COUNCIL REGULATION (EC) No 1910/2006
of 19 December 2006
imposing a definitive anti-dumping duty on imports of television camera systems originating in Japan following an expiry review pursuant to Article 11(2) of Council Regulation (EC) No 384/96
THE COUNCIL OF THE EUROPEAN UNION,
Having regard to the Treaty establishing the European Community,
Having regard to the Council Regulation (EC) No 384/96 of 22 December 1995 on protection against dumped imports from countries not members of the European Community (the ‘basic Regulation’) (1) and in particular Article 11(2) thereof,
Having regard to the proposal submitted by the Commission after having consulted the Advisory Committee,
Whereas:
1. PROCEDURE
1.1. Measures in force
(1)
The Council, by Regulation (EC) No 1015/94 (2), imposed a definitive anti-dumping duty on imports of television camera systems (‘TCS’) originating in Japan (‘the original investigation’).
(2)
In September 2000, the Council, by Regulation (EC) No 2042/2000 (3), confirmed the definitive anti-dumping duties imposed by Regulation (EC) No 1015/94 pursuant to Article 11(2) of the basic Regulation (‘the previous review investigation’).
1.2. Request for a review
(3)
Following the publication of a notice of impending expiry of the anti-dumping measures in force on television camera systems (‘TCS’) originating in Japan (4), the Commission received, on 28 June 2005, a request to review these measures pursuant to Article 11(2) of the basic Regulation.
(4)
This request was lodged by Grass Valley Nederland BV, a Community producer representing more than 60 % of the total Community production of TCS (‘the applicant’). Grass Valley is the resulting company following the acquisition of Philips Digital Video Systems by Thomson Multimedia, owner of Thomson Broadcast Systems. The request for an expiry review was based on the grounds that the expiry of the measures would be likely to result in a continuation or recurrence of dumping and injury to the Community industry.
(5)
Having determined, after consulting the Advisory Committee, that sufficient evidence existed for the initiation of an expiry review pursuant to Articles 11(2) of the basic Regulation, the Commission initiated this review on 29 September 2005 (5).
1.3. Parallel investigation
(6)
On 18 May 2006, the Commission initiated a new anti-dumping proceeding concerning imports of certain camera systems originating in Japan, and an interim review of the anti-dumping measures on imports of television camera systems originating in Japan (6). The scope of the new anti-dumping proceeding includes television camera systems covered by the measures in force mentioned in recital (2). Should it be determined that measures are to be imposed on certain camera systems originating in Japan, and thus cover the television camera systems subject to measures by the present Regulation, the continued imposition of measures imposed by the present Regulation will no longer be appropriate, and would have to be amended or repealed accordingly.
1.4. Current Investigation
1.4.1. Procedure
(7)
The Commission officially advised the exporting producers, users/importers, raw material producers known to be concerned, the representatives of the exporting country and the Community producers of the initiation of the expiry review. Interested parties were given the opportunity to make their views known in writing and to request a hearing within the time limit set out in the notice of initiation.
(8)
Questionnaires were sent to the applicant Community producer, two other known Community producers, 25 users, nine raw material producers, and to the five known exporting producers in Japan. Replies were received from one Community producer, one Japanese exporting producer and its related company in the Community, four users/importers and one raw material supplier.
(9)
The Commission sought and verified all the information deemed necessary for its investigation, and carried out verification visits at the premises of the following companies:
Community producer:
-
Grass Valley Netherlands BV, Breda (the Netherlands)
Other producers in the Community:
-
Ikegami Electronics (Europe) GmbH - UK Branch, Sunbury on Thames (United Kingdom)
Producer in the exporting country:
-
Ikegami Tsushinki Co., Ltd, Tokyo
(10)
The analysis focuses mainly on standard definition (SD) because SD TCS constitutes the vast majority of the products subject to the measures. It is also noted that a HD TCS, with a similar performance and quality as an SD TCS having a S/N ratio of 62dB (therefore subject to the current measures), may present a S/N ratio of less than 55dB, and consequently not be covered by the measures. This was also confirmed by the Community industry. One interested party, which did not cooperate in the present investigation, requested that the product definition of this review be aligned with the one of the new investigation referred to in recital (6). However, the current review cannot change the product definition and it is limited to determine whether the measures in force should be maintained or repealed. Therefore the argument had to be rejected.
1.4.2. Investigation period
(11)
The investigation regarding the likelihood of a continuation or recurrence of dumping and injury covered the period from 1 October 2004 to 30 September 2005 (‘investigation period’ or ‘IP’). The examination of the trends relevant for the assessment of a likelihood of a continuation or recurrence of injury covered the period from 1st January 2002 up to the end of the IP (‘period considered’, injury investigation period or ‘IIP’).
2. PRODUCT CONCERNED AND LIKE PRODUCT
2.1. Product concerned
(12)
The product concerned is the same as that in the original investigations which led to the imposition of measures currently in force, i.e. television camera systems.
(13)
As set out in Council Regulation No 1015/94, TCS may consist of a combination of the following parts, imported either together or separately:
(a)
a camera head with three or more sensors (12 mm or more charge-coupled device pick-up devices) with more than 400 000 pixels each, which can be connected to a rear adaptor, and having a specification of the signal to noise ratio of 55dB or more at normal gain; either in one piece with the camera head and the adaptor in one housing, or separate;
(b)
a viewfinder (diagonal of 38 mm or more);
(c)
a base station or camera control unit (CCU) connected to the camera by a cable;
(d)
an operational control panel (OCP) for camera control (i.e. for colour adjustment lens opening or iris) of single cameras;
(e)
a master control panel (MCP) or master set-up unit (MSU) with selected camera indication, for the overview and for adjustment of several remote cameras.
(14)
The products covered by this review are currently classifiable within CN codes ex 8525 30 90, ex 8537 10 91, ex 8537 10 99, ex 8529 90 81, ex 8529 90 95, ex 8543 89 97, ex 8528 21 14, ex 8528 21 16 and ex 8528 21 90.
(15)
Products not covered by this proceeding are:
(a)
lenses;
(b)
video tape recorders;
(c)
camera heads with the recording unit in the same, inseparable housing;
(d)
professional camera systems which cannot be used for broadcast purposes;
(e)
Professional camera systems listed in the Annex.
2.2. Like product
(16)
As established in the previous investigations mentioned in recitals (1) and (2), the current investigation confirmed that the product concerned manufactured by Japanese exporting producers and sold in the Japanese market and in the Community and the product manufactured and sold by the applicant Community producer on the Community market use the same basic technology and both conform with world-wide applicable industry standards. These products also have the same applications and uses, they consequently have similar physical and technical characteristics, are interchangeable and competing with each other. Therefore, these products are alike within the meaning of Article 1(4) of the basic Regulation.
3. LIKELIHOOD OF A CONTINUATION OR RECURRENCE OF DUMPING
3.1. Preliminary remarks
(17)
As in the previous review investigation, the level of cooperation of the Japanese exporting producers in the present proceeding was particularly low. Only one producer out of five cooperated. Out of the remaining four producers known to the Commission, none submitted a questionnaire reply although, according to facts available, and in particular the database maintained by the Commission under Article 14(6) of the basic Regulation (‘the 14(6) database’), at least three of them likely have exported TCS to the Community during the IP.
(18)
Only one exporting producer cooperated which did not, however, export the product concerned to the Community. Given the low degree of cooperation, no reliable information on imports of the product concerned to the Community during the IP could be gathered directly from the exporting producers. Moreover, in line with previous findings, the statistical information available from Eurostat appeared not to be reliable since the CN codes under which the product concerned is classifiable also record imports of other products, without any possibility of distinction. Therefore, Eurostat information had also to be disregarded to determine whether there were imports of TCS from Japan and in which quantities and values. Under these circumstances and in accordance with Article 18 of the basic Regulation, the Commission resorted to the use of the facts available, i.e. information contained in the 14(6) database and the request for the initiation of the review. On this basis, the volumes and values of TCS originating in Japan imported in the Community during the period considered were best estimated.
3.2. Dumping of imports during the investigation period
(19)
Given the insufficient cooperation/non-cooperation by exporting producers in Japan, and the fact that the sole cooperating exporting producer in Japan did not export to the Community during the IP, the Commission sought information regarding the continuation of dumping from other sources, and in particular in the information submitted by the applicant and in the 14(6) database, in accordance with Article 18 of the basic Regulation.
(20)
The 14(6) database shows that there were significant imports of the product concerned during the IP, and in particular of around 10 television camera heads (‘TCH’), which is the essential and most valuable part of a system. It is recalled that given the low cooperation and the fact that the sole cooperating exporting producer did not export to the Community during the IP, no formal dumping calculation could be processed on the product concerned.
(21)
Given the above, and in accordance with Article 18 of the basic Regulation, the Commission had to rely on the facts available, i.e. the evidence provided in the applicant's request, which showed that the dumping level for two models of the product concerned after payment of the duties is significant, reaching for one model more than 10 %.
(22)
As a conclusion, it appears from the evidence available that there is a likelihood of continuation of dumping practices by the Japanese exporting producers.
3.3. Development of imports should measures be repealed
3.3.1. Preliminary remarks
(23)
Worldwide producers of TCS are located only in Japan and in the EU. Therefore, the sales worldwide are divided among these producers. There are at least two known Community producers, out of which one is related to Japanese exporting producers, which produce for the Community market. There are five known Japanese exporting producers, which produce and sell worldwide.
(24)
It is recalled that measures have been in force since 1994. Moreover, in 1999, the Commission reached the conclusion that the exporting producers were absorbing the measures and therefore decided to increase their anti-dumping duties to very significant levels for the concerned exporting producers (up to 200,3 %). Finally, in 2000, an expiry review of the measures in force showed that measures should be extended for another period of five years given the likelihood of continuation and recurrence of dumping and injury.
3.3.2. Relationship between prices in the Community and the exporting country
(25)
Given the low cooperation from the exporting producers, the only available sources of information for the prices of the product concerned in Japan were the sales data from the sole cooperating exporting producer (Ikegami), the information gathered from the applicant and the information in the request for this investigation.
(26)
As mentioned in recitals (20) above, the TCH is the central and most valuable part of a television camera system in terms of value, and it was therefore considered appropriate to assess the relationship between prices in Japan and prices in the Community on this basis.
(27)
With the information in the request and the information gathered during the verification visits, it appears that the prices charged by Community producers in the Community are higher than the ones prevailing in the Japanese domestic market.
(28)
However, it has been shown above that despite this fact, Japanese companies are willing already today to export to the Community at prices without the anti-dumping duties which are by far lower than the ones prevailing in the Community and in their domestic market. The same is true for their exports to third countries.
(29)
On this basis, it can be expected that, should measures be allowed to lapse, imports would likely enter the Community at prices which would very significantly be dumped and would undercut the Community prices, since there is no reason to believe that Japanese exporting producers would modify their pricing behaviour in this case. Moreover, the high price level on the Community market also constitutes an incentive for the Japanese exporting producers to shift parts of the domestic sales to the EU.
(30)
Finally, since the measures in force are high (from 52,7 to 200,3 %), the Japanese exporting producers would have a significant margin of manoeuvre in setting the new prices should measures be allowed to lapse and should they decide to increase their export prices. In all cases, as shown before, any increase of prices below the existing measures in force would undercut the Community prices.
3.3.3. Relationship between export prices from Japan to third countries and prices in the exporting country
(31)
Given the low cooperation from the exporting producers, an analysis was carried out regarding the prices from Japan to third countries, of the sole cooperating exporting producer compared to those at which products were sold in Japan. In this respect, the vast majority of the sales to third countries were taken into account.
(32)
In order to carry out a proper comparison between such prices, adjustments were made when warranted for level of trade, transport, insurance, and credit costs. All elements of the systems, and not only the camera heads, were included in the comparison, since detailed information was available.
(33)
The comparison showed that the company was selling to third countries at significantly lower prices than to its domestic market.
(34)
With the information available, it can be considered that the company sells its products to third countries very likely at dumped prices (around 20 %). This confirms the prima facie evidence contained in the request that exporting producers sell at significantly dumped prices to other third countries.
(35)
There is no evidence available indicating that other Japanese exporting producers do not follow the same pricing policy and are not selling at likely dumped prices to other third countries.
(36)
On this basis, it is concluded that Japanese exporting producers have sold for export to third countries at prices significantly lower than prices on their domestic market and that these export prices were very likely at dumped levels during the IP, and there is no evidence that this practice will change.
3.3.4. Relationship between export prices from Japan to third countries and the price level in the Community
(37)
According to facts available, i.e. the request and the information given by the sole cooperating exporting producer, prices at which the exporting producers sell the product concerned to third countries are much lower than those prevailing in the Community. The difference can reach 220 % depending on the market. Thus, should measures be allowed to lapse, there would be a significant incentive for the Japanese exporting producers to redirect parts of their exports to third countries to the Community market.
(38)
It is also noted that the Community is the sole country where anti-dumping measures are in force against the product concerned. There is no evidence that producers would adopt a different pricing policy than the one followed for exports to third countries should measures be allowed to lapse.
3.3.5. Unused capacities and stocks
(39)
The applicant argued that, due to the nature of the product, capacity is flexible, and that Japanese exporting producers could expand theirs within a very short period of time. This has been confirmed by the on-spot verification at the sole cooperating exporting producer in Japan.
(40)
Indeed, the production process needs manpower, but is not bottlenecked by a particular production process or machine. Since the production line is mainly manual, it is enough to increase the number of shifts and the personnel employed in order to increase capacity. The most important bottleneck of the capacity increase is indeed the time it takes to train new employees to assemble and manufacture TCS. The sole possible mechanical bottleneck which would need a high investment to increase production is the machine producing the optical block. However, no evidence was found that this was, given the current production levels, a likely limiting factor of a possible production capacity increase. Furthermore, since the company was not fully using all possible shifts, it is concluded that production capacity could be quickly and significantly increased. Moreover, no evidence was submitted that the cost related to such an increase of the capacity would be high with regard to the value of the products produced.
(41)
This increase can be very significant given the low ‘entry ticket’ to be paid by the Japanese exporting producers to sell increased quantities in the Community (existing distribution channels and low level of investment to increase capacity).
(42)
Given the above, and given the fact that there is no evidence showing that this situation is not the same for all other exporting producers, it can be concluded that there is a likelihood that production capacity could increase significantly within a short period of time, should producers in Japan need to do so.
(43)
On the basis of the above, it can be concluded that there is a likelihood of increased imports into the EC should measures be allowed to lapse. The above has to be seen in the light of the attractive prices in the Community with regard to third countries as shown above, already existing channels of distribution, and of the fact that increasing capacity could be undertaken at a relatively low cost (training of new specialised workers).
3.4. Conclusion
(44)
Given the above described specificities of the market, i.e. that prices in the Community are higher than in third countries and in the Japanese domestic market, there are strong incentives to redirect parts of the sales to the Community market, likely at low prices to regain lost market shares. Moreover, as the production capacity is quickly expandable, it is very likely that imports of the product concerned would resume in significant quantities. Since there is no evidence that Japanese exporting producers would change their pricing behaviour in order to increase prices should measures be allowed to lapse, it is also very likely that these increased imports will be made at dumped prices.
(45)
On the basis of the above, it is concluded that there is a likelihood of recurrence of dumping of the product concerned by Japanese exporting producers should measures be allowed to lapse, and therefore that the measures in force should be maintained.
4. DEFINITION OF THE COMMUNITY INDUSTRY
(46)
In 2001, Philips Digital Video Systems (‘Philips DVS’) was taken over by Thomson Multimedia, owner of Thomson Broadcast Systems (‘TBS’), another Community producer of TCS, and the merged Philips DVS/TBS entity became Grass Valley Nederland B.V., the applicant.
(47)
One exporting producer argued that since five years ago, virtually all television camera systems sold by its related company in the Community were manufactured by that company in the Community. It was further argued that since this manufacturing facility did not only supply the EC market but the entire world, any decision regarding the existing anti-dumping duties was not likely to affect it.
(48)
Since this exporting producer did not provide any further information, in particular a reply to the questionnaires intended for other Community producers, it was not possible to investigate in detail the precise nature of its activities, including in the Community.
(49)
Another economic operator producing TCS in the Community and related to a Japanese exporting producer cooperated in this investigation and opposed the current measures. This economic operator argued that imports of TCS from Japan were made on a sporadic basis and merely to complement their operations in the EC. The verification on-spot revealed that only one particular model was assembled in those Community facilities with parts originating in Japan and the Community although, at the time of verification, no production of the CCD (charge-coupled device) block, the most important part of a camera head, was actually taking place. In addition, the investigation revealed that there are no other reasons for the production of such model to take place in the Community other than the existence of measures on TCS.
(50)
In any event, the present investigation confirmed that the applicant represented more than 60 % of the Community production of television camera systems. It therefore constitutes the Community industry within the meaning of Article 4(1) and Article 5(4) of the basic Regulation and is hereinafter referred to as the ‘Community industry’.
5. SITUATION ON THE COMMUNITY MARKET
5.1. Preliminary remarks
(51)
For the reasons explained in recitals (19) to (20) above, the analysis with regard to the situation on the Community market was based on collected data relating to television camera heads (‘TCH’).
(52)
As mentioned above, it was not possible to obtain data from one Japanese exporting producer which allegedly has manufacturing facilities in the Community market. As mentioned above, those Japanese parties which actually exported the product concerned to the Community did not cooperate. Consequently, in particular with regard to consumption, the Commission made use of facts available, in accordance with Article 18 of the basic Regulation.
(53)
Given the fact that data regarding sales and production was available from only one or two interested parties, and given the business sensitivity of such information, it is considered appropriate not to disclose absolute figures. They have therefore been replaced by the symbol ‘-’ and indexes were provided.
5.1.1. Consumption in the Community market
(54)
Apparent Community consumption of TCHs was assessed on the basis of the volume of sales in the Community as provided by the Community industry, the sales volume of Ikegami Electronics (Europe) GmbH, statistics of imports of TCHs from Japan obtained from the 14(6) database, as well as information on purchases provided by one user of TCS. Due to the non-cooperation by one Japanese exporting producer which allegedly also produces TCS in the Community, it is likely that Community consumption is slightly underestimated although the overall trends and conclusions drawn would not be significantly altered.
Table 1
Community consumption of TCHs
2002
2003
2004
IP
Units
-
-
-
-
Index
100
104
123
103
Source: Verified questionnaire replies and 14(6) database
(55)
Community consumption increased by 3 % between 2002 and the IP. However, there was a significant increase in 2004, when imports reached their higher level. In the IP, Community consumption decreased, by around 15 %, when compared with 2004.
5.1.2. Current imports from the country concerned
(i) Import volume and market share of the imports concerned in the IIP
(56)
During the period considered, the import volume of TCHs from Japan remained relatively low. However, they have increased almost tenfold between 2002 and 2004, reaching around 30 units. In the IP, imports decreased when compared with 2004 but remained significantly above those in 2002. In overall terms, during the period considered imports increased almost threefold. The Community industry argued that the volume of imports was underestimated since, on the basis the market information it had, deliveries in the EC by Japanese producers were significantly more than what could be allegedly produced in the Community by those companies. It was further argued that measures were probably being circumvented through imports of camera parts. However, this information provided was not in line with the findings of the investigation i.e. the verification visits and information received from independent users. In addition, the scope of the present review is not such as to determine whether the measures in force are being circumvented, although it is recognised that circumvention practices can have an impact on the situation of the Community industry.
(57)
The market share of imports increased constantly until 2004, when they reached their highest level. Despite a significant decrease in the IP, less than half of the 2004 level, imports have nevertheless increased their market over the period considered.
Table 2
Imports of TCHs from Japan and market share
2002
2003
2004
IP
Import volume
-
-
-
-
Index
100
167
1 000
300
Market share
-
-
-
-
Index
100
161
816
291
Source: Verified questionnaire replies and 14(6) database
(ii) Price evolution and price behaviour of the imports of the product concerned
(58)
In the absence of cooperation, no reliable information was available with regard to price levels of imports of TCHs. Indeed, Japanese exporting producers make their sales of the product concerned exclusively to related importers in the Community. Therefore, the price levels available from the 14(6) database are prices between related parties and they cannot consequently be considered as reliable. This is particularly so given the fact that due to the measures in force, the companies may decide to allocate profits to the Community entities.
(59)
Thus, no conclusion could be drawn with regard to the price evolution and price behaviour of the imports of the product concerned.
5.1.3. Economic situation of the Community industry
(60)
For the sake of clarity it is noted that the Community industry has supplied information in its questionnaire reply, with regard to TCS rather than to TCHs only. This was not considered a problem given the fact that each TCS will typically have a TCH. Therefore, for the sake of examining trends, and in the absence of more detailed information with regard to the activities of the Japanese exporting producers in the Community, the economic situation of the Community industry was done on the basis of data pertaining to TCS.
(i) Output, production capacity and capacity utilisation
(61)
Total production of TCS by the Community industry has increased slightly over the period considered. After a decrease of 8 % in 2003, production increased significantly in 2004, i.e. by around 35 %. During the IP, however, production decreased by around 16 % when compared with 2004, although to a level which still represented an increase of 5 % when compared with 2002.
Table 4
Production volume
2002
2003
2004
IP
Production
-
-
-
-
Index
100
92
124
105
Source: Verified questionnaire reply
(62)
Production capacity of the Community industry remained stable until 2004. However, in the IP a reduction of 14 % occurred following a re-organization of the company and allowed the company to adapt its production capacity to existing demand. In fact, as described below, such reduction in capacity was accompanied by stable capacity utilisation rates between 2004 and the IP.
(63)
With the increased production, and the adjustment in production capacity, capacity utilisation increased over the period considered. Overall, the capacity utilisation rate has followed similar trends as those of production, increasing between 2002 and 2004, with a nadir in 2003. In the IP, capacity utilisation remained stable in comparison with 2004 but was still around 20 % above the 2002 level.
Table 5
Production capacity and capacity utilisation
2002
2003
2004
IP
Production capacity
-
-
-
-
Index
100
100
100
86
Capacity utilisation
-
-
-
-
Index
100
92
124
122
Source: Verified questionnaire reply
(ii) Stocks
(64)
Stocks decreased significantly in 2003 (- 17 %) but increased in the following year, while still remaining 11 % below 2002 levels. The abnormal increase of inventories in the IP is explained by the fact that the IP ended before the end of the financial year when a number of orders was still to be delivered.
Table 6
Stock volume
2002
2003
2004
IP
Stock
-
-
-
-
Index
100
83
89
172
Source: Verified questionnaire reply
(iii) Sales volume, prices and market share
(65)
Sales by the Community industry on the Community market increased between 2002 and 2004 by 10 %, without, however, matching the expansion of the Community consumption, which substantially increased, i.e. by 23 % during the same period. This lead to an overall decrease of the Community industry's market share of more than 20 percentage points over the period considered, to the benefit of imports from Japan and other operators in the Community. In the IP, sales have decreased significantly compared with 2004 levels, which led to a further reduction in the Community industry market share.
(66)
However, it should be noted that the figures and trends observed with regard to the Community industry's market share had to be based on facts available in particular because the one other producer in the Community did not deliver his sales and production figures.
(67)
As far as average sales prices are concerned, over the period considered these have decreased by 3 %, although between 2002 and 2003 there was an increase of 7 %. However, the relatively small decrease of prices over the period considered hides a change in the product mix, as the Community industry introduced new products with higher (and more costly) configurations.
Table 7
Sales volume, prices and market share
2002
2003
2004
IP
Sales volume (units)
-
-
-
-
Index
100
103
110
79
Avg. prices (EUR/unit)
-
-
-
-
Index
100
107
98
97
Market share
-
-
-
-
Index
100
99
89
76
Source: Verified questionnaire reply
(iv) Employment, productivity and wages
(68)
Over the period considered, employment decreased (over 24 %) which, with the increase in production, resulted in a significant increase of productivity (37 %). It should be noted that the decrease in employment was accompanied by an increasing resort to workers under temporary/flexible contracts, therefore reducing the company's fixed costs.
(69)
Indeed, over the period considered the Community industry managed to significantly reduce its labour costs (- 14 %). As a consequence, the Community industry was able to reduce the proportion of labour costs in the total cost of production by several percentage points. This reveals a clear attempt by the Community industry to adapt its production structure and to reduce its fixed costs.
Table 8
Employment, productivity and wages
2002
2003
2004
IP
Employment
-
-
-
-
Index
100
102
87
76
Productivity (units per employee)
-
-
-
-
Index
100
90
142
137
Labour costs (000 EUR)
-
-
-
-
Index
100
97
103
86
Source: Verified questionnaire reply
(v) Profits
(70)
It should be noted that profitability of the Community industry was still negative during the investigation period of the last expiry review, and which led to the extension of the anti-dumping measures in force at the time. This situation has been reversed now and between 2002 and 2004 the Community industry presented positive profitability levels.
(71)
Indeed, profitability of the Community industry increased until 2004, even if higher profits (above 10 %) are normally expected in order to enable the industry to keep pace with requirements of technological developments. Thus, even in 2003 and 2004, the years with the highest profit margins, the levels were not sufficient to guarantee that the Community industry could continue to invest substantial volumes in new developments, as it is expected in this sector.
(72)
In the IP the situation with regard to profitability deteriorated considerably, reaching significant losses. This can be explained by two factors: on one side, the significant decrease of sales in the Community during the IP caused an increase in average fixed costs with the consequent negative impact on profitability. On the other side, the Community industry was unable to pass-on an increase in costs of certain raw materials as well as the additional R&D and selling expenses, arising from a wider network of sales offices, aimed at providing better services to its customers. It should also be noted, as described above under recital (67), that the small decrease of the average sales prices between 2004 and the IP, hides a change in the product mix, as the Community industry introduced new products with higher (and more costly) configurations, but was prevented from increasing prices proportionally.
Table 9
Profitability
2002
2003
2004
IP
Profitability ( %)
-
-
-
-
Index
100
176
251
- 321
Source: Verified questionnaire reply
(vi) Investments, return on investment and ability to raise capital
(73)
Investments have remained at high levels although decreased by 13 % in 2003. This was however recovered in the following year by an almost threefold increase, which was due to the Community industry's re-layouting and streamlining of production, as well as the continuous high R&D investments which are required in this industry.
(74)
Return on investments, expressed as the profit in percentage of the net book value of investments, broadly followed the trend in profitability described above.
Table 10
Investments and return on investment (RoI)
2002
2003
2004
IP
Investments (000 EUR)
-
-
-
-
Index
100
87
237
148
RoI
-
-
-
-
Index
100
143
182
- 116
Source: Verified questionnaire reply
(75)
The Community industry was not found to be experiencing difficulties in raising capital during the period considered.
(vii) Cash flow
(76)
Cash flow increased significantly until 2004 (39 %). This positive trend indicates that recovery of the industry was taking place. It should be noted that in 2004, cash flow represented only around 10 % of the total sales made in the Community which cannot be considered as excessive. However, during the IP cash flow was significantly affected by the negative profitability levels.
Table 11
Cash flow
2002
2003
2004
IP
Cash flow (000 EUR)
-
-
-
-
Index
100
99
139
-70
Source: Verified questionnaire reply
(viii) Growth
(77)
Between 2002 and the IP, the Community consumption increased by 3 %, while the volume of sales of the Community industry on the Community market decreased by 21 %. The Community industry lost more than 20 percentage points of market share, whereas dumped imports and other Community producers increased theirs.
(78)
In recent years, the TCS market has been characterized by a shift from standard definition TCS to high definition. It is expected that this trend will intensify in the future. However, as high definition transmission has not yet become widespread, a significant number of broadcasters, in particular the smaller or regional ones, continue to buy standard definition TCS, attracted by the relatively lower prices. Indeed, the Community industry was not able to benefit from the growth in the market, as revealed by its loss of market share.
(79)
In addition, production and sales of standard definition TCS continue to constitute an important feature for any producer of TCS not least because, due to high capital intensive nature of this industry, fixed costs tend to be naturally high. Therefore, it continues to be important that the Community industry benefits from the wider sales volumes offered by sales of standard definition TCS, in order to spread those fixed costs.
(ix) Magnitude of the dumping margin
(80)
The analysis with regard to the magnitude of dumping must take into account the fact that there are measures in force in order to eliminate injurious dumping. As determined above in recital (22) above, the information available indicates that the Japanese exporting producers continue to sell to the Community at dumped prices. Indeed, the margin of dumping found is significant and its impact on the situation of the Community industry cannot be considered negligible, in particular when associated with the significant volumes that could also arise.
(x) Recovery from the effects of past dumping
(81)
The situation of the Community industry improved to a certain extent during the period considered, since the extension of measures in 2000 through the previous expiry review. However, the indicators set out above also show that the Community industry is still fragile and vulnerable.
5.1.4. Effects of other factors on the situation of the Community industry
(i) Export activity of the Community industry
(82)
The investigation showed that the export activity of the Community industry developed as follows:
Table 12
Community industry exports
2002
2003
2004
IP
Volume (unit)
-
-
-
-
Index
100
117
193
148
Value (000' EUR)
-
-
-
-
Index
100
126
146
93
Avg. price (EUR/unit)
-
-
-
-
Index
100
107
75
63
Source: Verified questionnaire reply
(83)
Quantities exported by the Community industry grew significantly from 2002 to 2004, but decreased by more than 20 % in the IP. However, the sales level during the IP represents still almost 50 % more than the sales level at the beginning of the period considered. This overall positive trend was concomitant to an accentuated decrease in average prices, explained by the strong competition at extremely low prices faced in third country markets (see recital (35)).
(84)
Indeed, the investigation showed that the Community industry was faced with competition at extremely low prices in third countries, in particular in emerging markets such as Brazil and China, and that in order to be able to maintain a significant level of production and sales, it has been forced to substantially lower its prices to third countries. Naturally, this had negative consequences on its overall profitability.
(ii) Other producers in the Community
(85)
One factor which could explain the fact that the Community industry has not yet fully recovered its economic situation, taking into account in particular the loss of market share and the negative profitability level during the IP, is the setting up by certain Japanese exporting producers of operations in the Community which allegedly also produce TCS to be sold in the Community market. Indeed, other producers in the Community have gained significant market share during the period concerned (see recital (65) above). However, given the non-cooperation from one Japanese producer allegedly producing in the Community, it cannot be excluded that whatever gain in market share by that company is the result not from better competitive practices but from a pure transfer of the dumping practices into the Community via the assembly of the product in the Community, therefore undermining the effects of the measures.
(86)
In this regard it should be noted that at least in one case, the investigation found no other reason for such operations in the Community other than the existence of measures and the need to avoid them (see recital (49)).
5.1.5. Conclusion on the situation of the Community industry
(87)
The current state of the Community industry should be seen in light of the fact that measures are in place.
(88)
Sales in the Community market, production volume and capacity utilisation rate have increased significantly until 2004. Profitability and productivity have also improved until 2004, while the labour costs have been reduced. Cash flow, return on investment and stocks also had positive trends until 2004.
(89)
However, over the period considered the market share of the Community industry followed a negative trend, with a loss of more than 20 percentage points. Since 2000, there was an increase of activity of other economic operators in the Community which allegedly also produce TCS. This, together with imports from Japan at dumped prices, has prevented the Community industry from reflecting on its sales prices increased costs incurred with R&D, production and sales of TCS, leading it to negative profitability in the IP.
(90)
The Community industry's export performance was also affected by dumped prices in those markets, and forced it to reduce significantly (more than 30 %) its average prices to third countries with the consequent negative effects on the industry's overall profitability. This is a good indication of how the Community market of TCS could evolve in the absence of measures.
(91)
Overall, it has to be concluded that the state of the industry has generally improved until 2004 but certain indicators (e.g. sales volume in the Community, profitability, return on investment and cash flow) have inverted their positive developments in the IP. It can thus be concluded that the Community industry is in an improved situation when compared with the previous review investigation, and it has shown to be viable and competitive as it has significantly lowered its fixed costs and improved its productivity. However, it was still not able to fully recover and remains thus very fragile and vulnerable, as it can be concluded from the evolution in the IP.
6. LIKELIHOOD OF RECURRENCE OF INJURY
6.1. Impact of the projected volume and price effects in case of repeal of measures on the state of the Community industry
(92)
It is recalled that in recital (43) it was concluded that the expiry of the measures would be likely to lead to an increase of dumped exports from Japan to the Community.
(93)
When examining the likely impact of additional low-priced imports on the situation of the Community industry it is noted that the arrival of significant quantities of dumped imports would immediately cause a severe price depression on the Community market as the Community industry would be likely to first try to maintain its market share and its production level, as it could be observed during the period considered with regard to sales to third countries. Should this happen, the Community industry's loss of profitability would be significant and its financial situation would deteriorate.
(94)
It is recalled that in the market of TCS, the survival of a producer depends also on its ability to keep pace with new technological developments and thus to invest appropriately in R&D, state-of-the-art production facilities and training of employees. Therefore, it is vital that the Community industry reaches a certain profitability level which also has to be achieved by keeping the sales price at a level that allows to cover these costs. It is clear that under a scenario of a price depression caused by likely dumped imports from Japan, the sole remaining Community producer not related to Japanese exporting producers would suffer material injury caused by the dumped imports and most likely, given the very low prices practiced by the Japanese exporting producers on sales to third countries, not survive this situation.
(95)
Indeed, according to the 14(6) database data, the volume of dumped imports increased more than threefold until 2004 and more than 50 % over the period considered. As pointed out above, it is likely that without anti-dumping measures in place further increased volumes would be shipped to the Community market at very low prices, significantly undercutting the Community industry prices.
(96)
In fact, should the Japanese exporting producers practice export prices to the Community at levels similar to those they practiced to third countries, as it is reasonable to expect, the Community industry's prices would be undercut by around 30 %. Such pricing behaviour, coupled with the ability of the Japanese exporters to deliver significant quantities to the Community market, would in all likelihood depress prices in the Community market with the consequent negative impact in the economic performance of the Community industry.
6.2. Conclusion on the likelihood of recurrence of injury
(97)
Following the above, it is concluded that the repeal of the measures would in all likelihood result in the recurrence of material injury to the Community industry.
7. COMMUNITY INTEREST
7.1. Introduction
(98)
In accordance with Article 21 of the basic Regulation it was examined whether a prolongation of the existing anti-dumping measures would be against the interest of the Community as a whole. The determination of Community interest was based on an appreciation of all the various interests involved, i.e. those of the Community industry and other Community producers, the users and raw material suppliers of the product under consideration.
(99)
It should be recalled that, in the previous investigations, the adoption of measures and their subsequent extension was consistently found not to be against the interest of the Community. Furthermore, the present investigation is a second expiry review, thus analysing a situation in which anti-dumping measures are already in force since 1994.
(100)
On this basis it was examined whether, despite the conclusion that there exists a likelihood of continuation and/or recurrence of dumping and recurrence of injury, there are compelling reasons which would lead to the conclusion that it is not in the Community interest to maintain measures in this particular case.
7.2. Interests of the Community industry
(101)
The Community industry is the only producer of TCS not related to Japanese exporting producers. It has proven to be a viable industry, able to adapt to the changing conditions on the market. This was confirmed by its efforts to streamline production, reduce costs and increase productivity, as well as by its continued investments into the production of technologically more advanced products.
(102)
The improvement of its economic situation during the period considered indicates that the Community industry has managed to benefit from the continued imposition of measures and effective competition has been restored. Despite improvements in its profitability, it has yet to reach a profit level that can be expected in this type of technological product. However, as described above, it can be concluded that, without the continuation of anti-dumping measures, the situation of the Community industry will in all likelihood severely deteriorate, with a distinct possibility of closure as described under recital (93). This would jeopardize over 100 jobs directly linked to the product concerned.
(103)
Also, production in the Community of high tech products such as TCS, and in particular R&D developments associated with such production, have important spill-over effects. This is particularly the case of production of the CCD block, since its components are used as well for other applications such as security systems, medical, industrial and telecommunications applications. Furthermore, the existence of a Community industry manufacturing TCS has an impact on the entire television industry, i.e. from the development and manufacturing of broadcast equipment to the production of television sets and recorders, but it may also have an influence on the standards set for the Community television sector. Thus, it is also considered that if this high-technology industry disappears, there would be a negative impact on the television industry in general.
(104)
Given the above, it was concluded that to prolong the existing measures in order to ward off the adverse effects of dumped imports which could endanger the existence of such Community industry and consequently a number of specialized jobs, is necessary.
7.3. Interests of the other Community producers
(105)
With regard to the interests of other Community producers of TCS, it should be noted that only one co-operated in this investigation. This producer, related to a Japanese exporting producer, opposed the continuation of measures but argued that the existence of measures gave it a competitive advantage vis-à-vis other Japanese exporting producers, which it would not want to surrender.
(106)
In the absence of cooperation from the other alleged Community producer it has to be concluded that the cooperating Community producer will not be negatively affected by the extension of the measures. Indeed, as well as after the prolongation of the measure in 2000, its investment in the Community is fostered with the extension of the measures in force.
7.4. Interests of users
(107)
The Commission also sent out questionnaires to 25 users of TCS. Only four users co-operated with the investigation. These users are licensed broadcasting companies which broadcast their own programs by using their own equipment. They purchased directly from the TCS producers, whether produced in the Community or in the exporting country, and are representative of the majority of TCS users.
(108)
One user argued that it had no plans to buy any significant number of TCS in the next five years and that therefore no effect on its business was expected should measures be extended.
(109)
Another user argued that it had plans to migrate to high definition products and that should measures be allowed to lapse, this would increase the number of suppliers in the Community and lead to changes in pricing and product innovation. It was also argued that a change of the source of the camera is not realistic because TCS are not a generic or commodity item.
(110)
A third user argued they were against the renewal of anti-dumping measures because this would lead to less competition and less models available. In addition, it was argued that there is not much flexibility to change in the short term from one producer to another.
(111)
A fourth user claimed it could not foresee the impact if measures were maintained.
(112)
It should be noted that at least two Japanese producers are now established in the Community and continue to compete with the Community industry. Indeed, certain users have continued to buy Japanese TCS, whether imported or produced in the Community. It cannot therefore be concluded that the anti-dumping measures in force have completely eliminated competition between different suppliers of TCS. It is true that imports of TCS from Japan have decreased since the imposition of anti-dumping measures but this is the result of the inability of the Japanese exporting producers to sell to the Community at non-dumped prices.
(113)
Regarding the possibility to change suppliers of TCS it should be noted that the objective of anti-dumping measures is not to force a change to a different supplier of TCS but to establish a level playing field through the elimination of unfair trade practices. In addition, should the Community industry of TCS disappear as a consequence of the elimination of the anti-dumping measures in force, this would undoubtedly lead to a reduction in competition and to the dependence of Community TCS users on Japanese technology. The latter aspect is particularly important as producers of TCS can play an important role in setting future broadcasting standards. The Community would undoubtedly be in a disadvantageous situation should it not have a sufficiently strong producer of this product.
(114)
In line with the findings of previous investigations, it was found that TCS are not a significant cost factor for the users since, in relation to their production of broadcast programs, they only accounted for a small proportion of their total costs. Indeed, camera systems covered by the anti-dumping measures represent only part of the overall equipment needed by a broadcasting company. Likewise, when looking at the total costs of a broadcasting company, and not only at the equipment, the cost of TCS subject to anti-dumping duties represents even a lower proportion since there are other more important costs such as program production, personnel, overheads, etc. which are well above the mere cost of a TCS.
(115)
In general terms, the investigation concluded that the effects on users are limited when compared to the size of the global turnover of broadcasting companies, i.e. the purchase of a TCS represents less than 0,2 % of the total turnover of broadcasting companies. In addition, nowadays the average life time of a TCS is estimated at around seven years, sometimes reaching ten years, which means that TCS continue to be far from a recurrent cost factor for the users.
(116)
Thus, it is concluded that since the measures have been in place for a certain period and would be maintained at the same level, their extension will not imply a deterioration of the situation of the users. Furthermore, they continue to have access to TCS other than those produced by the Community industry. In any event, no evidence was available indicating that any impact which could be caused to users would overrule the need to eliminate the trade distorting effects of injurious dumping and the need to restore effective competition.
(117)
Finally, it should be noted that the parallel investigation described under recital (6) will, if measures will be imposed, de facto revise the measures in force and update their level.
7.5. Interests of upstream industry
(118)
Of the nine raw material suppliers contacted, only one replied to the questionnaire and agreed to cooperate in this review. This company supplies an important part of TCS which indicates that its operations are representative of raw material suppliers of this product.
(119)
Sales of this supplier to the Community industry represent a significant part of the company's total turnover for that product. The company argued that should the measures be extended, production of the raw material would be maintained. On the other side, should measures be repealed, its assembly capacity would be endangered given its inability to reduce prices.
(120)
It is therefore concluded that the extension of the measures in force will have a positive impact on the upstream industry of TCS.
7.6. Competition and trade distorting effects
(121)
One importer, which also produces TCS in the Community, and is related to a Japanese exporting producer, argued that regardless of whether measures would continue there was no intention to decrease production in the Community.
(122)
Consequently, it has to be concluded that even if the measures in force are renewed the Community industry will continue to be confronted with competition from other operators in the Community producing and selling TCS. Users will therefore, as until now, be able to buy TCS of Japanese brands.
(123)
In addition, the investigation revealed that should the measures be lifted, there are reasons to believe that the survival of the Community industry could be jeopardized (see recital (94) above). Should this happen, production of TCS would be confined to Japanese producers (or their related companies), with the consequent dependence of the Community on an even smaller number of producers.
(124)
Therefore, it is concluded that the continuation of the measures should have positive effects with regard to maintaining competition and eliminating trade distorting effects.
7.7. Conclusion on Community interest
(125)
Based on the above it is concluded that there are no compelling reasons on grounds of Community interest against the maintenance of the existing anti-dumping measures.
8. ANTI-DUMPING MEASURES
(126)
All interested parties were informed of the essential facts and considerations on the basis of which it is intended to recommend that the existing measures be maintained. They were also granted a period to make representations subsequent to this disclosure.
(127)
It follows from the above that, as provided for under Article 11(2) of the basic Regulation, the anti-dumping measures applicable to imports of TCS originating in Japan, should be maintained,
HAS ADOPTED THIS REGULATION:
Article 1
1. A definitive anti-dumping duty is hereby imposed on imports of television camera systems and parts thereof, falling within CN codes ex 8525 30 90 (TARIC code: 8525309010), ex 8537 10 91 (TARIC code 8537109191), ex 8537 10 99 (TARIC code 8537109991), ex 8529 90 81 (TARIC code 8529908138), ex 8529 90 95 (TARIC code 8529909530), ex 8543 89 97 (TARIC code 8543899715), ex 8528 21 14 (TARIC code 8528211410), ex 8528 21 16 (TARIC code 8528211610) and ex 8528 21 90 (TARIC code 8528219010), originating in Japan.
2. The television camera systems may consist of a combination of the following parts, imported either together or separately:
(a)
camera head with three or more sensors (12 mm or more charge-coupled device pick-up devices) with more than 400 000 pixels each, which can be connected to a rear adapter, and having a specification of the signal-to-noise ratio of 55 dB or more at normal gain; either in one piece, with the camera head and the adapter in one housing, or separate;
(b)
a view finder (diagonal, of 38 mm or more);
(c)
a base station or camera control unit (CCU) connected to the camera by a cable;
(d)
an operational control panel (OCP) for camera control (i.e. for colour adjustment, lens opening or iris) of single cameras;
(e)
a master control panel (MCP) or master set-up unit (MSU) with selected camera indication, for the overview and for adjustment of several remote cameras.
3. The duty shall not apply to:
(a)
lenses (TARIC additional code A727);
(b)
video tape recorders (TARIC additional code A727);
(c)
camera-heads with a recording unit in the same, inseparable housing (TARIC additional code A727);
(d)
professional cameras which cannot be used for broadcast purposes (TARIC additional code A727);
(e)
professional cameras listed in the Annex (TARIC additional codes 8786 and 8969).
4. When the television camera system is imported with the lens the free-at-Community-frontier value used in applying the anti-dumping duty shall be that of the television camera systems without the lens. If this value is not specified on the invoice the importer shall declare the value of the lens at the time of release for free circulation and shall submit appropriate evidence and information on that occasion.
5. The rate of the anti-dumping duty shall be 96,8 % of the net, free-at-Community-frontier price, before duty (TARIC additional code: 8744) except for the products manufactured by the following companies for which the rate shall be as follows:
-
Ikegami Tsushinki Co. Ltd: 200,3 % (TARIC additional code: 8741),
-
Sony Corporation: 108,3 % (TARIC additional code: 8742),
-
Hitachi Denshi Ltd: 52,7 % (TARIC additional code: 8743).
6. Unless otherwise specified, the provisions in force concerning customs duties shall apply.
Article 2
This Regulation shall enter into force on the day following its publication in the Official Journal of the European Union.
This Regulation shall be binding in its entirety and directly applicable in all Member States.
Done at Brussels, 19 December 2006.