Ningbo Yonghong Fasteners v Council [2012] EUECJ T-150/09 (10 October 2012)

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(Dumping -� Imports of certain iron or steel fasteners originating in China -� Market economy treatment -� Time-limit for adopting the decision on that treatment -� Manifest error of assessment -� Burden of proof -� Adjustment to costs -� Article 2(5) and (7)(b) and (c) of Regulation (EC) No 384/96 (now Article 2(5) and (7)(b) and (c) of Regulation (EC) No 1225/2009))

1 The applicant, Ningbo Yonghong Fasteners Co. Ltd., is a company governed by Chinese law which produces and exports iron and steel fasteners to the European Union.

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

3 On 3 December 2007, the applicant sent the Commission its replies to the sampling questionnaire.

4 On the same date, the applicant submitted a claim form for market economy treatment (-�MET-�).

5 On 5 December 2007, the Commission indicated that, owing to the large number of exporting producers in China, it had decided to apply sampling in accordance with Council Regulation (EC) No 384/96 of 22 December 1995 on protection against dumped imports from countries not members of the European Community (OJ 1996 L 56, p. 1), as amended (-�the basic regulation-�) (replaced by Council Regulation (EC) No 1225/2009 of 30 November 2009 on protection against dumped imports from countries not members of the European Community (OJ 2009 L 343, p. 51, corrigendum OJ 2010 L 7, p. 22)), in particular in accordance with Article 17(1) of the basic regulation (now Article 17(1) of Regulation No 1225/2009). The applicant was included in that sampling.

6 On 14 December 2007, the Commission invited the applicant to reply to sections A to D of the anti-dumping questionnaire for exporting producers.

7 On 3 January 2008, the applicant requested an extension until 4 February 2008 to reply to sections A to D of the anti-dumping questionnaire. That extension was granted by an e-mail from the Commission of 9 January 2008.

8 By fax of 4 January 2008, informing the applicant of the verification visit scheduled for 21 and 22 January 2008, the Commission requested clarification regarding certain issues in the applicant-�s MET claim. By e-mail of 7 January 2008, the Commission requested additional information and asked that all information be provided at the start of the verification visit.

9 On 21 January 2008, the applicant submitted that additional information along with some corrections to its earlier MET reply. On that same day, the Commission-�s services started the verification visit.

10 On 4 February 2008, the applicant submitted its reply to sections A to D of the anti-dumping questionnaire. By e-mail of 26 February 2008, the Commission requested additional clarification regarding that reply.

11 On 25 March 2008, the applicant submitted to the Commission its reply to sections E and F of the anti-dumping questionnaire, in accordance with the instructions given by the Commission in its letter of 21 February 2008, along with its answers to the questions set out in the Commission-�s e-mail of 26 February 2008.

12 Between 1 and 4 April 2008, the Commission carried out inspections at the premises of producers in an analogue country, namely India, to verify the data provided in their questionnaire responses, in particular, data on the price of raw materials on the Indian market.

13 On 7 April 2008, the Commission informed the applicant that the verification visit relating to the reply to the anti-dumping questionnaire, scheduled for 29 April and 1 May 2008, had had to be postponed because the Commission had not yet disclosed its MET findings to all the parties.

14 On 9 April 2008, the Commission requested additional information relating to the applicant-�s reply to sections A to D of the anti-dumping questionnaire. The applicant replied to those questions on 23 April 2008.

15 By e-mail of 30 April 2008, the Commission requested additional information and clarification regarding the applicant-�s reply to sections E and F of the anti-�dumping questionnaire.

16 On that same day, the applicant received an information document on the MET setting out the essential facts and considerations on the basis of which the Commission had concluded that the applicant did not meet the criteria allowing it to receive MET.

17 On 8 May 2008, the Commission informed the applicant that a visit would be carried out from 20 to 22 May 2008 to verify the applicant-�s reply to the anti-�dumping questionnaire.

18 On 16 May 2008, the applicant replied to the request of 30 April 2008 for additional information and clarification. On that same day, it also submitted its comments on and objections to the Commission-�s decision to deny it MET. On 18 May 2008, the Commission requested additional clarifications in respect of the applicant-�s reply of 16 May 2008.

19 Those clarifications and an error correction were presented to the Commission on 20 May 2008, during the on-the-spot verification of the applicant-�s replies to the anti-dumping questionnaire.

20 On 4 August 2008, the Commission sent the applicant an information document on the non-imposition of provisional anti-dumping measures. The applicant submitted its observations regarding that document on 4 September 2008.

21 On 3 November 2008, the Commission sent the applicant the final information document setting out the essential facts and considerations on the basis of which it intended to propose to the Council of the European Union that a definitive anti-�dumping duty be imposed on imports of certain iron or steel fasteners originating in China. On 18 November 2008, the applicant requested additional information regarding the method of calculating the normal value. The Commission replied to that request on 21 November 2008.

22 On 24 November 2008, the applicant submitted its comments on the final information document of 3 November 2008. On 9 December 2008, it confirmed its proposed undertaking, already submitted earlier. The Commission rejected that proposal on 18 December 2008.

23 On 2 February 2009, the Commission replied to the applicant-�s comments of 24 November 2008.

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

25 In the contested regulation, the applicant-�s MET claim was rejected. In that regard, recitals 63, 66, 67 and 68 of the contested regulation are worded as follows:

26 On the other hand, the Council did consider that the applicant met the conditions for granting individual treatment listed in Article 9(5) of the basic regulation (now Article 9(5) of Regulation No 1225/2009) (recitals 80 to 83 of the contested regulation).

27 Pursuant to Article 2(7)(a) of the basic regulation (now Article 2(7)(a) of Regulation No 1225/2009), normal value for the applicant was established on the basis of verified information received from the producer in India (recitals 91 and 92 of the contested regulation).

28 Article 1(1) and (2) of the contested regulation imposed a definitive anti-dumping duty of 78.3% on certain iron or steel fasteners, other than of stainless steel, imported by the applicant into the European Community.

29 By application lodged at the Registry of the Court of First Instance on 10 April 2009, the applicant brought the present action.

30 By document lodged at the Court Registry on 16 July 2009, the Commission sought leave to intervene in the present case in support of the form of order sought by the Council.

31 By document lodged at the Court Registry on 10 August 2009, EIFI sought leave to intervene in the present case in support of the form of order sought by the Council. In its observations of 24 September 2009, the Council raised no objections to that intervention. The applicant lodged no observations to that effect.

32 By order of 14 September 2009, the President of the Fifth Chamber of the Court of First Instance granted the Commission leave to intervene.

33 By letter received at the Court Registry on 9 October 2009, the Commission waived its right to submit a statement in intervention.

34 By order of 16 November 2009, the President of the Fifth Chamber of the Court of First Instance granted EIFI leave to intervene. EIFI lodged its statement within the prescribed period.

35 The applicant requested, on 21 September and 14 October 2009 and on 26 January 2010 respectively, that certain confidential elements contained in the application, the defence, the reply and the rejoinder and in certain of the annexes thereto be excluded from the notification to EIFI. It produced a non-confidential version of those pleadings. The notification of those pleadings to EIFI was confined to that non-�confidential version. No objection was raised by EIFI in that regard.

36 After a change in the composition of the Chambers of the General Court, the Judge-Rapporteur was assigned to the Seventh Chamber, to which the present case was, consequently, assigned.

37 On 19 July 2011, the Council replied to the General Court-�s written question of 4 July 2011.

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

39 The parties presented oral argument and answered the oral questions put to them by the Court at the hearing on 13 December 2011.

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

44 As a preliminary point, it should be noted that the contested regulation imposes a definitive anti-dumping duty on imports of certain iron or steel fasteners by a number of companies.

45 The applicant seeks the annulment of the contested regulation in its entirety. However, in setting out its pleas in law and arguments the applicant confines itself to contesting the legality only of the anti-�dumping duty imposed on Ningbo Yonghong Fasteners Co. Ltd.

46 In that regard, it must be stated that any illegality of that duty affects the legality of the contested regulation only in so far as that regulation imposes an anti-�dumping duty on the applicant. By contrast, it does not affect the legality of other parts of the contested regulation, namely, in particular, the anti-dumping duties imposed on the other undertakings affected by that regulation.

47 It is apparent from the case-law that, where a regulation which introduces an anti-�dumping duty imposes different duties on a series of undertakings, an undertaking is individually concerned only by those provisions which impose on it a specific anti-dumping duty and determine the amount thereof, and not by those provisions which impose anti-dumping duties on other undertakings, with the result that an action brought by that undertaking will be admissible only in so far as it seeks the annulment of those provisions of the regulation that exclusively concern it (see Case C-239/99 Nachi Europe [2001] ECR I-�1197, paragraph 22 and the case-law cited).

48 In those circumstances, having regard to the pleas in law and arguments put forward by the applicant in support of its action, the present action for annulment must be treated as seeking only partial annulment of the contested regulation, in so far as it imposes a definitive anti-�dumping duty on the applicant.

49 In support of its action, the applicant raises three pleas in law. The first plea alleges infringement of the second subparagraph of Article 2(7)(c) of the basic regulation (now the second subparagraph of Article 2(7)(c) of Regulation No 1225/2009). The second plea alleges a manifest error of assessment in the application of Article 2(7)(c) of the basic regulation. The third plea alleges a misinterpretation of Article 2(7)(b) and (c) of the basic regulation (now Article 2(7)(b) and (c) of Regulation No 1225/2009).

First plea in law, alleging infringement of the second subparagraph of Article 2(7)(c) of the basic regulation

50 The second subparagraph of Article 2(7)(c) of the basic regulation provides that a determination whether a producer is operating under market economy conditions -�shall be made within three months of the initiation of the investigation, after specific consultation of the Advisory Committee and after the Community industry has been given an opportunity to comment-� and that -�[t]his determination shall remain in force throughout the investigation-�.

51 It must be stated that the three-month time-limit mentioned in the second subparagraph of Article 2(7)(c) was exceeded in the present case. The investigation was initiated on 9 November 2007, whereas the decision in which the Commission set out for the applicant the essential facts and considerations on the basis of which it had concluded that the applicant did not meet the criteria allowing it to receive MET was sent to the applicant on 30 April 2008. In that regard, it should be stated that, contrary to the applicant-�s arguments, it is indeed that document which must be seen as containing the MET decision. The information document of 4 August 2008 on the non-imposition of provisional anti-�dumping measures and the final information document of 3 November 2008 were merely replies to the observations submitted by the various companies on the essential facts and considerations set out in the decision of 30 April 2008.

52 Accordingly, the Court must assess what the consequences of that non-compliance with the time-limit must be in the present case and, in particular, must assess whether that non-compliance must entail the annulment of the contested regulation.

53 In that regard, the General Court has already rejected the argument that any failure by the Commission to comply with the three-month period must automatically entail the annulment of the review regulation subsequently adopted (see, to that effect, Case T-299/05 Shanghai Excell M&E Enterprise and Shanghai Adeptech Precision v Council [2009] ECR II-�565 (-�Shanghai Excell-�), paragraphs 115 and 126).

54 Although the case which gave rise to that judgment concerned a request for the review of an original regulation from a -�new exporter-� within the meaning of Article 11(4) of the basic regulation (now Article 11(4) of Regulation No 1225/2009), the same general conclusion on that issue must be reached in the present case. It cannot be inferred either from the content of the relevant provisions or from the purpose and structure of the basic regulation that non-�compliance with the three-month time-limit for taking the MET decision may automatically entail the annulment of the contested regulation.

55 In that regard, the three-month period is intended, in particular, to ensure that the question whether the producer meets the criteria set out in that article is not decided on the basis of its effect on the calculation of the dumping margin (see, to that effect, Case T-138/02 Nanjing Metalink v Council [2006] ECR II-�4347, paragraph 44; Shanghai Excell, paragraph 53 above, paragraph 127; and judgment of 8 November 2011 in Case T-274/07 Zhejiang Harmonic Hardware Products v Council, not published in the ECR, paragraph 37).

56 The applicant claims that, at the time of the MET decision, the Commission had available to it detailed information to calculate a dumping margin on the basis of the applicant-�s own figures, along with verified detailed information to calculate a dumping margin on the basis of analogue country producers-� data. Therefore, the Commission was in a position to know the effect that the MET decision would have on the calculation of the applicant-�s dumping margin before making a decision regarding the applicant-�s MET claim. According to the applicant, that irregularity caused by the non-compliance with the three-�month time-�limit resulted in an anti-�dumping duty being imposed which could have been substantially different if the Commission had taken a MET decision before having all the necessary information to calculate the dumping margin.

57 In that regard, it is apparent from the case-file that the applicant-�s replies to sections E and F of the anti-dumping questionnaire, relating to normal value, were submitted to the Commission on 25 March 2008, following the Commission-�s request dated 21 February 2008. Therefore, it should be considered that, during the period between the expiry of the three-�month period and the MET decision, the Commission did have information at its disposal enabling it to know what effect that decision might have on the calculation of the applicant-�s dumping margin.

58 Accordingly, it must be assessed whether, in the present case, that circumstance could have undermined the practical effect of the three-�month time-limit as noted in the case-law recalled in paragraph 55 above.

59 This cannot be the case. In that regard, it should be borne in mind that, in the present case, and pursuant to Article 2 of the basic regulation, if it had been considered that the applicant was operating under market economy conditions, the normal value of its goods would have been determined in accordance with the rules applicable to market economy countries, namely on the basis of the information it had disclosed. By contrast, since the applicant was denied MET, normal value had to be determined, pursuant to Article 2(7)(a) of the basic regulation, on the basis of the prices paid in the analogue country. Therefore, in order to know what the effect of the MET decision would be on the calculation of the dumping margin, the institutions would have had to have information at their disposal concerning the prices paid or payable in the exporting country, together with those paid or payable in the analogue country.

60 The Council does not dispute the fact that the applicant-�s replies to sections E and F of the anti-dumping questionnaire, submitted to the Commission on 25 March 2008, contained information regarding the normal value of the product in question. It simply claims that those replies were not verified until 20 May 2008, that is, after the applicant had been informed that it had been denied MET. In addition, the Council submits that the effect of the MET decision on the calculation of the dumping margin in the present case was obvious even before the expiry of the three-month period and certainly before the Commission had received or analysed the applicant-�s normal value information.

61 In that regard, it is apparent from the case-file that, from the beginning of the investigation, the Commission had general information at its disposal indicating that the Chinese prices for steel wire rod, the major input of fasteners, representing approximately 50% of their production costs, were significantly below prices on other international markets. The Council adds that, with regard in particular to the applicant, that fact was also clear from the evidence supplied by the applicant in the context of its MET claim and verified by the Commission before the expiry of the three-month period, namely during the visits to the applicant-�s premises on 21 and 22 January 2008. The applicant has not disputed that fact.

62 Therefore, the Commission could reasonably infer from that fact that, since the applicant-�s production costs were lower than those of producers in a market economy country without access to Chinese raw materials, the normal value and thus the dumping margin for the applicant would in all likelihood be lower if the applicant were to be granted MET.

63 Accordingly, it must be held that, in the present case, the effect on the dumping margin of the MET decision regarding the applicant was known before the request for, and receipt of, the applicant-�s replies to sections E and F of the anti-dumping questionnaire.

64 It is true that those replies did supply the Commission with additional information, particularly the replies concerning the quality and type of goods. In addition, at the hearing, the applicant asserted that the normal values depended not only on the costs of raw materials, but also on the prices at which the goods in question were sold on a domestic market and, where the value was constructed, on the profit margin on domestic sales. In that regard, it should be borne in mind that the possibility that the granting of MET may be decided by reference to its effect on the calculation of the dumping margin does not presuppose awareness of the exact dumping margin, calculated on the basis of the applicant-�s normal value information, but only awareness of information relating to the effect that granting MET may have on that margin according to the two possible methods of calculation. In the present case, it should be observed that, according to the information which was available to the Commission, the Chinese prices for the major input were so much lower that a lower dumping margin if the applicant were to be granted MET was the only plausible hypothesis.

65 It follows that, in the particular circumstances of the present case, it was not its failure to comply with the three-month time-limit which enabled the Commission to decide whether the applicant should receive MET depending on its effect on the calculation of the dumping margin. The practical effect of the three-month time-�limit could not therefore be undermined by the Commission-�s awareness of the information contained in those replies.

66 In that context, the applicant-�s argument that it is clear from the Commission-�s detailed requests for additional information of 9 and 30 April 2008 that the Commission-�s services had already examined the applicant-�s replies in detail before adopting the MET decision is ineffective.

67 In addition, the applicant submits that no possibility of distorted prices of inputs in China was mentioned in the complaint and that it is clear from the document of 4 August 2008 that the claims of some companies who had been denied MET regarding the existence of and evidence for such prices still needed, according to the Commission, to be further examined by that institution. Moreover, the Council itself asserted that the MET decision was made late, inter alia, because the issue of distortion on the steel wire rod market was very complex and needed to be examined in detail. However, it should be borne in mind that the relevant information regarding the effect of the MET decision on the calculation of the dumping margin did not concern possible distortions and the distorted nature of the prices of inputs, but only the low level of those prices.

68 In any event, it must be concluded that, in the absence of a provision setting out either expressly or implicitly the consequences of failure to comply with a procedural time-limit such as the one in the present case, the failure can entail the annulment in whole or in part of the act to be adopted within the period in question only if it is shown that, in the absence of such alleged irregularity, that act might have been substantively different (see Shanghai Excell, paragraph 53 above, paragraph 138 and the case-law cited).

69 In that regard, the applicant claims that a MET decision within the three-month period, or before the Commission had all the necessary information at its disposal to calculate the applicant-�s dumping margin would have resulted in the applicant being granted MET, which would have permitted the determination of a substantially different dumping margin for the applicant, and that, consequently, the applicant would not have had to pay any anti-dumping duty. More specifically, the applicant submits that, but for that procedural irregularity, the Commission would not have concluded that the applicant-�s purchase prices of steel wire rod did not reflect prices charged on international markets for similar grades and the same type of wire rod, since that information was only disclosed to the Commission on 25 March 2008.

70 That line of argument does not prove that, if the Commission had not exceeded the three-month time-limit, the Council might have adopted a different regulation more favourable to the applicant-�s interests than the contested regulation. It must be stated that the information disclosed on 25 March 2008 confirmed the information already available to the Commission, namely that the prices of steel wire rod, the major input of fasteners, in China and, more specifically, those paid by the applicant, were significantly below prices on other international markets. In addition, it must be stated that the MET decision, as defined in paragraph 51 above, did not comment on the different grades or types of steel wire.

Second plea in law, alleging a manifest error of assessment in the application of Article 2(7) of the basic regulation and a breach of the obligation of due diligence and the principle of proper administration

72 This plea is in two parts, the first alleging a manifest error of assessment in the application of Article 2(7) of the basic regulation and the second alleging a breach of the obligation of due diligence and the principle of proper administration.

73 According to Article 2(7)(b) of the basic regulation: -�In anti-dumping investigations concerning imports from [China] normal value shall be determined in accordance with paragraphs 1 to 6, if it is shown, on the basis of properly substantiated claims by one or more producers subject to the investigation and in accordance with the criteria and procedures set out in subparagraph (c), that market economy conditions prevail for this producer or producers in respect of the manufacture and sale of the like product concerned. When this is not the case, the rules set out under subparagraph (a) shall apply.-�

74 Article 2(7)(c) of the basic regulation states that -�[a] claim under [Article 2(7)(b)] must be made in writing and contain sufficient evidence that the producer operates under market economy conditions, that is, [inter alia,] if: -� decisions of firms regarding prices, costs and inputs, including for instance raw materials, cost of technology and labour, output, sales and investment, are made in response to market signals reflecting supply and demand, and without significant State interference in this regard, and costs of major inputs substantially reflect market values-�.

75 It follows from the provisions cited above that the burden of proof lies with the producer wishing to claim MET under Article 2(7)(b) of the basic regulation. Accordingly, there is no obligation on the institutions to prove that the producer does not satisfy the criteria laid down for the receipt of that treatment. On the contrary, it is for those institutions to assess whether the evidence supplied by the producer in question is sufficient to show that the criteria listed in the first paragraph of Article 2(7)(c) of that regulation are fulfilled such that that producer may be granted MET and for the judicature to verify that that assessment is not vitiated by a manifest error (see, to that effect, Shanghai Excell, paragraph 53 above, paragraph 83 and the case-law cited).

76 Moreover, it is apparent from the case-law that the institutions have a wide power of appraisal when assessing factual situations of a legal and political nature in the country concerned in order to determine whether an exporter can be granted MET. It follows that review by the judicature of such assessments made by the institutions must be limited to establishing whether the relevant procedural rules have been complied with, whether the facts on which the contested choice is based have been accurately stated and whether there has been a manifest error of assessment of the facts or a misuse of power (see Case T-35/01 Shanghai Teraoka Electronic v Council [2004] ECR II-�3663, paragraphs 48 and 49 and the case-law cited).

77 It is also settled case-law that, where the institutions have such a power, respect for the rights guaranteed by the Community legal order in administrative procedures is of even more fundamental importance. Those guarantees include, in particular, the duty of the competent institution to examine carefully and impartially all the relevant aspects of the individual case (Case C-269/90 Technische Universität München [1991] ECR I-�5469, paragraph 14, and Case T-167/94 Nölle v Council and Commission [1995] ECR II-�2589, paragraph 73).

78 In the present case, the applicant was denied MET purely on the ground that it had not established that it met the criteria listed in the first indent of Article 2(7)(c) of the basic regulation (now the first indent of Article 2(7)(c) of Regulation No 1225/2009) and, more specifically, the criterion intended to ensure that -�costs of major inputs substantially reflect market values-�.

-� First part, alleging a manifest error of assessment in the application of Article 2(7)(c) of the basic regulation

79 In that regard, first, the applicant claims that its purchase prices for steel wire rod were substantially above the average purchase prices found by the Commission for the Chinese market. Second, it claims that its prices were in line with, and even in some cases higher than, prices on other international markets. By concluding that the cost of that major input did not substantially reflect market values within the meaning of Article 2(7)(c) of the basic regulation, the Council made a manifest error of assessment.

80 In support of its arguments, the applicant has produced several price comparison tables, taken from the documentation which it had already submitted during the administrative procedure and setting out its purchase prices for raw materials and those prices listed publicly for the Chinese market and international markets. It should be stated that the prices relating to the applicant are shown inclusive of value added tax (VAT) and relate to a specific quality of steel wire rod, reserved for drawing.

81 As a preliminary point, it should be stated that it is apparent from the case-�file that, first, the institutions compared the prices of the raw materials of the exporting producers included in the sampling with those of producers in the European Union and India. Those prices, which were based on the replies to the questionnaires and the information submitted by those operators, were shown without VAT and related to drawing quality steel wire rod, which is the quality used by fastener producers. That comparison enabled the Council to conclude that there was a huge price gap between steel of similar grades used by (i) the Chinese exporting producers and (ii) the Community and Indian producers (recital 68 of the contested regulation). Second, that conclusion was confirmed by the public data taken from the publication Steel Business Briefing which replicates prices for another grade of steel wire rod, mesh quality, and shows the VAT inclusive prices for the Chinese market and prices without VAT for all the other markets. On the basis of that comparison, the Council stated that -�the difference between Chinese prices of steel wire rod and prices on other markets -� and referring to the same type of wire rod is very significant-�; in respect of that type of steel wire rod, -�Chinese domestic prices -� were in the range of 300-350 [euros]/tonne in the [investigation period] whereas prices in North America, Europe and Japan ranged between 400-�500[euros]/tonne for the same quality-� (recital 68 of the contested regulation).

82 Thus, in recital 63 of that regulation, the Council concluded that it had been found -�that the prices of steel wire rod, or in some cases, drawn steel wire, charged on the Chinese market were significantly lower than those charged on other markets, such as Europe, India, North America and Japan-�. That conclusion was based on the public data from the publication Steel Business Briefing and on the data obtained from and verified with the investigated companies.

83 Contrary to the applicant-�s claims concerning the comparison of its prices with those on the Chinese market, in that conclusion the Council did not assert that the applicant-�s purchase prices for steel wire rod were in line with prices of steel wire rod on the Chinese domestic market. The same is true of recital 66 of the contested regulation, in which it was found that -�prices of steel wire rod on the Chinese domestic market [were] significantly below prices on other markets-� and that the conclusion that -�there [was] no justification for the abnormally low prices of steel wire rod, which [did] not substantially reflect market values[,] [applied] equally to the sector as a whole as well as individually to all of the investigated sampled companies-�.

84 On the other hand, it must be observed that the Council did, in fact, find in recital 68 of the contested regulation that -�[d]ata obtained and verified during the investigation at the sampled exporting producers -� [was] in line with the -� published data-�, which referred to the Chinese market in general.

85 However, the price comparisons submitted by the applicant cannot call in question the Council-�s conclusion mentioned in the preceding paragraph, since, as has been recalled in paragraphs 80 and 81, the prices which the applicant claims to have paid and the prices to which the Council refers concerning the Chinese market, namely the prices published in the Steel Business Briefing, do not relate to the same quality of steel wire rod. In that regard, it is apparent from comparing the data in the contested regulation and the data contained in a note from the Commission annexed to the non-confidential version of the case-file that the prices of drawing quality steel wire rod in, for example, the European Union exceed those of mesh quality steel wire rod by at least 100 euros/tonne. Although the applicant attempts to cast doubt on the price gap connected with that difference in the quality of the steel wire rod, it does not adduce any evidence to prove otherwise.

86 In any event, it is apparent from a combined reading of, inter alia, recitals 63 and 68 of the contested regulation that the institutions-� decision not to grant MET to those exporting producers requesting it was not based on the finding that the specific prices of steel wire rod paid by those producers were in line with general prices on the Chinese domestic market, but rather on the finding that the prices submitted by those producers which, as a whole, were in line with those found on the Chinese market, did not substantially reflect market values, as required by the first indent of Article 2(7)(c) of the basic regulation.

87 This is also confirmed by the Commission-�s assertion of 3 November 2008 that the average purchase price which the applicant claims, in its observations regarding the MET decision, to have paid -�is still far below average prices on other international markets-� (see paragraph 21 above and paragraph 103 below).

88 Accordingly, it must be ascertained whether the institutions made a manifest error of assessment in deciding that the prices paid by the applicant for steel wire rod were significantly below those charged on other markets, such as Europe, India, North America and Japan, and that, as such, they did not substantially reflect market values.

89 The General Court finds that the applicant has not adduced sufficient evidence to establish such a manifest error.

90 As the Council points out, in the documents submitted, the applicant compared the prices it paid for drawing quality steel wire rod, inclusive of VAT, with the prices charged on international markets for mesh quality steel wire rod as listed in the publication Steel Business Briefing which, regarding those markets, quotes prices without VAT.

91 In that regard, first, concerning the comparison of the prices which the applicant claims to have paid with those mentioned in the contested regulation and charged in Europe, North America and Japan, it is sufficient to state that the former prices are still, on average, lower than the latter and that that gap becomes even more significant when comparing those prices on an even footing with regard to VAT. It must be stated that, in taking into account the average price indicated by the applicant without the VAT which in China is charged at a rate of 17%, that price falls within the range of prices indicated by the institutions for the Chinese market in the contested regulation. In addition, as those prices do not relate to the same quality, any such comparison can only ever be approximate.

92 Second, the findings listed in the preceding paragraph are also valid as regards the comparison of the prices paid by the applicant with those charged on other markets, such as East Asia. In addition, even allowing that the gap between those prices is a little less significant than the gap between the applicant-�s prices and the prices charged on the markets in Europe, North America and Japan, it must be stated that the applicant has not supplied any further evidence enabling the calculation of an average of the VAT inclusive prices for drawing quality steel wire rod on all the international markets taken into account, thus enabling a proper comparison with the prices that it claims to have paid.

93 In addition, the applicant submits that it rightly compared its VAT inclusive prices with the prices without VAT on the other markets, since the VAT incurred on purchases of raw materials constituted a cost which would not be entirely refunded or reclaimable. That argument cannot be taken into account by the General Court, since the applicant has not supplied any evidence in that regard or any calculation of the resulting prices.

94 Lastly, the applicant submits that the institutions did not take into account all the factors which might explain price differences, such as quality differences. It should be borne in mind that, following examination of those arguments, the institutions considered that, even if some quality differences existed, those differences could not explain the -�huge price gap found for steel of similar grades-� used by the Chinese exporting producers and the Community and Indian producers. Moreover, they found that the difference between Chinese prices of steel wire rod and prices on other markets -�referring to the same type of wire rod [was] very significant-� (recital 68 of the contested regulation). It must be stated that the applicant adduces no additional evidence to support its argument which could call in question the institutions-� conclusions. In particular, the table which it produces in that regard does not refer to different types of raw materials, but only to those of the product in question.

95 In the light of the foregoing, it must be stated that the institutions did not make any manifest error of assessment in concluding that the prices paid by the applicant for the major input, steel wire rod, did not substantially reflect market values.

-� Second part, alleging a breach of the obligation of due diligence and the principle of proper administration

97 The applicant submits that, by not carefully and impartially examining all relevant arguments and evidence before them concerning the applicant-�s specific situation, the institutions have breached their obligation of due diligence and the principle of proper administration.

98 It is apparent from the case-file that, in its letters of 16 May and 4 September 2008, the applicant contested the Commission-�s conclusions in the MET decision and sent the Commission information relating to prices it had paid for raw materials. It should also be noted that, although the Commission did not contest the accuracy of that information, it none the less considered that that information did not call in question its conclusions regarding MET.

99 In that regard, the General Court has already ruled that it is clear from Article 2(7) of the basic regulation that the institutions are under an obligation in cases such as that at hand to conduct their examination on a case-by-case basis, as China cannot yet be regarded as a market economy country. The normal value of a product originating in China can therefore be determined in accordance with rules applicable to market economy countries only -�if it is shown -� that market economy conditions prevail for this producer or producers-� (see, to that effect, Shanghai Teraoka Electronic v Council, paragraph 76 above, paragraph 52).

100 As has been pointed out in paragraphs 75 to 77 above, it is true that the case-law has emphasised the importance of the duty of a competent institution with a wide power of appraisal to examine carefully and impartially all the relevant aspects of the individual case. However, the fact that the burden of proof lies with the exporting producer wishing to claim MET must also be taken into consideration.

101 In that context, the applicant-�s argument that the institutions made no reference to the information which it communicated during the investigation and that they undertook no individual examination of its specific situation must be rejected.

102 It is apparent from the case-file that, first of all, in paragraph 3.1 of the MET decision concerning the applicant, the Commission examined the prices at which the applicant was purchasing steel wire from various suppliers which, for the most part, were based in the same region. According to the Commission, it followed from that examination that although those prices were in line with those charged to the other exporting producers or groups under investigation, they did not reflect prices on the international markets. It added that the average price of steel wire rod on the Chinese domestic market was significantly below the average price on other markets, such as the European Union and India. Next, in the information document on the non-imposition of provisional anti-dumping measures of 4 August 2008, the Commission noted that -�companies having been denied MET based, exclusively or inter alia, on the first criterion, or for which the rejection of MET is proposed based, exclusively or inter alia, on those grounds, -� argue -� that in their particular case, [the] prices [of the input(s) in question] are not distorted in any manner-�. According to the Commission, those claims needed to be further examined.

103 In addition, in the document containing specific information in response to the applicant-�s comments on the initial findings of the investigation and accompanying the final information document, dated 3 November 2008, the Commission considered that the average purchase price which the applicant claims to have paid -�is still far below average prices on other international markets-� (see paragraphs 21 and 87 above). In that regard, it invited the applicant to refer to the final information document setting out in more detail the reasons for refusing to grant MET. The applicant itself recognises that that explicit reference clearly demonstrates that the Commission-�s decision to reject the applicant-�s MET claim is based on the purchase price data as provided by the applicant and that that information constituted relevant evidence before the institutions.

104 Lastly, in recitals 66 and 68 of the contested regulation, which reiterate the conclusions set out in the final information document of 3 November 2008, the Council asserted that the conclusion regarding the costs of major inputs -�applie[d] equally to the sector as a whole as well as individually to all of the investigated sampled companies-� and that, concerning more specifically any possible quality differences, the data relating to costs -�obtained and verified during the investigation at the sampled exporting producers and Community producers [was] in line with the -� published data-� relating to Chinese domestic prices for steel wire rod (see paragraph 25 above).

105 Similarly, the Court cannot uphold the applicant-�s argument that the institutions relied solely on data relating to prices on the European, Japanese and North American markets, excluding, in particular, and without justification, the East Asian import market, and that they did not take into account all the factors which could explain price differences, such as quality differences.

106 It is apparent from recital 60 of the final information document and from recital 68 of the contested regulation (see paragraphs 25, 94 and 104 above) that the institutions commented on the possible quality differences evoked by certain exporting producers. Regarding the prices of raw materials on other international markets, those prices did not represent a valid basis for comparison with the prices the applicant claimed to have paid, since they were taken from public data and were, as such, shown inclusive of VAT and for another grade of steel wire rod. Accordingly, the institutions were not required to make observations in that regard.

107 In any event, the institutions cannot be blamed for having based their decision on the information in their possession. On the basis of the Commission-�s conclusions, the main duty was the applicant-�s duty to supply evidence showing that the conditions for the grant of MET were met. As is apparent from the analysis of the arguments put forward in the context of the first part of this plea, the applicant has not produced sufficient evidence to that end.

108 In light of all of the foregoing, it must be concluded that the institutions have examined carefully and impartially all the relevant evidence submitted to them by the applicant.

109 Therefore, the second part of the second plea must be rejected, and, accordingly, the second plea in its entirety.

Third plea in law, alleging a misinterpretation of Article 2(7)(b) and (c) of the basic regulation

110 This plea is in three parts, the first alleging a breach of the obligation to assess a MET claim at an individual company-specific level, the second alleging infringement of the principle that an unreasonable burden of proof should not be imposed and the third asserting the relevance of adjustments under Article 2(5) of the basic regulation (now Article 2(5) of Regulation No 1225/2009).

-� First part, alleging a breach of the obligation to assess a MET claim at an individual company-specific level

111 Certain arguments asserting that there is an obligation to assess the MET claim at an individual company-specific level have already been analysed in the context of the second part of the second plea. The General Court confirms that the conditions for obtaining MET must be assessed individually for each exporting producer claiming MET and that, in the present case, that assessment was indeed carried out by the institutions. In so far as those conclusions also partly answer this part of the third plea, it is necessary to refer to paragraphs 97 to 108 of this judgment.

112 In addition, the applicant claims that country-wide or industry-wide arguments cannot be used for determining the possible grant of MET. Thus, the conclusion that prices of raw materials are distorted because of country-wide government policies affecting the upstream market cannot be used against the applicant.

114 Since one of the criteria listed in Article 2(7)(c) of the basic regulation is that -�costs of major inputs substantially reflect market values-� it necessarily follows from a literal interpretation of the basic regulation that the reference to the -�market-� in the specific context of that criterion can only be understood to refer to the market of the inputs and not the market of the product in question.

115 It is, therefore, completely in line with the intention of the legislature for the institutions to verify the manner in which the prices of major inputs are determined on the domestic market. A Chinese producer whose major input values are artificially reduced due to State interference is not in a similar situation to a producer operating in a market economy country.

116 Moreover, it should be noted that it follows from Article 2(7)(b) of the basic regulation that the method of determining normal value differs depending on whether or not the producers concerned establish that they satisfy the criteria set out in Article 2(7)(c) of that regulation and therefore that market economy conditions prevail in respect of them (Nanjing Metalink International v Council, paragraph 55 above, paragraph 40). Thus, producers must prove that they are in a similar situation to that applicable in market economy countries, which justifies the normal value of the product being determined in the same way as in those countries.

117 In that context, the institutions can take into account macroeconomic considerations which may explain a gap between the prices paid for major inputs by the company claiming MET and those paid on non-�distorted markets. However, it must be stated that, under Article 2(7)(c) of the basic regulation, refusal to grant MET cannot be based purely on those macroeconomic considerations, but must be based on the finding, as in the present case, that the costs of the major inputs of the company in question do not reflect market values.

118 In that regard, the applicant claims that, in the institutions-� past, and continuing, practice, non-company-specific elements, such as country-�wide government policies which affect the upstream market, have never been evoked to reject a MET claim. The past proceedings cited clearly show that distortions in the prices of input materials, whether the result of State interference or not, were never an obstacle to granting MET provided there was no direct State interference in the business decisions of the MET applicant.

119 That argument cannot be accepted. The past practice of the institutions cannot have any impact on the interpretation of Article 2(7)(b) and (c) of the basic regulation. It is apparent from that provision that the institutions must deny MET to an exporting producer which has not shown that the costs of its major inputs substantially reflect market values (see paragraph 114 above). Even assuming that, in past proceedings, the institutions had been able to favour another interpretation of the provision in question, that could not de facto cause a condition expressly provided for in the basic regulation to be inoperable.

120 Moreover, given that the conditions for obtaining MET must be assessed individually for each exporting producer claiming MET, the applicant cannot rely on the fact that, in their past practice of examining MET claims, the institutions have not considered certain country-wide government policies a determining factor in deciding whether or not to grant MET.

121 Lastly, contrary to the applicant-�s assertion, the Council-�s conclusion that the prices paid by the applicant for the major input did not substantially reflect market values is in no way incompatible with the Commission-�s finding, in the MET decision, that -�no State interference was found in the company-�s setting of sales prices or quantities-� and that -�there is no direct State interference at the level of [the applicant]-�. Those are two separate conditions for obtaining MET, which must be examined separately.

-� Second part, alleging infringement of the principle that an unreasonable burden of proof should not be imposed

123 The applicant claims that the Council-�s interpretation of Article 2(7)(c) of the basic regulation required the applicant to show not only that it itself operated under market conditions but also that there was no State interference in the upstream industry supplying its suppliers. Such a burden of proof is unreasonable.

124 According to case-law, it follows from the principle of proper administration, which is one of the general principles of European Union law, that the burden of proof imposed by the institutions on exporting producers claiming MET may not be unreasonable (see, to that effect, judgment of 8 July 2008 in Case T-221/05 Huvis v Council, not published in the ECR, paragraph 77).

125 In the present case, it should be borne in mind that it was for the applicant to adduce evidence demonstrating that the costs of its major input materials reflected market values and, if need be, following the MET decision, that the differences found by the Commission between the prices of raw materials were due to reasons other than State interference. In that context, it was not necessary for the applicant to show that there was no State interference in the upstream industry, but simply that the low purchase prices for raw materials were justified.

127 In addition, the circumstances which, according to the Commission, did not allow it to grant the applicant MET were clearly identified in the MET decision. The fact that the applicant subsequently contested those circumstances confirms that it was properly able to identify them. Moreover, by letter of 3 November 2008, the Commission replied to the applicant that the average purchase price which the applicant claimed to have paid was still far below average prices on other international markets. Accordingly, the applicant cannot assert that the Commission has not fulfilled its obligations stemming from the case-law recalled in paragraph 124 above.

128 First, regarding the prices paid by the applicant for the raw material, it follows from the foregoing that the evidence submitted by the applicant was not sufficient to prove that that condition had been met in so far as it concerned the applicant. Second, concerning State interference, it is apparent from the case-file that the applicant simply asserted, generally and without evidence to support the claim, that the allegedly lower prices for the raw materials in China were not necessarily the result of subsidies but could be due to a number of factors such as inefficiency of EU and Indian steel producers, excess capacity in China resulting in lower prices, and more onerous environmental obligations in the EU. According to the applicant, none of those factors was examined by the Commission. However, such unsubstantiated assertions cannot constitute sufficient evidence in the context of a MET claim. Third, it should be borne in mind that it is apparent from recital 68 of the contested regulation that, contrary to what the applicant claims, the assertion that the price differences may be explained by quality differences was examined by the institutions. However, they decided that those quality differences could not explain the price differences found (see paragraph 94 above).

-� Third part, asserting the relevance of adjustments under Article 2(5) of the basic regulation

130 The applicant claims that the Council-�s interpretation of Article 2(7)(c) of the basic regulation and its consequent rejection of the applicant-�s MET claim on the ground that prices of steel wire rod on the Chinese market do not reflect international market values renders Article 2(5) of that regulation redundant. According to the applicant, this is contrary to the principle of the effectiveness of Treaty provisions.

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

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

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

134 Article 2(5) of the basic regulation was amended by Council Regulation (EC) No 1972/2002 of 5 November 2002 (OJ 2002 L 305, p. 1), which inserted the following sentence after the first sentence:

135 It should be noted that, in the same regulation, the legislature also amended Article 2(3) of the basic regulation (now Article 2(3) of Regulation No 1225/2009) governing calculation of the normal value inter alia where, because of a particular market situation, sales of the like product do not permit a proper comparison. Thus, the following sentence was added to Article 2(3) of the basic regulation: -�A particular market situation for the product concerned within the meaning of the preceding sentence may be deemed to exist, inter alia, when prices are artificially low, when there is significant barter trade, or when there are non-commercial processing arrangements.-�

136 Those two amendments are linked, as is apparent from recital 4 of Regulation No 1972/2002, which is worded as follows:

137 Those amendments, which were made after the amendment made by Council Regulation (EC) No 905/98 of 27 April 1998 amending the basic regulation (OJ 1998 L 128, p. 18), which inserted Article 2(7)(c) into the basic regulation, did not amend that latter provision in any way.

138 Although Article 2(5) and (7)(c) of the basic regulation forms part of the provisions given over to determining normal value, it none the less governs two different issues which must be dealt with in two separate stages in the context of determining that value. Article 2(5) of the basic regulation concerns the calculation of the normal value for an exporting company operating in a market economy, whereas Article 2(7)(c) of that regulation states the conditions which must be met by an exporting company based in, inter alia, China in order that Article 2(1) to (6) of the basic regulation (now Article 2(1) to (6) of Regulation No 1225/2009) may be applied to that company.

139 Thus, Article 2(5) of the basic regulation cannot be understood as offering the institutions the possibility of ignoring a condition for obtaining MET set by Article 2(7)(c) of that regulation. Article 2(1) to (6) of the basic regulation governs the determining of the normal value for companies operating in a market economy. In that context, Article 2(5) of that regulation governs, inter alia, the calculation of costs where, due to a particular market situation, those costs are not reasonably reflected in the company-�s records.

140 Accordingly, the part of the first indent of Article 2(7)(c) of the basic regulation concerning costs of major inputs in no way renders the content of Article 2(5) of that regulation, as amended, redundant.

142 First, the applicant claims that the possibility provided for in Article 2(3) and (5) of the basic regulation to adjust costs associated with production has often been used by the institutions when certain costs of production were not considered to be in line with values on international markets. However, adjustments made in the context of case-files relating to imports from market economy countries are not relevant in the present case. As regards adjustments to costs of Chinese companies to which MET had been granted, it is sufficient to refer to paragraph 119 above.

143 Second, contrary to the applicant-�s assertion, it does not follow from the case-law of the General Court that a company claiming MET should obtain MET if adjusting the costs of production pursuant to Article 2(5) of the basic regulation makes it possible to use company-specific data to determine the normal value.

144 Therefore, the third part of the third plea must be rejected, and, accordingly, the third plea in its entirety.

146 Under Article 87(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party-�s pleadings. Since the applicant has been unsuccessful, it must be ordered to bear its own costs and to pay those of the Council and of EIFI, in accordance with the form of order sought by those parties.

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

2. Orders Ningbo Yonghong Fasteners Co. Ltd to bear its own costs and to pay those of the Council of the European Union and of the European Industrial Fasteners Institute AISBL;

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You are here: BAILII >> Databases >> Court of Justice of the European Communities (including Court of First Instance Decisions) >> Ningbo Yonghong Fasteners v Council [2012] EUECJ T-150/09 (10 October 2012) URL: http://www.bailii.org/eu/cases/EUECJ/2012/T15009.html Cite as: [2012] EUECJ T-150/9, [2012] EUECJ T-150/09

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