CJEC, 5th chamber, May 7, 1987, No 255-84

The court (fifth chamber)

1 By an application lodged at the court registry on 29 october 1984, Nachi Fujikoshi Corporation, tokyo, japan, (hereinafter referred to as "nachi ") brought an action before the court under article 173 of the treaty for a declaration that council regulation no 2089-84 of 19 july 1984 imposing a definitive anti-dumping duty on imports of ball bearings with a greatest external diameter of not more than 30*mm originating in japan and singapore (official journal 1984, l 193, p.*1) is void.

2 By regulation no 744-84 of 19 march 1984 (official journal 1984, l 79, p. 8) the commission had imposed a provisional anti-dumping duty on imports of such small ball-bearings originating in japan and singapore.

3 The applicant seeks primarily a declaration that regulation no 2089-84 is void in its entirety and, in the alternative, a declaration that the said regulation is void only in so far as it affects the applicant.

4 Reference is made to the report for the hearing for the relevant regulations, the facts of the case and the submissions and arguments of the parties, which are mentioned or discussed hereinafter only in so far as is necessary for the reasoning of the court.

Admissibility

5 The council considers that the application is admissible only in so far as it is concerned with the anti-dumping duty imposed on the applicant. The council observes that the contested measure is a

Regulation and therefore only those of its provisions which are of direct and individual concern to the applicant may be contested in an application for a declaration of nullity.

6 The court has consistently held, in particular in its judgment of 21 february 1984 in joined cases 239 and 275-82 allied corporation and others v commission ((1984)) ecr 1005, that measures imposing anti-dumping duties, adopted pursuant to council regulation (eec) no 3017-79 of 20 december 1979 on protection against dumped or subsidized imports from countries not members of the european economic community (official journal 1979, l 339, p. 1), are liable to be of direct and individual concern, within the meaning of the second paragraph of article 173 of the treaty, to those producers and exporters who are able to establish that they were identified in the measures adopted by the commission or the council or were concerned by the preliminary investigations. The council does not deny that the contested regulation is liable to be of direct and individual concern to nachi, which is expressly named therein.

7 However, it should be noted that the contested regulation does not lay down general rules which apply to a whole group of traders without distinguishing between them but imposes different anti-dumping duties on a series of manufacturers or exporters of small ball-bearings established in japan and singapore who are expressly named, and also on other undertakings which are not named but which pursue the same activities in those same countries. Under those circumstances it must be concluded that nachi is individually concerned only by those provisions of the contested regulation which impose on it a specific anti-dumping duty and determine the amount thereof, and not by those provisions which impose anti-dumping duties on other undertakings.

8 It follows from the foregoing that the objection of inadmissibility raised by the council must be upheld and the applicant' s principal claim for a declaration that regulation no 2089-84 is void in its entirety must be dismissed. It is, however, necessary to examine the merits of the alternative claim for a declaration that those provisions of the contested regulation which are of concern exclusively to nachi are void.

Substance

9 The applicant makes various submissions which, in the light of the various arguments put forward, must be rearranged as follows:

(a) Several submissions concerning the unlawfulness of the method used for calculating the dumping margin: in that regard the applicant makes the following complaints:

(I) Different methods were used for calculating the normal value and the export price;

(II) The comparison thus made for purposes of establishing the dumping margin was inequitable;

(III) The adjustments made to the normal value and the export price were not the same.

(b) Several submissions concerning infringement of the principle that the amount of duty imposed should be proportional to the injury suffered by the community industry: in that regard the applicant makes the following complaints:

(I) The rejection of the price undertakings offered, without any consideration of them, was illegal and was not supported by an adequate statement of reasons;

(II) There is no connection between the amount of the duty imposed and the injury caused to the community by the applicant' s imports;

(III) The amount of the anti-dumping duty was fixed on the basis of official exchange rates for the japanese currency which did not reflect actual purchasing-power parities.

I - Submissions based on the unlawfulness of the method of calculating the dumping margin

10 In order to understand the scope of the submissions and arguments put forward by the applicant in this connection, it must be recalled first that under article 2*(2) and (3)*(a) of council regulation no 3017-79 a product is considered to have been dumped if its export price to the community is less than the normal value of the like product, that is to say the price paid in the ordinary course of trade for the like product intended for consumption in the exporting country. Article 2*(13)*(a) of the regulation states that the dumping margin means "the amount by which the normal value exceeds the export price ".

11 It follows from those provisions that the export price and the normal value constitute the terms of the comparison enabling the dumping margin to be established. Article 2*(13)*(b) of regulation no 3017-79 provides that "where prices vary, the dumping margin may be established on a transaction-by-transaction basis or by reference to the most frequently occurring, representative or weighted average prices", and according to article 2*(13)*(c), "where dumping margins vary, weighted averages may be established ".

12 It is clear from paragraph 11 of the preamble to the contested regulation that in this case the normal value was calculated on the basis of a weighted average of the prices paid on the domestic market. As is stated in paragraph 16 of the preamble, the export price was calculated according to a transaction-by-transaction method. It is clear from the documents before the court that under that method export prices above the normal value were taken into account after being artificially reduced to the level of the normal value and a weighted average was determined of all the export prices established, whether they were below the normal value or equal to normal value. The dumping margin was then determined by comparing the normal value calculated according to the weighted average method and the export price calculated according to the transaction-by-transaction method.

A - Submission concerning the difference in the methods used for calculating the normal value and the export price

13 The applicant claims that by using different methods to calculate the normal value and the export price the council disregarded the principle laid down in article 2*(9) of regulation no 3017-79, from which it is clear that, in order to make a fair comparison, the methods used to calculate the normal value and the export price should be identical.

14 It must be stated first that the procedure for calculating the normal value is laid down in article 2*(3) to (7) of regulation no 3017-79, and the procedure for calculating the export price is laid down in article 2*(8) thereof. Those provisions separately specify several different methods for calculating each of the terms of the comparison.

15 The fact that the methods of calculation which may be used are independent is confirmed by the aforesaid provisions of article 2*(13) (b) and (c) of regulation no 3017-79, which merely state the various possibilities for calculating the dumping margin without imposing any requirement that the methods chosen for calculating the normal value and the export price should be similar or identical.

16 Secondly, it should be pointed out that article 2*(9) of regulation no 3017-79 provides as follows:

" for the purposes of a fair comparison, the export price and the normal value shall be on a comparable basis as regards physical characteristics of the product, quantities, and conditions and terms of sale."

17 It is clear from that provision, first, that it is intended to define the adjustments which may be made to the normal value and the export price after they have been calculated according to the methods specified for that purpose and, secondly, that the adjustments provided for relate exclusively, as is stated in the eighth recital in the preamble to regulation no 3017-79, to differences found to exist as between the domestic market and the export market in the physical characteristics and quantities of products, in conditions and terms of sale, and in the level of trade.

18 It follows from the foregoing that regulation no 3017-79 does not require the normal value and the export price to be calculated according to the same method.

19 Consequently, this submission must be rejected.

B - Submission that the comparison thus made for the purpose of establishing the dumping margin is inequitable

20 The applicant considers that the use of different methods referred to above distorts the terms of the comparison in so far as the weighted average of all the sale prices for a large quantity of products on one market is inevitably lower than the price established on a transaction-by-transaction basis, without any weighting, for smaller quantities of goods sold on another market. Thus the calculation of the dumping margin in this case is both inaccurate and unjustified.

21 It should be noted that the choice between the different methods of calculation specified in article 2*(13)*(b) of regulation no 3017-79 requires an appraisal of complex economic situations. The court must therefore, as it has held in particular in its judgment of 11 july 1985 in case 42-84 remia and others v commission ((1985)) ecr 2545, limit its review of such an appraisal 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.

22 The line of argument put forward by the applicant is tantamount to alleging that the institutions made a manifestly incorrect appraisal of the facts in adopting a method of assessing the dumping margin which takes into account only a portion of the transactions concerned on the export market and therefore leads to an inequitable result.

23 Such a line of argument cannot be accepted. It must be stated first that, contrary to what the applicant maintains, the transaction-by-transaction method used by the commission, like the weighted average method, takes account of all sales and quantities sold for export and also involves the establishment of a weighted average of export prices. This method differs from the weighted average method inasmuch as prices above the normal value are artificially reduced to the level of the normal value and then included in the calculation of the weighted average of all the prices charged on the export market.

24 Secondly, it should be stressed that the freedom to choose one of the methods specified in article 2*(13)*(b) of regulation no 3017-79 is specifically intended to ensure the application of the method most appropriate to the purpose of the anti-dumping proceeding. Articles 2*(1) and 4*(1) of that regulation provide that the purpose of such a proceeding is to eliminate the injury or threat of injury caused by dumping to an established community industry.

25 The transaction-by-transaction method is the only method capable of dealing with certain manœuvres in which dumping is disguised by charging different prices, some above the normal value and some below it. The application of the weighted average method in such a situation would not meet the purpose of the anti-dumping proceeding, since that method would in essence mask sales at dumping prices by those at what are known as "negative" dumping prices, and would thus in no way eliminate the injury suffered by the community industry concerned.

26 It must therefore be accepted that the commission did not in this case commit any manifest error in its appraisal of the facts by applying the transaction-by-transaction method in order to calculate the dumping margin; this submission must therefore be rejected.

C - Submission that the adjustments made to the normal value and the export price were not the same

27 The applicant claims that the adjustments made to the normal value and the export price must be established after deducting the administrative costs incurred. The commission took account only of the costs incurred by its european subsidiaries and failed to take account of the administrative costs borne by its japanese subsidiary.

28 It should be stressed that, under article 2*(8)*(b) of regulation no 3017-79, the export price is established according to a constructed value where the price agreed for export is unreliable. That is the case in particular where, as here, the transactions are effected by parties which are associated or connected by a compensatory arrangement. The export price is then constructed on the basis of the price at which the imported product is first resold to an independent buyer or on any reasonable basis. In such a case, allowance is made for "all costs incurred between importation and resale ".

29 For the purpose of constructing the export prices, it is therefore a correct application of regulation no 3017-79 to deduct all the expenses incurred by nachi' s european subsidiaries.

30 It is true that article 2*(10) of regulation no 3017-79 provides that, if the export price and the normal value are not on a comparable basis in respect of the factors mentioned in article 2*(9), due allowance is to be made for differences which affect price comparability. That applies in particular to differences in conditions and terms of sale. In that regard, article 2*(10)*(c) provides as follows:

"allowances shall be limited, in general, to those differences which bear a direct relationship to the sales under consideration and include, for example, differences in duties and indirect taxation, credit terms, guarantees, warranties, technical assistance, servicing, commissions or salaries paid to salesmen, packing, transport,... Allowances generally will not be made for differences in overheads and general expenses, including research and development costs, or advertising...".

31 In that regard it should be noted that the allowances made under article 2*(10)*(c) of regulation no 3017-79 are different, as regards both their purpose and the conditions in which they are applied, from the allowances made in the construction of the export price.

32 Whereas the latter allowances are intended to determine the export price which corresponds to normal trading conditions, the allowances made under article 2*(10) are intended to rectify the export price or the normal value already calculated pursuant to the rules laid down in article 2*(3) to (8). The allowances provided for by article 2*(10) are made by reference to objective factors enumerated in particular in subparagraph (c) thereof; these factors correspond to the particular features of each market (domestic and export) and have a varying impact on conditions and terms of sale, thus affecting price comparability.

33 Moreover, whereas adjustments required for the purpose of constructing the export price are made automatically by the community institutions pursuant to the provisions of article 2*(8) of regulation no 3017-79, the adjustments provided for by article 2*(10) may also be made on a claim by an interested party. A party making such a claim must prove that its claim is justified, that is to say that the difference on which it relies concerns one of the factors listed by article 2*(9), that the difference affects price comparability and lastly, if, as in this case, it is a question particularly of differences in conditions and terms of sale, that those differences bear a direct relationship to the sales under consideration.

34 In this case it does not appear, either from the documents before the court or from the oral argument presented at the hearing, that nachi has succeeded in showing that its claim for adjustments under article 2*(10)*(c) of regulation no 3017-79 satisfied the conditions required by those provisions.

35 Those conditions in general exclude adjustments for differences in administrative costs, and nachi has not proved the existence of any special circumstance capable of justifying a derogation from the rule thus laid down.

36 This submission must therefore be rejected.

II - Submissions based on the breach of the principle of proportionality

A - Submission that the categorical rejection of the price undertakings offered by nachi was illegal and was not supported by an adequate statement of reasons

37 The applicant considers that the general statement in paragraph 24 of the preamble to the contested regulation that a price undertaking is not an appropriate means of combating dumping is not an adequate statement of the commission' s reasons for refusing to consider the undertakings offered and constitutes a breach of the principle of proportionality. In that regard the applicant claims that the power conferred on the commission by article 10 of regulation no 3017-79 to consider whether or not an offer of an undertaking is acceptable is intended to ensure that the anti-dumping duty imposed corresponds to the injury caused by the exporter in question.

38 First of all, it is clear from the documents before the court that the undertakings proposed by the applicant were rejected after being given individual consideration, in the course of which it was requested to express its views on the council' s criticisms of those proposals.

39 Next, it should be recalled, as regards the complaint that the statement of reasons was inadequate, that the court has consistently held, in particular in its judgment of 26 june 1986 in case 203-85 nicolet instrument v hauptzollamt frankfurt-am-main ((1986)) ecr 2049, that the statement of reasons required by article 190 of the treaty must disclose in a clear and unequivocal fashion the reasoning followed by the community authority which adopted the measure in question in such a way as to make the persons concerned aware of the reasons for the measure and thus enable them to defend their rights, and to enable the court to exercise its supervisory jurisdiction.

40 That requirement was satisfied in this case by the reasons set out in paragraph 24 of the preamble to the contested regulation, from which it is clear that past experience in the ball-bearings sector has shown that undertakings do not provide a satisfactory solution to the problems caused by instances of dumping in that sector.

41 Lastly, it should be stressed that the course of action adopted by the institutions was a correct application of the texts and fulfilled the function conferred upon them by the community rules.

42 No provision of regulation no 3017-79 compels the institutions to accept price undertakings which are offered. As the applicant has admitted, it is on the contrary clear from article 10 thereof that it is for the institutions, in the exercise of their discretionary power, to determine whether such undertakings are acceptable. Nachi has not shown that the reasons for refusing the undertakings offered which are set out in paragraph 24 of the preamble to the contested regulation and further supported in the council' s written observations exceeded the margin of discretion conferred upon the institutions.

43 In particular, the applicant has not refuted the specific arguments of the council to the effect that the undertakings offered were inadequate.

44 The submission put forward by nachi must therefore be rejected.

B - Submission that the amount of the anti-dumping duty is illegal in view of the slight degree of injury caused to the community industry by the applicant' s imports

45 The applicant claims that the amount of the anti-dumping duty imposed upon it does not correspond to the injury that its imports were likely to cause to the community industry. After stressing that the injury referred to by the institutions results from the aggregation of imports from japan and singapore, the applicant emphasizes that it imported small ball bearings only from japan and that its market shares in the community are very small.

46 This argument cannot be upheld. It is clear from article 4 of regulation no 3017-79 that the injury caused to an established community industry by dumped imports must be assessed as a whole, and it is not necessary (or, indeed, possible) to define separately the share in such injury which is attributable to each of the companies responsible.

47 The contested regulation defined individually the dumping margin attributable to each company, by reference to the origin of its imports, in this case japan. In the case of nachi the dumping margin was fixed at 9.65% and the definitive duty imposed upon it was equal to that amount, by reason of the extent of the injury suffered by the community industry as a whole.

48 It follows from the foregoing that, contrary to what the applicant maintains, the rate of duty imposed corresponds to the dumping margin and therefore to the injury caused to the community industry by its imports of ball-bearings.

49 The submission must therefore be rejected.

C - Submission that the amount of the anti-dumping duty was fixed on the basis of the official exchange rates for japanese currency

50 The applicant claims that by basing the rate of the anti-dumping duty on official exchange rates the council imposed on it an anti-dumping duty which exceeded the injury caused by its imports. The applicant argues that in accordance with the principle of proportionality account should have been taken not of official exchange rates but of consumer purchasing power-parities calculated by, among others, the organization for economic cooperation and development, the united nations and the federal office of statistics in wiesbaden.

51 In the first place, it appears from the documents before the court that fluctuations in the value of japanese currency had no effect on the determination of the injury suffered by the community industry, in so far as the sales by importers were assessed in the currency of the importing member state.

52 It is true, however, that the comparison between the normal value and the export price expressed in different currencies was carried out by converting prices expressed in yen on the basis of official exchange rates, and those rates therefore had an effect on the calculation of the dumping margin.

53 In that regard it should be pointed out that the purpose of defining a dumping margin is to correct the effect which imports of products from non-member countries at dumped prices actually had on the corresponding community industry. That effect can only be assessed in the light of the official exchange rates on the basis of which international trade transactions take place.

54 It should also be stated that in this case the institutions used an average exchange rate calculated over a period of 12 months in order to take account of fluctuations in the exchange rate between the beginning and the end of the period covered by the investigation.

55 It follows from the foregoing that this submission is unfounded and must therefore be rejected. Consequently, the application must be dismissed in its entirety.

Costs

56 Under article 69*(2) of the rules of procedure, the unsuccessful party is to be ordered to pay the costs. As the applicant has failed in its submissions, it must be ordered to pay the costs.

On those grounds,

The court (fifth chamber)

Hereby:

(1) Dismisses the application;

(2) Orders the applicant to pay the costs, including those incurred by the interveners.