Slip Opinion 01-154 UNITED STATES COURT OF I NTERNATIONAL

TRADE

__________________________________________ : NIPPON STEEL CORPORATION, : NKK CORPORATION, : KAWASAKI STEEL

CORPORATION : and : TOYO KOHAN CO., LTD., : : Plaintiff s, :

: v. : Court No. 00-09-00479 : UNI TED STATE S, : Public Version : Defend ant, :

: WEIRTON STEEL CORPORATION, : : Defendant-Inte

rvenor. : __________________________________________: [ITC injury

determination remanded.] Dated: December 31, 2001 Willkie Farr & Gallagher ( William H. Barringer ; James P. Durling ; Daniel L. Porter ; Sean M. Thornton ; Karl von

Shriltz ) for plaintiffs. Ly n M. Schlitt , Office of General Counsel, James M. Ly ons , Deputy

Genera l Counsel, U .S. International Trade

Commission ( Laurent deWinter ), for de fendant

. Schagr in Associa

tes ( Roger B . Schag

rin ), for defendant-intervenor.

OPINION RESTANI, Judge: Ni pp on St ee l C or po ra ti on , N KK Co rp or at io n, Ka wa sa ki St ee l C or po ra ti on , a nd To yo Kohan Co., Ltd., (collectively “Nippon” or “Plaintiffs”), respondents in the underly ing investigation, move for judgment upon the age ncy rec ord pursuant to USCIT Rule 56.2. At issueC OURT N O
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1 The Depa

rtment of Commerce

(“Commer

ce”) de fined the

imported merchan

dise withi n the scope of the investigation gener ally as “tin mill flat rolled products that ar e coated or plated with tin, chromium or chromium oxides.” Tin- and Chromium-Coated Steel from Japan , 65 Fed. Reg. 39,364, 39,365 (Dep’t Comm. 2000) (final determ.). is the final determination of the Interna tional Trade Commission (the “Commission”) in Tin- and Chromium-Coated Steel Sheet From Japan , 65 Fed. Reg. 50005, USI TC Pub. 3300, Inv. No.
731-TA- 860 (fina

l determ. ) (Aug . 2000) (hereinafter “F inal Dete rmination ”). Nipp on first contests the Commission’s final affirmative material injury determination in the Tin- and Chromium-Coated Steel Sheet (TCCSS) investigation on the grounds that political interference with the Commission’s deliberations violated Plaintiff’s right to procedural due process. Second, Nippon challenges the Commission’s use of agg regated data in making its injury determination, and contends that its findings with respect to the effects of subjec t import volume and prices are not supported by substantial evidence . Third, Nippon argues that the Commission did not ad eq ua te ly a ss es s a lt er na ti ve ca us es of ma te ri al in

ju ry.

JURISDIC TION AND STA NDARD OF

REVIEW The Court

has jurisd

iction pursuant to 28 U.S.C. § 158 1 (c) (1 994). The court wil l uphold the Commission’s determination in antidumping investigations unless it is “unsupported by substantial evidence

in the administrative record or is otherwise not in accordanc e with law.” 19 U.S.C. § 1516(a)(2)(B)(i).

FACTUAL AND PROCEDURAL BACK GROUND The Commiss ion initiat

ed an an tidumping

investig ation of T CCSS imports 1 pursuant to aC OURT N O
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2 Non-petitioners include the following producers: Be thlehem Steel Corp., LTV Steel Co., National Steel Corp., USS Posco Industries Inc ., Ohio Coatings Co., and U.S. Steel Group. petition filed in November 1999 by Weirton Steel Corpora tion (“Weirton”) and two labor unions. None of the other six U.S. producers of TCCSS joined the petition, but all participated in the investigation. 2 See Final Staff Report at III-1, C.R. Doc. 145, App. Tab 1. The Commission held a hearing on November 18, 1999, at whic h it heard testimony from the pa rties and industry representatives. Prelim. Hr’g Tr. at 72-83, 87-98, P.R. Doc. 18, App. Tab 3. In December

1999, the Commission issued an affirmative preliminary determination of material injury. See Tin- and Chromium-Coated Steel Sheet From Japan , 64 Fed. Reg. 71497, USITC Pub. 3264, Inv. No. 731- TA-860 (Dec. 1999) at 13-14 (Preliminary Determination). On June 29, 200 0, the Commi ssion held a public hearing

at which f

our of the large st TCCSS purchas ers in the

U.S. mark

et testif ied, as di d seven Me

mbers of Congre ss, includ

ing U.S.
Senat or Jo hn D. R ockefe ller IV. Tin- a nd Ch romiu m-Co ated S teel S heet fr om J apan: Hearin gs before the United States Inte rnational Trade Commission 44-54 (June 29, 2000) (hereinafter “Hr’g Tr.”). In June

2000, the Department of Commerce is sued fina l antidumpi

ng duty margins as follows: 95.29 percent for Kawa saki, 95.29 percent for Nippon, 95.29 percent for Toyo Kohan and 32.52 pe rcent for all others. See 65 Fed. Reg. 39,364 (Dep’t Comm. June 26, 2000). In August 2000, the Commission, in a 4-2 vote, determined that Japanese imports of
TCCSS were

being so ld at less t

han fair value (“ LTF V”) and , as a re sult, wer e both mat

erially injuring and threatening further ma terial injury to an industry in the United States. See Final Determination at 1. In evalua ting the relevant factors, the Commission first concluded thatC OURT N O
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Japanese import prices “depressed and suppressed domestic [produce rs’] prices to a significant degree.” Id. at 27. This conclusion rested principally on several factual findings reg arding, inter alia , (1) the existence of “underselling” by Japanese suppliers; (2) the industry pr actice of establishing prices via negotiations for annual r equirements contracts; (3) the relative importance of non-price factors; and (4) alleg ations of lost sales and lost revenue because of subject imports. Second, the Commission concluded that the volume of subject imports grew rapidly over the period of investigations. Id. at 12. Fin ally , the Commis sion conc luded tha t the dome stic industry ’s financial per

formanc e was poor throug hout the pe

riod of in vestiga tion, with t

he worst results coinciding with the largest increa se in imports during the first three quarters of 1999. Id.
at 25. Nippon appeals the Commission’s final determination of material injury , claiming that Senator Rockefeller’s testimony appeared to and did impermissibly influence the Commission’s final determination. Nippon also contests the Commission’s findings with respect to volume,
pr ic e e ff ec ts , a nd ov er al l c au sa ti on of in ju ry.

DISCUSSION I. Congressional Interference
During the final phase of the investigation, Senator Rockefeller testified before the I TC Commissioners at a public hearing on June 29, 2000. After expressing his view on the state of the domestic industry, Senator Rockef eller related his perceptions reg arding the legislative intentC OURT N O
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3 Defendant argues that Nippon fa iled to exhaust its remedies before the Commission by not objecting to Senator Rockefeller’s testimony during the administrative proceedings. Section 2637(d) o f Title 28 of the Un ited State s code dir

ects tha t “the Cour

t of I nternat ional Tra de shall, where a ppropria te, requ ire the exhaustion of

administr

ative re medies.” “By its use of t

he phras e ‘where appropriate,’ Congr ess vested discretion with the court to determine the circumstances under which it shall require the exhaustion of administrative remedies.” FAG Kugelfischer Georg Schafer AG v. United States , 131 F. Su pp. 2d 104, 113 (2001 ); see also Cemex, S.A. v. United States , 133 F.3d 897, 905 (Ct. Int’l Trade 1998). “ [T]he Court has exercised its discretion to obviate exhaustion where requiring it would be futile, see Rhone Poulenc, S.A. v. United States , 7 CIT 133, 135, 583 F. Supp. 607, 610 (1984), or the question is one of law a nd does not require further factual deve lopment and, therefore, the court does not invade the provinc e of the agency .” Id. ; see also R.R. Yard masters o f Americ a v. Har ris , 721 F.2d

1332, 1337 -39 (D.C. Circ. 1983). Whether a Member of Congress impermissibly interfered with an antidumping investigation based on participation in a hearing is a que stion of law, requiring no further factua l findings bey

ond what is already

on the record, including the hearing transcript. Further, the usefulness of an objection to the testimony a fter the fact is doubtful. Therefore, we reach Nippon’s argume nts. behind the addition of the requirement that the Commission analy ze “conditions of competition” under 19 U.S.C. § 1677 (7)(C). Senator Rockefeller stated: From what I understa

nd, what is occurring here at the Commission is that lawy ers and economists representing foreign c ompetition or U.S. buyers, who can’ t argue about the numbers that your staff

has gathered, are spending their time before the Commission arguing about conditions of competition and taking the f ocus away

from the statute, which is called the law insofar as I ’m aware. I f ind this deeply disturbing, and I hope, perhaps vainly, tha

t the Commission will seriously reconsider the matter. Ther e should be no need for Congressional action. Hr’g Tr. at 50-51 , P.R. Doc. 74, App. Tab 4. Nippon claims that Senator Rocke feller’s reference to “Congressional action” constituted an impermissible “threat” to re duce Congressional appropriations to a subdivision of the ITC. Nippon arg ues that its due process rights were violated because this alleg ed threa

t not only had the f atal app earanc e of par

tiality but also actually interfe red with t he I TC’s dec ision-mak

ing proc ess. 3C OURT N O
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4 The court does not read Pesquera Mares Australes L tda. v. United States , 266 F.3d 1372, 1379 -82 (Fe d. Cir. 200 1) (find ing unfa ir trade procee dings akin to final adjudications for purposes of defe rence t o statutor y in terpretation) to

chang e this bas ic fact. For examp le, basic core findings must be made without regar d to the claims of the parties, ex parte factual submissions are permitted, there is no administrative law judge, and there is no for mal record prior to the final determination.

5 Presumab ly, Members

of Congr ess know s omething

about the state of i ndustrie s within their districts or states. It is less likely that individual Members of Congress can provide meaningful post-enactment legislative history , but they are not f

orbidden from opining thereon. An ti du mp in g p ro ce ed in gs ar e n ot ad ju di ca to ry b ut in ve st ig at or y. 4 See NEC Corp. v. United States , 21 CIT 933, 948-49 (1997) (citing H .R. Rep. No. 96-317, at 77 (1979); S. Rep. No. 96-249, at 100 (1979), reprinte d in 1979 U.S.C.C.A.N. 381, 486, and Budd Co. v. United
States , 1 CIT 67, 72, 507 F. Supp. 997, 1001 (1980)), aff’d , 151 F.3d 1361 (1998). The test for improper interfe rence i n an admin

istrative procee ding tha

t is neithe r judicia l nor quas i-judicia

l is “whether the Congressional action actua lly affec ted the decision.” Peter Kiewit Sons’ Co. v. U.S. Army Corps. of Engineers , 714 F .2d 16 3, 169 (D.C. Cir. 1983) (citi ng D.C. Federation of Civic Associations v. Volpe , 459 F.2d 1231, 1246-47 (D.C. Cir. 1971), cert. denied , 405 U.S. 1030 (1972)). Thus, Nippon’s assertion that Senator Rockefeller’s stateme nt gives the “appearance of impropriety ” misstates the applicable standard. Even if a more stringent standard applies, Nippon’s c laim fails. First, there is no prohibition against Members of Congress testify ing at public hearings before the Commission. 5 Second, the Senator’s statement that “there should be no need for Congressional action” does not appear to be a “threat” to reduc e appropriations to the Commission or any subdivision thereof. Senator Rockefeller is not on the appropriations committee and there is no evide nce that he was behind the proposal to reduce appropriations for the Off ice of Economics at the Inte rnationalC OURT N O
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6 Senator Rockefeller had stated that the legislative intent in adding the requirement that the I TC evalua

te “cond itions of c ompetition

” was, in his words, “to make

clear that even i

n situations where the unfair trading occurr ed during an upward phase of the de mand cycle , material injury by

law now could nevertheless be caused by unfair imports.” Hr’g Tr. at 49. Accordingly , he concluded, “[i]n the context of business cycles a nd conditions of competition, the Commission should not flip, but has, our intent around and make negative decisions based on your analy

sis of conditions of competition.” Id. at 50. Trade Commission. Indeed, the context of Senator Rockef eller’s comment strongly

suggests that he was indicating his view that it should be unnecessary for Congress to have to revise the statute. His testimony centers on his perc eption that the Commission was misinterpreting the purpose of the statutory r equirement that the Commission evaluate “conditions of competition.” 6
Ir resp ecti ve of whet her S enat or Roc kefe ller ’s int

erpr etat ion of the st atutory mandate t

o ana ly ze “conditions of competition” is accurate, the Commission is presumed to apply the law properly

. NEC Corp. , at 13 72 (qu otin g Parsons v. United States , 670 F.2d 164, 166 ( Ct. Cl. 1982) ) (“I t is

we ll es ta bl is he d t ha t t he re is a p re su mp ti on th at pu bl ic of fi ce rs pe rf

or m t he ir du ti es co rr ec tl y, fairly, in g ood faith, and in accordance with law and governing regulations, and the burde n is on the Plaintiff to prove otherwise.”). Third, there is nothing in the record to support a finding that Senator Rockefeller’s testimony affected the Commission’s decision-making at all. The Commission’s determination is considered and replete with citation to and analysis of the factual findings in the Staff Report. Accordingly , Nippon fails to establish that Senator Rockefeller’s testimony improperly

affected the Commission’s decision, or that it gives an appear ance of partiality by

the Commission.C OURT N O
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II. Material Injury To deter mine whet

her the s ubject imp orts have

caused m

aterial injury to a domes tic industry, the Commission is required to consider three f actors: (1) the volume of the subject imports; (2) the effect of the subject imports on prices of domestic like products; and ( 3) the impact of the subject imports on domestic producers of like products. See 19 U.S.C. § 1677(7)(B). Nippon disputes the Commission’s findings with respect to volume and price effects. Although Nippon does not directly challenge the Commission’s findings rega rding the impact on the domestic industry, Nippon does dispute the Commission’s overall conclusion that material injury wa s “by rea son of” subject imports. See 19 U.S.C. § 1673d(b).
A. Vol ume Under 19 U.S.C. § 1677(7)(c)(1), the Commission shall consider “whether the volume of imports of

the merc handise, or any

increa se in that volume, ei ther in a bsolute te rms or re lative to production or consumption in the United States, is significant.” “It is the significanc e of a quantity of imports, and not absolute volume alone, that must g uide ITC’s analy

sis under section 1677(7).” USX Corp. v. United States , 11 CI T 82, 85, 65 5 F. Supp. 487, 490 ( 1987); see also Atlantic Sugar, Ltd. v. United States , 2 CIT 18, 23, 519 F. Supp. 916, 921-22 (1981). There is no minimum rate of increase in subject import volume or a baseline perce ntage of market share for subject imports, above which volume will be considered “significant.” Congress has specified that “for one industry , an apparently small volume of imports may have a sig nificant impact on the market; for another the same volume might not be sig nificant.” H.R. Rep. 317, 96th Cong.,
1st Sess. 46

(1979); see also

S. Rep. No. 96-249, 96th Cong., 1st Sess. at 88 (“The significanceC OURT N O
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7 Relative to consumption of TCCSS in the United States, the market share of subject imports in t

erms of q uantity was [ ] perc ent in 1997 ; [ ] percen t in 1998; [ ] pe

rcent in 1999; and [ ] percent in the first quarter of 2000. Final Determination at 12-13 (c iting Staff Report at Table IV-4) . The market share held by the domestic industry in terms of quantity was as fo llows : [ ] per

cent in 199 7; [ ] pe

rcen t in 19 98; [ ] p erce

nt in 1 999; a

nd [ ] percent in the first quarter of 2000. of the various factors affecting an industry will depend upon the fa cts of each particular case.” ). Thus, for the Commission’s findings under section 1677(7)(C)(1) to be supported by substantial evidence, the Commission must analyze the volume and mar ket share data in the context of condition s of compe

tition. This

is espec ially

crucia l where, as here , subject

imports re

present a

sm al l p er ce nt ag e o f m ar ke t s ha re re la ti ve to th at he ld by t he do me st ic in du st ry. 7 1. Domestic Market Share and Apparent Dom estic Consumption In de termining the sign ificanc e of subje ct import volume, the Commission mu st assess the extent to which, if at all, subject imports “captured” market share fr om the domestic industry over the POI. T his inquiry

typ ically entails a ccountin g for a n increa se or dec

rease i n domestic producer’s market share and in domestic consumption overa ll. See , e.g. , Taiwan Semiconductor Indus. Ass’n v. United States , 118 F. Supp. 2d 1250, 1258 (Ct. Int’l Trade 2000) (sustaining Commission’s negative material injury determination based on a finding that volume lacked significance in relative terms where there was a “substantial increase in U.S. appar ent consumpti on” and there wa s a gre ater mar ket shar e held by non-subje ct imports ). For the volume of subject imports to

be consid

ered sig nifican t, there is no requ

irement t hat subje ct imports account for all

of the decline in domestic industry’ s market share. It is sufficie nt that the Commission point to evidence showing that subject imports captured a substantial portion of market share from the domestic industry

.C OURT N O
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8 The quantity of imports of the subject merchandise from Japan was 181,287 short tons in 1997; 245 ,872 shor

t tons in 199 8; 336,961 short tons in 1999; an

d 98,854 short tons in t

he first quarter of 2000. Staff Report at Table I V-4.

9 The Commiss ion found t hat rela tive to consumption o f TCCSS in the United Sta

tes, “the quantity of imports of the subjec t merchandise increased by [ ] percentage points between 1997 a nd 199 8; by [ ] percen tage po ints betwe en 199 8 and 1 999; and was [ ] p ercent age points higher in the first quarter of 2000 than in the first quarter of 1999.” The Commission calculated that “the quantity of subject imports, relative to consumption of TCCSS in the United States inc reased by [ ] pe

rcenta ge poin ts betwee n 1997 and

1999, and

continue d to incre ase rapidly throug

h the first quarter of 2000.” Final Determination at 13.

10 The Final Determination relied on Table I V-4 of the Staff Report, which shows that the market share (in

terms of v alue) he ld by

the domes tic industr

y w as as fol lows: [ ] perc ent in 1997; [ ] percent in 1998; [ ] percent in 1999; and [ ] percent in the first quarter of 2000; see also

Staff Repor t at Ta ble I V-3 ( indic ating

total U.S. c onsum

ption in 199 7 as [ 4,005 ,513 ] shor

t tons ; in 19 98 as[ ]; and in 199 9 as [ ], a net decl ine o f [ ] short tons ). The c ourt note s that the C ommission’ s finding of a net d

ecline in total app arent U. S. consumption differs somewhat from the character ization found in the Staff Report. See Staff Report at IV-4 (“[t]otal U.S. consumption of TCCSS remained relatively stable during the period

(continued...) Here, the Commission found that, in absolute terms, tons imported from Japan increased by 8 5.9 perc ent betwe en 1997 a nd 1999 an

d “contin ued to increase r

apidly through the first quarter of 2000.” Final Determination at 12. 8 The Commission calculated that “the quantity of subject imports increased by 35.6 percent between 1997 and 1998; by 37.0 percent between 1998 and 1999; and was 8.1 percent higher in the f irst quarter of 2000 than in the first quarter of
1999.” F inal Dete

rmination at 12. Af

ter appa rently deeming these ab solute inc

reases in volume facially sig

nificant, the Commission determined that because the increase in volume of subject imports took place over a period of declining domestic consumption, the incre ase in market share of subject imports ov er the PO I wa s also sig nifican t. 9 The record reflects that the domestic produc ers’ market share did in fact decline ove r the POI, a s did domes tic consu mption ove

rall. 10 Nippon does not dispute these facts. The recordC OURT N O
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10 (...continued) examined”). Even if consumption is more properly characterized as remaining “ stable” over the POI, t his does no t detract from the substantia

lity of the Comm

ission’s f indings. Total U.S. consumpti on need not in all ca ses be in d ecline f or an increase i

n the volume of subje ct imports to be significant. As the ultimate determination to be made is whether subject imports displace d domestic product, there is nothing to support the proposition that subject import volume cannot be considered significant where U .S. consumption is stable or even increasing, depending on other market indicators that speak to such displacement. For e xample, in Companhia Paulista de Ferro-Lig as v. United States , 20 CIT 473, 476-77 (1996) , the court sustained the Commission’s affirmative material injury determination where volume of subject imports rose by over 200 pe rc en t a nd th e i mp or te rs ’ s ha re of do me st ic co ns um pt io n i nc re as ed su bs ta nt ia ll y, notwithstanding evidence of stable or increasing domestic market share.

11 The market share of domestic producers de creased by 7.7 percentage points over the PO I. Mark

et sha re of subje ct imp orts i

n ter ms of v alue

are a s foll ows: [] (199 7); [ ] (1998 ); [ ] (1999 ); [ ] (firs t quar ter of 2000) , an ov erall increa se of 5 percen tage point s. I n com pari son, n on-subje ct ma

rket shar e in te rms of valu e are as fo llows : [ ] (1997); [ ] ( 1998); [ ] (19 99); and [ ] ( first qua rter of 2 000), an

overall increase of 2.7 percentag e points. See Staff Report at Table IV- 4. shows tha t the amou

nt by which domestic pro ducers l ost marke t share o ver the PO I is significantly hig

her than the overall increase in non-subject import marke t share. 11 Thus, the

re is substantial evidence to support the conclusion that Japanese imports displaced a significant portion of the domestic industry’s dec lining market share. 2. Regional Concentration of Competition Notwithstanding evidence of the concurre nt decline in domestic market share and consumption, Nippon claims that the Commission did not adequately account for c haracteristics of the TCCSS market that would preclude a finding that subject import volume was significa nt. Nippon doe s not, and i

ndeed c ould not, a ssert tha t the Commiss ion was required to conduct a market se gmenta

tion anal ysi s. Rather , Nippon a sserts tha t the Commiss ion must sup port its finding of signi ficanc e by

at least t aking in to accou nt regi onal conc entration of shipme nts as aC OURT N O
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12 The Commission does not argue that regional conce ntration of competition or subdivisions of a market, either in product or geog raphic terms, cannot constitute a “condition of competition” that may or may not vitiate a finding that subject import volume was significant. There is no statuto ry

require ment that t

he Commissio

n conduc t a “mark

et segmentation” analy

sis in any particular

case. “[N]either the governing statute nor its leg islative history requires adoption of any par

ticular analysis whe

re a market may

consist of several segments.” Acciai Speciali Terni, S.p.a. v. United States , 19 C IT 1051, 1056 ( 1995) (citi ng Copperweld Corp. v. United States , 12 CIT 148, 162, 682 F. Supp. 552, 566 (1988)). That a “ market segmentation” analy sis may not be re quired in

all case s, howeve

r, does not absolve

the Commissi on of its general duty

to analyze volume or price effects in terms of relevant conditions of competition. Although the question of the importance of market seg mentation often relates to productsubcategories, see , e.g. , Encon Indus. v. United States 16 CIT 840, 842 ( 1992), it i s clear that ge ographic concentration of sales may also be a condition of competition potentially having an effect on the signific ance of

import volu

me and pr

ice eff ects. “condition of competition.” In this case, the c ourt agrees, as appare ntly does the Commission. 12 Though ultimately dee

ming the TCCSS market “national,” the Commission described the conditions of the market in terms of regional concentr ation of competition. The Commission stated: The market for TCCSS is a national market. While most domestic producers are located in the East and Midwest and many tend to ship much of their production to destina tions nea r their pl ants, one

U.S. produ

cer . . . i s locate d on the Wes t Coast, and another . . . ships nearly half of its volume to purchasers located on the West Coast. With one exception . . . all domestic producers sell to purchasers on the West Coa st, notwith standing the fac t that ge

nerally they must absor

b the cost of trans porting their shipments to the se purchasers. M oreover , Japanese merchandise also competes throughout the United States. Indeed, only nonsubject imports do not compete throughout the United States, as significant headto-head competiti on in the We st is limited to U.S. and

Japanese TCCSS. Final Determination at 10. In its volume analy sis, the Com mission fou

nd that “i mports fr om Japan to the West Coas t did not attenuate subject imports’ negative impact on the domestic industry as a whole” for three

reasons : (1) the T CCSS market is a nation

al marke t where “ U.S. produ

cers, a lthough mainlyC OURT N O
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13 The St aff R epor t desc ribe s dome stic shipme

nts tothe We st as f

ollow s: [

] Staff Report at III-2 n.2. Actual amounts shipped to the West by these producers were not indicated, nor were separate pe rcentages available for

each year under investigation. Many of the purchasers apparently

have locations across the country and purchase volume was not listed by facility, so the court is unable to reconstruct domestic shipments by re gion simply by putting purchasers in groups according to region. located in the Eas t and the M idwest, c ompete th rougho ut the Unit

ed States ”; (2) su

bject imports increased over the period of investiga tion “not only in the West Coast but also in the remainder of the United States,” while domestic shipments declined throughout the country ; and (3) the only U.S. producer loc ated on the West Coast experienced declines in shipments, price, and financial performance similar to those declines experienc ed by other domestic pr oducers over the same period.” Final Determination at 13-14.

a. Attenuated Competition Nippon claims that competition was so attenuated as to preclude a finding tha t the volume of subject imports was “significant” on the gr ound that domestic TCCSS producers

concen trate on local sa les. I n support o f its conc lusion tha t domestic

produce rs compete nationally, the Commission relied on data in the Staff Report re garding shipments to the West by domestic p

roducer s expresse d as a per

centag e of eac

h produc er’s tota

l domestic

shipments. 13 Each domestic producer was assigne d a percentage that cove red the entire POI ra

ther than for each year. The Staff Report indicated that competition among fir ms was characterized by geographical conc entration of sales: “[N]one of the [U.S.] firms possesses a dominating market share. H owever , U.S. prod ucers a re geo graph

ically spaced a nd tend to c oncentr

ate on ce rtainC OURT N O
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14 Nippon states that [ ] of Japanese imports are shipped to the West and the remainder is shipped to the East and Midwest. Nippon asserts that “subject import market share was very low [ ] in the Eastern United States – the region of the country in which six of the seven U.S. producers had their operations.” Nippon B r. at 41. Nippon does not make clear to the court why this fig

ure should be considered de minimis , or why it is so low that it could not have any demonstrable adverse effect on the dome stic industry, especially in light of the Staff Report’s finding that no sin

gle U.S. produce

r enjoy s a domina

nt position i

n the U.S. T CCSS market. regions of the United States to minimize freight cost and shipping times, with some territorial overlap with other

produce rs.” Staf f Report a t II I-2. The Staff

Report did

not indica

te that thi s geographical conc entration was of such extent that regions of the country are insulated from competition. That producers may concentrate on local sales is not inconsistent with the Commission’ s finding

that prod ucers c ompete na

tionally , and doe s not nece ssarily equate t o insubstantial competition with Japanese imports. There is no eviden

ce that s ubject imp orts to the

East and M idwest we

re insubs tantial, much less non-existe

nt. 14 Thus, although Japanese imports compete more directly with domes tic product i n the West, Japanese

imports ap

parentl y c ompete th

rougho ut the cou ntry with all producers. Nippon has not pointed to any evidence that Japanese imports affected the East a nd Midwest in so attenuated a fashion as to preclude any adverse impact on the domestic industry as a whole in terms of volume or price. The court there fore declines Nippon’s invitation to secondguess the weig

ht the Commis sion assig

ned the vo lume of Japa

nese imports shippe d to the Wes t or to the rest of the country , nor will the court recalibrate the relative deg ree of intensity of competiti on acros s these r egions.
b. Correlation Nippon argues that the data disagg regated according

to geographical zones of competitionC OURT N O
. 00-09- 00479 P AGE 15

15 Nippon stat

es tha t ship ments

from these two pr oduc ers, [ ],

“ actually increased

from about [ ] short tons in 1998 to [ ] short tons in 1999.” Nippon B r. at 40 ( citing St aff Report at III -2 n.2) ( emphasis in origi nal). Nip pon appa rently arri ved a t thes e fig ures by appl yi ng th e per

cent age of tot al sa les that we

re sh ippe d by [ ] to the West over the POI, see note 13 supra , to the total amounts shipped in each ye ar, and t hen a dding the f igur es, [ ].

16 Applying Nippon’s me thodology to the data , the court finds that the two producers shipp ed a t

otal o f [ ] short ton s in 19 97. That is, [ ]. The court notes that Commissioner Aske y s tate d tha

t “[t]h e qua

ntity of do mesti c shipments

made by the two pro duce

rs [ ] increased from [ ] thousand short tons in 1997 to [ ] thousand short tons in 1999,” ye t provide d no citat

ion for th e source

of this da ta. Nippon does not i

ndicate whether it adopts Commissione

r Askey ’s calc

ulations f or 1997 or

cite to an y un derly ing sour ce mate rial that would indicate yea

r-specific percentag es for shipments to the West by eac h producer individually or by the industry as a whole. shows a lack of correlation between the de crease in domestic market share and the inc rease of subject im

port volume. Nippon

asserts t he Commission majority ’s finding s of a con sistency in trends across the country

is factually incorr

ect because (1) the two principal West Coast suppliers actually incre ased their shipments to the West from 1998 to 1999; 15 and (2) western areas of direct Japanese-U.S. competition fared better financia lly than the rest of the c ountry, as evidenc ed by

the rela tive per formanc e of the only

U.S. produ

cer loc ated on the West Coas t. Nippon’s statemen t that the only

two princ ipal West Co ast produ cers inc reased their shipments t

o the West f

rom 1998 to

1999 is misle ading in

that, by omitting d

ata for 1997, it avoids the question of whether shipments by these suppliers increased overall during the POI. Under Nippon’s method for calculating these 1998 a nd 1999 figures, the total shipments to the West by these two producer s in 1997 is higher than in 1998 or 1999. 16 Thus, there is a net decline in shipments by these two produc ers to the West over the POI, under Nippon’s ow nC OURT N O
. 00-09- 00479 P AGE 16

17 See Staff Report at Table VI- 3. Results of operations for [ ] show net declines in (1) Ne t Sales in sh

ort tons by

quantity , [ ] in 1997; [ ] in 19 98; and [ ] in 1999; (2) Operating I

ncome, [ ] in 1997; [ ] in 1998; [ ] in 1999; (3) Gross Profit in terms of value, [ ] in 1997; [ ] in 1998; [ ] i n 1999. The data doe s show, however, a slight re covery

in 2000 in te

rms of Ope

rating Inc ome and G

ross Profit for this producer: [ ] Operating Inc ome was [ ] for the first quarter of 2000, as c ompared

with [ ] in the f irst quar ter of 19 99, while

Gross Pro fit in the f

irst quarter of 2000, however, was [ ] as compared with [ ] in the first quarter of 1999. This slight upturn in financial indicators during the first quarter of 2000 does not detrac t from the

Commission’ s finding s rega rding the overa

ll financ ial perf

ormance of this pro duc er d uri ng t he P OI. me th od ol og y. Even if the combine d total of shipments to the West by

these two

produce rs did increase from 1997 to 1999, the record supports the Commission’s conclusion that the financial perfor mance of the U.S. pr

oducer l ocated on the West Co ast dete riorate d as did the

other U. S.
pr od uc er s, ev en if

on ly s om ew ha t l es s r ap id ly. 17 The Commiss ion is not un der an ob ligation

to find an exact

correlation between subject import volume and financial per formance, nor must the data be devoid of any

inconsistencies. The Commission’s overall trend analy sis of the data of a particu lar prod ucer’s shipments a

nd financ ial perf

ormance is suffic ient to sup

port its conclusions

. Accord ingly, the cour

t finds tha

t in isolatio

n the Commis sion’s de

terminat ion with respect to the significance of subject import volume is supported by substantial evidence. Unde r the “substantial evidence” standard of revie w, however, “the court must determine whether I TC’s conclusions are supported by the evidence on the record as a whole .” USX Corp. , 11 CIT at 84, 655 F. Supp. at 489 (emphasis in original). Therefore , this court must determine whether the Commission’s conclusions with respect to price effects of subject imports is supported by substantial evidence.C OURT N O
. 00-09- 00479 P AGE 17

B. Effect of Subject Imports on Domestic Prices Under 19 U.S.C. § 1677(7)(C)(ii), “[i]n evaluating the price effe cts of subject merchandise on prices, the Commission shall consider whether (I ) there has been a significant price underselling by

the imported merchandise as compared with the price of domestic like products of the Un

ited State s, and (I

I) the effe ct of impor

ts of such mercha ndise othe

rwise depresses prices to a significant deg ree or prevents price increa ses, which otherwise would have occurred, to a significant deg ree.” Nippon claims that the majority ’s methodology of using
aggrega te pricing data skewed its underselling a nalysis and masked a la

ck of correlation between subject imports and the decline in TCCSS prices. Nippon also claims that the Commission lacked substantial evidence to support its findings with respect to (1) pric e sensitivity; (2) the purchasers’ use of Japanese pricing in negotiating with U.S. suppliers; and (3) lost sales and

revenue allega tions.

1. Methodology

a. Undersel

ling The Commission majority determined that the fre quency a nd magnitude of underselling increased “dramatically

” over the POI. Fina

l Determination at 16. With respect to the frequency of underselling , the Commis sion major ity f ound that “ in 1997, four bids out of thirteen [30 percent of comparisons made] undersold the domestic producers’ bids. In 1998, seven out of sixteen [44 percent] bids undersold domestic bids. By 1999 that number had risen to 21 out ofC OURT N O
. 00-09- 00479 P AGE 18

18 In contrast, the Commission in the Preliminary Determination analy

zed underselling by comparing weighted aver age f.o.b. prices and quantities for U.S. produc ers with those for Japanese producers. See Preliminary Deter mination at Tables V-1 to 3. The court also notes that in the Preliminary Deter

mination, the Commission calculated prices from the discount rate, thereby f acilitating comparison of the purchasers’ pur chasing history . It is not clear why the Commission chose to revert to presenting data in terms of discount rate for some purchasers and price for others. On remand, the Commission shall present pricing da ta in as consistent a manner as possible to facilitate review.

19 This p urch aser is [ ]. 25 [84 percent] bids.” Id. (citing Staff Report at V-22). 18 The Commission further found that there wa s a signi ficant in

crease in the mag

nitude of the under

selling while “in 1997 Japanese bids were gener ally not underselling

domestic b ids. I

n 1998, Japa

nese bids undersol d domestic bids by 0.70 perce

nt on average and by

1999, when subject import volume was greatest, the magnitude of underselling had risen to 5.77 per cent on average.” Id. Nippon challenges the I TC’s finding of underselling on the ground tha t a particular purchaser 19 reported separate bidding information for three different tin-mill products purchased at each of its three facilities, while the other larg e purchasers submitted a unified pricing cha rt detailing a single bid price for ea ch supplier. Nippon argues that data for this purcha ser was consequently “ove

r-represented” on account of the Commission’s methodology of counting “instances” of underselling without reg ard to the actual volumes purchased. The Commission contends that its reliance on aggr egate pricing data is consistent with Commission practice and has been sustained by

this court. (1) Aggr egate Pricing Data As a preliminary ma

tter, generally

the Commission is not obligated to conduct a price comparison analy sis that accounts for variations in sales volumes. See , e.g. , MetallverkenC OURT N O
. 00-09- 00479 P AGE 19

Nederland B.V. v. United States , 13 CIT 1013, 1024 (1989) (sustaining price comparisons based on largest quarterly

sales). Nor is the Commission generally required to make a disaggr egated analysis of mater

ial injury. See Copperweld Corp. , 12 CIT at 166, 682 F. Supp. at 569. The court in Copperwe ld

reasone d as follows: Section 1673d(b)(1) required that the [Commission] make and publish a final determination of whether a ‘domestic industry ’ is materially injured by reason of the subje ct imports . The dome stic indust ry is furthe r define d as ‘the

domestic produ cers as a whol e of th e like produ ct. 19 U.S. C. § 1 677(4 )(A). T his l anguage makes manifestly cle ar that Congress intended the [Commission] determine whether or not the domestic industry (as a whole) has experienced material injury due to the imports.’ Id. Nevertheless, where the Commission chooses to limit its underselling analy sis to a subset of the pricing data available, the Commission must indicate the criteria it used for making the price comparisons. Neither the Final Deter mination nor the Staff Report explain the methodology used f

or making price comparisons. The Staff Report mer ely states that the price comparison table “shows a summary of the number of cases in which the Japanese product’s final bid p

rice wa s (1) bel ow all final bids by the U.S. pr

oducers , (2) with

in the ra nge of U.S. final bids, and (3) above all U.S. prices.” Staff Report at V-22. A t oral argument, the Commission explained that it based its underselling calculations solely on the number of individual bids from purchasers that purchased from both Japanese and domestic suppliers in a particu lar y ear, ir respective of vo lume, but it does not explain in the

Final De terminat ion or in its Respo nse Bri ef its reason for do ing so , or wh y it chose to rej ect th e quart erly weight ed aver age price calculations made in the Preliminary Determination. Why underselling was judged on such

a narrow basis is n

ot clear to the cou

rt. The Co mmission ha s not pointe d to any previous case inC OURT N O
. 00-09- 00479 P AGE 20

20 [ ] which it limited price comparisons in the manner it did here when it had acce ss to a similar set of specific pricing data. Thus, although the Commission ge nerally has the

discretion to choose a methodology for

analyzing unde

rselling, where it chooses to limit the set of data for comparison, the Commissi on is at lea st under a n obliga tion to expla

in to the c ourt the ma

nner in w hich it determined an “in stance” of underselling , or in some way enable t he court to revie w its calculations and reasoning process. The Commission has not met this obligation in this case. In addition, the Commission must account for difference s in the way that data is re ported in order to ensure that its ca

lculation s are ac curate . The Commis sion has th e discre tion to fashion its questionnaires in whatever manner it sees fit. Once the da ta is received, however, the Commission cannot ignore the manner in which the data is presented, a nd the Commission cannot rely on the

number of instances of underselling without first taking into ac count how the underlying

data is grouped. The Commission is not bound to present the data in the exact manner in which they

were reported. I

n this case, the Commission does not explain in the Final
De te rm in at io n w hy a pa rt ic ul ar pu rc ha se r’ s t hr ee fa ci li ti es we re co un te d s ep ar at el y. 20 At oral argument, the Commission explained that each the three facilities neg otiated independently fr om one another and from any central corporate headquar ters, yet did not addre ss whether this is the case for the other purchasers w ho reported volume and pricing data. The c ourt does not accept this insufficient “post hoc rationalization.” See U.H.F.C. Co. v. United States , 916 F.2d 689, 700 (Fed. Cir. 1990) (“Post hoc rationalizations of agency actions first advocated by counsel in courtC OURT N O
. 00-09- 00479 P AGE 21

21 Similarly, the Commission does not explain why f or this particular purchaser it counted separately each type

of product purchased by

an individual canning company . Nor does the Commission explain whether other purchasers who provided separate data according to product type were similarly considered sepa rately. See , e.g. , Staff Report at Table V-6 (purchaser provided separate data for “tin-plate” and “chromium-coated steel sheet”), & Table V-7 (purcha ser prov

ided data for “TCCSS -Double

Rolled,” “ Chromium Cua tro Coils” and “TCCSS - Single Rolled”). may not serve a s the basis for sustaining the agency ’s determination.”). 21

(2) Margin of Underselling As stated above, the Commission found that “[i]n 1997 Japanese bids were generally not underselling domestic bids. In 1998, Japanese bids undersold domestic bids by 0.70 percent on average and by

1999, when subject import volume was greatest, the mag nitude of underselling had risen to 5.77 percent on averag e.” Final Determination at 16. The Final Dete rmination cites
to an a ppa ren tl y non -ex is ten t “T abl e V- 16” as s upp ort for it s m arg in of u nde rse ll in g fi gur es. If this table existed, it a

ppears t hat it was removed from the f

inal ver sion of the

Staff Rep ort, thereby pr

ecluding any

meaningful review of the Commission’s conclusions in this regard. Further more, the Commission h as not met i ts burden of estab lishing w

hy t hese mar gins, assuming the figures are a ccurate, are significa

nt. For example, it may be that 2.156 per cent -- the aver age ma rgin of underse lling ove

r the POI -- falls within the

range of price differe ntials that purchasers on the whole indicated would induce them to switch suppliers, but the Commissioners did not analyze the magnitude of se lling in relation to this information. See Questionnaire, at Question IV-11. L ogically , a rapid rate of increase nonethe less may be immateria

l if, for e xample, the

margin never g oes abov e a pric e diffe rential t hat would cause
purchase rs to c hang e sup

plier s to an y s igni fica

nt de gre e. No r did t

he Com missi on an aly

ze whether the undisp

uted lea d-time ad vantag e held by

the domes tic industr

y in fact tra nslated in toC OURT N O
. 00-09- 00479 P AGE 22

22 The Staff Report indicates that “[l]ead times from U.S. producers varied betwee n 6 and 12 weeks, with most producers reporting delivery within 6 to 8 weeks. For imports, lead times range d from 2.5 months to 7 months, with 6 of the 11 i

mporters reportin g lead t imes in the

3 to 4.5 month range.” Staff Report at I I-13. an ability to maintain a price pr emium over imports, which may or ma y not account for

the margin of und ersel ling. 22 The Commission need not analyze ever y piece of data it receives. Nevertheless, wher e information is available that would give meaning to the fig ures used to support a determination, the Commission should use it, or at least explain why such information is unusable. The Commission must be careful not to solicit information from purchasers regardingtheir decisionmaking c riteria merely as a for mality . Nor shou

ld the Commis sion invoke “rate o f incre ase” to support its

finding s without pr

oviding s ome conte

xt that would

reveal why the incr ease is significant for the purposes of determining ma terial injury. Therefore, on remand, the Commission shall explain its methodology for making price comparisons, and why this methodolog y was chose

n over that used in the Preliminary Determination. It also shall present purc hasing history in a way that will facilitate r eview of pricing/volume trends, e.g. weig hted average prices, e ither industry-wide or by individual purchas er, on a q

uarter ly or y early

basis. The

Commission mu st prese

nt the dat a in a re asonably consistent manner with respect to purchaser and produc t grouping, as well as the expression of prices bid and paid. The Commission also must indicate the basis for its margin of underselling analy sis, and in

dicate w hy t his partic ular mar gin is sig nifican t. b. Correl ation of Subje ct Impo rts to a General D ecline in P rices The Commission found that “the evidence shows a clear trend of g enerally de cliningC OURT N O
. 00-09- 00479 P AGE 23

23 The Commission noted that “[e]ven though the list price increased slightly from 1997 to 98, di sco unt rat es i ncr eas ed s ign ifi can tl y in b ot h yea rs r esu lt in g in a ne t d ecl in e in pri ces . In 1999, this trend was magnified by the fact that domestic producers were not able to increase the list price while discount rates continued to increase.” Final De termination at 15.

24 Most domes tic produ

cers en ter into a nnual supp ly c ontract s, the pri ce of wh ich is negotia ted as a d iscount of a list pric e announ

ced eve ry autumn by

one of the

domestic producers.

25 The court notes that the quarterly weighted-averag e pricing data compiled in the Prelimina ry Determi nation shows a dec line in U.S. prices. In the first qua rter of 1 996, U.S. prices were $70 6.02 (Prod uct One), $65 6.88 (Prod uct Two), and $620.49 (P roduct Three). By th e t hi rd qu ar te r o f 1 99 9, U. S. pr ic es we re $6 21 .2 1, $6 22 .7 1, an d $ 57 7. 31 , r es pe ct iv el y. prices paid by pur

chasers over the period of investigation.” 23 Final Determination at 15. The Commission grouped the data into those purchasers reporting in ter ms of price actually

paid and those reporting the amount of discount from the annually announced list price. 24 The Commission f

ound that ( 1) for f

our major purchas ers, disc ounts fro m all sourc es of supp ly (domestic, Japan, and others) increased for ea ch period examined, and (2) for companies reporting in terms of bid prices, “domestic prices we re mixed between 1997 and 1998 . . . but down across the board (except for [one purchaser ] in 1999).” Final Determination at 15 n.66. The Commiss ion also f

ound that, in conjunc

tion with th

is gene ral dec line in dome stic pric es, “Japanese price movements were mixed between 1997 and 1998 . . . but down ac ross the board (except for [the same purchaser noted previously ] in 1999.” Thus, the Commission linked the general decli ne in d omest ic pri ces to overal l tren ds in Japa nese p ricin g. Nippon does not dispute the Commission’s finding that prices paid to domestic suppliers
gen era ll y dec li ned ove r th e PO I. 25 Rather, Nippon claims that the majority ig nored detailed bidding i nformati on submitte d by

the purc hasers d emonstra ting tha t subject i mport pric es could not have negatively

impacted domestic prices. Nippon asserts that “the Commission’s focus onC OURT N O
. 00-09- 00479 P AGE 24

26 Although [ ] consistently satisfied [ ] of its TCCSS requirements from Japanese suppliers, it apparently paid prices [ ] than other domestic TCCSS purchasers. Heinz Questionnaire Response, at Question II -1, C.R. Doc. 222, Pl. App. at Tab 8; Staff Report at Table V-4a, b, c.

27 The record shows that [ ] obtained price decreases in ea ch yea r of the POI no tw it hs ta nd in g t he la ck of an y pu rc ha se s f

ro m J ap an . S ta ff

Re po rt at Ta bl e V -6 . S im il ar ly, data for [ ] show that U.S. producers were gener ally able to incre ase prices in 1999 notwithstanding the introduction of lower-priced bids from subject imports. Staff Report at Table V-2. aggrega te pricing data is fundamentally flawed, and ignores the lack of a ny corre lation between
pu rc ha se s o f s ub

je ct im po rt by individua l custome rs and declines in domestic TCCSS prices.” Nippon Br. at 18. Nippon contends the following facts contravene a finding of such a correlation: (1) the largest purchasers of subject imports g enerally pa id increased prices to domestic suppliers; (2) those who

purchas ed no subje ct imports were a ble to sec ure pric e decre ases fr

om their domestic suppliers. Pricing trends for a particular large purchaser may indicate the lack of a correlation between the existence of competition with Japanese imports and a decline in prices paid by that particular purchaser. 26 Other large purchasers of TCCSS seem to have paid increased or unchanged domestic prices when lower -priced subject imports were present, and in many cases paid dec reasing amounts where no su

bject imports in fac

t compete d for the

purchas ers’ business. 27 In the absence of a table with average industry -wide pricing, on a quarterly basis or otherwise, the court is unable to make a more thoroug h assessment of the Commission’s conclusions. If the Commission deems the evidence a pparently contr

adicting a finding of

co rr el at io n s om eh ow un im po rt an t, th e C om mi ss io n m us t s ta te it s r ea so ns fo r s o f in di ng . C le ar ly,
a gene ral dec line in dome stic pric es is rele vant to the

extent it ca

n be corr elated to a decre ase inC OURT N O
. 00-09- 00479 P AGE 25

28 See 19 U.S.C. § 1 677f(i) (3)(B) (1994); see also Altx, Inc. v. United States , 167 F. Supp. 2d 1353, 1359-60 & n.7 (Ct. Int’l Trade 2001) (finding that under the new statute, the Commission is required to respond to parties’ material and reasonable arg uments with a “reasoned explanation”). Japanese import prices. The Commission is not required in all cases to determine the relationship between subject import competition and domestic prices on an individual purchaser basis. Nevertheless, where the other data is so mixed and where data is available to determine whether such a correlati on existed f or partic ular pur chaser s, and is r

elied on by r

esponde nts, 28 the Commission must address the individual purchaser data in some manner.

2. Substantial Evidence

a. Price Sensitivity In describing c onditions of competition in the Final Determination, the Commission recognized that “[t]he record indicates that non-price f actors such as product quality , product consistency, and on- time delivery ar e very importa

nt.” Final Determination at 8. The Commission found, however, that “the record also reflects that during annual contract negotiations, price is a critical factor. The market is therefore characterized by a hig h degree of price sensitivity.” Id. The Commiss ion does not cite any record evidenc e to suppor

t its conclusion. In analy

zing price effects of the subject imports, however , the Commission specified that (1) the domestic TCCSS market is concentrated with respect to both purchasers and suppliers, and (2) “price, in the form of discount rates, is negotiated intensely, often down to the hundredths of one percent.” Final Dete rmination at 15. Nippon claims these criteria are not meaning ful, and f

urther c laims that

the Commissi on’s find

ing of pr ice as a “critic al” factor isC OURT N O
. 00-09- 00479 P AGE 26

29 The Co mmis sion cited severa l docu ments in su pport of its price s pecifi city find ing, including one May

18, 1998 internal document of [ ] in which [ ] proposed disco unt ra te of [ ] per

cent is con tras ted with ot

her suppli ers’ disco

unt ra te of [ ] percent. Final Determination at 14 n.65 . The Commission explains in its brief that “[w]hen a difference as small as [ ] in price means potentially losing substantial amounts of business, it was reasonable for the Commission to conclude that this industry is price sensitive.” ITC Br. at 36. The Commission’s statement is misleading bec ause the bids discussed are expr essed in di scoun t rate , rath er than strai ght pri ce per t on. Un der th e Comm issi on’s r eason ing, evidence of prices expressed in amounts to the dollar would in all cases support a f inding of price sensitivity. contradicted by

the purchasers’ testimony at hearings and in questionnaire responses, a ccording to which reliability and quality were repeatedly

cited as most determinative of their purchasing decision, whereas price was ranke d seventh in order of importance.

(1) Market Concentra

tion and Pr

ice Spec ificity The Commission did not make clear why the f act that there are a small number of purchasers and suppliers is necessarily indicative of price sensitivity, a s markets that are not particularly c oncentrated may still exhibit a high degree of price sensitivity for any numbe

r of reasons. Nor is it apparent why the degree of price specific ity in negotiations would be necessarily

indicative of price sensitivi ty , since the Commission is presumably not precluded from finding a lack of price sensitivity in markets that do not exhibit similar degrees of price
sp ec if ic it y. 29 In lig

ht of the la

ck of any preced ent in whic

h these two factors alone or in combination supported, without more, a finding of price sensitivity , the court finds that the Commission’s explanation for its finding of price sensitivity insufficient.

(2) Non-price Factors Nippon’s assertions that purchaser testimony and questionnaire responses reveal that
pr ic e i s n ot co ns id er ed th e m os t i mp or ta nt fa ct or mi ss th e m ar k. A f in di ng of “p ri ce se ns it iv it y”C OURT N O
. 00-09- 00479 P AGE 27

30 The Commiss ion did disc uss a par ticular d omestic pr

oducers ’ on-time

perfor mance in terms of whether the declining health of the domestic industry could be attributed to subject imports or some other cause. See discussion, infra , section C.

31 The record indicates that seven of thirteen r eporting purchasers described pr ice as “very important,” and six described price as “somewhat important.” Staff Report at Ta ble II -4. The record also indicates that other factors ra nked higher than price, e.g ., “delivery time” was listed as “very important” by nine purc

hasers and “somewhat important” by four; and all responding purchasers indicated “quality ” as “very important.” Id. Overall, price was ranked seventh of approximately ten factors. I t is not appropriate for the court to make an assessment of the we ight that shoul d be giv en these data, if any . Never

theless, where r

esults ar e, as her e, mixed wit

h respect to purchaser assessments of the re lative importance of price in decision-making, the Commission should evaluate the other factors cited by purchasers, or at least the amounts they cite as sufficient to warrant changing suppliers. The Commission may articula te a reason why (continued...) is not precluded by the f

act that price is not the most important factor . For exa

mple, the court in Acciai , 19 CIT at 1059-60, found that the Commission’s finding as to importance of price was supported by evidenc e where the only two purchasers of a particular import, though not listing price as the most important factor in decision-making, listed price a s “a very important factor,” and indic ated tha

t a five to ten perc ent rise i

n import pr

ice would cause them to switc

h to domestic producers. In this case, unlike in Acciai , the Commission did not evaluate purchaser responses regarding the amount of a pr ice increase necessary

to induce them to switch suppliers. See Purchaser Questionnaires at Question IV-8. Nor did the Commission account for the role of nonpr ic e f ac to rs in pu rc ha se r d ec is io n- ma ki ng in an y me an in gf ul wa y. 30 In making its price sensitivity finding, rather

than evaluate purchasers’ assessments of non-price factors such as ontime deliv ery

or produc

t quality , or whet her thes e other f

actors a ctually drove the ir decisi on to switch suppliers, the Commission simply noted that other non-price fac tors were also considered “important.” 31 The Commission cannot determine price sensitivity in a va cuum. The focus ofC OURT N O
. 00-09- 00479 P AGE 28

31 (...continued) the purchasers’ assessment of decision-making criteria is not to be accorded weig ht, but without an analysis of these

factors, a thorough review of the Commission’s determination in this regard is impossible. the pric e sensitiv

ity i nquiry is appar ently on the deg

ree to wh ich pric e is a det

ermining factor in the mind of the purchaser in making its purchasing de cision. Therefore, if the Commission chooses to rely on pr

ice sensitivity to support its price effe cts determination, it must assess other aspects of the TCCSS industry that would tend to reduce if not entirely vitiate, the importance of price in purchaser decision-making. I n this case, it is insufficient merely to a cknowledge that non-price factors are consider ed “very important” without discussing the nature of these factors in the industry or relating them to its overall determination, as such factors may eclipse the impo rtance of pri ce in p urchas er deci sion -maki ng.

b. Negotiating Practices The Commission found that “the record reflects that the aggressive pricing by importers of Japanese TCCSS has been used by a t least some purchasers in their price neg otiations with the domestic s

uppliers , and Japanese suppl y is recog nized as a n importan

t factor affec ting U.S. prices.” Final Determination at 16. The Commission deemed not credible testimony by four large purchasers that imports from Japan have no e ffect on TCCSS prices. The Commission found that, contrary

to a particular purchaser’s testimony, negotiations with importers “often take place simultaneously with domestic supply negotiations,” citing this purchaser’s documenta tion referencing neg otiations with Japanese suppliers that were taking place in the fall and winter , while negotiations with domestic suppliers were still ongoing. The court may

not question the weight the Commission assigns to particular testimonialC OURT N O
. 00-09- 00479 P AGE 29

32 The court notes that there is in fact some inconsistency in this purchaser’s repres entation s to the Comm ission. I n [ ] questionnaire re sponse, it indicate d that: [

]. Questionnaire Response, C.R. Doc 243, 244, Pl. App. Tab 12 at 18-1 to 2 (emphasis added).

33 [

]

34 See , e.g. , [ ] Supply Agreement, C.R. Doc 208, Pl. App. Tab 16 at Exh. (continued...) evidence. Nevertheless, the Commission’s rejection of the purcha sers’ entire testimony is not supporte d by

adequa te reas oning. I

t is not inconsistent f

or domest ic produc ers to ne gotiate

with purchas ers at the

same time

as Japane se produc ers, y et in their negotia tions rema

in or at le ast consi der th emsel ves in sulat ed from compe titi on fro m Jap anese p ricin g. Thus, even if the purchas er inac curate ly r

eprese nted the t iming of negotia tions, 32 the Commissi on must still address the documentary

evidence that supports the purchaser’s contention and f undamental point that negotiations run on separate tracks acc ording to different procedures a nd criteria. 33 First, th e Commission

does not a

ddress e vidence of supply agree ments whe

reby domestic produce rs are o bligate d to match

prices w ith only other domestic pro ducers. 34 Second, theC OURT N O
. 00-09- 00479 P AGE 30

34 (...continued) 1, wh ic h i nc lu de s a pr ov is io n w he re by [

]. The Commis sion does n ot discuss whether this ty pe of ag reemen t is typ ic al in th e T CC SS in du st ry.

35 Weirton submitted to the Commission its internal “Competitive Price Allowance” sheets f or sever al purchasers du

ring the POI. We irton lists t

he follow ing as it s “Competi

tion”: for [ ] in 1997 , 1999 and 2000 [ ], but on ly [ ] in

1998; for [ ] in 1997, 1998, and 2 000, [], but a lso [ ] in

1999; for [ ] in 1997 [ ], and in 1999 [ ]; in for [ ] in 1998, 1999 and 2000 [ ], but also [ ] in 1997; and for [ ] in 1999 [ ]. See Petitioner’s Post-hearing Br. at Exh 2. Commission h as not ass essed wh ether th e acknowledge d differ ence in l ead-time s cause purchas ers to consider f

oreign supply “supplementary

,” and a llocate p redete rmined vo lumes to foreign and domestic supply sources. See Testimony of Mr. Rourke of B -Way, Hr’g Tr. at 220 (“We also will mitigate the risk by choosing a finite number of specifications to give an off-shore source. And typic ally in our case it may be heavie

r runners, things that will supplement other specifications that we’re getting from others.”). In addition, the Commission sidesteps the question of whether Weirton’s internal document s belie its

contenti ons that it a

djusted pr icing a ccordin g to comp etition fr

om Japanes e imports. T

he Commission had solic ited from Weirton at

the public

hearing document s to support its claim that subject import pricing damaged its negotiating leverage. I

n its submitted response, Weirton conceded that “the competitors listed on the [competitive pricing memora nda sent from the sales department to the pricing depar tment] are always other

domestic firms.” See Affidavit of David Gill, Petitioner’s Post-hearing Br. at Exh. 20. 35 This docu mentary evidenc e is consistent with purchasers’ testimony that each year domestic producers negotiate only within aC OURT N O
. 00-09- 00479 P AGE 31

36 The Commiss ion noted only that “[s]pe cifical ly, in 1999 [ ] incr eased it s purchases of Japanese TCCSS by [ ] short tons . . . (while reducing its purchases from domestic suppliers by [ ] short tons).” Final Determination at 17 n.71. set range of a list price announce d by a particula r domestic producer, and that foreign pr ices are not established until after domestic contracts have been sig ned. Hr’g Tr. at 202-203. I n an affidavit, however, Weirton stated that this evidence should be discounted bec ause a particular purchaser indicated the availability of lower priced Japanese imports during neg otiations. Weirton Pos t-Hear

ing Br . at Exh 20. T

he Commissio

n deemed the aff idavit cr edible “ because the state ments made

therein about the intentions

of two maj or purchasers to increa se their purchases of Japanese TCCSS due to its low prices is borne out by the purchasing history

of these two companie s. 36 As the Commission mentions the purchasing history of only one purchaser, the court cannot speculate a s to how the Commission viewed the other’s purchasing history to support Weirton’s represe ntations. While the court does not question the veracity of the representations in the affidavit, or the weig ht the Commis sion choos es to assig n it, the re asoning

the Commissi on extrac ts theref rom is fla wed. Tha t a purchaser swi

tched to a foreig n source of supply does not ne cessar

ily mean it did so for price reasons. Also, simply because a purchaser indicate s to a producer the availability of lower pr

iced subject imports does not negate the evidence of Weirton’s pricing practic es. Weirton’s pric ing dep artment a pparent ly d erives it s pricing

allowanc e rang e solely according to pricing data of domestic producers submitted by its sales de partment. There is no evidence that Weirton somehow abandoned its way of calculating the pricing allowa nces, or that the documents it submitted are somehow inaccurate. Although g iven the opportunity, Weirton did not provide any evidenc e that it actually had to bid below the calculated range, or a

ny otherC OURT N O
. 00-09- 00479 P AGE 32

37 The r elev ant te xt of the memo cite d by

the Commiss ion isas fo llows : [ ] [ ] Memo (September 4, 1998), C.R. Doc. 208, Pl. App. at Tab 17. The context of this memo reveals that the writer was discussing sourcing supply in light of labor and perfor mance c oncerns , and pric ing of im ports app ears inc idental. The Commiss ion also om its that in 199 9 this purc

haser, a lthough p urchasi ng from a Japanes e produc er for the first time, in fact increased its purchases from Weirton from [ ] tons in 1998 to [ ] tons in 1999. evi den ce t hat th e sa les dep art men t s ubm it ted for eig n pr ici ng d ata to th e pr ici ng d epa rtm ent . If the ultimate question is whether lower Japanese prices forced dome stic producers to lower prices or prevented them from raising prices, the Commission cannot ignore, and must evaluate on remand, evidence showing that the petitioner set its price s within a range established only by domestic p

rices. The Commiss ion did re ly on four int ernal ne gotiatin

g memor anda. On ly one of the se memoranda indicates that lower-priced Japanese imports wer e taken into consideration during negotia tions with d

omestic su

ppliers. 37 The second refers only generally to “foreign suppliers,” and the final two discuss only the e ffect of Weirton’s filing of an antidumping petition on the supply of Japanese imports. The Commission may rely on documenta

ry evidenc e to determine the extent to which subject import pricing factored into domestic supply negotiations. Nevertheless, if the Commission chooses to rely on this type of evidence , it must make an affirmative assessment of the documentary evidence in its entirety , rather than selecting a few document s without explaining why they exemplify

industry practic e, or why

they otherwis e should be a

ccorde d weigh

t.

c. Lost Sales a nd Revenue Lastly , the Commission stated that “the adverse effect of subject imports is also reflec ted in, among other things, [the fact that] four purchasers c onfirmed that a particular producer eitherC OURT N O
. 00-09- 00479 P AGE 33

38 The Staff

Report ind

icates: “ The Commiss ion reque sted U.S. producer s of TCCSS to report a ny i nstance s of lost sa

les or re venues they

experienced due

to compet

ition from

imports of TCCSS from Japan since 1997. Of all responding U.S. producers, only [ ] reported specific data of reduced price s, roll-backs of announced price increa ses, or lost sales to Japan. See Staff Rep ort at V- 22. Five out of six pur

chaser s disagr

eed with i ts lost sale s alleg ations, while one out of four disagreed with its lost revenue a llegations.” Staff Report at Tables V-14 and V-15. had been forced to reduce its price to these purchasers because of lower prices by seller

s of Japanese TCCSS or had lost a sale outright.” Final Determination at 17-18. Evidence of actual lost sales and lost r

evenue s is not req

uired to s upport a f inding that the domestic indu stry is materially injured by

reason of the subject imports. Companhia Paulista , 20 CIT at 479-80 (citi ng Acciai , 19 CIT at 1056-57 (noting that Commission not required to rest its decision on lost sales or lost revenues, as these may be only possible signals of impac t)). Although evidence of lost sales and revenue may be probative, the lack of such evidence or dinarily will not vitiate a Commission determination. Stalexport v. United States , 890 F. Supp. 1053, 1076 (Ct. Int’l Trade 1 995); Metallverken , 13 C IT at 102 5 (cit ing USX , 11 CIT at 86, 655 F. Supp. at 491). This is not to

say , howeve

r, that where the

Commission c

hooses to r

ely on finding s of lost sales/revenue, it need not support such findings with substantial evidence. The Commiss ion fails t

o indicat e the dat a upon whi ch it reli ed in maki ng its los t sales/revenue conclusions, or any context which would reveal why these four confirmations were given weight. Presumably, the Commission derived “four confirmations” from the Staff Report. 38 Nippon al leges t hat the pu rchase r may have be en confu sed abou t whether the lost sa

le had to be t

o a Japane se supplie

r. The re cord show s, howeve r, that the Commission to ok steps to make sure the purchaser understood the natur e of the allegation. See Notes (May 12, 2000; June 7, 2000; July

5, 2000) C. R. Docs. 6 6, 133, 260 . Nippon a lso alleg es that one confir med lost sa

leC OURT N O
. 00-09- 00479 P AGE 34

39 Nippon cla

ims th at the

Japanese m

ills “ neve r supplied the sa me fa cilit ies a s [ ] and never competed for [this purchaser’s] sales with [ ].” Nippon Br. at 33.

40 The Staff

Report ind

icates that [ ] alleg ed that: ( 1) it lost a sale to [ ] in October of 1998, (2) that the quantity it allegedly

lost was [ ] short tons, (3) that its rejected U.S. price was [ ] per short ton, and (4) the accepted import price wa s [ ], for a total alleged lost sales amount of [ ]. See Staff Rep ort at Ta ble V-14 . There

is no sale to Japanese producers corresponding to a volume of [ ] short tons. The Purchasing History for [ ] , how ever , rev ealsthat [] did not bid b elow [ ] at [ ]. See id. at Table V-4a, c. The only bid approximating [ ] was in 1999 when [ ] bid [ ] in 1999, when Japanese producers overbid [ ] at [ ], and were not awarded any

volume. See id. at Table V-4b. I t is thus unc lear whi ch sale [ ] lo st sale alle gation i s actual ly r efere ncing. On reman

d, the Commi ssion shal l specify which lost

sale it is referring to in its lost sales discussion, and why that particular lost sale is significant. The Commission should not force the court to engage in gue sswork.

41 See Trip Report at 4 (“I did not understand the allegation regarding

[ ] where there was no competing import price.”) was “an impossibilit

y” because the Japane se produc ers suppl ied diffe rent fa cilities than the U. S. produce r alleg ing lost s ales. 39 Nippon ove rlooks the fact tha t each of this purchaser’ s facilit

ies in fact received bids from Japanese and U.S. produce rs. “Lost sales alleg ations refer to the situation in which the domestic industry is unable to make a sale because of the presence of lower priced imports.” Copperwe ld , 12 CIT at 169 n.15, 682 F. Supp. at 572 n.15. Thus, it is not “impossible” for this producer to report as a “lost sale” a sale that was ultimately awarded to a Japanese producer. Nevertheless, th e data in

the lost sa

les allegation do no t reflec t the purc hasing h istory data provided for this particular purchaser. 40 Although the Commission followed up on the lost sales allegation with the purchaser in question, the Commission does not indicate that there was in fa ct a competing import price for that sale. 41 Furthermore, the absolute number of lost sales is not, by itself, meaningful. Rather, the Commission must indicate in the Final Determination how manyC OURT N O
. 00-09- 00479 P AGE 35

42 Nippon also asserts that “the majority also cites three unconfirmed lost sales allegations as further evidence of the adver se impact of subject imports.” The Commission discounted purchaser testimony

disputing the lost sales/revenue allegations with circular reasoning, stating that “the evidence of lost revenue and sale s undermined the credibility of purchaser testimony and Respondents’ a

rgumen t that Japanese and d

omestic su

ppliers d o not compe

te for the same business.” Final Determination at 18 n.72. Nevertheless, Nippon overstate s its case, as it is clear that the Commission did

not “rel y” on unconf

irmed sal es. The Commission me rely noted its concerns about the veracity of the purchasers who disagree d with the lost sales allegations, and did not convert these unconfirmed lost sales into “confirmed” lost sales. Thus, the Commission need not revisit the issue of unconfirmed lost sales allegations, but may choose to do so. allega tions wer e actua lly made, or a

t least the volume of

the individ

ual conf irmed lost

sale(s)it relies on , in order

to give t he court a basis f or revie wing wh y th e Commission

deemed t he lost sale(s) significant. Therefore , on remand, the Commission shall indicate the specific data upon which it relied in light of the corresponding purc hasing history, a

nd explain why such data ar e signific ant. 42C OURT N O
. 00-09- 00479 P AGE 36

C. Causation After a ssessing

the sign ificanc e of volume, price

effec ts, and imp act of th e LTFV imports on the dome stic indust

ry , “the Comm

ission must t

ake an a naly tically distinct st

ep to comp ly w

ith the ‘by reason o f’ stand

ard: the Commission mu st determ ine whether these

factor s as a who le indicate that the LTFV imports themselves made a material contribution to the injury.” Gerald Metals, Inc. v. United States , 27 F. Supp. 2d 1351, 1356 (Ct. Int’l Trade 1998). I n addition, the court in Taiwan Semiconductor , 59 F. Supp. 2d at 1329-31, held that “the Commission must not attribute the harm ful effe cts from o ther sour ces of in jury to the subj ect impor

ts and must adequately

explain how it ensured not doing so.” See alsoStatement of Administrative Action, H.R. Doc. No. 316, 103rd Cong., 2nd Sess. (1994), reprinte d in Urugua y Ro und Agr eements Act, Legislative History

, Vol. VI, at 851-52 (Commission must “ensure that it is not attributing injury from other sources to the subject imports.”). Nippon cl aims that t

he major ity f ailed to a ccount a dequate ly f

or: (1) d eclining domestic producer reliability ; (2) rapid purchaser consolidation; and (3) non-subject imports. Nippon, however, misstates the Commission’s obligations with regard to assessing a lternative causes of injury. I t is not sufficient that the other putative sources of injury had a “demonstrable effect” on the ability of U.S. producers to raise prices. See Nippon Br. at 44. The Commission need not fi nd th at th e a lt er na ti ve ca us es en ti re ly negate the po ssib ilit y of subje ct im ports ’ havi ng any adverse effec t on domest

ic pricin g. Rathe r, the Comm

ission must d

etermine whether these alternative sources are of such extent and mag nitude that they prec lude a finding that the subject imports made a material

contribution to the injury. Taiwan Semiconductor , 59 F. Supp. 2d at 1329 (“[I]n some cases, other source s of injury ‘may have such a predominant effect in producingC OURT N O
. 00-09- 00479 P AGE 37

43 In docu ments submi tted by U .S. Ca

n in re spons e to Chairm an Ko plan ’s re ques t, [ ] on-time pe

rforman ce in 1998 was [ ], and i n 1999 was

[ ], which ap

parentl y f alls below contractual requirements, thereby triggering price

reductions. See U.S. Can Questionnaire Response, C.R. Docs. 243-44, Pl. App. at Tab 12 Attachment F-1.

44 Appare ntly the Commissi on conside rs purchaser te stimony

to be “re spondents ’ testimony.” the ha rm as t o . . . p revent the [ subj ect] i mport s from being a mater ial fa ctor. ”) (cit ing Gerald Metals , 27 F. Supp. 2d at 1356 n.8).

1. U.S. On-Time Performance and Quality Nippon does not dispute that the domestic industry’s perf ormance deteriorated between 1997 and 1999, in terms of employment, ca pacity utilization, shipments, and profits. Nippon claims, however, that the Commission’s attribution of these effects to subject imports is in error on the ground that the majority ignored evidence that purchase rs were forced to requisition increa sed quan

tities of im

ported TC CSS due to de clining domestic p

roducer reliabil ity. In its impact analysis, the Commission acknowledg ed that there was documentary evidence that sho wed dom est ic p rod uce rs’ on- ti me p erf orm anc e wa s po or d uri ng t he P OI. 43 The Commission stated, however, that it was “not persuaded by respondents’ inconsistent and contradictory testimony that purchasers turned to Japanese sourcing solely because of non-price reasons.” Fi na l D et er mi na ti on at 26 . T he Co mm is si on ’s ba si s f or re je ct in g a ll “r es po nd en ts ’ t es ti mo ny” 44

re ga rd in g o n- ti me pe rf

or ma nc e w as an in co ns is te nc y in U. S. Ca n’ s t es ti mo ny: U.S. Can claimed that it began shifting more business to Japanese suppliers because of their willingness to supply its increasingly

global operations, and theC OURT N O
. 00-09- 00479 P AGE 38

45 The Commission cites to the Preliminary Conf. Tr. at 95 and an inter nal U.S. Can memo dated February

1, 2000.

46 The Commiss ion speci fied tha t U.S. Can “

reduce d its purchases fr

om domestic producers by

[ ] short tons while it increased its purchases of Japanese TCCSS by approximately [ ] short tons.” Final Determination at 26. Total domestic purcha ses by U.S. Can in 1998 were [ ] short tons compared to [ ] short tons in 1999, a difference of [ ] short tons. U.S. purchases from Japan increased fr om [ ] short tons in 1998 to [ ] short tons in 19 99, a diff erence of [ ]. The Com

mission app arently inadvertently included U .S. Can’s purchases from Sollac of France in its calc ulations for Japan, as total foreign purchases in 1998 were [ ] short tons in 1998, compared to [ ] short tons in 1999 , a diffe

rence o f [ ] short ton s.

47 The text of

this m emo r

eads as fo llows : [

] Pl. App. at Tab 16, Exh. 3. shift accelerated in 1999 due to domestic suppliers’ poor perf ormance. 45

. . . Thomas Yurco of U.S. Can testified at the Commission’s Preliminary Confe rence that his company had re duced volume purchased from Weirton because of delivery proble

ms and had switched to other domestic suppliers rather than to imports from Japan or other nonsubject country sources. [No citation.] However U.S. Can’ s purcha sing hist ory shows tha

t in 1999 the

company reduce d its purchases from domestic producers . . . while it increa sed its purchases of Japanese TCCSS . . . . 46 Thus, contrary to the statements in the . . . internal memorandum cited above (and contrary to the representations made by Mr. Yurco to Weirton officials), other U.S. producers . . . were not the bene ficiaries of Weirton’s alleged delivery problems in 1999. 47
First, the court is unable to assess the Commission’s reasoning fully because, in the Staff Report’s Table describing U.S. Can’s purchasing history, two sets of pricing data are inexplicably given for

U.S. Steel, while Weirton is not listed at all. See Staff Report at Table V3. Second, Mr. Yurco specifically testified at the Preliminary Confe rence that U.S. Can increa sed its pur

chases f rom Japane se supplie

rs. Prelim

inary Conf. Tr. at 94, P.R. D oc. 18, Pl. App. at Ta

b 3. He expl ained tha

t foreig n produc ers tend

to be more

globall y- oriente d, and tha

t itC OURT N O
. 00-09- 00479 P AGE 39

48 Mr. Owen

of Silga n testifie d as follows: [

] Hr’g Tr. at 209-10. Silgan’s purc hasing history supports this testimony : in 1998, it purchased a total of [ ] short tons, wh ich incr eased to [ ] short tons in

1999, eve

n though it reduced purchases from Weirton ([ ] short tons in 1998 compared to [ ] short tons in 199 9), w

hile i ncre asing purchase s fro m [ ]. Jap anes e pur chas es we nt fr om [ ] short tons in 1998 to [ ] short tons in 1999. Staff Report at Table V-9. had on-time delivery

problems with Weirton, Bethlehem, and Wheeling-Pitt. Id. at 95-96. Nowhere in Mr. Yurco’s Preliminary Conference testimony

does he represent to the Commission that U.S. Can shifted sourcing from Weirton to other domestic producers. His testimony at the Preliminary Confere

nce is therefore consistent with his testimony at the Final-Phase Hearing.
See Hr’g Tr. at 201-08. Apparently , the Commission has conflated U.S. Can’s testimony and purchasing history

with that of Silgan. 48 Third, that other U.S. producers may or may not have be

nefitted from Weirton’s alleged delivery proble

ms says nothing about the e xtent to which U.S. producers as a whole suffered from delivery pr

oblems or whether purchasers actually switched for non-price reasons. The Commission does not address either the fact that U.S. Can’s communications with Weirton continually refe

rence on-time performance pr oblems, or the specific performance ra tes provided to the Commission by this purchaser. See Post-Hearing Documentation, C.R. Doc. 208, Pl. App. at Tab 16 . Nor doe s it discuss whether Weirton sa

tisfied its perfor mance r equirements in itsC OURT N O
. 00-09- 00479 P AGE 40

49 [

] Letter (January 30, 1998), C.R. Doc. 208, Pl. App. Tab 16 at Exh 9.

50 To the exte

nt this aff ects the Commission’ s price e ffects a naly sis, the Com

mission sha

ll consider these ma tters in th at context as well. supply agr

eement with U.S. Can. 49 The Commission may determine that such per formance requirements are not in fact industry custom or routinely adher ed to, but without any such assessment, the court cannot review adequate ly its decisions reg arding shift in supply. F ourth, the Commission rejects testimony rega rding on-time performance problems, but say s nothing about the prevalence of problems with quality among domestic TCCSS producers. As its reasons for rejecting purchaser

testimony are not well-f

ounded and are otherwise incapable of being reviewed properly

by the court, the Commission must assess on remand the evide nce regarding domestic performance. 50

2. Purchaser Consolidation In the Final De terminat ion, the Co mmission re

jected the Respond

ents’ cla im that ra pid purchaser consolidation rather than Japanese imports actually caused the general domestic pric e decline. The Commission based its rejection on the finding that the effect that consolidation among TCCSS purchasers had on domestic prices was “slig ht” because: (1) “with only seven producers, there is a similar degre e of concentration between the major U.S. purc hasers and the domestic producers;” (2) the most significant buy er consolidation occurred between 1990 andC OURT N O
. 00-09- 00479 P AGE 41

51 The Commission relied on purchaser concentration data provided by Weirton that showed the top 6 purchasers represented a pproximately 30 percent of the ma rket in 1990; 30 percent in 1991; 35 percent in 1992; 42 percent in 1993; 45 perce nt in 1994; 56 percent in 1995; 71 percent in 1996; 76 percent in 1997; 78 percent in 1998; and 75 perc ent in 1999. See Petitioner’s Post-Hearing Br., Exh. 13. Thus, the record supports the Commission’s finding that the most sig

nifican t purcha ser cons olidation o ccurre d betwee n 1990 and

1996, and

justifies its focus on measures of price stability during this period

.
52 Nippon does not claim that the entry of Ohio Castings into the TCCSS market accounted for the price decline of the domestic industry during the POI, as Commissioner Askey maintained in her dissent. See Commissioner Askey Dissent at 23. 1996, during which time consolidation did not “substantially a ffect prices;” and (3) there ha d been no significant increase in purcha ser consolidation during the POI. F inal Determination at
20-21. The rec ord sh ows th at pur chaser concen trati on in crease d from 1990 t o 1999 , alth ough much more rapidly mid-de cade than in the latter part of the decade

. 51 During the POI , the top six purchas ers maint

ained ro ughly three- quarters of the ma

rket. I n contra st, the num

ber of domestic produce rs remai ned at six fr

om 1990 unti l 1997, whe n Ohio Cast

ings ent ered the TCCSS market. 52 The question underlying

the issue of purchaser consolidation in this case is whether the purchasers have increased the ir leverage to an extent that subject imports could not have been a material cause of the injury . The fact of a similar degree of concentration across purchaser and
pro duc er s ect ors dur in g th e PO I, or th at n o si gni fic ant con sol id ati on t ook pl ace dur in g th e PO I, says nothing a

bout whether the relative bargaining power has changed over time to have an effect on price. In some case s, events occurring before the POI may have a current e

ffect on the industry dy

namics during the POI. The refore, the Commission’s second finding rega rding pricing trends du ring pe riods of p urchase r consoli dation is c

rucial.C OURT N O
. 00-09- 00479 P AGE 42

53 The Staff

Report spe cified that: On e p ur ch as er , [ ], no te d t ha t t he pr ic e g ro wt h r at e h as fa ll en . P ri ce s i nc re as ed by 5 perc ent in 1994, incr

ease d 2.75 perc ent in

1997, then

incr ease d 3.75 perc ent in

2000. [

] Id. The Staff Report did not discuss whether there was a re lationship, either direct or inverse, between purchaser consolidation and industry -wide pricing trends from 1990 to 1999.

54 Weirt on’sweig hted aver age pric es we

re ap proximatel

y a s foll ows: [ ] Weirton’s Post-Hearing Br. at Exh. 13. The Commission does not explain the apparent inconsistency in deeming this a “narrow rang e” of pricing, when in its price sensitivity argument it maintains that a small fra ction of a discount rate would induce a purchaser to switch suppliers. Nevertheless, price stability over time is not necessarily dictated by purch asers’ crite ria in decis ion-m aking. The Staff Report indicated that “[a]s a result of [purchaser] consolidations, smaller purchasers have indirect acce ss to discounts that once were reserved for the la rger purchasers.” Staff Report at V-7. 53 The Commiss ion’s re view of pricing

data fr om 1990 to 19 96 led it to conclude otherwise. Rather than analy ze industry-wide pricing

data to support its conclusion that domestic pricing remained relatively unaffected by

the rapid purchaser consolidation from 1990 to 1996, the Commission relied on Weirton data showing that its weighted averag e price remained within a “narrow rang e” during this period. 54 It is within the Commission’s discretion to draw conclusions about an industry from the pricing trends of a particular producer occupy

ing a substantial portion of the market. The record reve als that Weirton itself, however, viewed purchaser consolidation during the entire dec ade as having an effec t on its bargaining power and pricing. In a Weirton Steel Mill Visit Report, ITC officials state that Weirton represented that “Weirton purchaser base went from approximately 80 in 1989 to approximately 6 [in 2000]. TheC OURT N O
. 00-09- 00479 P AGE 43

result was a greatly diminished power to negotiate and a decrease in price. ” Memorandum from Christophe

r Cassie a nd Sandra

Rivera to File (May 22, 2000), a

t 5, C.R. Doc. 67, Pl. App. at Tab 22 (staf f notes)(emphas is added) . The Commis sion did not state tha t the I TC investigators’ findings were incorrect. Nevertheless, th e court f

inds no er ror her e. The Com

mission’s i

nterpre tation of t he data i t receives is not limited by the interpr etation of the party

providing them. Nippon has not pointed to evidence that industry-wide pricing trends from 1990 to 1996 are inconsistent with Weirton’s submitted pricing

data for this perio d. Nor ha s Nippon a sserted that Weirt

on’s pric ing act

ually decli ned ov er thi s peri od. Fo r the p urpos e of di scoun ting p urchas er cons olid ation as hav ing a “predominant effect” in producing injury, it is sufficient in this case, wher e there is minimal evidence to the contrary, for the Commission to rely on evidence that prices for a substantial segment of the industry

remained relatively

stable over time in the face of rapidly increasing purchaser concentration.
3. Non-Subject Imports The Commission rejected the contention that non-subject imports accounted for the decline in domestic pricing based on its finding that “[a]lthough non-subject imports wer e a significant factor in the domestic market during the period of investigation, subject imports [1] grew more rapidly

and [2] were generally

priced more aggre ssively.” Final De termination at 22. Nippon argues that non-subject import volume would have had a sig nificantly larg er competitive impact than subject import volume because the majority of domestic shipments were in the
Eastern United Sta

tes, in dir ect comp etition wit

h all non- subject c ompetition . Nippon a lso argues that the “I TC staff’s own comparison of subject and non-subject prices de monstrates thatC OURT N O
. 00-09- 00479 P AGE 44

55 The record shows that the market share of non- subject imports was greater than that of subject imports at all times during the POI except the first quar ter of 2000. See Staff Report at Table IV-5. subject imports largely

oversold non-subject imports.” Reply B r. at 14.

a. Non-S ubjec t Impor t Volu me With respect to non-subject import volume, the Commission discounted non-subject imports as an alternative source of injury on the ground that subject imports’ market share was “compar able” to the non-s ubject imp orts’ mar

ket shar e where “[b]y 1999, the volume of

imports from Japan alone nearly

equaled the volume of imports from all other sources combined.” F inal Determination at 22. The Commission in describing “conditions of competition” had noted that “while non-subject imports accounted for a somewhat g reater proportion of total U.S. market share than subject imports during most of the period of investigation, 55 subject imports’ total market share increased at a substantially greater rate than non-subjec t imports.” Final Determination at 11. As stated in the disc

ussion above reg arding

volume, Jap anese im

ports account for at least some of the decre ase in market share held by the domestic industry. Although this may be suff icient for the purpose of finding subject import volume “signific ant,” the Commission must still address whether non-subject imports constitute a predominant source of injury in light of conditions of compe tition. See Taiwan Semiconductor , 59 F. Supp. 2d at1329. The Commission acknowledged in its conditions of competition discussion that nonsubject im

ports wer e not sold i

n the West, ye

t does not a

naly ze this condition in re sponse to Respondents’ alternative source of injury claim. Even if subject and non-subject market share levels are “comparable” on the whole , non-subject imports are not necessarily precluded from constituti ng the predomina

nt source of injury where, as in this c ase, the y a re conc entrate d inC OURT N O
. 00-09- 00479 P AGE 45

56 It appears that this manner of grouping parallels that found in Weirton’s Post-hearing Br. There, Weirton grouped the c ountries in this manner based on the fact that Canada, Germa ny and the Netherlands are the only three countries (besides Japan) whose exports to the United States exceeded 50,000 tons in 1999. region s to which m

ost domesti c shipmen

ts were made. Tha

t Japanese

import volu

me gre w at a higher rate of increase

does not relieve the Commission from assessing characteristics of the industry that may

or may not show a c orrelation between non-subject imports and injury to the do me st ic in du st ry.

b. Non-Subjec

t Impor t Pricing With respe ct to non- subject im port pric ing, the

Commission sp ecified

that “hig h-quality subject imports frequently unde rsold high quality non-subjec t imports and even undersold lesser quality non-subjects as we ll.” Final Determination at 22. For support of this conclusion, the Commission c ites to all

of the pr icing ta bles – i.e ., “Tabl es V-1 thr ough V- 13” – and

instructs the rea der to “c ompare”

all of the se table s with Tab le II-6. The Commission the n indicat ed that: A summary of these

data indicates that TCCSS from Canada, Germany , and the Netherlands (countries that, like Japan, are sources of hig h quality TCCSS) were priced higher than TCCSS from Japan in five of seven comparisons. I n 1997- 1998, imports from Japan generally oversold imports from other non-subject countries (those whose principal sales advantag es are favorable prices a nd/or discounts ), but in 19 99-2000, imports fr om Japan ma

tched or undersol d imports from these countries in half of the comparisons. Final Determination at 22-23 n.84 (citing Staff Notes, Requeste d by Commissioner Okun’s staff (January 30, 2001, revised July 31, 2001) [“Staff Notes”], see Pl. App. at Tab 24). The Staff Notes memo indicates that the latter group is comprised of China, Fr ance, Brazil, Korea, Mexico, Norway, B elgium, and Taiwan, but does not explain whether the countries wer e grouped accord ing to qua lity or volume 56C OURT N O
. 00-09- 00479 P AGE 46

57 The cour

t notes tha

t the Commiss ion’s stat

ement tha t subject i mports “e ven unde rsold lesse r-qual ity non-s ubjec t imp orts” is po ssib ly misle ading b ecause , by omit ting p ercent age incidenc e of unde

rselling , it implies t

hat ther e was g eneral ly u

ndersel ling of i

mports fr om these countries. In fact, ther

e was only one instanc e of underselling of non-subject imports by Japanese imports, out of a total of 15 comparisons. See Staff Note at Table 4. First, the Commission does not make clear why it chose to distinguish between “countries that are sources of high-quality TCCSS” and “those whose principal sales advantages ar e favorable prices and/or discounts,” or its basis for g rouping the countries in the way that it did. The Commission does not cite to anything that would ena ble the court to review the reasons for this choic e. Nor do es the Comm ission expla

in the app arent inconsiste ncy in its gro uping in t his manner with that described in purchaser testimony and the Staff Report. Mr. Owen of Silgan testified as follows: “If we did choose to purchase on the basis of price, Silgan would pursue imports from Brazil, Korea, or Taiwan or other countr ies that aggressively

solicit orders from us at prices well below any

that we see from the U.S., Japan, Europe or Canada.” Hr ’g Tr. at 213. The Staff Report indicates that “Questionnaire respondents re ported that TCCSS produced in the United States, Japan, and in non-subject countries are gener ally interchangeable in most uses. With the exce

ption of so me speci alty

orders f or which specific ations ca

nnot be me

t by U.S. producers, the products are relatively close substitutes regarding phy sical characteristics.” Staff Report at II -6. Natu

rally , dividing

non-subje ct countr

ies into ones that charge

high pri ces with those who charge low prices will likely cause the Commission to find a higher incidence of underselling of the former gr oup than of the latter. 57 As there is no apparent reasonable and consiste nt basis fo

r group ing the c ountries

as it did, the Commission on reman

d shall re assess non-subject underselling. Second, t he Commission negle cted to c ompile the pricing data in a ny meaning ful,C OURT N O
. 00-09- 00479 P AGE 47

consistent way to ena

ble the court to follow its reasoning process. I t is insufficient for the Commission simply to cite to all the tables of raw pricing da ta submitted by the purchase rs, and force the court to attempt to reconstruct its analy sis. Table II -6 compares quality assessments of purchas ers of U. S. produc t with non- subject product. T hat U.S. pr

ices wer e gene rally superior to non-subject prices, and superior to Japanese prices, say s nothing about whether non-subject prices w ere or w ere not s

uperior to Japanes e price s. Where t he Commissio

n has acc ess to dat

a that would

enable i t to constr uct a tab le compa

ring Japa nese pri ces dire ctly

to non-sub

ject pric es, in either aggreg ated or disaggreg ated form, it should do so (as it now must on remand), rather than leaving the parties and the court to fig ure out how it arrived at its conclusion.C OURT N O
. 00-09- 00479 P AGE 48 Conclusion Even though the court finds no error in the Commission’s volume analy sis, the price effects analysis is unsupported and the causation analy sis is flawed in at least two respects. The court expr

esses no o

pinion on the result, but the Comm ission must provide a

more com

plete analysis for wha

tever decision is reached. According ly, the court re

mands the Commission’s Final Determination. With respect to price effects, the Commission on remand shall, in light of the conc erns det

ailed he rein: (1) reconsi der unde

rselling taking i nto acco unt incons istencie s in the manner in which the data were prese nted; (2) explain its methodology for making price comparisons for underselling; (3) indicate the basis for calculating the y

early a verage margin of underselling and for concluding that such ma rgins are significant; (4) re assess its conclusions with respect to a correlation between subject import compe tition and domestic prices; (5) reeval uate its pr ice sens itivity

finding in light o f eviden

ce in the record ; and (6)indicate

the data and conte xt upon which it bases

its finding s rega

rding lo st sales. T

he Commissio

n shall als o reassess causation taking into consideration the role of non-price factors in purchasing de cisions and non- subject im

ports.

_______________________ Jane A. Restani Judge DATED: New York, New York This 31st day of Dec ember, 2001