19 March 2025 (*1)

(Dumping – Import of superabsorbent polymers originating in the Republic of Korea – Regulation (EU) 2022/547 – Definitive anti-dumping duty – Article 3(2), (3), (5), (6) and (7) of Regulation (EU) 2016/1036 – Article 9(4) of Regulation 2016/1036 – Determination of injury – Examination of the effect of the imports on prices for like products sold on the EU market – Analysis of price undercutting – Application of the product control number method – Causal link – Attribution and non-attribution analysis – Other known factors – Amount of anti-dumping duty – Rights of the defence – Principle of sound administration)

In Case T‑356/22,

applicant,

European Commission, represented by G. Luengo and J. Zieliński, acting as Agents,

defendant,

supported by

BASF Antwerpen NV, established in Antwerp (Belgium),

Nippon Shokubai Europe NV, established in Antwerp,

represented by M.-S. Dibling and J.Pauwelyn, lawyers,

and by

Evonik Superabsorber GmbH, established in Essen (Germany), represented by T. Wessely, T. Oeyen, lawyers, and A. Çelebi, Solicitor,

interveners,

THE GENERAL COURT (Seventh Chamber, Extended Composition),

composed of K. Kowalik-Bańczyk, President, E. Buttigieg, G. Hesse, I. Dimitrakopoulos (Rapporteur) and B. Ricziová, Judges,

Registrar: M. Zwozdziak-Carbonne, Administrator,

having regard to the written part of the procedure,

further to the hearing on 11 April 2024,

gives the following

Judgment (1)

By its action under Article 263 TFEU, the applicant, LG Chem, Ltd., seeks the annulment of Commission Implementing Regulation (EU) 2022/547 of 5 April 2022 imposing a definitive anti-dumping duty on imports of superabsorbent polymers originating in the Republic of Korea (OJ 2022 L 107, p. 27; ‘the contested regulation’), in so far as it concerns the applicant.

…

II. Forms of order sought

The applicant claims that the Court should:

annul the contested regulation in so far as it concerns the applicant;

order the Commission to pay the costs.

The Commission, supported by BASF, NSE and Evonik, contends that the Court should:

dismiss the action as unfounded;

order the applicant to pay the costs.

III. Law

In support of its action, the applicant relies on four pleas in law. The first plea alleges, in essence, that the Commission committed manifest errors of assessment, infringed Article 3(3) of the basic regulation and infringed the applicant’s rights of defence when analysing the price effect of imports from the Republic of Korea. The second plea alleges, in essence, that the Commission committed manifest errors of assessment and infringed Article 3(2), (5), (6) and (7) of the basic regulation and its obligation to state reasons by analysing the injury situation of Union producers in a biased manner and by attributing the alleged injury to Korean imports, rather than to other known factors. The third plea alleges, in essence, that the Commission committed manifest errors of assessment and infringed Article 3(3) and Article 9(4) of the basic regulation and infringed the applicant’s rights of defence by determining the injury margin based on a simplified PCN, by failing to provide adequate non-confidential summaries of the injury margin calculations and by failing to reflect other known factors of injury in its injury margin determination. The fourth plea alleges, in essence, that the Commission conducted the investigation in a manner that infringed the applicant’s rights of defence and the right to sound administration.

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In its third plea, the applicant submits, in essence, that the injury margin established by the Commission in the contested regulation is incompatible with Article 3(3) and Article 9(4) of the basic regulation and that the Commission infringed its rights of defence. The applicant puts forward two complaints in support of that plea.

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In the second complaint, the applicant argues that, under Article 9(4) of the basic regulation, the Commission should have imposed an anti-dumping duty not exceeding what was necessary in order to counter the injurious effects of the imports in question and that that amount should therefore not take into account injurious effects caused by factors other than those imports. The applicant maintains that it has demonstrated, by the third part of the second plea, that there were other known factors of injury which the Commission should have taken into account. According to the applicant, since the Commission’s calculations of the injury margin fail to take those factors into account, it is impossible to ensure that the amount of the anti-dumping duty imposed does not also counter the injurious effects caused by factors other than imports originating from the Republic of Korea. The applicant adds that, during the administrative procedure, it had estimated conservatively the amount of injury which should have been attributed to other known factors. As regards the Commission’s argument that, by definition, the price undercutting calculation does not take account of effects due to other causes of injury, the applicant submits that it runs counter to the obligation not to attribute to the imports targeted the injurious effects due to other factors and that it is incorrect, since Korean prices are as depressed by the impact of low-priced Japanese and Turkish imports as by NSE’s predatory pricing strategy and the SAP price formula, whereas the Union industry’s costs are inflated by elevated investment costs.

The Commission, supported by the interveners, disputes the applicant’s arguments. The Commission submits, in essence, that the injury margin, as calculated in the contested regulation, takes account only of the difference between the applicant’s sale price and the hypothetical target price of the Union industry. In its submission, the injury margin is therefore the expression of the duty necessary to eliminate the injury arising solely from the applicant’s imports.

It should be borne in mind, first of all, that the second subparagraph of Article 9(4) of the basic regulation provides that ‘the amount of the anti-dumping duty shall not exceed the margin of dumping established but it should be less than the margin if such lesser duty would be adequate to remove the injury to the Union industry’ and that ‘Article 7(2a), (2b)[,] (2c) and (2d), shall apply accordingly’.

Under Article 7(2c) of the basic regulation, as amended by Regulation (EU) 2018/825 of the European Parliament and of the Council of 30 May 2018 (OJ 2018 L 143, p. 1):

‘When the injury margin is calculated on the basis of a target price, the target profit used shall be established taking into account factors such as the level of profitability before the increase of imports from the country under investigation, the level of profitability needed to cover full costs and investments, research and development (R&D) and innovation, and the level of profitability to be expected under normal conditions of competition. Such profit margin shall not be lower than 6%.’

Moreover, under Article 7(2d) of the basic regulation, as amended by Regulation 2018/825:

‘When establishing the target price, the actual cost of production of the Union industry, which results from multilateral environmental agreements, and protocols thereunder, to which the Union is a party, or from International Labour Organisation (ILO) Conventions listed in Annex Ia to this Regulation, shall be duly reflected. Moreover, future costs, which are not covered in paragraph 2c of this Article, which result from those agreements and conventions, and which the Union industry will incur during the period of the application of the measure pursuant to Article 11(2), shall be taken into account.’

It should be recalled, in that regard, that Article 9(4) of the basic regulation lays down the ‘lesser duty rule’, under which the amount of the anti-dumping duty must be lower than the margin of dumping established if that lesser duty is adequate to remove the injury caused to the Union industry. The objective of that rule is to prevent the anti-dumping duty imposed from going beyond what is necessary to remove the injury caused to the Union industry by the dumped imports. Such a rule is justified in the light of the nature and purposes of anti-dumping duties which are neither penalties nor compensatory measures intended to make good the actual damage caused, but protective measures against unfair competition resulting from dumped imports. Those duties seek only to prevent dumped imports or to make them economically unattractive and thereby to redress an imbalance in the domestic market caused by that dumping (see judgment of 8 June 2023, Severstal and NLMK v Commission, C‑747/21 P and C‑748/21 P, EU:C:2023:459, paragraphs 72 and 73 and the case-law cited).

Moreover, although Article 9(4) of the basic regulation does not contain any indication of how the anti-dumping duty is to be calculated and does not impose any particular methodology on the institutions in order to ensure that the anti-dumping duty does not exceed what is necessary to counter the injurious effects of the dumped imports of the product concerned, it should be borne in mind that those institutions are required, in that context, to take into account the conclusions they reached in the analyses carried out pursuant to Article 3(6) and (7) of that regulation (see, to that effect, judgment of 27 March 2019, Canadian Solar Emea and Others v Council, C‑236/17 P, EU:C:2019:258, paragraphs 161 and 163).

In order to ensure that the amount of the anti-dumping duty imposed in accordance with Article 9(4) of the basic regulation does not exceed that which is necessary to counter the injurious effects of the dumped imports, that amount should not take into account injurious effects caused by factors other than those imports. In other words, the institutions are to take into account, for the purpose of determining that amount, the conclusions reached by those institutions following the examination of the determination of injury, within the meaning of Article 3(6) and (7) of that regulation. That conclusion is, moreover, confirmed by the wording of Article 9(4) of the basic regulation, which, in its first sentence, refers to ‘dumping and [the] injury caused thereby’. Thus, the term ‘injury’ in that same paragraph must be understood in the same way, as a reference to the injury arising from dumping, that is to say to the injury caused only by the dumped imports (judgment of 27 March 2019, Canadian Solar Emea and Others v Council, C‑236/17 P, EU:C:2019:258, paragraphs 169 and 170; see, to that effect, judgment of 3 December 2020, Changmao Biochemical Engineering v Distillerie Bonollo and Others, C‑461/18 P, EU:C:2020:979, paragraph 65).

It should be noted, with respect to Article 7(2c) of the basic regulation, that it largely codifies the approach taken in the ‘price undercutting’ method in order to determine the ‘injury margin’ (see, to that effect, Opinion of Advocate General Emiliou in Joined Cases Severstal and NLMK v Commission, C‑747/21 P and C‑748/21 P, EU:C:2023:20, points 33 to 35 and 57).

Under that method, the injury margin is calculated by comparing the price of the dumped imports with a target sales price of the Union industry. That price represents the price the Union industry could reasonably expect to charge in the EU market in the absence of the dumped imports. To establish such a hypothetical price, a target profit is added to the Union industry’s production costs. That target profit corresponds to the profit margin that the Union industry could reasonably expect under normal market conditions (judgment of 8 June 2023, Severstal and NLMK v Commission, C‑747/21 P and C‑748/21 P, EU:C:2023:459, paragraph 74).

The Court of Justice held, in essence, that the use of that method came within the Commission’s margin of discretion. The use of a target price instead of the actual sales price of the Union industry in order to determine the injury margin makes it possible to take into account the downward pressure exerted by the dumped imports on the sales prices of the Union industry. Taking that pressure into account contributes to the plausibility of the results obtained by using that method (judgment of 8 June 2023, Severstal and NLMK v Commission, C‑747/21 P and C‑748/21 P, EU:C:2023:459, paragraph 77).

Lastly, Article 7(2c) of the basic regulation is applicable to procedures initiated as from 8 June 2018, with the result that it is applicable to the present case.

In the present case, the Commission applied Article 7(2c) of the basic regulation and calculated the injury margin on the basis of a target price.

In particular, the Commission stated, in section 5 of the contested regulation, that, due to their volume and prices, imports from the Republic of Korea caused material injury to the Union industry within the meaning of Article 3(6) of the basic regulation. In the assessment under Article 3(7) of the basic regulation, the Commission, whilst acknowledging that imports from Türkiye and Japan were factors that had contributed to the injury suffered by the Union industry, concluded, in essence, that those factors were not sufficiently material to attenuate the causal link.

In section 7 of the contested regulation, the Commission examined whether a duty lower than the dumping margin would be sufficient to eliminate the injury caused to the Union industry by the dumped imports, in accordance with Article 9(4) of the basic regulation. In recital 378 of the contested regulation, the Commission found that that would be the case if the Union industry were able to cover its costs of production and obtain a reasonable profit (in other words, a ‘target profit’) by selling at a target price within the meaning of Article 7(2c) and 7(2d) of the basic regulation.

In recitals 378 to 380 and 383 and 384 of the contested regulation, the Commission explained its methodology as follows:

(378)‘(378)

The Commission first established the amount of duty necessary to eliminate the injury suffered by the Union industry. In this case, the injury would be eliminated if the Union industry was able to cover its costs of production, including those costs resulting from multilateral environmental agreements, and protocols thereunder, to which the Union is a party, and of ILO Conventions listed in Annex Ia to the basic Regulation, and was able to obtain a reasonable profit (“target profit”) by selling at a target price in the sense of [Article 7(2c) and 7(2d)] of the basic regulation.

In accordance with Article 7(2c) of the basic Regulation, to establish the target profit, the Commission took into account the level of profitability before the increase of imports from the country concerned and the level of profitability to be expected under normal conditions of competition. Such profit margin should not be lower than 6%.

The Commission established a basic profit covering full costs under normal conditions of competition. During the entire period considered the Union industry incurred losses. As this was lower than the minimum 6% required by Article 7(2c) of the basic Regulation, that profit margin was replaced by 6%.

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On that basis, the Commission calculated a non-injurious price of the like product for the Union industry by applying the target profit margin of 6% to the cost of production of the sampled Union producers during the investigation period and then adding the adjustments under Article 7(2d) of the basic Regulation on a type-by-type basis.

The Commission then determined the injury elimination level on the basis of a comparison of the weighted average import price of the sampled exporting producers in the country concerned on a type-by-type basis, as established for the price undercutting calculations, with the weighted average non-injurious price of the like product sold by the sampled Union producers on the free Union market during the investigation period. Any difference resulting from that comparison was expressed as a percentage of the weighted average import CIF [cost, insurance and freight] value.’

The injury elimination level (definitive injury margin) was thus determined to be 34.4% as regards the applicant (see recital 385 of the contested regulation).

Lastly, the Commission stated the following:

(386)‘(386)

Following the Final Disclosure [the applicant] argued that the injury margin determination is affected by the same error as the undercutting calculations, and their considerations made for the undercutting apply mutatis mutandis. Also the injury margin should be adjusted by the impact of the other factors put forward by [the applicant].

The Commission referred to its arguments in recitals (184) to (188) as well as its rebuttal of [the applicant’s] arguments on the impact of imports from other countries, the SAP price formula and the investments of the Union industry, set forth in the respective sections of the causation analysis. Those claims were thus rejected also with regard to the injury margin determination.’

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288In the second place, the applicant maintains that the methodology used by the Commission in the contested regulation was not such as to guarantee that the anti-dumping duty amount would not take account of the injurious effects caused by factors other than Korean imports, namely, on the one hand, the SAP price formula and the impact of the investments of the Union industry and, on the other, imports from Türkiye and Japan.

289First, as regards the SAP price formula and the impact of the investments of the Union industry, it is apparent from the examination of the first complaint of the third part of the second plea (see paragraphs 227 to 232 above) that the applicant has failed to demonstrate that such factors contributed to the injury suffered by the Union industry. Consequently, the applicant may not criticise the Commission for having failed to disregard the alleged injurious effects of those factors.

290Second, as regards the imports from Türkiye and Japan, the Court finds that the applicant has failed to establish that the methodology used by the Commission was not appropriate for determining the suitable level of duty that would enable the injury caused to the Union industry by the dumped imports to be eliminated, in accordance with Article 9(4) of the basic regulation. In that regard, it should be noted that, by ensuring that the injury margin expresses only the difference between the weighted average import price and a Union industry target price calculated in accordance with Article 7(2c) of the basic regulation, the Commission ensured that any injury caused by other factors was not attributed to the dumped imports.

291As indicated in paragraphs 276 to 278 above, the ‘price undercutting’ method used by the Commission pursuant to Article 7(2c) of the basic regulation is based on the use of a Union industry hypothetical target price which, in contrast to the actual Union industry sale prices, is not affected by the effects of other injurious factors recognised by the Commission.

292In that regard, in its written pleadings submitted to the Court, the applicant, referring to the judgment of 27 March 2019, Canadian Solar Emea and Others v Council (C‑236/17 P, EU:C:2019:258), argues that that method runs counter to the obligation referred to in paragraph 169 of that judgment, not to attribute to the targeted imports any injury caused by other factors. However, the applicant relies on the judgment of 27 March 2019, Canadian Solar Emea and Others v Council (C‑236/17 P, EU:C:2019:258) for the sole purpose of establishing the existence of such an obligation, without however claiming specifically that that judgment actually called into question the use of that method when there are other injurious factors present. Nor is there anything in that judgment to suggest that the Court of Justice stated that recourse should not be had to the ‘price undercutting’ method, now codified in Article 7(2c) of the basic regulation, on the ground that that method is such as to infringe the rule that the anti-dumping duty amount must not take account of the injurious effects caused by factors other than the dumped imports.

293It should also be observed that, in its application, the applicant did not specifically and actually challenge the weighted average import price used by the Commission to establish price undercutting. In its reply, however, it submits for the first time, that Korean prices are also depressed by other factors, including, in particular, low-priced Japanese and Turkish imports. It is clear that that allegation is inadmissible because it is put forward for the first time in the reply. In any event, that allegation, which was, moreover, never put forward in order to challenge the causal link between imports from Korea and the injury suffered by the Union industry, does not contain any specific, substantiated explanation in the reply, and nor is it supported by specific evidence of the impact of those other factors on Korean prices.

294In the light of the foregoing considerations, the Court finds that the applicant has failed to establish that the Commission made manifest errors of assessment and infringed Article 3(3) or Article 9(4) of the basic regulation in applying its method for calculating the injury margin and anti-dumping duty rate or that the Commission had infringed its rights of defence.

295Consequently, the third plea must be dismissed in its entirety.

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341In the light of the foregoing considerations, the action must be dismissed in its entirety.

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On those grounds,

hereby:

Dismisses the action;

Orders LG Chem, Ltd. to bear its own costs and to pay those incurred by the European Commission, BASF Antwerpen NV, Nippon Shokubai Europe NV and Evonik Superabsorber GmbH.

Kowalik-Bańczyk

Buttigieg

Hesse

Dimitrakopoulos

Ricziová

Delivered in open court in Luxembourg on 19 March 2025.

[Signatures]

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(*) Language of the case: English.

(1) Only the paragraphs of the present judgment which the Court considers it appropriate to publish are reproduced here.