CJEU, 3rd chamber, October 27, 2011, No C-511/09 P

THE COURT (Third Chamber),

1 By its appeal, Dongguan Nanzha Leco Stationery Mfg. Co., Ltd ('Dongguan') requests the Court, first, to set aside the judgment of the Court of First Instance of the European Communities (now 'the General Court') of 23 September 2009 in Case T-296/06 Dongguan Nanzha Leco Stationery v Council ('the judgment under appeal'), in so far as it rejected the first part of Dongguan's first plea and, second, to settle the dispute itself by annulling Council Regulation (EC) No 1136/2006 of 24 July 2006 imposing a definitive anti-dumping duty and collecting definitively the provisional duty imposed on lever arch mechanisms originating in the People's Republic of China (OJ 2006 L 205, p. 1) ('the definitive regulation'), in so far as that regulation imposes an anti-dumping duty on lever arch mechanisms ('LAMs') produced by Dongguan in excess of that which would have been chargeable if the contested adjustment to the export price had not been made.

Legal context

2 The provisions governing the application of anti-dumping measures by the European Union are set out in Council Regulation (EC) No 384/96 of 22 December 1995 on protection against dumped imports from countries not members of the European Community (OJ 1996 L 56, p. 1), as amended by Council Regulation (EC) No 2117/2005 of 21 December 2005 (OJ 2005 L 340, p. 17) ('the basic regulation').

3 Article 2(1) to (7) of the basic regulation defines the normal value of goods deemed to have been dumped. Those provisions state the following:

'1. The normal value shall normally be based on the prices paid or payable, in the ordinary course of trade, by independent customers in the exporting country.

...

3. When there are no or insufficient sales of the like product in the ordinary course of trade, or where, because of the particular market situation, such sales do not permit a proper comparison, the normal value of the like product shall be calculated on the basis of the cost of production in the country of origin plus a reasonable amount for selling, general and administrative costs and for profits, or on the basis of the export prices, in the ordinary course of trade, to an appropriate third country, provided that those prices are representative. ...

...

7 (a) In the case of imports from non-market-economy countries, normal value shall be determined on the basis of the price or constructed value in a market-economy third country, or the price from such a third country to other countries, including the Community, or, where those are not possible, on any other reasonable basis, including the price actually paid or payable in the Community for the like product, duly adjusted if necessary to include a reasonable profit margin.

...

(b) In anti-dumping investigations concerning imports from the People's Republic of China, Vietnam and Kazakhstan and any non-market-economy country which is a member of the [World Trade Organisation; 'WTO'] at the date of the initiation of the investigation, normal value will be determined in accordance with paragraphs 1 to 6, if it is shown, on the basis of properly substantiated claims by one or more producers subject to the investigation and in accordance with the criteria and procedures set out in subparagraph (c) that market-economy conditions prevail for this producer or producers in respect of the manufacture and sale of the like product concerned. When this is not the case, the rules set out under subparagraph (a) shall apply.

...'

4 Article 2(8) of the basic regulation provides:

'The export price shall be the price actually paid or payable for the product when sold for export from the exporting country to the Community.'

5 Article 2(10) of the basic regulation states:

'A fair comparison shall be made between the export price and the normal value. This comparison shall be made at the same level of trade and in respect of sales made at as nearly as possible the same time and with due account taken of other differences which affect price comparability. Where the normal value and the export price as established are not on such a comparable basis, due allowance, in the form of adjustments, shall be made in each case, on its merits, for differences in factors which are claimed, and demonstrated, to affect prices and price comparability. Any duplication when making adjustments shall be avoided, in particular in relation to discounts, rebates, quantities and level of trade. When the specified conditions are met, the factors for which adjustment can be made are listed as follows.

...

(i) Commissions

An adjustment shall be made for differences in commissions paid in respect of the sales under consideration. The term "commissions" shall be understood to include the mark-up received by a trader of the product or the like product if the functions of such a trader are similar to those of an agent working on a commission basis.

...'

Background to the dispute

6 Paragraphs 8 to 24 of the judgment under appeal set out the facts at the origin of the dispute:

'The initial investigation procedure

8 The applicant, Dongguan ... is a company governed by Chinese law with its headquarters in Dongguan (China). It manufactures [LAMs] generally used for archiving sheets of paper or other documents in binders or files.

9 The applicant sells all of its production to World Wide Stationery Ltd ("WWS") via its principal shareholder, Leco Stationery Manufacturing Co. Ltd ("LECO"). WWS and LECO are both established in Hong Kong (China). WWS then resells the LAMs manufactured by the applicant to customers on the Chinese market and, also, for export outside China to the European Community and to other non-member countries.

10 On 11 March 2005, a complaint was made to the Commission of the European Communities [(now "the European Commission")] by three Community producers, Interkov spol. s r.o., MI.ME.CA. Srl and NIKO - kovinarsko podjetje, d.d., Železniki, which together account for more than 50% of the total production of LAMs within the Community. The complaint was supported by IML Industria Meccanica Lombarda Srl ['IML']. In that complaint, it was alleged that imports of LAMs from China were being dumped and were thereby causing material injury to the Community industry.

11 On 28 April 2005, a notice of initiation of an anti-dumping proceeding concerning imports of LAMs originating in ... China was published, in accordance with Article 5 of the basic regulation, in the Official Journal of the European Union (OJ 2005 C 103, p. 18).

12 Once the procedure had been initiated, the Commission sent questionnaires to all of the parties known to be concerned by the investigation. The applicant completed that questionnaire and then made a request for market economy treatment (MET), pursuant to Article 2(7)(b) and (c) of the basic regulation and, in the alternative, a request for individual treatment (IT), pursuant to Article 9(5) of that regulation. The Commission rejected the applicant's first request but accepted the second.

13 By e-mail of 16 September 2005, the Commission asked the applicant to assist it in preparing for a visit to Dongguan and Hong Kong, from 17 to 19 October 2005, to enable it to carry out on-the-spot verifications in the context of the investigation. By fax of 4 October 2005, the Commission sent the applicant a formal confirmation of its visit. However, by e-mail of 5 October 2005, the Commission advised the applicant that, due to unforeseen circumstances, it was obliged to cancel the planned visit.

The provisional regulation and the outcome of the investigation procedure

14 On 26 January 2006, the Commission adopted Regulation (EC) No 134/2006 imposing a provisional anti-dumping duty on imports of LAMs originating in the People's Republic of China (OJ 2006 L 23, p. 13) ("the provisional regulation"). That regulation imposed a provisional anti-dumping duty of 33.3% on imports of LAMs manufactured by the applicant from 28 January 2006, and of 48.1% on all other imports of LAMs originating in China.

15 The normal value of LAMs for exporting producers not granted MET status, such as the applicant, was established, in accordance with Article 2(7)(a) of the basic regulation, on the basis of information received from a producer in an analogue country. The Commission made a provisional finding that Iran was the most appropriate and reasonable choice in that regard. The normal value was thus established as corresponding to the weighted average of the sale price on the domestic market of Iran applied by the Iranian producer in respect of independent customers.

16 The export price for LAMs, for the export sales to the Community of the exporters granted IT which were made via related companies established outside the Community, was determined on the basis of resale prices to independent customers in the Community, in accordance with Article 2(8) of the basic regulation. In particular, the export price of the applicant's LAMs was established on the basis of the prices applied by WWS to the first independent customer within the Community, with a deduction of 12.6% for certain costs incurred between the factory gate and the Community border (namely, transport, insurance, handling, etc.).

17 Under the provisional regulation, the normal value and the export prices were compared on an ex-factory basis and at the same level of trade. For the purpose of a fair comparison between the normal value and the export price, due account was taken, in accordance with Article 2(10) of the basic regulation, of differences which were claimed and demonstrated to affect prices and their comparability. As regards the applicant, an adjustment was made on the basis of Article 2(10)(i) of the basic regulation, as the export sales were made via a related company established in a country other than the country concerned or outside the Community. That adjustment consisted in a deduction, from the export price of LAMs, of 18.6% for sales, general and administrative ("SG&A") expenses of WWS; of 1.8% for those of LECO; and of 5% in respect of a reasonable profit margin.

18 By letter of 3 March 2006, the applicant submitted written observations on the application of the provisional regulation. Amongst other claims, the applicant submitted, first, that it was incorrect to deduct from WWS's export price a certain amount for SG&A expenses and for the profits of LECO and WWS, because the comparison between the normal value and the export price would not then be made at the same level of trade. It observed, secondly, that errors had been made in the calculation of WWS's SG&A expenses and, in particular, that certain direct-sales expenses had been counted twice.

19 On 21 April 2006, the applicant set out its views at a hearing. Following that hearing, on 26 April 2006, the applicant submitted additional written observations.

20 By letter of 24 May 2006, the Commission, acting pursuant to Article 20(1) of the basic regulation, provided the applicant with definitive disclosure of the essential facts and considerations on the basis of which it intended to propose the imposition of definitive countervailing duties. By letter of 5 June 2006, the applicant submitted written observations on that document. It also presented oral argument at a hearing held on 21 June 2006. Finally, by letter of 3 July 2006, the Commission replied to the applicant's observations with additional comments.

The definitive regulation

21 On 24 July 2006, the Council of the European Union adopted [the definitive regulation]. The definitive dumping margin applicable to the applicant was 27.1%, while for the other manufacturers it was 47.4%.

22 As regards the normal value of LAMs, the Council, in the definitive regulation, stated that, following a further analysis of all the information obtained from the producer in Iran, it had to be concluded that that information was incomplete and/or inconsistent and therefore could not be used as the basis for the calculation of the normal value of the LAMs at the definitive level. Recourse was therefore had to another reasonable basis for the calculation of the normal value in accordance with Article 2(7)(a) of the basic regulation. In that regard, it is stated in the definitive regulation that, due to a lack of information from other non-member countries in which LAMs are produced, the view was taken that the data available from the complaint and from the Community industry constituted the most reasonable basis on which to establish the normal value of LAMs at the definitive level. The definitive regulation further indicates that adjustments were made to reflect specific verified data obtained during the investigation, in particular concerning prices of raw materials and freight.

23 The export price was determined in accordance with the method set out in the provisional regulation (see paragraph 16 above).

24 According to the definitive regulation, the normal value and the export prices were compared at ex-factory level and at the same level of trade. For the purpose of a fair comparison between the normal value and the export price, as regards the applicant, contrary to the first allegation set out in its letter of 3 March 2006, the adjustment to WWS's export price in accordance with Article 2(10)(i) of the basic regulation was maintained. The Community institutions confirmed their position that the relationship between the applicant, on the one hand, and LECO and WWS, on the other, was similar to that of a trader working on a commissions basis. However, an examination of the applicant's second allegation in the letter of 3 March 2006, to the effect that some of LECO's and WWS's sales expenses had been counted twice, confirmed that a clerical error had been made in the calculation of those expenses. This led to WWS's deduction for SG&A expenses being reduced from 18.6% to 3.2%. Ultimately, the adjustment effected by the Community institutions consisted in a deduction of 3.2% from the export price, by way of, inter alia, WWS's direct-sales, administrative and other general expenses, 1.8% for LECO, and 5% as the profit margin for the two companies together.'

The procedure before the General Court and the judgment under appeal

7 By application lodged on 19 October 2006, Dongguan brought an action for partial annulment before the General Court. By order of 16 February 2007, the President of the Fifth Chamber of the General Court granted the Commission leave to intervene in support of the form of order sought by the Council. By order of 19 April 2007, he granted IML leave to intervene in support of the form of order sought by the Council.

8 Dongguan raised two pleas in law in support of that action.

9 The first part of the first plea alleged a breach of Article 2(10) of the basic regulation, in that the institutions compared the normal value and the export prices of the LAMs at different levels of trade, while the second part of that plea alleged infringement of the principles of sound administration and 'diligent investigation', in that the institutions had failed to carry out an adequate check of the information communicated to them. The second plea alleged a breach of Article 2(7)(a) of the basic regulation, in that the institutions, in the definitive regulation, changed the method for calculating the normal value of LAMs as compared with the provisional regulation, without having very serious grounds on which to do so.

10 As regards the first part of the first plea at first instance, which is the only part of the plea concerned by the present appeal proceedings, the General Court concluded that the adjustment made pursuant to Article 2(10) of the basic regulation, consisting in a deduction from the export price of the sales expenses arising from the marketing of Dongguan's LAMs on the Community market, was necessary to avoid an imbalance in the comparison of the normal value and the export price of those LAMs.

11 The General Court found, in particular, in paragraphs 40 to 53 of the judgment under appeal:

'40 It should be borne in mind, as a preliminary point, that, in the sphere of measures to protect trade, the institutions enjoy a broad discretion by reason of the complexity of the economic, political and legal situations which they have to examine (Case C-351/04 Ikea Wholesale [2007] ECR I-7723, paragraph 40, and Case T-221/05 Huvis v Council, judgment of 8 July 2008, not published in the ECR, paragraph 38).

41 It is, moreover, settled case-law that, in the sphere of measures to protect trade, review by the Community judicature of assessments made by the institutions must be limited to establishing whether the relevant procedural rules have been complied with, whether the facts on which the contested choice is based have been accurately stated and whether there has been a manifest error of assessment of those facts or a misuse of power (see Case T-35/01 Shanghai Teraoka Electronic v Council [2004] ECR II-3663, paragraphs 48 and 49 and case-law cited, and Case T-300/03 Moser Baer India v Council [2006] ECR II-3911, paragraph 28 and case-law cited). That limited judicial review covers, in particular, the choice between the different methods of calculating the dumping margin and the assessment of the normal value of a product (see Ikea Wholesale, cited in paragraph 40 above, paragraph 41 and case-law cited).

42 The case-law has further established that it is apparent from both the wording and the scheme of Article 2(10) of the basic regulation that an adjustment to the export price or the normal value may be made only in order to take account of differences in factors which affect the prices and therefore their comparability (Case T-88/98 Kundan and Tata v Council [2002] ECR II-4897, paragraph 94). That means, in other words, that the purpose of an adjustment is to re-establish the symmetry between normal value and export price, with the result that, if the adjustment has been validly made, that implies that it has re-established the symmetry between normal value and export price. By contrast, if the adjustment has not been validly made, that implies that it has created an asymmetry between the normal value and the export price (Case T-249/06 Interpipe Niko Tube and Interpipe NTRP v Council [2009] ECR [II-383], paragraphs 194 and 195).

43 It is in this context that the Court must examine the issue whether the level of comparison chosen by the institutions was respected in the calculation of the normal value and the export price and ascertain, subsequently, whether the adjustment made led to a re-establishment of the symmetry in the comparison of those two factors or whether, on the contrary, it resulted in a comparison at different levels of trade.

44 In the present case, it is apparent from recital 22 in the preamble to the definitive regulation that the comparison between the normal value and the export price of the LAMs originating in China was carried out by the institutions at the same level of trade, namely at the ex-factory stage. In particular, as regards the LAMs manufactured by the applicant, it is stated in the letter of 3 July 2006 that both the normal value and the export price of those products were determined before any involvement by any intermediate trader in the sales process, that is, before the involvement of LECO and WWS in the marketing of LAMs manufactured by the applicant.

45 Next, as regards, first, the export price, the Court notes that the applicant does not dispute that the calculation of that price was made in accordance with Article 2(8) of the basic regulation. The applicant acknowledges, with the institutions, that the export price of its LAMs corresponds to the prices applied by WWS to independent customers on the Community market, as provided for in recital 21 in the preamble to the definitive regulation and, by reference to that recital, in recitals 41 and 42 in the preamble to the provisional regulation.

46 As regards, secondly, the normal value, the applicant, by contrast, takes the view that that value ought to have been determined in accordance with Article 2(1) and (3) of the basic regulation and thus correspond to the price of its LAMs as applied by WWS on the Chinese domestic market.

47 It should be borne in mind in that regard that it is apparent from the wording of Article 2(7)(b) of the basic regulation that the determination of the normal value of products originating in China by reference to the rules laid down in Article 2(1) to (6) thereof is confined to specific individual cases in which each of the producers concerned has made a properly substantiated claim in accordance with the criteria and procedures laid down in Article 2(7)(c) of the basic regulation to show that market-economy conditions prevail for them (see, to that effect, Case T-255/01 Changzhou Hailong Electronics & Light Fixtures and Zhejiang Yankon v Council [2003] ECR II-4741, paragraph 40).

48 It is clear in the present case, by contrast, that, according to recital 14 in the preamble to the definitive regulation, the claim submitted by the applicant pursuant to Article 2(7)(b) of the basic regulation was rejected. Accordingly, the normal value of the applicant's LAMs could not be established as corresponding to the prices of those products on the applicant's domestic market, namely, the prices applied by WWS on the Chinese market, in so far as it had been determined that they were not the subject of normal market transactions.

49 The Court further notes that the applicant's reference in this regard to paragraphs 15 to 18 of the judgment in [Case 250/85] Brother Industries v Council [[1988] ECR 5683] is not relevant to the present case. In that judgment, although the Court of Justice found that the institutions had correctly calculated the normal value of the imports originating in Japan on the basis of the resale prices applied by the distributor on the domestic market, that assessment was based on the fact that Japan is a market-economy country.

50 Next, the Court notes that, according to recital 17 in the preamble to the definitive regulation, the normal value of the LAMs produced by the applicant was calculated on a reasonable basis in accordance with Article 2(7)(a) of the basic regulation. According to the case-law, the aim of that provision is precisely to prevent account from being taken of prices and costs in non-market-economy countries, as they are not the normal result of market forces (see, by way of analogy, Joined Cases C-305/86 and C-160/87 Neotype Techmashexport v Commission and Council [1990] ECR I-2945, paragraph 26, and Case C-16/90 Nölle [1991] ECR I-5163, paragraph 10). As regards, in particular, the applicant's LAMs, it is apparent from the letter of 3 July 2006 that the normal value was calculated on the basis of the costs of manufacture, administrative expenses and other general costs of similar Community producers and a reasonable profit estimate. No direct sales expenses could be included in that calculation, however, because, as the applicant acknowledges a number of times, including in the answers to the questionnaire sent to the Commission during the investigation and in the letter of 5 June 2006, LECO and WWS were in charge of marketing the applicant's products.

51 It thus follows from the manner in which the calculation of the normal value of the applicant's LAMs was carried out, including the non-inclusion in that calculation of the sales expenses, that an imbalance would have occurred in the comparison of the normal value and the export price of the applicant's LAMs if an adjustment had not been made by the institutions in accordance with Article 2(10) of the basic regulation, consisting in a deduction from the export price of the sales costs arising from the marketing of the applicant's LAMs on the Community market.

52 Consequently, the Court finds that the institutions did not make a manifest error of assessment in making an adjustment to the export price of the LAMs manufactured by the applicant in accordance with Article 2(10) of the basic regulation.

53 In the light of the foregoing, the first part of the first plea put forward by the applicant must be rejected.'

Procedure before the Court of Justice and the forms of order sought by the parties

12 By its appeal, Dougguan claims that the Court should:

- set aside the judgment under appeal in so far as it rejects the first part of the first plea raised by Dongguan at first instance;

- settle the dispute by annulling the definitive regulation in so far as it imposes an anti-dumping duty on Dongguan's LAMs products in excess of that which would result if the contested adjustment to the export price had not been made; and

- order the Council to pay the costs of the present proceedings, including those incurred at first instance.

13 In its response, the Council contends that the Court should:

- dismiss the appeal;

- in the alternative, dismiss the action; and

- in any event, order Dongguan to pay the costs of the appeal.

14 The Commission states that it adopts the same position as the Council.

15 IML supports the form of order sought by the Council.

The appeal

16 Dongguan requests, by its single ground of appeal, that the judgment under appeal be set aside in so far the General Court rejected the first part of the first plea alleging a breach of Article 2(10) of the basic regulation in that the institutions compared the normal value and the export prices of the LAMs at different levels of trade.

Arguments of the parties

17 Dongguan submits that the General Court failed to give the correct legal effect to the notion of analogue normal value as defined by Article 2(7)(a) of the basic regulation.

18 Consequently, the General Court concluded - wrongly, in Dongguan's view - that such an analogue normal value corresponded to the point at which the LAMs left Dongguan's production line in China, even though the judgment under appeal itself found that the SG&A expenses for both domestic and export sales were incurred, not by the company in China, but by related companies in a market economy country, Hong Kong.

19 Next, Dongguan submits, taking paragraphs 38, 50, 60 and 63 of the judgment under appeal together, that it is established that the SG&A expenses incurred by LECO and WWS in Hong Kong were expenses incurred in making export sales and sales in China, and that the fact that Dongguan did not have any sales expenses in China was not challenged. In that regard, Dongguan submits that the breach of Article 2(10) of the basic regulation results directly from the argument relating to Article 2(7)(a) of that regulation.

20 According to Dongguan, the fact that LECO and WWS were in charge of marketing its products had nothing to do with the determination of the normal value because that value was an analogue normal value and so was not based on Dongguan's costs. Consequently, the General Court's finding, in paragraph 50 of the judgment under appeal, that no direct sales expenses could be included in that calculation because LECO and WWS were in charge of marketing Dongguan's products is erroneous.

21 By contrast, the finding that LECO and WWS were in charge of marketing Dongguan's products was relevant to determining the stage in Dongguan's distribution chain for which the normal value determined pursuant to Article 2(7)(a) of the basic regulation was a true analogue. In Dongguan's view, the stage in its distribution chain to be taken into consideration corresponded to the 'ex-WWS' stage, that is to say, the normal value at which the product is supplied for the first time to an unrelated party on the domestic market.

22 The Council notes that the facts on which this ground of appeal is based are not in dispute. It submits that the institutions validly calculated a normal value constructed at ex-factory level for a company which did not bear any direct sales expenses for its sales on the internal market on the basis of data from the Community industry. The export price was determined on the basis of the prices which WWS charged for sales to the first independent customer.

23 However, the institutions adjusted Dongguan's export price pursuant to Article 2(10)(i) of the basic regulation because Dongguan did not sell its products directly to independent customers, but made all of its export sales via its two related sales companies, namely LECO and WWS. In that regard, the institutions concluded that the relationship between Dongguan, on the one hand, and its related companies LECO and WWS, on the other, was similar to that of a trader working on a commission basis.

24 In the Council's view, Dongguan has not claimed that the institutions breached Article 2(1) to (3) and 2(7)(a) of the basic regulation because they did not include sales expenses in the constructed normal value. Finally, the Council expresses the view that the allegations of a breach of Article 2(10)(i) of the basic regulation are founded exclusively on the claim that the normal value corresponded to an 'ex-WWS' stage. That claim, it submits, is manifestly erroneous and, in any event, inadmissible in that it challenges the factual findings of the General Court. Consequently, the contention that Article 2(10)(i) of the basic regulation was breached should also be rejected.

Findings of the Court

25 The Court notes that different rules apply for the determination of normal value and export price and therefore the SG&A expenses in issue need not necessarily be treated in the same way in both cases. However, possible differences between the two values may be taken into account under the adjustments provided for in Article 2(10) of the basic regulation (see, to that effect, Case C-69/89 Nakajima v Council [1991] ECR I-2069, paragraph 73).

26 In that regard, it is apparent from the wording and scheme of Article 2(10) of the basic regulation that an adjustment of the export price or of the normal value may be made solely in order to take account of differences concerning factors which affect prices and, thus, their comparability, in order to ensure that a comparison is made at the same level of trade.

27 In the present case, Dongguan submits, in essence, that the analogue normal value determined in accordance with Article 2(7)(a) of the basic regulation should be an analogue for the normal value, which corresponds, in this case, to the 'ex-WWS' stage. It is submitted that, in the present case, since the country at issue is not a market-economy country, the normal value determined in accordance with Article 2(7)(a) of the basic regulation should be an analogue for such a normal value determined under market-economy conditions, corresponding to the normal value at which the product is supplied for the first time on the internal market to an unrelated party, that is to say, the first independent customer.

28 According to Dongguan, in the judgment under appeal, the General Court approved the reduction of the export price to a level that predates the 'ex-WWS' stage and, consequently, infringed the principle of symmetry between the normal value and the export price, which should correspond to the 'ex-WWS' stage, which thus constitutes a breach of Article 2(10) of the basic regulation.

29 In the present case, it transpires from recital 18 in the preamble to the definitive regulation that the normal value was determined on the basis of data from the Community industry. In accordance with recital 21 in the preamble to the definitive regulation, the methodology set out in recitals 41 and 42 in the preamble to the provisional regulation was confirmed.

30 According to recital 22 in the preamble to the definitive regulation, the normal value and export price of those LAMs were compared on an ex-factory basis and at the same level of trade. Under that recital, in order to ensure a fair comparison between normal value and export price, account was taken, in accordance with Article 2(10) of the basic regulation, of differences in factors which were claimed and demonstrated to affect prices and price comparability. The factors for which adjustments were accepted relate to Dongguan's marketing costs for LAMs on the Community market.

31 However, Dongguan submits, first of all, citing Brother Industries v Council, paragraphs 15 to 18, that the main question at issue concerns the determination of the stage in its distribution chain to which the analogue normal value should correspond pursuant to Article 2(7)(a) of the basic regulation, that is to say, a normal value determined under market-economy conditions.

32 It does, admittedly, follow from that judgment that, since the construction of the normal value seeks to determine the sale price of a product as it would be if that product were sold in its country of origin or export, there was justification in that particular case for using the resale prices of the affiliated distributor as those prices could be regarded as being those of the first sale of the product made in the ordinary course of trade. However, in that case, the country concerned was a market-economy country. By contrast, in the present case, the normal value of the LAMs at issue was constructed on a reasonable basis, as described in paragraph 27 of the present judgment, in accordance with Article 2(7)(a) of the basic regulation, by reason of the fact that the country concerned is not a market-economy country.

33 Even though Article 2(1) of the basic regulation sets out the general principle that the normal value is normally to be based on the prices paid or payable, in the ordinary course of trade, by independent customers in the exporting countries, it does not follow from either the wording or the scheme of Article 2(7) of that regulation or from the Court's case-law that, when the institutions of the European Union determine the normal value 'on any other reasonable basis', that normal value must always correspond to the normal value at which the product is supplied to the first independent customer. Such an interpretation would undermine the discretion granted to the institutions of the European Union when determining the normal value in respect of non-market-economy countries (see, to that effect, Ikea Wholesale, paragraph 40).

34 That conclusion is not brought into question by Article 2(3) of the basic regulation, which concerns only the calculation of the normal value of an export undertaking operating in a market economy.

35 In the light of the foregoing considerations, it must be accepted that the institutions were entitled to calculate the constructed normal value on an ex-factory basis by reason of the fact that the undertaking at issue does not incur any direct sales expenses for its sales on the internal market.

36 In paragraph 51 of the judgment under appeal, the General Court concluded that an imbalance would have occurred in the comparison of the normal value and the export price of Dongguan's LAMs if an adjustment had not been made by the institutions in accordance with Article 2(10) of the basic regulation, consisting in a deduction from the export price of the sales costs arising from the marketing of Dongguan's LAMs on the Community market, since sales costs were not included in the determination of the normal value.

37 In order to be able to make such an adjustment, the institutions must rely on factors, such as sales costs resulting from Dongguan's marketing of LAMs on the Community market, which are likely to have a definite effect on the comparison between the export price and the normal value.

38 In the present case, the institutions determined the export price on the basis of prices invoiced by undertakings linked to Dongguan to the first independent customer. The General Court states, in paragraph 45 of the judgment under appeal, that Dongguan acknowledges, with the institutions, that the export price of its LAMs corresponds to the prices applied by WWS to independent customers on the Community market.

39 Consequently, the constructed normal value and the export price were, in the present case, determined at two different levels of trade, a fact which was capable of justifying an adjustment.

40 It must therefore be concluded that the taking into account by the institutions of the European Union, for the purposes of the adjustment made by them, in accordance with Article 2(10)(i) of the basic regulation, of the fact that Dongguan did not make direct sales to independent customers made it possible to compare, at the same level of trade, the normal value and the export price with a view to determining the dumping margin, in accordance with the requirements concerning a fair comparison laid down in that provision. It is apparent from that adjustment that neither of those two elements contains direct sales expenses.

41 Consequently, neither the institutions nor the General Court erred in regard to the making of the adjustment at issue on the basis of Article 2(10)(i) of the basic regulation.

42 In those circumstances, the single ground of appeal raised by Dongguan must be rejected.

Costs

43 Under Article 69(2) of the Rules of Procedure of the Court of Justice, which applies to appeal proceedings by virtue of Article 118 thereof, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party's pleadings. As the Council and IML have asked that costs be awarded against Dongguan, and as the latter has been unsuccessful, Dongguan must be ordered to pay the costs. In accordance with Article 69(4) of the Rules of Procedure, which also applies to appeal proceedings by virtue of Article 118 thereof, the Commission, intervener at first instance, shall bear its own costs.

On those grounds, the Court (Third Chamber) hereby:

1. Dismisses the appeal;

2. Orders Dongguan Nanzha Leco Stationery Mfg. Co., Ltd to pay, in addition to its own costs, those incurred by the Council of the European Union and by IML Industria Meccanica Lombarda Srl;

3. Orders the European Commission to bear its own costs.