Court of Justice of the European Communities (including Court of First Instance Decisions)

JUDGMENT OF THE GENERAL COURT (Seventh Chamber)

10 October 2012 (*)

(Dumping -� Imports of certain iron or steel fasteners originating in China -� Support of the complaint by the Community industry -� Definition of the product concerned -� Injury -� Market economy treatment -� Costs of major inputs substantially reflecting market values -� Article 2(7)(b) and (c) of Regulation (EC) No 384/96 (now Article 2(7)(b) and (c) of Regulation (EC) No 1225/2009))

In Case T-172/09,

Gem-Year Industrial Co. Ltd, established in Zhejiang (China),

Jinn-Well Auto-Parts (Zhejiang) Co. Ltd, established in Zhejiang,

represented initially by K. Adamantopoulos and Y. Melin, and subsequently by Melin, V. Akritidis and F. Crespo, lawyers,

applicants,

v

Council of the European Union, represented initially by J.-�P. Hix, acting as Agent, assisted by G. Berrisch and G. Wolf, lawyers, and subsequently by Hix and B. Driessen, acting as Agents, assisted by G. Berrisch,

defendant,

supported by

European Commission, represented by H. van Vliet and C. Clyne, acting as Agents,

and by

European Industrial Fasteners Institute AISBL (EIFI), established in Brussels (Belgium), represented initially by J. Bourgeois, Y. van Gerven and E. Wäktare, and subsequently by J. Bourgeois, lawyers,

interveners,

APPLICATION for the annulment of Council Regulation (EC) No 91/2009 of 26 January 2009 imposing a definitive anti-dumping duty on imports of certain iron or steel fasteners originating in the People-�s Republic of China (OJ 2009 L 29, p. 1),

THE GENERAL COURT (Seventh Chamber),

composed of A. Dittrich, President, I. Wiszniewska-Białecka and M. Prek (Rapporteur), Judges,

Registrar: J. Weychert, Administrator,

having regard to the written procedure and further to the hearing on 16 December 2011,

gives the following

Judgment

Background to the dispute

1 The applicants, Gem-Year Industrial Co. Ltd and its subsidiary, Jinn-�Well Auto-�Parts (Zhejiang) Co. Ltd, are Chinese companies which produce and export the product concerned to the European Union. The product concerned consists of -�certain iron or steel fasteners, other than of stainless steel, i.e. wood screws (excluding coach screws), self-tapping screws, other screws and bolts with heads (whether or not with their nuts or washers, but excluding screws turned from bars, rods, profiles or wire, of solid section, of a shank thickness not exceeding 6 mm and excluding screws and bolts for fixing railway track construction material), and washers, originating in -� China-�.

2 Following a complaint lodged on 26 September 2007 by the European Industrial Fasteners Institute AISBL (EIFI), on 9 November 2007 the Commission of the European Communities published a Notice of initiation of an anti-dumping proceeding concerning imports of certain iron or steel fasteners originating in the People-�s Republic of China (OJ 2007 C 267, p. 31). The investigation covered the period from 1 October 2006 to 30 September 2007. The examination of the trends relevant for the assessment of injury took place from 1 January 2003 to the end of the investigation period.

3 In view of the large number of parties involved, paragraph 5.1(a) of the notice of initiation provided for the use of sampling in accordance with 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 (-�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, corrigendum OJ 2010 L 7, p. 22)), in particular in accordance with Article 17(1) of the basic regulation (now Article 17(1) of Regulation No 1225/2009). In addition, in paragraph 5.1(b) of the notice of initiation, the Commission stated that, in order to obtain the information it deemed necessary for its investigation, it would send questionnaires to the sampled exporting producers in China, to any association of exporting producers, to the sampled importers and to any association of importers named in the complaint, as well as to the authorities of the exporting country concerned.

4 On 26 November 2007, Gem-Year Industrial Co. provided the Commission with the information required by paragraph 5.1(a)(i) of the notice of initiation, in order to form part of the sample of exporting producers which the Commission proposed to establish. It also requested market economy treatment (-�MET-�) or individual treatment.

5 Gem-Year Industrial Co. was not selected for the sample of exporting producers established by the Commission. It did not request that an individual dumping margin be calculated pursuant to Article 17(3) of the basic regulation (now Article 17(3) of Regulation No 1225/2009).

6 On 4 August 2008, the Commission sent the applicants an information document on the non-imposition of provisional anti-dumping measures. The applicants did not submit comments on that document.

7 On 3 November 2008, the Commission sent the applicants the disclosure document setting out the essential facts and considerations on the basis of which it intended to propose to the Council of the European Union that a definitive anti-dumping duty be imposed on imports of certain iron or steel fasteners originating in China.

8 On 26 January 2009, the Council adopted Regulation (EC) No 91/2009 imposing a definitive anti-dumping duty on imports of certain iron or steel fasteners originating in the People-�s Republic of China (OJ 2009 L 29, p. 1) (-�the contested regulation-�).

9 Article 1(1) and (2) of the contested regulation imposed a definitive anti-dumping duty of 77.5% on the imports of the product concerned in respect of those companies, including Gem-Year Industrial Co., which had cooperated but had not been included in the sample.

Procedure and forms of order sought

10 By application lodged at the Registry of the General Court on 24 April 2009, the applicants brought the present action.

11 By document lodged at the Court Registry on 16 July 2009, the Commission sought leave to intervene in support of the form of order sought by the Council. By order of 14 September 2009, the President of the Fifth Chamber of the General Court granted the Commission leave to intervene. By letter of 9 October 2009, the Commission informed the General Court that it was waiving the right to lodge a statement in intervention, but that it would take part in the hearing.

12 By document lodged at the Court Registry on 24 August 2009, EIFI sought leave to intervene in the present case in support of the form of order sought by the Council. By order of 23 October 2009, the President of the Fifth Chamber of the General Court granted EIFI leave to intervene. EIFI submitted its statement in intervention on 11 December 2009.

13 On 29 September 2009, the applicants requested that certain confidential elements contained in two of the annexes to the application be excluded from the notification to EIFI and produced a non-confidential version of that application. The notification to EIFI was confined to that non-confidential version. No objection was raised by EIFI in that regard.

14 Upon hearing the report of the Judge-Rapporteur, the General Court (Seventh Chamber) decided to open the oral procedure.

15 In the course of measures of organisation of procedure, the General Court asked the Council and the applicants to reply to certain written questions. The parties complied with that request.

16 The main parties to the dispute and the interveners presented oral argument and replied to the questions put to them by the General Court at the public hearing on 16 December 2011.

17 The applicants claim that the Court should:

-� annul the contested regulation;

-� order the Council to pay the costs.

18 The Council contends that the Court should:

-� dismiss the action as being partly inadmissible and, in any event, unfounded;

-� order the applicants to pay the costs.

19 EIFI contends that the Court should:

-� dismiss the action;

-� order the applicants to pay the costs, including those incurred by EIFI owing to its intervention.

Law

The extent of the claim for annulment

20 Without formally raising a plea of inadmissibility under Article 114 of the Rules of Procedure of the General Court, the Council states that the action should be declared inadmissible since the applicants seek the annulment of the contested regulation in its entirety and not only in so far as it concerns them.

21 The fourth paragraph of Article 230 EC makes the admissibility of an action for annulment brought by a natural or legal person subject to the condition that the contested measure, although in the form of a regulation, is of direct and individual concern to that person.

22 According to settled case-law, regulations imposing an anti-dumping duty, although by their nature and scope of a legislative nature, are liable to be of direct and individual concern to inter alios those producers and exporters who are able to establish that they were identified in the measures adopted by the Commission or the Council or were concerned by the preliminary investigations (see Case C-239/99 Nachi Europe [2001] ECR I-�1197, paragraph 21 and the case-law cited).

23 Where a regulation which introduces an anti-dumping duty imposes different duties on a series of undertakings, an undertaking is individually concerned only by those provisions which impose on it a specific anti-dumping duty and determine the amount thereof, and not by those provisions which impose anti-dumping duties on other undertakings, with the result that an action brought by that undertaking will be admissible only in so far as it seeks the annulment of those provisions of the regulation that exclusively concern it (Nachi Europe, paragraph 22 above, paragraph 22).

24 In the present case, it should be observed that, although the applicants seek the annulment of the contested regulation in its entirety, it is apparent from their written pleadings that in actual fact they are confining themselves to contesting the legality of the anti-dumping duty which has been imposed on them, which they have, moreover, confirmed in their reply to the question put to them by the Court in the course of measures of organisation of procedure.

25 Thus, any illegality of that duty affects the legality of the contested regulation only in so far as that regulation imposes an anti-dumping duty on the applicants. By contrast, it does not affect the legality of other parts of the contested regulation, namely, in particular, the anti-dumping duties imposed on the other undertakings affected by that regulation.

26 In those circumstances, the present action for annulment must be treated as seeking only partial annulment of the contested regulation, in so far as it imposes a definitive anti-dumping duty on the applicants.

Substance

27 In order to challenge the legality of the contested regulation, the applicants put forward seven pleas in law.

28 In their first plea, the applicants refer to infringement of Article 5(1) and (4) of the basic regulation (now Article 5(1) and (4) of Regulation No 1225/2009), in that the procedure was initiated on the basis of a complaint by EIFI, even though EIFI accounted for less than 25% of total Community production of the like product.

29 In the second plea, the applicants criticise the definition of the product concerned, in that it included, in actual fact, several products, whereas it is apparent from a combined reading of various provisions of the basic regulation that the product concerned cannot cover more than one product.

30 The third plea alleges a manifest error of assessment in determining the injury allegedly suffered by the Community industry.

31 In their fourth and fifth pleas, the applicants argue that the institutions infringed Article 2(7)(b) and (c) of the basic regulation (now Article 2(7)(b) and (c) of Regulation No 1225/2009) by denying them MET on the basis of a misinterpretation of the criterion set out in the first indent of Article 2(7)(c) of the basic regulation (now the first indent of Article 2(7)(c) of Regulation No 1225/2009) and by demanding that costs of major inputs substantially reflect market values.

32 In their sixth plea, the applicants submit that, when examining the value of the major input on the Chinese market, the institutions breached their duty to examine, carefully and impartially, all the relevant aspects of the present case.

33 Lastly, the seventh plea alleges infringement of Council Regulation (EC) No 2026/97 of 6 October 1997 on protection against subsidised imports from countries not members of the European Community (OJ 1997 L 288, p. 1).

First plea in law, alleging infringement of Article 5(1) and (4) of the basic regulation

34 The applicants criticise the Council for having taken the view that EIFI accounted for more than 25% of Community production, relying on the Prodcom (-�Production Communautaire-�) data from Eurostat (the statistical office of the European Union) (-�the Prodcom data-�), which covers only 90% of Community production, without taking account of a 10% margin of error. The application of that margin of error means that EIFI can only account for 24.58% of the total production of the like product in the European Union. Since it follows from a combined reading of Article 5(1) and (4) of the basic regulation that an investigation cannot be initiated when Community producers expressly supporting the complaint account for less than 25% of Community production, that manifest error of assessment in ascertaining the representativeness of EIFI vitiates the legality of the contested regulation.

35 In their reply, they also argue that the Prodcom data did not include either data relating to producers accounting for less than 1% of Community production or data for undertakings employing less than 20 people. Since it is acknowledged that Community production is highly fragmented, it was clearly an error to initiate an investigation in such circumstances.

36 The Council, supported by EIFI, contends that this plea should be rejected.

37 The first paragraph of Article 5(1) of the basic regulation (now the first paragraph of Article 5(1) of Regulation No 1225/2009) provides that, -�[e]xcept as provided for in paragraph 6, an investigation to determine the existence, degree and effect of any alleged dumping shall be initiated upon a written complaint by any natural or legal person, or any association not having legal personality, acting on behalf of the Community industry-�.

38 Article 5(4) of the basic regulation provides as follows:

-�An investigation shall not be initiated pursuant to paragraph 1 unless it has been determined, on the basis of an examination as to the degree of support for, or opposition to, the complaint expressed by Community producers of the like product, that the complaint has been made by or on behalf of the Community industry. The complaint shall be considered to have been made by or on behalf of the Community industry if it is supported by those Community producers whose collective output constitutes more than 50% of the total production of the like product produced by that portion of the Community industry expressing either support for or opposition to the complaint. However, no investigation shall be initiated when Community producers expressly supporting the complaint account for less than 25% of total [Community] production -� .-�

39 Article 5(6) of the basic regulation (now Article 5(6) of Regulation No 1225/2009) refers to the possibility for the authorities, -�in special circumstances-�, of initiating an investigation without having received a complaint.

40 In the present case, it is common ground that the investigation was initiated on the basis of Article 5(4) of the basic regulation and not of Article 5(6) thereof. Therefore, it must be ascertained whether the institutions were legitimately able to conclude that the condition relating to a sufficient level of support for the complaint by the Community industry had been met.

41 In that regard, first, it must be pointed out that the figure of 27% appearing in recital 114 of the contested regulation, on which the applicants-� argument is based, refers to -�[undertakings] that supported the complaint and fully cooperated in the investigation-�.

42 However, regarding the examination of the representativeness of the Community industry within the meaning of Article 5(4) of the basic regulation, all that matters is the portion of the Community industry which supported the complaint at the time that complaint was lodged, whatever the subsequent conduct of those undertakings. That follows necessarily from the fact that Article 5(4) of the basic regulation does not place any obligation on the Commission to terminate an anti-dumping proceeding in progress where the level of support for the complaint falls below a minimal threshold of 25% of Community production (Case T-249/06 Interpipe Niko Tube and Interpipe NTRP v Council [2009] ECR II-�383, paragraph 139).

43 It is apparent from Annex B.1, an annex in the form of a note in the case-file dated 8 November 2007 accessible to the applicants during the administrative procedure, to which the Council refers in paragraph 17 of its defence, that while, according to the Commission, the complainant, EIFI, accounted for 26.7% of Community production in 2006 and 29.6% in the first half of 2007, another 53 producers supported its complaint. Thus the representativeness of the Community industry supporting the complaint was 37% of Community production in 2006 and around 41% in 2007.

44 Therefore, and despite the infelicitous wording of recital 114 of the contested regulation, in that that recital refers to -�[undertakings] that supported the complaint and fully cooperated in the investigation-� as constituting the Community industry within the meaning of Article 5(4) of the basic regulation, it must be concluded that the portion of the Community industry supporting the complaint was, on the date that complaint was lodged, far greater than 27% of Community production and thus far greater than the threshold of 25% referred to in Article 5(4) of the basic regulation.

45 Second, and in any event, even if the representativeness of the Community industry had to be established on the basis of EIFI alone, the condition set out in Article 5(4) of the basic regulation would appear to be met.

46 As is emphasised in recitals 112 and 113 of the contested regulation, the institutions took the view that they did not have sufficient information at their disposal to define precisely the total volume of Community production. They therefore established that total volume on the basis of the Prodcom data gathered using the method defined in Council Regulation (EEC) No 3924/91 of 19 December 1991 on the establishment of a Community survey of industrial production (OJ 1991 L 374, p. 1), as amended.

47 It is indeed apparent from a reading of the latter regulation that the method in question includes a margin of approximation, since Article 3(2) thereof requires the data to cover at least 90% of production. In the same way, Article 3(3) of that regulation emphasises that -�account shall be taken of all undertakings employing at least 20 people-� and that -�[t]his threshold shall be reviewed in the light of the requirement of representativeness referred to in paragraph 2-�. Lastly, Article 3(4) of that regulation emphasises that, -�[w]here the production of [a] Member State-�s undertakings in a -� class represents less than 1% of the Community total, the data on the headings in that class need not be collected-�.

48 It is also common ground between the parties that Community production is fragmented, recital 112 highlighting the existence of a high number of producers, over 300 -�mostly small and medium-sized enterprises-�.

49 Thus, the representativeness of EIFI might have been calculated on the basis of a reduced Community production, which would logically lead to an artificial increase in its representativeness.

50 However, first, it should be pointed out that the institutions were entitled to rely on the statistical data, since it was not possible for them to determine the exact volume of Community production for the like product.

51 Second, the Court finds that the possible reduction in Community production connected with the use of the Prodcom data had no effect on the sufficiently representative nature of EIFI.

52 First, concerning the possibility that the Prodcom data did not take into account data from States in which production is less than 1% of the Community total, the Council claims, without contradiction on that point by the applicants, that production from those States was taken into account in the present case.

53 Second, the fact that the Prodcom data account for -�at least-� 90% of total production by the Community industry means that the portion of the Community industry occupied by EIFI is likely to have been between 24.58% and 26.7% in 2006. For 2007, the applicants give no assessment, while the Council refers to 29.6% of total Community production. Therefore, even taking into account the assessment favoured by the applicants, the fact remains that the representativeness of EIFI is approximately equal to the 25% threshold referred to in Article 5(4) of the basic regulation.

54 Having regard to the foregoing, the first plea must be rejected.

Second plea in law, concerning the definition of the product concerned

55 In essence, the applicants claim that the definition of -�the product concerned-� set out in recitals 40 to 43 of the contested regulation in actual fact relates to several products, whereas based on a combined reading of Article 1(4), Article 2(8) and (10), Article 3(4), Article 9(5), Article 11(4) and Article 13(1) of the basic regulation (now Article 1(4), Article 2(8) and (10), Article 3(4), Article 9(5), Article 11(4) and Article 13(1) of Regulation No 1225/2009), -�the product concerned-� cannot cover more than one product. They argue that two goods cannot be considered to be a single product unless they are identical.

56 The products in respect of which the anti-dumping duties were imposed can be divided into eight categories: -�(1) High quality bolts; (2) Low quality bolts; (3) High quality washers; (4) Low quality washers; (5) High quality nuts; (6) Low quality nuts (7) High quality screws; and (8) Low quality screws-�. The applicants argue that bolts, washers, nuts and screws are clearly different in light of their physical characteristics, their use, their different basic functions and the needs to which they respond. That disparity is even more obvious where both standard and special fasteners have been taken into account.

57 The Council, supported by EIFI, contends that this plea should be rejected.

58 Although Article 1(4) of the basic regulation defines -�the like product-� as -�a product which is identical, that is to say, alike in all respects, to the product under consideration, or in the absence of such a product, another product which, although not alike in all respects, has characteristics closely resembling those of the product under consideration-�, the basic regulation does not specify exactly how the product or range of products which may be subject to an anti-dumping investigation is to be defined or require an intricate classification (Case T-170/94 Shanghai Bicycle v Council [1997] ECR II-�1383, paragraph 61).

59 According to settled case-law, the purpose of the definition of the product concerned in an anti-dumping investigation is to aid in drawing up the list of the products which will, if necessary, be subject to the imposition of anti-dumping duties. For the purposes of that process, the institutions may take account of a number of factors, such as, inter alia, the physical, technical and chemical characteristics of the products, their use, interchangeability, consumer perception, distribution channels, manufacturing process, costs of production and quality (Case T-314/06 Whirlpool Europe v Council [2010] ECR I-�5005, paragraph 138, and Case T-369/08 EWRIA and Others v Commission [2010] ECR I-�6283, paragraph 82).

60 It necessarily follows that products which are not identical may be grouped together under the same definition of -�the product concerned-� and, together, be subject to an anti-dumping investigation. On that basis, the applicants-� argument alleging that -�the product concerned-� can only refer to a single product or to identical products must therefore be rejected.

61 Accordingly, it must be ascertained whether the applicants are in a position to show either that the institutions made an error of assessment with regard to the factors which they decided were relevant, or that the application of other, more relevant factors would have required the exclusion of a product from the definition of -�the product concerned-�.

62 In that context of review, account must be taken of the fact that, in the sphere of measures to protect trade, the Community institutions enjoy a wide discretion by reason of the complexity of the economic, political and legal situations which they have to examine and that, consequently, review by the EU judicature of assessments made by the institutions must be limited to establishing whether the relevant procedural rules have been complied with, whether the facts on which the contested choice is based have been accurately stated and whether there has been a manifest error of assessment of the facts or a misuse of power (see Case T-462/04 HEG and Graphite India v Council [2008] ECR II-�3685, paragraph 68 and the case-law cited). In that regard, since it has already been held that the determination of -�the like product-� fell within the exercise of the wide discretion given to the institutions and was therefore subject to limited review (Shanghai Bicycle v Council, paragraph 58 above, paragraph 63), the same approach must be adopted when reviewing the merits of the definition of -�the product concerned-�.

63 The complaints submitted by the applicants can be divided into two categories: first, they challenge the very principle of determining a single category made up of -�fasteners-� and, second, they claim that the quality differences between those products prohibit their being included in the same category.

-� Merits of the determination of a product concerned made up of fasteners

64 In essence, the applicants argue that the differences separating bolts, washers, nuts and screws do not allow them to be placed in a single category made up of -�fasteners-�.

65 That complaint must be rejected, since the Council was legitimately able to bring together those products within a single category on the ground that they had the same function of mechanically joining two or more elements, were used by the same public, and had to comply with -�the same -� physical and technical characteristics including notably strength, tolerance, finishing and coating-� (recital 42 of the contested regulation). In the light of the case-law cited in paragraph 59 above, factors such as the purpose of the products and the public concerned seem particularly relevant. Furthermore, it does not seem a manifest error to consider that the application of those factors to the products in question permits the conclusion that they are in the same category of products, made up of -�fasteners-�.

66 That conclusion is not undermined by the applicants-� argument that those products are not interchangeable, in that -�[a] washer cannot be used as a nut, which cannot be used as a screw-� and that their physical characteristics are clearly different.

67 It is possible to hold that the products in question can be used alternatively for the purposes of mechanically joining two or more elements. Moreover, to follow the applicants-� line of argument would amount to finding that only products which are strictly identical can be included in the same definition of -�the product concerned-�. For the reasons set out in paragraph 60 above, such an approach would be a mistaken one.

-� Merits of including fasteners of differing quality in the same category

68 In this context, the applicants invoke, in essence, two complaints. First, their argument can be understood as criticising the inclusion of products of differing quality under a single category. Second, and more explicitly, they submit that the institutions made a manifest error of assessment in including both standard and special fasteners in the definition of -�the product concerned-�.

69 The first complaint, in essence, replicates certain arguments evoked during the administrative procedure and summarised in recital 45 of the contested regulation, alleging that a distinction must be made between DIY fasteners and fasteners destined for professional use on the ground that the former are of lower quality than the latter.

70 In that regard, it is sufficient to point out that both DIY fasteners and those destined for a more professional public can be classified as standard fasteners, in that they are -�described in detail by industry standards-� and that those standards -�ensure that the products manufactured by different suppliers in different countries are essentially interchangeable from a user point of view-� (recital 50 of the contested regulation). Therefore, the institutions were able, without making a manifest error of assessment, not to distinguish between fasteners destined for professional use and DIY fasteners, since both appeared to be subject to the same standards and were interchangeable (see, to that effect and by analogy, Shanghai Bicycle v Council, paragraph 58 above, paragraphs 68 to 71).

71 The first complaint must therefore be rejected.

72 In their second complaint, the applicants criticise the institutions for including not only standard fasteners but also special fasteners in their definition of -�the product concerned-�.

73 The contested regulation defines special fasteners as ones which -�conform to a particular user-�s design and/or requirements-� and points out that -�[i]t is also generally recognised that special fasteners tend to be used in more demanding applications such as the automotive, chemical and other industries and are, on average, significantly more expensive to produce and sell than standard fasteners-� (recital 50 of the contested regulation).

74 It is certainly apparent from that definition of special fasteners that the demand for those fasteners can be clearly distinguished from the demand for standard fasteners. Indeed, beyond their common function, namely mechanically joining two or more elements, special fasteners differ, in many respects, from standard fasteners. They are not manufactured according to international standards, are produced upon demand from the client for industrial applications and, consequently, generate a cost which is not comparable to the cost of standard products.

75 However, first, it should be noted that, from the point of view of supply, it can be shown that it is possible to substitute special fasteners for standard fasteners, in that it is possible to move from producing standard fasteners to producing special fasteners. In that regard, it is apparent from reading recitals 131, 137, 138, 146, 149 and 176 of the contested regulation that one of the effects of importing standard fasteners from China has been a migration of the Community industry towards producing special fasteners. That point, moreover, is not disputed by the applicants.

76 Therefore, the comprehensive nature of the analysis of the effects of Chinese imports on the Community industry necessarily involved taking into account not only standard fasteners but also special fasteners.

77 Second, it follows from recitals 51, 54 and 103 of the contested regulation that, while exports in the European Union are mainly made up of standard fasteners, they also include special fasteners.

78 Under those circumstances, it is apparent that special fasteners had to be examined in the anti-dumping investigation, not only in assessing the injury suffered by the Community industry, but also in order to ascertain the occurrence of dumping concerning that type of import.

79 Thus, and since, applying the case-law cited in paragraph 59 above, the purpose of the definition of the product concerned in an anti-dumping investigation is to aid in drawing up the list of the products which will, if necessary, be subject to the imposition of anti-dumping duties, it must be concluded that the institutions legitimately included special fasteners in the definition of -�the product concerned-�, since they took into account the intrinsic cost differences between standard and special fasteners. In that regard, it should be observed that it is apparent from recitals 102, 103 and 125 of the contested regulation that the institutions did not carry out a comparison based on the average prices of the fasteners, but on the type of fasteners.

80 In the light of the foregoing, this complaint must be rejected and, accordingly, the plea in its entirety.

Third plea in law, concerning the injury allegedly suffered by the Community industry

81 The applicants claim that the contested regulation is vitiated by a manifest error of assessment in that it concludes that the Community industry has suffered injury. This plea is, in essence, in three parts, the first alleging infringement of Article 3(5) of the basic regulation (now Article 3(5) of Regulation No 1225/2009), due to taking only one relevant factor into account, the second alleging a contradiction in the grounds of the contested regulation and the third alleging the unreliable and non-credible nature of the evidence taken into consideration by the Council in order to establish the injury suffered by the Community industry.

82 The Council, supported by EIFI, contends that that plea should be rejected.

-� First part, alleging that only one relevant factor was taken into account

83 The applicants submit that it follows from the wording of the contested regulation that the institutions relied solely on a single factor based on the reduction of the Community industry-�s market share to conclude that a significant injury had been suffered by that industry, whereas it is apparent from Article 3(5) of the basic regulation, as well as from settled case-law, that the examination of injury must relate to a set of factors.

84 The Council contends that the basic regulation and the case-law do not mean that the occurrence of injury cannot be established on the basis of a single factor. In addition, it claims that the applicants are distorting the contested regulation by maintaining that the institutions relied solely on the indicator of market share.

85 It must be stated that it is apparent from reading recitals 153 to 161 of the contested regulation that the change to the Community industry-�s market share is not the only relevant factor the institutions relied on to establish the occurrence of injury.

86 First, it is necessary to read recital 154 of the contested regulation, which, admittedly, is infelicitously worded, in which it is stated that, -�while the Community consumption increased by 29%, the sales volume of the Community industry only decreased by 1%-�, in conjunction with recital 155 of that regulation, where it is pointed out that, -�[a]s a consequence, production did not increase at the same pace as Community consumption-�. It follows that the institutions also took into account as a factor revealing the occurrence of a serious injury suffered by the Community industry the fact that, due to the imports of the product concerned, the Community industry had not been in a position to benefit from a favourable context of increased Community demand.

87 Second, it is also pointed out in recital 155 that -�capacity utilisation remained very low, at around 50%, during the period considered-� and that -�[t]his has also had a negative impact on profitability, as it kept the industry from fully taking advantage of economies of scale-�. That reference must also be understood as meaning that a continuing low level of the Community industry-�s capacity utilisation in a situation of increased demand reveals injury. That point is noted again in recital 157 where, regarding the Community industry, it is pointed out that -�its profitability, cash flow and return on investment did not reflect the continuing increase of the Community demand for the product concerned-�.

88 It must therefore be concluded that, contrary to what the applicants claim, the institutions did not rely solely on the reduction of the Community industry-�s market share. Accordingly, and without there being any need to ascertain whether the institutions might have been entitled to establish the occurrence of injury to the Community industry on the basis of a single factor, this part of the plea must be rejected as having no factual basis.

-� Second part, alleging a contradiction in the grounds of the contested regulation

89 According to the applicants, the recitals concerning the assessment of the injury suffered by the Community industry are contradictory. Although in recital 223 of the contested regulation it is stated that a profit margin of 5% could be expected in the absence of injurious dumping, recital 140 of that regulation states that the Community industry achieved a profit margin of 4.4% during the investigation period. Referring to the case-law of the General Court, the applicants submit that that contradiction justifies annulling the contested regulation. In their reply to the Council, the applicants deny that a lower level of profitability for the Community industry than that which could have been expected may be taken into account as an indicator of injury, since it does not constitute a negative trend.

90 The Council, supported by EIFI, denies that there is a contradiction of grounds within the contested regulation.

91 First, the Court rejects at the outset the applicants-� argument submitted in the reply and alleging that the Community industry-�s profitability during the examined period precludes the conclusion that an injury occurred. The institutions were entitled to take account of the fact that the dumping had resulted in a lower profitability level for the Community industry than could have been expected without that dumping, in view of the very rapid expansion of the market (see, to that effect and by analogy, Joined Cases 277/85 and 300/85 Canon and Others v Council [1988] ECR 5731, paragraph 58).

92 Second, the applicants-� argument could be understood as meaning that the small difference between the Community industry-�s actual profit margin and what could have been expected without the dumping should have led the Community institutions to conclude that there was no significant injury.

93 First, it should be pointed out that the expected profit margin of 5% should not be compared solely with the Community industry-�s actual profit margin during the investigation period, that is, 4.4%, but rather with its actual profit margin during the examined period, the purpose of which is to enable examination of the trends relevant for the assessment of injury over a longer period than the investigation period. It follows from that comparison that, with the exception of 2004, where the profit margin was 4.7%, the profit margin has always been below 4.4%: 2.1% in 2003; 3.4% in 2005; and 2.9% in 2006. Moreover, the applicants do not challenge the Council-�s assertion that the investigation period was characterised by exceptional growth.

94 Second and consequently, since the applicants do not dispute the materiality of the figures indicated in the contested regulation and since it is apparent from those figures that there is a difference between the actual profit margin and the margin which the Community industry could have expected without the dumping, it must be concluded that there is no contradiction in the grounds of the contested regulation. Furthermore, it is evident that the institutions did not make any manifest error of assessment in inferring from that difference in profitability levels that significant injury had been suffered by the Community industry.

95 The second part of the plea must therefore be rejected.

-� Third part, alleging the unreliable and non-credible nature of the evidence taken into account by the Council

96 The applicants complain that the institutions based their assessment of the injury allegedly suffered by the Community industry on mere speculation, even though, applying Article 3(2) of the basic regulation (now Article 3(2) of Regulation No 1225/2009), they were required to take account of positive evidence. Interpreting that provision in the light of the World Trade Organisation (WTO) panels-� decisions requires that such evidence be inherently reliable and credible. The applicants dispute the assessments set out in recitals 156 and 157 of the contested regulation based, respectively, on the end of a favourable economic cycle for the Community industry and on the fact that the dumping could severely impact the Community industry-�s capacity to maintain the production of high-quality parts. They also argue, first, that considerations concerning future developments are not relevant for the purposes of ascertaining the occurrence of significant injury to the Community industry during the period considered and, second, that the margin of discretion enjoyed by the institutions cannot extend to establishing a presumption of significant injury.

97 The Council submits that the applicants-� claim regarding the speculative nature of its analysis is groundless, since it is entitled to draw conclusions concerning imminent future developments from evidence gathered during the investigation. It also argues, in essence, that that claim is, in any event, ineffective, since it is possible to conclude on the basis of other recitals of the contested regulation that the Community industry has suffered significant injury.

98 Under Article 3(2) of the basic regulation, -�[a] determination of injury shall be based on positive evidence and shall involve an objective examination of both: (a) the volume of the dumped imports and the effect of the dumped imports on prices in the Community market for like products; and (b) the consequent impact of those imports on the Community industry-�.

99 In recital 156 of the contested regulation, the Council observed that the factors enabling the Community industry to limit the impact of dumped imports on its profitability were due to a favourable economic cycle and would no longer be present once that cycle had ended. In recital 157 of that regulation, it is, inter alia, stated that the fact that the Community industry-�s cash flow and return on investment do not reflect the continuing increase of the Community demand for the product concerned could severely impact its capacity to maintain the production of high-quality parts.

100 There is, however, no need to ascertain whether the institutions, by taking those elements into consideration, infringed Article 3(2) of the basic regulation, given that their conclusion regarding the occurrence of significant injury suffered by the Community industry is sufficiently justified by other grounds in the contested regulation.

101 In that regard, it should be pointed out that the two criticised elements do not make up the main aspect of the institutions-� reasoning concerning the injury. In essence, the main aspect is based on the finding that the dumping has prevented the Community industry from benefiting from the growth of the market resulting from the increase in Community consumption, by obliging the industry to move away from producing standard fasteners on a wider scale in order to focus on producing special fasteners. In that regard, the Council relies on a number of pieces of positive evidence within the meaning of Article 3(2) of the basic regulation, such as the development of the Community industry-�s production volume (recital 129), production capacity (recital 130), sales (recital 137) and profitability (recitals 141 to 143) during the period considered.

102 Since the applicants do not dispute the materiality of the other evidence taken into account in order to reach that finding and since that finding is not vitiated by a manifest error of assessment, it must be concluded that the institutions were, on that basis, legitimately able to conclude that the Community industry had suffered significant injury.

103 Under those circumstances, the third part of the plea must be rejected as ineffective and, accordingly, this plea must be rejected in its entirety.

Fourth and fifth pleas in law, alleging a misinterpretation of Article 2(7)(b) and (c) of the basic regulation

104 In these two pleas, which should be examined together, the applicants criticise the institutions-� interpretation of Article 2(7)(b) and (c) of the basic regulation, an interpretation which led them, in recital 63 of the contested regulation, to deny MET to all the companies claiming it, on the grounds that the cost of the major input did not substantially reflect international prices.

105 According to settled case-law, in interpreting a provision of Community law, it is necessary to consider not only its wording but also the context in which it occurs and the objects of the rules of which it is part (see Case C-17/03 VEMW and Others [2005] ECR I-�4983, paragraph 41 and the case-law cited).

106 In addition, since the textual and historical interpretations of a regulation, and in particular of one of its provisions, do not permit its precise scope to be assessed, the legislation in question must be interpreted by reference to its purpose and general structure (see, to that effect, Joined Cases C-68/94 and C-30/95 France and Others v Commission [1998] ECR I-�1375, paragraph 168, and Case T-102/96 Gencor v Commission [1999] ECR II-�753, paragraph 148).

107 Lastly, it should also be borne in mind that the operative part of an act is indissociably linked to the statement of reasons for it, so that, when it has to be interpreted, account must be taken of the reasons which led to its adoption (Case C-355/95 P TWD v Commission [1997] ECR I-�2549, paragraph 21).

108 Article 2(7)(b) of the basic regulation provides as follows:

-�In anti-dumping investigations concerning imports from [China], normal value shall be determined in accordance with paragraphs 1 to 6, if it is shown, on the basis of properly substantiated claims by one or more producers subject to the investigation and in accordance with the criteria and procedures set out in subparagraph (c), that market economy conditions prevail for this producer or producers in respect of the manufacture and sale of the like product concerned. When this is not the case, the rules set out under subparagraph (a) shall apply.-�

109 The first indent of Article 2(7)(c) of the basic regulation (now the first indent of Article 2(7)(c) of Regulation No 1225/2009) states that -�[a] claim under [Article 2(7)(b)] must be made in writing and contain sufficient evidence that the producer operates under market economy conditions, that is if: -� decisions of firms regarding prices, costs and inputs, including for instance raw materials, cost of technology and labour, output, sales and investment, are made in response to market signals reflecting supply and demand, and without significant State interference in this regard, and costs of major inputs substantially reflect market values-�.

110 In recital 63 of the contested regulation, the Council pointed out the following:

-�-� MET [was denied] on the grounds that the costs of the major input, steel wire rod, did not substantially reflect market values, as required by Article 2(7)(c) of the basic regulation. It was found that the prices of steel wire rod, or in some cases, drawn steel wire, charged on the Chinese market were significantly lower than those charged on other markets, such as Europe, India, North America and Japan -� . Given that China has to import the majority of its iron ore at international market prices, it is clear that it does not benefit from any natural comparative advantage, which would explain these abnormally low prices of steel wire rod on the Chinese domestic market. At the same time various studies -� point to significant State interference in this sector -�-�

111 In addition, the following is stated in recital 66 of the contested regulation:

-�-� Article 2(7)(c) of the basic regulation requires, inter alia, that the costs of major inputs substantially reflect market values. The main input of fasteners, steel wire rod, accounts for around 50% of the cost of manufacturing. Based on data obtained and verified during the investigation as well as from independent market sources, such as the -�Steel Bulletin Board-�, it is undisputable that prices of steel wire rod on the Chinese domestic market are significantly below prices on other markets. Given that [China] does not benefit from any natural comparative advantage with regard to iron ore, which it imports at international market prices, it is considered that there is no justification for the abnormally low prices of steel wire rod, which do not substantially reflect market values. This conclusion applies equally to the sector as a whole as well as individually to all of the investigated sampled companies. Therefore criterion 1 of Article 2(7)(c) is not considered to be met.-�

112 Lastly, in recital 67 of the contested regulation, the Council stated the following:

-�As regards the interpretation of -�market value-�, -�market value-� has to be understood as a non-distorted market price. In this regard, as mentioned above, there are several sources and studies which point to State interference in the Chinese steel sector. Moreover, as mentioned above, some of the largest Chinese producers of steel wire rod received various types of subsidies in 2006 and 2007, as evidenced by their audited financial statements. It should also be borne in mind that it is up to the exporting producers to demonstrate that they operate under market economy conditions and that the costs of their major inputs substantially reflect market values. This has not been demonstrated in this case.-�

113 In their fourth plea, the applicants criticise the institutions-� interpretation to the effect that a -�non-distorted market-� must be taken into account in order to ascertain whether costs of major inputs substantially reflect market values.

114 According to the applicants, the requirement that -�costs of major inputs substantially reflect market values-� means that account must be taken of the values of the market where the company buys its inputs, that is, in the present case, the price of steel wire rod on the Chinese market. By deciding, in recital 63 of the contested regulation, that Article 2(7)(c) of the basic regulation concerned a -�non-distorted market-� and by taking into account the value of steel wire rod on the international market, the institutions misinterpreted that provision.

115 The Council, supported by EIFI, contends that that plea should be rejected.

116 In order to ascertain whether the institutions misinterpreted the first indent of Article 2(7)(c) of the basic regulation, and therefore erred in law, in deciding that the expression -�market values-� ought to be understood as referring to a non-distorted market, the general structure and purpose of Article 2(7) of the basic regulation must be taken into account.

117 Article 2(7)(a) of the basic regulation (now Article 2(7)(a) of Regulation No 1225/2009) establishes a general rule applicable to non-market economy countries as regards determining the normal value of the product concerned. By way of derogation, Article 2(7)(b) of the basic regulation provides for the possibility, concerning, inter alia, imports from China, of allowing one or more producers to show that market economy conditions prevail in respect of them and, thus, to avoid Article 2(7)(a) being applied to them. The purpose of the criteria listed in Article 2(7)(c) is to enable it to be determined whether the possibility provided by Article 2(7)(b) is applicable.

118 Thus, the method of determining the normal value of a product, set out in Article 2(7)(b) of the basic regulation, is an exception to the specific rule laid down for that purpose in Article 2(7)(a) of that regulation, which is, in principle, applicable to imports from non-market economy countries. It is settled case-law that any derogation from or exception to a general rule must be interpreted strictly (see Case T-299/05 Shanghai Excell M&E Enterprise and Shanghai Adeptech Precision v Council [2009] ECR II-�565, paragraph 82 and the case-law cited).

119 It must be stated that the criterion set out in the first indent of Article 2(7)(c) of the basic regulation, requiring that costs of major inputs substantially reflect market values, would lose a great deal of its effectiveness if values which had been artificially lowered due to State interference could be taken into account.

120 Therefore, since the interpretation of one of the factors intended to ascertain whether market conditions prevail in respect of a producer is at issue, the expression -�market values-� appearing in the first indent of Article 2(7)(c) of the basic regulation can only be understood as referring to a market in which the determination of prices is not distorted by State interference of the type highlighted by the Council in, inter alia, recital 63 of the contested regulation.

121 It must therefore be concluded that the institutions did not err in law as claimed by the applicants and that, accordingly, the fourth plea must be rejected.

122 In their fifth plea, the applicants complain that the institutions have misinterpreted Article 2(7)(b) and (c) of the basic regulation by denying MET to those exporting producers claiming it on the ground that their suppliers did not operate under market economy conditions themselves, even though the markets for steel wire rod and for fasteners were different.

123 In support of their argument, the applicants note that Council Regulation (EC) No 905/98 of 27 April 1998 amending the basic regulation (OJ 1998 L 128, p. 18), which led to the insertion of Article 2(7)(b) and (c) into the basic regulation, was adopted due to reforms carried out in China. They also submit that those provisions should be interpreted in the light of the Community-�s obligations under the WTO, that is, in the light of Article 2 of the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 (OJ 1994 L 336, p. 103) (-�the 1994 anti-dumping code-�) and Paragraph 15 of the Protocol on the Accession of the People-�s Republic of China to the WTO (-�the Protocol-�). It follows that MET can only be denied if market economy conditions are not present in the production area under investigation. Therefore, Article 2(7)(c) of the basic regulation cannot be interpreted in a way which leads to a Chinese company being denied MET on the ground that its raw material suppliers do not operate under market economy conditions themselves.

124 The Council, supported by EIFI, contends that the fifth plea should be rejected.

125 Since one of the criteria listed in Article 2(7)(c) of the basic regulation is that -�costs of major inputs substantially reflect market values-�, it necessarily follows from a literal interpretation of the basic regulation that the reference to the -�market-� in the specific context of that criterion can only be understood to refer to the market of the inputs and not the market of the product concerned. Moreover, for the reasons referred to in paragraphs 117 to 120 above, -�market values-�, appearing in the first indent of Article 2(7)(c) of the basic regulation, can only be understood as referring to a market in which the determination of prices is not distorted by State interference.

126 Therefore, the institutions did not err in law in any way in taking into account the fact that the price of the major input, steel wire rod, did not reflect market values.

127 That finding, far from being undermined by the applicants-� argument concerning the Council-�s intention as expressed in Regulation No 905/98, is strengthened by it.

128 Recital 5 in the preamble to that regulation points out that it is appropriate to revise anti-dumping practice with regard to China, by specifying in particular that the normal value of a product may be determined in accordance with the rules applicable to market economy countries in cases where it can be shown that market conditions prevail for one or more producers subject to investigation in relation to the manufacture and sale of the product concerned. It is also pointed out in recital 6 of that regulation that -�an examination of whether market conditions prevail will be carried out on the basis of properly substantiated claims by one or more producers subject to investigation who wish to avail themselves of the possibility to have normal value [of the product concerned] determined on the basis of rules applicable to market economy countries-�.

129 Thus, that preamble shows the legislature-�s choice to offer Chinese producers the opportunity to show that market conditions prevail in respect of them and that, consequently, they are in a similar situation to those applicable in market economy countries, which justifies the normal value of their products being determined in the same way as in those countries.

130 Accordingly, it is completely in accordance with the intention of the legislature that the institutions should verify the way in which the prices of major inputs are determined on the domestic market. A Chinese producer whose major input prices are artificially reduced due to State interference is not in a similar situation to a producer operating in a market economy country.

131 Regarding the argument based on the need to interpret Article 2(7)(b) and (c) of the basic regulation in the light of Paragraph 15 of the Protocol, it is true that, applying settled case-law, Community legislation must, so far as possible, be interpreted in a manner that is consistent with international law, in particular where its provisions are intended specifically to give effect to an international agreement concluded by the Community (see Case C-76/00 P Petrotub and Republica [2003] ECR I-�79, paragraph 57 and the case-law cited).

132 However, for the reasons referred to in paragraph 125 above, the criterion set out in Article 2(7)(c) of the basic regulation, requiring that -�costs of major inputs substantially reflect market values-�, is completely unambiguous. It is not therefore possible to interpret it in the light of Paragraph 15 of the Protocol. In any event, it should be noted that, contrary to what the applicants claim, it in no way follows from Paragraph 15 of the Protocol that the institutions may not take account of the fact that a Chinese company-�s raw material suppliers do not operate under market economy conditions themselves.

133 The fifth plea must therefore also be rejected.

Sixth plea in law, alleging a breach by the institutions of their duty to examine, carefully and impartially, all the relevant aspects of the present case

134 The applicants submit that the conclusion that raw material prices in China were distorted due to subsidisation is based on insufficient information and, therefore, breaches the institutions-� duty, in areas where they have a wide power of appraisal, to examine, carefully and impartially, all the relevant aspects of the case. The price difference could be because the Indian producers are not as efficient and because, in the European Union, industries are subjected to much more onerous environmental and social requirements than those imposed on their Chinese counterparts. Furthermore, the institutions-� finding that the allegedly lower Chinese prices were caused by subsidies was based on studies prepared, or commissioned, by groups and associations with interests which are opposed to those of the Chinese steel industry.

135 The applicants also refer to the fact that, in Commission Regulation (EC) No 112/2009 of 6 February 2009 imposing a provisional anti-dumping duty on imports of wire rod originating in the People-�s Republic of China and the Republic of Moldova (OJ 2009 L 38, p. 3), the Commission concluded that a Chinese exporting producer met the first criterion of Article 2(7)(c) of the basic regulation.

136 Lastly, in their reply, they point out that the MET decision was taken after the expiry of the three-month time-limit established in Article 2(7)(c) of the basic regulation. In essence, they claim that the fact that the institutions knew the actual dumping margins of each company might have influenced them in their decision to deny those companies MET on the basis of the situation in the upstream industry.

137 The Council, supported by EIFI, contends that this plea should be rejected.

138 First, regarding the criticism concerning the fact that the MET decision was taken after the expiry of the three-month time-limit, it should be pointed out that that criticism was raised for the first time in the reply.

139 It is apparent from the combined provisions of Articles 44(1)(c) and 48(2) of the Rules of Procedure of the General Court that the application initiating proceedings must indicate the subject-matter of the proceedings and contain a summary of the pleas in law on which the application is based and that no new plea in law may be introduced in the course of proceedings unless it is based on matters of law or of fact which come to light in the course of the procedure. However, a submission, or an argument, which may be regarded as amplifying a submission made previously, whether directly or by implication, in the application initiating proceedings, and which is closely connected therewith, will be declared admissible.

140 It must be stated that that criticism, although formally submitted in the context of this plea, in actual fact constitutes a separate plea in law. Moreover, it cannot be held that that plea is based on matters which have come to light in the course of the procedure.

141 Accordingly, the criticism concerning the fact that the MET decision was taken after the expiry of the three-month time-limit must be rejected as inadmissible.

142 Second, regarding the alleged breach by the institutions of their duty to examine, carefully and impartially, all the relevant aspects of the present case, it is true that it is apparent from settled case-law that, where the institutions have a wide discretion, respect for the rights guaranteed by the Community legal order in administrative procedures is of even more fundamental importance. Those guarantees include, in particular, the duty of the competent institution to examine carefully and impartially all the relevant aspects of the individual case (see HEG and Graphite India v Council, paragraph 62 above, paragraph 68 and the case-law cited).

143 However, the fact that the burden of proof lies with the exporting producer wishing to claim MET should also be taken into consideration. Article 2(7)(c) of the basic regulation states that the claim -�must -� contain sufficient evidence-�. Accordingly, there is no obligation on the institutions to prove that the exporting producer does not satisfy the criteria laid down for the receipt of that treatment. On the contrary, it is for them to assess whether the evidence supplied by the exporting producer in question is sufficient to show that the criteria listed in Article 2(7)(c) of the basic regulation are fulfilled and for the judicature to examine whether the institution-�s assessment is vitiated by a manifest error (see Shanghai Excell M&E Enterprise and Shanghai Adeptech Precision v Council, paragraph 118 above, paragraph 83 and the case-law cited). It is in that context that it must be ascertained whether the institutions breached their duty under the case-law cited in paragraph 142 above.

144 It must be stated that the applicants do not refer in their argument to precise evidence which had been disclosed to the institutions and ought to have led them to conclude that the criteria in Article 2(7)(c) had been fulfilled.

145 Under those circumstances, since they were not denied MET on the basis of evidence which they put forward in the course of the procedure, and they have not been able to establish which evidence was submitted by the exporting producers in the course of the procedure, the applicants cannot legitimately invoke a breach by the institutions of their duty to examine carefully and impartially all relevant aspects of the present case.

146 For the same reason, the applicants-� criticisms based on an alleged lack of objectivity in the evidence admitted by the institutions for the purposes of finding that there were subsidies in the Chinese industry and on a failure to examine other factors likely to explain the price differences, such as more onerous labour law and environmental requirements, must also be rejected.

147 In addition, it should be noted that, in view of the reasons set out in, inter alia, recitals 63, 66 and 67 of the contested regulation, the institutions were able to conclude, without making a manifest error of assessment, that the criterion for granting MET set out in the first indent of Article 2(7)(c), requiring that -�costs of major inputs substantially reflect market values-�, had not been met in the present case. In that regard, it should be borne in mind that the institutions observed that the price of steel wire rod was lower than prices charged on other markets, even though its main component (iron ore) was for the most part imported into China and was therefore charged at international market prices. They also highlighted the existence of significant intervention by China in favour of steel wire rod producers -� which could explain that abnormally low price.

148 Third, regarding the criticism concerning the conflict between the approach favoured in the present regulation and the approach favoured by the Commission in Regulation No 112/2009, it is sufficient to point out that that criticism is based on a mistaken premiss. The applicants submit, in essence, that it follows from that latter regulation that the Commission has acknowledged that a Chinese exporting producer of steel wire rod meets the criteria set out in the first indent of Article 2(7)(c) of the basic regulation. However, a reading of recitals 24 to 31 of that regulation shows that the Commission did not analyse compliance with the first indent of Article 2(7)(c) of the basic regulation, but relied entirely on the fact that the exporting producer in question was not able to prove that he met other criteria necessary for obtaining MET to dismiss his claim.

149 In the light of all of the foregoing, this plea must be rejected.

Seventh plea in law, alleging infringement of Regulation No 2026/97

150 The applicants submit that the institutions have infringed the provisions of Regulation No 2026/97, read in the light of the WTO rules. In essence, they claim that, by denying the applicants MET in the context of an anti-dumping procedure, the institutions, first, found that subsidies had been granted, without following the procedure laid down in Regulation No 2026/97 and, second, countervailed those subsidies using an illegal measure, namely MET rejection.

151 The Council disputes the merits of that plea.

152 As has been pointed out in paragraphs 117 to 120 above, the institutions followed a correct interpretation of the criterion requiring that costs of major inputs substantially reflect market values, set out in the first indent of Article 2(7)(c) of the basic regulation, by concluding that that criterion referred to a market in which the determination of prices was not distorted by State interference. In that context, they observed that several sources and studies pointed to State interference in the Chinese steel sector and that some of the largest Chinese producers of steel wire rod had received various types of subsidies (recital 67).

153 However, it must be stated that the present anti-dumping procedure related to -�the product concerned-� as defined in recitals 40 to 47 of the contested regulation and not the major input of the companies claiming MET. It was only in the context of examining the MET claims that the institutions evoked the existence of subsidies capable of explaining the abnormally low prices of that major input in China. Contrary to what the applicants claim, the institutions were in no way obliged to initiate and successfully bring to conclusion a procedure laid down in Regulation No 2026/97 in respect of products other than the product concerned and situated in the upstream market.

154 In any event, following the applicants-� line of argument would amount to finding that the institutions, in similar circumstances to those in the present case, may refuse to grant MET only after having initiated an anti-subsidy procedure pursuant to Regulation No 2026/97. Such an interpretation would render the criterion set out in the first indent of Article 2(7)(c) of the basic regulation largely ineffective.

155 Therefore, this plea must be rejected and, accordingly, the action must be dismissed in its entirety.

Costs

156 Under Article 87(2) of the Rules of Procedure of the General Court, 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 applicants have been unsuccessful, they must be ordered to bear their own costs and to pay those of the Council and EIFI in accordance with the form of order sought by those parties.

157 The Commission shall bear its own costs, in accordance with the first subparagraph of Article 87(4) of the Rules of Procedure.

On those grounds,

THE GENERAL COURT (Seventh Chamber)

hereby:

1. Dismisses the action;

2. Orders Gem-Year Industrial Co. Ltd and Jinn-Well Auto-Parts (Zhejiang) Co. Ltd to bear their own costs and to pay those of the Council of the European Union and of the European Industrial Fasteners Institute AISBL;

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

Delivered in open court in Luxembourg on 10 October 2012.

[Signatures]

** Language of the case: English.

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