CELEX: 62003TJ0300
Anti-subsidy investigations
Recordable compact discs originating in India
Calculation of the amount of the subsidy
Determination of injury
Causal link
Rights of the defence

Relevant provisions
1       Article 5 of Council Regulation (EC) No 2026/97 of 6 October 1997 on protection against subsidised imports from countries
not members of the European Community (OJ 1997 L 288, p. 1; ‘the basic regulation’) provides:
‘Calculation of the amount of the countervailable subsidy
The amount of countervailable subsidies, for the purposes of this Regulation, shall be calculated in terms of the benefit
conferred on the recipient which is found to exist during the investigation period for subsidisation. Normally this period
shall be the most recent accounting year of the beneficiary, but [it] may be any other period of at least six months prior
to the initiation of the investigation for which reliable financial and other relevant data are available.’
2        Article 7(3) of the basic regulation provides:
‘Where the subsidy can be linked to the acquisition or future acquisition of fixed assets, the amount of the countervailable
subsidy shall be calculated by spreading the subsidy across a period which reflects the normal depreciation of such assets
in the industry concerned. …’
3       Article 8 of the basic regulation provides:
‘Determination of injury
…
2.      A determination of injury shall be based on positive evidence and shall involve an objective examination of both:
(a)      the volume of the subsidised imports and the effect of the subsidised imports on prices in the Community market for like products;
and
(b)      the consequent impact of those imports on the Community industry.
3.      With regard to the volume of the subsidised imports, consideration shall be given to whether there has been a significant
increase in subsidised imports, either in absolute terms or relative to production or consumption in the Community. With regard
to the effect of the subsidised imports on prices, consideration shall be given to whether there has been significant price
undercutting by the subsidised imports as compared with the price of a like product of the Community industry, or whether
the effect of such imports is otherwise to depress prices to a significant degree or prevent price increases which would otherwise
have occurred, to a significant degree. No one or more of these factors can necessarily give decisive guidance.
…
5.      The examination of the impact of the subsidised imports on the Community industry concerned shall include an evaluation of
all relevant economic factors and indices having a bearing on the state of the industry, including: the fact that an industry
is still in the process of recovering from the effects of past subsidisation or dumping, the magnitude of the amount of countervailable
subsidies, actual and potential decline in sales, profits, output, market share, productivity, return on investments, utilisation
of capacity; factors affecting Community prices; actual and potential negative effects on cash flow, inventories, employment,
wages, growth, ability to raise capital or investments and, in the case of agriculture, whether there has been an increased
burden on government support programmes. This list is not exhaustive, nor can any one or more of these factors necessarily
give decisive guidance.
6.      It must be demonstrated, from all the relevant evidence presented in relation to paragraph 2, that the subsidised imports
are causing injury within the meaning of this Regulation. Specifically, this shall entail a demonstration that the volume
and/or price levels identified pursuant to paragraph 3 are responsible for an impact on the Community industry as provided
for in paragraph 5, and that this impact exists to a degree which enables it to be classified as material.
7.      Known factors other than the subsidised imports which are injuring the Community industry at the same time shall also be examined
to ensure that injury caused by these other factors is not attributed to the subsidised imports pursuant to paragraph 6. Factors
which may be considered in this respect include the volume and prices of non-subsidised imports, contraction in demand or
changes in the patterns of consumption, restrictive trade practices of, and competition between, third country and Community
producers, developments in technology and the export performance and productivity of the Community industry.’
4       Article 11(1) of the basic regulation provides:
‘… [The] investigation shall cover both subsidisation and injury, and these shall be investigated simultaneously. For the
purpose of a representative finding, an investigation period shall be selected which, in the case of subsidisation, shall
normally cover the investigation period provided for in Article 5. Information relating to a period subsequent to the investigation
period shall not, normally, be taken into account.’
5       By its Communication 98/C 394/04 (OJ 1998 C 394, p. 6), the Commission published guidelines for the calculation of the amount
of subsidy in countervailing duty investigations (‘the guidelines’).
6       Section A of the guidelines provides:
‘Articles 5, 6 and 7 of [the basic regulation] contain provisions on the calculation of the amount of subsidy. The purpose
of this communication is to explain the application of these provisions … in order to clarify the methodology which will normally
be used by the Commission in calculating the amount of subsidy in countervailing duty cases, unless special circumstances
justify a departure from this methodology. In this way it is intended to render the process of calculation more open and to
introduce greater certainty for economic operators and foreign governments. This communication does not bind the Community
institutions in any way, but rather provides guidelines solely for the purpose of conducting countervailing duty investigations
under [the basic regulation]. …’
7       Section F(a)(ii) of the guidelines provides:
‘For non-recurring subsidies, which can be linked to the acquisition of fixed assets, the total value of the subsidy has to
be spread over the normal life of the assets (Article 7(3) of [the basic regulation]). Therefore the amount of subsidy … can
be spread over the normal period used in the industry involved for the depreciation of assets. This will normally be done
using the straight-line-method. …’

Background to the dispute
8       The applicant is a company established in India which manufactures various forms of storage media, including recordable compact
discs (‘CD-Rs’).
9       After a complaint was filed by the Committee of European CD-R Manufacturers (CECMA), the Commission initiated an anti-subsidy
investigation on 17 May 2002 into imports of CD-Rs from India (OJ 2002 C 116, p. 4).
10     By letter of 4 March 2003 the Commission provided the applicant with the essential facts and considerations on the basis of
which it was intended to propose the imposition of definitive countervailing duties. The subsidy identified by the Commission
consisted in a customs duty exemption for capital goods imported by the applicant. The amount of that subsidy was calculated
by spreading it over a period of three years pursuant to Article 7(3) of the basic regulation. The statement envisaged the
imposition of a countervailing duty of 10%.
11     The applicant replied to that statement by two letters of 19 March 2003, challenging both the method used in order to calculate
the amount of the subsidy, and the existence and causation of the injury.
12     By two letters of 9 April 2003 the Commission rejected the applicant’s arguments as to the existence of injury and of a causal
link, and sent the applicant an additional statement containing a revised calculation of the amount of the subsidy, which
was spread over a period of 4.2 years. The additional statement envisaged the imposition of a countervailing duty of 7.3%.
13     By letter of 14 April 2003 the applicant challenged the revised calculation of the amount of the subsidy. By letter of 5 May
2003 the Commission sent the applicant an additional explanation of that calculation. The applicant replied to that letter
on 9 May 2003, putting forward additional observations.
14     Following the Commission’s proposal of 20 May 2003, the Council adopted Regulation (EC) No 960/2003 of 2 June 2003 imposing
a definitive countervailing duty on imports of recordable compact discs originating in India (OJ 2003 L 138, p. 1; ‘the contested
regulation’). That regulation imposed a definitive countervailing duty of 7.3% on imports of CD-Rs from India.

Procedure and forms of order sought
15     The applicant brought the present action by lodging an application at the Registry of the Court of First Instance on 29 August
2003.
16     By order of the President of the Fourth Chamber dated 23 January 2004 the Commission was given leave to intervene in support
of the form of order sought by the Council. It did not lodge any written submissions.
17     By order of the President of the Fourth Chamber of 18 April 2005 the Committee of European CD-R Manufacturers (CECMA), now
the Committee of European CD-R and DVD+/-R Manufacturers (CECMA), was given leave to intervene in support of the form of order
sought by the Council. CECMA lodged its statement in intervention within the prescribed period. Observations on that statement
were lodged by the applicant.
18     By letters of 13 April 2004 and 30 June 2004 the applicant requested that certain confidential items in the application, defence,
reply and rejoinder be excluded from the notification to CECMA. It produced a non-confidential version of those pleadings.
By letter of 5 April 2004 the Council requested that certain confidential items in its defence be excluded from the notification
to CECMA. It produced a non-confidential version of the defence which satisfied its own application for confidential treatment
as well as the applicant’s. The notification of those pleadings to CECMA was confined to that non-confidential version. No
objection was raised by CECMA in that regard.
19     Upon hearing the report of the Judge-Rapporteur, the Court of First Instance decided to open the oral procedure and, in connection
with measures of organisation of procedure, put written questions to the parties, to which they replied within the prescribed
period.
20     The oral arguments of the main parties to the proceedings and the Commission and their replies to the questions put by the
Court were heard at the public hearing on 10 May 2006. CECMA informed the Court that it would not take part in the hearing.
21     The applicant claims that the Court should:
–       annul the contested regulation in so far as it applies to the applicant;
–       order the Council to pay the costs;
–       order CECMA to bear its own costs in any event.
22     The Council, supported by the Commission, contends that the Court should:
–       dismiss the application;
–       in the alternative, annul Article 1(2) of the contested regulation in so far as it imposes a definitive countervailing duty
at a rate exceeding the rate that would have applied had the subsidy amount been established on the basis of a depreciation
period of 6 years;
–       order the applicant to pay the costs.
23     CECMA contends that the Court should:
–       dismiss the application;
–       order the applicant to pay the intervener’s costs.

Law
24     The applicant’s complaints are expressed in the form of five pleas in law concerning, first, the determination of the normal
depreciation period of the imported assets in relation to calculating the amount of the subsidy and, second, the assessment
of injury and causation.
25     As regards the determination of the normal depreciation period, the applicant relies on manifest error of assessment and infringement
of Articles 5, 7(3) and 11(1) of the basic regulation (first plea), and on infringement of the rights of the defence and failure
to state reasons (second plea).
26     As regards the assessment of injury and causation, the applicant relies on manifest error of assessment and infringement of
Article 8(2), (6) and (7) of the basic regulation with regard to the analysis of the factors relating to the determination
of injury and the causal link (third plea), the analysis of the effects of imports from Taiwan (fourth plea), and the analysis
of the effects of anti-competitive behaviour of a CD-R patent holder (fifth plea).

First plea: infringement of Articles 5, 7(3) and 11(1) of the basic regulation and manifest error in assessment of the normal
depreciation period of the assets
Introductory observations
27     By its first plea, the applicant claims that the determination in the contested regulation of the normal depreciation period
for the imported assets is defective because of errors in law and a manifest error of assessment.
28     It should be observed that, in the sphere of measures to protect trade, review by the Community judicature of 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).
29     The same is true of the assessment of the depreciation period under Article 7(3) of the basic regulation, referred to in this
case. Under that provision, the subsidy relating to the acquisition of fixed assets is to be spread ‘across a period which
reflects the normal depreciation of such assets in the industry concerned’. It is apparent from the wording and the scheme
of that provision, which requires in particular an assessment of normal practice in the industry concerned, that the determination
of the period in question is part of the wide discretion enjoyed by the Community institutions in the analysis of complex
economic situations.
30     Each of the complaints made by the applicant in this case must be examined in the light of those considerations.
Assessment of the factors relating to the depreciation period (first limb)
–       Arguments of the parties
31     The applicant submits that, according to Article 7(3) of the basic regulation, as interpreted by section F(a)(ii) of the guidelines,
the subsidy in question should have been spread over the ‘normal life of the assets’ or the period of ‘normal depreciation
of such assets in the industry concerned’. Moreover, the practice of the Community institutions is to determine the weighted
average of the depreciation periods by reference to the accounting records of producers in the relevant industry in the country
concerned.
32     According to the applicant, in the present case the Council should therefore have taken into consideration all of the evidence
in the case relating to the life of the assets concerned. In that respect, by considering that the normal depreciation period
of those assets (their normal life) was 4.2 years, the Council applied a period which was shorter than that resulting from
the evidence provided during the investigation. Based on that evidence, the period of depreciation was 13 years (according
to the applicant’s accounting records) or even 15 to 20 years (according to the applicant’s suppliers). According to the information
for the Community industry, it was six years.
33     In addition, the Council was wrong to take the view that the normal depreciation period for the assets concerned was 4.2 years,
applying a declining balance method of depreciation provided for under Indian law. There is no depreciation period in relation
to the declining balance method of depreciation. Moreover, according to the applicant’s calculations, applying that method
the assets are not completely depreciated at the end of the period determined by the Council, as there is always a residual
value.
34     The Council submits that, according to Article 7(3) of the basic regulation, the subsidy relating to the purchase of fixed
assets should be spread over the normal depreciation period. The normal life of an asset, which is a different concept, can
potentially be one of the factors taken into account in determining the period of depreciation. That is also the practice
of the institutions relied on by the applicant.
35     The applicant confuses those two concepts when it claims, wrongly, that the institutions assumed that the period of 4.2 years
was not only the depreciation period but also the life of the assets. As regards the evidence referred to by the applicant,
the letters from its suppliers mention only the physical life of the goods concerned and not their appropriate depreciation
period. In any event, in the present case the Council acted on the basis of Indian company law which prescribes an obligatory
depreciation period regardless of the life of the assets.
36     As to the use of the declining balance method of depreciation, the Council used that method in order to determine the difference
between the depreciation period applying that method and the average six-year depreciation period used in the Community industry.
In that respect, the alternative calculation put forward by the applicant is not appropriate because it does not take account
of constant investments.
–       Findings of the Court
37     Under the first limb of the first plea the applicant raises, essentially, two complaints. First, it submits that the depreciation
period applied is manifestly inaccurate in relation to information from, respectively, itself, the suppliers of the goods
concerned and the Community industry. Secondly, it claims that the Council made a manifest error in assessment of the depreciation
period under the declining balance method of depreciation provided for under Indian law.
38     As regards the first complaint, it is apparent, in particular, from recitals 43 and 45 of the contested regulation that in
determining the depreciation period the Council took into account the method of depreciation provided for, in accounting matters,
by the law of the applicant’s country.
39     It must therefore be examined, first, whether the Council could legally act on that basis, rather than on the information
put forward by the applicant.
40     Article 7(3) of the basic regulation does not contain any specific rules on the factors to be taken into account in determining
the depreciation period. The Community institutions therefore enjoy a wide discretion with regard to the factors which may
be considered to be relevant.
41     As to the purpose of the provision referred to in the preceding paragraph, it appears from a joint reading of Articles 5 and
7(3) of the basic regulation that the purpose of the determination of a normal depreciation period in the industry concerned
is to calculate the amount of the advantage obtained by the exporter on the purchase of fixed assets attributable to the investigation
period. It should be noted that the applicant does not submit that the method of depreciation provided for under the law of
the exporter’s country is irrelevant in that respect.
42     Nevertheless, it observes that consideration of that method departs from the guidelines and the previous practice of the Community
institutions.
43     As regards the guidelines, according to section F(a)(ii) thereof, the value of the subsidy has to be spread ‘over the normal
life of the assets [concerned]’ and ‘[t]herefore the amount of subsidy … can be spread over the normal period used in the
industry involved for the depreciation of assets.’ Although it should be observed, therefore, that the guidelines refer both
to the ‘normal [depreciation] period’ and the ‘normal life’ of the assets concerned, it does not follow from those two references
that the Commission restricted the scope of the factors used in the application of Article 7(3) of the basic regulation.
44     Moreover, the applicant itself claims that the previous practice of the Community institutions with regard to the application
of the aforementioned provisions of the basic regulation and the guidelines was to find the average depreciation period applied
in accounting records in the industry of the country concerned. To the extent that depreciation is regulated in that country,
the method of depreciation provided for under national law may be relevant in that regard.
45     As regards the applicant’s argument that in calculating a subsidy the Community institutions have never made reference to
a method of depreciation provided for under the law of the country concerned, it should be recalled that Article 7(3) of the
basic regulation allows the institutions discretion as to what factors are to be taken into account in the determination of
the normal depreciation period. The fact that the Community institutions did not use the method in question in other anti-subsidy
investigations does not lead, in itself, to infringement of that provision (see, by analogy, Case T-132/01
Euroalliages and Others
v
Commission
[2003] ECR II-2359, paragraphs 68 and 69).
46     In addition, although the applicant’s argument regarding previous practice should be interpreted as being based on infringement
of the principle of legal certainty, it should be observed that, when the applicable legislation leaves the institutions a
certain discretion, the fact that they exercise that discretion without explaining in detail and in advance the criteria which
they intend to apply in every situation does not infringe that principle, even where the institutions create new policy options
(Case 250/85
Brother
v
Council
[1988] ECR 5683, paragraphs 28 and 29; Case C-69/89
Nakajima
v
Council
[1991] ECR I-2069, paragraph 118; and Case T-118/96
Thai Bicycle Industry
v
Council
[1998] ECR II-2991, paragraphs 67 to 69).
47     Accordingly, the view must be taken that the Community institutions were able to take account of the method of depreciation
provided for under the law of the country of the exporter concerned to determine the normal depreciation period of the assets
in question without infringing Article 7(3) of the basic regulation.
48     Secondly, in respect of the applicant’s information according to which it applied the average depreciation period of 13 years
in its accounts, it is apparent from recital 40 of the contested regulation that the accuracy of that data was called in question
by the fact that the classification of the assets was not the same in its accounting records and tax records.
49     As for the certificates from the suppliers according to which the goods in question could be used for 15 to 20 years, as noted
by the Council those certificates do not state the depreciation period of those goods in the industry concerned but mention
only their physical life.
50     As regards the depreciation period of six years applied by the Community industry, according to recitals 44 and 45 of the
contested regulation the economic state of that industry is not comparable to that of the Indian industry concerned.
51     Accordingly, the information relied on by the applicant does not show that the assessment made by the Council in the present
case is manifestly incorrect.
52     As regards the applicant’s second complaint, regarding manifest error in the application of the method of depreciation provided
for under Indian law, it should be noted that the declining balance method does not entail reliance on a set depreciation
period as such.
53     In the present case, the Council used a formula to calculate that period, corresponding to application of the declining balance
method by an undertaking in the applicant’s situation. In particular, it noted in recital 45 of the contested regulation that
application of that method in circumstances of ongoing regular investments allows ‘30% faster’ depreciation of assets than
the straight-line method, which corresponds to the period of 4.2 years used in this case.
54     In that regard, the applicant has not shown that such an approach was, in itself, manifestly incorrect. Nevertheless, it seeks
to call in question the accuracy of the Council’s calculations by putting forward an alternative calculation according to
which application of declining balance depreciation results in a residual value at the end of the fifth year.
55     In that respect, the alternative calculation put forward by the applicant is based on the depreciation of an asset invested
over the first year and not on ongoing investments. Since that calculation was based on criteria different from those taken
into account by the Council, it cannot be relied on to challenge the accuracy of the assessment carried out by the latter.
56     In the light of the foregoing, the complaints made by the applicant under the first limb of the first plea cannot be accepted.
Classification of the assets as moulds and failure to take account of the information in the applicant’s accounting records
(first and second complaints of the second limb)
–       Arguments of the parties
57     The applicant relies on the Council’s practice according to which the exporter’s accounting records constitute the principal
source of information. That practice is comparable to that of taking into consideration accounting records maintained in accordance
with generally accepted principles in the country concerned for the purpose of calculating production costs in dumping cases.
The Council ought therefore to have based its assessment on the depreciation period following from the accounting records.
58     The applicant claims that the Council infringed Article 7(3) of the basic regulation, as interpreted in its practice, by failing
to take account of that period and by classifying the assets concerned as moulds, although those assets are shown as machines
in the applicant’s accounting records. The applicant admits that the same assets were classified differently in its accounting
and tax records. However, where there is a difference the classification in the tax records cannot prevail over that in the
accounting records.
59     The contested regulation also lacks a statement of reasons in that regard. The Council should have given reasons for its choice
of classification of the assets concerned, based on objective elements associated with their nature, and not simply on the
conflict between the applicant’s accounting and tax records.
60     Moreover, in its letter to the Commission of 14 April 2003, the applicant stated that only a proportion of the assets concerned
had been reclassified as moulds in its tax records. That information was based on the applicant’s declaration of income, which
was examined by the Commission during the investigation. Thus the Commission had all the information necessary to check the
applicant’s calculations.
61     The Council contends that although, in principle, exporters’ accounting records constitute the principal source of information,
the institutions are not bound by that information but should consider the matter from the perspective of the normal depreciation
period in the industry concerned. It was not appropriate in the present case to take as a basis the depreciation period in
the applicant’s accounting records. First, the classification of the assets in those accounts was inconsistent with their
classification for taxation purposes. Secondly, the average depreciation period applied in the Community industry, which was
making losses, was approximately six years, and the depreciation period applied by the applicant, a company which was profitable
and investing constantly and heavily, should have been significantly lower than that average.
62     The Council submits that the applicant reclassified the assets in question as moulds in its tax return. It follows from the
Indian legislation that the same assets must be classified consistently for tax and accounting purposes. In order to define
the appropriate period of depreciation the Council therefore proceeded on the basis that the reclassification of the assets
for taxation purposes should have resulted in a reclassification of the assets in the applicant’s accounting records.
63     That reasoning is sufficiently set out inter alia in recital 41 of the contested regulation. Having regard to that statement
of reasons, the Council was not required to address the objective nature of the assets in question. In addition, the applicant
also failed to demonstrate that the reclassification of the assets for taxation purposes was based on their objective nature,
and not solely on the applicant’s tax interests.
64     As for the applicant’s statement that the reclassification for taxation purposes did not affect all of the assets in question,
the Council replies that the applicant did not produce any evidence to substantiate that fact in its letter to the Commission
of 14 April 2003 or in its application. Furthermore, it follows from the Commission’s reply of 8 May 2003 that the information
given in the letter of 14 April 2003, namely the total value of the imported goods, conflicted with the information previously
submitted and verified during the investigation. Accordingly the Commission could not verify the new information nor, consequently,
take it into account.
–       Findings of the Court
65     According to recitals 39 to 43 of the contested regulation, the Council determined the depreciation period of the assets in
question by reference to the method of depreciation provided for under the Indian legislation for goods such as moulds. It
thus refused to base that determination on the depreciation period referred to in the applicant’s accounting records, in which
those assets are shown as machines.
66     The applicant admits that it reclassified the assets in question as moulds in its tax return relating to the investigation
period. Nevertheless it submits that the Council infringed Article 7(3) of the basic regulation by basing its determination
on a classification shown in the tax records rather than taking account of information shown in the accounting records.
67     First of all it should be recalled, as noted in paragraph 45 above, that the mere fact that the Community institutions did
not use the same method in other anti-subsidy investigations does not lead, in itself, to infringement of the abovementioned
provision. Moreover, in this case, according to recitals 40 and 41 of the contested regulation the reason that account was
taken of the tax information was the fact that the classification of the assets in question in the applicant’s accounting
records was not consistent with that shown in its tax records. It cannot therefore be maintained that the Council disregarded
the information in the applicant’s accounting records on arbitrary grounds.
68     Secondly, it is apparent from recital 38 of the contested regulation that the Community institutions based their determination
on the depreciation period applicable for accounting purposes. In that examination the applicant’s tax return was referred
to only in connection with seeking the appropriate classification of the assets in question for accounting purposes. As is
apparent from recital 41 of the contested regulation, that reference was justified by the fact that the same assets should
have been classified in an identical manner in the accounting and tax records. Accordingly, the applicant is wrong to argue
that the Community institutions unlawfully gave priority to the tax records over the accounting records.
69     Finally, it should be noted first that the applicant did not challenge the Council’s view that, although an undertaking may
use different methods of depreciation in its accounting and tax records, the same asset must be classified identically in
both records. Secondly, it does not maintain that the classification of the assets in its tax records was incorrect. Indeed
the investigation carried out by the Commission did not show that the classification of the assets in the tax return had been
challenged by the Indian authorities or adjusted by the applicant.
70     In those circumstances, the Council could lawfully have taken the view that, since the applicant changed the classification
of the assets in question in its tax records, account had to be taken of the same change for accounting purposes.
71     As regards the applicant’s subsidiary plea regarding absence of a statement of reasons for that finding, it is settled case-law
that the statement of reasons required by Article 253 EC must disclose in a clear and unequivocal fashion the reasoning followed
by the Community institution which adopted the measure in such a way as to enable the persons concerned to ascertain the reasons
for the measure and uphold their rights and to enable the competent Community Court to exercise its power of review (see Case
T-89/00
Europe Chemi-Con (Deutschland)
v
Council
[2002] ECR II-3651, paragraph 65 and the case-law cited).
72     In that respect, recitals 40 to 42 of the contested regulation state that the applicant’s information concerning the classification
of the assets in the accounting records was inconsistent with the change in their classification in the tax records, when
the classification of the same assets in both records should have been identical. Accordingly, the contested regulation does
make sufficiently clear the reasons for which the Council did not base its determination on the classification of the assets
in the applicant’s accounts, but referred to other relevant factors.
73     Finally, the applicant alleges that the classification of the assets as moulds did not affect all of the assets in question,
a fact which it pointed out to the Commission by letter of 14 April 2003.
74     The Council’s reply to that contention is that the information put forward to support it was inconsistent with other information
obtained during the investigation and that it cannot therefore be taken into account.
75     It is apparent from the information submitted by the parties in reply to the written question put by the Court that, in support
of the contention at issue, the applicant referred to the information in its tax return in respect of the investigation period.
It is common ground that the value of the assets entered in that return does not correspond to the value used to calculate
the subsidy. The Council states that the institutions were not able, on the basis of those elements alone, to compare the
contention at issue with other information verified in the investigation.
76     Nevertheless, the applicant submits that the different values which resulted, which may be explained by the addition of transport
and installation costs, did not prevent the Community institutions from seeing that the reclassification did not affect all
of the imported assets.
77     The Council stated, in this respect, that the Community institutions had not been able to ascertain the precise value of the
assets classified as moulds because, first, the applicant did not explain the classification criteria of its assets in the
tax return and, secondly, it had not provided a complete and verifiable list of those assets. In the absence of that information,
the Community institutions had not been able to verify the figures submitted by the applicant in support of its contention.
78     In the light of the latter information, which was not called in question by the applicant before the Court, it must be considered
that the applicant did not put forward any evidence to enable the Community institutions to verify the accuracy of its contention
and, if necessary, to take account of the proportion of the assets in question which had not been classified as moulds. Accordingly,
solely by that contention it cannot challenge the determination in the contested regulation.
79     Consequently, without infringing Article 7(3) of the basic regulation the Council was able to take the view that the assets
in question, classified as moulds for taxation purposes, should also have been taken into account as such for the purposes
of determining their depreciation period for accounting purposes and that it was not therefore appropriate to base that determination
on information shown in the applicant’s accounting records. Furthermore, the applicant has not shown that a statement of reasons
is lacking in that respect.
80     The claims set out by the applicant in the first two complaints of the second limb must therefore be rejected as unfounded.
Taking into account the applicant’s profitability and investments (third complaint of the second limb)
–       Arguments of the parties
81     According to the applicant, the Council infringed Article 7(3) of the basic regulation by making a distinction between profitable
and unprofitable companies for the purpose of determining the depreciation period. That distinction does not follow at all
from the basic regulation. Furthermore it is illogical, because the normal life of an asset and its normal depreciation period
are connected with its nature, not the profitability or investment schedule of the company which owns it.
82     By adopting the premiss that the applicant would invest heavily over a period of six years, the Council was also in breach
of Articles 5 and 11(1) of the basic regulation. The fact that the applicant was profitable and that it invested during the
investigation period and the two previous years does not constitute evidence that the same level of profitability and investment
was maintained for six years. Thus the Council’s approach means that it is speculating on events after the investigation period.
83     The Council replies that it did not distinguish between profitable and unprofitable companies. It merely relied on the fact
that the applicant was investing constantly and heavily in order to conclude that the applicant was depreciating its assets
very quickly. Accordingly, the Council sought to ascertain the normal depreciation period for a company in the same situation
as the applicant. The applicant is wrong to claim that profitability does not affect depreciation periods, as profitability
is important in terms of the choice of that period.
84     In concluding that the applicant is profitable and that it invests heavily, the Council relied on information obtained in
the investigation which was not disputed. In accordance with Articles 5 and 11(1) of the basic regulation, it did not use
any information subsequent to the investigation period.
–       Findings of the Court
85     It is common ground that the Council took into account the fact, ascertained in the investigation, that the applicant was
very profitable and was making ongoing regular investments. That fact was relied on in two respects. First, of the two methods
of depreciation possible under Indian legislation the Council referred to the declining balance method of depreciation, which
allows swifter depreciation. Secondly, the Council calculated the depreciation period under that method in circumstances of
ongoing and regular investments.
86     Those considerations are set out in recital 45 of the contested regulation:
‘[T]he position of the exporting producer is very different to the average company. It is very profitable, it is investing
constantly and heavily and it is therefore reasonable to assume that its depreciation period would be significantly lower
than the abovementioned average. Therefore, it was considered appropriate to apply a declining balance method which takes
account of the fact that it allows swifter depreciation than the straight-line method. It is noted that in circumstances of
ongoing regular investments, the declining balance method of depreciation provided by the Indian Companies Act set out in
recital 43 allows 30% faster depreciation than the equivalent straight-line method over a representative period of six years
applicable when using the straight-line method. This corresponds to a period of 4.2 years as compared to six years for the
straight-line method …’
87     The applicant submits that, by taking into account its profitability and investments, the Council infringed Article 7(3) of
the basic regulation and Articles 5 and 11(1) of that regulation.
88     As regards Article 7(3) of the basic regulation, it should be observed that under that provision the Council is required to
determine the depreciation period in the industry concerned. That determination may thus entail taking account of circumstances
specific to the exporter concerned. As has already been pointed out in paragraph 40 above, in the absence of specific rules
for that purpose, the Community institutions enjoy discretion with regard to the relevant factors to be taken into account.
89     In that respect, the applicant has not adduced any proof in support of its contention that an exporter’s profitability cannot
affect the depreciation period of its assets. On the other hand, the Council rightly stated that the choice of a method of
depreciation by an exporter may depend, inter alia, on anticipated investments and, accordingly, on the profitability of the
company concerned.
90     In those circumstances, the applicant has not shown that the Council infringed Article 7(3) of the basic regulation.
91     As for Article 5 of the basic regulation, that provision lays down that the amount of the subsidy is to be calculated in terms
of the benefit conferred on the recipient which is found to exist during the investigation period for subsidisation. In this
case, the Community institutions concluded that the applicant’s favourable financial situation during the three financial
years under consideration had influenced its choice of depreciation method. They then referred to the method thus chosen to
determine the portion of the subsidy attributable to the investigation period. The applicant is therefore wrong to allege
that the Community institutions included in the calculation of the amount of the subsidy a benefit attributable to a period
other than the investigation period.
92     In respect of Article 11(1) of the basic regulation, it provides, inter alia, that information relating to a period subsequent
to the investigation period is not, normally, to be taken into account to determine subsidisation and injury. Consequently,
the relevant information for the purposes of the analysis conducted by the Community institutions is normally that relating
to a period ending with the investigation period. Nevertheless that provision does not preclude taking into account forecasts
of future events in the analysis of that information, in so far as those forecasts are relevant and based on objective evidence
obtained during the investigation.
93     So far as concerns the relevance of such forecasts in this case, the applicant has not succeeded in calling in question the
Council’s determination that the profitability of the exporter concerned and its anticipated investments can be relevant in
determining the method of depreciation to be used.
94     As regards the substance of the forecasts taken into account by the Council, the applicant does not dispute that it regularly
invested substantial amounts over a period of three years up to the end of the investigation period. Although that fact does
not necessarily lead to the view taken by the Council that the depreciation in question was effected in circumstances of ongoing
regular investments, it should be noted that that determination, which is one of economics, comes within the wide discretion
enjoyed by the Community institutions in the examination of complex economic situations. The applicant has not shown that
the Council’s assessment in that regard was manifestly incorrect.
95     The applicant has not therefore proven that the Council infringed Article 5 or Article 11(1) of the basic regulation.
96     In the light of the foregoing, the present complaint is not well founded.
Use of the declining balance depreciation method (fourth complaint of the second limb)
–       Arguments of the parties
97     The applicant submits that the Council infringed Article 7(3) of the basic regulation by using the declining balance depreciation
method to calculate the amount of the subsidy. The guidelines refer to the use of the straight‑line method, as does the institutions’
practice. In that regard, there is no explanation in the contested regulation as to why the Community institutions departed
from their established practice, when the applicant had used the straight-line method in its accounting records.
98     The Council argues that Article 7(3) of the basic regulation does not preclude the use of a method other than the straight-line
method of depreciation, even though the latter is the method that is generally used. The fact that the declining balance method
of depreciation has not been used in the past is irrelevant.
–       Findings of the Court
99     It is apparent from recital 45 of the contested regulation that the Community institutions determined the depreciation period
by applying the declining balance method of depreciation provided for under Indian legislation for the assets in question.
100   In that respect, the applicant claims that use of the declining balance method of depreciation in itself infringes Article
7(3) of the basic regulation, as interpreted in the Commission’s guidelines and applied in its previous practice.
101   It should be observed that the wording of Article 7(3) does not preclude use of the declining balance method.
102   As regards the guidelines, section F(a)(ii) thereof provides that in order to spread the amount of the subsidy, the Commission
will normally use the straight-line method. On the other hand, that information does not mean that use of another method of
depreciation is precluded. Moreover, according to Section A of the guidelines, the guidance they contain does not apply if
special circumstances justify a different approach.
103   In the present case, the Council explained in recitals 44 and 45 of the contested regulation that use of the declining balance
method of depreciation provided for under Indian legislation, which led to swifter depreciation than the straight-line method
provided for under the same legislation, was more appropriate in the light of the depreciation period used by the Community
industry and the special circumstances of the applicant. In those circumstances the Community institutions could lawfully
adopt an approach other than that generally provided for by the guidelines.
104   As regards the applicant’s argument that the declining balance method of depreciation has not been used by the Community institutions
in other anti-subsidy investigations, that argument is not sufficient, in itself, to call in question the lawfulness of its
use in this instance (see paragraphs 45 and 46 above).
105   Regarding the applicant’s criticism that the Council applied a different method from that used in its accounting records,
it should be recalled that the latter was entitled to take the view that use of the depreciation method used in those accounting
records was inappropriate in this case (see paragraphs 65 to 67 and 79 above).
106   The applicant is therefore not justified in claiming that the Community institutions infringed Article 7(3) of the basic regulation
merely because they departed from the approach provided for by the guidelines and used in previous anti-subsidy investigations.
107   In view of those considerations, the present complaint must be rejected as unfounded.
Allegedly arbitrary nature of the calculations (fifth complaint of the second limb)
–       Arguments of the parties
108   The applicant claims that the method used by the Council in order to arrive at a period of 4.2 years is arbitrary. In particular,
the institutions arbitrarily chose six years as the period over which to compare the straight-line and declining balance depreciation
methods, as well as the period during which the applicant was deemed to have invested continually. If the institutions had
used a different number of years, they could have produced a different result.
109   The arbitrary nature of the determination of the depreciation period in question is illustrated by the fact that the Commission
proposed a period of three years in its first statement, for which a period of 4.2 years was later substituted by reference
to the same available information.
110   According to the Council, the fact that it could have arrived at a different depreciation period by altering the parameters
of the calculation does not prove that its approach was arbitrary. In that respect the applicant has failed to show that the
Council exceeded its discretion.
111   According to the Council, the Commission was able to alter its approach during the investigation, even if that alteration
was not based on new information. That does not mean that the new approach is arbitrary.
–       Findings of the Court
112   By this complaint, the applicant submits that the determination of the normal depreciation period in question was not objective.
It argues, first, that the Community institutions arbitrarily chose the parameters used to compare the two alternative methods
provided for under Indian legislation and, secondly, that they altered the depreciation period at a late stage in the investigation
and in the absence of new evidence.
113   As regards the first contention, recital 45 of the contested regulation indicates that the representative period of six years
used in this case corresponded to both the average depreciation period applied by the Community industry and that resulting
from the straight-line method provided for under Indian legislation, which was one of the methods which could be used. It
cannot therefore be considered that the institutions made an arbitrary choice by applying that period. The applicant’s argument
that the result of the calculation over another period would have been different cannot call in question the earlier finding
that the period applied was not arbitrary.
114   As regards the second contention, that the Commission had initially proposed a period of three years, it must be recalled
that an investigation in the sphere of measures to protect trade is an ongoing process during which many findings are constantly
revised. It cannot therefore be ruled out that the definitive findings made by the Community institutions will differ from
the findings made at any other stage of the investigation (
Shanghai Teraoka Electronic
v
Council
, cited above, paragraph 182). The applicant cannot therefore claim that an alteration in the determination of the depreciation
period, which has an impact during the investigation, is indicative of the arbitrary nature of that determination. In addition,
as stated by the Council, although not based on new evidence the alteration in the present case was made following the written
and oral observations of the applicant.
115   Consequently, the applicant has not shown that the determination by the Community institutions was arbitrary. The present
complaint cannot therefore be accepted.
116   In the light of all of the foregoing, the first plea must be rejected in its entirety.

Second plea: infringement of the rights of the defence and failure to state reasons in relation to the determination of the
normal depreciation period for the assets
Arguments of the parties
117   The applicant claims that, in the statement of 9 April 2003, the Commission put forward a new method of calculating the depreciation
period which was substantially different from the method used in its final disclosure statement of 4 March 2003. That statement
was not sufficiently clear for the applicant to understand the new method. The Commission implicitly acknowledged that fact
by sending a supplementary explanation on 5 May 2003.
118   Furthermore, the supplementary explanation of 5 May 2003 also did not allow the applicant to exercise its rights of defence.
First, the applicant could not usefully submit its comments after 5 May 2003, because at that stage it was not possible to
amend the proposal for the adoption of the contested regulation. Secondly, even the supplementary explanation failed to clarify
how the Commission had determined the depreciation period of 4.2 years. In that respect, enclosing a table of the calculation
figures would have sufficed, which the Commission failed to do.
119   As for the Council’s argument that the applicant should have asked for an explanation of the statement of 9 April 2003, the
applicant notes that that statement imposed a very short deadline for reply and that its reply, of 14 April 2003, contained
a tacit invitation to provide further explanation.
120   In the alternative, the applicant submits that the contested regulation is vitiated by a failure to state reasons, in so far
as it reiterates the incomplete grounds included in its statement of 9 April 2003.
121   The Council contends that the additional statement of 9 April 2003 was sufficient. If the applicant had not understood the
method of calculation introduced in that statement, it should have asked for an explanation. In its reply of 14 April 2003
the applicant merely expressed its disagreement with the method applied by the Commission.
122   In addition, the fact that the Commission sent a supplementary explanation on 5 May 2003 does not mean that it acknowledged
the statement of 9 April 2003 to be insufficient. That explanation was in fact confined to a response to the calculation presented
by the applicant on 14 April 2003. Contrary to what the applicant pleads, it was sent in time.
123   The applicant was acquainted with the depreciation methods used by the Commission, and should not have had any difficulty
calculating the amounts concerned. During the administrative procedure, it never asked to be provided with the calculation
figures in the form of a table.
124   Lastly, the applicant has not in any event put forward any argument capable of showing that the possible lack of information
prevented it from defending its interests.
Findings of the Court
125   It must be observed that, under Article 30(1) and (2) of the basic regulation, the exporters concerned may request final disclosure
of the essential facts and considerations on the basis of which it is intended to recommend the imposition of definitive measures.
That obligation of final disclosure is to ensure respect for the rights of the defence of the undertakings concerned (see,
by analogy in relation to dumping, Case T-88/98
Kundan and Tata
v
Council
[2002] ECR II-4897, paragraph 131).
126   Furthermore, according to settled case-law on measures to protect trade, the undertakings affected by an investigation preceding
the adoption of definitive measures must be placed in a position during the administrative procedure in which they can effectively
make known their views on the correctness and relevance of the facts and circumstances alleged (see
Kundan and Tata
v
Council
, paragraph 132 and the case-law cited).
127   In that respect, the fact that final disclosure is incomplete renders the regulation imposing definitive duties unlawful only
if, as a result of the omission, the parties were not in a position to defend their interests effectively (see
Shanghai Teraoka Electronic
v
Council
, paragraph 292 and the case-law cited).
128   In the light of those principles, it is necessary to examine the applicant’s criticism regarding the incomplete nature of
the disclosure in question.
129   The method of calculating the subsidy set out in the statement of 4 March 2003 was altered by the statement of 9 April 2003.
Accordingly, so far as concerns the determination of the depreciation period applied to spread the subsidy over time, the
Commission made final disclosure in its statement of 9 April 2003.
130   Paragraph 28 of that statement reads as follows:
‘[I]t was considered appropriate to apply a declining balance method which takes account of the fact that it allows swifter
depreciation than the straight-line method. It is noted that in circumstances of ongoing regular investments, the declining
balance method of depreciation provided by the Indian Companies Act set out in recital 43 allows 30% faster depreciation than
the equivalent straight-line method over a representative period of six years applicable when using the straight-line method.
This corresponds to a period of 4.2 years as compared to six years for the straight-line method and this shorter period was
used to allocate the benefit obtained.’
131   The applicant claims, essentially, that the final disclosure statement cited above, although it refers to circumstances of
ongoing regular investments, does not show that the Commission determined the depreciation period by taking into account the
investment of constant annual amounts over a six-year period.
132   In that respect, the final disclosure statement at issue relates to the comparison between the two methods of depreciation
provided for under the legislation of the applicant’s country and contains all the calculations as well as the result. In
those circumstances, although admittedly the words ‘circumstances of ongoing regular investments’ do not necessarily mean
that the annual amounts invested are constant throughout the period in question, any ambiguity resulting from that expression
could not prevent the applicant from understanding the method applied. Even if the applicant had had doubts as to the exact
meaning of the words in question, since it had available all the calculations and was acquainted with the depreciation methods
involved it was in a position to verify its meaning in relation to the other calculations.
133   Furthermore, it should be pointed out that the applicant never asked the Commission about the meaning of those words. In its
reply to the statement in question, of 14 April 2003, the applicant merely challenged the accuracy of the Commission’s calculation
by putting forward an alternative calculation. That alternative calculation shows that the applicant proposed calculating
the depreciation in relation to an initial investment, rather than contemplating ongoing regular investments. That correspondence
therefore shows, not that the latter was not in a position to understand the method applied, but that it disputed one of the
calculations.
134   In those circumstances, the view must be taken that the applicant has not proven that the statement of 9 April 2003 was incomplete
regarding the determination of the normal depreciation period for the assets in question.
135   In any event, in its letter of 5 May 2003 the Commission replied to the applicant’s proposed alternative calculation by stating
that the calculation by the institutions was based on investments of constant annual amounts over the whole of the representative
period. Since that information was forwarded to the applicant before the date for adoption by the Commission of the proposal
in respect of the contested regulation, the applicant cannot claim that it was not sent in time (see, to that effect, Case
T-147/97
Champion Stationery and Others
v
Council
[1998] ECR II-4137, paragraph 82).
136   As regards the applicant’s alternative argument relating to failure to state reasons, it should be noted that paragraph 28
of the statement of 9 April 2003 was repeated in recital 45 of the contested regulation. Considering that the applicant has
failed to show that that statement was incomplete, the reasons in the contested regulation must be regarded as being sufficient
in that respect.
137   In the light of the foregoing, the applicant has not shown that final disclosure was incomplete and thereby resulted in infringement
of its rights of defence.
138   Consequently, the second plea cannot be accepted.

Third plea: manifest error of assessment and infringement of Article 8(2) and (6) of the basic regulation with regard to the
analysis of the factors relating to the determination of injury and the causal link
Introductory observations
139   It must be recalled that the question whether the Community industry has suffered injury and whether that injury is attributable
to subsidised imports involves the assessment of complex economic matters, in respect of which the institutions enjoy a wide
discretion. Judicial review of that discretion must be exercised within the limits noted in paragraph 28 above.
140   In addition, it is for the applicant to adduce evidence enabling the Court to find that the Council made a manifest error
of assessment when determining the injury (
Shanghai Teraoka Electronic
v
Council
, paragraph 119 and the case-law cited).
141   In the context of this plea, the applicant claims that the analysis by the Community institutions of the economic factors
relevant to the determination of the injury and the causal link was arbitrary, vitiated by manifest errors of assessment and,
alternatively, by a failure to state reasons. It puts forward four complaints in that respect.
Method used to compare economic trends (first complaint)
–       Arguments of the parties
142   The applicant submits that, in their analysis of the economic factors relating to the injury, the Community institutions underestimated
the significance for the Community industry of the positive trends. It does not dispute the factual findings but their comparison
as well as the conclusions drawn from that comparison.
143   First, the Community institutions were wrong to assess the impact of the imports on the basis of data for the period 1998
to 2000.
144   In that regard, first, the Community institutions erred in taking into account the data of the Statistical Office of the European
Communities (Eurostat) for 1998. The information set out in the table in recital 62 of the contested regulation shows that
the applicant, the only Indian exporting producer of the product concerned, started exporting in its 1999/2000 financial year.
145   Secondly, the data from Eurostat for the years 1998 to 2000 are not reliable. The relevant category of the nomenclature determined
for the statistics includes several products other than CD-Rs, imported in a variety of packaging, and the quantity is stated
in tonnes, so that a mathematical formula had to be applied to the Eurostat data in order to estimate the number of imported
CD-Rs. Given the very small quantities, such a formula is statistically unreliable.
146   Third, it is apparent from recitals 55 to 64 of the contested regulation that from 1998 to 2000 imports from India did not
exceed the threshold of 1% of the Community market. They are thus negligible within the meaning of Article 14(4) of the basic
regulation.
147   Fourthly, the fact that the imports were small in the first three years of the period under consideration was not taken into
account sufficiently when assessing the state of the Community industry. Consequently, the Community institutions compared
the data for 1998 and the investigation period and concluded that the Community industry had gained 3.7 percentage points
of the Community market, whereas a comparison between 2000, the first year in which imports ceased to be negligible, and the
investigation period would have shown a larger gain of five percentage points.
148   Secondly, the Community institutions erred in basing their conclusions on the comparison of periods which overlap.
149   First, the comparison between calendar years on the one hand and the investigation period on the other was wrong. The year
2001 and the investigation period, from April 2001 to March 2002, overlap by nine months, which means that seasonal changes
cannot be taken into account in that comparison.
150   Secondly, the Council wrongly compared the trends relating to several consecutive years prior to 2001 with those found between
that year and the investigation period or during the investigation period. For example, in the comparison of the increase
in Community production in recital 73 of the contested regulation the conclusion that the increase slowed down during the
investigation period is wrong, since the figure stated relates to a much shorter period than the period to which the other
figures used in the comparison relate. The same applies to the findings as to the fall in prices, the limited increase in
capacity, and the slow increase in sales volumes, in recitals 59, 74 and 76 of the contested regulation respectively.
151   The Council states as a preliminary point that, according to the practice of the Community institutions, the determination
of injury is based on an assessment of economic indicators over an injury investigation period of four to five years ending
with the investigation period. In the present case the Community institutions looked at the development of the injury factors
during the period 1998 to 2001 and during the investigation period.
152   In the first place, the applicant is wrong to claim that that investigation should have left out the years 1998, 1999 and
2000, during which the level of imports was low.
153   First, it is irrelevant that the applicant did not export to the Community in 1998, since the Community institutions have
to analyse the data relating to the country concerned, not the individual exporter.
154   Secondly, the applicant has not shown that the Eurostat data for the years in question was wrong. In any event, the Community
institutions also examined the development of import indicators on the basis of figures supplied by the applicant and obtained
comparable results to those derived from the Eurostat data.
155   Thirdly, the comparison of information relating to the years in question does not conflict with Article 14(3) and (4) of the
basic regulation, which covers cases where imports were negligible during the investigation period.
156   Fourthly, the Council took into account the fact that import levels were low from 1998 to 2000. Regarding the applicant’s
argument in relation to the increase in the market share of the Community industry, the development of that indicator was
considered to be positive and the applicant does not show how the additional analysis called for could have influenced the
assessment of injury.
157   In the second place, the applicant is wrong to claim that the comparison of trends relating to periods which overlap could
lead to an error of assessment.
158   First, regarding the comparison made between the calendar year 2001 and the investigation period, in accordance with Article
5 of the basic regulation the Community institutions normally take the exporter’s last accounting year as the investigation
period, which may not be the same as the calendar year. Nothing prevents the Community institutions in such a case from comparing
trends during the investigation period with trends in the previous year which partly overlaps with the investigation period.
Moreover, the applicant has not shown that the import of CD-Rs is subject to seasonal variations which make it inappropriate
to compare the two periods concerned.
159   Secondly, the applicant does not allege any factual error in the data used or in the analysis undertaken by the institutions.
Specifically, it does not dispute the factual findings in recitals 59, 73, 74 and 76 of the contested regulation. Furthermore,
the applicant does not explain how the alleged faults in the comparison of the data affected the overall injury assessment.
–       Findings of the Court
160   In its first complaint, the applicant challenges, essentially, the taking into account of data relating to different periods
to compare the development of economic trends.
161   It is settled case-law that the Community institutions have wide discretion in determining what period is to be considered
for the purpose of determining injury (see
Shanghai Teraoka Electronic
v
Council
, paragraph 277 and the case-law cited).
162   It should also be noted that the Community institutions may determine injury over a period longer than that covered by the
investigation. That possibility is justified by the fact that the study of economic trends must be carried out over a sufficiently
long period (
Nakajima
v
Council
, paragraph 87).
163   In this case, according to recital 10 of the contested regulation the investigation period extended from 1 April 2001 to 31
March 2002 and corresponded to the applicant’s last financial year. The period considered for the determination of injury
covered the investigation period and the four previous calendar years, and was thus from 1 January 1998 to 31 March 2002.
164   The applicant states that it does not dispute the choice of the period considered as such. On the other hand, it submits first
that the Community institutions could not base their findings on the data in respect of 1998, 1999 and 2000, during which
the level of imports was very low.
165   Recitals 55 and 57 of the contested regulation show that imports were very small in terms of volume and market share from
1998 to 1999, and that they only reached 1% of the Community market in 2000.
166   It must be examined whether the Community institutions took that fact into account in their analysis of the factors relating
to injury.
167   In that respect, first, the applicant states that it was the only Indian exporter and that it started exporting to the Community
from April 1999.
168   It should be noted, first of all, that the existence of injury must be assessed as a whole and it is not necessary to define
separately the effect of the imports carried out by each of the companies responsible (see, by analogy in relation to dumping,
Shanghai Teraoka Electronic
v
Council
, paragraph 163 and the case-law cited). The case-law also makes clear that the Community institutions do not commit a manifest
error in that assessment where they base their findings on the information reasonably available to them (see
Shanghai Teraoka Electronic
v
Council
, paragraphs 229 and 230 and the case-law cited).
169   Further, in this case even if the data submitted to the Commission by the applicant, according to which the latter started
exporting from 1 April 1999, could have called in question the representative nature of the Eurostat data in respect of 1998
and the beginning of 1999, it should be noted that the Community institutions pointed out in recital 64 of the contested regulation
that the assessment of the indicators relating to imports focused on a period beginning in 2000, during which the applicant
actually exported to the Community.
170   Secondly, the applicant submits that the small volume of imports affected the representativeness of Eurostat’s statistical
data in respect of the years 1998 to 2000.
171   In that respect, the applicant has not adduced any evidence in support of its contention that the statistical formula applied
by Eurostat to compile the data at issue is unreliable for small quantities. In those circumstances, the argument connected
with the small volume of imports during the period in question is not sufficient to show that the Eurostat data relating thereto
is unreliable. In any event, it is apparent from recitals 61 and 62 of the contested regulation that the Community institutions
compared the Eurostat data with the figures provided by the applicant and reached similar conclusions for the period concerned.
172   The view must therefore be taken that the Council could take into account the Eurostat data for 1998, 1999 and 2000 without
making a manifest error of assessment.
173   Thirdly, the applicant submits that taking into account the data for the years in question was precluded by Articles 10(11)
and 14(3) and (4) of the basic regulation, since the imports were negligible in those years.
174   Under Articles 10(11) and 14(3) and (4) of the basic regulation, anti-subsidy proceedings are not to be initiated or are to
be immediately terminated where it is determined that the injury is negligible or where the market share of the imports is
below 1%.
175   In the present case, the applicant does not submit that the market share of the imports was below the aforementioned 1% at
any time in the investigation period, from 1 April 2001 to 31 March 2002. The fact that the market share of those imports
was below the threshold at the beginning of the longer period which was taken into consideration to assess economic trends
is immaterial with regard to the abovementioned provisions. The applicant’s argument relying on those provisions is therefore
irrelevant.
176   Finally, in respect, fourthly, of the applicant’s argument regarding assessment of the economic indicators relating to the
state of the Community industry in the period 1998 to 2000, in order to carry out a study of economic trends the Community
institutions may lawfully take into account developments observed in respect of the Community industry during the whole period
considered, including the years in which imports were still below significant levels.
177   In the present case, the applicant has not shown that the choice of the starting date of the period considered resulted in
inaccurate presentation of economic trends so far as concerns the coincidence of entry on the market of the imports in question
with negative developments in the Community industry. Although, following the example given by the applicant, the Community
industry gained a greater market share between 2000 and the investigation period than between 1998 and the investigation period,
it should be observed that that indicator was, in any event, considered to be positive. In that regard, the applicant has
not shown how the Council’s findings regarding injury and a causal link would have been affected if 2000 had been the beginning
of the period considered.
178   The applicant’s arguments regarding the taking into account of the data in respect of 1998, 1999 and 2000 must therefore be
rejected.
179   In the second place, the applicant criticises the assessment of the data in respect of periods which overlap in part.
180   In that regard, it maintains, first, that the Community institutions made a manifest error of assessment by comparing the
data relating to calendar years, in particular 1998 and 2001, with those of the investigation period which overlap by nine
months in 2001.
181   In that connection, the investigation period chosen in this case is one year. The comparison between the data in respect of
the calendar years and that period, of the same length, could not therefore have resulted in inaccurate presentation of economic
trends unless it were proven that there were seasonal changes on the CD-R market. The applicant does not state, however, that
there were such changes on the CD-R market.
182   Secondly, the applicant complains that the Council compared developments from one year to another with those found between
2001 and the investigation period. That criticism relates to the assessment of production, price levels, capacities and volumes
of Community sales, made in recitals 59, 73, 74 and 76 of the contested regulation respectively.
183   It should be noted that the developments which took place between the consecutive calendar years examined are not directly
comparable with those appearing between 2001 and the end of the investigation period, since the latter relate to a period
of a different length.
184   However, an analysis of recitals 59, 73, 74 and 76 of the contested regulation does not show that the findings regarding the
development of the indicators in question were based on trends appearing between 2001 and the end of the investigation period.
Although the Council stated in recitals 73, 74 and 76 that the increase in Community production ‘slowed down during the [investigation
period]’, that the increase in its capacity as from 2001 ‘was limited’ and that the increase in the volume of sales of the
Community industry ‘increased only by 6% in the [investigation period] as compared to 2001’, it did not infer from those findings
that the state of the Community industry revealed by those indicators had worsened. As regards recital 59, although the Council
stated that the import price increased by 17% between 2001 and the investigation period, it nevertheless based its conclusions
on injury in recital 102 on the decrease by 59% in overall prices between 2000 and the end of the investigation period. It
should be noted that the applicant does not dispute any of those factual findings.
185   In addition, although the applicant criticises the fact that the Community institutions did not extrapolate the data in respect
of 2002, it does not show how, in the absence of such extrapolation, the Council gave an inaccurate picture of the development
of the indicators concerned. Accordingly, the applicant does not prove that such an alleged omission in the presentation of
the data resulted in an error in the assessment of those indicators.
186   In any event, the applicant does not state what impact the error allegedly made by the Council in the comparison of the data
in question could have had on the conclusions regarding existence of injury and a causal link (see, to that effect,
Shanghai Teraoka Electronic
v
Council
, paragraph 167 and the case-law cited). It does not even state how those conclusions could significantly have been modified
if the Council had taken into account the data extrapolated in respect of 2002.
187   The view must therefore be taken that the applicant has not shown that the Council was in error as to the facts or made a
manifest error in its assessment of the indicators in question.
188   Finally, under the present complaint the applicant relies on Article 8(2) and (6) of the basic regulation, claiming that the
Community institutions did not carry out an objective analysis of the data in respect of the different periods.
189   Since the applicant has not shown that there is an error of fact or a manifest error in the assessment of the data in question,
it cannot claim that the periods compared were chosen arbitrarily. The argument as to lack of objectivity in that connection
cannot therefore succeed.
190   Accordingly, the present complaint must be rejected as unfounded.
Assessment of stock levels (second complaint)
–       Arguments of the parties
191   The applicant states that the Community institutions made a manifest error in concluding in recital 103 of the contested regulation
that the development of stock levels of the Community industry was one of the indicators which worsened dramatically. The
Community industry’s stocks declined between 2000 and the investigation period, demonstrating, on the contrary, a positive
trend. That error alone could result in the annulment of the contested regulation.
192   The Council claims that the stock assessment in recital 103 of the contested regulation is accurate, given that it refers
to the worsening of that factor during the injury investigation period, between 1998 and the investigation period, rather
than to the situation during the investigation period. Stock levels were not, in any event, decisive in terms of the injury.
Any possible error cannot therefore result in the annulment of the contested regulation, since it does not affect the outcome
of the investigation of the injury.
–       Findings of the Court
193   Under this complaint, the applicant maintains that the assessment of the development of stocks of the Community industry is
manifestly incorrect. It does not dispute the detailed figures in that regard in recital 80 of the contested regulation. Nevertheless
it observes that the Council was not able to conclude in recital 103 of the contested regulation, on the basis of that data,
that the indicator of stocks had dramatically worsened during the period considered.
194   It should be noted that the period considered in this case was from 1998 to the end of the investigation period. The data
undisputed by the applicant shows that during the whole of that period the stocks of the Community industry increased significantly.
195   The applicant has not shown that the improvement in the indicator relating to the stocks expressed as a percentage of production
from 2000 was such as to reverse the negative trend observed over the entire period considered. It is apparent from recital
80 of the contested regulation that stocks remained at high levels throughout the whole of the period considered, increasing
in absolute terms towards the end of 2001, which therefore coincided with the increase in the volume of imports, and representing,
in relative terms, a high level of production – 15% – during the investigation period.
196   The present complaint is therefore without substance.
Assessment of import prices (third complaint)
–       Arguments of the parties
197   The applicant submits that the Community institutions based their claim that import prices had decreased on the data for 1998,
1999 and 2000, which were neither relevant nor reliable. The only reliable feature of the trends in import prices is the fact
that they increased by 15% between 2001 and the investigation period. In fact that increase is even greater, since the two
periods overlap.
198   The fact that import prices were analysed also on the basis of figures provided by the applicant adds nothing in that regard.
Furthermore, the data in question were not properly presented by the Community institutions. The data relating to the applicant’s
financial years were attributed entirely to the most recent calendar years. Thus, the prices for the financial year 1999/2000,
which covered only three months of 2000, were attributed to the year 2000 rather than to the year 1999 in which the bulk of
the revenue was generated.
199   The Council argues that the applicant is wrong to state that the analysis of the price level of imports should have covered
the period from 2001 to the investigation period and not the whole of the injury investigation period. The fact that the level
of imports does not exceed the threshold of 1% of the Community market at the outset is not relevant.
200   The Community institutions admitted that the Eurostat prices for 1998 and 1999 were not representative owing to the small
quantities of imports. Consequently, in recital 59 of the contested regulation, they compared price development between 2000
and the investigation period. In addition, they carried out a further analysis of the prices based on the data provided by
the applicant in respect of the period from its financial year 1999/2000 to the investigation period. The results were comparable.
–       Findings of the Court
201   The assessment of the price levels of imports was, in this case, the main factor on which the finding of undercutting of Community
prices and thus of injury was based. The Community institutions analysed that indicator in recitals 58 to 64 of the contested
regulation on the basis of the Eurostat data and the figures provided by the applicant.
202   As regards the Eurostat data, the institutions concluded, primarily, that there was a significant price fall – 59% – between
2000 and the end of the investigation period. The applicant challenges the taking into account of the data for 2000, arguing
that imports were still negligible. That argument has already been examined and rejected in paragraphs 170 to 175 above.
203   Concerning the analysis of the figures provided by the applicant, it should be noted that that led to results very similar
to those based on the Eurostat data, that is to say a price fall of 54%. The applicant submits nevertheless that the presentation
of those figures is inaccurate.
204   The table in recital 62 of the contested regulation shows that the 54% relates to price development between the two financial
years of the applicant. Even if recital 63 is not sufficiently precise when it states that that percentage concerns development
between 2000 and the investigation period, that lack of precision is also not an error. The table preceding the recital in
question shows clearly that the development is that between the 2000 financial year and the investigation period. The applicant
has not therefore shown that the figures which it provided were presented inaccurately.
205   In addition, even if the data provided by the applicant relate to the period beginning on 1 April 1999, whereas the Eurostat
data concern the period commencing on 1 January 2000, that fact alone does not mean that the Council’s finding that the Eurostat
figures and those of the applicant show similar trends is inaccurate. The applicant does not state that the taking into account
of another starting date for its data could have resulted in different conclusions regarding import prices.
206   Consequently, the applicant has not shown that there is a factual error or a manifest error of assessment in respect of the
analysis of import prices.
207   The present complaint must therefore be rejected as unfounded.
Assessment of positive and negative trends (fourth complaint)
–       Arguments of the parties
208   The applicant claims that the Community institutions did not balance the positive and negative indicators of injury, in breach
of Article 8(2) and (5) of the basic regulation. The overall assessment set out in recitals 104 and 105 of the contested regulation
does not include all the positive and negative indicators. The Council found, in essence, that the undercutting of import
prices had an effect on the ability of the Community industry to raise capital, which was illustrated by the negative developments
in investment returns, profitability and cash flow. Thus, its overall assessment was based on a small number of closely related
indicators, to the exclusion of positive factors.
209   Although the period considered extended from 1998 to the investigation period, the institutions should have taken account
of the fact that imports prior to 2000 had been negligible. They did not explain why a number of positive trends between 2000
and the investigation period, namely the respective increases in Community production, Community industry sales volumes, its
market share and its productivity, and at the same time the reduction in production costs, were offset by negative trends.
210   The Council recalls that the injury investigation period started in 1998. Thus the trends cited by the applicant which relate
to the period after 2000 are of limited value. In addition, the Community institutions never denied the existence of positive
trends. Nevertheless, they cannot be counted against or offset by the negative trends, but must be assessed as a whole in
the circumstances of the case.
211   In the present case, the Community institutions’ finding of injury was based on factors associated with the industry’s ability
to raise capital. They took into account, first, the negative development of the Community industry in terms of prices, profitability
and cash-flow, involving a significant reduction in investments, and secondly, the fact that the industry had been prevented
from benefiting from its cost reductions. The positive, essentially growth-related, trends were considered less important
in the light of a strong increase in Community consumption. The increase in sales and the reduction in costs of the Community
industry were not sufficient to compensate for the price fall and thus lead to the positive development of its profitability.
The Community institutions were therefore justified in concluding that the positive trends were offset by the negative ones.
212   Weighing the various factors in that analysis falls within the discretion of the Community institutions, and the applicant
has not shown that there was a manifest error in that regard.
–       Findings of the Court
213   It is settled case-law that the injury investigation must relate a set of factors, any one of which cannot alone be the basis
for a conclusive decision. The positive development of a factor does not preclude a finding of significant injury, provided
that that finding is based on various factors which the basic regulation requires to be taken into consideration (see, to
that effect, Case T-51/96
Miwon
v
Council
[2000] ECR II-1841, paragraph 105 and the case-law cited).
214   In its conclusions on the injury caused in this case, in particular in recitals 103 to 105 of the contested regulation, the
Council took into consideration positive trends in the state of the Community industry. It also explained the reasons for
which other indicators, which developed negatively, nevertheless resulted in material injury.
215   The applicant has not cast doubt on any of the factual findings relating to that assessment or shown that there was a manifest
error in assessing the different factors of injury. Under this complaint it submits, however, that the Community institutions
did not correctly examine the different positive and negative indicators.
216   It should be observed in that respect that in a dispute concerning the overall assessment of injury an applicant cannot merely
propose its interpretation of the different economic factors but must state the reasons for which the Council should have
reached a different conclusion on injury on the basis of those factors (see, to that effect,
Miwon
v
Council
, paragraph 103).
217   In this case, although the applicant states that certain indicators relating to the state of the Community industry were positive,
inter alia the respective increases in production, sales volumes, market share and productivity of that industry, as well
as the reduction in production costs, that fact is not sufficient to show that the industry concerned did not suffer material
injury consisting in particular, according to the Council, in negative development in profitability and substantial financial
losses observed during the investigation period, resulting in a slowing down of investments.
218    The applicant does not pursue any argument which may show that the Council was wrong to conclude that the industry had suffered
the injury referred to in the above paragraph, in the light of the overall analysis of the relevant factors.
219   Further, as regards the applicant’s argument as to the starting date of the period considered, that has already been examined
and rejected in paragraphs 176 and 177 above.
220   Consequently, the present complaint, regarding the overall assessment of the indicators of injury, cannot be accepted.
221   The third plea must therefore be rejected as unfounded.

Fourth plea: manifest error of assessment in the application of Article 8(6) and (7) of the basic regulation with regard to
the analysis of the effects of imports from Taiwan
Arguments of the parties
222   The applicant states that in the contested regulation the Council examined whether the injury to the Community industry was
attributable to factors other than the Indian imports, in particular to the dumped imports from Taiwan in respect of which
a provisional anti-dumping duty was imposed in December 2001.
223   Before that duty was imposed, Taiwanese imports had a market share of 62% and their average price was considerably lower than
that of the Indian imports. During the investigation period, that 27.5% price difference was higher than the anti-dumping
duty imposed on the Taiwanese exporters, with the exception of Princo Corp and the non-cooperating exporters. The injury caused
during that period could not therefore be attributed to the Indian imports.
224   In order to dismiss the effects of the Taiwanese imports, the Council’s assessment could only have been based on an analysis
of the three-and-a-half-month period from the imposition of the provisional anti-dumping duty to the end of the investigation
period. However, the Council was unable to show that the Community industry had faced price pressure exerted by Indian imports
during that period. Between 2001 and the investigation period, Taiwanese imports lost 6% of the market, whereas the Community
and Indian producers and those of other third countries each gained 2%. During the investigation period the volume of Indian
imports increased by 16 187 000 units, in the region of 0.73% of market share. Those factors were not sufficient to support
the conclusion that the Indian imports could individually cause material injury.
225   Moreover, in the same period, the growth in imports from other third countries, namely Hong Kong, Switzerland and China, was
higher than in Indian imports, and the prices of those imports were lower than Indian prices.
226   The Council claims that a causal link between the imports at issue and the injury continues to exist even if those imports
are part of a wider set of factors, provided that those other factors do not break the causal link between those imports and
the injury.
227   In this case, the Council concluded that the injury caused by Taiwanese imports was not such as to break that causal link.
First of all, Indian producers gained a market share of more than 8% between 2000 and the investigation period, before the
anti-dumping measures in respect of Taiwan came into force. Secondly, after the imposition of the anti-dumping measures, Indian
producers could have taken over part of the market share lost by the Taiwanese exporters. Thirdly, the low prices of Indian
imports significantly undercut Community prices.
228   The applicant’s argument relies, wrongly, on splitting the investigation period into two parts – before and after the introduction
of an anti-dumping duty on Taiwan. Further, the applicant’s allegations in relation to the investigation stage following the
imposition of measures against Taiwan are irrelevant. The applicant claims that the effect of the Indian imports is confined
to a market share gain resulting from an increase in the volume of imports of 16 187 000 units and thus to a hypothetical
loss of that part of the market by the Community industry. However, the injury in the present case did not consist of a loss
of market share but of financial losses by the Community industry which affected its ability to invest. In that respect, the
undercutting of prices by Indian imports in the amount of 9% of the market had a significant effect on those financial losses.
229   As regards the applicant’s observations concerning imports from Hong Kong, Switzerland and China, the market share that they
represented was too small to influence Community prices.
Findings of the Court
230   Article 8(7) of the basic regulation provides for the obligation to examine known factors which are injuring the Community
industry at the same time as the subsidised imports. That examination must enable the possibility that the injury caused by
those other factors is attributable to the imports in question to be ruled out. Those factors include, inter alia, the volume
and prices of non-subsidised imports.
231   According to recital 116 of the contested regulation, in this case during the period considered the Community industry concerned
was faced with dumped imports from Taiwan which caused it material injury between 1997 and 2000. It was also possible that
the negative effects of those imports continued until the imposition of provisional measures in December 2001 by Commission
Regulation (EC) No 2479/2001 of 17 December 2001 imposing a provisional anti-dumping duty on imports of recordable compact
discs originating in Taiwan (OJ 2001 L 334, p. 8).
232   In the light of that known factor, the Community institutions were required, in determining the injury caused by the Indian
imports, to examine whether the effect of the Taiwanese imports was such as to break the causal link between the Indian imports
and the injury caused to the Community industry (see, to that effect, Case T-166/94
Koyo Seiko
v
Council
[1995] ECR II-2129, paragraph 81; Case T-97/95
Sinochem
v
Council
[1998] ECR II-85, paragraph 98; and Joined Cases T-33/98 and T-34/98
Petrotub and Republica
v
Council
[1999] ECR II-3837, paragraph 176).
233   It must be pointed out that the Council in fact examined the effects of the Taiwanese imports in recitals 116 to 118 of the
contested regulation and reached the conclusion that, although they influenced the Community market during the period considered,
that influence was nevertheless not such as to break the causal link.
234   The applicant complains that the Community institutions made a manifest error in connection with that analysis.
235   It must be observed, first of all, that in its arguments the applicant makes a distinction between the periods before and
after the imposition of provisional measures in respect of the Taiwanese imports, implying that the Community institutions
were required to examine the two periods separately. However, under Article 11(1) of the basic regulation the injury to be
determined is that suffered during the investigation period. Thus although the Council had to take into account the imposition
of provisional measures during the investigation period, which it did, in particular, in recitals 116 and 117 of the contested
regulation, its conclusions on injury and the causal link relate, with good reason, to the whole of that period.
236   Next, it is common ground that the Taiwanese imports may have contributed to the injury caused to the Community industry during
a part of the period considered. The applicant wrongly submits that that fact alone precludes the possibility that the Indian
imports also caused material injury in the same period.
237   According to case-law, it is possible to attribute to the imports considered responsibility for injury even if their effects
are merely part of more extensive injury attributable to other factors (see to that effect Joined Cases 277/85 and 300/85
Canon and Others
v
Council
[1988] ECR 5731, paragraph 62). The possibility that injury may be caused simultaneously by several factors, each of which
taken in isolation amounts to the cause of material injury, cannot therefore be excluded from the outset.
238   Accordingly, the presence of a significant external factor, such as the Taiwanese imports in this case, does not automatically
break the causal link between the imports in dispute and the injury caused to the Community industry. It should, however,
be examined whether the Community institutions were entitled to find that, despite that external factor, the subsidised imports
caused material injury.
239   In that regard, first, the applicant maintains that the Taiwanese imports had a market share of 62% and that their average
price was considerably lower than that of the Indian imports. In the light of the volume and price of those imports, no injury
was attributable to the Indian imports, since they had just 9% of the market and were priced at a considerably higher level.
240   First of all, assuming that the applicant is thus touching on the fact that it was forced to align its prices with those of
the dumped Taiwanese imports, that fact does not preclude the possibility that its imports caused material injury to the Community
industry.
241   Secondly, the applicant does not deny that the Indian imports had a significant market share, that their prices were lower
than Community prices and that they competed with the Taiwanese producers. In the light of those circumstances, its contention
that the Taiwanese imports, which were much greater and made at lower prices, ruled out any possibility of undercutting on
its part is unfounded. It cannot be ruled out at the outset that material injury involving losses caused by undercutting of
Community prices is the result of imports from various countries, each of which may have a different effect.
242   Finally, the Community institutions explained the reasons for which the presence of the Taiwanese imports, even at very low
prices and in large volumes, did not rule out the possibility that the Indian imports taken in isolation exerted pressure
on Community prices. According to recital 117 of the contested regulation, Indian imports were able not only to face up to
the Taiwanese competition but also to gain more than 8% market share between 2000 and the investigation period and to take
over part of the market share lost by Taiwanese exporters between 2001 and the investigation period. Those considerations,
which are not disputed by the applicant, enabled the Council correctly to conclude in the same recital that the low prices
of Indian imports had a significant influence on Community prices.
243   Consequently, the applicant is wrong to maintain that, in the light of the volumes and prices of the Taiwanese imports, no
injury was attributable to its imports.
244   Secondly, the applicant states that the fact that the Indian imports were able to gain, at the same time as Community production,
part of the market lost by Taiwanese exporters following the imposition of the provisional measures does not suffice to conclude
that they had a significant influence on the Community market.
245   It should be pointed out in that regard that the Council’s findings, set out in recital 117 of the contested regulation, are
not based only on the consideration that the Indian imports were able to take over part of the market share lost by Taiwanese
exporters, but also on the fact that they were able, faced with Taiwanese competition, to gain a significant part of the Community
market and that their low prices affected Community prices.
246   The fact that other participants in the market, including the Community producers, also took over part of the market lost
by Taiwanese exporters cannot call in question the Council’s conclusion that the Indian imports taken in isolation caused
material injury to Community producers during the investigation period.
247   In the light of all those considerations, the applicant has not shown that the Community institutions made a manifest error
of assessment by finding that the imports originating in Taiwan were not such as to break the causal link in this case.
248   The applicant also observes that the cumulative increase in imports from Hong Kong, Switzerland and China was higher, and
that those imports were priced at a lower level than Indian imports.
249   In that regard, the Council’s conclusions are not based only on the consideration that the Indian imports were able to take
over significant market share lost by Taiwanese exporters. In any event, the applicant accepts that the share taken over by
the Indian imports was comparable to that gained, respectively, by Community producers and all the producers from other third
countries.
250   In addition, although the applicant’s observation must be interpreted as meaning that the institutions did not examine sufficiently
the effects of the imports from Hong Kong, Switzerland and China, that contention likewise cannot succeed. According to recital
121 of the contested regulation, not challenged by the applicant, the volume of imports originating in India was five to six
times larger than the volume of imports from each of the three countries in question, which individually held a market share
of 2% during the investigation period, whereas the share held by the Indian producer was 9%. The Council was therefore able
in any event to take the view that the imports from those third countries were not significant enough to break the causal
link in this case.
251   Consequently, the fourth plea cannot be accepted.

The fifth plea: infringement of Article 8(6) and (7) of the basic regulation with regard to the analysis of the effects of
anti-competitive behaviour by a patent holder
Arguments of the parties
252   The applicant states that, in the context of the administrative procedure, the Community industry claimed that a holder of
CD-R patents was abusing its dominant position by charging excessively high royalties. By dismissing that allegation in recital
135 of the contested regulation solely on the ground that it had not been confirmed by a formal decision of the competition
authorities, the Community institutions infringed Article 8(6) and (7) of the basic regulation, as interpreted in Case C-358/89
Extramet Industrie
v
Council
[1992] ECR I-3813 and Case T-58/99
Mukand and Others
v
Council
[2001] ECR II-2521.
253   The Commission was aware of that allegation of abuse of a dominant position since, as is apparent from its press release of
3 August 2003, at the time of adoption of the contested regulation the investigation in relation to that infringement of the
competition rules was in its final stages.
254   As to the assessment of the effects of royalties in recital 134 of the contested regulation, it is not sufficient to dismiss
the effects of the alleged abuse of dominant position or, in particular, the effects of excessive royalties. First of all,
the possibility that the Indian exporter may also have suffered injury as a result of excessive royalties is not relevant
to the assessment of the injury suffered by the Community industry. Secondly, although the Community industry’s profitability
was at its highest in 1999, at the time when the royalties already applied, that does not preclude those royalties from having
contributed to the injury during the investigation period. Thirdly, the Council’s observation that downward pressure on prices
prevented the Community industry from passing on royalties to consumers is irrelevant. The Community institutions should have
examined whether in the absence of excessive royalties the Community industry would still have suffered injury. Further, if
the Community industry’s costs were artificially high due to the excessive royalties, the analysis of price undercutting in
the present case is not accurate.
255   The Council contends that it examined in detail the impact of the royalties and thus the alleged anti-competitive behaviour
in recitals 134 and 135 of the contested regulation, even though that behaviour was never confirmed. The applicant’s allegation
that the Council dismissed that point because of the absence of a formal decision is therefore based on a misreading of the
contested regulation.
256   The allegations of anti-competitive behaviour concerned the pricing of royalties. In that respect, since the royalties were
paid by both Community and Indian producers, their payment cannot be the reason for the difference in price. Moreover the
Community industry had to pay the royalties in 1999, the year in which its profitability was at its highest, as well as in
2000 and during the investigation period, when its profitability was negative. Thus, contrary to the applicant’s claims, the
question whether the Community industry suffered injury owing to the allegedly excessive royalties is irrelevant to the assessment
of the causal link in the present case, since a single cost factor, which is the same for all participants in the market,
cannot have broken the causal link. Nevertheless, the Council explained in recital 135 that the allegation of anti-competitive
behaviour had not been confirmed by any formal decision.
257   The Council notes that the circumstances of the case are different from those in
Mukand
v
Council
, cited above. The facts relating to the behaviour in question here have never been established, there is no automatic link
between the behaviour alleged and the prices of the product at issue, and the exporter concerned is also affected by that
behaviour.
258   As regards the Commission’s press release which is annexed to the reply, the Council points out that the applicant has not
explained why it was not produced with the application in accordance with Article 48(1) of the Rules of Procedure of the Court
of First Instance. Furthermore, that press release mentions pre-recorded CDs, not CD-Rs, and indeed concerns neither abuse
of a dominant position nor the payments of excessive royalties alleged by the applicant.
259   CECMA argues that the institutions are not required to examine the allegation in question pursuant to Article 8(7) of the
basic regulation. First, the alleged behaviour affects Community producers and producers worldwide in the same way. It is
not therefore capable of affecting competition between third-country and Community producers. Secondly, the alleged anti-competitive
behaviour is not a known factor.
Findings of the Court
260   It is settled case-law that in determining injury, the Community institutions are under an obligation to consider whether
the injury on which they intend to base their conclusions actually derives from dumped imports and must disregard any injury
deriving from other factors, particularly from anti-competitive behaviour involving Community producers themselves (
Extramet Industrie
v
Council
, paragraph 16, and
Mukand
v
Council
, paragraphs 39 and 40).
261   In this case, according to the case-file the Community industry making the allegation stated, in a submission of 7 January
2003, that a company holding CD-R patents was abusing its dominant position by charging excessively high royalties and that
a European producer had withdrawn from the market following a dispute with that company. The industry made that observation
to counter the applicant’s allegation that the degree of support for the complaint within the meaning of Article 10(8) of
the basic regulation had fallen below the threshold required to proceed with the case. The applicant made the same observation
during the investigation, claiming that the effects of the alleged anti-competitive behaviour, involving the excessive pricing
of royalties, was a factor to be examined in the determination of the injury.
262   Under the present plea, the applicant submits that the Council failed to examine that factor, simply stating in recital 135
of the contested regulation that the allegation in question had not been confirmed by any formal decision further to an investigation
led by the competition authorities.
263   It should be pointed out in that respect that it is not apparent from recital 135 of the contested regulation that the Community
institutions in fact examined the question whether the injury on which they base their conclusions derived from the anti-competitive
behaviour alleged.
264   Although that recital does not suffice to dismiss the effects of the factor pleaded by the applicant, it should be pointed
out that the question whether the Council failed to take into account those effects must nevertheless be considered by reference
to the whole of the reasoning adopted in the contested regulation (see, to that effect,
Koyo Seiko
v
Council
, paragraph 79).
265   The Council contends that it took that factor into account in recital 134 of the contested regulation. It is apparent from
that recital that the Council examined in general the effects of royalty payments in respect of patents, finding that that
factor was not such as to break the causal link in this case. The Council contends that by making that finding it also dealt
with the allegation that those royalties were excessive and constituted anti-competitive conduct.
266   In that respect, although recitals 134 and 135 appear under different subheadings, namely ‘Royalties’ and ‘Other factors’,
the arguments of the parties show that nevertheless they both concern the same material in the file relating to the payment
of royalties. Moreover, those two recitals follow each other, so that the structure of the contested regulation demands they
be read in conjunction.
267   Account should therefore be taken of the findings made in recital 134 to examine whether the Council disregarded any injury
resulting from the anti-competitive behaviour pleaded by the applicant.
268   First, the applicant disputes the relevance of those findings, claiming that the institutions should have assessed the effects
of the royalties specifically and thus should have concluded that even in the absence of excessive royalties the Community
industry would have suffered injury.
269   In that regard, in order to disregard the effects resulting from an external factor, the Community institutions are required
to examine whether those effects were such as to break the causal link between the imports at issue and the injury caused
to the Community industry (see paragraph 232 above). That examination does not necessarily entail a determination of the precise
effects of the factor at issue. It suffices for the Community institutions to find that, despite such an external factor,
the injury caused by the imports in question was material.
270   In this case, the Council maintained that the Indian imports had caused material injury to the Community industry, resulting
in particular in undercutting of Community prices. It explained that, even if the royalties had had a negative influence on
the profits of the Community industry, that factor, which affected all the producers on the market, was already present in
1999, before the imports became significant. The negative development in the situation of Community producers from 1999 was
not therefore attributable to that factor. In the light of those elements, it was not unreasonable for the Council to take
the view that the payment of royalties could not have had an effect on the injury caused by the subsidised imports.
271   The Council rightly states that the examination of the question whether the royalties were excessive owing to anti-competitive
behaviour on the part of a patent holder cannot, in any event, call in question its conclusion referred to in the preceding
paragraph.
272   It should also be observed that, unlike the situations obtaining in the cases giving rise to the judgments in
Extramet
and
Mukand
, the anti-competitive practice alleged is not attributable to the behaviour of Community producers. In order to assess the
effects of that factor in this case, the Community institutions were not therefore required to examine whether or not the
Community industry had itself contributed to the injury suffered.
273   Secondly, the applicant submits, in reliance on
Mukand
, cited above, that the injury determined by the undercutting of prices was not accurately assessed if Community prices were
artificially high due to the excessive royalties.
274   The facts of the case which gave rise to the judgment in
Mukand
concerned conduct affecting Community prices, not import prices. In this case, the Council found that the royalties in question
had to be paid by all producers, including the applicant. The applicant did not dispute that fact.
275   Accordingly, the Council was able to take the view in recital 134 of the contested regulation that the external factor at
issue could not explain the difference between the Community prices and the Indian prices and that it therefore had no bearing
on the factors taken into account to calculate the level of undercutting. Even if the royalties were excessive owing to anti-competitive
behaviour, that factor cannot affect that assessment.
276   In the light of those factors, the view must be taken that the applicant has not shown that, in the determination of injury,
the Council failed to disregard the effects resulting from alleged anti-competitive behaviour.
277   In those circumstances, it is not necessary to rule on the admissibility of the factual evidence put forward by the applicant
in its reply, namely the Commission’s press release of 3 August 2003 referring to an investigation on the application of Articles
81 EC and 82 EC to a standard agreement concerning patents for certain types of CD. It is apparent from the applicant’s arguments
that that element was put forward to substantiate its contention that the factor in question was known to the Community institutions.
On the other hand, it did not explain how that press release could support the argument that that factor was such as to break
the causal link in this case.
278   Accordingly, the fifth plea cannot be accepted.
279   It follows from all the foregoing that the action must be dismissed in its entirety. Consequently, there is no need to rule
on the Council’s alternative claims.

Costs
280   Under Article 87(2) of the Rules of Procedure of the Court of First Instance, 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 pay the costs incurred by the defendant in accordance with the form of order sought by the latter.
281   The Commission shall bear its own costs pursuant to Article 87(4) of those Rules of Procedure.
282   Under the third subparagraph of Article 87(4) of the Rules of Procedure, the Court may order an intervener other than the
Member States and the institutions to bear its own costs. In the circumstances of this case, and in particular in view of
the fact that the observations of CECMA, which intervened in its capacity of an association defending the interests of the
Community industry concerned, did not add anything decisive to the Council’s arguments, the Court deems it fair that the latter
bear its own costs.
On those grounds,
THE COURT OF FIRST INSTANCE (Fourth Chamber)
hereby:
1.
Dismisses the action;
2.
Orders the applicant to bear its own costs and to pay those incurred by the defendant;
3.
Orders the interveners to bear their own costs.
Legal
Lindh
Vadapalas
Delivered in open court in Luxembourg on 4 October 2006.
E. Coulon

H. Legal
Registrar

President
Table of contents
Relevant provisions
Background to the dispute
Procedure and forms of order sought
Law
First plea: infringement of Articles 5, 7(3) and 11(1) of the basic regulation and manifest error in assessment of the normal
depreciation period of the assets
Introductory observations
Assessment of the factors relating to the depreciation period (first limb)
– Arguments of the parties
– Findings of the Court
Classification of the assets as moulds and failure to take account of the information in the applicant’s accounting records
(first and second complaints of the second limb)
– Arguments of the parties
– Findings of the Court
Taking into account the applicant’s profitability and investments (third complaint of the second limb)
– Arguments of the parties
– Findings of the Court
Use of the declining balance depreciation method (fourth complaint of the second limb)
– Arguments of the parties
– Findings of the Court
Allegedly arbitrary nature of the calculations (fifth complaint of the second limb)
– Arguments of the parties
– Findings of the Court
Second plea: infringement of the rights of the defence and failure to state reasons in relation to the determination of the
normal depreciation period for the assets
Arguments of the parties
Findings of the Court
Third plea: manifest error of assessment and infringement of Article 8(2) and (6) of the basic regulation with regard to the
analysis of the factors relating to the determination of injury and the causal link
Introductory observations
Method used to compare economic trends (first complaint)
– Arguments of the parties
– Findings of the Court
Assessment of stock levels (second complaint)
– Arguments of the parties
– Findings of the Court
Assessment of import prices (third complaint)
– Arguments of the parties
– Findings of the Court
Assessment of positive and negative trends (fourth complaint)
– Arguments of the parties
– Findings of the Court
Fourth plea: manifest error of assessment in the application of Article 8(6) and (7) of the basic regulation with regard to
the analysis of the effects of imports from Taiwan
Arguments of the parties
Findings of the Court
The fifth plea: infringement of Article 8(6) and (7) of the basic regulation with regard to the analysis of the effects of
anti-competitive behaviour by a patent holder
Arguments of the parties
Findings of the Court
Costs
*
Language of the case: English.