CJEC, 5th chamber, December 7, 1993, No C-216/91

THE COURT (Fifth Chamber),

1 By application lodged at the Court Registry on 14 August 1991, Rima Eletrometalurgia SA ("Rima") brought an action under Article 173 of the EEC Treaty in which it sought the annulment of Article 1(3) of Council Regulation (EEC) No 1115-91 of 29 April 1991 imposing definitive anti-dumping duties in connection with the review of anti-dumping measures concerning imports of ferro-silicon originating in Brazil (OJ 1991 L 111, p. 1) ("the contested regulation").

2 Rima is a Brazilian company which has its registered office in Belo Horizonte and is engaged in the production and sale of ferro-alloys, including ferro-silicon. On 12 September 1986, further to a complaint lodged by the Community producers of ferro-silicon, the Commission initiated an anti-dumping proceeding concerning imports of ferro-silicon originating in Brazil. Rima submitted, in response to an anti-dumping questionnaire, a reply which was verified by the Commission' s officers at the company' s premises in Belo Horizonte. Since the investigation showed that Rima, at that time trading under the name Eletrometalur SA Indústria e Comércio, had not been engaged in dumping, Article 1(3) of Commission Regulation (EEC) No 2409-87 of 6 August 1987 imposing a provisional anti-dumping duty on imports of ferro-silicon originating in Brazil and accepting undertakings offered by Italmagnésio SA of Brazil and from Promsyrio-Import of the USSR (OJ 1987 L 219, p. 24) exempted products manufactured and exported by Rima from the application of that duty. That exemption was confirmed by Article 1(3) of Council Regulation (EEC) No 3650-87 of 3 December 1987 imposing a definitive anti-dumping duty on imports of ferro-silicon originating in Brazil (OJ 1987 L 343, p. 1).

3 On 3 May 1990, the Commission, pursuant to Article 14 of Council Regulation (EEC) No 2423-88 of 11 July 1988 on protection against dumped or subsidized imports from countries not members of the European Economic Community (OJ 1988 L 209, p. 1) ("the basic regulation"), opened a review of the anti-dumping measures adopted under Regulation No 3650-87, cited above.

4 That review was opened in response to the filing of a review application by a number of Brazilian exporters upon whom the anti-dumping duty had been imposed. Those undertakings asserted that their exports in 1989 were no longer being dumped and that the Community industry was for that reason no longer suffering material injury.

5 The review was not limited to those exporters who had requested it but was extended to cover all Brazilian exporters, including Rima. In that connection, the notice of initiation of the review (OJ 1990 C 109, p. 5) stated as follows: "Having decided, after consultation, that there is sufficient evidence to justify a review, the Commission has begun an investigation in accordance with Article 14 of Council Regulation (EEC) No 2423-88 of 11 July 1988. As the Commission has, moreover, reason to believe that the circumstances cited by certain Brazilian exporters are equally applicable to other Brazilian producer-exporters and that the ferro-silicon market has changed, overcapacity at world level having brought about a substantial fall in prices on the Community market, the review has been extended to all Brazilian producer-exporters".

6 The Commission sent a second anti-dumping questionnaire to Rima. The investigation related to the period between 1 September 1989 and 30 April 1990 inclusive. On receipt of Rima' s reply, the Commission carried out an investigation at the company' s premises. The Commission later communicated its initial calculations, which indicated a dumping margin for Rima of 38.2%. After hearing the views of the company, the Council, acting on a proposal by the Commission, adopted the contested regulation.

7 Article 1(3) of that regulation, the provision annulment of which is sought in these proceedings, imposed a definitive anti-dumping duty of 12.2% of the net free-at-Community-frontier price on exports by Rima of ferro-silicon.

8 Reference is made to the Report for the Hearing for a fuller account of the facts of the case, the procedure, and the pleas in law and arguments of the parties, which are mentioned or discussed hereinafter only in so far as is necessary for the reasoning of the Court.

9 In support of its application, Rima relies on the following four pleas in law:

° The Community institutions infringed essential procedural requirements in including the applicant within the scope of the review and in imposing an anti-dumping duty on it;

° The dumping determination made by the Community institutions is based on factors falling outside the investigation period determined by the Commission;

° The dumping determination made by the Community institutions results from an unfair comparison between the normal value and the export price, contrary to Article 2(9)(a) of the basic regulation;

° The applicant was denied its fundamental right to be heard with respect to the anti-dumping measure proposed by the Commission.

The first plea in law

10 By this plea, as clarified in the course of the hearing, Rima claims that, since the initial investigation resulted in a finding that it had not been engaged in dumping, the new investigation into its affairs carried out in the context of the review prompted by the request by five exporters subjected to an anti-dumping duty was vitiated by illegality. It takes the view that a new investigation would have been lawful only if there had been evidence of dumping on its part.

11 The Council and the Commission, on the other hand, take the view that the investigation was entirely proper, since the anti-dumping proceeding, which concerned products originating in Brazil and not products manufactured by specific undertakings, was still in progress notwithstanding the negative result of the first investigation into Rima' s affairs. They point out that under Article 7(1) of the basic regulation sufficient evidence of dumping and injury to the Community industry is necessary in order to justify initiation of a proceeding but that that requirement does not apply where, as in this case, a new investigation is opened in the context of a proceeding which has not yet been closed. In accordance with Article 14(1) of the basic regulation, the evidence required for a review, unlike that required for the opening of an anti-dumping proceeding, does not relate to the existence of dumping and injury to the Community industry but rather to changed circumstances of such a nature as to justify the review.

12 The relevant provisions of Article 14 of the basic regulation which deal with the procedure for the review of anti-dumping measures are as follows:

"1. Regulations imposing anti-dumping or countervailing duties and decisions to accept undertakings shall be subject to review, in whole or in part, where warranted.

Such review may be held either at the request of a Member State or on the initiative of the Commission. A review shall also be held where an interested party so requests and submits evidence of changed circumstances sufficient to justify the need for such review, provided that at least one year has elapsed since the conclusion of the investigation. Such requests shall be addressed to the Commission which shall inform the Member States.

2. Where, after consultation, it becomes apparent that review is warranted, the investigation shall be reopened in accordance with Article 7, where the circumstances so require. Such reopening shall not per se affect the measures in operation.

3. Where warranted by the review, carried out either with or without reopening of the investigation, the measures shall be amended, repealed or annulled ...".

13 It follows from those provisions that, where review necessitates a new investigation which, with regard to one or more undertakings, has the same scope as the initial investigation, the new investigation must be reopened in accordance with Article 7. Article 7(1) requires sufficient evidence, which must, under Article 5(2), relate to the existence of dumping and the injury resulting therefrom.

14 That conclusion is corroborated by Article 5(1) of the GATT Anti-Dumping Code. As the applicant has pointed out, this makes the opening of any investigation (whether of the Commission' s own motion or at the request of the parties concerned), which seeks to determine the existence, degree and effect of any alleged dumping, subject to sufficient evidence of the existence of dumping, of injury and of a causal connection between the dumped imports and the injury alleged.

15 The purpose of the above provisions of the basic regulation, as of Article 5(1) of the GATT Anti-Dumping Code, is thus to prevent exporters from being subjected to anti-dumping investigations which are not justified on objective grounds.

16 It follows that the existence of sufficient evidence of dumping and the injury resulting therefrom is always a prerequisite for the opening of an investigation, whether at the initiation of an anti-dumping proceeding or in the course of a review of a regulation imposing anti-dumping duties.

17 Contrary, however, to what the applicant has maintained, the evidence required need not necessarily relate to dumping on the part of each of the undertakings under investigation. As the Council and Commission correctly pointed out, anti-dumping proceedings relate in principle to all imports of a certain category of products from a third country and not to imports of products manufactured by specific undertakings.

18 For that reason it cannot be excluded that the Commission may, if it has sufficient evidence of dumping in the case of imports of certain products originating in a third country, decide to open an investigation into undertakings manufacturing or exporting the products in question, even though it does not have evidence of dumping by each of the undertakings included in the investigation.

19 In the light of those factors, the question is whether, in the present case, the investigation opened by the Commission with respect to Rima was justified by the existence of sufficient evidence.

20 In that connection, the Council and Commission refer to the matters set out in the notice of initiation of the review, that is to say, on the one hand, the evidence provided by the five exporters who had requested the review and, on the other hand, the new situation on the ferro-silicon market resulting from the substantial fall in prices on the Community market brought about by overcapacity at world level.

21 So far as the evidence provided by the five exporters is concerned, it is not possible, in the absence of more detailed information, to accept that it constitutes sufficient evidence within the meaning of Article 7(1) of the basic regulation, in view of the fact that, being submitted in support of the request for review, it was intended rather to show that the undertakings making that request had not been engaged in dumping during 1989.

22 With regard to the new situation on the ferro-silicon market resulting from the substantial fall in prices on the Community market brought about by overcapacity at world level, it is to be noted that that overcapacity might also have been the cause of a fall in prices on other markets, including the Brazilian market. That argument was, indeed, relied on by the exporters who had requested the review in support of their claim that they were no longer engaged in dumping.

23 Since the concept of dumping implies that the price on the Community market is lower than that charged on the market of the country of exportation or origin, the new situation on the ferro-silicon market resulting from the substantial fall in prices on the Community market could not be regarded as sufficient evidence of dumping.

24 It follows that, in the absence of any evidence of dumping, the conditions for the initiation of an investigation which are imposed by Article 7(1) of the basic regulation were not satisfied.

25 The Council and Commission further contend that they were obliged to include the applicant in the review in order to avoid subjecting it to unequal treatment.

26 That argument cannot be sustained. Whilst dictates of equal treatment might justify extending the review to producers and exporters who were affected by the anti-dumping duty and who had not requested that review, they could not justify the opening of a new investigation into the case of the applicant, whose products had, following the initial investigation, been excluded from application of the anti-dumping duty.

27 It follows from all the foregoing considerations that, in imposing an anti-dumping duty on the applicant, the Community institutions did not comply with the conditions laid down by the basic regulation.

28 Article 1(3) of the contested regulation must accordingly be annulled, without the necessity of considering the other pleas in law submitted by the applicant.

Costs

29 Under Article 69(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs. Since the Council has been unsuccessful, it must be ordered to pay the costs. Under the first subparagraph of Article 69(4), the Commission, which has intervened in the proceedings, must bear its own costs.

On those grounds,

THE COURT (Fifth Chamber)

hereby:

1. Annuls Article 1(3) of Council Regulation (EEC) No 1115-91 of 29 April 1991 imposing definitive anti-dumping duties in connection with the review of anti-dumping measures concerning imports of ferro-silicon originating in Brazil;

2. Orders the Council to pay the costs;

3. Orders the Commission to bear its own costs.