GC, 7th chamber, September 27, 2011, No T-199/04

THE GENERAL COURT (Seventh Chamber),

Background to the dispute

1 The applicant, Gul Ahmed Textile Mills Ltd ('Gul Ahmed'), is a company incorporated under Pakistani law, whose registered office is in Karachi (Pakistan). It is engaged, in particular, in export sales and marketing of bed linen. The applicant manufactures that product in Pakistan and exports it to the European Union. It does not sell any bed linen on the domestic market in Pakistan, although it does sell various commodities there.

2 Following a complaint lodged on 30 July 1996 by the Committee of the Cotton and Allied Textile Industries of the European Community ('Eurocoton'), and the initiation of an anti-dumping proceeding on 13 September 1996, definitive anti-dumping duties were imposed on Pakistani and other producers by Council Regulation (EC) No 2398/97 of 28 November 1997 imposing a definitive anti-dumping duty on imports of cotton-type bed linen originating in Egypt, India and Pakistan (OJ 1997 L 332, p. 1; 'the previous anti-dumping duties'). Pursuant to the first paragraph of Article 1 of that regulation, a definitive anti-dumping duty was imposed on imports of bed linen of cotton fibres, pure or mixed with man-made fibres or flax (flax not being the dominant fibre), bleached, dyed or printed, falling within CN codes ex 6302 21 00 (TARIC codes 6302 21 00*81 and 6302 21 00*89), ex 6302 22 90 (TARIC code 6302 22 90*19), ex 6302 31 10 (TARIC code 6302 31 10*90), ex 6302 31 90 (TARIC code 6302 31 90*90) and ex 6302 32 90 (TARIC code 6302 32 90*19).

3 In accordance with the Memorandum of Understanding between the European Community and the Islamic Republic of Pakistan on transitional arrangements in the field of market access for textile and clothing products, initialled in Brussels on 15 October 2001 (OJ 2001 L 345, p. 81), and following the adoption of Council Regulation (EC) No 2501/2001 of 10 December 2001 applying a scheme of generalised tariff preferences for the period from 1 January 2002 to 31 December 2004 (OJ 2001 L 346, p. 1), Pakistan began to benefit from that scheme in so far as it applied to countries combating drug production and trafficking. As a consequence, textile and clothing products from Pakistan began, as from 1 January 2002, to enter the European Community free of duties after being subject to a customs duty of 12%. In accordance with Article 10 of Regulation No 2501/2001, read in combination with Annex IV to the same regulation, products exempted from duties by reason of their inclusion in the special arrangements to combat drug production and trafficking included the following products falling within Chapter 63 of the combined nomenclature: 'other made-up textile articles; sets; worn clothing and worn textile articles'.

4 The previous anti-dumping duties were abolished as from 30 January 2002, in relation to Pakistani producers, by Council Regulation (EC) No 160/2002 of 28 January 2002 amending Council Regulation (EC) No 2398/97 (OJ 2002 L 26, p. 1).

5 Following a fresh complaint lodged on 4 November 2002 by Eurocoton on behalf of producers representing a major proportion of total Community production of cotton bed linen, the Commission of the European Communities initiated an anti-dumping proceeding with regard to imports into the Community of bed linen of cotton fibres, pure or mixed with man-made fibres or flax (flax not being the dominant fibre), bleached, dyed or printed originating in Pakistan ('the product concerned'), in relation to which it stated 'purely for information' that they fell within CN codes 'ex 6302 21 00, ex 6302 22 90, ex 6302 31 10, ex 6302 31 90 and ex 6302 32 90'. The notice of initiation of that proceeding was published in the Official Journal of the European Communities of 18 December 2002 (OJ 2002 C 316, p. 6).

6 The investigation relating to the dumping and resulting injury covered the period from 1 October 2001 to 30 September 2002 ('the investigation period'). The examination of the trends relevant for the assessment of injury covered the period from 1999 to the end of the investigation period ('the period considered').

7 Taking account of the large number of exporting producers concerned by the anti-dumping proceeding, in accordance with Article 17 of 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, most recently as at the date of the facts, by Regulation (EC) No 1972/2002 (OJ 2002 L 305, p. 1) ('the basic regulation') (replaced by Council Regulation (EC) No 1225/2009 of 30 November 2009 on protection against dumped imports from countries not members of the European Community (OJ 2009 L 343, p. 51, amendment in OJ 2010 L 7, p.22)), the Commission chose a sample of six companies, representing more than 32% by volume of Pakistani exports of cotton bed linen to the Community during the investigation period. Those companies were invited to reply to the anti-dumping questionnaire.

8 Taking account of the large number of Community producers supporting the complaint, and in accordance with Article 17 of the basic regulation, the Commission also selected a sample, composed of five companies from three Member States, by reference to the production and sales volume considered as being the most representative of the size of the market. The Commission then sent questionnaires to those companies.

9 All the Pakistani exporting producers included in the sample provided answers to the questionnaire, as did the five Community producers behind the complaint included in the sample. In addition, answers to the questionnaire had also been provided by two independent importers in the Community, and by three Pakistani exporting producers not included in the sample who had requested individual treatment.

10 On 10 February 2003, the associations representing the Pakistani exporting producers of bed linen sent the Commission a document entitled 'Observations on injury'. In those observations, they dispute, inter alia, the legality of initiating the anti-dumping proceeding, the substance of the injury suffered by the Community industry, and the existence of a causal link between their imports and that alleged injury. On 2 June 2003, a hearing was arranged by the Commission, attended inter alia by the Pakistani exporting producers, including the applicant. The associations representing the Pakistani exporting producers then supplied the Commission with a document entitled 'Observations post-hearing as to injury', in which they reacted to the points discussed at that hearing.

11 In accordance with Article 16 of the basic regulation, the Commission carried out verification visits at the premises of the exporting producers in order to verify the information it had received in the replies to the questionnaire. However, while carrying out verifications at the second exporting producing company, Al-Abid Silk Mills, Karachi, the Commission received an anonymous letter addressed personally to the officials responsible for the verification visits, threatening them with death. In the light of the specific and personal nature of that threatening letter, the Commission took the view that the conditions required for carrying out the verifications were not met and that the investigation was significantly impeded. Consequently, the verification visits had to be interrupted. Thus it was only possible to carry out a full verification at the premises of one exporting producer, namely Gul Ahmed, and a partial verification at the premises of another exporting producer. The exports of those two companies represent more than 50% of the total CIF value of exports to the Community by the exporting producers in the sample. Moreover, taking the view that the necessary conditions were not met for carrying out the investigation on the spot in Pakistan, the Commission did not accept the requests for individual treatment submitted by the three Pakistani exporting producers not included in the sample.

12 On 10 December 2003, the Commission sent the applicant a definitive disclosure document setting out the facts and grounds on which it proposed the adoption of definitive anti-dumping measures, as well as a specific definitive disclosure document for the applicant ('the final information documents'). By letter of 5 January 2004, the applicant officially disputed the Commission's submissions as set out in the final information documents. Other information was submitted to the Commission by the applicant in letters dated 16 February 2004.

13 On 17 February 2004, the Commission replied to the letter of 5 January 2004. Although it had made some corrections to its calculations, it confirmed the findings it had set out in the final information documents. By letter of 27 February 2004, the applicant drew particular attention to the errors allegedly made by the Commission in its analysis.

14 On 23 February and 1 March 2004, the applicant requested a new hearing in order to submit evidence which would justify the decrease of the dumping margin, but the Commission did not accede to that request.

15 On 2 March 2004, the Council adopted Regulation (EC) No 397/2004 imposing a definitive anti-dumping duty on imports of cotton-type bed linen originating in Pakistan (OJ 2004 L 66, p. 1; 'the contested regulation').

16 By the contested regulation, the Council imposed anti-dumping duties of 13.1% on imports of bed linen of cotton fibres, pure or mixed with man-made fibres or flax (flax not being the dominant fibre), bleached, dyed or printed originating in Pakistan classifiable within CN codes ex 6302 21 00 (TARIC codes 6302 21 00 81 and 6302 21 00 89), ex 6302 22 90 (TARIC code 6302 22 90 19), ex 6302 31 10 (TARIC code 6302 31 10 90), ex 6302 31 90 (TARIC code 6302 31 90 90) and ex 6302 32 90 (TARIC code 6302 32 90 19).

17 Subsequently, the contested regulation was amended, in relation to the applicant, by Council Regulation (EC) No 695/2006 of 5 May 2006 (OJ 2006 L 121, p. 14). The amending regulation established the rate of definitive anti-dumping duty applicable to the products concerned manufactured by the applicant at 5.6%.

Procedure and forms of order sought

18 By application lodged at the Registry of the General Court on 28 May 2004, the applicant brought the present action.

19 By letter lodged at the Court Registry on 9 September 2004, the applicant requested that the proceedings be stayed until 31 December 2004. After giving the defendant the opportunity to submit its observations, the President of the Fifth Chamber of the General Court granted that request by order of 15 October 2004.

20 By document lodged at the Court Registry on 14 September 2004, the Commission applied for leave to intervene in support of the forms of order sought by the Council. Leave to intervene was granted by order of the President of the Fifth Chamber of the Court of 15 March 2005.

21 By letter lodged at the Court Registry on 31 December 2004, the applicant submitted a request to extend the stay of proceedings until 30 April 2005. In its observations, lodged at the Court Registry on 7 March 2005, the defendant took the view that, from a procedural point of view, it would be more advisable to stay the proceedings indefinitely, until such time as the applicant sought to reopen proceedings. By order of 31 March 2005, the President of the Fifth Chamber stayed the proceedings indefinitely.

22 By letter lodged at the Court Registry on 23 June 2006, the applicant requested that proceedings be reopened. After giving the defendant and the intervener the opportunity to submit their observations, the President of the Fifth Chamber reopened the proceedings by order of 7 September 2006.

23 By letter of 15 January 2007, the Commission informed the Court that it waived the right to lodge a statement in intervention, but that it would take part in the hearing.

24 As the composition of the Chambers of the Court was altered, the Judge-Rapporteur was assigned to the Seventh Chamber, to which the present case was therefore assigned. Since the Judge-Rapporteur initially designated was prevented from performing his duties, the President of the General Court reassigned the case on 16 October 2009 to another Judge-Rapporteur.

25 The applicant claims that the Court should:

- annul the contested regulation in so far as it concerns the applicant;

- order the Council to pay the costs.

26 The Council, supported by the Commission, contends that the Court should:

- dismiss the action;

- order the applicant to pay the costs.

27 The parties were notified of the closure of the written procedure on 14 May 2007. Upon hearing the report of the Judge-Rapporteur, the Court (Seventh Chamber) decided to open the oral procedure. The parties presented oral argument and replied to the questions put by the Court at the hearing on 27 October 2010.

Law

28 In support of its application for annulment, the applicant relies on five pleas in law, alleging respectively:

- infringement, with regard to the initiation of the investigation, of Article 5(7) and (9) of the basic regulation, and Articles 5.1 and 5.2 of Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 (GATT) (OJ 1994 L 336, p. 103, 'the 1994 Anti-dumping Code'), which is contained in Annex 1A to the Agreement establishing the World Trade Organisation (WTO) (OJ 1994 L 336, p. 1);

- manifest error of assessment and infringement of Article 2(3) and (5) and Article 18(4) of the basic regulation, and infringement of the 1994 Anti-dumping Code, with regard to calculation of the normal value;

- infringement of Article 2(10) of the basic regulation, of the 1994 Anti-dumping Code, and of the obligation to state adequate reasons under Article 253 EC, with regard to drawback adjustment in the comparison of the normal value and export price;

- manifest error of assessment and infringement of Article 3(1), (2), (3) and (5) of the basic regulation, and of the 1994 Anti-dumping Code, with regard to the determination of material injury;

- manifest error of assessment and infringement of Article 3(6) and (7) of the basic regulation, and the 1994 Anti-dumping Code, with regard to the establishment of a causal link between the allegedly dumped imports and the alleged injury.

29 The Court finds that the fifth plea is divided into four parts. By the first part of the fifth plea, the applicant alleges, in essence, that the Council made a manifest error of assessment by failing correctly to assess the effect of the alleged commercial decision, made consciously by the Community industry, to redirect its production and sales from the low-value segment to the high-value segment of the Community bed linen market. By the second part of the fifth plea, the applicant alleges, in essence, that the Council made a manifest error of assessment by failing to conclude that imports of the product concerned from Turkey and the central and eastern European states, the result of a decision by the Community industry to manufacture low-end products offshore in those countries, broke the causal relationship between imports from Pakistan and the injury caused to the Community industry. By the third part of the fifth plea, the applicant alleges, in essence, that the Council made an error of law by failing to examine whether the abolition of the previous anti-dumping duties on products from Pakistan, and the implementation of a scheme of generalised tariff preferences in favour of Pakistan at the start of 2002, had the effect of breaking the causal link between the injury suffered by the Community industry and the imports from Pakistan. By the fourth part of the fifth plea, the applicant alleges, in essence, that the Council infringed Article 3(7) of the basic regulation, and Article 3.5 of the Anti-dumping Agreement, by failing to assess the collective impact of other factors causing injury to the Community industry.

30 The Court considers it appropriate to rule first on the third part of the fifth plea.

Arguments of the parties

31 The applicant alleges, in essence, that the Council made an error of law by failing to examine whether the abolition of the previous anti-dumping duties on products from Pakistan, and the implementation of a scheme of generalised tariff preferences in favour of Pakistan at the start of 2002, had the effect of breaking the causal link between the injury allegedly suffered by the Community industry and the imports from Pakistan concerned by the contested regulation, even though those two measures had the immediate cumulative effect, according to the applicant, of reducing the cost of those imports by approximately 20%.

32 The Council accepts that the EU institutions did not assess the impact of the removal of the anti-dumping duties formerly imposed against Pakistan, or the scheme of generalised tariff preferences. It takes the view, however, that the basic regulation did not oblige them to do so.

33 In the first place, the Council argues, regulatory measures do not constitute 'known factors other than the dumped imports which at the same time are injuring the Community industry' within the meaning of Article 3(7) of the basic regulation. The examples referred to in that article demonstrate that 'other known factors' are developments or conduct on the market, but not amendments to the regulatory framework of the market. The Council adds that, since the introduction or reduction of the duties applied only to imports, they can have an impact only on the volume and price of the dumped imports, not on the Community industry. Moreover, those economic indicators had already been taken into consideration at the time of the determination of the cause of the injury.

34 At the hearing, the Council argued in that respect that amendments to the legislative context could not, as such, have a direct and immediate impact on the performances of European undertakings. In its submission, only conduct on the market, subsequent to those amendments, should be taken into consideration in order to determine whether the causal link between the injury suffered by the Community industry and the dumped imports from Pakistan had been broken.

35 In the second place, the Council argues that, even if the abolition of the previous anti-dumping duties and the establishment of the scheme of generalised tariff preferences in favour of Pakistan could be regarded as 'known factors other than the dumped imports which at the same time are injuring the Community industry', those factors were not relevant in this case, since they could not break the causal link referred to above.

36 The Council argues, in that respect, that the relevant clause of the scheme of generalised tariff preferences did not enter into force until 1 January 2002 and that the previous anti-dumping duties were not abolished until 30 January 2002. As the investigation period ran from 1 October 2001 to 30 September 2002, both those elements could have an impact on part of the investigation period, but could not explain the negative trend during the period considered. Furthermore, three of the six Pakistani exporters included in the sample, including the applicant, had not been subject to anti-dumping duties under the previous regulation. Community importers therefore had available to them at all times important Pakistani sources that were not subject to anti-dumping duties. The Council further argues that, following the entry into force of the scheme of generalised tariff preferences in favour of Pakistan and the abolition of the previous anti-dumping duties, the prices of the Community industry remained stable or increased, which showed that none of those events had a notable effect.

37 Lastly, the Council submits that the applicant failed to raise that point during the administrative procedure.

38 The Commission argued at the hearing, with reference to figures arising in particular from recital 78 of the contested regulation, that it had analysed the impact of the legislative amendments in question in the context of the assessment of the CIF value of the relevant products.

39 The applicant replies that the distinction made by the Council when interpreting the expression 'known factors other than the dumped imports which at the same time are injuring the Community industry' between, on the one hand, market-related developments or conduct and, on the other, amendments to the legislative context of the market is doubtful, as it finds no support in the applicable legislation.

40 Firstly, according to the applicant, neither the list in Article 3(7) of the basic regulation nor that provided in Article 3.5 of the 1994 Anti-dumping Code is exhaustive. The Council's proposed interpretation of Article 3(7) of the basic regulation would go against the objective pursued by Article 3.5 of the 1994 Anti-dumping Code, which is to ensure that the effects of other factors causing the injury suffered by the national industry are not attributed to the imports under investigation. The two amendments to the legislative context at issue in this case clearly had a known and major impact on the price of imports from Pakistan, and thus on the common market. The applicant underlines the importance of that aspect having regard to recital 106 of the contested regulation, arguing that, as envisaged by the latter, the average prices of imports from Pakistan had put pressure on the Community industry by, inter alia, forcing it to lower its prices.

41 Secondly, the applicant argues, although those changes on the Community market took effect, respectively, only from 1 and 30 January 2002, they nevertheless had a significant impact on the Community market, and on Community production. First of all, contracts for imports to the Community of the product concerned anticipated the abolition of the existing duties, which was known about long before it took effect.

42 Next, concerning the Council's statement that three of the six exporters forming the subject-matter of the sample taken into account in this case had not been subject to previous anti-dumping duties, the applicant replies that the whole sample represented only one third of the imports at issue during the investigation period, that the percentage of imports not affected by the anti-dumping duties was relatively low and that the abolition of ordinary customs duties under the scheme of generalised tariff preferences in favour of Pakistan had, in itself, the effect of significantly reducing the price of imports of Pakistani origin, of the order of 10%, which the Council did not take into account. Moreover, even the complainants acknowledged, in their complaint, the effects of that abolition of duties on the sudden increase of imports from Pakistan.

43 Finally, the applicant argues that several economic indicators put forward by the Council in support of its claims, such as the prices of the Community industry, the fall of its profitability level, sales volume and the market share of the imports concerned, clearly show that the injury suffered by the Community industry was concentrated between the end of 2001 and the end of the investigation period, that is to say after the legislative framework applicable to the Community market had already changed, that change having an obvious correlation with the evolution of the parameters mentioned above. The applicant thus argues that the Council has not established the existence of a 'negative trend' during the period considered, which cannot be explained by the abolition of the duties in question. At the hearing, the applicant argued that abolition of the duties in such a proportion necessarily had an impact on the market during the whole of the investigation period.

Findings of the Court

44 With regard to the establishment of a causal link between dumped imports and the injury suffered by the Community industry, Article 3(6) and (7) of the basic regulation (now Article 3(6) and (7) of Regulation No 1225/2009) provide:

'6. It must be demonstrated, from all the relevant evidence presented in relation to paragraph 2, that the dumped imports are causing injury within the meaning of this Regulation. Specifically, this shall entail a demonstration that the volume and/or price levels identified pursuant to paragraph 3 are responsible for an impact on the Community industry as provided for in paragraph 5, and that this impact exists to a degree which enables it to be classified as material.

7. Known factors other than the dumped imports which at the same time are injuring the Community industry shall also be examined to ensure that injury caused by these other factors is not attributed to the dumped imports under paragraph 6. Factors which may be considered in this respect include the volume and prices of imports not sold at dumping prices, contraction in demand or changes in the patterns of consumption, restrictive trade practices of, and competition between, third country and Community producers, developments in technology and the export performance and productivity of the Community industry.'

45 In the first place, it should be noted that it is sufficiently clear from the documents before the Court that, as from the start of the administrative procedure, the associations representing exporting producers of Pakistani bed linen duly drew the attention of the EU institutions to the fact that the injury allegedly suffered by the Community industry had, in any event, its origin not in the dumping of products originating in Pakistan, but in the abolition of the previous anti-dumping duties and ordinary customs duties in the context of the scheme of generalised tariff preferences in favour of Pakistan.

46 In fact, firstly, an express reference in that regard had already been made in pages 2 to 4, 23 and 24 of the letter of 10 February 2003, containing submissions of the associations representing Pakistani exporting producers of bed linen as to injury. Those associations maintained in particular, with reference to Article 3(7) of the basic regulation, that the alleged injury to the Community industry caused by the evolution of the market could not be attributed to imports originating in Pakistan subject to the anti-dumping proceeding.

47 Secondly, in page 24 of that letter, those associations argued that the complainant itself, that is to say Eurocoton, had indicated that 'the surge of imports [of bed linen from Pakistan] ... during the first quarter of 2002 has been helped by another EU concession granted to Pakistan of benefiting of a duty-free access to EU bed linen market under the anti-drug GSP special regime'. The associations representing the Pakistani exporting producers concluded therefrom that it was therefore clear that the increase in question was a consequence not of dumping but of the abolition of the previous duties.

48 Thirdly, in their observations submitted following the hearing of 2 June 2003, in pages 20 to 22, the associations representing the Pakistani exporting producers argued that European producers did not regard imports from Pakistan as the cause of an injury suffered by the Community industry and that, according to European producers, that industry had to fight low prices arising inter alia, first, from the comparative advantage of 'developing countries' and, second, from the abolition of the previous duties on imports from Pakistan, whether ordinary customs duties or anti-dumping duties.

49 In those circumstances, it must be held that the EU institutions were placed in a position, by the associations representing Pakistani exporting producers, to assess the effects which changes in the legislative framework were capable of producing on the Community industry and, consequently, on the causal link between the injury allegedly suffered by that industry and the imports forming the subject-matter of the anti-dumping proceeding, even though that question was absent from the applicant's observations on the final information documents.

50 In the second place, it should be noted that, as the applicant has argued, the complaint lodged by Eurocoton referred to the negative effects on the Community industry of the abolition of the previous anti-dumping duties and ordinary customs duties in the context of the scheme of generalised tariff preferences in favour of Pakistan. In that regard, in particular, after informing the Commission, on page 3 of its complaint, of the fact that the product in question enjoyed exemption from import duties under the scheme of generalised tariff preferences after having been previously subject to a 12% ad valorem duty, the complainant indicated, on page 7 of its complaint, that the previous anti-dumping duties had been abolished with effect from 30 January 2002. On page 8 of the complaint, the complainant put forward the conclusion referred to above, according to which the increase in imports from Pakistan had been facilitated by the exemption from certain duties.

51 In this case, it must therefore be held that the factor consisting in amendments to the legislative framework was known to the EU institutions not later than the date of the lodging of the complaint in the investigation in question.

52 Therefore, it is necessary to assess the arguments of the applicant concerning the third part of the fifth plea.

53 As regards, more particularly, the consequences of a possible abstention by the EU institutions charged with the anti-dumping investigation to examine all the 'known factors other than the dumped imports which at the same time are injuring the Community industry' in accordance with Article 3(7) of the basic regulation, it must be held that, if the injurious effects of the dumped imports are not correctly separated and distinguished from the injurious effects of those other factors, the said institutions will not be in a position to conclude that the injury which they attribute to the dumped imports has actually been caused by the latter, rather than by other factors. Thus, in the absence of such separation and distinction of the various injurious effects, those institutions would have no rational basis to conclude that the dumped imports are indeed causing the injury which justifies the imposition of anti-dumping duties. That separation of the injurious effects due to factors other than the dumped imports requires a concrete analysis of the nature and importance of the factors in question. Moreover, that analysis cannot be based on the simple hypothesis that the factors other than the dumped imports do not cause the injury and do not contribute to it.

54 In that respect, first of all, it should be noted that the Community texts must be interpreted, so far as possible, in the light of international law, in particular where such texts are intended precisely to implement an international agreement concluded by the Community, as is the case with the basic regulation, which was adopted in order to satisfy the international obligations flowing from the 1994 Anti-dumping Code (see, to that effect, Case C-341/95 Bettati [1998] ECR I-4355, paragraph 20; Case C-149/96 Portugal v Council [1999] ECR I-8395, paragraph 49, and Case C-76/00 P Petrotub and Republica [2003] ECR I-79, paragraphs 55 to 57).

55 Next, as regards the distinction established by the Council between, on the one hand, market-related developments or conduct and, on the other, amendments to the legislative framework of the market, it should be noted that that distinction does not follow either from Article 3(7) of the basic regulation or from Article 3.5 of the 1994 Anti-dumping Code. In any event, the distinction put forward by the Council cannot be deduced either from any common features presented by the known factors expressly listed in those provisions.

56 In fact, firstly, as is apparent from the very wording of those two provisions, the enumerations of 'known factors other than the dumped imports, contained therein are not exhaustive but, on the contrary, indicative, as is shown by the use of the word 'include' introducing the list of factors which may be regarded as relevant (see, by analogy, concerning the 1994 Anti-dumping Code, the reports of the special group established under the GATT and entitled 'United States - Imposition of anti-dumping duties on imports of fresh and chilled atlantic salmon from Norway', adopted on 27 April 1994 (ADP/87, paragraph 550), and 'Thailand - Anti-Dumping Duties on Angles, Shapes and Sections of Iron or Non-Alloy Steel and H-Beams from Poland', adopted on 28 September 2000 (WT/DS122/R, particularly paragraphs 7.274 and 7.275)).

57 Secondly, far from establishing a distinction between, on the one hand, market-related developments or conduct and, on the other, amendments to the legislative framework of the market, the common objective of Article 3(7) of the basic regulation and Article 3.5 of the 1994 Anti-dumping Code is to ensure that the imports forming the subject-matter of the investigation do not have attributed to them the possible negative effects of other possible factors having an impact on the injury suffered respectively by the Community or national industries, lest those industries have conferred upon them protection going beyond what is necessary (see, by analogy, Case C-535/06 P Moser Baer India v Council [2009] ECR I-7051, paragraph 90). That is moreover the reason why Article 3.5 of the 1994 Anti-dumping Code places the emphasis on the obligation to examine all the relevant known factors, that examination having to appear in the documents of the competent authorities (see, to that effect, report of the special group established under the GATT, 'Thailand - Anti-Dumping Duties on Angles, Shapes and Sections of Iron or Non-Alloy Steel and H-Beams from Poland', paragraph 56 above, in particular paragraph 7.275).

58 Moreover, if the increase in imports of a product hitherto subject to quantitative restrictions may, after the expiry of those restrictions - which must, like the two contested measures in this case, be classified, in accordance with the distinction proposed by the Council, as an amendment of the legislative framework of the market - be taken into account when assessing the existence of an injury (see, to that effect, Case T-410/06 Foshan City Nanhai Golden Step Industrial v Council [2010] ECR II-0000, paragraphs 133 to 135), although Article 3(5) of the basic regulation refers only to the 'the impact of the dumped imports on the Community industry' and, subsequently, to a non-exhaustive list of factors and relevant economic indicators which have an impact on the situation of that industry, it cannot be otherwise for the assessment of causality in accordance with Article 3(7) of the same regulation.

59 It follows that the abolition of the previous anti-dumping duties and ordinary customs duties under the scheme of generalised tariff preferences were known factors which the EU institutions had to take into account in assessing, in the context of Article 3(7) of the basic regulation, the reality of the causal link between the injury suffered by the Community industry and the imports from Pakistan of the product concerned, forming the subject-matter of the anti-dumping investigation. A contrary conclusion would deprive the obligation arising from that article of its useful effect in circumstances such as those in this case, where the question concerning the effects of amendments to the legislative framework had been clearly raised in the administrative procedure.

60 The Council does not deny that it did not take account of the impact of the two measures referred to above on the causal link between the injury suffered by the Community industry and the imports from Pakistan of the product concerned, which were the subject-matter of the anti-dumping investigation, even though the amended legal regime applied during the greater part of the investigation period. In those circumstances, it must be held that the EU institutions did not correctly carry out the determination of the said causal link (see, by analogy, Case C-358/89 Extramet Industrie v Council [1992] ECR I-3813, paragraphs 15 to 20).

61 That conclusion is, moreover, confirmed by the fact that the evolution of the economic factors presented in the contested regulation shows that it was between the end of 2001 and the end of the investigation period that the imports from Pakistan made their greatest progression on the Community market and that the Community industry experienced a significant deterioration in its position. One cannot therefore exclude the possibility that taking account of the effects of the two legislative amendments in question could have had a significant impact on the conclusion of the EU institutions as to the causal link referred to above.

62 In that respect, first, concerning imports from Pakistan, it should be noted at the outset that, according to recital 76 of the contested regulation, '[a]fter a drop to 31 800 tonnes in 2000 imports bounced back to 35 500 tonnes in 2001' and that '[b]etween 2001 and the investigation period they rose sharply by almost 14 000 tonnes; i.e. by more than one third'. That latter substantial increase is confirmed in recital 104 of the said regulation, concerning the analysis of the effects of the dumped imports.

63 Next, recital 77 of the contested regulation shows that, after having amounted to 17.2% in 2000, the share of the European market corresponding to the said imports increased in 2001 to 18.9%, and during the investigation period to 24.7%. That same information is repeated in recital 104 of the said regulation.

64 Finally, regarding the average prices of imports from Pakistan, according to recital 78 of the contested regulation, they first increased from 1999 to 2000, rising from EUR 5.95 to 6.81 per kg, to then progressively decrease during the following years, reaching EUR 6.34 per kg in 2001 and EUR 5.93 per kg during the investigation period.

65 Secondly, concerning the significant deterioration in the position of the Community industry, it is apparent, first, from recital 87 of the contested regulation that the market share held by that industry fell from 20.8 to 18.9% during the investigation period. Although it fluctuated, initially, around 20% between 1999 and 2001, it was 'between 2001 and the investigation period' that it diminished by 1.5% (in absolute terms). Nor, in that context, does the statement in recital 101 of the said regulation that, over the period considered, namely between 1999 and the end of the investigation period, the market share of the Community industry diminished by 9.1% (in relative terms), contradict the consideration that a significant fall in the Community industry's market share took place, in particular, during the investigation period.

66 Next, as regards the profitability of the Community producers in the chosen sample, it is indicated, in recital 96 of the contested regulation, that it fell significantly during the period considered, falling from 7.7% in 1999 to 4.4% during the investigation period, representing a diminution of 42%.

67 Finally, according to the same recital, the yield on investments followed the same trend, falling by 44% from 10.5% in 1999 to 5.9% during the investigation period. Furthermore, according to recital 92 of the contested regulation, average sales prices per kilogramme of the Community industry overall went up marginally from EUR 11.3 in 1999 to EUR 11.5 in 2001, but dropped subsequently to EUR 11.1 during the investigation period. It should, moreover, be noted that these are figures, concerning market share, profitability, yield and average sales prices of the Community industry, which had been particularly emphasised in recital 101 of the contested regulation, drawing a conclusion on the injury suffered by the said industry.

68 In the following part of the said regulation, concerning the causal link, it was stated, in particular in recitals 106 and 107, that it was precisely taking account of their impact, in terms both of volume and of price, on the Community market that imports from Pakistan put strong downward pressure on the prices and sales volumes of the Community industry. It was concluded, in recital 116 of the contested regulation, that the substantial increase in volume and market share of the imports originating in Pakistan, 'especially between 2001 and the investigation period', as well as the considerable decrease in their sales prices and the level of price undercutting found during the investigation period coincided in time with the material injury suffered by the Community industry.

69 It follows from the whole of the factors referred to in paragraphs 62 to 68 above that the most intense period of injury suffered by the Community industry coincided with the period when the amended legislative framework applied. Moreover, it must be held that a suspension or abolition of customs duties or anti-dumping duties on imports from a non-member country is a factor likely to influence the volumes and prices of the latter, and, consequently, the situation of the Community industry and the injury claimed. That is all the more so in this case as it has been found, in recital 105 of the contested regulation, that competition operated essentially at the price level.

70 With regard to the Council's claim that the prices of the Community industry remained stable or even increased following the entry into force of the scheme of generalised tariff preferences in favour of Pakistan and the abolition of the previous anti-dumping duties, demonstrating that those events had no notable effects, this Court finds that, as is shown by recital 92 of the contested regulation, and as stated in paragraph 67 above, the average prices per kilo of the Community industry taken as a whole fell, during the investigation period, to EUR 11.1, having amounted to EUR 11.5 in 2001.

71 Similarly, regarding the average prices per kilo charged by the Community producers included in the sample, which, alone, progressively increased, increasing from EUR 13.3 to 14.2 over the period considered, it was found, in the abovementioned recital of the contested regulation, that that development had been linked to the fact that 'the Community industry has been forced to shift to more sales of higher value niche products as their sales in the high volume, mass market were taken over by imports from low price countries'. Thus, taking that consideration into account, read in combination with recitals 105 to 107 and 116 of the contested regulation, which concern the negative effects of the 'considerable decrease' of the sales prices of the imports from Pakistan, this Court finds that the abovementioned claim by the Council, that the amendments to the legislative framework had no noticeable effects by reason of the lack of impact on Community prices, is not supported by the facts.

72 This Court further finds that, contrary to the arguments put forward by the Council at the hearing, and in accordance with paragraph 53 above, it cannot be presumed, through a mere hypothesis, that the impact of the legislative amendments in question was, in any event, only delayed, that it concerned only a negligible part of the investigation period or that it did not explain the previous negative trends.

73 In the first place, the Court considers, like the applicant, that the possibility cannot be excluded that the import contracts towards the Community of the product concerned anticipated the suspension and abolition of the existing customs duties and previous anti-dumping duties, the latter being known in advance or foreseeable, and that thus, no later than the date of the entry into force of the legislative amendments in question, their impact on imports from Pakistan may have been real. Moreover, the Council has not provided concrete evidence to demonstrate that the effects of those amendments on the market could only be delayed.

74 Secondly, the existence of certain previous negative trends, assuming it is proved, cannot be decisive since, as has been established in paragraph 68 above, the most intense period of injury suffered by the Community industry, which justified, in the contested decision, the imposition of anti-dumping duties, coincided with that of the application of the amended legislative regime, covering the greater part of the investigation period.

75 As regards the Council's argument that the abolition of the previous anti-dumping duties was not able to break the causal link between the injury suffered by the Community industry and the imports from Pakistan, since half the exporting producers in the sample, including the applicant, were not subject to those duties, the Court finds that argument irrelevant to the question whether or not the EU institutions entrusted with the investigation failed to fulfil their obligation to examine all the known factors, in accordance with Article 3(7) of the basic regulation.

76 First, in contrast with the possibility, provided for in Article 17(3) of the basic regulation, of establishing an individual dumping margin, the said regulation does not provide for the establishment of an individual causal link where there are a large number of exporters subject to the same anti-dumping investigation. According to Article 3(6) of that regulation, demonstration of the causal link between the dumped imports and the injury caused to the Community industry implies demonstrating that the volume and/or the price levels referred to in Article 3(3) have a major impact on that industry. The data in question are thus necessarily overall economic data which concern, on the one hand, all imports of the product concerned to the Community market, and, on the other, all of the Community industry. The fact that the applicant was not itself subject to the previous anti-dumping duties, and that the same applied to half the exporting producers in the sample in this case, is thus not in itself decisive for the purposes of assessing the said causal link.

77 Next, where sampling is carried out in accordance with Article 17 of the basic regulation, the EU institutions must, in principle, take into consideration the data concerning the exports of all the undertakings in the sample. It follows that, in this case, they should have assessed whether, for three of the six undertakings in the sample, there had been, as from 30 January 2002, a reduction in the export price corresponding to the rate of the previous anti-dumping duties to which they had previously been subject, or should have determined the effect on prices of the abolition of the previous anti-dumping duties.

78 Moreover, in so far as the undertakings in the sample not subject to the previous anti-dumping duties constituted only a part of the latter, that sample itself representing, in its entirety, only about 32% of the volume of Pakistani exports of the product concerned to the Community during the investigation period, it cannot be taken for granted that Community importers always had access to available Pakistani sources of products not subject to anti-dumping duties, in the absence of any evidence submitted by the Council in that regard, taking account in particular of the exporting Pakistani undertakings' production capacities. In any event, there is nothing to indicate that the Community importers obtained supplies, in the past, exclusively or predominantly, from those undertakings not subject to the previous anti-dumping duties.

79 Finally, it is apparent from recitals 104 to 109 of the contested regulation that, when establishing the causal link pursuant to Article 3(6) of the basic regulation, the EU institutions referred, as regards the volume of imports from Pakistan, the share of the Community market held by those imports and the price of the latter, to overall economic indicators and not to data specific to the undertakings in the sample.

80 Consequently, the fact that three exporting producers in the sample, including the applicant, had not been subject to the previous anti-dumping duties did not exonerate the institutions entrusted with the investigation from examining the impact of the abolition of those duties on the injury caused to the Community industry, and, thus, assessing whether or not the causal link had been broken as a result of that measure.

81 Moreover, the mere failure to take account, under the heading 'known factors other than the dumped imports which at the same time are injuring the Community industry', of the elimination of customs barriers of the order of 12% following the introduction in relation to Pakistan of the scheme of generalised tariff preferences, would have been sufficient to support the conclusion that the institutions entrusted with the investigation had not fulfilled all their obligations under Article 3(7) of the basic regulation. This conclusion is all the more justified inasmuch as the level of anti-dumping duties fixed by the contested regulation was 13.1%.

82 Finally, concerning the Commission's claim at the hearing that it took account of the amendments to the legislative framework in question in particular when it analysed the CIF values of the products concerned, the Court considers that mere reference to import prices, in recital 78 of the contested regulation, or, more generally, to volumes, market shares and prices of imports from Pakistan, are not sufficient to demonstrate that the impacts of the legislative amendments on the Community industry were taken into account by the institutions entrusted with the investigation.

83 Those economic indicators, on which the analysis of the injury suffered by the Community industry and of the causal link depends, a necessarily diachronic and comparative analysis of a series of relevant indicators which vary over time, must be assessed in such a way as to permit a differentiation and distinction between the various potential causes of the alleged injury, in accordance with what has been held in paragraph 53 above. That implies that conclusions concerning the impact of the imports forming the subject-matter of the anti-dumping investigation on the Community industry can be validly drawn only if the situation of the Community producers at the time of the investigation is compared with that in previous years in a manner that is not biased by factors rendering that comparison incomplete, and thus erroneous.

84 More particularly, it is not apparent from the analysis carried out by the EU institutions in this case, even in the form of a mere estimate, what the injury suffered by the Community industry would have been in the absence of any dumping, that is to say what would have been the injury arising merely from the entry into force of the scheme of generalised tariff preferences and the abolition of the previous anti-dumping duties, whether in terms of loss of market share, reduction in profitability or performance of the industry referred to above, of renunciation of lower segments of the market or any other relevant economic indicator. It was all the more necessary to analyse the impact of the measures in question since several passages of the contested regulation state that competition on prices had been 'fierce', so that a diminution in the prices of imports from Pakistan following the said legislative amendments could not, in all probability, have remained without impact on the state of the market.

85 The third part of the fifth plea is therefore well founded. Therefore, and taking into account the fact, first, that it is not for the General Court to substitute its assessment of the matter for that of the Council, and that, secondly, one cannot exclude the possibility that, without the error of law in question, the Council would not have determined the existence of a causal link between the imports forming the subject-matter of the anti-dumping procedure and the injury suffered by the Community industry, the contested regulation must be annulled in so far as it affects the applicant, without there being any need to examine its other pleas and arguments.

86 It should, moreover, be stated, concerning the effects on this action of the adoption of amending Regulation No 695/2006 (see paragraph 17 above), reducing the anti-dumping duty applicable to the applicant's products from 13.1% to 5.6%, that that regulation was adopted following the opening of a partial intermediate re-examination, limited to dumping, of the measures adopted by the contested regulation. It should also be noted that that amending regulation does not go back over the analysis of injury and the causal link carried out by the Commission in the course of the first investigation, as, moreover, the parties emphasised at the hearing, so that that regulation is of no relevance to the present dispute.

Costs

87 Under Article 87(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party's pleadings. Since the Council has been unsuccessful, it must be ordered to pay the costs, as applied for by the applicant.

88 In accordance with the first subparagraph of Article 87(4) of the Rules of Procedure, the institutions which have intervened in the proceedings are to bear their own costs. Consequently the Commission, which has intervened in support of the Council, must bear its own costs.

On those grounds,

THE GENERAL COURT (Seventh Chamber),

hereby:

1. Annuls Council Regulation (EC) No 397/2004 of 2 March 2004 imposing a definitive anti-dumping duty on imports of cotton-type bed linen originating in Pakistan in so far as it concerns Gul Ahmed Textile Mills Ltd;

2. Orders the Council of the European Union to bear its own costs and pay those incurred by Gul Ahmed Textile Mills;

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