GC, 9th chamber, September 15, 2016, No T-139/14

THE GENERAL COURT (Ninth Chamber),

Background to the dispute

Administrative procedure

1 The applicants, PT Wilmar Bioenergi Indonesia and PT Wilmar Nabati Indonesia, are Indonesian biodiesel producers belonging to the same group.

2 Biodiesel, an alternative fuel similar to conventional diesel, is produced in the European Union, but it is also imported in large quantities. In Indonesia, it is mainly produced from crude palm oil ('CPO'), the main raw material used in the production of biodiesel.

3 Following a complaint lodged on 17 July 2012 by the European Biodiesel Board (EBB) on behalf of producers accounting for more than 60% of the total production of biodiesel in the European Union, the European Commission published, on 29 August 2012, a notice of initiation of an anti-dumping proceeding concerning imports of biodiesel originating in Argentina and Indonesia (OJ 2012 C 260, p. 8), in accordance with Article 5 of 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) ('the basic regulation').

4 The investigation of dumping and injury covered the period from 1 July 2011 to 30 June 2012 ('the investigation period'). The examination of trends relevant for the assessment of injury covered the period from 1 January 2009 to the end of the investigation period.

5 Under Article 17(1) of the basic regulation, the Commission selected, in the context of the investigation in question, a sample of four exporting producers or groups of exporting producers from Indonesia, including the applicants, based on the largest representative volume of exports of the product concerned to the European Union.

6 On 27 May 2013, the Commission adopted Regulation (EU) No 490-2013 imposing a provisional anti-dumping duty on imports of biodiesel originating in Argentina and Indonesia (OJ 2013 L 141, p. 6) ('the provisional regulation').

7 In recitals 60 to 63 of the provisional regulation, the Commission found that the domestic sales in Indonesia were not representative and provisionally calculated the normal value of the like product in accordance with Article 2(3) and (6) of the basic regulation. Consequently, that normal value was calculated on the basis of actual production costs found during the period under investigation, plus selling, administrative and other general costs and a reasonable profit margin.

8 As regards the costs connected with production of the like product, the Commission stated, in recital 63 of the provisional regulation, that it would examine further at the definitive stage of the investigation and in the context of the anti-subsidy investigation the complainants' statement that Indonesia's Differential Export Tax system ('the DET system') depressed the price of palm oil and therefore distorted the costs connected with the production of biodiesel.

9 In recitals 64 and 65 of the provisional regulation, the Commission noted that the investigation had shown that the Indonesian domestic market for biodiesel was heavily regulated by the State, with the result that the amount of profit could not be based on actual data from the sampled companies given that the domestic sales of biodiesel are not regarded as being made in the ordinary course of trade. It also stated that, therefore, the amount for profit used when constructing the normal value had been determined pursuant to Article 2(6)(c) of the basic regulation.

10 In the provisional regulation, the Commission concluded that the imports of biodiesel produced by the applicant were dumped, the provisional dumping margin being 9.6% and the provisional injury margin 26.4%. In accordance with the lesser duty rule, it set the provisional anti-dumping duty rate at 9.6% for the applicant.

11 On 28 May 2013, the Commission informed the applicants of the essential facts and considerations on the basis of which provisional anti-dumping measures were adopted.

12 On 1 July 2013, the applicants submitted observations on the essential facts and considerations referred to in paragraph 11 above.

13 On 1 October 2013, the Commission informed the applicants of the essential facts and considerations on the basis of which it intended to recommend the imposition of a definitive anti-dumping duty on the imports of the product concerned ('the definitive disclosure'). The applicants submitted their observations on the definitive disclosure on 17 October 2013.

14 On 19 November 2013, the Council of the European Union adopted Implementing Regulation (EU) No 1194-2013 imposing a definitive anti-dumping duty and collecting definitively the provisional duty imposed on imports of biodiesel originating in Argentina and Indonesia (OJ 2013 L 315, p. 2) ('the contested regulation').

Contested regulation

15 In recital 28 of the contested regulation, the Council confirmed the conclusions of the provisional regulation, in accordance with which the normal value of the like product was calculated pursuant to Article 2(3) and (6) of the basic regulation. In that regard, the Council stated that domestic sales could not be regarded as being made in the ordinary course of trade, since the Indonesian biodiesel market was heavily regulated by the State.

16 However, as regards the calculation of costs relating to the production of the product concerned, it is apparent from recitals 30, 34 and 66 to 70 of the contested regulation that, following a further investigation, the Council accepted the Commission's proposal to amend the conclusions in recital 63 of the provisional regulation. It confirmed, inter alia, the assessment that the DET system depressed the price of CPO, the main raw material, on the domestic market to an artificially low level, influencing the costs of the biodiesel producers. Given that the costs relating to the production and sale of the product concerned were therefore not reasonably reflected in the records of the Indonesian producers under investigation, the Council decided, in accordance with Article 2(5) of the basic regulation, to disregard the actual costs of CPO, as indicated in the records of the companies concerned, and to replace them with the price at which those companies would have purchased it in the absence of distortion, namely by the export reference price published by the Indonesian authorities which is in turn based on published international prices (Rotterdam, Malaysia and Indonesia) ('the HPE price').

17 In view of the dumping margins found and the level of injury caused to the European Union industry, the Council decided that the amounts secured by way of the provisional anti-dumping duty, imposed by the provisional regulation, should be definitively collected and that a definitive anti-dumping duty was to be imposed on imports of biodiesel originating in Indonesia.

18 As regards the applicants, the rate of the definitive anti-dumping duty applicable to the product concerned was set at 20.0% and at EUR 174.91 per tonne net.

Procedure and forms of order sought

19 By application lodged at the Court Registry on 19 February 2014, the applicants brought the present action.

20 By documents lodged at the Court Registry, on 13 May and 2 June 2014 respectively, the Commission and the EBB sought leave to intervene in the present proceedings in support of the form of order sought by the Council. By orders of 17 July and 22 September 2014, the President of the Ninth Chamber of the General Court granted them leave to intervene.

21 Since the main parties requested that certain confidential material in the file be omitted from the documents communicated to the EBB, only the non-confidential versions of the procedural documents at issue were communicated to that party. The EBB did not submit any objections to the requests for confidential treatment.

22 The interveners submitted their statements in intervention and the other parties submitted their observations thereon within the prescribed time limits.

23 Upon hearing the report of the Judge-Rapporteur, the Court (Ninth Chamber) decided to open the oral part of the procedure. In addition, in the context of the measures of organisation of procedure provided for in Article 89 of its Rules of Procedure, the Court put written questions to the parties, which replied within the prescribed period.

24 The parties presented oral argument and answered questions put to them by the Court at the hearing on 28 April 2016.

25 The applicant claims that the Court should:

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

- order the Council to pay the costs.

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

- dismiss the action as unfounded;

- order the applicant to pay the costs.

Law

27 In support of their action, the applicants put forward eleven pleas in law: the first and sixth pleas in law relate, in essence, to the rejection of the CPO prices in the records; the second, third and fifth pleas in law relate, in essence, to the replacement of the real costs of CPO with the HPE price; the fourth plea in law alleges infringement of Article 2(3) and (5) of the basic regulation; the seventh plea in law alleges infringement of Article 2(10) of the basic regulation; the eighth plea in law alleges a manifest error of assessment relating to the use of incorrect raw materials; the ninth plea in law alleges a manifest error of assessment committed in the context of the adjustment of the costs of CPO purchased from related companies; the tenth plea in law concerns the determination of the applicants' profit margin and the eleventh concerns the profit margin retained for related trading companies located inside the European Union.

28 It is necessary to begin by examining the fourth plea in law followed by the sixth plea in law.

The fourth plea in law, alleging infringement of Article 2(3) and (5) of the basic regulation

29 That plea in law, which formally alleges infringement of Article 2(3) and (5) of the basic regulation, concerns, in essence, use of the normal value of the like product calculated pursuant to Article 2(3) of the basic regulation.

30 The applicants divide the present plea into three parts.

31 In the context of the first and third parts, the applicants call into question the findings in recital 28 of the contested regulation (see paragraph 15 above). They claim, first, in essence, that the Council distorted the facts justifying the construction of the normal value of the like product pursuant to Article 2(3) of the basic regulation and, secondly, that the statement that the biodiesel market in Indonesia is heavily regulated by the State is both unsubstantiated and incorrect.

32 In the context of the second part, the applicants complain, in essence, that the Council wrongly interpreted the concept of 'particular market situation'. They claim that the justification for the calculation of the normal value of the like product and the adjustment of the CPO costs, included in recital 68 of the contested regulation and based on the existence of such a market situation for CPO prices, is incorrect since that justification relies on an interpretation of that concept which does not comply with Article 2(3) of the basic regulation.

33 The Council, supported by the Commission, contends that those arguments are unfounded. Moreover, it submits that the argument alleging infringement of the rights of the defence and the obligation to state reasons is inadmissible in so far as concerns the concept of a particular market situation, maintaining that it was submitted for the first time only in the reply.

34 The Court considers that it is necessary to examine the three parts of the fourth plea in law together, taking into account the fact that they are closely linked.

35 As regards the plea of inadmissibility raised by the Council, it must be recalled that it is clear from Article 44(1)(c) in conjunction with Article 48(2) of the Rules of Procedure of the General Court of 2 May 1991 that no new plea in law may be introduced after the application has been lodged unless that plea is based on matters of law or of fact which come to light in the course of the procedure. However, a plea or an argument which may be regarded as amplifying a plea put forward previously, whether directly or by implication, in the application and which is closely connected therewith must be declared admissible (see judgment of 22 May 2014, Guangdong Kito Ceramics and Others v Council, T 633-11, not published, EU:T:2014:271, paragraph 65 and the case-law cited).

36 In the present case, the applicants' argument alleging infringement of the rights of the defence and the obligation to state reasons in so far as concerns the concept of a particular market situation merely develops the argument that they put forward in the application in support of the second part of the fourth plea in law. It follows that the plea of inadmissibility concerning the argument in question must be rejected.

37 Furthermore, it must be noted that the objections made by the applicants in so far as concerns the use of the normal value of the like product calculated pursuant to Article 2(3) of the basic regulation allege, in essence, first, that the relevant reasoning contained in the contested regulation generates confusion, secondly, infringement of the rights of the defence and, thirdly, substantive errors.

38 In the first place, as regards the objection alleging infringement of the obligation to state reasons, at the outset, it must be recalled, first, that, according to case-law, the statement of reasons required by Article 296 TFEU must show clearly and unequivocally the reasoning of the European Union authority which adopted the contested measure, so as to inform the persons concerned of the justification for the measure adopted and thus to enable them to defend their rights and the Court to exercise its power of review (see, to that effect, judgments of 7 May 1987, NTN Toyo Bearing and Others v Council, 240-84, EU:C:1987:202, paragraph 31, and of 12 October 1999, Acme v Council, T 48-96, EU:T:1999:251, paragraph 141).

39 However, it is not necessary for the reasoning of the regulation to go into all the relevant facts and points of law, since the question whether the statement of reasons meets the requirements of Article 296 TFEU must be assessed with regard not only to its wording but also to its context and to all the legal rules governing the matter in question (see, to that effect, judgments of 26 June 1986, Nicolet Instrument, 203-85, EU:C:1986:269, paragraph 10, and of 12 December 2014, Crown Equipment (Suzhou) and Crown Gabelstapler v Council, T 643-11, not published, EU:T:2014:1076, paragraph 130).

40 Provided that a regulation imposing definitive anti-dumping duties, as in the present case, falls within the general scheme of a series of measures, it cannot be required that its statement of reasons specify the often very numerous and complex matters of fact and law dealt with in the regulation or that the institutions adopt a position on all the arguments relied on by the parties concerned. On the contrary, it is sufficient for the institution which adopted the measure to set out the facts and the legal considerations which have decisive importance in the scheme of the contested regulation (judgment of 13 September 2010, Whirlpool Europe v Council, T 314-06, EU:T:2010:390, paragraph 114).

41 Furthermore, it must be recalled that, by virtue of the first subparagraph of Article 2(3) of the basic regulation, where 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 is to 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 ('the constructed normal value'). Those derogations from the method of establishing the normal value on the basis of actual prices are exhaustive in nature (see, to that effect, judgments of 3 May 2001, Ajinomoto and NutraSweet v Council and Commission, C 76-98 P and C 77-98 P, EU:C:2001:234, paragraph 40, and of 1 October 2014, Council v Alumina, C 393-13 P, EU:C:2014:2245, paragraph 21).

42 Those considerations must be taken into account when examining whether the grounds stated in the contested regulation concerning the use of the constructed normal value of the like product meet the requirements arising from the obligation to state reasons enshrined in Article 296 TFEU.

43 In the present case, it must be noted that the reasons justifying the construction of the normal value of the like product pursuant to Article 2(3) of the basic regulation appear in recitals 28 and 75 of the contested regulation.

44 In recital 75 of the contested regulation, the Council confirmed recitals 60 to 62 of the provisional regulation, in which the Commission found that the sales of the like product on the Indonesian market were not representative as regards their volume, and, consequently, upheld the reason given by the Commission in recital 63 of that regulation to justify the use of the constructed normal value of the like product. In that regard, it must be noted that the non-representative nature of the sales of that product on the domestic market of the exporting country is one of the situations referred to in the first subparagraph of Article 2(3) of the basic regulation which allows for the application of an alternative method of calculating the normal value.

45 Furthermore, in recital 28 of the contested regulation, the Council considered, in order to justify the use of the constructed normal value of that product, that sales of biodiesel on the Indonesian market could not be regarded as being made in the ordinary course of trade on the ground that that market was heavily regulated by the State. That justification also, like that referred to in paragraph 44 above, refers to a situation allowing the normal value to be constructed pursuant to Article 2(3) of the basic regulation.

46 Accordingly, the Council set out, in the contested regulation, two grounds justifying use of the constructed normal value of the like product pursuant to Article 2(3) of the basic regulation. It cannot reasonably be considered that such an approach is ambiguous and constitutes an infringement of the obligation to state reasons.

47 That conclusion cannot be called into question by the applicants' argument that, in recital 68 of the contested regulation, reference is made to the concept of a particular market situation concerning the calculation of the normal value of the like product.

48 Although a particular market situation can, pursuant to Article 2(3) of the basic regulation, justify a derogation from the method of establishing the normal value of the like product on the basis of actual prices where, as a result of that situation, such sales do not permit a proper comparison, it does not follow from the contested regulation that, in the present case, the existence of such a situation was alleged by the institutions in respect of Indonesia in order to justify the use of the constructed normal value of the like product.

49 In that context, it must be recalled that Article 2(3) of the basic regulation indicates only the criteria for disregarding the method for establishing normal value calculated on the basis of the prices on the domestic market of the exporting country and does not prescribe the detailed rules for calculating the production costs for establishing the constructed normal value, that calculation being governed by Article 2(5) (judgment of 7 February 2013, EuroChem MCC v Council, T 84-07, EU:T:2013:64, paragraph 50).

50 It follows, as the Council rightly submits, that it is necessary to distinguish those two questions.

51 In the present case, it follows from recitals 28 to 34 and 66 to 70 of the contested regulation that the concept of a particular market situation forms part of the explanations associated with the application of Article 2(5) of the basic regulation justifying the method applied in order to calculate the production costs when establishing the constructed normal value of the like product and does not seek to provide a new or additional ground in support of the use of the constructed normal value method pursuant to Article 2(3) of that regulation.

52 It follows that the objection alleging infringement of the obligation to state reasons relied on by the applicants concerning the use of the constructed normal value of the like product pursuant to Article 2(3) of the basic regulation must be rejected.

53 In the second place, as regards infringement of the applicants' rights of defence, as a preliminary point, it must be recalled that it is apparent from the case-law that the requirements stemming from the right to a fair hearing must be observed not only in the course of proceedings which may result in the imposition of penalties, but also in investigative proceedings prior to the adoption of anti-dumping regulations which may directly and individually affect the undertakings concerned and entail adverse consequences for them (judgments of 27 June 1991, Al-Jubail Fertilizer v Council, C 49-88, EU:C:1991:276, paragraph 15, and of 10 March 2009, Interpipe Niko Tube and Interpipe NTRP v Council, T 249-06, EU:T:2009:62, paragraph 64). In particular, in the context of the communication of information to the undertakings concerned during the investigation procedure, the respect for their rights of defence presupposes that those undertakings should have been placed in a position during the administrative procedure in which they could effectively make known their views on the correctness and relevance of the facts and circumstances alleged and on the evidence presented by the Commission in support of its allegation concerning the existence of dumping and the resultant injury (judgments of 27 June 1991, Al-Jubail Fertilizer v Council, C 49-88, EU:C:1991:276, paragraph 17, and of 16 February 2012, Council and Commission v Interpipe Niko Tube and Interpipe NTRP, C 191-09 P and C 200-09 P, EU:C:2012:78, paragraph 76). Those requirements have also been made clear in Article 20 of the basic regulation, paragraph 2 of which provides that complainants, importers and exporters and their representative associations, and representatives of the exporting country 'may request final disclosure of the essential facts and considerations on the basis of which it is intended to recommend the imposition of definitive measures'.

54 In the present case, first, it must be noted that the reasons given by the Council in the contested regulation in order to justify the use of the constructed normal value of the like product pursuant to Article 2(3) of the basic regulation, alleging both the absence of sales made during the ordinary course of trade (recital 28) and the absence of representative sales on the Indonesian biodiesel market (recital 75) were relied on during the administrative procedure and form part of the definitive disclosure (recitals 24 and 63).

55 Secondly, it is apparent from the file that, during the administrative procedure, the applicants had the opportunity to state their views effectively on the reasoning relied on by the Commission to justify the use of the constructed normal value of the like product pursuant to Article 2(3) of the basic regulation.

56 Thirdly, as has already been stated (see paragraphs 47 to 51 above), the concept of a particular market situation in the contested regulation was used in the context of the explanations associated with the application of Article 2(5) of the basic regulation in order to justify the method applied for calculating the production costs when establishing the constructed normal value of the like product and does not seek to provide a new or additional reason justifying the use of the constructed normal value method pursuant to Article 2(3) of that regulation.

57 Consequently, it must be concluded that, as regards the use of the constructed normal value of the like product pursuant to Article 2(3) of the basic regulation, the applicants' rights of defence were not infringed, and nor were the institutions' obligations of diligence and sound administration.

58 In the third place, it is necessary to examine substantive arguments, alleging, in essence, first, incorrect interpretation of the concept of a particular market situation and, secondly, that the biodiesel market in Indonesia is not regulated.

59 In that regard, first, it must be noted that each of the situations referred to in Article 2(3) of the basic regulation allow the method for establishing normal value based on real prices on the domestic market of the exporting country to be disregarded and the constructed normal value to be used and, as a consequence, the production costs to be determined by virtue of Article 2(5) of the basic regulation.

60 Secondly, it must be noted that the applicants did not dispute either in their written submissions or at the hearing that, in the present case, the institutions could use the constructed normal value of the like product pursuant to Article 2(3) of the basic regulation on account of the non-representative nature of biodiesel sales on the Indonesian market, and that, consequently, the conditions for application of a situation referred to in Article 2(3) of the basic regulation were met.

61 Thirdly, as noted in paragraphs 47 to 51 above and as the institutions rightly contend in their written submissions, it is not apparent from the contested regulation that the existence of a particular situation was alleged in order to justify the construction of the normal value of the like product pursuant to Article 2(3) of the basic regulation. Consequently, the question whether such a situation should concern the product under investigation or its inputs is irrelevant for the purposes of assessing the lawfulness of the use of the constructed normal value.

62 Fourthly, the objection by which the applicants call into question the conclusion in recital 28 of the contested regulation that the Indonesian biodiesel market was heavily regulated by the State so that sales of that product on that market were not made in the ordinary course of trade must be rejected as ineffective.

63 Even if the conclusion in recital 64 of the provisional regulation, to which recital 28 of the contested regulation refers, were vitiated by a manifest error of assessment, such an error cannot call into question the use of the constructed normal value of the like product pursuant to Article 2(3) of the basic regulation, in so far as the absence of representative sales on the Indonesian market allowed the institutions to apply that measure.

64 The applicants' arguments in the context of the fourth plea in law concerning the rejection of the CPO prices in the records of the Indonesian producers under Article 2(5) of the basic regulation must be regarded as having been put forward in support of the sixth plea in law which relates, in essence, to the rejection of the CPO prices in those records and concerns the application of that provision. They will therefore be examined under that plea in law.

65 The fourth plea must therefore be rejected.

The sixth plea in law relating, in essence, to the rejection of the CPO prices in the records

66 The sixth plea in law seeks to call into question the Council's disregarding of the CPO costs included in the records of the producers under investigation on account of distortion of the CPO costs caused by the DET system.

67 The applicants claim, in essence, that the practice of the institutions indicates that cost adjustments have been made on the basis of Article 2(5) of the basic regulation only where there was direct governmental intervention or barter trade. They maintain that CPO costs are not regulated on the Indonesian market by direct State intervention. They also submit that the findings of the judgment of 7 February 2013, Acron and Dorogobuzh v Council (T 235-08, not published, EU:T:2013:65), cannot be transposed in the present case, given that CPO prices on that market are not directly regulated by the State. Furthermore, they claim, in essence, that what is stated in recital 68 of the contested regulation, namely the effects of the DET system on the prices of CPO on that market, does not amount to State intervention on prices necessarily making them artificially low. Moreover, they argue that the statements of the institutions on the volume of CPO exports are contradictory. They conclude that the institutions acknowledge that the DET system has no effect on the volume of those exports.

68 The Council contends that the applicants' arguments are unfounded.

69 The Council maintains that there is no practice within the institutions to the effect that cost adjustments are made only in the event of direct government intervention or barter trade. It adds in that context that a claim that such a practice exists is contradicted by the wording of Article 2(5) of the basic regulation. Furthermore, it submits that the investigation revealed that, notwithstanding the fact that CPO was exported from Indonesia in large quantities, its price on the domestic market was artificially low in comparison with international prices and that the price difference was close to the export tax imposed by the DET system. According to it, the low price level on that market was a result of a distortion caused by the DET system and not a natural cost advantage. Finally, as regards the judgment of 7 February 2013, Acron and Dorogobuzh v Council (T 235-08, not published, EU:T:2013:65), the Council maintained, in essence, that, in that judgment, the Court confirmed the general principle that the costs associated with the production of the product under investigation may not serve as a basis for calculating the normal value of the like product where they are not reasonably reflected in the records of the companies at issue. That general interpretation of Article 2(5) of the basic regulation applies to the facts established by the institutions.

70 In the present case, it must be stressed that, in the contested regulation, in the context of determining the normal value of the like product, the institutions did not calculate the costs of biodiesel production with reference to the CPO price reflected in the applicants' records, but, as is apparent, inter alia, from recital 29 et seq. of that regulation, disregarded that price and replaced it with the HPE price on the basis of Article 2(5) of the basic regulation.

71 In that regard, it must be recalled that, by virtue of Article 2(3) of the basic regulation, where 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 that product is to 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. That provision provides that a particular market situation for the product concerned within the meaning of the preceding sentence may be deemed to exist, inter alia, when prices are artificially low, when there is significant barter trade, or when there are non-commercial processing arrangements.

72 Furthermore, it follows from the first subparagraph of Article 2(5) of the basic regulation that, when the normal value of the like product is calculated in accordance with Article 2(3) of that regulation, the costs of production are normally to be calculated on the basis of the records kept by the party under investigation, provided that those records are in accordance with the generally accepted accounting principles of the country concerned and reasonably reflect the costs associated with the production and sale of the product in question.

73 Under the second subparagraph of Article 2(5) of the basic regulation, if costs associated with the production and sale of the product under investigation are not reasonably reflected in the records of the party concerned, they are to be adjusted or established on the basis of the costs of other producers or exporters in the same country or, where such information is not available or cannot be used, on any other reasonable basis, including information from other representative markets.

74 The objective of the first and second subparagraphs of Article 2(5) of the basic regulation is to ensure that the costs associated with the production and sale of the like product used in calculating the normal value of that product reflect the costs that a producer would have incurred on the domestic market of the exporting country.

75 Moreover, it follows from the wording of the first subparagraph of Article 2(5) of the basic regulation that the records kept by the party under investigation are the prime source of information in order to establish the costs of production of the like product and that the use of the data included in those records constitutes the rule and the adaptation or replacement of that data on another reasonable basis is the exception.

76 Since a derogation from or exception to a general rule must be interpreted narrowly (see judgment of 19 September 2013, Dashiqiao Sanqiang Refractory Materials v Council, C 15-12 P, EU:C:2013:572, paragraph 17 and the case-law cited), it must be considered, as the applicant argues, that the exception arising from Article 2(5) of the basic regulation must be interpreted narrowly.

77 In the present case, the applicants dispute the application of Article 2(5) of the basic regulation, on the basis of which, in the context of calculating the normal value of the like product, the institutions did not rely on the CPO prices reflected in their records.

78 In the contested regulation, the institutions did not state that the applicants' records did not comply with the accounting principles generally accepted in Indonesia. By contrast, they maintained that their records did not reasonably reflect the costs associated with CPO required for the production of biodiesel.

79 As is clear from recitals 29 to 34 and 66 to 70 of the contested regulation, the institutions took the view that, inasmuch as it included differential export taxes on CPO and biodiesel, the DET system had caused distortion of the price of CPO in so far as that system depressed the CPO price on the domestic market to an artificially low level.

80 On the basis of the judgment of 7 February 2013, Acron and Dorogobuzh v Council (T 235-08, not published, EU:T:2013:65), the institutions considered in recital 31 of the contested regulation that when the prices of raw materials were regulated in such a way that they were artificially low on the domestic market, it could be presumed that the cost of producing the product concerned was affected by a distortion. Under such circumstances, they considered that the data included in the records of the exporting producers may not be considered reasonable and, consequently, should be adjusted.

81 In that regard, it is necessary to recall that, in paragraph 44 of the judgment of 7 February 2013, Acron and Dorogobuzh v Council (T 235-08, not published, EU:T:2013:65), the Court held that, given that natural gas was necessarily supplied at a very low price to the exporting producers concerned by virtue of Russian law, the production price of the product concerned in the case giving rise to that judgment was affected by a distortion of the domestic Russian market regarding the price of gas, as that price was not the result of market forces. The Court therefore considered that the institutions were fully entitled to conclude that one of the items in the records of the applicants in that case could not be regarded as reasonable and that, consequently, that item had to be adjusted by having recourse to other sources from markets which the institutions regarded as more representative.

82 However, as the applicants correctly claim, unlike the situation at issue in the case which gave rise to the judgment of 7 February 2013, Acron and Dorogobuzh v Council (T-235-08, not published, EU:T:2013:65), it is not apparent from the file that the CPO price was directly regulated in Indonesia. The DET system referred to by the institutions merely provided for export taxes with different rates on CPO and biodiesel.

83 The fact that the DET system does not directly regulate the prices of CPO in Indonesia nevertheless does not, in itself, rule out the application of the exception referred to in Article 2(5) of the basic regulation.

84 It must be recalled that the provision corresponding to the second subparagraph of Article 2(5) of the basic regulation was inserted into the preceding basic regulation, namely 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), by Council Regulation (EC) No 1972-2002 of 5 November 2002 amending Regulation No 384-96 (OJ 2002 L 305, p. 1).

85 It is apparent from recital 4 of Regulation No 1972-2002 that the insertion of the provision corresponding to the second subparagraph of Article 2(5) of the basic regulation sought to give some guidance as to what should be done if the records did not reasonably reflect the costs associated with the production and sale of the product under consideration, in particular in situations where, because of a particular market situation, sales of the like product did not permit a proper comparison. In such a case, that recital states that the relevant data should be obtained from sources which are unaffected by 'such distortions'.

86 Recital 4 of Regulation No 1972-2002 therefore envisages the possibility of relying on Article 2(5) of the basic regulation, in particular in a situation where the sales of the like product do not permit a proper comparison on account of distortion. It also follows from it that such a situation may arise, in particular, when a particular market situation exists, such as that referred to in the second subparagraph of Article 2(3) of the basic regulation, concerning artificially low prices of the product concerned, but that type of situation is not limited to cases in which there is direct regulation of prices of the like product or the raw materials of that product by the exporting State.

87 By contrast, it cannot reasonably be considered that any measure of the public authorities of the exporting State which could have an influence on the price of the raw materials and, as a result, on the price of the product in question, may be the source of a distortion that permits, in the context of the calculation of the normal value of the like product, the prices included in the records of the party under investigation to be disregarded. If any measure taken by the public authorities of the exporting country which is capable of influencing, even slightly, the prices of the main raw materials could be taken into account, the principle enshrined in the first subparagraph of Article 2(5) of the basic regulation, to the effect that those records are the prime source of information in order to establish the costs of production of the like product, would risk being deprived of any useful effect.

88 Accordingly, a measure of the public authorities of the exporting country may lead the institutions to disregard, in the context of calculating the normal value of the like product, the prices of the raw materials included in the records of the party under investigation only when it causes appreciable distortion of the prices of those raw materials. Another interpretation of the exception provided for in Article 2(5) of the basic regulation, such as that recommended by the institutions, allowing, in a situation such as that in the present case, that data to be replaced by costs established on another reasonable basis, risks disproportionately impairing the principle that those records are the prime source of information in order to establish the costs of production of that product.

89 Furthermore, as regards the burden of establishing the existence of factors justifying the application of the first subparagraph of Article 2(5) of the basic regulation, it must be considered that, where the institutions consider that they must disregard the costs of production contained in the records of the party under investigation and replace them with another price deemed reasonable, the institutions must rely on direct evidence, or at least on circumstantial evidence pointing to the existence of the factor for which the adjustment was made (see, by analogy, judgment of 10 March 2009, Interpipe Niko Tube and Interpipe NTRP v Council, T 249-06, EU:T:2009:62, paragraph 180 and the case-law cited).

90 Consequently, given the fact that the disregard, in the context of calculating the normal value of the like product, of the production costs of that product included in the records of the party under investigation falls within the scope of an exception (see paragraph 76 above), where the distortion relied upon by the institutions is not an immediate consequence of the State measure from which it originates, as in the case giving rise to the judgment of 7 February 2013, Acron and Dorogobuzh v Council (T 235-08, not published, EU:T:2013:65), but of the effects that that measure is deemed to produce on the market, they must ensure that they explain the operation of the market in question and demonstrate the specific effects of that measure on it, without relying in that regard on mere conjecture.

91 It is necessary to examine, in the light of those considerations, whether the institutions have established to the requisite legal standard that the conditions were met in the present case for disregarding, in the context of calculating the normal value of the like product, the CPO prices contained in the records.

92 First, the measure of the Indonesian public authorities identified as the source of the distortion of the prices of CPO, as indicated inter alia in recital 29 of the contested regulation, is the DET system, in that it includes differential levels of tax imposed on CPO and biodiesel, as the institutions confirmed at the hearing. It is apparent from recital 69 of that regulation that, during the investigation period, biodiesel exports were taxed at a rate between 2 and 5%, while, during the same period, the taxation rate for CPO exports was between 15 and 20% and there was a taxation rate for exports of between 5 and 18.5% for refined bleached deodorised palm oil.

93 Secondly, as regards the effects of the DET system, the Council maintained, inter alia, in recital 30 of the contested regulation, that a further investigation had shown that that system depressed the domestic price of the raw materials on the domestic market to an artificially low level.

94 Although, in that context, the Council indicated, in recital 68 of the contested regulation, that the DET system limited the possibilities of exporting CPO, since larger quantities of that oil were available on the domestic market and depressed CPO prices on that market, it must be noted that that regulation did not establish the extent to which that system, in that it included export taxes at differential rates on CPO and biodiesel, had led to appreciable distortion of the prices of that raw material on the Indonesian market.

95 In recital 68 of the contested regulation, the Council also explained that the difference between the price of CPO sold on the domestic market and its international reference price was very close to the export tax applied to CPO. However, in so doing, it did not state the effects that the difference between the rate of tax on CPO and the rate of tax on biodiesel could have had in itself on the price of that raw material on the Indonesian market. The finding in that recital at most allows conclusions to be drawn as regards certain effects that imposing an export tax on CPO could have on its price, but does not allow conclusions to be drawn on the effects that the difference between the rate of that tax and the rate of the tax on biodiesel could have had on the price of CPO on the Indonesian market.

96 Nor does the information provided by the Council in recitals 67 and 70 of the contested regulation, to the effect that the price of CPO recorded in the records of the relevant companies was replaced by the prices at which those companies would have purchased CPO on the domestic market in the absence of distortion, namely the HPE price, allow conclusions to be drawn as to the effects that the difference between the rate of export tax on CPO and the rate of export tax on biodiesel could have on the price of that raw material on that market. In so far as those recitals must be read as a finding of the Council that, in the absence of such a difference in rates, the price of CPO on that market would have been at the same level as the HPE price, it suffices to note that that has not been established in the contested regulation or in the proceedings before the Court.

97 Finally, it follows from recitals 73 and 74 of the contested regulation that the institutions do not dispute that CPO is exported from Indonesia in large quantities. In view of such a circumstance, it cannot suffice to draw the conclusion, in recital 68, that CPO is more widely available on the domestic market and its price lowered without providing further supporting explanations.

98 As regards the economic studies on which the institutions relied during the proceedings before the Court, it should be noted that it is true that it may be inferred from them that export taxes lead to an increase in the export price of the product affected by the tax compared with its price on the domestic market, a reduced export volume of that product and downward pressure on the prices of that product on the domestic market. It may also be inferred that a system of export taxes which taxes raw materials at a higher level than products on a downstream market protects and favours downstream domestic industries by providing them with raw materials in sufficient quantities at advantageous prices.

99 However, it must be noted that those studies merely analyse the effects of export taxes on the prices of the raw materials and not the effects of the differential rates used for export taxes on the raw materials and biodiesel.

100 The institutions therefore merely explained the relationship between the international prices and the domestic prices of CPO and gave indications as regards the impact of the export tax on CPO on the availability of that raw material on the domestic market and on its price, without, however, establishing specifically the effects that the DET system as such could have had on the price of CPO on that market and the extent to which those effects differ from those of a taxation system without a differential rate for export taxes on CPO and biodiesel.

101 Accordingly, it must be considered that the institutions failed to establish to the requisite legal standard that there was appreciable distortion of the price of CPO in Indonesia as a result of the DET system in that it included differential rates for export taxes on CPO and biodiesel. Therefore, by taking the view that the price of CPO was not reasonably reflected in the records of the Indonesian exporting producers examined and by disregarding them, the institutions infringed Article 2(5) of the basic regulation.

102 Contrary to what the institutions claim, that conclusion is not invalidated by the fact that they have broad discretion in the field of the common commercial policy, in particular, as regards complex economic assessments concerning commercial defence measures and that, in that regard, the Court must be restricted to checking that the rules governing procedure have been complied with, that the facts taken into account are materially accurate, and that there has been no manifest error of assessment of the facts or misuse of power (see, to that effect, judgment of 18 September 2002, Since Hardware (Guangzhou) v Council, T 156-11, EU:T:2012:431, paragraphs 134 to 136 and the case-law cited).

103 A review by the Court which merely determines whether the elements on which the European Union institutions base their findings are capable of substantiating the conclusions which they draw from them does not encroach on their broad discretion in the field of commercial policy (see, to that effect, judgment of 16 February 2012, Council and Commission v Interpipe Niko Tube and Interpipe NTRP, C 191-09 P and C 200-09 P, EU:C:2012:78, paragraph 68).

104 In the present case, the Court has simply examined whether the institutions demonstrated that the conditions were met for disregarding, in the context of calculating the normal value of the like product, the costs associated with the production and sale of that product, as reflected in the records of the Indonesian exporting producers examined, in accordance with the rule laid down in Article 2(5) of the basic regulation.

105 It follows that the sixth plea in law must be upheld.

106 It is also necessary to examine the extent to which the error found justifies the annulment of the contested regulation, in so far as it imposes an anti-dumping duty on the applicants.

107 Contrary to the institutions' contention, in the circumstances of the present case, it is not possible partially to annul Article 1 of the contested regulation solely with regard to the error found concerning the method of calculation of the anti-dumping duty rate.

108 According to case-law, partial annulment of a European Union act is possible only if the elements whose annulment is sought may be severed from the remainder of the act. That requirement of severability is not satisfied where the partial annulment of an act would have the effect of altering its substance (judgment of 10 December 2002, Commission v Council, C 29-99, EU:C:2002:734, paragraphs 45 and 46).

109 As explained in relation to the examination of the sixth plea in law, the institutions' calculation of the normal value of the like product is based on incorrect considerations. Since the normal value is an essential condition for determining the applicable rate of anti-dumping duty, Article 1 of the contested regulation cannot be maintained in so far as it imposes an individual anti-dumping duty on the applicants.

110 Having regard to the interrelationship between the definitive anti-dumping duty and the provisional anti-dumping duty provided for in Article 10(2) and (3) of the basic regulation, Article 2 of the contested regulation must also be annulled with respect to the applicants, in so far as it provides that the amounts secured by way of the provisional anti-dumping duties are to be definitively collected.

111 The contested regulation must therefore be annulled in so far as it concerns the applicants, without there being any need to examine the other pleas in law in the action.

Costs

112 Under Article 134(1) 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 bear its own costs and to pay those of the applicants in accordance with the form of order sought by the applicants.

113 The Commission and the EBB shall bear their own costs, in accordance with the provisions of Article 138(1) and (3) of the Rules of Procedure.

On those grounds,

THE GENERAL COURT (Ninth Chamber)

hereby:

1. Annuls Articles 1 and 2 of Council Implementing Regulation (EU) No 1194-2013 of 19 November 2013 imposing a definitive anti-dumping duty and collecting definitively the provisional duty imposed on imports of biodiesel originating in Argentina and Indonesia, in so far as they concern PT Wilmar Bioenergi Indonesia and PT Wilmar Nabati Indonesia;

2. Orders the Council of the European Union to bear its own costs and to pay the costs incurred by PT Wilmar Bioenergi Indonesia and PT Wilmar Nabati Indonesia;

3. Orders the European Commission and the European Biodiesel Board (EBB) to bear their own costs.

Berardis - Czúcz - Popescu

Delivered in open court in Luxembourg on 15 September 2016.