Targetti (UK) Ltd v Revenue & Customs [2012] UKFTT 766 (TC) (13 December 2012)
DECISION
Introduction
1.
Targetti (UK) Limited ("Targetti") appeals against three
decisions of the Respondents ("HMRC") on reviews under section 16
Finance Act 1994. The review decisions confirmed a Post-clearance Demand for
duty and VAT and refused two claims for repayment of duty and VAT. In all
three cases, the duty and VAT related to compact fluorescent lamps with
integrated electronic components ("CFL-i") imported by Targetti.
2.
The disputed duty was chargeable pursuant to Council Regulation (EC) No
1470/2001 of 16 July 2001 ("the Definitive ADD Regulation")
imposing a definitive anti-dumping duty on imports of CFL-i originating in the
People's Republic of China ("PRC"). There is no challenge to the
customs duty classification of the CFL-i or their origin in the PRC. Targetti
appeals against the decisions confirming that duty is payable and refusing the
repayment claims solely on the ground that the Definitive ADD Regulation is
invalid.
3. Mr Timothy
Lyons QC, who appeared for Targetti, submitted that the Definitive ADD
Regulation is rendered invalid in its entirety by a number of manifest errors
and procedural irregularities. Targetti alleged manifest errors in relation to
the Community interest, the existence of dumping, the assessment of material
injury to the Community interest and in relation to the causation of injury by
dumping. Targetti also claimed that the Regulation fails to state adequately
the reasons on which it is based contrary to Article 253 of the EC Treaty and
breaches general principles of EU law, namely the principles of legal certainty
and duty of “good”, “sound” or “proper” administration”. Mr Kieron Beal QC,
who appeared for HMRC, submitted that the matters raised by Targetti do not
cast any doubt on the validity of the Definitive ADD Regulation so no reference
to the CJEU is necessary. In addition, HMRC contended that the reference is
not admissible as Targetti would have had standing to challenge the Definitive
ADD Regulation in a direct action before the CJEU but failed to do so.
4.
The Tribunal (or any other national court) cannot declare Community
legislation invalid. If the Tribunal considers that one or more of the
arguments in relation to the validity of the Definitive ADD Regulation are
reasonably arguable or not unfounded then it must stay the proceedings and make
a reference to the Court of Justice of the European Union ("CJEU")
for a preliminary ruling on the Regulation's validity (see Case C-344/04 The
Queen on the application of International Air Transport Association and
European Low Fares Airline Association v Department for Transport [2006] ECR I-403 at [29] and [30] "IATA and ELFAA").
5.
For the reasons set out below, I have concluded that none of Targetti's
submissions that the Definitive ADD Regulation is invalid are reasonably
arguable and, therefore, the Tribunal should not make a reference to the CJEU
for a preliminary ruling.
Facts
6.
There was a statement of agreed facts. Witness statements were produced
by Dr Maurizio Gambardella, Dr Tommaso Nannelli, Mr Gherardo Nardi Dei and Mr
Cliff Stevenson on behalf of Targetti and by Ms Jan Pond on behalf of HMRC.
The witness statements were admitted as evidence in chief. The witnesses for
Targetti all gave oral evidence and were cross-examined. On the basis of the
evidence, I find the material facts concerning the background to the dispute to
be as set out below. Evidence in relation to the alleged manifest errors in
the Definitive ADD Regulation was principally provided by Mr Stevenson and Mr
Nardi Dei and I consider that evidence in the context of the alleged errors
below. The bundle of documents included correspondence and various documents
that had been provided by the European Commission (“the Commission”) to
Targetti following a request for sincere co-operation by the Tribunal in 2009.
7.
In 2000, the European Lighting Companies Federation, representing
Community producers of CFL-i, lodged a complaint with the Commission alleging
dumping of CFL-i by exporters in the PRC. The Commission initiated an
anti-dumping investigation shortly thereafter.
8.
Mr Nardi Dei, formerly the director of research and development at
Targetti Sankey SpA which is the parent company of Targetti, described the
construction of the CFL-i. The CFL-i consist of a plastic socket with a
screw-fitting onto which are glued cleaned glass tubes. The plastic socket
contains an electronic circuit and electrolytic capacitor. The glass tubes
contain mercury, gas, fluorescent white powder and two filaments connected to
the electronic circuit. The electronic circuit transmits an electric pulse
through the filaments into the gas. The subsequent chemical reaction produces
ultraviolet light, which stimulates the white fluorescent powder to emit
visible light. Mr. Nardi Dei’s evidence was that there were various
differences between CFL-i manufactured in the EU and those made in the PRC.
The differences included differences in component quality, materials,
appearance and assembly. Mr Nardi Dei said that the differences would have an
effect on the performance and reliability of the products.
9.
By Council Regulation (EC) No 255/2001 of 7 February 2001 ("the
Provisional ADD Regulation"), the Commission imposed provisional
anti-dumping duties on exports of CFL-i from the PRC with particular rates for
a number of specified PRC manufacturers, as well as a country-wide rate of
74.4% for all the other PRC manufacturers. The recitals to the Provisional ADD
Regulation set out the background to the investigation, the steps taken in the
course of the investigation and the Commission’s findings. I comment on the
specific recitals, where relevant, when considering the submissions below. The
Provisional ADD Regulation came into force on 9 February 2001 and was stated to
apply for a period of six months.
10.
The Definitive ADD Regulation confirmed the Provisional ADD Regulation,
subject to some further findings and revisions of calculations, and imposed the
definitive anti-dumping duty on imports of CFL-i originating in the PRC with
effect from 20 July 2001. The Regulation provided for particular rates in
relation to specified manufacturers and a country-wide rate of 66.1% for all
other manufacturers. Targetti paid the country-wide rate on its imports of
CFL-I which are the subject of this appeal.
11.
Targetti was incorporated in the UK on 4 December 2001. At all
relevant times, Targetti’s principal activity has been the provision of
interior and exterior architectural lighting. At the time of the importations
in question, its principal place of business was in London E1.
12.
By Council Regulation (EC) No 866/2005 of 6 June 2005, the Council
extended the anti-dumping measures imposed by the Definitive ADD Regulation so
that they covered imports of CFL-i consigned from the Socialist Republic of
Vietnam, the Islamic Republic of Pakistan and the Republic of the Philippines.
13.
By Council Regulation (EC) No 1322/2006 of 1 September 2006, the Council
amended the anti-dumping measures in force so that direct current voltage lamps
(known as DC-CFL-i) were excluded from the scope of the measures which
thereafter encompassed only CFL-i which were capable of functioning on an
alternating current (known as AC-CFL-i).
14.
This appeal relates to two importations of CFL-i which Targetti acquired
from Hangzhou Duralamp Electronics Co Limited in the PRC in 2007. Targetti
imported the CFL-i into the UK for sale on the UK market. There is no dispute
that these products were liable on importation to the anti-dumping duty imposed
by the Definitive ADD Regulation.
15.
The first of the two importations with which this appeal is concerned
was of 5,000 CFL-i in 50 cartons. It took place in March 2007. The price was
US $11,300, including freight charges. The goods were shipped by air from Shanghai to Gatwick airport. The terms of sale were that the goods were delivered duty and
VAT unpaid. The goods were entered for free circulation on 19 March 2007.
16.
Initially, Targetti paid duty of £171.54 and VAT of £1,218.41 in respect
of the CFL-i. This was the duty and tax appropriate to a commodity
classification under CN code 85 3929 9290. It is not disputed that the correct
classification should have been CN code 85 3931 9095 which carried liability to
the anti-dumping duty.
17.
On 22 March 2007, Targetti's agent, Davies Turner Air Cargo Limited,
made a voluntary declaration on behalf of Targetti that too little duty had
been paid.
18.
On 17 April 2007, HMRC issued a post-clearance demand note C18 seeking
an additional sum of £4,934.61 which was sent to Targetti by letter the
following day. The sum of £4,934.61 consists of anti-dumping duty of £4,199.66
and additional VAT of £734.95. The anti-dumping duty was charged at a rate of
66.1%. This was the country-wide duty rate contained in Article 1(2) of the
Definitive ADD Regulation. On 23 April, the amount of £4,934.61 was paid by
being debited from the deferment account of Davies Turner Air Cargo Limited.
19.
The second of the two importations with which this appeal is concerned
was of 200 CFL-i in four cartons. It took place in April 2007. The price was
US $1,570, including freight charges. The goods were shipped by air from Shanghai to Gatwick airport. The terms of sale were that the goods were delivered duty and
VAT unpaid. The goods were entered for free circulation on 27 April. Duty of
£550.90 and VAT of £254.16 was paid in respect of the CFL-i which were
classified under CN code 85 3931 9095. The anti-dumping duty was charged at
the country-wide rate of 66.1%.
20.
By a letter dated 23 May 2007, Targetti sought a formal departmental
review of the decision to issue the post-clearance demand note C18 of 17 April
in relation to the first importation.
21.
By a form C285 dated 8 June 2007, Targetti claimed repayments of duty
and VAT in relation to the first and second importations. Targetti claimed a
repayment of £4,934.59, being duty of £4,199.65 and VAT of £734.94, in relation
to the first importation and of £622.24, being £529.57 anti-dumping duty and
£92.67 VAT, in relation to the second importation.
22.
In a letter dated 9 July 2007, Ms Jan Pond, the HMRC reviewing officer,
confirmed the decision to issue the C18 of 17 April 2007. Targetti appealed
against the review decision. By letter dated 11 July, HMRC rejected the claims
for repayment of duty and VAT in relation to the first and second importations
made by Targetti in June.
23.
In a letter dated 22 August 2007, Targetti sought a formal departmental
review of the decision contained in the letter dated 11 July refusing the
repayment of duty and VAT in relation to the first and second importations.
24.
In a letter dated 27 September 2007, Ms Jan Pond upheld the decision to
reject Targetti’s claim for repayment of duty and VAT in relation to the first
and second importations. Targetti appealed against the review decision.
25.
By Council Regulation (EC) No 1205/2007 of 15 October 2007, a definitive
anti-dumping duty was imposed, following an expiry review, on imports of CFL-i
of the description contained in Article 1 of the regulation and originating in
the PRC. The country-wide rate of duty was 66.1%. By virtue of Article 1(3),
the duty was extended to Vietnam, Pakistan and the Philippines. The Regulation
entered into force on 17 October 2007 for a period of one year. The period has
now expired and there is no longer any anti-dumping duty imposed on CFL-i
originating in the PRC.
Admissibility of the
reference
26.
HMRC contended that, even if Targetti's arguments on invalidity are
reasonably arguable, the Tribunal should not make a reference in this case
because it is not admissible. I accept that the Tribunal should not make a
reference if I consider that the CJEU will rule that the reference is
inadmissible.
27.
HMRC submitted that if a person could have brought a direct action to
challenge a regulation and failed to do so then a collateral action to
challenge the regulation will be inadmissible. It is clear from Case C-239/99 Nachi
Europe GmbH v Hauptzollamt Krefeld [2001] ECR I-1197 at [29] – [40] that if
an importer of products subject to anti-dumping duty undoubtedly had a right to
challenge the imposition of the duty but failed to do within the two month time
limit in Article 263 of the Treaty on the Functioning of the European Union
("TFEU") then the importer cannot subsequently plead the invalidity
of that anti-dumping duty before a national court and any reference would be
inadmissible.
28.
HMRC accepted that, as Targetti was not incorporated until after the
expiry of the time limit for challenging the Definitive ADD Regulation, it
could not have challenged the regulation at the time of its introduction.
Nevertheless, HMRC contended that Targetti could have challenged the Definitive
ADD Regulation by challenging the subsequent amending regulations in 2005, 2006
and 2007. HMRC relied on Case C-299/05 Commission v Parliament and Council
[2007] ECR I-8695 in which the CJEU stated at [30] that "where a provision
in a regulation is amended, a fresh right of action arises, not only against
that provision alone, but also against all the provisions which, even if not
amended, form a whole with it". HMRC submitted that Targetti could have
challenged the amending regulations because Targetti is associated with
Hangzhou Duralamp, one of the Chinese exporters affected by the regulation (see
Case 277/85 Canon Inc v Council [1988] ECR 5731 at [8] and Nachi
Europe at [38] and [39]). HMRC submitted that the amending regulations
were free-standing measures susceptible to challenge by Targetti. HMRC pointed
out that Hangzhou Duralamp has challenged the 2007 amending regulation and the
hearing before the General Court of the European Union (formerly the Court of
First Instance and together referred to as “the GCEU") was due to take
place in September. HMRC also invited the Tribunal to infer from the
circumstances of the importation that the dispute had been artificially
generated by Targetti in order to challenge the Definitive ADD Regulation.
29.
Targetti’s position was that the amending regulations are not of direct
and individual concern to Targetti and so it would not have standing under Article
263 TFEU to challenge the amending regulations. The anti-dumping duty was not
a matter of direct and individual concern to Targetti in the sense explained by
the CJEU in Case C-263/02 P Commission v Jégo-Quéré & Cie SA [2004] ECR I-3425 at [45] where the CJEU observed that:
"… natural or legal
persons cannot be individually concerned by ... a measure unless they are
affected by it by reason of certain attributes peculiar to them, or by reason
of a factual situation which differentiates them from all other persons and
distinguishes them individually in the same way as an addressee."
30.
Even if it could be argued that the regulations were of direct and
individual concern to it, Targetti submitted that the position is not beyond
doubt relying on Case C‑550/09 E and F [2010] ECR I-6213 at [44] –
[50] and Case C-494/09 Bolton Alimentari SpA v Agenzia delle Dogane [2011]
ECR I-647 at [22] – [23] in which the CJEU said that, in this context, the
admissibility of a direct action must be beyond any doubt before holding that a
reference was not admissible.
31.
Targetti does not deny that it was associated with Hangzhou Duralamp but
says that the company was a joint venture with Chinese investors and,
accordingly, it was not related for these purposes. Targetti submitted that
the ECJ in Canon was dealing with subsidiaries. The evidence of Dr
Maurizio Gambardella was that Targetti did not control Hangzhou Duralamp.
Hangzhou Duralamp was founded on 31 December 2002 as a joint venture
company between Duralamp International SA, a Luxembourg company, and some
Chinese investors and the majority of the board was Chinese.
32.
Targetti referred to Joined Cases 239/82 and 275/82 Allied
Corporation v Commission [1984] ECR 1005 in which the CJEU held at [12]
that "measures imposing anti-dumping duties are liable to be of direct and
individual concern to 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". The CJEU
went onto to hold that the position was different for an importer established
in one of the Member States that was not referred to in any of the measures and
the fact that the importer acted as importing agent for the producer and exporter
did not alter that conclusion. The CJEU held, at [15], that the importer could
bring an action in a national court and put forward its argument against the
validity of the regulations.
33.
Having considered the submissions by both parties, it seems to me that
it is not possible to say that it is beyond doubt that Targetti had a right to
challenge the amending regulations by direct action. It is not disputed that
the regulations were not addressed to Targetti. The Allied Corporation
case shows that simply being an importer will not give a person sufficient
interest to challenge regulations imposing anti-dumping duties. I accept that
where an importer is related to or associated with an exporter who is affected
by the measure then the importer can bring an action. In my view, it has not
been established in this case that Targetti was a related or associated
importer in relation to Hangzhou Duralamp. Article 4(2) of Council regulation
(EC) No 384/96 on protection against dumped imports (“the Basic Regulation”)
provides that two persons are considered to be related where one controls the
other or both are controlled by or control a third person. In this case, the
evidence shows that Targetti and Hangzhou Duralamp were engaged in a joint
venture but does not, in my view, establish the necessary control. The
involvement of Chinese investors, who form a majority of the board, in
particular appeared to establish that the two companies operated with a degree
of independence that shows they were not related in the way described in
Article 4(2) of the Basic Regulation. Further, I am not satisfied that the
dispute which led to this appeal has been artificially generated in such a way
as to make a reference an abuse. It seems to me that the facts described above
give rise to a genuine dispute. I have not seen any evidence to support HMRC's
assertion that the facts giving rise to the appeal have been artificially
created or to justify accepting HMRC's invitation to infer that the dispute is
not real. In conclusion, I consider that it is not beyond doubt that a
reference in this case would be ruled to be inadmissible by the CJEU and,
accordingly, I will make a reference if I am satisfied that it is right to do
so.
Test for whether to
refer question on validity of a regulation to the CJEU
34.
Targetti contended that the Tribunal must refer a question to the CJEU
if the arguments that the Definitive ADD Regulation is invalid are not
"unfounded" (see IATA and ELFAA at [29] and [30]). HMRC
submitted that the burden of proof is on Targetti to satisfy the Tribunal that
its arguments that the Definitive ADD Regulation is invalid are well-founded.
In R (Telefonica O2 Europe Plc) v Secretary for State for Business Enterprise and Regulatory Reform [2007] EWHC 3018 (Admin), Mitting J expressed the test
at [4] as whether the challenge to validity was "reasonably arguable or,
put negatively, not unfounded". In my view, Mitting J's formulation of
the test shows that it is not necessary to distinguish between "well-founded"
and "founded" when evaluating the strength of the arguments in favour
of invalidity. I consider that the Tribunal should make a reference if I am
satisfied that Targetti's submissions that the Definitive ADD Regulation is
invalid are reasonably arguable.
Introduction to challenges to validity
35.
The legal framework within which anti-dumping duties may be imposed in
the EU is set out in the Basic Regulation. Article 1(1) of the Basic
Regulation provides that an anti-dumping duty may be applied to any dumped product
whose release for free circulation in the Community causes injury. A product
is to be considered as being dumped if its export price to the Community is
less than a comparable price for the like product in the ordinary course of
trade, as established for the exporting country (see Article 1(2)). Like
product is defined by Article 1(4) 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.
36.
The Basic Regulation sets out four main criteria that must be satisfied
for anti-dumping duty to be imposed. There must have been:
(1)
dumping (Articles 1(2) and 2);
(2)
material injury to the Community industry or the threat of such material
injury (Articles 3 and 4)
(3)
caused by the dumping (Article 3(6)); and
(4)
duty must not be imposed where, on the basis of information submitted,
it is clearly not in the Community interest to do so (Article 21).
37.
Further, the level of duty imposed must not exceed the margin of dumping
established and should be less than that if duty at a lower level would be
adequate to remove injury to the Community industry (“the lesser duty rule” -
see the final sentence of Article 9(4) of the Basic Regulation).
38.
Targetti contended that serious errors were made in relation to each of
the criteria set out above and, consequently, the Definitive ADD Regulation is
invalid. Targetti alleges that there are manifest errors of appraisal in
relation to
(1)
the Community interest;
(2)
the assessment of dumping; and
(3)
the assessment of injury and the causation of injury.
39.
In addition, Targetti submitted that, contrary to the requirement in
Article 253 of the EC Treaty, the Definitive ADD Regulation does not contain an
adequate statement of the reasons on which it is based. Targetti also alleged
that the general principle of EU law of good administration was breached in
relation to the Definitive ADD Regulation.
40.
I consider below each of the alleged errors in the order in which Mr
Lyons dealt with them at the hearing rather than the order in which they
appeared in his skeleton argument. Both parties referred to Case T-158/010 The
Dow Chemical Company v Council [2012] ECR II-0000 as describing the
principles to be applied by the GCEU and the CJEU in cases such as this. In
the Dow Chemical case, the GCEU observed at [21]:
“At the outset, it must first
be noted that, in the sphere of the common commercial policy and, most
particularly, in the realm of measures to protect trade, the institutions of
the European Union enjoy a broad discretion by reason of the complexity of the
economic, political and legal situations which they have to examine (Case C-351/04
Ikea Wholesale [2007] ECR I-7723, paragraph 40, and Case C-373/08 Hoesch
Metals and Alloys [2010] ECR I-951, paragraph 61). In that respect it must
be held that the examination of the likelihood of a continuation or recurrence
of dumping and of injury involves the assessment of complex economic matters
and that the judicial review of such an appraisal must therefore be limited to
verifying whether the procedural rules have been complied with, whether the
facts on which the contested choice is based have been accurately stated, and
whether there have been manifest errors in the assessment of those facts or a
misuse of powers (see, to that effect, Case T-188/99 Euroalliages v Commission
[2001] ECR II-1757, paragraphs 45 and 46).”
The Euroalliages case also shows, at [90] – [94],
that the applicants must provide specific evidence to prove that there has been
a manifest error and mere suspicion is not enough.
41. The comments of the GCEU in Dow
Chemical indicate that the court (and, therefore, this Tribunal) is
concerned with whether there are manifest errors in the assessment of the facts
relevant to the imposition of anti-dumping duty. The GCEU’s comments in Euroalliages
show that Targetti bears the burden of proof and must establish that the
Community institutions have made manifest errors in the assessment of the facts
relevant to the imposition of anti-dumping duty. I consider that a distinction
should be drawn between an error and a manifest error in the assessment of the
facts. A manifest error is one that is obvious and clear cut. The nature of
the Tribunal’s task in this case is not to second guess EU institutions’
appraisal but is limited to verifying whether there have been obvious and clear
cut errors in the assessment of the facts on which the decision to impose the
anti-dumping duty on CFL-i from the PRC was based.
Error in relation to
Community interest
42.
Targetti submitted that, even where dumping and injury have been
established, the Community interest must clearly call for intervention before
anti-dumping duty can be imposed. This seems to me to be plainly correct.
Article 9(4) of the Basic Regulation provides:
"Where the facts as
finally established show that there is dumping and injury caused thereby, and
the Community interest calls for intervention in accordance with Article 21, a
definitive anti-dumping duty shall be imposed by the Council …"
43.
Article 21 of the Basic Regulation sets out how the authorities shall
determine whether the Community interest calls for intervention. Article 21(1)
states that the determination must be based on an appreciation of all the
various interests taken as a whole. Article 21(1) also states that:
“Measures, as determined on
the basis of the dumping and injury found, may not be applied where the authorities,
on the basis of all the information, submitted, can clearly conclude that it is
not in the Community interest to apply such measures.”
44.
Targetti submitted that the EU institutions have failed to demonstrate
that the Community interest called for intervention in this case. Targetti
points to recital 46 of the Definitive ADD Regulation which says:
"… the findings set out
in recitals 100 to 118 of the provisional Regulation are confirmed, i.e. there
are no compelling reasons on the grounds of Community interest against the
imposition of anti-dumping duties."
45.
Targetti's submission on this point was that the recital shows that
there was no positive call for intervention because if there had been then it
would have been stated. The facts as to whether or not the Community interest
“called for” intervention were not assessed, either adequately or at all.
Targetti submitted that it is not for the Tribunal to substitute its view or
try to second guess what the decision would have been if it had been taken on a
proper basis. Targetti contended that the only issue for the Tribunal is
whether the Commission asked the right question, namely did the Community
interest call for intervention.
46.
HMRC contended that whether the Community interest called for
intervention is a matter for the discretion of the EU institutions. The EU
institutions clearly considered that the Community interest called for
intervention because they introduced the Provisional ADD Regulation and the
Definitive ADD Regulation. The reasons of Community interest which justified
intervention were set out in recitals 102 to 105 of the Provisional ADD
Regulation.
47.
Recitals 100 to 118 of the Provisional ADD Regulation deal with the
subject of Community interest. Recital 118 concludes with similar words to
those in recital 46 of the Definitive ADD Regulation, namely
"… it is provisionally
concluded that there are no compelling reasons against the imposition of
anti-dumping duties."
I do not regard those words as showing that the EU
institutions had failed to consider whether the Community interest called for
intervention. Those words and, therefore, the words of recital 46 of the
Definitive ADD Regulation reflect the wording of Article 21 of the Basic
Regulation. Further, recital 118 should be read in the context of the
preceding recitals in the Provisional ADD Regulation.
48.
In my view, recitals 100 to 117 of the Provisional ADD Regulation show
that the Community institutions considered whether the Community interest
called for intervention to counter the material injury caused by dumping.
Recital 116 states that the Community interest analysis focused on the economic
impact on the economic operators concerned ie the Community industry, importers
and traders. Recitals 103 to 105 state that the Community industry suffered
material injury caused by dumping which would be mitigated by the imposition of
anti-dumping duties. Recital 105 specifically states that a failure to take
measures would frustrate the Community industry's efforts to regain market share
and to reach a satisfactory margin of profitability as well as jeopardising
necessary new investment. Recitals 106 to 109 deal with the impact of measures
on importers and traders. Recital 109 concludes that anti-dumping measures
will not have such a negative impact on importers as a whole so as to outweigh
the need to eliminate the trade distorting effects of injurious dumping and to
restore effective competition.
49.
In conclusion on this point, I consider that the recitals to Provisional
ADD Regulation, which are incorporated by reference in the Definitive ADD
Regulation, show that the EU institutions carried out an assessment of the
Community interest and concluded that the facts established showed that it
clearly called for intervention. In reaching this conclusion, I am not
substituting my own view of Community interest or second guessing what the
decision should have been. My view, having considered the relevant recitals,
is that they do not disclose any obvious error in the assessment of the facts
in relation to the Community interest. It follows that I reject Targetti's
submission that the EU institutions have failed to demonstrate that the
Community interest called for intervention in relation to the Definitive ADD
Regulation.
Manifest errors in
appraisal and assessment in relation to dumping
50.
Articles 1 and 2 of the Basic Regulation provide that, in order to
determine whether or not dumping has occurred in relation to a product, it is
necessary to establish the price of the product, in the ordinary course of
trade, in the exporting country ("the normal value") and then compare
it with the export price. If the normal value exceeds the export price then
dumping has occurred and the amount of the excess is the dumping margin. Article
2(10) of the Basic Regulation requires a "fair comparison" between
the export price and the normal value. In this case, the normal value was not
determined by using the price of sales of CFL-i for the domestic market in the
PRC because normal market economy conditions did not exist for CFL-i products
in the PRC at the time. Instead, the normal value was established by using
information obtained from Mexico, a so-called “analogue” country.
Order of adjustments
for physical differences
51.
It is necessary to make certain adjustments to the price of the analogue
products which are used to establish the normal value in order to make a fair
comparison with the export price of the goods. Targetti criticised the order
in which the various adjustments were applied. Mr Stevenson’s evidence was
that the Commission made an error in calculating the adjustments for wattage,
lifetime and cover to ensure that the Mexican normal values were comparable
with the prices of exports from the PRC. The alleged error was that the Commission
applied the adjustments for different characteristics sequentially rather than
adding the different percentage adjustments together and then making a single
adjustment. To give a simple example, if the adjustment for voltage was a 10%
reduction in price and the adjustment for lifetime was a 15% reduction in price
then Targetti considered that the total adjustment to the price of the Mexican
product should have been 25%. Mr Stevenson’s evidence was that the Commission
applied the second adjustment to an adjusted figure ie 10% was applied to 100
and 15% was applied to 90. Targetti contended that the error inflated the
dumping margin in relation to Firefly Lighting Corporation Ltd
("Firefly"), one of the co-operating exporting producers in the PRC,
and that inflated calculation was used to set the country-wide dumping margin
that was payable by Targetti.
52.
Mr Stevenson did not say that the methodology of sequential or layered
adjustments was flawed. In reply to a question from Mr Beal, Mr Stevenson said
that if the Commission had said that they would use layered adjustments then he
would have no criticism of the methodology per se. The criticism was that Mr
Stevenson did not know what methodology had been used ie whether they made a
single adjustment or sequential adjustments.
53.
Recital 40 of the Provisional ADD Regulation confirmed that adjustments
were made to the normal value in order to take account of differences in
voltage, lifetime, wattage and type of cover. I do not accept the submission
by Targetti that the use of a sequential or layered calculation was wrong, even
if it inflated the dumping margin. The submission depends on accepting that
the methodology that produces the lowest margin must be the correct one. Mr
Stevenson did not say that the methodology actually chosen was flawed. His
complaint was that he did not know what methodology had been used. It seems to
me that the choice of one permissible methodology over another is clearly a
matter within the discretion of the EU institutions. I do not consider that
the fact that the precise methodology used was not stated in the recitals to
the Provisional ADD Regulation was a manifest error.
Voltage adjustment
54.
Targetti contended that no adjustment for voltage was made to the normal
value of the Mexican products in respect of export prices of Firefly and
Zhijang Sunlight Group Co Ltd (“Sunlight”), another exporting producer, and
this had the effect of inflating the dumping margin. Mr Stevenson’s evidence
was that the Commission stated that an adjustment of 19.03% had been applied to
take account of voltage but he could not find that it had actually been made.
HMRC say that Targetti is simply wrong on this point as an adjustment was made
for voltage across the board and was shown in a provisional disclosure
document, as referred to by Mr Stevenson.
55.
As stated above, recital 40 of the Provisional ADD Regulation confirmed
that adjustments were made to the normal value in order to take account of
differences in voltage. The provisional disclosure spreadsheet showed that an
across the board adjustment of 19.03% was applied. Mr Stevenson’s criticism
was that he had not seen evidence that the adjustment was applied. He said
that he would expect to see it in a work sheet but it was not there. I do not
accept that the failure to include the adjustment in the worksheets included in
the provisional or general disclosure amounts to a manifest error. The
evidence is that a single adjustment for voltage was made to prices for all
Mexican products. In the absence of any evidence that the adjustment was not
made (and there is none), the statements in the recital and spreadsheet
referred to above that it was made must be accepted. It follows that there is
no manifest error in relation to the voltage adjustment.
Basis of dumping margin for non-co-operators and
co-operators
56.
The final dumping margin that was used to set the country-wide dumping
margin that was payable by Targetti was a weighted average of the dumping
margins for co-operating and non-co-operating companies. Mr Stevenson said
when giving evidence that his criticism was that he could not find the
statistical basis for the figure of 66.3% used for non-co-operating companies.
Targetti contended that the absence of any statistical basis for the dumping
margin for non-co-operating companies is a manifest error.
57.
As HMRC submitted, the basis for the dumping margin calculation was set
out in recitals 45 and 46 to the Provisional ADD Regulation and, in revised
form, in recitals 19 to 21 to the Definitive ADD Regulation. In my view, the
basis of the calculation does not disclose any obvious error in assessment of
the facts on which the margin was based. HMRC acknowledged that the underlying
data, on which the margin was calculated, had not been disclosed. I do not
accept that the failure to disclose the data is itself a manifest error in the
calculation of the margin. I deal with this further when I consider Targetti's
criticism that the Regulations fail to state the reasons on which they are based.
58.
Mr Stevenson criticised the way the calculation had been carried out.
Mr Stevenson had found from examination of the worksheets containing the
dumping calculation for Firefly that “model zeroing” had been included through
automatic coding in the spreadsheet. Zeroing is the practice of changing
negative dumping margins to zero and was found to be contrary to the Basic
Regulation in Case C-351/04 Ikea Wholesale Ltd v HMC&E [2007] ECR I-7723 at [56] and [57]. Zeroing was also used in other calculations
concerning Sunlight. Mr Stevenson found that the use of zeroing in the dumping
calculation had no effect on the dumping margin because, after rounding to one
decimal place, the result was the same with and without zeroing. HMRC accepted
Mr Stevenson’s evidence that zeroing was used in the calculation for Firefly.
HMRC submitted that, as Mr Stevenson had found that the practice of zeroing had
no impact in this case, there was no basis for a reference on this point. HMRC
referred to Case C-348/11 Thomson Sales Europe SA v Administration des
douanes [2012] ECR I-0000, only available in French, where at [59] to [64]
the CJEU held that, in the absence of any evidence that the practice of zeroing
had influenced the actual calculation of the anti-dumping duty imposed, the
zeroing did not render the regulations invalid.
59.
I consider that the use of zeroing is a manifest error but, as the use
of zeroing had no effect on the calculation of the dumping margins then,
following Thomson Sales Europe, it does not render the Definitive ADD
Regulation invalid. My conclusion is that the Tribunal should not refer a
question to the CJEU on this point.
Choice of Mexico as analogue country
60.
Targetti objects to the choice of Mexico as an analogue country. In
addition and even if Mexico was an appropriate analogue, Targetti alleges that
a fair comparison was not made between the export price and the normal value of
the CFL-i because necessary adjustments to take account of the difference
between the Chinese and Mexican products were not made. Targetti submitted
that incorrect or inadequate adjustments meant that the extent of the dumping
and the dumping margin could not be accurately determined.
61.
Targetti contended that Mexico should not have been chosen as the
analogue country because the sole producer of comparable products (Philips
Mexicana SA de CV) was associated with one of the complainants (Philips Lighting BV). Article 2(7) of the Basic Regulation provides:
"An appropriate market
economy third country shall be selected in a not unreasonable manner, due
account being taken of any reliable information made available at the time of
selection."
Targetti submitted that the selection of Mexico was carried out in an unreasonable manner and the decision was flawed.
62.
Targetti referred to the comments of the CJEU in Case C-338/10 Grünwald
Logistik Service GmbH (GLS) [2012] ECR I-0000 at [22] and Case
C-16/90 Nölle [1991] ECR I-5163 at [12] and [13] as showing that the
choice of an appropriate analogue country is important and it is essential that
all information is considered before intervening on the market. Targetti
submitted that the EU institutions were wrong to rely on evidence from one
related party in an analogue country and more could and should have been done.
In Grünwald, the CJEU noted, at [31], in relation to Article 2(7) that:
" “... that provision’s objective of seeking to find
an analogue country where the price for a like product is formed in
circumstances which are as similar as possible to those in the country of
export would be jeopardised if the concept of ‘reliable information made
available’, within the meaning of Article 2(7)(a) of the basic regulation, were
restricted to information provided by the complainant in its complaint or to
the information supplied subsequently by the parties concerned in the context
of the investigation. "
In the present case, the information was provided by a
party, Philips Mexicana, related to one of the complainants, Philips Lighting.
Recital 31 of the Provisional ADD Regulation states that "this
relationship does not, per se, render the information provided by the Mexican
producer unreliable".
63.
Targetti also relied on the fact that recital 29 of the Provisional ADD
Regulation referred to an objection to the choice of Mexico because of the
different voltages of Mexican and Chinese products. Targetti contended that
this showed that other differences were not considered when they should have
been and this shows that the decision to choose Mexico was flawed. Targetti's
position was that Korea should have been chosen as the analogue country and, in
support of this, Targetti pointed out that Korea was used as the analogue in
Council Regulation (EC) No 1205/2007, following an expiry review
64.
HMRC referred to a decision of the GCEU in Case T-255/01 Changzhou
Hailong Electronics & Light Fixtures Co. Ltd v Council and Commission
[2003] ECR II-4741 in relation to the Definitive ADD Regulation. In that case,
the GCEU rejected a challenge to the use of Mexico as an analogue country on the
ground that the use of Philips Mexicana data was clearly inappropriate and
unreasonable. The GCEU held at [59] that:
"The competent
institutions may choose not to apply the general rule set out in Article
2(7)(a) of the basic regulation for the determination of the normal value of
products originating in non-market economy countries, using a different
reasonable basis, only where it is impossible to apply that general rule. The
Court of First Instance considers that such impossibility arises only where the
data required in order to determine normal value are not available or are not
reliable. That it happens to be necessary to adjust those data in order to
adapt them as closely as possible to the conditions which would obtain for
Chinese producers if the PRC were a market-economy country does not demonstrate
that it was either impossible or even inappropriate to use the data concerning
Philips Mexicana."
65.
HMRC accepted that Philips Mexicana was related to Philips Lighting but
state that Philips Lighting withdrew as a complainant and there was no evidence
that the data from Philips Mexicana was unreliable.
66.
HMRC contended that the choice of Korea as the analogue in Council
Regulation (EC) No 1205/2007 did not mean that the choice of Mexico in the Definitive ADD Regulation was flawed. HMRC pointed out that the co-operation
of Philips Mexicana could not be obtained at the time of the later regulation
and manufacture of the relevant product in Mexico had ceased (see recital 28 to
Regulation 1205/2007).
67.
I do not accept Targetti’s submission that the choice of Mexico as an analogue country was a manifest error. The use of the data from Philips
Mexicana was not inappropriate as the Changzhou Hailong case
demonstrates. I accept HMRC's submissions that the choice of Korea as the analogue in Council Regulation (EC) No 1205/2007 does not cast any doubt on the choice
of Mexico as the analogue in the Definitive ADD Regulation. The passage of
time between the two investigations and the different circumstances in which
the investigations took place mean that it is not possible to draw any
conclusion from the fact that different countries were chosen as analogues.
Errors in appraisal and
assessment in relation to injury
68.
Article 3(1) of the Basic Regulation provides that ‘injury’ means
material injury to the Community industry or the threat of such injury. In
determining whether there is such injury, Article 3.2 requires
“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.”
69.
Targetti submitted that that there were a number of manifest errors in
relation to injury. The errors include a failure to identify correctly the
Community industry, an absence of positive evidence of injury and a failure to
conduct an objective examination of the volume, effect and impact of dumping.
One of the errors was a failure to recognise that there was another cause of
injury to the Community industry apart from the imports from the PRC, namely
imports of CFL-i from Hungary and Poland.
Failure to identify Community industry
70.
Article 4(1) of the Basic Regulation defines Community industry and
provides:
“… the term ‘Community
industry’ shall be interpreted as referring to the Community producers as a
whole of the like products or to those of them whose collective output of the
products constitutes a major proportion, as defined in Article 5(4), of the
total Community production of those products, except that:
(a) when producers are
related to the exporters or importers or are themselves importers of the
allegedly dumped product, the term ‘Community industry’ may be interpreted as
referring to the rest of the producers.”
The effect of article 4(1)(a) is that the EU institutions
are given a discretion to exclude any producer importing the allegedly dumped
product (CFL-i in this case) from Community industry.
71.
Recital 8 of the Provisional ADD Regulation identifies three Community
producers who had made complaints and replied to the Commission’s
questionnaires. One of those was Philips Lighting BV which, during the
investigation period, informed the Commission that it no longer wished to be
treated as a member of the group of complainants (see recital 49 to the
Provisional ADD Regulation). Recital 50 stated that the two remaining
co-operating Community producers accounted for more than 85% of the Community
production of CFL-i during the investigation period. Recital 51 states that,
on average, 14.6 % of the total sales of CFL-i by the two producers originated
in the PRC. Although not stated in the recitals, a letter dated 28 July
2010 from the Commission revealed that the figure of 14.6% referred to volume
not value of sales. The same letter also disclosed that, for one of the two
producers, sales of CFL-i imported from the PRC constituted between 50% and 60%
of its sales whereas the other producer imported only between 0.5% and 5% of
its total sales from the PRC. The latter producer accounted for between 75%
and 85% of total Community sales whereas the producer whose imports amounted to
between 50% and 60% of its total volume of sales accounted for between 15% and
25% of total Community sales.
72.
Article 5(4) of the Basic Regulation provides that an investigation
shall not be initiated unless it has been determined that the complaint has
been made by or on behalf of the Community industry. The article goes on to
provide that a complaint is 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”.
73.
In this case¸ the producer whose imports from the PRC represented
between 0.5% and 5% of its sales accounted for more than 50% of total Community
sales of CFL-i. It is clear, therefore, that the complaint could have been
considered as made by or on behalf of the Community industry, as required by
Article 5(4), on the basis of that one Community producer. However, Article 4
provides that Community industry refers to Community producers as a whole but
gives the Community authorities a discretion to exclude producers who are
themselves importers of the allegedly dumped product. The Commission did not
exclude either of the Community producers who were also importers of CFL-i from
the PRC and gave its reasons in Recital 51 of the Provisional ADD which stated
that:
“However, despite these sales
of imported CFL-i, the primary activity of these companies remained in the
Community. Furthermore, the sales are explained by the need for the
complainants to complete their product range so as to be able to satisfy
demand, as well as by the attempt to defend themselves against low priced
imports due to dumping. Consequently, the described trading activity of these
producers did not affect their status as Community producers.”
That reasoning was repeated in recital 26 of the
Definitive ADD Regulation.
74.
Targetti made various criticisms of the inclusion of the two companies
in the Community industry. Mr Stevenson’s evidence was that, given that one of
the producers imported more than 50% of its sales of CFL-i from the PRC, the
figure of 14.6% of total sales was distortive. Targetti submitted that, in
deciding whether or not to include the two Community producers in the Community
industry, each producer should have been considered individually (see Case
C-156/87 Gestetner Holdings v Commission [1990] ECR I-781, at [43].
Targetti submitted that, had each producer been considered individually, the
producer whose imports from the PRC accounted for more than 50% of its sales
should have been excluded from the Community industry and its inclusion was a
manifest error. Mr Stevenson’s evidence was that exclusion of the producer
that imported more than 50% of its sales from the PRC could result in
significant changes to the assessment of the injury to the Community industry
and the calculation of the injury margin.
75.
The first criticism is that the two importers should, on the authority
of Gestetner have been assessed separately. In my view, Targetti has
not established that the two producers were not assessed separately. It is
clear that they were described together in the recitals but that seems to me to
follow from the terms of Article 4 and does not indicate that they were not
assessed separately. Targetti has not, in my view, established that there was
any error of assessment.
76.
Further, I consider that the fact that the Commission did not exercise
its discretion to exclude one of the two complaining producers from the
Community industry in this case cannot be described as a manifest error. It is
clear from the recitals to the Provisional and the Definitive ADD Regulations
referred to above that the Commission considered the position of the producers
and made a decision not to exclude one or both of them from the Community
industry. The reasons given in the recitals appear on their face to provide a
justification for that decision. This conclusion is consistent with that of
the CJEU in Case C-260/85 Tokyo Electric Company v. Council [1988] ECR
I-5855, at [47] where it said that:
“In that connection, it is
apparent from the contentions of the institutions, which have not been
seriously challenged by TEC, that only a few models, all of them at the lower
end of the range, were imported by Community manufacturers to fill gaps which
at that time existed in their range of products and that the total volume of
such imports was always relatively low. In those circumstances, the Community
manufacturers’ imports must be regarded as not having contributed to the injury
to the Community industry and there is therefore no reason to exclude such
manufacturers from the determination of injury.”
In the absence of something more, my view is that the
decision to include both producers in the Community industry cannot be
described as a manifest error.
77.
Targetti contended that there was more in that there was no positive
evidence to support the statements in recital 26 of the Definitive ADD
Regulation that the trading activities of the two producers in question were
held not to have affected their status as Community producers because their
primary activity remained in the Community and the imports were to complete
their product ranges or were defensive. HMRC contended that there was positive
evidence in the form of the complaint and complainants' questionnaires and
correspondence. In particular, a letter dated 8 September 2000 from a
complainant to the Commission set out the basis of the defensive imports,
namely by purchasing products from the PRC in the hope of maintaining some
market share at reasonable price levels. A further letter dated 15 April
2001 confirmed that the statements, in recitals 51, 96 and 97 to the
Provisional ADD Regulation, that the imports were defensive were correct. In
any event, recital 97 to the Provisional ADD Regulation shows that imports of
CFL-i from the PRC by the Community producers were relatively small at only 4%
of the total volume of imports of the product concerned from the PRC. The
recital records that the Commission concluded that the low volume of such
imports was unlikely to have caused the injury and, in any event, was not such
as to break the causal link between dumping and injury.
78.
In conclusion, I consider that, despite the fact that they were also
importers of CFL-i from the PRC, the inclusion of both of the complaining
Community producers in the Community industry was not a manifest error in this
case.
Failure to make necessary or adequate adjustments for
product differences in the assessment of injury
79.
The injury margin is the measure of the level of anti-dumping duty which
is necessary to eliminate the injury to the EU producers (ie the difference
between the price of CFL-i imported from the PRC and the non-injurious price of
like products). The price undercutting calculation is the difference between
the price of CFL-i imported from the PRC and the price of CFL-i produced in the
EU. Article 2(10)(a) of the Basic Regulation states that:
"An adjustment shall be
made for differences in the physical characteristics of the product concerned.
The amount of the adjustment shall correspond to a reasonable estimate of the
market value of the difference."
80.
Targetti contended that there was a failure to make adequate adjustments
for product differences in calculating the injury margin and that constituted a
manifest error. In his evidence, Mr Nardi Dei said that, in addition to
differences of wattage, lifetime and cover, the products were quite different
in terms of quality of components and manufacture which affected performance,
lifespan and reliability of the CFL-i. Targetti contended that there was no
mention of any adjustments in relation to the assessment of the injury margin
in the recitals to the Provisional ADD Regulation or the Definitive ADD
Regulation. Mr Stevenson said that he could not find any evidence that the
adjustments had been taken into account in calculating the injury margin.
81.
In relation to the price undercutting calculation, Mr Stevenson also
said that he could not find any evidence that the adjustments had been taken
into account in the calculations. Targetti acknowledged that recital 60 to the
Provisional ADD Regulation states that adjustments were made for lifetime,
wattage and cover but submitted that there was no indication that any adjustments
to take account of the differences identified by Mr Nardi Dei had been made.
Targetti submitted that the failure to make such adjustments constitutes a
manifest error.
82.
I agree that a failure to make adjustments for differences in the
physical characteristics of the products would be a manifest error. It seems
to me, however, that the recitals to the Provisional ADD Regulation contain
clear evidence that some adjustments were made to take account of the
differences between products. Recital 60 of the Provisional ADD Regulation is
headed "Undercutting" and states as follows:
"The Commission has
examined whether the exporting producers of the country concerned undercut the
prices of the Community industry during the IP. For this purpose, the exporting
producers' prices have been duly adjusted to a cif level, whereas the Community
producers' prices have been adjusted to an ex-works level. For the analysis of
the price undercutting, the exported CFL-i as well as those manufactured in the
Community by the Community industry, were grouped according to the lifetime,
wattage and the type of cover of the lamp. Within each group, the weighted
average ex-works prices charged by the Community producers were compared, at
the same level of trade, to the weighted average export prices. Adjustments
for differences in physical characteristics were made where appropriate."
83.
Recital 121 of the Provisional ADD Regulation refers to the calculation
of the injury margin on the basis of comparisons per product type. Recital 123
is also concerned with the calculation of the injury margin and states:
"As for the calculation
of the undercutting margins, this comparison was carried out by appropriate
groups of types."
84.
It seems clear from recitals 60, 121 and 123 of the Provisional ADD
Regulation that products were grouped according to lifetime, wattage and the
type of cover and that adjustments for differences in physical characteristics
were made in relation to the undercutting and injury margins. It follows that
Targetti's complaint, relying on the evidence of Mr Nardi Dei, is that the
adjustments were inadequate and further adjustments should have been made for
other differences in physical characteristics between the products.
85.
Article 2(10)(a) of the Basic Regulation requires an adjustment that is
no more precise than “a reasonable estimate of the market value of the
difference” between the products. It is for Targetti to show that the required
adjustments were either not made or, if made, were inadequate. There is no
evidence that any adjustments were made to take account of the specific
differences identified by Mr Nardi Dei in his evidence but, in my view, that is
not enough to demonstrate a manifest error. Targetti must demonstrate that the
adjustments were not adequately made and, in addition, that the inadequacy made
a material difference to the amount of the adjustment.
86.
HMRC contended that the differences identified by Dr Nardi Dei had
actually been taken into account in the adjustments that were made eg the lower
quality of the components or manufacture was reflected in reduced lifetime of
the product. Although this is possible, there was no evidence that showed
that, for example, quality of manufacture had been a factor in adjusting for
differences in lifetime of products and, accordingly, I do not accept that this
occurred.
87.
The burden of proving that the adjustments were not adequate rests on
Targetti. In my view, Targetti has not established that the adjustments were
inadequate for the purpose of ensuring that like products were compared with
like. Mr Nardi Dei's evidence showed that there are a number of features that
might distinguish the CFL-i produced in the PRC from those produced in Mexico. The evidence did not establish that the adjustments that were made produced an
unreasonable estimate of the market value of the differences between the
products as required by Article 2(10)(a) of the Basic Regulation. My
conclusion is that Targetti has not established that there was a failure to
make the necessary adjustments for the different characteristics of the
products in order to calculate the injury margin and the price undercutting
margin. Accordingly, I do not accept that there was any manifest error in
relation to the adjustment for differences in the physical characteristics of
the product.
Failure to consider substitutability of products
88.
Targetti submitted that the issue of whether the CFL-i imported from the
PRC were substitutable for the CFL-i produced in the EU is material to the
issue of causation of injury. Targetti contended that there was no
investigation of substitutability and, without it, there could not have been
any finding that injury had been caused by the imports from the PRC which is a
requirement of Article 3(6) of the Basic Regulation. Targetti submitted that
the recitals contained no reference to substitutability and proceeded on the
basis that CFL-i from the PRC were substitutable for CFL-i manufactured in the
EU without any adequate evidential basis for so doing. The evidence of Mr
Stevenson was that the CFL-i from the PRC did not compete in the same market.
Mr Stevenson referred to substitutability as a subset of the concept of like
product in Article 1(4) of the Basic Regulation ie a product that has
characteristics closely resembling those of the product under consideration.
Targetti submitted in closing that the concept of substitutability was not
found in the Basic Regulation but was necessary to establish causation of
injury.
89.
Targetti referred to Commission Regulation (EU) No 402/2012 imposing a
provisional anti-dumping duty on imports of aluminium radiators originating in
the PRC as an example of an investigation in relation to dumping which
specifically considered substitutability. I do not consider that Regulation
402/2012 is analogous to the situation under consideration in this case. The
reference to substitutability in recital 18 of Regulation No 402/2012 was in
the context of a complaint by one of the PRC producers that there were two
production processes used to manufacture the radiators. The producer submitted
that one of the methods was uncommon in the EU and the PRC and, for that
reason, should not be subject to the anti-dumping duty. The Commission
rejected the argument because radiators produced by both methods had the same
basic physical and technical characteristics as well as uses and so were highly
substitutable. In Regulation No 402/2012, substitutability was considered in
the context of the identification of two types of product that the Commission
proposed should both be subject to the same anti-dumping duty. In my view,
Regulation No 402/2012 does not provide any authority for the proposition that
a failure to consider specifically whether the products produced in the PRC are
substitutable for products produced in the EU is a manifest error.
90.
My view is that there is no requirement that allegedly dumped products
must be substitutable in order for injury to be established. The test to be
applied is whether the product is a like product as defined by Article 1(4) of
the Basic Regulation, that is to say a product that is 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. Recitals 12 and 13 to the
Provisional ADD Regulation state that the Commission found, after considering
representations by exporting producers, that the CFL-i produced in the EU and
the CFL-i from the PRC had the same basic physical and technical
characteristics and so were alike within the meaning of Article 1(4) of the
Basic Regulation. Recitals 8 and 9 to the Definitive ADD Regulation confirmed
that the CFL-i made in the PRC were comparable with those made in the EU and
that comparisons made for the purpose of calculating injury and undercutting
margins were based on CFL-i with comparable lifetimes. I consider that the
recitals show that the Commission applied the correct test, namely whether the
products were alike rather than any stricter test of substitutability.
Further, I consider that the representations of exporting producers and the use
of CFL-i from the EU and the PRC with similar lifetimes for the purposes of
comparison provided an adequate evidential basis for the conclusion that the
PRC and EU products were alike.
Incorrect attribution of all injury to imports from
PRC
91.
Article 3(7) of the Basic Regulation requires the EU institutions to
take account of any factors other than dumped imports to ensure that injury
caused by these other factors is not attributed to the dumped imports which
cause injury to the Community industry. The requirement for the authorities to
consider whether the injury on which they intend to base their conclusions
derives from dumped imports rather than from any other factors which must be
disregarded was confirmed by the GCEU in Case T-107/04 Aluminium Silicon
Mill Products GmbH v Council [2007] ECR II-669 at [72] as follows:
"… in determining injury,
the Council and the Commission are under an obligation to consider whether the
injury on which they intend to base their conclusions actually derives from
dumped imports and must disregard any injury deriving from other factors,
particularly from the conduct of Community producers themselves."
92.
Targetti submitted that the Commission wrongly concluded that all the
injury to the Community industry was caused by the products imported from the
PRC. There is no statement to that effect in the Provisional ADD Regulation or
the Definitive ADD Regulation but Targetti contended that it was the
consequence of the failure to distinguish between imports from Hungary and Poland (which were at the material time outside the EU) and imports from the PRC.
Targetti submitted that such failure meant that the authorities attributed all
the injury to products from the PRC because they could not disregard the injury
caused by imports from Hungary and Poland. Targetti pointed to recital 35 of
the Definitive ADD Regulation as clearly showing the attribution of all injury
to the importers from the PRC.
93.
I do not accept Targetti's submission that the EU institutions
disregarded the impact of the imports from Hungary and Poland or that they should have done more by way of analysis. Recital 87 of the
Provisional ADD Regulation, under the heading "Effect of other
factors", shows that the authorities considered the level of imports from Hungary and Poland. Recital 89 states that an exporting producer claimed that one cause of the
material injury suffered by the Community industry was imports from Hungary and Poland. The authorities' provisional conclusion in recital 91 was that these imports
did not break the causal link between dumping and injury.
94.
I also reject Targetti's contention that the authorities concluded that
all the injury to the Community industry was caused by the products imported
from the PRC. Recital 35 of the Definitive ADD Regulation does not say that
the dumped imports caused all the injury. Recital 35 simply states
“In the absence of any new
evidence, the findings on causation set out in recitals 84 to 99 of the
provisional Regulation are confirmed, ie, that the dumped imports caused the
material injury suffered by the Community industry.”
That indicates only that the dumped imports from the PRC
caused the material injury to the Community industry which is not the same as
saying that all injury arises from imports from the PRC. Targetti did not
adduce any evidence that the imports from Hungary and Poland caused injury which broke the causal link between the dumping and the material
injury. My conclusion is that Targetti has not established that there was any
manifest error in the attribution of material injury to the imports from the
PRC.
95.
As I do not accept the basis of Targetti's submission that the EU
institutions erred in attributing all injury to imports from the PRC, it is not
strictly necessary to consider the five specific criticisms made by Targetti
but, in case I am wrong in my approach, I consider them briefly below:
(1)
Analysis of the trends of volume of imports
Mr Stevenson's evidence was that the increase in imports
from Hungary and Poland was underestimated and that the loss of Community
market share that could not be attributed to imports from the PRC and from Hungary and Poland was just over 15% which was never analysed. Recital 87 of the Provisional ADD
Regulation states that CFL-i were imported from other third countries although
only at de minimis levels from each country. Even if the increase in imports
from other countries was underestimated, that does not demonstrate that there
was dumping of the imports from Hungary and Poland or that those imports caused
material injury such as to break the link between the dumped imports from the
PRC and the injury to the Community industry. The fact that that part of the
loss of Community market share due to imports from countries other than Hungary, Poland and the PRC was not analysed does not appear to me to undermine the EU institutions'
analysis or demonstrate a manifest error.
(2)
Movement of production from the Community to Hungary and Poland
Targetti submitted that the attribution of all injury to
imports from the PRC was plainly incorrect in view of the relocation of
production of CFL-i from the EU to Hungary and Poland as referred to in
recitals 87 and 88 of the Provisional ADD Regulation. In my view, the recitals
show that the EU institutions took account of the movement of production by two
Community producers to Hungary and Poland. In the case of one of the two
producers, recital 88 states that the move was a reaction to the aggressive
pricing of products from the PRC. Recital 7 of the Definitive ADD Regulation
stated that there was no evidence of injurious dumping by Hungary and Poland and Targetti did not produce any evidence that the imports from Hungary and Poland were dumped. In view of the fact that the authorities took account of the
movement of Community production to Hungary and Poland and the lack of any
evidence of dumping by the two producers, I do not regard this criticism as
showing that there has been any manifest error.
(3)
Price analysis and adjustments
Targetti submitted that there should have been
adjustments to the prices of CFL-i imported from Hungary and Poland in order to assess whether they caused material injury. In particular, Targetti contended
that, by ignoring the need for adjustments for physical characteristics, the EU
institutions did not take account of factors which would decrease the price of
products from Poland. Lower prices might indicate dumping of CFL-i from Poland. The authorities concluded in recital 90 of the Provisional ADD Regulation that the
prices of imports from Hungary and Poland were higher than the prices of the
products from the PRC. Targetti contended that it was not clear that the
prices would be higher once the adjustments had been made but did not produce
evidence that adjustments would have any material impact on the prices. I
accept that adjustments to the prices of CFL-i imported from Hungary and Poland would be necessary to determine whether there was material injury to the
Community industry in the event that there was found to be dumping. I do not
accept that, in the absence of dumping, it is necessary to make adjustments to
the price of imports from Hungary and Poland in order to establish the injury
attributable to imports from the PRC. If the price of the imports from Hungary and Poland is higher than that of the imports from the PRC then it would follow that the
former have no impact on the injury caused by the latter. I do not consider
that the lack of adjustments to the prices of imports from Hungary and Poland constitutes a manifest error.
(4)
The direction of causality
Mr Stevenson's evidence was that prices of CFL-i from Poland fell one year ahead of the prices of CFL-i from the PRC and the imports from Poland increased while those from the PRC fell. Targetti submitted that the movement in
prices was not taken into account. Mr Stevenson's evidence, which I accept,
shows that a reduction in prices can make products, in this case from Poland, more competitive in relation to products from the PRC. It does not show that the
imports from the PRC did not cause material injury to the Community industry or
that the imports from Poland did cause such injury. I do not consider that the
fact that the reduction in prices was not specifically considered by the EU
institutions was a manifest error.
(5) Issues over
use of data
Mr Stevenson said in his evidence that unidentified
sources of data were used to analyse matters such as the volume of imports from
Hungary and Poland or, if the data was given (as in recital 90 of the
Provisional ADD Regulation) it was unclear and no explanations were given.
HMRC submitted that the reason why the figures in relation to imports from Hungary and Poland were not given was in order to preserve confidentiality. I consider that the
criticisms of Mr Stevenson are not well founded. As well as the
confidentiality point made by HMRC, the fact that data sources are not
identified in the recitals does not seem to me to indicate a lack of
transparency. More detail about the data was made available to the
complainants and affected parties. The recitals are not the place for detailed
discussions of data and the absence of detail does not seem to me to indicate a
manifest error.
Use of different methodologies in calculating dumping
and injury margins
96.
Mr Stevenson noted that the Commission used different product groupings
for the purposes of calculating the dumping margin and the injury margin. The
comparison of the two margins is important. Anti-dumping duty must not exceed
the dumping margin but should be less than that margin if a lower rate of duty
would be enough to remove the injury to Community industry (“the lesser duty
rule” – see article 9(4) Basic Regulation). Targetti submitted that, in order to apply the lesser duty rule, it is
important to be able to compare the two margins. Targetti contended that a
proper comparison was not possible because the dumping margin and the injury
margin were calculated using different product groupings for the different
types of CFL-i.
97.
HMRC accepted that there were differences in the two calculations
because they used different Product Control Number ("PCN") codes.
PCN codes were assigned according to the different characteristics of the
products. HMRC submitted that the PCN codes used for the injury margin
contained a refinement which was appropriate for the broader range of products
being compared than the range of Mexican products being considered for the
dumping calculation. HMRC referred to Cases C-191/09 P and C-200/09 P Council
and Commission v Interpipe Niko Tube and Interpipe NTRP [2012] ECR I-0000 at [51] where the CJEU held that:
"… it should be noted,
first of all, that different rules apply for the determination of normal value
and export price and therefore the sales, general and administrative expenses
need not necessarily be treated in the same way in both cases. However, any
differences between the two values may be taken into account under the
adjustments provided for in Article 2(10) of the basic regulation."
98.
In my view, Targetti has not demonstrated that that the use of the
different PCN codes to calculate the dumping margin and the injury margin invalidated
the comparison or make the proper application of the lesser duty rule more
difficult or impossible. The Interpipe case shows that different rules
apply to the dumping calculation and the injury calculation. In the
circumstances, I do not consider that the use of different product groupings in
calculating dumping and injury margins was a manifest error.
Failure to state
reasons contrary to Article 253 EC Treaty
99.
Article 253 of the EC Treaty (now Article 296 of the TFEU) states:
“Regulations, directives and
decisions adopted jointly by the European Parliament and the Council, and such
acts adopted by the Council or the Commission, shall state the reasons on which
they are based and shall refer to any proposals or opinions which were required
to be obtained pursuant to this Treaty.”
100. Targetti
contended that the need to state reasons is of particular importance in this
case. It referred to the observations of the General Court in Case T-122/09 Zhejiang Xinshiji Foods v Commission [2011] ECR I-22 at [75] where it said:
“...where the institutions
enjoy a wide power of appraisal, as is clearly the case when a choice is to be
made between a number of methods for calculating the injury margin in
anti-dumping matters, respect for the safeguards guaranteed by the Community
legal order in administrative procedures is of even greater fundamental
importance.”
101. HMRC submitted
that the duty to state reasons did not require the statement of evidence and
methodologies. As authority for this proposition, HMRC referred to the passage
from the judgment of the CJEU in Case C-241/95 The Queen v Intervention
Board for Agricultural Produce, ex parte Accrington Beef Co. Ltd and Others
[1996] ECR I-6699 at [39]:
“The Court has consistently
held that the statement of the reasons on which regulations are based is not
required to specify the often very numerous and complex matters of fact or of
law dealt with in the regulations, provided that the latter fall within the
general scheme of the body of measures of which they form part, and that in
order to satisfy the requirements of Article 190 of the Treaty it is sufficient
that the statement of reasons is appropriate to the nature of the measure in
question. The reasoning of the institution which adopted the measure must be
stated clearly and unequivocally, so as to inform persons concerned of the
justification for the measure adopted and to enable the Court to exercise its
powers of review”
102. Targetti
acknowledged that the reasons do not have to be exhaustive but submitted that they
must provide sufficient explanation to enable judicial oversight. Targetti
relies on the following passage from the judgment of the CJEU in Petrotub at
[81]:
“...it is settled case-law
that the statement of reasons required by Article 190 of the Treaty must be
appropriate to the act at issue and must disclose in a clear and unequivocal
fashion the reasoning followed by the institution which adopted the measure in
question in such a way as to enable the persons concerned to ascertain the
reasons for the measure and to enable the competent Community court to exercise
its power of review.”
103. Targetti
contended that the stated reasons in the Provisional ADD Regulation and the
Definitive ADD Regulation do not clearly and unequivocally state the reasoning
of the EU institutions and so do not allow the GCEU and the CJEU to review the
Regulation effectively. Targetti considered that the reasons stated are
inadequate in 19 respects set out in its skeleton argument. All of Targetti's
criticisms relate to the alleged manifest errors referred to above. My
comments on the individual criticisms are as follows:
(1)
Targetti submitted that there is no indication of the manner in which
multiple adjustments were made. This is the alleged error dealt with in
[51]-[53] above. The complaint seems to me to be that the methodology for
calculating the dumping margin was not described in the recitals. In my view,
the methodology is a step in the process of determining the dumping margin. I
consider that it is too remote to qualify as a reason on which the ADD
Regulations were based. It follows that the failure to include an explanation
of the manner in which the adjustments were made does not constitute a failure
to state reasons.
(2)
Targetti stated that statement of reasons is inaccurate to the extent
that it indicates that adjustments have been made for voltage when they have
not been made. This is the error dealt with in [54]-[55] above. I have found
that the evidence showed that a single adjustment for voltage was made to prices
for all Mexican products and there was no evidence that the adjustment was not
made. It follows that this criticism must be rejected.
(3)
In relation to the alleged error that the dumping margin for
non-co-operators and co-operators was flawed (dealt with in [55]-[59] above),
Targetti submitted that there was no indication of the basis for the choice of
66.3% as the rate for the dumping margin for non-co-operating companies. This
is really a complaint that the calculations are not set out. As in the case of
the first criticism, I consider that the method of calculating the margin is
not a reason on which the ADD Regulations were based so its absence is not a
failure to state reasons.
(4)
The next criticism also related to the alleged error that the dumping
margin for non-co-operators and co-operators was flawed. Targetti states that
there is no explanation for the use of “zeroing” or the reasoning in relation
to it which is dealt with at [58]-[59] above. Again, it seems to me that the
criticism is that a method used to calculate the margin was not set out and, as
before, I do not regard the method as a reason or the fact that it is not
stated as a failure to state reasons.
(5)
Targetti submitted that there is no indication of why the Commission
used a particular figure in the calculation of the level of cooperation or the
source of the figure. This point was abandoned as a manifest error at the
hearing as Targetti accepted that the reason for the differences between its
figures and those of the Commission was due to the fact that the Commission had
been "annualising" the numbers. Targetti maintained that the fact
that the recitals do not refer to figures being annualised is a failure to
state reasons. As I have already stated, the method by which a figure is
calculated is not, in my view, a reason and the failure to set out the method
in the recitals is not a failure to state reasons.
(6)
Targetti contended that the justification of the use of Mexico as an analogue country is inadequate. This is the error dealt with in [60]-[67]
above. I have found that the choice of Mexico over Korea was justified. It
seems to me that the explanation of that choice found in recitals 12, 29 and 30
of the Provisional ADD Regulation and recital 12 of the Definitive ADD Regulation
adequately explained the choice of Mexico. I do not consider that there has
been any failure to state reasons.
(7)
In relation to the same alleged error, Targetti pointed out that the
statement in recital 31 to the Provisional ADD Regulation that the sales
referred to were made “in the ordinary course of trade” was very similar to the
statement criticised by the CJEU in Petrotub. Recital 31 refers to the
fact that the cooperating Mexican producer, Philips Mexicana, was related to
one of the complainants, Philips Lighting, and continues:
"It was found that the
Mexican producer sold substantial quantities of the product concerned on the
domestic market and that these sales were made in the ordinary course of
trade. It was carefully checked whether the relationship in question had any
distorting impact on costs of production and, consequently, on profitability of
the Mexican producer concerned. No indication was found that this was the
case."
In Petrotub, the recital merely asserted that
"… during the course of the investigation, it was found that sales made
using compensation were indeed made in the ordinary course of trade"
essentially just repeating the words of the third subparagraph of Article 2(1)
of the Basic Regulation. The CJEU in Petrotub held, at [86]-[87], that
"… by merely stating, in
the contested regulation, that it had been found that sales made using
compensation were indeed made in the ordinary course of trade, the Council did
not satisfy the requirements of the obligation to state reasons.
Such a peremptory statement,
which amounts to no more than a reference to the provisions of Community law,
does not contain any explanatory element of such a kind as to enlighten the
parties concerned and the Community judicature as to the reasons which led the
Council to consider that the prices charged in connection with those sales made
using compensation had not been affected by the relationship."
In the case of recital 31 of the Provisional ADD
Regulation, the statement goes further than a mere reference to the Basic
Regulation. It sets out that the effects of the relationship were carefully
checked and no indication was found that it distorted the costs or
profitability of Philips Mexicana. The recital does not set out the evidence
that was reviewed but that is not what the CJEU in Petrotub held was
required. The CJEU held that there must be some explanatory element to
enlighten the parties and the courts as to the reasons for the conclusion. In
this case, the reason for the conclusion is explained as, after careful
checking, nothing was found that indicated that the relationship had any
distorting impact. Targetti has not provided any evidence that the data from
Philips Mexicana was unreliable. In the circumstances, I consider that recital
31 contains an adequate statement of reasons.
(8)
Targetti submitted that there is no indication in recital 26 to the
Definitive ADD Regulation or elsewhere whether the figure of 14.6% relates to
volume or value and no statement in the recitals of the range of the figures of
which 14.6% is an average. This is part of the error dealt with in [70]-[78]
above. Recital 51 of the Provisional ADD Regulation states that, on average,
14.6 % of the total sales of CFL-i by the two producers originated in the PRC.
It is true that the recital does not specify whether the percentage relates to
volume or value and there is no information about the data supporting the
calculation of the average. As I have set out above, the statement of reasons
must reflect the reasoning, in this case to justify why certain Community
producers were not excluded. The reasons are not the same as the data on which
such reasons were based. I accept that it would have been helpful if the
recital had made clear that the figure of 14.6% referred to volume but the
omission of that information, while it may be a reason for a request for
further information, as happened in this case, does not constitute a failure to
state reasons.
(9)
In relation to the same alleged error (failure to identify Community
industry), Targetti contended that there is no statement in the recitals that
the company with between 0.5% and 5% of sales originating in the PRC
represented between 75% and 85% of total Community sales and the company with
between 50% and 60% of sales originating in the PRC represented between 15% and
25% of total Community sales. Targetti maintains that such information was
material and should have been mentioned. I agree that the information is
relevant to the assessment of whether the producers should be included in the
Community industry but I do not accept that it was necessary to set out the
additional information identified by Targetti in the recitals. That
information is not, in my view, a reason. The information in recitals 50 and
51 to the Provisional ADD Regulation provides reasons and the failure to set
out the additional information is not a failure to state reasons.
(10)
In relation to the same error, Targetti stated that there is no
“positive evidence” to support the assertions that the two complainants
imported products from the PRC in order to complete their product range and/or
defend themselves against low-priced imports. The assertions are part of the
reasoning for including the two complainants in the Community industry but Targetti's
criticism relates to evidence not reasons. I have rejected the criticism of
the lack of evidence in [77] above. I further reject the criticism that, in
not referring to the evidence in the recitals, there was a failure to state
reasons for the reasons already given.
(11)
Targetti contended that there is a failure to record adequately or at
all the adjustments which were made, if any, in calculating the injury margin.
At [82]-[87] above, I rejected this criticism and found that recitals 60, 121
and 123 contain clear statements that adjustments were made and the nature of
those adjustments. Targetti's criticism is really that the recitals do not
contain sufficient detail. Even if that were correct, it would not amount, in
my view, to a failure to state reasons.
(12)
Targetti stated that the recitals contain no reasoning justifying the
implicit assumption of substitutability of PRC and EU products. This refers to
the error dealt with in [88]-[90] above. As I state above, Article 1(4) of the
Basic Regulation requires the allegedly dumped products to be like products
which does not mean that they must be substitutable. I have already concluded
that the recitals show that the Commission applied the correct test of whether
the products were alike rather than any stricter test of substitutability and
that there was an adequate evidential basis for the conclusion that the PRC and
EU products were alike. I do not, therefore, accept that there was a failure
to state reasons in relation to this point.
(13)
Targetti submitted that the recitals do not contain any adequate
justification or explanation of why all injury was incorrectly attributed to
imports from the PRC and why a loss 13.3% of Community market share by
Community producers was ignored. This refers to the alleged error dealt with
at [91]-[95] above. For the reasons given at [93]-[94], I have already
rejected Targetti's contention that the Commission concluded that all the
injury to the Community industry was caused by the products imported from the
PRC and that the Commission ignored the impact of imports from Hungary and
Poland by reference to, among other things, recital 87 to the Provisional ADD
Regulation and recital 35 to the Definitive ADD Regulation. It follows that,
in my view, the recitals do deal adequately with the attribution of injury.
(14)
In relation to the same error, Targetti submitted that there is no
adequate justification for the assumption that prices of imports from Hungary
and Poland were higher than the prices of imports from the PRC so that no
adjustments needed to be made on account of physical differences between the
products. For the reasons given in relation to the immediately preceding
criticism, I do not accept that there was a failure to state reasons in
relation to this point.
(15)
In relation to the same error, Targetti states that there is no, or no
adequate, explanation of the reasoning relating to the impact of imports from
Hungary and/or Poland and no indication of the volume of the imports or the
sources of data used. I deal with these criticisms at [93] and [95] above in
the context of the alleged error. As I have rejected the criticisms in that
context, it follows that I must reject the contention that there was a failure
to state reasons.
(16)
In relation to the same error, Targetti contended that there is no
indication what the figures of 56% and 79% relating to imports from Poland and Hungary in recital 90 to the Provisional ADD Regulation mean. I have rejected this
criticism at [95] above. For the reasons given above, I do not consider that
there is any lack of transparency about the figures and my view is that
recitals are not the place for detailed discussions of data. I do not accept
that there was a failure to state reasons.
(17)
Also in relation to the same error, Targetti criticised the absence of
any explanation of the disparity in the amounts of product concerned within the
relevant CN code imported into the EU from the PRC and from Hungary and Poland. Targetti did not explain and I cannot understand how the reason for the
disparity can be regarded as a reason for the anti-dumping measures. It seems
to me that the amounts of product being imported are reasons for the measures
but the reason for the disparity is irrelevant if material injury has been
established.
(18)
In relation to the alleged error that different methodologies were used
in calculating the dumping and injury margins, Targetti contended that no
justification or explanation was given for the use of different product
groupings in calculating dumping and injury margins or why they did not distort
the application of the lesser duty rule. At [97]-[98] above, I have concluded
that that the use of different product groupings in calculating dumping and
injury margins was not a manifest error. It follows that I do not accept that
the absence of any explanation for the use of different product groupings in
calculating dumping and injury margins was a failure to state reasons.
(19)
Finally, Targetti criticised the lack of any reasons explaining why the
Community interest called for intervention as required by the Basic
Regulation. This is the alleged error dealt with at [42]-[49] above. At [49],
I concluded that recitals 100-118 of the Provisional ADD Regulation show that
the EU institutions had carried out an assessment of the Community interest
and, on the facts, established that it clearly called for intervention. It
follows that, in my view, the recitals clearly explained why the Community
interest called for intervention. I do not accept that there was any failure
to state reasons.
Breach of principles of EU law
104. Targetti
contended that the Community institutions acted in breach of the principles of
legal certainty and the duty of good, sound or proper administration.
105. Targetti
referred to the use of the criterion of whether or not there were compelling
reasons on grounds of Community interest against the imposition of anti-dumping
duty (discussed at [42] – [49] above). Targetti contended that the use of that
test was contrary to the principle of legal certainty because it was not found
in the Basic Regulation and so was inherently uncertain in scope and
unpredictable in application. Essentially, Targetti's point is that the
Community institutions did not apply the correct test for determining whether
the Community interest called for intervention and that was contrary to legal
certainty. I have already found, at [49] above, that the recitals to the
Provisional ADD Regulation, which are incorporated by reference in the
Definitive ADD Regulation, show that the EU institutions carried out an
assessment of the Community interest and that the facts established showed that
it clearly called for intervention. It follows that, in my opinion, the
correct test was used and there is no question of any breach of the principle
of legal certainty.
106. Targetti also
alleged that the conduct of the Community institutions was influenced by
unpublished documents which meant that the institutions had failed to disclose
the criteria governing the investigation into the alleged dumping. Targetti
submitted that this was a breach of the principles of legal certainty and the
duty of proper administration. Targetti made an application under Regulation
(EC) No 1049/2001 regarding public access to European Parliament, Council and
Commission documents for access to internal guidelines in 2007. That
application was initially refused by the Commission in a letter dated 10 July
2007. The application was partially granted subsequently on review. Article 4
of the 2001 Regulation provides that documents need not be disclosed if such
disclosure would seriously undermine the institution's decision-making process,
unless there is an overriding public interest in disclosure. In a letter dated
29 October 2007, the Commission justified its refusal to disclose all the
documents requested on the grounds that it would undermine the Commission’s
decision making and investigation process. The letter stated that Targetti
could bring proceedings before the GCEU or could make a complaint to the
European Ombudsman. It seems to me that the Commission are entitled to refuse
to make certain documents publicly available and, where it does so, the
appropriate way to challenge such refusal is by one of the methods set out in
the Commission’s letter of 29 October 2007. In fact, as Dr Gambardella stated
in evidence, Targetti began proceedings before the European Ombudsman. Those
proceedings are ongoing. I do not consider that it is appropriate for this
Tribunal to provide an alternative method of challenging a decision of the
Commission not to disclose documents (and a back-door method of challenging the
Definitive ADD Regulation) by making a reference to the CJEU.
107. Targetti’s
contention that the Community institutions acted in breach of the duty of good,
sound or proper administration relies on the commission of manifest errors
which I have already dealt with above. Targetti also relies on the
Commission’s failure to obtain information from a Korean company to enable Korea to be used as an analogue country. I do not accept that this demonstrates that the
Community institutions acted in breach of the duty of good, sound or proper
administration. Recital 28 to the Provisional ADD Regulation states that only
one producer in Korea initially agreed to cooperate with the Commission but
then failed to provide the necessary information requested by the Commission.
In reality, Targetti’s complaint is that the Commission did not try hard enough
to obtain information from Korea when the only company that responded stopped
co-operating. That appears to me to fall well short of establishing a lack of
good, sound or proper administration.
Summary of conclusions
108. To summarise, I
have reached the following conclusions:
(1)
it is not beyond doubt that a reference in this case would be ruled to
be inadmissible by the CJEU;
(2)
the Tribunal should make a reference if it is satisfied that Targetti's
submissions on invalidity are not unfounded but are reasonably arguable;
(3)
the EU institutions have not failed to demonstrate that the Community
interest called for intervention in relation to the Definitive ADD Regulation;
(4)
the fact that the methodology used sequential or layered adjustments
rather than a single adjustment to calculate the dumping margin is not a
manifest error;
(5)
there is no evidence that no adjustment for voltage was made and,
accordingly, no manifest error in relation to the voltage adjustment;
(6)
the use of “model zeroing” in the worksheets for the dumping margin had
no impact on the calculation and thus did not render the Definitive ADD
Regulation Tribunal invalid so the Tribunal should not refer a question on the
use of zeroing to the CJEU;
(7)
there was no manifest error in the identification of the Community
industry;
(8)
there was no failure to make the necessary adjustments for the different
characteristics of the products in order to calculate the injury margin and the
price undercutting margin;
(9)
the Commission applied the correct test of whether the products were
alike rather than any stricter test of substitutability in considering the
issue of injury;
(10)
there was no manifest error in the attribution of material injury to the
imports from the PRC;
(11)
the use of the different PCN codes to calculate the dumping margin and
the injury margin did not invalidate the comparison or make it more difficult
or impossible to apply the lesser duty rule and so it was not a manifest error;
(12)
there was no failure to state reasons; and
(13)
the Community institutions did not act in breach of the principles of
legal certainty and the duty of good, sound or proper administration
Decision
109. I have concluded
that, for the reasons set out above, none of the challenges to the validity of
the Definitive ADD Regulation has been substantiated. It follows that I do not
consider that it is necessary to make any reference to the CJEU for a
preliminary ruling on the validity of the Definitive ADD Regulation. My
decision is that Targetti’s appeal must be dismissed.
Rights of appeal
110. This document
contains full findings of fact and reasons for the decision. Any party
dissatisfied with the Tribunal’s decision has a right to apply for permission
to appeal against it pursuant to Rule 39 of the Tribunal Procedure (First-tier
Tribunal) (Tax Chamber) Rules 2009. The application must
be received by this Tribunal not later than 56 days after this decision is sent
to that party. The parties are referred to “Guidance to accompany a Decision
from the First-tier Tribunal (Tax Chamber)” which accompanies and forms part of
this Decision Notice.
GREG SINFIELD
TRIBUNAL JUDGE
RELEASE DATE: 13
December 2012
