Important legal notice

61986C0294

European Court reports 1988 Page 06077

Opinion of the Advocate-General

My Lords,

By Regulation No 2800/86 of 9 September 1986 ( Official Journal 1986, L 259, p . 14, "the Provisional Duty Regulation ") the Commission imposed a provisional anti-dumping duty of 33% on upright deep-freezers originating in the USSR . It appears that Technointorg is the only exporter of such products from the USSR to the EEC . By an application lodged on 26 November 1986 Technointorg brought an action against the Commission ( Case 294/86 ) claiming that the Court "should declare Commission Regulation No 2800/86 void, at least in so far as it applies to Technointorg, specifically in its Article 1 ". By another application lodged on 26 November 1986 ( Case 294/86 R ) Technointorg asked the Court, by way of interim measures, to suspend the application of Regulation No 2800/86 to Technointorg on condition that Technointorg should continue to provide security for the amount of the provisional duty . That application was dismissed by an Order of the President of the Court of 17 December 1986, which also reserved the costs.

By Regulation No 29/87 of 22 December 1986 ( Official Journal 1987, L 6, p . 1, "the Definitive Duty Regulation ") the Council imposed a definitive anti-dumping duty of 33% on the same products ( Article 1 ) and ordered the amounts secured by way of provisional anti-dumping duty under Regulation No 2800/86 to be collected definitively ( Article 2 ). By an application lodged on 18 March 1987 Technointorg brought an action against the Council ( Case 77/87 ) for an order that the Court should declare Regulation No 29/87 void in so far as it applied to Technointorg . The arguments advanced in that case include arguments similar to those advanced in Case 294/86, with further points added . By another application lodged on 18 March 1987 ( Case 77/87 R ) Technointorg asked the Court, by way of interim measures, to suspend the application of Regulation No 29/87 to Technointorg on condition that Technointorg should continue to provide security "for the performance of its obligation under Commission Regulation No 2800/86 ". By order of 23 March 1987 the President of the Court allowed the Commission to intervene in Case 77/87 R in support of the Council . By order of 9 April 1987 the President of the Court dismissed the application for interim measures and reserved the costs . By order of 8 May 1987 the Court allowed the Commission to intervene in Case 77/87 in support of the Council.

By order of 8 July 1987 the Court joined Cases 294/86 and 77/87 for the purposes of the written and oral procedure and of the judgment .

By a telex received at the Court on 20 March 1987, the Commission submitted that the application in Case 294/86 for annulment of the Provisional Duty Regulation had become without purpose since the provisional duty imposed by that regulation was no longer in force . By telex of 6 April 1987 Technointorg replied that the Council' s decision that provisional duties should be definitively collected merely constituted a decision on the enforcement of the Commission regulation imposing the provisional duties and that such duties can be recovered only if the Court of Justice annuls the Commission regulation imposing them . In my view, that argument cannot be reconciled with the scheme for anti-dumping measures laid down in Council Regulation No 2176/84 of 23 July 1984 on protection against dumped or subsidized imports from countries not Members of the EEC ( Official Journal 1984, L 201, p . 1, "the Basic Regulation "). Pursuant to Articles 11 and 12 of that regulation and the terms of its own Article 6, the Provisional Duty Regulation ceased to have any effect except to the extent to which it was readopted by the Definitive Duty Regulation, as, e.g . where Recital 14 of the Definitive Duty Regulation partially confirmed Recital 24 of the Provisional Duty Regulation and where Article 2 of the Definitive Duty Regulation required amounts secured by way of provisional duty to be collected definitively . Any parts of the Provisional Duty Regulation thus incorporated in the Definitive Duty Regulation in my opinion fall to be challenged in an action brought against the latter, and Technointorg has done so in Case 77/87 . Any parts of the Provisional Duty Regulation not so confirmed have lapsed and there is no longer anything left to annul .

Technointorg has argued that, in spite of its expiry, the Provisional Duty Regulation has created a "lasting economic fact" still capable of separate judicial review . However, the continuing applicability of the duties arises solely from the Definitive Duty Regulation . Under the Provisional Duty Regulation alone the provisional duties would lapse and fall to be reimbursed . In my view Technointorg has failed to demonstrate any independent effect which could be attributed to the Provisional Duty Regulation after the date of entry into force of the Definitive Duty Regulation ( 9 January 1987 ).

Technointorg also alludes to the non-contractual liability of the Commission and argues that it retains an interest in pursuing an annulment action against the Provisional Duty Regulation because any ground of illegality found by the Court could provide a basis for a damages claim . Neither in Case 294/86 nor in Case 77/87 has Technointorg claimed damages . Moreover it has not alleged any loss or injury possibly resulting from the Provisional Duty Regulation, even if it were to be annulled by the Court . Therefore in my opinion this argument does not provide grounds for finding that there was any purpose in maintaining Case 294/86 before the Court after the entry into force of the Definitive Duty Regulation .

Accordingly, in my view, Case 294/86 ceased to have any purpose after 9 January 1987 and should be dismissed; Technointorg should pay the Commission' s costs . The issues canvassed in that case fall to be decided under Case 77/87 .

In Case 77/87 Technointorg puts forward seven grounds in support of its claim for annulment .

By its first ground of annulment, it alleges breach of the general principle of the rights of the defence and of the essential procedural requirement of granting a fair hearing to the parties involved . Technointorg' s case is that it gave a proxy to Mr Astakhov, general director of its associated importer in Belgium, East-West Agencies - Technical and Optical Equipment Belgium SA - NV (" EWA ") to act on its behalf in the anti-dumping proceedings in question and that the Commission wrongfully failed to ask him for information or to send him an exporters' questionnaire . It also alleges that this was a breach of Article 7 ( 1 ) ( b ) of the Basic Regulation, which requires the Commission to advise exporters of the initiation of an anti-dumping proceeding .

The facts do not in my opinion support Technointorg' s contention . The Commission announced the initiation of the anti-dumping proceeding in question by a notice ( 85/C 319/05 ) published in the Official Journal on 11 December 1985 ( Official Journal 1985, C 319, p . 3 ) which set a time-limit for interested parties to supply information and request hearings, namely 17 January 1986 . A copy of that notice, and an exporters' questionnaire were sent to Technointorg at its Moscow address in December 1985 . The Council alleges that they were sent by registered post on 13 December, but the post office receipt produced to the Court is dated 17 December . I accept that the notice and questionnaire were sent at the latest on 17 December 1985 . The Council also says that a telex announcing that the questionnaire had been sent was sent on 13 December 1985 to Technointorg in Moscow at the telex number subsequently used by Technointorg for telexes to the Commission . Technointorg denies receiving that telex . A further telex was, it is said by the Commission, sent on 13 February 1986 to Technointorg but no reply was received . Whatever the position in regard to those telexes, it is clear that the letter with the questionnaire was received because on 19 February 1986 Technointorg sent a telex to the Commission acknowledging receipt of it "just some days ago" and asking for an extension of the time-limit for reply until March 1986 . In my opinion on that basis the Commission fulfilled its obligation to inform the exporter under Article 7 ( 1 ) ( b ) of the Basic Regulation .

As regards Mr Astakhov, Technointorg alleges that the Commission received a copy of his proxy ( which is dated 23 December 1985 ) on 14 February 1986 . The Commission denies that, and there is no evidence of it . It is to be noted that EWA' s letter to the Commission dated 14 February 1986 signed by Mr Astakhov does not mention the proxy nor indeed does it mention Technointorg . It can fairly be read as being sent on behalf of the importers to whom an importers' questionnaire was also sent . The Commission contends that it first heard about Mr Astakhov' s representative capacity in a telex of 27 February 1986 from Technointorg and only received the proxy on 7 March 1986 under cover of a letter sending the answer to the questionnaire addressed to importers . The telex of 27 February 1986 does not say that a proxy had already been sent and I would accept that the Commission did not know of Mr Astakhov' s authorization before 27 February 1986 . There is nothing in the documents to show that it received notice of such authorization earlier . Technointorg having acknowledged receipt of the questionnaire on the 19th of the same month and implied ( by asking for an extension ) that it was going to answer it, there was no obligation on the Community authorities to address themselves to Mr Astakhov until they received a reply to the questionnaire . It is a curious feature of the case that apparently on 10 March 1986, EWA telexed the Commission to say that Technointorg had asked whether the export questionnaire had been sent to the correct address in the USSR, when already by telex of 19 February 1986 Technointorg had acknowledged receipt of it . Moreover, on 3 March by telephone and 14 March 1986 by telex, it is said by the Commission ( and not challenged ) that EWA was told that a questionnaire had been sent to Technointorg and no reply received .

Mr Astakhov had a meeting or meetings with officials of the Commission, e.g . on 1 April 1986 . Moreover, during 1986 information was supplied by EWA about the importer' s position so that Mr Astakhov or his colleagues were in touch with the Commission . It is said by Technointorg that Mr Astakhov was not specifically asked questions about Technointorg' s position or about undertakings which it would give or to fill up the questionnaire . Whether or not he was specifically asked, it seems to me that he had the opportunity to proffer information or arguments on behalf of Technointorg and to supply the completed questionnaire . I find it impossible to accept Technointorg' s case at the hearing that "if the Commission would have said, 'Fill in the questionnaire' we would have done so" and that the blame lies on the Commission . The Commission had made it plain beyond a peradventure that it had sent the questionnaire and wanted a reply .

In fact the exporters' questionnaire was never answered . In an anti-dumping proceeding the Community authorities have only limited powers of inquiry and are largely dependent on information being furnished to them, in particular by exporters concerned . It appears that they depend on the answers to the exporters' questionnaire to establish the main outlines of the position and to establish what further points they may need to ascertain, e.g . by verification visits . Technointorg itself has failed to provide the basic information from which other steps in the investigation could flow . In such circumstances the Community authorities were in my view fully entitled to rely on Article 7 ( 7 ) ( b ) of the Basic Regulation whereby, when information is withheld, they may make findings on the basis of the facts available .

In all the circumstances I would reject Technointorg' s argument that the rights of the defence were infringed or that a fair hearing was denied .

By its second ground of annulment Technointorg alleges infringement of Article 190 of the EEC Treaty and of the general principle of law that decisions should state the reasons on which they are based . Technointorg criticizes Recitals 14, 17 and 18 of the Definitive Duty Regulation as well as Recital 33 of the Provisional Duty Regulation for failing to give adequate explanation respectively of : ( a ) the definition of the market share of Technointorg, ( b ) the concept of the Community interest and ( c ) the reason why a rate of 33% was considered appropriate to eliminate the injury caused to the Community industry .

As regards market share, Technointorg complains that Recital 14 refers only to the increase in its market share in the United Kingdom and Belgium whereas it does not follow that its market share in the EEC as a whole increased correspondingly or that injury was caused to EEC industry as a whole . That assertion ignores the first sentence of the third paragraph of Recital 14, which makes it clear that Technointorg' s market share in the EEC as a whole did increase ( since although consumption in the Community remained steady, imports from the Soviet Union had increased by more than 20 000 units from 1981 to 1985 ), and it ignores Recital 13 which endorses the points noted by the Commission in this connection in the Provisional Duty Regulation which deals with the matter in some detail, particularly in Recital 23 . Accordingly I consider that this complaint is unsubstantiated and fails .

Technointorg argues that Recital 17 fails to explain why the Community interest had to prevail over the interest of the importer Peja Import BV in continuing imports of the product concerned . However, the recital does explain that the Community interest must prevail "because of the difficulties facing Community production of deep-freezers and in view of the economic and social importance of such production ". To my mind that is an adequate statement of reasons to fulfil the requirements of Article 190 of the EEC Treaty and I would reject Technointorg' s contention .

Similar considerations in my opinion apply both to Recital 33 of the Provisional Duty Regulation and to Recital 18 of the Definitive Duty Regulation, concerning the rate of duty . The dumping margin established was 204 %. Under Article 13 ( 3 ) of the Basic Regulation the amount of the duty had to be less than that margin "if such lesser duty would be adequate to remove the injury ". The two recitals mentioned explain why a 33% duty is sufficient to remove that injury ( comparing the selling price needed to provide efficient Community producers with a reasonable profit margin and the selling prices in the Community of dumped imports ), and in my view they do so in sufficient detail and with sufficient clarity to satisfy the requirements of Article 190 of the EEC Treaty .

Accordingly I reject Technointorg' s second ground of annulment .

By its third ground of annulment, Technointorg alleges infringement of Article 2 ( 5 ) of the Basic Regulation and of Article 190 of the EEC Treaty .

Under Article 2 ( 5 ) of the Basic Regulation the normal value of imports from non-market economy countries ( such as the USSR ) must be determined "in an appropriate and not unreasonable manner" on the basis of : ( a ) the actual price of the like product of a market economy third country, or ( b ) the constructed value of the like product in a market economy third country, or, failing either of those, ( c ) the actual price of the like product in the Community, adjusted, if necessary, to include a reasonable profit margin . Recital 8 of the Provisional Duty Regulation states that Spain ( which did not belong to the EEC at the relevant time ) was suggested as a comparable country for this purpose but met objections inter alia from an importer linked to the Soviet exporter, and that : "The Commission considered the prices on the Yugoslav domestic market to be an appropriate and not unreasonable basis for comparison, and none of the parties objected to this choice ".

Technointorg contests the assertion in that recital that none of the parties objected to the choice of Yugoslavia, on the grounds that the Commission failed to request Technointorg' s views or request information from Mr Astakhov . In my view, the Commission was under no duty to make any such request . It was up to the party to make its views known in due time . It is common ground that Technointorg did not comment ( either directly or through Mr Astakhov ) on the choice of comparable country until after the imposition of the provisional anti-dumping duty . Accordingly, in my opinion, the objection is unfounded .

In any event the objection is irrelevant, in my view, because that part of the Provisional Duty Regulation was superseded by the Definitive Duty Regulation, Recital 6 of which states :

"Technointorg disputed the choice of Yugoslavia as a comparable country on the grounds that, firstly, production methods in Yugoslavia were different from those in the Soviet Union and, secondly, purchasing power there was three times higher than in the Soviet Union. However, Technointorg did not bring forward any evidence for its statements, nor did it propose any alternative comparable country. In any case, even if the exporter' s arguments had been supported by convincing evidence, a further investigation would have been necessary and, for the reasons already set out in point 4 above, this is not possible ..."

Recital 4 states:

"After the provisional anti-dumping duty was imposed, Technointorg said it was ready to cooperate fully with the Commission. The Commission notes that, despite these statements, Technointorg supplied no information as to its exports to the Community. In any case, as it did not make its views known within the time-limits laid down when the notice of initiation of the procedure was published, any information it might have submitted concerning its exports to the Community could not have been taken into consideration, without a supplementary investigation being carried out. Quite apart from the additional administrative burden which it would involve, carrying out such a further inquiry after a provisional anti-dumping duty had been imposed might encourage parties not to cooperate at the initial stage of the procedure and to make their views known only when an investigation carried out without their participation had results which affected them."

Technointorg complains, in relation to these recitals, that the question whether or not Technointorg did bring forward any evidence for its statement (which, it submits, it did) is made totally irrelevant by the Council itself as it states there that any such evidence would have required a further investigation which was impossible in any event.

Recital 6 to my mind gives due weight to Technointorg' s objection in view of the late stage at which it was made. Recital 4 sets out the policy of the Community authorities, which is against opening a further inquiry at a late stage of proceedings in order to accommodate parties who have earlier refused to participate in the normal course of proceedings according to the scheme laid down in the Basic Regulation. The policy, as a general rule, is in my view acceptable, though as the Commission accepts there may be cases when it would be right to reopen an investigation when the basic facts have been supplied, which is not this case. The opposite approach would discriminate against parties who do participate in the normal way. For the Court to uphold Technointorg' s argument would, in my opinion, risk undermining the procedural rules laid down in the Basic Regulation. Recitals 4 and 6 of the Definitive Duty Regulation are, in my view, clear and self-explanatory. There can therefore be no question of a breach of Article 190 of the EEC Treaty. Accordingly I would dismiss Technointorg' s third ground of annulment.

By its fourth ground of annulment Technointorg alleges infringement of Article 2 (5) of the Basic Regulation in that, in the case of a USSR exporter, the domestic price on the Yugoslav market is an unreasonable criterion of comparison because: (1) the purchasing power of Yugoslav consumers converted into Belgian francs is almost three times as great as the purchasing power of Soviet consumers and (2) certain components of deep-freezers produced in Yugoslavia are either manufactured under licences granted by non-Yugoslav undertakings (entailing payment of royalties) or are acquired outside Yugoslavia. These factors, it is said, could easily have been taken into account by the Community authorities if they had chosen to construct the normal value on the Yugoslav market instead of using the actual domestic price in Yugoslavia.

The last argument is in my opinion erroneous. In constructing normal value in one country (here, Yugoslavia), the Community authorities may not take into account cost factors from other countries (here, the USSR). Under Article 2 (5) of the Basic Regulation the Community authorities have a discretion as to whether to construct normal value or base it on actual prices. In my opinion, Technointorg fails to demonstrate that they misused that discretion in choosing to base normal value on Yugoslav domestic prices in this case, which, on the evidence, the Commission was entitled to take as the most appropriate yardstick.

The arguments about purchasing power and component costs also fail, in my view, because they relate to alleged purchasing power and costs in a non-market economy country (the USSR), whereas the very purpose of Article 2 (5), as I see it, is to exclude the use of prices and costs in such countries as they are not the result of market forces. It follows, in my view, that adjustments do not fall to be made under that provision for differences in costs or prices between the comparable country and the exporting country.

Accordingly, I would reject Technointorg' s fourth ground of annulment.

By its fifth ground of annulment, Technointorg alleges infringement of Article 2 (9) and (10) of the Basic Regulation inasmuch as the Commission failed to make a "fair comparison" by refusing to take into account other allowances than those contained in Article 2 (9) and (10). The Community authorities should have made allowances for the higher wages and higher component costs in Yugoslavia already alleged under the fourth ground, even though they might not fall within the categories mentioned in Article 2 (9) and (10) of the Basic Regulation.

For the purpose of a fair comparison between export price and normal value, Article 2 (9) and (10) provide for allowances to be made for differences in physical characteristics of the product, differences in quantities, differences in conditions and terms of sale and differences in import charges and indirect taxes. In my view, the differences alleged by Technointorg do not fall within any of these categories, and, even though Article 2 (10) specifies "guidelines" rather than "exclusive factors", it seems to me that the Community authorities were entitled not to take into account the allowances claimed. I would accordingly reject the fifth ground of annulment.

By its sixth ground of annulment, Technointorg avers that Article 4 (1) and Article 11 (1) of the Basic Regulation were infringed, as well as Article 190 of the EEC Treaty, in that, supposing dumping did take place, no material injury could have been caused to the Community industry as a whole by Technointorg' s exports but only to a small fraction of Community producers operating in the lower segment of the market. The low number of units exported by Technointorg to the EEC (approximately 20 000 in 1985) makes it impossible for material injury to have been caused to the Community industry by Technointorg exports considered separately from the exports from other non-EEC countries, and the Community authorities have failed to state reasons for their finding of a cumulative injury.

Technointorg argues that the EEC market for upright freezers is divided into two completely separate segments, the upper one consisting of sophisticated, high-quality, expensive freezers and the lower one consisting of cheap, basic freezers without frills or expensive promotional campaigns. It argues that only the affluent buy the former whereas only the poor buy the latter. I do not accept those arguments. In my view, whilst a distinction can validly be drawn between upright freezers and chest freezers (as in Recital 6 of the Provisional Duty Regulation), no reason has been shown why upright freezers (the only kind at issue in this case) should not all be regarded as "like products" for the purposes of Article 4 (1) and (5) of the Basic Regulation. Technointorg has provided no substantial evidence for treating them as different products, and, as regards the categories of potential purchasers, it does not seem at all to follow that the relatively well off or the well off will necessarily go for the expensive model. For far more purchasers than "poor immigrants" (as relied on in argument) a cheap basic unit may be an attractive buy if a luxury model is much more expensive. For purchasers who would otherwise buy in the middle or lower ranges there is an even greater attraction to purchase the cheap model.

Nor does its argument that its products are not of the same quality as EEC products in my view help it. If products cannot compete on quality, the alternative is to compete on price, and that makes protection against unfair price competition by dumping particularly necessary. Finally, Technointorg seeks to rely on the fact that the Community authorities compared its products with "bottom of the range" EEC products for the purpose of assessing price undercutting. That fact is in my view irrelevant to the argument, because that comparison goes to an examination of price undercutting under Article 4 (2) (b) of the Basic Regulation, not to the definition of the like product for the purposes of Article 4 (1) and (5). In any event, by measuring the USSR imports against the lower range of EEC products the authorities took the approach most favourable to Technointorg and still found that there was dumping and injury to Community producers on evidence which has not successfully been challenged.

On a market of 1.6 million units (Recital 23 of the Provisional Duty Regulation), I would not consider a figure of 20 000 units as de minimis. Furthermore, the volume of dumped imports is only one of the several factors to be examined in determining injury pursuant to Article 4 (2) of the Basic Regulation. Although the number of units exported to the EEC by Technointorg in 1985 may have been relatively modest, the increase in those exports - which also falls to be examined under Article 4 (2) (either in absolute terms or relative to production or consumption in the Community) - was substantial, while consumption in the Community remained steady. In my view, Technointorg has failed to demonstrate a defective assessment by the Community authorities in this regard.

As regards the Community authorities' decision to consider the effect on the Community industry of dumped imports from Technointorg along with those from Yugoslavia and the German Democratic Republic, it seems clear to me that, where dumped imports originate from several different countries, their effects on Community industry are cumulative. It must therefore be open to the Community authorities to take action against all the exporters, even if each individual exporter' s exports are relatively low. In order to achieve the object of the Basic Regulation, which is to provide protection against dumping, the Community authorities must be regarded as entitled to examine the effect of dumping of the like product from several different countries in aggregate, as in this case. I would therefore reject Technointorg' s argument to the contrary.

The foregoing points were considered at length in Recitals 11 to 15 of the Definitive Duty Regulation and Recital 24 of the Provisional Duty Regulation, which was specifically confirmed by the last paragraph of Recital 14 of the Definitive Duty Regulation. The reasons given were in my view clear and adequate to comply with Article 190 of the EEC Treaty.

Accordingly I would reject Technointorg' s sixth ground of annulment.

By the seventh ground of annulment, Technointorg asserts that Article 10 (1) and (3) of the Basic Regulation, Article 190 of the EEC Treaty and the principle of non-discrimination were all infringed in that the Commission refused to accept any of the undertakings offered by Technointorg and to discuss with Technointorg any undertaking it might have been willing to offer.

Technointorg offered two alternative undertakings, the first on 22 October 1986, amended on 24 November 1986, and the second on 4 November 1986. As stated in Recital 16 of the Definitive Duty Regulation, the Commission rejected both of them and informed Technointorg of the reasons, in particular by telexes of 18 and 28 November 1986 and by a letter of 11 December 1986, which have been produced to the Court. This correspondence shows that the proposed undertakings were considered inadequate in three respects: (1) Technointorg proposed much lower price rises than were required to eliminate the injury; (2) the price rises offered were spread over a period of several years so that the maximum rate would not have been reached until 1989-90, and (3) the maximum price rise of 25% was conditional upon the opening of a new factory, which was an event outside the control of the Community authorities. In the light of these factors, which are not denied by Technointorg, I consider that the Commission did not exceed its discretion under Article 10 of the Basic Regulation in rejecting the proposed undertakings.

Moreover, although refusing to meet to discuss the drafting of the terms of undertakings, since the necessary information had not been supplied by Technointorg, the Commission made it clear that it would consider undertakings submitted to it.

As regards the allegation of discriminatory treatment, the correspondence produced to the Court shows that the Commission was throughout prepared, contrary to Technointorg' s allegations, to consider comments from Technointorg. In my view, it was not discriminatory for the Commission to accept undertakings from the exporters in Yugoslavia and the German Democratic Republic, as it did in the Provisional Duty Regulation, whilst refusing those of Technointorg, because their situations were different. As appears from Recital 34 of that regulation, the undertakings accepted had the effect of raising prices by an amount sufficient to remove the injury caused by the dumping, and it was possible to ensure that those undertakings were actually kept. Technointorg, on the other hand, proposed inadequate price increases and, by failing to fill in the questionnaire and supply information, made it impossible to know whether its undertakings could be effectively policed.

Therefore I consider Technointorg' s seventh ground of annulment unfounded.

Accordingly, in my opinion:

(i) Case 294/86 should be dismissed, either as having no purpose or for the same reasons mutatis mutandis as those which lead to the dismissal of Case 77/87, and Technointorg ordered to pay the Commission' s costs of that action including those relating to the proceedings for interim measures, and

(ii) Case 77/87 should be dismissed and Technointorg ordered to pay the costs of the Council and of the Commission including those relating to the proceedings for interim measures.