(Reference for a preliminary ruling from the Finanzgericht Düsseldorf)

(Common commercial policy – Countervailing duties – Protection against subsidies – Regulation (EC) No 1599/1999 – Stainless steel wires – Injury to the Community industry – Causal link)

Summary of the Judgment

Common commercial policy – Protection against subsidisation practices of non-Member States – Injury – Establishing a causal link – Obligations of the institutions – Taking into account of matters extraneous to the subsidy

(Council Regulation No 2026/97, Art. 8(7))

In determining, in an anti-subsidy proceeding, injury to the Community industry, the Council and the Commission are under an obligation to consider whether the injury on which they intend to base their conclusions actually derives from the subsidised imports and must disregard any injury deriving from other factors, particularly from the conduct of Community producers.

Where the institutions have complied with that obligation and concluded that a factor arising from anti-competitive conduct of the Community producers constituted but a small percentage of the final price of the product in question, so that such price could be regarded as a reliable indicator for the purposes of establishing what injury was suffered by the Community industry, it is for the parties pleading the invalidity of the regulation imposing the countervailing duty to adduce evidence to show that that factor could have had an effect of such magnitude that the final prices of the product could no longer be used to establish the existence of that injury and that there was a causal link between it and the subsidised imports.

(see paras 35, 51, 54)

28 February 2008 (*)

(Common commercial policy – Countervailing duties – Protection against subsidies – Regulation (EC) No 1599/1999 – Stainless steel wires – Injury to the Community industry – Causal link)

In Case C‑398/05,

REFERENCE for a preliminary ruling under Article 234 EC from the Finanzgericht Düsseldorf (Germany), made by decision of 2 November 2005, received at the Court on 15 November 2005, in the proceedings

Hauptzollamt Aachen,

THE COURT (Fourth Chamber),

composed of K. Lenaerts, President of the Chamber, G. Arestis (Rapporteur), R. Silva de Lapuerta, J. Malenovský and T. von Danwitz, Judges,

Advocate General: E. Sharpston,

Registrar: B. Fülöp, Administrator,

having regard to the written procedure and further to the hearing on 21 June 2007,

after considering the observations submitted on behalf of:

– AGST Draht- und Biegetechnik GmbH, by P. Henseler and T. Lieber, Rechtsanwälte,

– the Council of the European Union, by J.-P. Hix, acting as Agent, assisted by G. Berrisch, Rechtsanwalt,

– the Commission of the European Communities, by T. Scharf and K. Gross, acting as Agents,

having decided, after hearing the Advocate General, to proceed to judgment without an Opinion,

gives the following

This reference for a preliminary ruling concerns the validity of Council Regulation (EC) No 1599/1999 of 12 July 1999 imposing a definitive countervailing duty and collecting definitively the provisional duty imposed on stainless steel wires with a diameter of 1 mm or more originating in India and terminating the proceeding concerning imports of stainless steel wires with a diameter of 1 mm or more originating in the Republic of Korea (OJ 1999 L 189, p. 1).

The reference was made in proceedings between AGST Draht- und Biegetechnik GmbH (‘AGST’) and Hauptzollamt Aachen (‘the Hauptzollamt’), by which the latter imposed on AGST a countervailing duty on imports of stainless steel wires with a diameter of 1 mm or more under subheading 7223 00 19 in the Combined Nomenclature (‘the CN’) originating in India.

Legal context

European Union law

Directive 2011/92

Recitals 7 to 9 of Directive 2011/92 state:

‘(7) Development consent for public and private projects which are likely to have significant effects on the environment should be granted only after an assessment of the likely significant environmental effects of those projects has been carried out. …

(8) Projects belonging to certain types have significant effects on the environment and those projects should, as a rule, be subject to a systematic assessment.

(9) Projects of other types may not have significant effects on the environment in every case and those projects should be assessed where the Member States consider that they are likely to have significant effects on the environment.’

Article 2(1) of that directive provides:

‘Member States shall adopt all measures necessary to ensure that, before development consent is given, projects likely to have significant effects on the environment by virtue, inter alia, of their nature, size or location are made subject to a requirement for development consent and an assessment with regard to their effects on the environment. Those projects are defined in Article 4.’

Under Article 3(1) of that directive:

‘The environmental impact assessment shall identify, describe and assess in an appropriate manner, in the light of each individual case, the direct and indirect significant effects of a project on the following factors:

…

(b) biodiversity, with particular attention to species and habitats protected under [Council Directive 92/43/EEC of 21 May 1992 on the conservation of natural habitats and of wild fauna and flora (OJ 1992 L 206, p. 7), as amended by Council Directive 2013/17/EU of 13 May 2013 (OJ 2013 L 158, p. 193) (“Directive 92/43”)] and Directive 2009/147/EC [of the European Parliament and of the Council of 30 November 2009 on the conservation of wild birds (OJ 2010 L 20, p. 7)];

…’

Article 4 of Directive 2011/92 provides:

‘1. Subject to Article 2(4), projects listed in Annex I shall be made subject to an assessment in accordance with Articles 5 to 10.

(a) a case-by-case examination;

(b) thresholds or criteria set by the Member State.

Member States may decide to apply both procedures referred to in points (a) and (b).

Where a case-by-case examination is carried out or thresholds or criteria are set for the purpose of paragraph 2, the relevant selection criteria set out in Annex III shall be taken into account. Member States may set thresholds or criteria to determine when projects need not undergo either the determination under paragraphs 4 and 5 or an environmental impact assessment, and/or thresholds or criteria to determine when projects shall in any case be made subject to an environmental impact assessment without undergoing a determination set out under paragraphs 4 and 5.

Where Member States decide to require a determination for projects listed in Annex II, the developer shall provide information on the characteristics of the project and its likely significant effects on the environment. The detailed list of information to be provided is specified in Annex IIA. The developer shall take into account, where relevant, the available results of other relevant assessments of the effects on the environment carried out pursuant to Union legislation other than this Directive. The developer may also provide a description of any features of the project and/or measures envisaged to avoid or prevent what might otherwise have been significant adverse effects on the environment.

The competent authority shall make its determination, on the basis of the information provided by the developer in accordance with paragraph 4 taking into account, where relevant, the results of preliminary verifications or assessments of the effects on the environment carried out pursuant to Union legislation other than this Directive. The determination shall made available to the public and:

(a) where it is decided that an environmental impact assessment is required, state the main reasons for requiring such assessment with reference to the relevant criteria listed in Annex III; or

(b) where it is decided that an environmental impact assessment is not required, state the main reasons for not requiring such assessment with reference to the relevant criteria listed in Annex III, and, where proposed by the developer, state any features of the project and/or measures envisaged to avoid or prevent what might otherwise have been significant adverse effects on the environment.

Member States shall ensure that the competent authority makes its determination as soon as possible and within a period of time not exceeding 90 days from the date on which the developer has submitted all the information required pursuant to paragraph 4. In exceptional cases, for instance relating to the nature, complexity, location or size of the project, the competent authority may extend that deadline to make its determination; in that event, the competent authority shall inform the developer in writing of the reasons justifying the extension and of the date when its determination is expected.’

Annex II.A of that directive contains the list of ‘information to be provided by the developer on the projects listed in Annex II’. That list reads as follows:

‘1. A description of the project, including in particular:

(a) a description of the physical characteristics of the whole project and, where relevant, of demolition works;

(b) a description of the location of the project, with particular regard to the environmental sensitivity of geographical areas likely to be affected.

(a) the expected residues and emissions and the production of waste, where relevant;

(b) the use of natural resources, in particular soil, land, water and biodiversity.

4. The criteria of Annex III shall be taken into account, where relevant, when compiling the information in accordance with points 1 to 3.’

Annex III to that directive sets out the ‘criteria to determine whether the projects listed in Annex II should be subject to an environmental impact assessment’.

Directive 2014/52

Recitals 11 and 29 of Directive 2014/52 state:

‘(11) The measures taken to avoid, prevent, reduce and, if possible, offset significant adverse effects on the environment, in particular on species and habitats protected under [Directive 92/43] and Directive 2009/147 …, should contribute to avoiding any deterioration in the quality of the environment and any net loss of biodiversity, in accordance with the [European] Union’s commitments in the context of the [United Nations Convention on Biological Diversity, signed in Rio de Janeiro on 5 June 1992,] and the objectives and actions of the Union Biodiversity Strategy up to 2020 laid down in the [Communication from the Commission to the European Parliament, the Council, the Economic and Social Committee and the Committee of the Regions] of 3 May 2011 entitled ‘Our life insurance, our natural capital: an EU biodiversity strategy to 2020’ [(COM(2011) 244 final)]

…

(29) When determining whether significant effects on the environment are likely to be caused by a project, the competent authorities should identify the most relevant criteria to be considered and should take into account information that could be available following other assessments required by Union legislation in order to apply the screening procedure effectively and transparently. In this regard, it is appropriate to specify the content of the screening determination, in particular where no environmental impact assessment is required. Moreover, taking into account unsolicited comments that might have been received from other sources, such as members of the public or public authorities, even though no formal consultation is required at the screening stage, constitutes good administrative practice.’

Directive 92/43

Article 6(3) of Directive 92/43 provides:

‘Any plan or project not directly connected with or necessary to the management of the site but likely to have a significant effect thereon, either individually or in combination with other plans or projects, shall be subject to appropriate assessment of its implications for the site in view of the site’s conservation objectives. In the light of the conclusions of the assessment of the implications for the site and subject to the provisions of paragraph 4, the competent national authorities shall agree to the plan or project only after having ascertained that it will not adversely affect the integrity of the site concerned and, if appropriate, after having obtained the opinion of the general public.’

Article 12(1) of that directive provides:

‘Member States shall take the requisite measures to establish a system of strict protection for the animal species listed in Annex IV(a) in their natural range, prohibiting:

(a) all forms of deliberate capture or killing of specimens of these species in the wild;

(b) deliberate disturbance of these species, particularly during the period of breeding, rearing, hibernation and migration;

(c) deliberate destruction or taking of eggs from the wild;

(d) deterioration or destruction of breeding sites or resting places.’

Point (a) of Annex IV to that directive mentions ‘all species’ of bats belonging to the suborder of ‘microchiroptera’.

Irish law

23The Commission submits, on the other hand, that the Community institutions examined, both in the provisional regulation and in Regulation No 1599/1999, the Indian producers’ objections concerning the existence of an alloy surcharge cartel between the Community producers of flat products.

24In that regard, the Commission states that it found, among other matters, in the 212th to 216th recitals in the preamble to the provisional regulation, that stainless steel wires were not manufactured from flat products and that comparison of the Community industry producers’ sale prices revealed that they varied for identical references.

25Moreover, those recitals stated that the alloy surcharge cartel constituted only a small percentage of the total price of stainless steel wire products. The Council confirmed those findings, subsequently, in the 93rd recital in the preamble to the definitive Regulation No 1599/1999.

26Furthermore, the Council and the Commission submit that the conclusions of the Court of First Instance in Mukand and Others v Council are not applicable to the main proceedings for the purpose of determining the validity of Regulation No 1599/1999. In that regard, the Community institutions correctly concluded, in that regulation, that the application of the alloy surcharge, which constituted only a small percentage of the total price of the products in question, had cast no doubt on the reliability of the final weighted average prices for the purposes of the determination of the injury to the Community industry.

27In any event, those institutions state that the observations based on the final weighted average prices in Regulation No 1599/1999 concerning the injury and the causal link between it and the subsidised imports of the products in question in the main proceedings are not vitiated by a manifest error of assessment.

28In the context of the determination of that injury, the two essential factors were, first, a considerable undercutting of the imports from India and, second, a significant depression in the Community industry’s sale prices. Consequently, even assuming that the application of the alloy surcharge raised all the net prices in the Community and that, in addition, that increase was entirely attributable to anti-competitive conduct, the undercutting would be of around 17% of those imports.

29It must be examined whether the Community institutions fell into manifest error in the determination of the existence of injury to the Community industry and of the causal link between that injury and the subsidised imports of stainless steel wires.

30The referring court points out that Regulation No 1599/1999 repeats the same reasons as those set forth in Regulation No 2450/98 for rejecting the Indian exporting producers’ objection relating to the Community producers’ restrictive practices, namely the uniform application of the alloy surcharge.

31It must be noted, on the one hand, that, under Article 8(7) of the basic regulation, known factors, other than the subsidised imports, which are injuring the Community industry at the same time are also to be examined to ensure that injury caused by those other factors is not attributed to the subsidised imports pursuant to Article 8(6).

32As an indication, that article provides, among other things, that the factors which may be considered relevant in this respect include restrictive trade practices of, and competition between, third country and Community producers.

33It must, on the other hand, be observed that in the sphere of the common commercial policy and, most particularly, in the realm of measures to protect trade, the Community institutions enjoy a broad discretion by reason of the complexity of the economic, political and legal situations which they have to examine (see Case C‑351/04 Ikea Wholesale [2007] ECR I‑0000, paragraph 40, and the case-law cited).

34Furthermore, it is settled case-law that the determination of the existence of harm to the Community industry requires an appraisal of complex economic situations and the judicial review of such an appraisal must therefore be limited to verifying whether relevant procedural rules have been complied with, whether the facts have been accurately stated, and whether there has been a manifest error in the appraisal of those facts or a misuse of powers (see Ikea Wholesale, paragraph 41, and the case-law cited). That is, particularly, the case as regards the determination of the factors injuring the Community industry in an anti-subsidy proceeding.

35In determining injury, the Council and the Commission are under an obligation to consider whether the injury on which they intend to base their conclusions actually derives from the subsidised imports and must disregard any injury deriving from other factors, particularly from the conduct of Community producers themselves (see Case C‑358/89 Extramet Industrie v Council [1992] ECR I‑3813, paragraph 16).

36In that regard, it should be noted that, in order to refute AGST’s argument that the Indian producers’ objections concerning the alloy surcharge cartel for flat products was not examined by the Community institutions, those institutions referred, in the proceedings before the Court, to the 93rd recital in the preamble to Regulation No 1599/1999, which confirmed the conclusions set forth in the 209th to 216th recitals in the preamble to the provisional regulation, since none of the parties concerned put forward additional arguments concerning the Indian exporting producers’ objections that all data submitted by the Community industry within the framework of the anti-subsidy proceeding would be artificially inflated as a result of the uniform application of the ‘alloy surcharge’ system.

37In the 210th and 211th recitals in the preamble to the provisional regulation, it was noted that the decision which held that the alloy surcharge was an anti-competitive practice covered flat products as opposed to long products, which include the stainless steel wires in question in the main proceedings. However, the exporting producers argued that the existing illegal practice for flat products would have a synergy or downstream effect on long products.

38In that regard, in the 212th recital in the preamble to the provisional regulation, the Commission, in order to refute that argument of the exporting producers, maintained that stainless steel wires were not produced, for technical reasons, from flat products and that therefore any downstream effect of the concerted practice found for flat products on stainless steel wires was doubtful. The Commission added that the producers of flat products and the producers of long products were not the same and that the number of the latter was significantly higher than that of the former.

39It follows from those recitals that, contrary to AGST’s submission, the Community institutions, in accordance with the requirement of the basic regulation to disregard any injury arising from factors other than the subsidised imports, examined whether the data submitted by the Community industry within the framework of the anti-subsidy proceeding could have been influenced by the concerted application of the ‘alloy surcharge’ system by the flat product producers.

40In support of its arguments, AGST declares that the 209th to 216th recitals in the preamble to the provisional regulation, in which the Commission had rejected the Indian producers’ objection relating to the existence of an alloy surcharge cartel, correspond, on the whole, to the 43rd, 46th and 47th recitals in the preamble to Regulation No 2450/98, on the basis of which the Court of First Instance, in Mukand and Others v Council, declared that they contained manifest errors of assessment.

41In that regard, it is clear from the contents of the Court file that Regulations No 1599/1999 and No 2450/98 cover stainless steel products which belong in the category of long products. In addition, it is not disputed that the alloy surcharge applied to stainless steel wires had been fixed in the same way by the steel bar producers, by multiplying the alloy surcharge applied to flat steel products by a factor of 1.35.

42Thus, the question which arises is whether the anti-competitive conduct of the flat steel producers, linked to the uniform application of the alloy surcharge cartel, constituted, for the stainless steel wires sector, a known factor within the meaning of Article 8(7) of the basic regulation.

43In that context, Mukand and Others v Council, upon which AGST relies, concerns the anti-competitive fixing of the amount of the alloy surcharge, applied by the Community producers to flat stainless steel products, which had significantly affected the prices of stainless steel bars and artificially caused their increase, and which would render those prices unreliable for the purposes of the determination of the injury suffered by the Community industry.

44In that judgment, the Court of First Instance held that, although it was not proved that the final sale prices of stainless steel bars had been fixed by Community producers acting in concert, the Community institutions, by failing to take account of the uniform, consistent industrial practice of Community stainless steel bar producers, the objective effect of which was automatically to mirror, in the markets for those products, the artificial price increases achieved through concerted action between the flat product producers, disregarded a known factor, other than the subsidised imports, which could have caused injury to the Community industry at the same time.

45It is therefore necessary to examine whether the concerted application of the alloy surcharge by the flat product producers which, as was held in Mukand and Others v Council, could have had a significant influence on the prices of stainless steel bars, could also have had such an influence on the prices of stainless steel wire for the purposes of Article 8(7) of the basic regulation.

46In that regard, it is necessary to note that the Community institutions stated that the alloy surcharge for stainless steel wires had already been imposed as an element in the final price.

47Those institutions submit that the alloy surcharge for stainless steel wires was, during the period under investigation, a percentage lower on average than 5% of the net average weighted price of those products. Even assuming that the amount of the alloy surcharge was influenced by the flat product producers’ anti‑competitive conduct, the effect of the artificial increase of the alloy surcharge on the net average weighted prices of stainless steel wires was so small that it could not cast doubt on the reliability of those prices.

48AGST claims that if the alloy surcharge for stainless steel bars artificially increased their prices, since it was multiplied by a yield factor of 1.35, it also inevitably artificially increased the price of stainless steel wires. In that regard, AGST maintained, at the hearing, that the alloy surcharge for stainless steel wires, during the period under investigation, was, in any event, higher than the 4 or 5% suggested by the Commission.

49The exporting producers stated, during the administrative procedure, that the Community producers which had applied an alloy surcharge to steel wires had fixed its amount in the same way as the steel bar producers, by multiplying the alloy surcharge applied to flat steel products by a factor of 1.35, the objective effect of which was automatically to mirror, in the markets for those products, the artificial price increases achieved through the concerted action between the flat product producers.

50However, AGST provided no evidence concerning the parallelism between the evolution of the prices of flat products and that of the prices of stainless steel wires because of the uniform application of the yield coefficient of 1.35 by the wire producers to the alloy surcharge applied to flat products which could show that the flat product producers’ anti‑competitive conduct could have significant repercussions on the level of stainless steel wire prices which would render them artificially higher.

51In the main proceedings, the Community institutions did not fail to take account of a known factor like the system of applying the alloy surcharge. They examined the factor of the application of the alloy surcharge and concluded that it constituted a small percentage of the final price. In those circumstances, it is for the parties pleading the invalidity of the regulation to adduce evidence to show that the concerted application of the alloy surcharge by the flat product producers could have had an effect of such magnitude that the final prices of stainless steel wires could no longer be used to establish the existence of injury to the Community industry and of the causal link between that injury and the subsidised imports.

52However, the Court file contains no material which could lead to the conclusion that the Community institutions made a manifest error of assessment by relying, in the determination of the injury and of the causal link between that injury and the subsidised imports, on the absence of factors, other than those imports, which, according to AGST, caused injury to the Community industry at the same time.

53AGST relied solely on Mukand and Others v Council to claim that the conclusions therein apply to Regulation No 1599/1999, since stainless steel wires belong, just like stainless steel bars, in the category of so‑called ‘long’ products, and on the similarity between the two products in respect of the calculation of the alloy surcharge.

54No indication has been given that the concerted application of the alloy surcharge to flat products led to an increase in the overall level of stainless steel wire prices such that the final prices of those products could not be regarded as a reliable indicator for the purpose of establishing what injury was suffered by the Community industry because of the subsidised imports.

55It follows from all the foregoing that consideration of the question referred has disclosed nothing capable of affecting the validity of Regulation No 1599/1999.

Costs

56Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.

On those grounds, the Court (Fourth Chamber) hereby rules:

Consideration of the question referred has disclosed nothing capable of affecting the validity of Council Regulation (EC) No 1599/1999 of 12 July 1999 imposing a definitive countervailing duty and collecting definitively the provisional duty imposed on stainless steel wires with a diameter of 1 mm or more originating in India and terminating the proceeding concerning imports of stainless steel wires with a diameter of 1 mm or more originating in the Republic of Korea.

[Signatures]

*

*Language of the case: German.