baci, I. and Bellis, J.-E, Anti- dumping and other Trade Protection Laws of the EC, CCH — There were no price controls in the Europe, Bicester, 1996, p. 92 et seq.; Vermufst, E. and Waer, United States and there was sufficient P., E. C. Anti-Dumping Law ana Practice, Sweet & Max­ well, London, 1996, p. 200 et seq. competition as a result of substantial

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imports of potassium permanganate from duty on imports from Spain allow the other countries. United States producer to maintain selling prices for potassium permanganate on its domestic market which are higher than those established by the Community producer. Consequently, the absence of effective condi­ tions of competition in the United States — The Commission verified that the prices prevents its being used as a reference country charged by the sole United States pro­ to determine the normal value of potassium ducer guaranteed it a reasonable but not permanganate exported to the Community. excessive profit.

24. Furthermore, the national court ques­ 22. Rotexchemie and the national court tions the reasons expressed by the Commis­ doubt that the choice of the United States as sion for using the United States and rejecting reference country satisfies the requirements India and Brazil as market economy refer­ of Article 2(5)(a)(i) of the basic regulation, ence countries for the purpose of calculating which provides that the normal value is to be the normal value of potassium permanganate determined in an appropriate and not unrea­ exported to the Community from China. sonable manner, on the basis of the price at which the like product of a market economy third country is actually sold for consump­ tion on the domestic market of that country.

In any event, the small-scale nature of pro­ duction in India, the high selling price on its 27. In Regulation No 2495/86, India was domestic market and the small quantities mentioned as another market economy produced (36 tonnes in 1985) in comparison country where potassium permanganate was with Chinese exports to the Community produced. However, the Community institu­ (1 850 tonnes in 1987) meant that India was tions chose the United States rather than manifestly inappropriate as a reference coun­ India as the reference country because the try for the purpose of determining the nor­ selling prices of potassium permanganate in mal value of potassium permanganate India were higher than those on the United imported into the Community from China. States domestic market, because no Commu­ nity importer and no undertaking exporting potassium permanganate from China sug­ gested India as reference country and because production in India was carried out on a small scale and, moreover, amounted to only 36 tonnes in 1985, the period investi­ gated prior to the adoption of Regulation 29. During the procedure prior to the adop­ No 2495/86. tion of Regulation No 2819/94, which imposed a new anti-dumping duty on imports of potassium permanganate from China, the Commission became aware of the existence of a potassium permanganate pro­ duction centre in Brazil. The 29th recital in the preamble to that regulation, in the Ger­ man and French versions ('In anderen Ländern wurde die Produktion eingestellt 28. The information on potassium perman­ (Brasilien) oder noch nicht aufgenommen ...' ganate production in India was submitted to and 'dans d'autres pays, la production a été the Commission by the Community pro­ interrompue (Brésil) ou n'a pas encore com­ ducer which had lodged the complaint and mencé ...'), gives the impression that potas­ the Community institutions justifiably took sium permanganate was produced in Brazil the view that if there had been any change in prior to 1994. That is not so, however, that information between 1985 and 1987 the because the production centre in Brazil was Community importers of Chinese potassium not in operation in 1994 and had not been permanganate would have brought it to their beforehand, as may be inferred from the notice. Since that did not happen, the English version (the original version) Community institutions had no evidence to ('Finally, production in other countries is not

31. Secondly, in the United States domestic market there were minimum conditions of competition, which ensured that the price of potassium permanganate was established in accordance with market economy rules. 34. The fact that there is only one producer of potassium permanganate in the United States does not eliminate competition in the United States market, owing to imports from other countries — of the same quality as domestic production, since permanganate is a primary chemical product. Although the 32. Rotexchemie and the Finanzgericht Commission and the Council did not pro­ Hamburg consider, however, that the prices vide the precise volume of those imports, of potassium permanganate in the United since that was confidential information sup­ States are not the result of market forces plied by the United States producer, they because there is only one producer in that indicated that they were significant. That country, the Carus Chemical Company, appears to be borne out by the 29th recital in which charges extremely high prices because the preamble to Regulation No 2819/94, it is not exposed to competition. They assert where it is stated that between 1 July 1992 that the anti-dumping duties imposed by the and 30 June 1993 imports accounted for United States authorities on imports of between 25 and 30% of the United States potassium permanganate originating in market.

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35. The sole United States producer was also 37. The anti-dumping duties on imports required to contend with competition from from Spain, at the rate of 16.6%, it appears, other oxidants, such as ozone and pure oxy­ were not collected by the United States gen, which compete with potassium perman­ authorities in 1987 and the rate was signifi­ ganate for numerous applications. That cir­ cantly reduced in subsequent years, accord­ cumstance has an effect on the prices of ing to the information submitted by the potassium permanganate and obliged the Spanish Government. Furthermore, there United States producer to maintain prices were imports from other countries, such as which were in reasonable proportion to pro­ the former German Democratic Republic, duction costs. which were not subject to anti-dumping duties.

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Injury to the Community industry 42. Article 4(5) of the basic regulation pro­ vides that 'Community industry' is to be interpreted as referring to 'the Community producers as a whole of the like product or to those of them whose collective output constitutes a major proportion of 40. Dumping is exceptionable only where it the total Community production of those causes or threatens to cause significant injury products ...'. to production within the Community. Accordingly, when the Commission has established the existence of a dumping mar­ gin, it must ascertain whether the dumped imports are causing injury to the Commu­ nity industry which manufactures a product 20 similar to the imported product. Thus 43. In the present case Rotexchemie has Article 4(1) of the basic regulation provides challenged only the fact that the sole Com­ as follows: munity producer, the Spanish undertaking Asturquímica SA, was regarded as a 'Com­ munity industry' affected by the dumping by the Chinese producers of potassium perman­ ganate. Rotexchemie takes the view that Article 4(5) of the basic regulation refers to '1 . A determination of injury shall be made 'producers', which means that a sole pro­ only if the dumped ... imports are, through ducer is unable to constitute a 'Community the effects of dumping ..., causing injury i. e., industry' for the purpose of the application causing or threatening to cause material of the anti-dumping duties. Were the con­ injury to an established Community indus­ trary to be accepted, the anti-dumping duties try or materially retarding the establishment would eliminate competition within the of such an industry ...'. Community market and operate to the advantage of the dominant position of the Community producer and of a pricing struc­ ture designed to ensure its profitability.

Community that producer necessarily repre­ Articles 11(1) and 12(1) of the basic regu­ sents the Community production as a whole lation, where the interests of the Community and there is no reason why it should not be so require. given protection against dumped imports in the form of the relevant anti-dumping duties, as was the case when Regulation No 1531/88 was adopted. That conclusion is supported by the practice of the Community institu­ tions and there is no indication to the con­ trary in the case-law of the Court of Justice. This third condition is not defined in the basic regulation, which does not specify what factors are to be taken into consider­ ation for the purpose of determining whether or not the interests of the Commu­ Furthermore, the application of anti­ nity call for the adoption of anti-dumping 21 dumping duties in respect of a product duties. This means that the Commission which has only one producer in the Com­ and the Council have a wide discretion, munity does not adversely affect free compe­ which has given rise to a practice which tition on the Community market, since anti­ principally consists in weighing up two dumping duties are intended to neutralize an opposing factors, namely the interest of con­ unfair commercial practice (which dumping sumers, users and processors in the Commu­ is), which is what in fact distorts the condi­ nity in having access to goods at the lowest tions of competition. possible price and the need to protect Com­ munity producers against dumping, in order to ensure fair competition in the economic sector concerned and hence the viability of 22 Community production. 45. The 16th to 22nd recitals in the preamble to Regulation No 1531/88 adequately estab­ lish the injury sustained by the Community potassium permanganate industry, consisting of a single undertaking. There is nothing therein to affect the validity of that regu­ lation. 47. In the main proceedings Rotexchemie argues that there is no Community interest in imposing an anti-dumping duty only on imports of potassium permanganate from China, because the prices of potassium per­ Community interest manganate within the Community will

49. Lastly, Regulation No 1531/88 imposed an anti-dumping duty on imports of potas­ sium permanganate originating in China because the Chinese undertaking Sinochem 48. That argument is unfounded and must failed to comply with the price undertaking be rejected. The Council provided sufficient which it had given to the Community insti­ justification in the 23 rd recital in the pre­ tutions and which was given effect in amble to Regulation No 1531/88 for the Decision 86/589, which avoided the defini­ Community interest in imposing an anti­ tive collection of the provisional anti­ dumping duty on imports of potassium per­ dumping duties established in Regulation No manganate from China. Those arguments, 2495/86. The Community institutions were which were already found in the 22nd to unaware that the Czechoslovakian and Ger­ 24th recitals in the preamble to Regulation man producers had thus far failed to comply No 2495/86, were set out in greater detail in with the price undertakings in which they Regulation No 2819/94, which establishes a had also participated. In 1989 the Commis­ new anti-dumping duty on the same prod­ sion was informed by the Community uct. industry that the Czechoslovakian exporter had failed to comply with the price under­ taking and, accordingly, adopted Regulation No 2535/89 imposing a provisional anti­ dumping duty, which was made definitive by Regulation No 385/90.

that was because potassium permanganate 2. Such Regulation shall indicate in particu­ from China was imported with false declara­ lar the amount and type of duty imposed, tions of origin with the intention of evading the product covered, the country of origin or payment of the anti-dumping duty. In the export, the name of the supplier, if practi­ present case, for example, the potassium per­ cable, and the reasons on which the Regu­ manganate imported by Rotexchemie was lation is based. initially declared as originating in Taiwan, where no production exists. According to the information provided by the Commis­ sion, that was not an isolated case, since in 1988 and 1989 approximately 667 tonnes of potassium permanganate from China, 3. The amount of such duties shall not imported into the Community with false exceed the dumping margin provisionally declarations of origin, were detected. estimated or finally established ...; it should be less if such lesser duty would be adequate to remove the injury.

51. Having regard to the foregoing reason­ ing, I consider that the Council adequately established the Community interest in the adoption of the anti-dumping duty provided for in Regulation No 1531/88.

53. According to Article 16(1) of the basic The rate of the anti-dumping duty regulation, '[w]here an importer can show that the duty collected exceeds the actual dumping margin ..., consideration being given to any application of weighted aver­ ages, the excess amount shall be reimbursed'.

52. The determination of the rate of the anti­ dumping duty is governed by Article 13 of the basic regulation, which provides as fol­ lows:

The rate of anti-dumping duty is arrived at by combining an ad valorem duty of 20% and a variable duty representing the differ­ ence between the import price and the amount of ECU 2.25 per kilogram. In any event, the higher of the two duties is col­ lected, and that will always be a minimum of In practice, the Community institutions 20%. impose three types of anti-dumping duties, namely specific, ad valorem and variable. In Regulation No 1531/88 they chose a combi­ nation of an ad valorem duty of 20% and a variable duty established with reference to a minimum price. The ad valorem duty is lower than the dumping margin of 30% 55. Rotexchemie considers that the anti­ established in Regulation No 1531/88. The dumping duties imposed on its imports of variable duty, which represents the difference potassium permanganate from China, at the between the export price of Chinese potas­ rate of 92 %, were much higher than the sium permanganate and the reference price dumping margin of 30% determined in of ECU 2.25 per kilogram, was established Regulation No 1531/88. Accordingly, it takes to prevent imports at prices considerably the view that the method of determining the below those prevailing when the Commis­ rate of anti-dumping duty provided for in sion carried out its investigation. The mini­ that regulation is contrary to Article 13(3) of mum price was established at a level which the basic regulation, pursuant to which the was substantially lower than the dumping amount of the anti-dumping duties is not to margin but which ensured sufficient profit exceed the dumping margin. for the Community producer. In contrast to the situation as regards the ad valorem duty, the dumping margin does not act as a ceiling in the case of the variable duty because a sig­ nificant drop in the export prices of Chinese potassium permanganate may lead, as in the

In the present case no factors have been disclosed such as to affect the validity of Council Regulation ( EEC ) No 1531/88 of 31 May 1988 imposing a definitive anti­ dumping duty on imports of potassium permanganate originating in the People's Republic of China and definitively collecting the provisional anti-dumping duty imposed on those imports .

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