CJEC, 5th chamber, May 7, 1987, No 258-84

The court (fifth chamber)

1 By an application lodged at the court registry on 2 november 1984, Nippon Seiko KK, tokyo, japan, (hereinafter referred to as "nsk ") brought an action before the court under article 173 of the treaty for a declaration that council regulation n°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 n°744-84 of 19 march 1984 (official journal 1984 n°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 n°2089-84 is void in its entirety. In the alternative, it seeks a declaration that the said regulation is void only in so far as it affects the applicant, that is to say that article 1 is void in so far as it fixes at 14.71% the definitive anti-dumping duty on small ball-bearings manufactured and exported by the applicant and that article 2 is void in so far as it orders that the amounts secured by way of the provisional anti-dumping duty applicable to the applicant should be definitively collected.

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) n°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 nsk, 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 nsk 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 n°2089-84 is void in its entirety must be rejected. 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 nsk are void.

Substance

9 The applicant makes various submissions which, in the light of the various arguments put forward, must be arranged 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 transaction-by-transaction method used to calculate the export price was inequitable;

(III) The statement of the reasons for choosing that method was inadequate;

(IV) The new method was adopted in breach of the principles of legal certainty, legitimate expectation and sound administration;

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

(b) Submission that the refusal to take account of the undertakings offered or at least of the price increases introduced by nsk was unlawful;

(c) Submission that no adequate statement of reasons was given for the assessment of the injury suffered by the community industry, which was considered equal to the dumping margin;

(d) Submission that the contested regulation authorized the definitive collection of the provisional anti-dumping duty without taking account of the fact that the definitive duty is less than the provisional duty.

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 n°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 n°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 if, as the council states, calculation of the normal value and calculation of the export price are, having regard to their economic context, different operations, they are none the less not independent of one another. According to the applicant, the possibility of choosing between the various methods of calculating the dumping margin specified in article 2*(13) of regulation n°3017-79 must be reconciled with the basic principle laid down in article 2*(9) of the regulation, which requires that the normal value and the export price should be calculated according to the same methods so that a fair comparison may be made.

14 It must be stated firstly that the procedure for calculating the normal value is laid down in article 2*(3) to (7) of regulation n°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 n°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 n°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 firstly 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 n°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 Contrary to what the applicant maintains, it follows that article 2*(9) of the regulation 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 transaction-by-transaction method used to calculate the export price is inequitable

20 The applicant claims that the result of the transaction - by-transaction method of assessing the export price applied by the contested regulation was that only sales at dumping prices were taken into account, while those at prices above the normal value were disregarded. The applicant considers that the method adopted therefore inevitably led to a finding of dumping and to the establishment of a dumping margin which had no connection with reality. In its view, only by assessing the export price according to the weighted average method could an equitable result have been achieved in this case.

21 It should be noted that the choice between the different methods of calculation specified in article 2*(13)*(b) of regulation n°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 does not take account of export prices above the normal value and thus gives rise to an inequitable result.

23 Such a line of argument cannot be accepted. It must be stated firstly that, contrary to what the applicant maintains, the transaction-by-transaction method does not exclude from the calculation of the dumping margin transactions at prices above the normal value. It merely artificially reduces such prices to the level of the normal value but includes them 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 n°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 statement of the reasons for choosing the transaction-by-transaction method is inadequate

27 The applicant considers that the reasons set out in paragraph 18 of the preamble to the contested regulation are inadequate in so far as it is not explained why the export price was not determined on the basis of an average of the prices established, as it had been in the past.

28 As 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, 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.

29 That requirement was satisfied in this case by the reasons set out in paragraph 18 of the preamble to the contested regulation, from which it is clear in particular that the change of method at issue was decided upon in order to eliminate the injury to the community ball-bearings industry which subsisted as a result of the application of the methods of calculation used previously, which permitted dumping to be compensated for by "negative" dumping.

30 The submission that the statement of reasons is inadequate must therefore be rejected.

D - Submission concerning the conditions in which the new transaction - by-transaction method was adopted

31 In support of this submission, the applicant claims that the undertakings given in 1981, which were based on the old methods of calculating the export price, remained in force until 22 march 1984, on which date the commission informed it that it was withdrawing its acceptance. The principles of legitimate expectation and of legal certainty and the rules of sound administration required that adequate advance notice of a change in the method of calculating the export price should be given so that traders might reorganize their commercial practices in order to comply with the community requirements.

32 In the first place it should be stressed that under article 14 of regulation n°3017-79 decisions to accept undertakings may be subject to review, which, according to paragraph (3) thereof, may result in the amendment, repeal or annulment of the measures adopted in connection with such undertakings. Therefore the principle of legal certainty did not prevent the measures adopted in 1981 from being re-examined.

33 Secondly, it should be recalled that under article 2*(13)*(b) of regulation n°3017-79, which entered into force before nsk' s undertakings were agreed upon, the transaction-by-transaction method is one of the methods which may be adopted by the institutions in order to calculate the dumping margin where, as in this case, prices vary.

34 Consequently, as the court held in its judgment of 28 october 1982 in case 52-81 faust v commission ((1982)) ecr 3745, where the institutions enjoy a margin of discretion in the choice of the means needed to achieve their policies, traders cannot claim to have a legitimate expectation that the means originally chosen will be maintained, since these may be altered by the institutions in the exercise of their powers.

35 Lastly, the rules of sound administration cannot prevent the institutions from using the powers conferred upon them by the regulations in force.

36 This submission must therefore be rejected.

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

37 The applicant claims that, in breach of article 2*(9) of regulation n°3017-79 and contrary to the statement made by the commission at paragraph 19 of the preamble to regulation n°744-84, the normal value and the export price were not established on a comparable basis, since the adjustments made to them were not the same.

38 Thus the applicant explains that when the export price was constructed all the expenses of its european subsidiaries were deducted, whereas only some of the corresponding expenses incurred on the japanese market were deducted from the normal value. In its opinion, that disparity in treatment resulted in the overestimation of the normal value and thus the dumping margin and is not justified because nsk' s sales on the japanese market are at the same level of distribution as its sales on the european market.

39 It should be stressed that, under article 2*(8)*(b) of regulation n°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 ".

40 For the purpose of constructing the export prices it is therefore a correct application of regulation n°3017-79 to deduct all the expenses incurred by nsk' s european subsidiaries.

41 It is true that article 2*(10) of regulation n°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...".

42 On the basis of that provision the applicant claims that various expenses deducted from the export price should also have been deducted from the normal value. In that respect it refers firstly to the cost of telephone communications and services connected with the customers of its japanese subsidiaries. It then refers to the activities of its technical service, which it claims is not, as the council maintains, a research and development department whose costs cannot be allowed, but a department providing pre-sales and post-sales service for japanese customers. Lastly, it refers to the freight incurred on the japanese market.

43 In that regard it should be noted that the allowances made under article 2*(10)*(c) of regulation n°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.

44 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.

45 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 n°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.

46 In this case it does not appear, either from the documents before the court or from the oral evidence presented at the hearing, that nsk had succeeded in showing that its claim for adjustments under article 2*(10)*(c) of regulation n°3017-79 satisfied the conditions required by those provisions.

47 As regards the allowances in respect of the cost of telephone communications, customer services and technical services, nsk has not established that those differences bore a direct relationship to the sales under consideration. Although it is true that article 2*(10)*(c) provides that allowances shall only "in general" be limited to differences which bear a direct relationship to sales, nsk has not established the existence of any special circumstance capable of justifying an exception to that general rule.

48 As regards the allowance claimed in respect of freight in japan, the council in its rejoinder contends that an allowance was made in that regard, and nsk has not shown that that statement is inaccurate.

49 The submission regarding the adjustments made to the normal value and the export prices must therefore be rejected.

II - Submission that the refusal to take account of the undertakings offered or at least of the price increases introduced by nsk was unlawful

50 The applicant claims that, after provisional anti-dumping duties were imposed by regulation n°744-84, it offered price undertakings and in addition communicated to the council the price increases which it had immediately introduced; however, the council took no account of those increases and did not refrain from imposing definitive anti-dumping duties. The applicant considers in particular that the reason for refusing to take into account the voluntary price increases - namely that such increases were made after the period covered by the investigation - is not valid since it fails to take account of the difference between provisional anti-dumping duties and definitive anti-dumping duties. Furthermore, regulation n°3017-79 makes no mention of an investigation period.

51 It must first be stressed that no provision of regulation n°3017-79 compels the institutions to accept price undertakings which are offered. On the contrary, it is 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. Nsk has not shown that the reasons for refusing the undertakings offered set out in paragraph 24 of the preamble to the contested regulation exceeded the margin of discretion conferred upon the institutions.

52 Secondly, it must be stated that regulation n°3017-79 makes no provision for the taking into account of voluntary price increases made after the period covered by the inquiry. The decision-making process includes an investigation, the initiation and course of which are governed by article 7. By allowing interested parties to make known their views the investigation is intended to allow the establishment of incontrovertible evidence providing a basis for the termination of the proceeding or the imposition of an anti-dumping duty. It is, at the same time, clear from the 14th and 15th recitals in the preamble to the regulation that the investigation procedure should not prevent rapid and efficient action by the community. In order to reconcile those two objectives, it is essential that the period covered by the investigation, during which the facts to be established occurred, should be of specified and limited duration.

53 It is therefore impossible to accept that the anti-dumping proceeding may not be terminated or a decision to impose a definitive anti-dumping duty may not be adopted merely because the companies which are subject to the provisional anti-dumping duty have made voluntary price increases after the end of the period covered by the investigation. The line of argument put forward by nsk is all the more unjustified since such price increases may, in appropriate cases, give rise to a review pursuant to article 14 of regulation n°3017-79, or result in a refund of the duty collected, in accordance with article 15 thereof.

54 This submission must therefore be rejected.

III - Submission that no adequate statement of reasons was given for the assessment of the injury suffered by the community industry which was considered equal to the dumping margin established

55 The applicant, which refers to the judgment of 23 may 1985 in case 53-83 allied corporation and others v council ((1985)) ecr 1621, claims that under article 13*(3) of regulation n°3017-79 the council is required to establish that the amount of definitive anti-dumping duties decided upon is necessary in order to remove the injury allegedly suffered by the community industry. In this case the council did not provide adequate reasons for the amount of the definitive duties adopted, in so far as it merely, in paragraph 21 of the preamble to the contested regulation, refers to the conclusions on injury reached by the commission in regulation n°744-84 and states that no fresh evidence regarding injury to the community industry has been submitted. The latter statement is inaccurate since the definitive anti-dumping duty imposed on nsk was lower than the provisional anti-dumping duty.

56 It must be stated firstly that paragraph 21 of the contested regulation expressly refers to the statements regarding the injury suffered by the community industry which are contained in regulation n°744-84. Paragraphs 23 to 35 of the latter regulation set out in detail the increase in the market share accounted for by the contested imports between 1979 and the end of the first half of 1983, the price differences established in relation to the prices charged by community producers during the investigation period, the overall decline in production suffered by the community industry concerned, the decrease in sales of the ball-bearings in question and the financial losses and loss of employment established. The commission also established that the reduction in demand in the community had affected community production much more than it had affected the dumped imports. All those factors led the commission to conclude that the effects of the dumped imports had to be regarded as constituting material injury to the community industry concerned, and that, having regard to the extent of the injury caused, the rate of the provisional anti-dumping duty should correspond to the dumping margin provisionally established.

57 Secondly, it should be noted that in the contested regulation the council stated that no fresh evidence regarding injury to the community industry had been submitted and it was therefore necessary to confirm the conclusions on injury reached in regulation n°744-84. That implied that the definitive duty would, like the the provisional duty, be fixed at a rate corresponding to the dumping margin.

58 Lastly, although the rate of the definitive duty imposed on nsk (14.71 %) was lower than the rate of the provisional duty (18.45 %), that was merely because the assessment of the dumping margin was reduced as a result of checks carried out in the course of the investigation, and not because there had been a fresh assessment by the institutions of the seriousness of the injury suffered by the community industry.

59 In those circumstances, it must be recognized that the contested regulation gave adequate reasons for the assessment made of the extent of the injury suffered by the community industry and for the decision to fix the anti-dumping duty at a rate corresponding to the dumping margin.

IV - Submission that the contested regulation authorized the definitive collection of the provisional anti-dumping duty without taking account of the fact that the definitive duty is less than the provisional duty

60 It should be noted that under article 2 of the contested regulation the sums secured by way of provisional anti-dumping duty are to be definitively collected "up to a maximum of the respective rates of the definitive anti-dumping duty ". It must therefore be concluded that, contrary to what the applicant maintains, the contested regulation takes account of the fact that the definitive duty was fixed at a lower rate than the provisional duty.

61 This final submission must therefore be rejected. Consequently, the application must be dismissed in its entirety.

Costs

62 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.