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5. Article 2(3) of the basic regulation tion and a reasonable margin of defines the 'normal value' of the like profit ...'. 5 product as follows:

6. Article 2(6) of the basic regulation pro- vides: 'For the purpose of this regulation, the normal value shall be:

'Where a product is not imported directly from the country of origin but is exported to the Community from an intermediate country, the normal value shall be the (a) the comparable price actually paid or comparable price actually paid or payable payable in the ordinary course of trade for the like product on the domestic market for the like product intended for con- of either the country of export or the sumption in the exporting country or country of origin. The latter basis might country of origin ... be appropriate inter alia where the product is merely transhipped 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.' (b) where there are no sales of the like product in the ordinary course of trade on the domestic market of the export- ing country or country of origin, or when such sales do not permit a proper comparison: I I — Facts and procedure

Facts giving rise to the dispute (i) the comparable price of the like product when exported to any third country ...; or 7. The product to which the contested regulation related was aspartame, a

12. On 22 March 1991 the Commission informed them of the main facts and considerations on the basis of which it intended to propose that the Council 9. During the investigation period, namely impose a definitive anti-dumping duty. from 1 January to 31 December 1989, NutraSweet was the sole producer of aspartame in the United States. Ajinomoto for its part was the sole producer of aspartame in Japan. Except for a few direct sales to independent customers in the Community, or in the United States for 13. On 27 May 1991 the Council adopted export to the Community, aspartame was the contested regulation, which instituted distributed in the Community through a definitive anti-dumping duties on the appel- jointly owned subsidiary of NutraSweet lants' imports. 8Article 2 of that regulation and Ajinomoto, the Swiss company NutraSweet AG. 6 — OJ 1990 C 52, p. 12. 7 — Commission Regulation (EEC) No 3421/90 of 26 Novem- ber 1990 imposing a provisional anti-dumping duty on imports of aspartame originating in Japan and the United States of America (OJ 1990 L 330, p. 16, hereinafter 'the provisional regulation'). In this Opinion I shall also use the term 'provisional regulation' to mean, in general terms, any regulation by which the Commission institutes a provisional anti-dumping duty. Further, I shall use the term 'definitive regulation' to mean any regulation by which the Council 10. Following a complaint filed by Holland institutes a definitive anti-dumping duty and orders defini- tive collection of provisional anti-dumping duties. Sweetener Company Vof, on 3 March 1990 8 — The definitive anti-dumping duty was fixed at ECU 27.21 the Commission initiated an anti-dumping per kilogram for imports of aspartame originating in Japan and ECU 25.15 per kilogram for imports from the United proceeding concerning imports of aspar- States.

18. The appellants brought their action at 16. The institutions also used actual Amer- first instance on 6 September 1991. 10 They ican prices for Japanese aspartame. The requested annulment of the contested regu- Council observed that the Japanese product lation in its entirety or, in the alternative, to was not imported from Japan to the the extent to which it concerned them. Community direct but was sold to Nutra- Sweet in order to be re-exported to the Community market. Under Article 2(6) of 10 — They lodged their application at the Court of Justice, the basic regulation, the Council therefore which remitted the cases to the Court of First Instance by an order of 18 April 1994 in application of Council Decision 93/350/Euratom, ECSC, EEC of 8 June 1993 amending Decision 88/591/ECSC, EEC, Euratom estab- lishing a Court of First Instance of the European Commu- 9 — The contested regulation was repealed by Council Regula- nities (OJ 1993 L 144, p. 21), as amended by Council tion (EC) No 1936/95 of 3 August 1995 (OJ 1995 L 186, Decision 94/149/ECSC, EC of 7 March 1994 (OJ 1994 p. 8). L 66, p. 29).

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They pointed out that, during the investiga- tion period, the manufacture and distribu- '126 There is nothing in the wording of the tion of aspartame were protected by a basic regulation which indicates that patent in the United States (which was in the imposition of anti-dumping duties force until 1992), but that the patents is dependent on any factor other than covering the Member States had already an injurious price differentiation as expired (in 1988). between the prices charged in the domestic market (in this instance, the

11 — Only the pleas in law here referred to are relevant to these appeal proceedings. 13 — Paragraph 121 of the contested judgment. 12 — Paragraph 120 of the contested judgment. 14 — Paragraph 123 of the contested judgment.

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United States market) and those the Community judicature to exercise its charged in the export market (in this power of review'. 15 case, the Community market).

As regards the claim that sufficient reasons '179 ... the Community institutions deter- were not given, the Court of First Instance mined the normal value on the basis held that the explanations given in the of the price paid or payable on the contested regulations 'were sufficient to make the persons concerned aware of the reasons for the measure and thus enable 15 — Paragraph 133 of the contested judgment. them to defend their rights, and to enable 16 — Paragraphs 169 to 175 of the contested judgment.

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domestic market of the country of The institutions are under a duty to provide export (the United States market). the interested parties with, first, the information available on the allegations and evidence submitted by the complai- nant(s) and, secondly, the correctness and relevance of the facts alleged and the evidence relied on. That obligation on the part of the institutions arises before provi- 180 By merely asserting that that price sional anti-dumping duties are imposed. could not be used because the product However, in this case, the Commission in question was covered by a patent, failed to inform the appellants of the main [Ajinomoto] has not shown that it was facts and considerations on the basis of not comparable (see paragraphs 126 which it intended to impose provisional to 129 above). anti-dumping duties.

181 Moreover, the criteria which would 25. At paragraphs 87 and 88 of the con- have allowed the Community institu- tested judgment, the Court of First Instance tions to use the prices prevailing in the held as follows: country of origin (in this instance, Japan) were not fulfilled in the present case ...

28. The institutions for their part request that the appeal be dismissed and that the appellants be ordered to pay the costs of 88 Consequently, it is necessary in the the appeal. present case to consider whether the right of the parties concerned to a fair hearing was respected in the course of the procedure leading to the adoption of the contested regulation imposing a definitive duty and ordering the defini- tive collection of the provisional 29. In support of their appeal, the appel- duties.' lants rely on three common grounds of appeal:

26. In the rest of its reasoning, 18 the Court of First Instance found that the appellants' right to be heard was in fact respected during the procedure leading to the adopt- — infringement of Article 2(3) of the ion of the contested regulation. It therefore basic regulation; held the plea to be unfounded and dis- missed the action in its entirety.

— infringement of Article 190 of the IV — The appeal Treaty;

27. By this appeal, the appellants are asking that the Court annul the contested — infringement of essential procedural 18 — Paragraphs 89 to 118 of the contested judgment. requirements.

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In the contested judgment the Court of First Findings Instance found that in no circumstances can the fact there is a patent protecting sales of the product on the exporter's domestic market influence 'price comparability' within the meaning of Article 2(3) of the 36. In support of their first ground of basic regulation. appeal, the appellants essentially put for- ward two arguments. They claim:

The appellants acknowledge that the ques- (a) that the Court of First Instance erred in tion of the interpretation of the terms law in finding that a patent on the 'comparable price' and 'proper compari- exporter's domestic market can never son' in Article 2(3) was not expressly affect 'price comparability' within the broached in the contested judgment. How- meaning of Article 2(3) of the basic ever, they argue that, by deduction, 20 the regulation; and only possible conclusion is that the Court of First Instance decided that the existence of a patent was not a factor capable of affecting 'price comparability'.

(b) that Article 2(3) of the basic regulation provides that, where actual prices are not sufficiently 'comparable' to export prices to the Community, the normal value must be established on the basis of a constructed value in accordance 35. In support of their own interpretation with Article 2(3)(b)(ii). of Article 2(3) of the basic regulation, the appellants rely on various factors, namely: the wording of that provision and in particular the term 'comparable price'; the structure of the basic regulation; the objec- tives of Community anti-dumping legisla- tion; the General Agreement on tariffs and 37. However, both those arguments are, in trade and the Agreement on the implemen- my view, based on a misreading of the tation of Article VI of the General Agree- contested judgment and the basic regula- ment on tariffs and trade; 21 American law; tion. and intellectual property law.

In that regard, the Court of First Instance held: 'The criteria of the market structure or the level of competition are not in themselves decisive for the purposes of Contrary to the appellants' claim, rejection applying a constructed normal value ...', of that argument does not equate to a provided that the actual prices 'are the finding that the existence of a patent on the result of market forces'. 23 exporter's domestic market can never influ- ence the way in which the institutions are to establish the normal value. On the contrary, the Court of First Instance indi- cated that it might do so if it is established that, because of the patent, the actual prices are no longer 'the result of market forces'. The Court of First Instance therefore required that the appellants prove a specific fact to be true. It asked them to show that, because of the patent owned by Nutra- Sweet, the prices on the American market could no longer be considered to be 'the result of market forces', that is to say, the result of the normal interplay of supply and 39. Secondly, it must be remembered that demand. But the appellants did not demon- Article 2(3) of the basic regulation provides strate that to be so in this case. The Court for three distinct methods of establishing normal value.

22 — Paragraph 121 of the contested judgment. 23 — Paragraph 127 of the contested judgment. 24 — Idem (emphasis added).

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Under the first method, the normal value is 41. In that regard, the Court of Justice and to be determined on the basis of the actual the Court of First Instance have consist- price, that is to say on the basis of the ently held that: 'comparable price actually paid or payable in the ordinary course of trade for the like product intended for consumption in the exporting country or country of origin' (Article 2(3)(a)).

Finally, under the third method, the institu- tions are to determine the normal value on the basis of a 'constructed value' (Art- icle 2(3)(b)(ii)). 'The ordinary course of trade is a concept which relates to the nature of sales them- selves. It is designed to exclude, for the determination of the normal value, situa- tions in which sales on the domestic market are not made under conditions correspond- ing to the ordinary course of trade, in particular where a product is sold at a price 40. Article 2(3)(b) of the basic regulation below production costs or where trans- states that the institutions are to use the actions take place between parties which second two methods of calculation when 'there are no sales of the like product in the ordinary course of trade' or when 'such 25 — Case C-105/90 Goldstar v Council [1992] ECR I-677, paragraph 12 (emphasis added). See also Case T-118/96 sales do not permit a proper comparison'. Thai Bicycle v Council [1998] ECR II-2991, paragraph 46.

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are associated or have a compensatory the two exceptions provided for by Art- arrangement with each other.' 26 icle 2(3)(b) of the basic regulation.

Furthermore, '[t]he requirement that domestic sales must permit a proper com- 44. However, the appellants do not in this parison relates to the question as to case rely on either of those two possibili- whether those sales are sufficiently repre- ties. At no point in these proceedings have sentative to serve as a basis for the deter- they claimed that, because there is a patent mination of the normal value. Transactions owned by NutraSweet, sales of aspartame on the domestic market must reflect normal on the American market did not take place behaviour on the part of purchasers and 'in the ordinary course of trade' or did not result from normal patterns of price for- allow a 'proper comparison'. mation'. 27

28 — The issue of 'price comparability' must be examined in the context of Articles 2(9) and (10) of the basic regulation which provide: 'The normal value ... and the export 43. In order for their appeal to succeed, the price ... shall be compared as nearly as possible at the same time. For the purpose of ensuring a fair comparison, appellants must therefore show that the due allowance in the form of adjustments shall be made in Court of First Instance erred in law in each case, on its merits, for the differences affecting price comparability ...' (Article 2(9)(a), emphasis added). See in refusing to hold that the situation in this regard Joined Cases 294/86 and 77/87 Technomtorg v Commission and Council [1988] ECR 6077, paragraph question falls within the scope of one of 34. Furthermore, the 'comparable price' within the meaning of Article 2(3)(a) of the basic regulation is the normal value established on the basis of the first sale to an independent buyer (see Cases 277/85 and 300/85 Canon and Others v 26 — Goldstar v Council, cited above, paragraph 13. See also Council [1988] ECR 5731, paragraph 19; C-171/87 Canon Thai Bicycle v Council, cited above, paragraphs 47 and 48. v Council [1992] ECR I-1237, paragraph 12; and 27 — Thai Bicycle v Council, cited above, paragraph 49. See also C-174/87 Rucoh v Council [1992] ECR I-1335, paragraph Goldstar v Council, cited above, paragraph 15. 18).

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48. From an economic point of view, In my view, Article 177 of the EC Treaty 'dumping' is traditionally defined as 'price (now Article 234 EC), which authorises the discrimination between national markets'. Court on occasion to infer what is the real issue in a reference for a preliminary ruling under the principle of judicial cooperation instituted by that article, 29 Article 168(a) of the EC Treaty (now Article 225 EC) and Article 51 of the EC Statute of the Court of Justice do not authorise the Court to compensate for any deficiencies in an In that regard, economists generally con- appeal, inter alia, by substituting any sider that it is necessary that three condi- particular argument for one relied on by tions be fulfilled in order for there to be the appellant. such discrimination. 31 They are as follows: (1) a certain economic power — a mono- poly or an oligopoly — on the part of the person dumping the goods on the market where prices are high; (2) 'separability' of the various markets in question; and (3) Furthermore, I would point out that the different price elasticity in the markets. appellants in this case constructed their

30 — See in particular paragraphs 7 to 12 of the defence. 29 — See inter alia Case 16/65 Schwarze [1965] ECR 1081 and 31 — See EC Anti-Dumping Law and Practice, E. Vermulst and 1/71 Cadillon [1971] ECR 351, paragraph 4. P. Waer, Sweet & Maxwell, London, 1996, p. 179.

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In Anti-Dumping and Anti-Subsidy Law, 32 that there is such a monopoly and such a Beseler and Williams explain those three difference in price elasticity should be conditions as follows: sufficient to preclude following the method of determining normal value based on actual prices.

Thus, in some anti-dumping proceedings, the institutions have determined the normal value of the product on the basis of actual prices, even though competition on the 49. It follows that, from a strictly economic domestic market on the country of export point of view, a monopoly on the exporter's was limited by a system of price control by domestic market and a difference in price the public authorities. 35 In the 'Freezers elasticity between the domestic market and the export market are regarded as factors inherent in price discrimination. I therefore 34 — See, inter alia, Anti-Dumping and other Trade Protection Laws of the EC, by I. Van Baci and J-F. Bellis, CCH find it difficult to see why, legally, the fact Europe, Bicester, 1996, 3rd edition, p. 71 and EC Anti- Dumping Laic — A Commentary on Regulation 384/96, by W. Müller, N. Kahn and FI-A. Neumann, John Wiley & Sons, Chichester, 1998, p. 69. 35 — See, in particular, Commission Decision (EEC) 32 — Sweet & Maxwell, London, 1986, p. 41 (emphasis added). 83/360/EEC of 18 July 1983 terminating the anti-dump- 33 — For more detail sec in particular The Economics of ing proceeding in respect of imports of certain pears in Imperfect Competition by J. Robinson, MacMillan & syrup originating in Australia, the People's Republic of Co. Ltd, London, 1961, p. 179 et seq. (particularly China and the Republic of South Africa (OJ 1983 L 196, pp. 184 and 185). p. 22, especially paragraph 8 of the recitals).

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from the Soviet Union' case, 36 the Com- the exporter's domestic market is not a mission even indicated that it: reason to derogate from the principle laid down in Article 2(3)(a) of the basic regula- tion.

54. In my view, even where competition on 52. There is another factor which leads me the domestic market is restricted by the to the view that the existence of a patent on existence of a patent, domestic sales none the less continue to reflect and to be the result of 'normal patterns of price forma- 36 — Commission Regulation (EEC) No 2800/86 of 9 Septem- tion'. ber 1986 imposing a provisional anti-dumping duty on imports of certain deep freezers originating in the USSR, accepting the undertakings in connection with the investi- gation of imports of certain deep freezers originating in Yugoslavia and the German Democratic Republic and 39 — According to the case-law, that requirement is satisfied terminating the investigation, and terminating the proced- where the volume of sales realised by the manufacturer ure concerning imports of certain deep freezers (OJ 1986 concerned on the domestic market exceeds 5% of the L 259, p. 14). volume of sales for export to the Community (see Goldstar v Council, paragraph 16 and Thai Bicycle v Council, 37 — Paragraph 7 of the recitals (emphasis added). See also paragraph 50). However, it is possible to derogate from Decision 83/360, cited above, paragraph 8 of the recitals. that 5% criterion where there are exceptional circum- 38 — E. Vermulst and P. Waer, cited above, p. 179. stances (see Goldstar v Council, paragraphs 17 to 25).

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Even if there is a monopoly, a patent-holder 56. I therefore propose that the Court still determines his prices on the basis of his dismiss the first ground of appeal as own commercial strategy. Thus he may unfounded. decide to charge high prices if he wishes to maximise profits on his invention quickly or to present his product as a luxury article. 40 Conversely, he may, notwith- standing his monopoly, decide to charge relatively modest prices if he wishes to make rapid inroads into the market or to acquire a larger customer base. Second ground of appeal: infringement of Article 190 of the Treaty

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the Court. The Court has consistently held First Instance, which the Court of Justice that: does not have jurisdiction to undertake'. 43

'[I]t follows from those provisions that an 59. However, the appellants here confine appeal must clearly state which aspects are themselves to rehearsing the arguments criticised in the judgment which the Court they submitted at first instance without is requested to set aside and the legal specifically identifying the error in law arguments which specifically support the allegedly vitiating the contested judgment. request'. 41

Before the Court of First Instance they In Bergaderm and Goupil v Commission, 42 claimed that, 'by failing to state the reasons the Court of Justice held as follows: for finding that the patent-protected prices were comparable to prices for export to the Community, the defendant ... committed a breach of its obligation to provide a statement of reasons (Article 190 of the Treaty).' 44

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infringement of Article 190 [of the during the procedure leading to the adopt- Treaty] ...'. 45 ion of the definitive regulation. 46

60. To the extent that the appellants are simply asking for the arguments they 62. The appellants point out that it is a submitted at first instance to be reheard, fundamental principle of Community law the second ground of appeal must be that the rights of the defence be observed. dismissed as manifestly inadmissible. They claim that that principle requires the Commission to inform the interested par- ties, before adopting a provisional regula- tion, of the principal facts and considera- tions on the basis of which it intends to impose provisional anti-dumping duties.

Third ground of appeal: infringement of essential procedural requirements

63. However, contrary to the finding of the Court of First Instance, a breach of that obligation in the course of the procedure leading to the adoption of the provisional Arguments of the appellants regulation would irreversibly affect the legality of the definitive collection of the provisional duties. 61. By their third ground of appeal, the appellants claim that the Court of First Instance infringed essential procedural requirements. 64. In support of their theory, the appel- lants essentially rely on two arguments. 47

In that case, Neotype was asking for annulment of a provisional regulation and of a definitive regulation both of which were adopted following an investigation procedure. The applicant considered that the provisional regulation was unlawful on Secondly, it follows from Article 12(2)(a) the ground that the Commission (1) had of the basic regulation that the existence of only informed it very late that the investig- provisional anti-dumping duties is a pre- ation procedure was being reopened and requisite for definitive collection of those (2) had adopted the provisional regulation duties. Definitive collection of provisional on a date when its observations could not duties can only be ordered if the provi- reasonably have been considered. 49 Neo- sional duties have already been imposed by type claimed that, because the provisional the Commission. Therefore, any illegality regulation was illegal, the provision in the vitiating the provisional regulation must definitive regulation collecting definitively necessarily entail the illegality of definitive the provisional anti-dumping duties should collection of the provisional duty. be annulled.

67. The Court of Justice, in deciding that plea in law, found as follows: 50

Findings

'... Neotype contends that the definitive collection under Article 2 of the definitive regulation of the amounts secured as provi- sional duties is unlawful, inasmuch as the 65. The appellants essentially submit that provisional regulation was null and void an infringement of the rights of the defence during the course of the procedure leading to the adoption of the provisional regula- 48 — Joined Cases C-305/86 and C-160/87 [1990] ECR I-294J. tion necessarily means that definitive col- 49 — See the Report for the Hearing in Neotype (paragraph lection of the provisional anti-dumping IU.2(a)(i)). 50 — Paragraphs 68 to 70 of the judgment in Neotype (emphasis duties is illegal. added).

Just as in Neotype, the appellants argue that the provisional regulation is illegal because their right of defence was infringed in the course of the procedure leading to The submissions put forward by Neotype the adoption of that regulation. Just as in against the provisional regulation cannot Neotype, the appellants argue that the fact be relied on against the definitive regula- that the provisional regulation is illegal tion. Neotype's first submission that the means that the definitive collection of the provisional regulation is unlawful owing to provisional anti-dumping duty must also be an irregularity occurring in the hearing legal. However, just as in Neotype, the procedure does not affect the definitive Community judicature found that the collection of the provisional duty. Even if appellants were afforded an opportunity Neotype was not informed in due time of to submit their arguments prior to adoption the imposition of the provisional duty, that of the definitive regulation. 52 could not affect the definitive collection of that duty, since Neotype had the opportun- 51 — The appellants claim that the 'defects' relied on by ity of making known its arguments before Neotype reiate to 'minor aspects' of the investigation the definitive regulation was adopted.' procedure and 'cannot he equated with the infringement of a fundamental principle of Community law, such as a failure to provide any information regarding the imposi- tion of extremely severe anti-dumping measures' (para- graph 103 of Ajinomoto's reply and paragraph 101 of NutraSweet's reply). However, the appellants do not explain why the Court is asked to distinguish between irregularities relating to 'minor aspects' of the investigation procedure and those relating to 'fundamental principles'. Furthermore, the appellants do not explain what is to be understood by 'minor aspects' and 'fundamental princi- ple'. The other arguments advanced by the appellants (at paragraphs 104 and following of the reply filed by 68. It is clear from the judgment in Neo- Annomoto and paragraphs 102 and following of the reply filed by NutraSweet) in reality serve to demonstrate that type that an illegality in a provisional the Commission is bound to communicate to the interested parties, before it adopts the provisional regulation, the regulation does not affect the legality of main facts and considerations on the basis of which it is the definitive collection of provisional contemplating imposing provisional duties. For the reasons set out in footnote 46 of this Opinion, those arguments are duties unless that illegality is reflected in irrelevant. the definitive regulation. 52 — See paragraphs 89 to 118 of the contested judgment.

Costs

72. Finally, Ajinomoto claims that the Court of First Instance infringed Art- icles 2(3) and (6) of the basic regulation 76. Under Articles 69(2) and 118 of the by finding that the institutions were right to Rules of Procedure of the Court of Justice, determine the normal value of Japanese the unsuccessful party is to be ordered to aspartame on the basis of prices charged in pay the costs if they have been applied for the United States. in the successful party's pleadings. Since the appellants have been unsuccessful, they must be ordered to pay the costs in accordance with the application to that effect made by the institutions in their pleadings.

73. However, the appellant does not invoke any separate argument in support of this 53 — See paragraph 118 of Ajinomoto's appeal.

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Conclusion