61977C0113
OPINION OF MR ADVOCATE GENERAL WARNER
DELIVERED ON 14 FEBRUARY 1979
Contents
I — Introductory
II — Article VI of the GATT and the anti-dumping code
III — The basic Community legislation
IV — The bearings industry
V — The events leading to the present actions
VI — The present actions and the claims made in them
VII — Admissibility of the claims under Article 173
VIII — The substance of the claims under Article 173
1. Formal points going to the validity of the whole of Regulation No 1778/77
2. Points going to the lawfulness of the process of accepting undertakings and then imposing and suspending a definitive duty
3. Points going to the lawfulness of imposing the definitive duty at a flat rate of 15 %
4. Points going to the validity of the Commission's methods of constructing prices, including its selections of representative types
(a) The ‘construction’ of expon prices
(b) The NTN-GKN point
(c) The ISO point
(d) Comparison between export prices and domestic prices .
(e) The ‘construction’ of domestic prices
(f) The selection of ‘representative types’
5. Points about the right to be heard on whether there was dumping
6. Points about ‘injury’
7. Points about bearings manufactured by NSK UK
8. Points going only to the validity of Regulation No 261/77 and hence of Article 3 of Regulation No 1778/77 .
9. Other points going only to the validity of Article 3
(a) ‘Discrimination’ as between the Big Four
(b) ‘Discrimination’ as between the Big Four and the minor Japanese exporters.
(c) Lawfulness of the collection of the provisional duty after acceptance of ‘retrospective’ undertakings
IX — The claims for compensation for damage in Case 119/77
X — The outstanding applications in Case 119/77 .
XI — Conclusions .
My Lords,
I — Introductory
These actions are brought by four Japanese manufacturers of ball and tapered roller bearings, and by a number of importers of their products into the Community, to challenge in whole or in part, the validity of a Regulation of the Council, namely Regulation No 1778/77 of 26 July 1977 (Official Journal, L 196 of 3 August 1977, p. 1) which is described in its title as ‘concerning the application of the anti-dumping duty on ball bearings and tapered roller bearings originating in Japan’. The Applicants rely, as entitling them to bring that challenge, on the second paragraph of Article 173 of the EEC Treaty. In one of the actions, Case 119/77, there are, in addition, claims for compensation for damage under Article 178 and the second paragraph of Article 215 of the Treaty.
This being the first occasion on which the Court has ever had to consider antidumping legislation, and the questions raised in these actions being of some complexity, I think I must, before stating in more detail who the Applicants are and what their claims are, explain, at some length, the background.
II — Article VI of the GATT and the anti-dumping code
The Council, which is of course the main Defendant in these actions, has mentioned in its pleadings the early history of anti-dumping legislation in such countries as Canada (where it was first introduced as long as 1904), New Zealand, South Africa, Australia and the USA. It seems to me that the only relevance of that early history is to show that the authors of the GATT, when they framed Article VI of that Agreement, were seeking, not so much to innovate, as to regulate.
Article VI of the GATT (as amended and now in force) provides, so far as here relevant, as follows:
‘1.   The contracting parties recognize that dumping, by which products of one country are introduced into the commerce of another country at less than the normal value of the products, is to be condemned if it causes or threatens material injury to an established industry in the territory of a contracting party … For the purposes of this article, a product is to be considered as being introduced into the commerce of an importing country at less than its normal value, if the price of the product exported from one country to another
(a)
Is less than the comparable price, in the ordinary course of trade, for the like product when destined for consumption in the exporting country, or,
(b)
In the absence of such domestic price, is less than either
(i)
The highest comparable price for the like product for export to any third country in the ordinary course of trade, or
(ii)
The cost of production of the product in the country of origin plus a reasonable addition for selling cost and profit.
Due allowance shall be made in each case for differences in conditions and terms of sale, for differences in taxation, and for other differences affecting price comparability.
2.   In order to offset or prevent dumping, a contracting party may levy on any dumped product an antidumping duty not greater in amount than the margin of dumping in respect of such product. For the purposes of this article, the margin of dumping is the price difference determined in accordance with the provisions of paragraph 1.
…
6.   No contracting party shall levy any anti-dumping … duty on the importation of any product of the territory of another contracting party unless it determines that the effect of the dumping … is such as to cause or threaten material injury to an established domestic industry …’
The ‘interpretative notes’ to that Article say, again so far as here relevant:
‘Hidden dumping by associated houses (that is, the sale by an importer at a price below that corresponding to the price invoiced by an exporter with whom the importer is associated, and also below the price in the exporting country) constitutes a form of price dumping with respect to which the margin of dumping may be calculated on the basis of the price at which the goods are resold by the importer.
…
As in many other cases in customs administration, a contracting party may require reasonable security (bond or cash deposit) for the payment of antidumping … duty pending final determination of the facts in any case of suspected dumping …’
On 30 June 1967 there was signed at Geneva an Agreement on the implementation of Article VI of the GATT. That Agreement came into force on 1 July 1968. The parties to it include the EEC and Japan.
The Agreement recites that the parties to it recognize ‘that anti-dumping practices should not constitute an unjustifiable impediment to international trade and that anti-dumping duties may be applied against dumping only if such dumping causes or threatens material injury to an established industry … ’; that those parties consider ‘that it is desirable to provide for equitable and open procedures as the basis for a full examination of dumping cases’; and that they desire ‘to interpret the provisions of Article VI of the General Agreement and to elaborate rules for their application in order to provide greater uniformity and certainty in their implementation’.
Thus it is that that Agreement lays down an ‘Anti-Dumping Code’, of which Article 1 provides:
‘The imposition of an anti-dumping duty is a measure to be taken only under the circumstances provided for in Article VI of the General Agreement. The following provisions govern the application of this Article, in so far as action is taken under anti-dumping legislation or regulations.’
The Code itself is divided into five Sections:
A —
Determination of Dumping;
B —
Determination of Material Injury, etc.;
C —
Investigation and Administration Procedures;
D —
Anti-dumping Duties and Provisional Measures; and
E —
Anti-dumping Action on behalf of a Third Country.
A number of the provisions in Sections A to D are relevant in these cases.
Section A of the Code contains only one Article, Article 2, which defines the circumstances in which a product is to be considered as being dumped. The general rule, which echoes the wording of paragraph (1) (a) of Article VI of the GATT, is in Article 2 (a) :
‘For the purposes of this Code a product is considered as being dumped, i.e. introduced into the commerce of another country at less than its normal value, if the export price of the product exported from one country to another is less than the comparable price, in the ordinary course of trade, for the like product when destined for consumption in the exporting country.’
After defining the term ‘like product’ (Article 2 (b)) and dealing with the case where products are not imported directly from the country of origin (Article 2 (c)), the Article goes on to provide for the steps that are to be taken if it is impossible, or at any rate inappropriate, to determine the margin of dumping by a straightforward comparison between domestic and export prices. Paragraph (d) of Article 2 relates to what Article VI (1) (b) of the GATT refers to as the‘absence’ of domestic prices ‘in the ordinary course of trade’. It provides so far as here relevant:
‘When there are no sales of the like product in the ordinary course of trade in the domestic market of the exporting country or when, because of the particular market situation, such sales do not permit a proper comparison, the margin of dumping shall be determined by comparison with … the cost of production in the country of origin plus a reasonable amount for administrative, selling and any other costs and for profits. As a general rule, the addition for profit shall not exceed the profit normally realized on sales of products of the same general category in the domestic market of the country of origin.’
As regards the ‘export price’ paragraph (e) provides:
‘In cases where there is no export price or where it appears to the authorities concerned that the export price is unreliable because of association or a compensatory arrangement between the exporter and the importer or a third party, the export price may be constructed on the basis of the price at which the imported products are first resold to an independent buyer, or if the products are not resold to an independent buyer, or not resold in the condition as imported, on such reasonable basis as the authorities may determine.’
Paragraph (f) requires the price comparison to be made ‘at the same level of trade, normally at the ex-factory level, and in respect of sales made as nearly as possible at the same time’. ‘Due allowance’ is to be made in each case ‘on its merits’ for differences in conditions and terms of sale, and in taxation, and for other differences affecting price comparability and, where the export price is constructed in accordance with paragraph (e), ‘for costs, including duties and taxes, incurred between importation and resale, and for profits accruing’.
In Section B of the Code, Article 3 contains elaborate provisions relating to the determination of the question of material injury or threat of such injury to a domestic industry. Article 3 (a) requires the dumping to be ‘demonstrably the principal cause’ of such injury or threat. In reaching their decision the authorities are to ‘weigh, on the one hand, the effect of the dumping and, on the other hand, all other factors taken together which may be adversely affecting the industry’. The determination is ‘in all cases’ to be ‘based on positive findings and not on mere allegations or hypothetical possibilities’. Paragraph (b) of the Article lays down that ‘the evaluation of the effects of the dumped imports on the industry in question … shall be based on examination of all factors having a bearing on the state of the industry in question, such as: development and prospects with regard to turnover, market share, profits, prices (including the extent to which the delivered, duty-paid price is lower or higher than the comparable price for the like product prevailing in the course of normal commercial transactions in the importing country), export performance, employment, volume of dumped and other imports, utilization of capacity of domestic industry, and productivity; and restrictive trade practices’. It is expressly stated that ‘No one or several of these factors can necessarily give decisive guidance’. Paragraph (c) of the Article further provides that:
‘In order to establish whether dumped imports have caused injury, all other factors which, individually or in combination, may be adversely affecting the industry shall be examined, for example: the volume and prices of undumped imports of the product in question, competition between domestic producers themselves, contraction in demand due to substitution of other products or to changes in consumer tastes.’
Detailed procedural requirements are laid down by Section C.
Investigations are normally to be initiated upon a request on behalf of the industry affected, which must be supported by evidence of dumping and injury (Article 5 (a)); upon initiation of an investigation and thereafter the evidence of dumping and injury is to be considered simultaneously (Article 5 (b)); and an investigation must be terminated promptly where the authorities are satisfied that there is not sufficient evidence of dumping or of injury or ‘where the margin of dumping or the volume of dumped imports, actual or potential, or the injury is negligible’ (Article 5 (c)).
Articles 6 and 7 deal respectively with evidence and with undertakings by exporters to revise their prices. Because of their importance in connexion with a number of issue in these actions, I must quote them in full:
‘Article 6
Evidence
(a)
The foreign suppliers and all other interested parties shall be given ample opportunity to present in writing all evidence that they consider useful in respect to the anti-dumping investigation in question. They shall also have the right, on justification, to present evidence orally.
(b)
The authorities concerned shall provide opportunities for the complainant and the importers and exporters known to be concerned and the governments of the exporting countries, to see all information that is relevant to the presentation of their cases, that is not confidential as defined in paragraph (c) below, and that is used by the authorities in an anti-dumping investigation, and to prepare presentations on the basis of this information.
(c)
All information which is by nature confidential (for example, because its disclosure would be of significant competitive advantage to a competitor or because its disclosure would have a significantly adverse effect upon a person supplying the information or upon a person from whom he acquired the information) or which is provided on a confidential basis by parties to an antidumping investigation shall be treated as strictly confidential by the authorities concerned who shall not reveal it, without specific permission of the party submitting such information.
(d)
However, if the authorities concerned find that a request for confidentiality is not warranted and if the supplier is either unwilling to make the information public or to authorize its disclosure in generalized or summary form, the authorities would be free to disregard such information unless it can be demonstrated to their satisfaction from appropriate sources that the information is correct.
(e)
In order to verify information provided or to obtain further details the authorities may carry out investigations in other countries as required, provided they obtain the agreement of the firms concerned and provided they notify the representatives of the government of the country in question and unless the latter object to the investigation.
(f)
Once the competent authorities are satisfied that there is sufficient evidence to justify initiating an anti-dumping investigation pursuant to Article 5 representatives of the exporting country and the exporters and importers known to be concerned shall be notified and a public notice may be published.
(g)
Throughout the anti-dumping investigation all parties shall have a full opportunity for the defence of their interests. To this end, the authorities concerned shall, on request, provide opportunities for all directly interested parties to meet those parties with adverse interests, so that opposing views may be presented and rebuttal arguments offered. Provision of such opportunities must take account of the need to preserve confidentiality and of the convenience to the parties. There shall be no obligation on any party to attend a meeting and failure to do so shall not be prejudicial to that party's case.
(h)
The authorities concerned shall notify representatives of the exporting country and the directly interested parties of their decisions regarding imposition or non-imposition of antidumping duties, indicating the reasons for such decisions and the criteria applied, and shall, unless there are special reasons against doing so, make public the decisions.
(i)
The provision of this Article shall not preclude the authorities from reaching preliminary determinations, affirmative or negative, or from applying provisional measures expeditiously. In cases in which any interested party withholds the necessary information, a final finding, affirmative or negative, may be made on the basis of the facts available.
Article 7
Price undertakings
(a)
Anti-dumping proceedings may be terminated without imposition of antidumping duties or provisional measures upon receipt of a voluntary undertaking by the exporters to revise their prices so that the margin of dumping is eliminated or to cease, to export to the area in question at dumped prices if the authorities concerned consider this practicable, e.g. if the number of exporters or potential exporters of the product in question is not too great and/or if the trading practices are suitable.
(b)
If the exporters concerned undertake during the examination of a case, to revise prices or to cease to export the product in question, and the authorities concerned accept the undertaking, the investigation of injury shall nevertheless be completed if the exporters so desire or the authorities concerned so decide. If a determination of no injury is made, the undertaking given by the exporters shall automatically lapse unless the exporters state that it shall not lapse. The fact that exporters do not offer to give such undertakings during the period of investigation, or do not accept an invitation made by the investigating authorities to do so, shall in no way be prejudicial to the consideration of the case. However, the authorities are of course free to determine that a threat on injury is more likely to be realized if the dumped imports continue.’
In Section D of the Code the imposition and collection of anti-dumping duties is dealt with by Article 8. According to paragraph (a) of that Article it is ‘desirable’ that the duty imposed should be less than the margin of dumping if a lesser duty would be adequate to remove the injury to the domestic industry. Paragraph (b) provides, so far as relevant:
‘When an anti-dumping duty is imposed in respect of any product, such antidumping duty shall be levied, in the appropriate amounts in each case, on a non-discriminatory basis on imports of such product from all sources found to be dumped and causing injury. The authorities shall name the supplier or suppliers of the product concerned. If, however, several suppliers from the same country are involved, and it is impracticable to name all the suppliers, the authorities may name the supplying country concerned.
…’
Paragraph (c) provides that:
‘The amount of the anti-dumping duty must not exceed the margin of dumping as established under Article 2. Therefore, if subsequent to the application of the anti-dumping duty it is found that the duty so collected exceeds the actual dumping margin, the amount in excess of the margin shall be reimbursed as quickly as possible.’
Paragraph (d) sets out certain rules applicable where a ‘basic price system’ is adopted. Those rules are not directly in point here but they play a part in the anti-dumping machinery of the ECSC, which was referred to in the course of argument. Very briefly, under such a system a comparison is made between the export price and a ‘basic price’ established for the purpose. The rules prescribe, among other things, that the basic price must not exceed ‘the lowest normal price in the supplying country or countries where normal conditions of competition are prevailing’.
As to the duration of anti-dumping duties, Article 9 provides that such a duty is to remain in force ‘only as long as it is necessary in order to counteract dumping which is causing injury’ and that ‘the authorities concerned shall review the need for the continued imposition of the duty, where warranted, on their own initiative or if interested suppliers or importers of the product so request and submit information substantiating the need for review’.
Article 10 relates to ‘provisional measures’. Such measures may be taken ‘only when a preliminary decision has been taken that there is dumping and when there is sufficient evidence of injury’ (Article 10 (a)). They may ‘take the form of a provisional duty or preferably, a security — by deposit or bond — equal to the amount of the antidumping duty provisionally estimated, being not greater than the provisionally estimated margin of dumping’ (Article 10 (b)). The authorities concerned are to ‘inform representatives of the exporting country and the directly interested parties of their decisions regarding imposition or provisional measures indicating the reasons for such decisions and the criteria applied’ and the decisions are normally to be made public (Article 10 (c)). The measures must be limited to as short a period as possible and, more specifically, ‘shall not be imposed for a period longer than three months or, on decision of the authorities concerned upon request by the exporter and the importer, six months’ (Article 10 (d)).
Finally, there are the provisions of Article 11 about retroactivity. That Article establishes the general principle that anti-dumping duties and provisional measures are not to be imposed with retroactive effect. There are exceptions to that principle, of which one (contained in paragraph (i) of Article 11) is directly relevant in these cases and another (contained in paragraph (iii)) is of some relevance in connexion with the antidumping rules of the ECSC.
The exception in paragraph (i) is to the effect, briefly, that, where provisional measures have been taken, and dumped imports carried out during the period of their application would, in the absence of those measures, have caused material injury, duties may be levied retroactively for the period during which the provisional measures applied. Paragraph (i) concludes:
‘If the anti-dumping duty fixed in the final decision is higher than the provisionally paid duty, the difference shall not be collected. If the duty fixed in the final decision is lower than the provisionally paid duty or the amount estimated for the purpose of the security, the difference shall be reimbursed or the duty recalculated, as the case may be.’
Paragraph (iii) allows the imposition of a duty retroactive for 90 days in certain circumstances where ‘sporadic dumping’ (i.e. massive dumped imports of a product in a relatively short period) has taken place.
III — The basic Community legislation
Anti-dumping measures are under the EEC Treaty an aspect of the common commercial policy. They were during the transitional period a matter to which Article 111 of the Treaty applied and they are expressly mentioned in Article 113.
On 5 April 1968 the Council adopted, pursuant to Articles 111 and 113, Regulation (EEC) No 459/68 (Official Journal, L 93 of 17 April 1968, p. 1) of which the general effect, so far as here relevant, may be summarized by saying that it did two things: it translated the Anti-Dumping Code into Community law and it allocated to the Council, to the Commission and to the Member States their respective roles in the implementation of the resulting Community anti-dumping law. The preamble to the Regulation recites among other things that ‘in view of the international obligations of the Community and its Member States, this Regulation must be drawn up with due regard for the rules laid down in Article VI of the General Agreement on Tariffs and Trade and in the Agreement on Implementation of that Article’.
Article 1 of the Regulation is introductory. Paragraph (2) thereof states somewhat cryptically that, ‘provided such action does not run counter to obligations under the GATT’, the provisions of Articles 2 to 5 (which lay down the substantive requirements for the levying of anti-dumping duties) ‘shall not preclude the adoption of special measures’.
Article 2 (1) provides so far as material:
‘An anti-dumping duty may be applied to any dumped product whose introduction into Community commerce causes, or threatens to cause, material injury to an established Community industry …’
The rules relating to the determination of dumping are set out in Article 3 which follows very closely the wording of Article 2 of the Anti-Dumping Code.
The normal test of dumping, stated in Article 3 (1) (a), is that:
‘… the price of the product when exported to the Community is less than the comparable price, in the ordinary course of trade, of the like product … when destined for consumption in the exporting country of origin.’
Article 3 (2) provides tor the situation where ‘there are no sales of the like product in the ordinary course of trade in the domestic market of the exporting country’ or where ‘because of the particular market situation, such sales do not permit a proper comparison’. It is, so far as material, in terms identical to those of Article 2 (d) of the Anti-Dumping Code, and in particular permits, in such a situation, the ‘construction’ of the ‘domestic price’ on the basis of ‘the cost of production in the country of origin plus a reasonable amount for administration, selling and other costs and for profits’, with the proviso that ‘as a general rule, the addition for profit shall not exceed the profit normally realized on sales of products of the same general category in the domestic market of the country of origin’.
Article 3 (3) corresponds to Article 2 (e) of the Anti-Dumping Code. It provides in particular for the construction of the ‘export price’ on the basis of the price upon the first resale to an independent buyer, ‘where it appears that the export price is unreliable because of association or a compensatory arrangement between the exporter and the importer’.
Article 3 (4), corresponding to Article 2 (f) of the Anti-Dumping Code, requires (by subparagraph (a)) the comparison between the export price and the domestic price to be ‘based upon prices ruling at the same level of trade, normally the ex-factory level’, and ‘in respect of sales made as nearly as possible at the same time’; and (by subparagraph (b)) ‘due allowance’ to be made ‘for differences in conditions and terms of sale, for the differences in taxation, and for the other differences affecting price comparability’, and also in cases where export prices are constructed under Article 3 (3) ‘for costs incurred between importation and resale, and for profits accruing’.
Article 3 (7) defines ‘margin of dumping’ as meaning ‘the price difference determined in accordance with the foregoing provisions’.
Article 4 is concerned with the determination of injuryand reflects the provisions of Section B of the Anti-Dumping Code.
Article 4 (1) (a) provides that a determination of injury is to be made ‘only when the dumped imports are demonstrably the principal cause of such injury’ and that, in establishing whether injury exists, ‘the consequences of the dumping positively found to be as such shall be weighed against all other factors taken together which may be adversely affecting the Community industry in question’. Article 4 (1) (b) requires any determination of threat of injury to ‘be based on facts and not merely on allegation, conjecture or remote possibility’. Paragraph (2) of Article 4, which deals with the evaluation of injury, and paragraph (3), which deals with the question of causation, are identical in all material aspects to, respectively, paragraphs (b) and (c) of Article 3 of the Anti-Dumping Code.
Articles 6 and 7 of the Regulation lay down rules concerning anti-dumping complaints which go into greater detail than Article 5 (a) of the Anti-Dumping Code.
Article 6 (1) provides that a complaint must be in writing and may be lodged by ‘any natural or legal person, or any association not having legal personality, acting on behalf of a Community industry which considers itself injured or threatened by dumping’. Article 6 (2) envisages that such a complaint may be submitted to a Member State or to the Commission. In the latter case, which is that relevant here, the Commission is required by sub-paragraph (b) to forward the complaint immediately to the Member States.
Article 7 provides that the complaint must give a description of the product in question; the name of the exporting country; where possible, the names of the country of origin, of the producer and of the exporter; and ‘evidence both of dumping and of injury resulting therefrom for the industry which considers itself injured or threatened’.
Article 9, as amended by Article 4 of Council Regulation (EEC) No 2011/73, prescribes a procedure for the summary rejection of a complaint which does not contain the particulars specified in Article 7, or if it is apparent without investigation that the margin of dumping, the volume of dumped imports, actual or potential, or the injury is negligible (compare Article 5 (c) of the Anti-Dumping Code). Unless that procedure is applied, the Commission, acting in cooperation with the Member States, is required by Article 10 (1) immediately to commence an ‘examination of the matter’, covering both dumping and injury, at Community level.
In conducting such an examination the Commission is empowered by Article 10 (3) (a) ‘to obtain all necessary information from importers, exporters, traders and producers, and from trade associations and organizations’. Article 10 (3) (b), as amended by Article 5 of Regulation No 2011/73, makes provision for investigations to be carried out in third countries where necessary ‘in order to verify information collected or to obtain further details’. The Commission may carry out such investigations ‘only if the undertakings concerned give their consent and the government of the country in question has been officially notified and raises no objection’. There is provision also for the Commission to be ‘assisted by officials of one or more Member States, if the latter have so requested, in all investigations conducted on the spot’. Article 10 (5) enables the Commission to call for assistance from Member States. It may ask them to supply information or to carry out checks and inspections, including investigations in third countries, but again ‘where the purpose of such investigations is to verify information provided or to obtain further details from within the undertaking concerned, they may be carried out only if the undertakings concerned give their consent and the government of the country in question has been officially notified and raises no objection’. Commission officials may assist the officials of Member States in carrying out such duties.
Procedural safeguards for interested parties are afforded by paragraphs (2), (4) and (6) of Article 10.
Under paragraph (2), ‘where the information received by the Commission shows that protective measures against dumping may be necessary the Commission, without prejudice to the continued examination of the matter,’ is to ‘advise the representatives of the exporting country and the exporters and importers known to be concerned’. It must, at the same time, publish a notice in the Official Journal of the European Communities. That notice must, among other things "state that all relevant information is to be communicated to the Commission and set the period within which interested parties may apply to be heard by the Commission in accordance with the provisions of paragraph (6) (compare Article 6 (f) of the Anti-Dumping Code).
Paragraph (4), which corresponds to Article 6 (b) of the Anti-Dumping Code, and which has been the subject of much argument in these cases, requires that:
“The Commission shall provide opportunities for the complainant and the importers and exporters known to be concerned, and the representatives of the exporting country to see all information that is relevant to the defence of their interests and not confidential within the meaning of Article 11, and that is used by the Commission in the anti-dumping investigation.”
Paragraph (6) gives effect to paragraph 6 (g) of the Anti-Dumping Code. It provides :
‘(a)
The Commission may hear the interested parties. It shall so hear them if they have, within the period prescribed in the notice published in the Official Journal of the European Communities, made a written request for a hearing showing that they may be directly affected by the result of the examination of the matter. In such case, the Commission shall give the parties an opportunity to make known their views in writing within a period which it shall set. The Commission shall, furthermore, give the parties directly interested who have so requested in writing and can show a sufficient interest an opportunity to express their views orally.
(b)
Furthermore, the Commission shall, on request, give the parties directly concerned an opportunity to meet, so that opposing views may be presented and any rebuttal argument put forward. In providing this opportunity the Commission shall take account of the need to preserve confidentiality and of the convenience of the parties. There shall be no obligation on any party to attend a meeting and failure to do so shall not be prejudicial to that party's case.’
Paragraph (7) gives effect to Article 6 (i) of the Anti-Dumping Code.
Article 11 relates to confidential information. Paragraph (2) forbids the disclosure by the Council, the Commission, the Member States or any of their officials, of ‘any information of a confidential nature received in pursuance of this Regulation or any information provided on a confidential basis by a party to an anti-dumping investigation, without specific permission of the party submitting such information’ (compare Article 6 (c) of the Anti-Dumping Code). The case of unwarranted requests for confidentiality is dealt with by paragraph (3), which is materially identical to (but, so far as the English text is concerned, more grammatical than) Article 6 (d) of the Anti-Dumping Code.
Articles 12 and 13 relate to the process of consultation between the Commission and the Member States. Such consultations may be held at any time, either immediately on request by a Member State or on the initiative of the Commission (Article 12 (1)). They take place within an Advisory Committee (thereafter in the Regulation called ‘the Committee’) consisting of representatives of each of the Member States, with a representative of the Commission in the Chair (Article 12 (2)). Article 12 (4), which was added by Article 6 of Regulation No 2011/73, enables consultation to be, where necessary, in writing only. Article 13 provides that consultation shall, in particular: cover:
‘(a)
The existence and margin of dumping;
(b)
The existence and extent of injury;
(c)
The measures which, having regard to all the circumstances, are appropriate to remedy the effects of dumping, and the ways and means for putting such measures into effect.’
Article 14 (1) prescribes the procedure that is to apply where ‘it becomes apparent from consultation as provided for in Article 13 that protective measures are unnecessary’. In such a case, subparagraph (a) provides that, ‘where no objection is raised within the Committee, the proceeding shall stand terminated’. Otherwise, the Commission is required to submit forthwith to the Council ‘a report on the results of the consultation, together with a proposal that the proceeding be terminated’. The proceeding will then stand terminated either if the Council, acting by a qualified majority, approves the Commission's proposal or if within one month the Council has taken no decision or made no request by a qualified majority to the Commission for the examination of the matter to be resumed. Sub-paragraph (b) provides for the representatives of the exporting country and the directly interested parties to be informed by the Commission of the termination of the proceeding, and of the reasons for termination and of the criteria applied. If a notice was published in the Official Journal under Article 10 (2), that paragraph also requires the Commission immediately to announce the termination in the same Journal, unless there are special reasons against so doing (compare Article 6 (h) o£ the Anti-Dumping Code).
Article 14 (2) of the Regulation deals with price undertakings and corresponds to Article 7 of the Anti-Dumping Code. Sub-paragraphs (a), (b) and (c) are in these terms:
‘(a)
The provisions of the foregoing paragraph shall also apply where, during examination of the matter, the exponers give a voluntary undertaking to revise their prices so that the margin of dumping is eliminated or to cease to export the product in question to the Community, provided that the Commission after hearing the opinions expressed within the Committee, considers this acceptable.
(b)
Where the Commission, acting in accordance with the provisions of the foregoing subparagraph, accepts the undertaking referred to therein, the investigation of injury shall nevertheless be completed if the exporters so desire or if, after hearing the opinions expressed within the Committee, the Commission so decides. If the Commission, after hearing the opinions expressed within the Committee, makes a determination of no injury, the undertaking given by the exporters shall automatically lapse unless the exporters state that it is not so to lapse.
(c)
The fact that exporters do not offer to give such undertakings, or do not accept an invitation made by the Commission to do so, shall in no way be prejudicial to the consideration of the case. However, the Commission shall be free to determine that a threat of injury is more likely to be realised if the dumped imports continue.’
Two further sub-paragraphs, which provide for the policing of undertaking, were added by Article 7 of Regulation No 2011/73. Of these, sub-paragraph (d) provides:
‘Where the Commission finds that the undertaking of exporters is being evaded or no longer observed or has been withdrawn and that, as a result, protective measures might be necessary, it shall forthwith so inform the Member States and shall recommence the examination of the facts in accordance with Article 10.’
Sub-paragraph (e) makes the provisions of Article 18 (1) of the Regulation (which concern the monitoring of the effects of anti-dumping measures that have been put into operation) applicable mutatis mutandis to undertakings given by exporters on the basis of Article 14.
Articles 15 and 16 of the Regulation lay down rules for the adoption of provisional measures. They correspond to Article 10 of the Anti-Dumping Code, but are far more elaborate.
Article 15 (1) (a) is in these terms:
‘Where preliminary examination of the matter shows that there is dumping and there is sufficient evidence of injury and the interests of the Community call for immediate intervention, the Commission, acting at the request of a Member State or on its own initiative, shall:
—
having due regard to the provisions of Article 19 (3), fix an amount to be secured by way of provisional antidumping duty, collection of which shall be determined by the subsequent decision of the Council under Article 17;
—
indicate, using the description required under Article 20, the products covered by this measure;
—
stipulate that entry of such products for Community consumption shall be conditional upon the provision of security for the aforementioned amount.’
(Article 19 (3), so far as relevant for present purposes, limits the amount of a provisional duty to the margin of dumping provisionally determined and adds that ‘it should be less than the margin if such lesser duty would be adequate to remove the injury’. To Articles 17 and 20 I shall come).
Article 15 (1) (b) provides for consultation within the Committee about the adoption of provisional measures. Article 15 (1) (c) provides, so far as here relevant, that, where a Member State requests immediate intervention by the Commission, the latter is to decide within a maximum of five working days whether a provisional anti-dumping duty should be imposed.
Article 15 (2) provides, so far as relevant, by sub-paragraph (a) that provisional measures continue to operate until the entry into force of a decision by the Council under Article 17, subject, however to a maximum of three months, and, by sub-paragraph (b) that after the period of validity of such measures has expired, the security must be released to the extent of the amount secured that the Council has not decided to collect definitively under Article 17. Article 16 (2) enables the Commission ‘if so requested by the exponers and by the importers, and if examination of the matter has not yet been completed’ to submit a proposal to the Council for the extension of the provisional measures ‘for a period not exceeding three months’. The Council is to act on such a proposal by a qualified majority.
Article 17 provides:
‘1.   Where the facts as finally established show that there is dumping and injury, and the interests of the Community call for Community intervention, the Commission shall, after hearing the opinions expressed within the Committee, submit a proposal to the Council. Such proposal shall also cover the matters set out in paragraph 2.
(a)
The Council shall act by a qualified majority. Where Article 15 (1) has been applied, the Council shall decide, subject to the provisions of Article 15 (2), what proportion of the amounts secured by way of provisional duty is to be definitively collected.
(b)
The definitive collection of such amount shall not be decided upon unless the facts as finally established show that there is material injury … or that such injury would have been caused if provisional action had not been taken.’
Article 18, which was amended by Council Regulation (EEC) No 1411/77, provides for what I described earlier as monitoring of the effects of antidumping measures after they have been imposed, and for their amendment or revocation as may be necessary.
Article 19 (1) provides that:
‘Anti-dumping duties, whether provisional or definitive, shall be imposed by Regulation.’
Article 19 (2) (a) provides, so far as relevant:
‘(a)
Without prejudice to the provisions of Article 17 (2), such duties shall be neither imposed nor increased with retroactive effect.
(b)
Such duties shall apply to all the products specified in the Council or the Commission measure which, after entry into force of such measure, are entered for Community consumption.’
(Compare Article 11 of the Anti-Dumping Code).
Article 19 (3) is in these terms:
‘The amount of an anti-dumping duty, whether definitive or provisional, shall not exceed the margin of dumping established, or, in the case of a provisional duty, the margin of dumping provisionally determined; it should also be less than the margin if such lesser duty would be adequate to remove the injury.’
(Compare Article 8 (a) and (c) of the Anti-Dumping Code).
Article 19 (4) provides a safeguard for importers. Its essential provisions are these:
‘(a)
Where an importer can show that the products which he has entered for Community consumption were not dumped, or where the margin of dumping is lower than that on which the Council or Commission measure was based, the antidumping duties collected on those products shall be returned to him in whole or in part; where provisional measures were taken, the same shall apply in respect of the release of securities.
(b)
For this purpose, the importer may, within three months of the date on which the products were entered for consumption, submit an application to the Member State in whose territory they were so entered.’
The remainder of the paragraph lays down the procedure (involving consultation between that Member State, the Commission and the other Member States) whereby it is to be decided whether and to what extent the application should be granted.
Article 20 lays down how a product covered by an anti-dumping measure is to be described. Paragraph (1) requires such description to include:
‘(a)
tariff description;
(b)
commercial description;
(c)
country of origin or export
(d)
name of supplier.’
Paragraph (2) provides however that:
‘If several suppliers from the same country are involved, and it is impracticable to name them all, the product may be described by the particulars referred to in (a), (b) and (c) of the foregoing paragraph …’
(Compare Article 8 (b) of the Anti-Dumping Code, second and third sentences).
Article 21 makes it clear that antidumping duties are to be collected by the Member States. They form part, however, of the Community's own resources.
Those are, I think, all the provisions of the basic EEC legislation that call for consideration in these cases.
Having regard, however, to the references that were made in argument to the anti-dumping rules of the ECSC, I think that I ought to say something about them.
They rest on Articles 74 and 86 of the ECSC Treaty. Article 74 empowers the Commission, in the cases there set out, to take measures and to make recommendations to Governments. One of those cases is ‘if it is found that countries not members of the Community or undertakings situated in such countries aré engaging in dumping’. Article 86 binds Member States to give effect to such measures and recommendations.
Thus a fundamental difference between the ECSC and the EEC is that, in the case of the former, the power to decide lies with the Commission. The Council has no part to play.
The exercise of its power was not put by the Commission on a systematic basis until it made Recommendation No 77/329/ECSC on 15 April 1977. The preamble to that Recommendation refers to Regulation No 459/68 (as amended) and recites that ‘it is appropriate that the legislation governing external trade should be as homogeneous as possible in the two Communities’. It also refers to ‘the international obligations of the two Communities and their Member States’. The system adopted by Recommendation No 77/329 was essentially that of Regulation No 459/68, as amended by Regulation No 2011/73, with adaptations appropriate to the different institutional structure of the ECSC.
On 28 December 1977, the Commission made Recommendation No 3004/77/ECSC modifying in a number of respects Recommendation No 77/329. Of the modifications thus introduced, three are, I think, notable.
The first, and probably the most important in the light of the arguments presented to us in these cases, was the modification of Article 14 (2) (d) of Recommendation No 77/329, which had, until then, been identical to Article 14 (2) (d) of Regulation No 459/68 (added by Regulation No 2011/73). Both had provided that, if the Commission should find that an undertaking given by exporters was being evaded or no longer observed or had been withdrawn, and that, as a result, protective measures might be necessary, the Commission should forthwith resume the ‘examination of the facts’. Article 3 of Recommendation No 3004/77 substituted for that provision in Recommendation No 77/329 an elaborate set of provisions, culminating in this:
‘Where the Commission finds that the undertaking is being evaded or no longer observed or has been withdrawn it shall immediately take such measures as may be necessary.’
The other two notable modifications were the introduction, by Article 4 of Recommendation No 3004/77, of provisions moulded on those of Article 11 (iii) of the Anti-Dumping Code, relating to cases of ‘sporadic dumping’; and, by Article 5, of provisions enabling a basic price system, of the kind envisaged in Article 8 (d) of the Anti-Dumping Code, to be instituted.
None of those modifications has ever been made in the EEC legislation.
IV — The bearings industry
The products that are in question in these actions are, as I indicated at the outset, ball bearings and tapered roller bearings. There are some 25000 types and sizes of bearings prescribed by international standards, so that, subject to differences in quality, bearings produced by different manufacturers are interchangeable. Among those types and sizes there are some that are in great demand. They are known as ‘bread and butter’ or ‘star’ types. They can be produced cheaply in long production runs. The European industry has complained that it is on those types that competition from Japanese manufacturers has been concentrated.
There are in Japan four major manufacturers of bearings, who between them, account for some 90 % of sales on the Japanese market and some 95 % of exports from Japan to the Community. They are NTN Toyo Bearing Company Limited (‘NTN’), Nippon Seiko K.K. (‘NSK’), Koyo Seiko Company Limited (‘KOYO’) and Nachi Fujikoshi Corporation (‘NACHI’). I shall call them ‘the Big Four’. There are nine minor Japanese manufacturers whose products are exported or have been exported to the Community. The Big Four and those nine are members of the ‘Japan Bearing Industrial Association’.
Within the Community the production of bearings takes place mainly in France, Germany and the United Kingdom. There is some production in Italy, where imports from Japan are subject to quantitative restrictions. It appears, moreover, that Italy is authorized by the Commission under Article 115 of the EEC Treaty to exclude imports of bearings of Japanese origin that are in free circulation in other Member States. There is no statistically significant production of bearings in Belgium, Denmark, Ireland, Luxembourg or the Netherlands.
The national associations of bearing manufacturers in France, Germany and the United Kingdom, whose common interests had previously been looked after by a ‘Committee of the European Bearing Manufacturers’ Associations', formed in March 1977 the Federation of European Bearing Manufacturers Associations (FEBMA) which has intervened in each of these actions.
There are in the Community as a whole some two to three hundred importers of Japanese bearings, but the importation of the products of the Big Four is effected, for the most part, by subsidiaries of theirs or by companies otherwise connected with them.
NTN has a subsidiary in France, NTN-Roulements Sidag S.A. (‘NTN France’), and one in Germany, NTN Wälzlager (Europa) GmbH (‘NTN Germany’). In the United Kingdom it has a 50 % holding in NTN Bearings-GKN Ltd (‘NTN-GKN’) the other 50 % of which is owned by a well-known English company, Guest, Keen & Nettlefolds Ltd.
NSK has subsidiaries in France, Germany and the United Kingdom, namely NSK France S.A. (‘NSK-France’), NSK Kugellager GmbH (‘NSK Germany’) and NSK Bearings Europe Ltd (‘NSK UK’). NSK UK both imports bearings manufactured in Japan and itself manufactures bearings at Peterlee in County Durham.
KOYO also has subsidiaries in France, Germany and the United Kingdom, namely a company simply called ‘Koyo France’, Deutsche Koyo Wälzlager Verkaufsgesellschaft mbH (‘Deutsche Koyo’) and Koyo UK Ltd (‘Koyo UK’).
NACHI has a subsidiary in Germany, Nachi (Deutschland) GmbH (‘Nachi Deutschland’), and one in the United Kingdom, Nachi (UK) Ltd (‘Nachi UK’). Of NACHI's exports to the Community 67 % are however handled by an independent French company, Import Standard Office S.A. (‘ISO’), which is NACHI's sole distributor in France.
V — The events leading to the present actions
The degree of penetration of the common market by bearings manufactured in Japan seems to have caused concern in the European industry as early as 1968. This concern led to a number of initiatives, including an approach to the Commission in 1968, after which the latter agreed to treat bearings as a ‘sensitive product’ in trade negotiations with Japan.
However, for present purposes, I do not think that it is necessary to go back further than May 1967, when a Memorandum entitled ‘Low-priced imports from Japan and the state-trading countries — The threat to the EEC bearing industry’ was presented to the Commission by the European manufacturers. It was stated in the Memorandum that there could be little doubt that dumping had taken place on a number of occasions but that it was almost impossible to obtain the evidence which was necessary in order to make out a complaint satisfying the GATT rules. Accordingly, the Memorandum did not ask the Commission to initiate antidumping proceedings but rather to introduce Community import surveillance and Community import quotas in respect of bearings originating in Japan and the State-trading countries. The Commission says that it discussed the Memorandum with the Member States but was unwilling to take any action such as the imposition of quotas which might have led to a revival of protectionism in international trade. For the time being, therefore, it was content merely to keep the situation under review.
Despite the difficulties referred to in the Memorandum of May 1976, an antidumping complaint was lodged with the Commission on 15 October 1976 by the Committee of the European Bearing Manufacturers' Associations. For the purposes of the complaint, the comparison between domestic and export prices was made in relation to ten types of ball bearings and six types of roller bearings. The domestic prices were based on price-lists issued by three of the Big Four in 1975. It was acknowledged that, in practice, domestic sales took place at prices well below the list prices, Accordingly, a discount of 60 % was allowed for by the complainants in their calculations and documents supporting this figure were supplied to the Commission. Export prices were taken from a price-list for 1975 stated to have been issued ‘by the Export Cartel of the Japanese bearing industry’. It was alleged that those documents together established dumping margins averaging 45 %. In addition, the complaint provided evidence of injury, allegedly amounting to DM 500 million during the period 1970 to mid-1976. The accuracy of the information in the complaint was challenged before us by the applicants, in particular by NSK.
The Commission has however told us (and the Applicants have accepted) that it did not use any of this material either for the purpose of the provisional finding of dumping and injury that it subsequently made, or for the purpose of its definitive findings.
As required by Article 6 (2) (b) of Regulation No 459/68, the Commission forwarded the complaint to the Member States. They made their views known to the Commission on 5 November 1976. The decision to open an official antidumping investigation was taken on 9 November 1976 and was communicated to the Japanese Embassy to the Community. On 13 November 1976, a notice of the initiation of the proceeding, complying with the requirements of Article 10 (2) of Regulation No 459/68, was published in the Official Journal of the European Communities. It set 30 days as the period within which interested parties should ‘make known their views in writing’ and stated that the Commission would hear those directly concerned who so requested and who could ‘show that they have an interest sufficient to entitle them to express their views more fully’.
The Commission was also of course required by Article 10 (2) to advise ‘the exporters and importers known to be concerned’ of the initiation of an antidumping investigation. Letters dated 10 November 1976 were, accordingly, sent to the Big Four and to a number of importers, including the European subsidiaries of the Big Four and ISO. For some unexplained reason, the letter to NSK France was sent at a date later than the others. With each of the letters there were enclosed a copy of the notice to be published in the Official Journal and a questionnaire which the recipient was invited to complete for the purpose of presenting what the Commission itself described as its ‘defence’. The questionnaires were in a standard form used for EEC anti-dumping investigations and asked for details of, among other things, prices and quantities sold. The exporters were particularly requested to include in their supporting evidence copies of all invoices issued by them for sales in the period January to June 1976, both on the domestic market of Japan and for export to the Community, of the sixteen types of bearings selected by the complainants. The letters to them added:
‘In order to attempt to reach a speedy and equitable solution you might wish to present your case orally to representatives of the Commission and, possibly, to meet the European producers so that opposing views may be presented. For that purpose, the Commission would propose a meeting on 18 January 1977. Please confirm, by return, whether this date is suitable to you. You should bear in mind, however, that your written submission must in any case be made within the time-limit of 30 days fixed in the publication.’
Some of the recipients of the letters requested, and were granted, an extension of time for answering the questionnaires. Initial replies from the Big Four were received by the Commission under cover of letters dated 17 and 18 December 1976. Correspondence between them and the Commission continued thereafter and indeed throughout the investigation.
A meeting between ‘the parties directly concerned’ took place in Brussels on 18 and 19 January 1977. This appears to have been a ‘confrontation meeting’ of the type envisaged in Article 6 (g) of the Anti-Dumping Code and Article 10 (6) (b) of Regulation No 459/68, providing an opportunity for the presentation of ‘opposing views’ by representatives of the European industry, on the one hand, and representatives of exporters and importers of Japanese bearings, on the other, rather than an oral hearing of the type envisaged by Article 10 (6) (a) of the Regulation. The meeting was attended also by Japanese Government officials. It appears to be common ground that little progress was made at the meeting, chiefly because the Japanese exporters were unwilling to discuss information of a confidential nature in the presence of their competitors. They did however say that the discount on their domestic list prices should have been 70 to 80 %, instead of the 60 % on which the calculations of the complainants had been based. Much of the case put forward on their behalf consisted in an attack upon the evidence of material injury relied on by the complainants. On this subject a written memorandum was submitted by the Japan Bearing Industrial Association. It is also common ground that, although invited to do so, the Japanese exporters were unwilling to discuss the possibility of increasing their expon prices or of giving undertakings. That being so, the Commission warned them that a preliminary decision might be taken in the near future and asked them to supply, by 25 January 1977 at the latest, certain additional information. Some at least of that information was sent to the Commission on or about 26 January 1977.
On 28 January 1977 a meeting was held of the Advisory Committee at which the representatives of several of the Member States requested that provisional antidumping duties be imposed immediately. That meant that, by virtue of Article 15 (1) (c) of Regulation No 459/68, the Commission was required to decide within a maximum of five working days whether that step should be taken.
In the event, the Commission took the view that dumping and injury had been sufficiently established by its preliminary examination and that the interests of the Community called for immediate intervention. Accordingly, on 4 February 1977, it adopted Regulation No 261/77, which entered into force on the day of its publication in the Official Journal, 5 February 1977. By that Regulation a provisional anti-dumping duty of 20 % was imposed on ball bearings, tapered roller bearings and parts thereof originating in Japan. The Commission evidently took the view that it was impracticable to name all the suppliers, for the Regulation did not do so (see Article 20 (2) of Regulation No 459/68). However, duty at a lower rate f 10 % was imposed on the products NACHI and KOYO. The Commission explained to us that that more favourable treatment was due to the fact that, in the preliminary examination, it had seemed that the margin of dumping was lower in their case. It later transpired that the rate of duty should have been the same for the products of all the Big Four. The Regulation made the entry into free circulation in the Community of products to which the duty applied conditional upon the deposit of security for the amount of the duty. (In general the security took the form of a bank guarantee). In accordance with Article 15 (2) of Regulation No 459/68, the provisional duty was to apply for a maximum period of three months.
After the adoption of Regulation No 261/77 the Commission continued its investigation. This involved frequent meetings in Brussels, including meetings with Japanese Government and Embassy officials, and also on-the-spot investigations. On-the-spot investigations at the premises of the Big Four's subsidiaries in France, Germany and the United Kingdom (including NTN-GKN) took place in February and March 1977. They were followed in April 1977 by investigations at each of the Big Four's own premises in Japan. There was also in April an on-the-spot investigation at ISO's premises. The various investigations were carried out by antidumping specialists from the Commission and from certain of the Member States, who were reinforced in the case of the visit to Japan by a Commision accountant and an economist attached to the Commission's Delegation in Tokyo. All those meetings and visits create the impression of an investigation conducted with great thoroughness. Attempts made on behalf of some of the applicants to dispel that impression, to my mind, failed. I refrain from seeking even to summarize the kind of evidence obtained by the Commission in the course of the investigation. We were told of invoices, computer print-outs of prices, details of costs, audited accounts, and so forth. We were told also that it contributed to the existence now in Brussels of 135 files relating to this matter.
The maximum period of three months fixed by Regulation No 261/77 for the application of the provisional duty was due to end on 5 May 1977. It was clear that the ‘examination of the matter’ would not be completed by then. So, on 3 May 1977, pursuant to Article 16 (2) of Regulation No 459/68, the Council adopted Regulation (EEC) No 944/77 extending the provisional duty for a further three months, i.e. until 5 August 1977. It was a pre-condition of the exercise of that power that it should be ‘requested by the exporters and by the importers’. We were told at the hearing that it had been requested at least by the Big Four and by their European subsidiaries.
In May and June 1977 the Commission made calculations designed to enable it to determine definitively whether there had been dumping and, if so, what the margin of it was. One of the major issues in these cases arises from the fact that the Commission did not consider itself bound to disclose those calculations, or anything about them, to anyone; and did not do so.
I must at this point say something about the methods used by the Commission in calculating dumping margins, both for the purpose of its provisional findings, on which Regulation No 261/77 was based, and for the purpose of its definitive findings.
Firstly, because a very large number of different types of bearing of Japanese origin were sold in the Community (some 3500), it was impracticable to calculate dumping margins for all of them. So it was done for representative types. The representative types considered in the preliminary examination were the sixteen originally selected by the complainants. Wider samples, which provided the basis for the definitive determination of dumping, were selected during the on-the-spot investigations of the Big Four's European subsidiaries. These samples varied from firm to firm and as between Member States.
Secondly, the prices used by the Commission for the purposes of its calculations were, both in the case of export prices and in the case of domestic prices, weighted average prices, in other words for each product an average calculated by dividing the total amount obtained on sales by the total amount of units sold. This method was chosen because there were considerable price variations on individual transactions even in respect of the same product from the same supplier.
Thirdly, because of the ‘association’ between the Big Four and the European importers of most of their products, the Commission used the method of constructing export prices provided for in Article 3 (3) of Regulation No 459/68, i.e. it worked back from the prices at which the goods were first resold to an independent buyer within the Community. That the Commission was using that method was mentioned in the preamble to Regulation No 261/77 and was confirmed to the European subsidiaries of the Big Four when the on-the-spot investigations at their premises took place and they were asked for details of their costs and profits. Consistently, however, with its view that it was not bound to disclose its calculations, the Commission left them in the dark as to how it had used the figures they had supplied. This led to a particular complaint on the part of NSK at the hearing because, in its Rejoinder in Case 119/77, the Commission disclosed the percentage deductions that it had made for costs from the resale prices of each of NSK's subsidiaries. It was said on behalf of NSK that those percentages could not have been correctly calculated.
Fourthly, the comparison of export and domestic prices was in general made, at the ex-factory level, in respect of sales during the first half of 1976, which was referred to as ‘the base period’. (It was, Your Lordships remember, the period for which invoices had been requested in the Commission's letters of 10 November 1976). The Commission considered that that approach was consonant with the requirements of Article 3 (4) of Regulation No 459/68. In the calculations that it made in May and June 1977, however, the Commission, so it revealed in its Rejoinders in Cases 119/77 and 120/77, updated the domestic prices to January 1977. The reason for that adjustment, the Commission explained, was to ensure that any duty to be imposed should be related to the latest ascertainable margin of dumping and not to a margin that was already historical. None of the exporters or importers concerned were informed of the Commission's intention to make such an adjustment, nor was the Court given more than the vaguest indication of what it entailed. It seems that there was no corresponding adjustment to export prices. Before us it became an issue between NSK and the Commission whether such an adjustment should have been made.
The Commission also revealed in those Rejoinders that, in the calculations that it made in May and June, it made a further adjustment to the domestic prices, namely the addition of an amount representing a notional profit of 8 %. (In a limited number of cases an allowance for a notional profit was made in constructing export prices but never in constructing both export prices and the corresponding domestic prices). The Commission took the view that that was justified because press reports and the audited accounts of the Japanese manufacturers showed that they had persistently been trading at a loss. Persistent sales at a loss could not, the Commission considered, be regarded as ‘in the ordinary course of trade’ within the meaning of Article VI (1) of the GATT, Article 2 (d) of the Anti-Dumping Code and Article 3 (1) (a) of Regulation No 459/68. So the Commission concluded that it was entitled to ignore the actual home market prices and to do what it called ‘a cost of production exercise’ under Article 3 (2) of the Regulation. But since such an ‘exercise’ would have been impossible in the time, on the information that the Commission was able to obtain, it decided to assume that the home market prices covered costs of production, and it added the 8 % to them. The assumption that home market prices covered costs of production operated, the Commission said, in the Japanese manufacturers' favour. The rate of 8 % was calculated by reference to the profits earned in certain Japanese industries which the Commission regarded as ‘of the same general category’ as the bearings industry, namely the manufacture of springs, of chains and conveyors, and of conveyors alone. Whether the arguments put forward by the Commission in support of its interpretation of Article VI of the GATT, of Article 2 (d) of the Anti-Dumping Code and of Article 3 (2) of Regulation No 459/68 are good in law is a matter that I shall have to consider later in this Opinion. For the time being it is sufficient to record that, although the Japanese exporters were asked for information about their profits and losses, they were never told by the Commission that any amount representing a notional profit, let alone the specific figure of 8 %, was to be added to their weighted average prices either in their home market or in Community markets; nor was the comparability of the industries selected by the Commission for the purpose of establishing that figure discussed with them.
I return to the narrative.
There were also during May and June 1977 discussions about the possibility of the Japanese exporters giving undertakings to revise their prices. The Commission's submissions to the Court were couched in terms suggesting that the exporters were blameworthy in that they had not been willing to discuss that possibility until such a late stage in the investigation, but Article 14 (2) (c) of Regulation No 459/68 clearly prevents that fact from having any prejudicial consequences for them. The participants in the discussions were the Commission on the one hand and the Big Four and their subsidiaries, together with representatives of the Japanese Government and of the Japan Bearing Industrial Association, on the other. The possibility of undertakings being given by the minor Japanese exporters was discussed with the Association.
It seems that in the course of those discussions some at least of the Big Four were informed in general terms by Commission officials of the margins of dumping that had been calculated in respect of their exports. Thus we were told on behalf of NSK that, at a meeting on 25 May 1977 with representatives of NSK, officials of the Commission stated that the margin of dumping that they had found on exports by NSK to the Community varied between nil and 30 % according to type, with the average around 15 to 16 %. Counsel for KOYO told us that, at a meeting which he attended, a Commission official had said that the margin of dumping established in KOYO's case was 12.24 %. On the other hand it appears that none of the Big Four was given details of the margins of dumping found on its products, type by type. Much less would the Commission disclose how the margins had been calculated.
Before the Court it became a bone of contention between NSK and the Commission whether statements made by Commission officials during the discussions were such as to induce the exporters to believe that, if they gave acceptable undertakings, their products would not be subjected to any duty. In my opinion, that point can be left aside because, whatever may have been said, the exporters cannot reasonably have believed that the officials concerned were in a position to commit the Commission itself, not to mention the Council.
As a result of the discussions the Big Four signed undertakings on 20 June 1977.
On behalf of the minor Japanese exponers, the Japan Bearing Industrial Association informed the Commission by telex dated 1 July 1977 that they were willing to give undertakings in a form already agreed between the Association and the Commission's officials. Undertakings were given by the nine minor exporters and were dated 7 July 1977. Eight of them were sent to the Commission under cover of a letter dated 8 July 1977 and the ninth under cover of a letter dated 28 July 1977. We do not know the exact terms of any of them.
We do have before us, however, copies of the undertakings given by the Big Four. Each of them is expressed to be given ‘on behalf of the aforesaid Company and its subsidiaries and affiliates’. There is no material difference between them, though NACHI's undertaking differs in some respects from the others in so far as it relates to exports to France, in recognition presumably of ISO's independent status. Broadly speaking what each of the Big Four (and its subsidiaries and affiliates) undertook was this:
(1)
Taking its prices in January 1977 as a starting point, to increase them in two steps, one starting on 5 February 1977 and to be completed by 30 June 1977, and the other starting not later than 1 July 1977 and to be completed by 31 December 1977, the increase being, at each step, of 10 %.
(2)
To increase its prices in the last month of each half-year ‘by the percentage change in the Bank of Japan's Producer Price Index for Manufactured Goods — General Machinery and Precision Instruments’, the first such increase, reflecting the percentage change between June 1977 and December 1977, to be put into effect by the end of June 1978.
(3)
Under clause 5 of each of the undertakings (except NACHI's where it is under clause 6), to take steps to ensure ‘a similar price development’ for bearings ‘of origin other than Japanese’.
(4)
To supply to the Commission, at specified intervals, detailed information about its prices for the 100 most important types of bearings and to allow ‘whatever verification of such information is deemed necessary by the Commission’.
The undertakings were to come into effect ‘on notification by the Commission to the firm that they are considered acceptable’. They were to be ‘valid until 31 December 1978 renewable half-yearly by tacit agreement, unless either the Commission decides to withdraw its acceptance or the Company denounces them, on condition that twenty days' previous notice is given by the Company’.
Among the written questions put by the Court to the parties at the close of pleadings was one designed to elucidate how it was envisaged that undertakings given on 20 June 1977 would affect prices charged on sales taking place between 5 February and 20 June 1977. In answer to that question, the Commission said that it did not envisage that the undertakings could affect prices already charged on sales that had taken place between 5 February and 20 June 1977 but that it accepted that any price increases made between 5 February and 30 June 1977 should be considered as ‘conforming with the first step of the undertaking’. The Big Four explained more fully that each of them had been striving in the first half of 1977 to increase its prices in so far as national price controls, existing contracts and customer resistance permitted. NACHI had announced a first increase of 5 % taking effect on 1 January 1977. In February it announced an increase of 12 %. KOYO initiated increases in February, related to the imposition of the provisional duty. NTN and NSK followed suit, instructing their European subsidiaries to increase prices by 10 % in March and April respectively. The Commission was, the Big Four said, aware of those facts and the undertakings reflected a consensus between them and the Commission that the price increases effected by them in the first half of 1977 should count towards the aggregate increase of 20 % that was to be achieved by 31 December 1977.
NSK objected strongly to the terms of clause 5 of its undertaking, because they applied to bearings manufactured by NSK UK at Peterlee, i.e. within the Community. NSK had sought to have the draft of the undertaking (prepared by the Commission) modified in that respect, but the Commission had insisted that the clause should stand. It was explained to us on behalf of the Council and of the Commission that the object of such a clause was to prevent a manufacturer with production capacity outside Japan from evading his undertaking by switching sources of supply; it was added that, without the clause, NSK's undertaking would have been unacceptable, because incapable of being policed.
On 21 June 1977 (the day after the signing of the Big Four's undertakings) there was a meeting of the Advisory Committee, following which the Commission decided to propose to the Council that the Big Four's undertakings should be accepted, that a definitive antidumping duty at the rate of 15 % should be imposed on ball bearings and roller bearings (but not parts thereof) originating in Japan, that that duty should be suspended so long as the Big Four's undertakings were observed, and that the amounts secured by way of provisional duty on products of the Big, Four, but not on those of the minor exporters, should be definitively collected to the extent to which they did, not exceed 15 %. On 4 July 1977 the Commission sent to the Council a formal Proposal for a Council Regulation having that effect.
I have already mentioned certain revelations that were made by the Commission for the first time in its Rejoinders in Cases 119/77 and 120/77. A further such revelation was that, after it had sent its Proposal to the Council, but before the Council acted on it, the Commission made a further series of what it described as ‘verifying calculations’. What those calculations consisted in, we do not know.
In argument before us much was made on behalf of NSK of a particular incident, also revealed for the first time in the Commission's Rejoinders in Cases 119/77 and 120/77, that occurred during that period. On 8 July 1977 the Commission's Delegation in Tokyo sent to it summary translations of Japanese press reports about an increase in domestic prices that had been made by the Big Four in 1976, and in particular of a speech by Mr Otsu, the President of NTN and of the Japanese Bearing Industrial Association, suggesting that that increase, averaging 6 to 8 %, which the Commission had previously believed to have taken effect in July 1976, i.e. outside the base period, had in fact been applied, for the most part, as from January 1976. The Commission took the view that the retroactive element in that price increase ought to have been disclosed by the Japanese manufacturers, but it did not discuss the matter with them. Instead it used the information contained in those press reports for the purpose of ‘verifying calculations’ purportedly made under Article 10 (7) (b) of Regulation No 459/68, which relates to ‘cases in which any interested party withholds the necessary information’. Those calculations were, it seems, distinct from the verifying calculations that I mentioned a moment ago. On behalf of NSK we were told that, if the Commission had discussed the matter with them, it would have found that the retroactive price increase was made in April 1976 and that it applied only to a small proportion of the bearings in the representative sample (because it related mostly to bearings of a kind supplied to the Japanese motor industry and not exponed to Europe) its effect being to raise the overall average of prices in the base period for the types in that sample by about one-half of 1 %; and that the increases for May and June had been included in the computer print-outs relating to those months. In the event, the Commission's Proposal to the Council was not changed as a result of that incident.
On 24 July 1977 the Council adopted Regulation No 1778/77 the terms of which did not, save in one respect, materially differ from what had been proposed by the Commission. The Regulation entered into force on 4 August 1977, which was the day following its publication in the Official Journal. Counsel for NSK suggested at the hearing that there may have been improper motives for the delay in publication, which prolonged the period of application of the provisional duty. There was however no evidence to support that suggestion. The delay may have been due to delays in translation.
On the same day as the Regulation was published (3 August 1977) the Commission sent telexes to the Big Four notifying them that their undertakings had been accepted.
There was much argument before us about the contents of the preamble to Regulation No 1778/77. Nonetheless I do not propose to examine that preamble in detail at this stage. I confine myself to mentioning that the only information it gives about the Commission's findings on the question of dumping is that contained in the 12th recital, which is in these terms.
‘Whereas this examination of the matter shows that dumping has taken place, the margin of which varies considerably from transaction to transaction but, on the average, exceeds 15 % in the major part of the Community.’
(The preamble to Regulation No 261/77 had been no more explicit on the subject, recording only that ‘preliminary examination of the matter shows that dumping has taken place, the margin of which varies considerably from one transaction to another and in several cases exceeds 30 %’). The Commission's findings on the question of injury are much more fully set out in the preambles to both Regulations.
A curious feature of the 12th recital to Regulation No 1778/77 is the use of the phrase ‘the major part of the Community’ which at first sight would seem to mean more than half of it. That is however clearly not the sense in which the phrase was understood by the Commission, which submitted that any one or more of France, Germany and the United Kingdom would constitute such a part. The Council said that the phrase ‘a major part’ rather than ‘the major part’ was obviously intended. Indeed that is the phrase used in the Italian text of the Regulation, which has ‘per gran parte della Comunità’.
Articles 1, 2 and 3 of Regulation No 1778/77 are of such central importance in these cases that I must cite them almost verbatim:
‘Article 1
1.   A definitive anti-dumping duty of 15 % is hereby imposed on the following goods, falling within heading No ex 84.62 of the Common Customs Tariff, originating in Japan, on the basis of the value declared …
—
ball bearings (NIMEXE code 84.62-11),
—
tapered roller bearings (NIMEXE code 84.62-17).
The provisions in force for the collection of customs duties shall apply for the collection of this duty.
2.   The application of this duty is hereby suspended without prejudice to Article 2 hereof.
Article 2
1.   The Commission shall, in collaboration with the Member States, closely monitor the observance of the undertakings given by the major Japanese roller bearings producers to revise their prices and shall keep a close watch on import trends and developments on the Community market.
2.   If the Commission finds that these undertakings are being evaded, are not being observed or have been withdrawn, it shall forthwith, after consulting the Member States within the Advisory Committee provided for in Article 12 of Regulation (EEC) No 459/68, convened within a period of five days, terminate the suspension of the application of the duty imposed under Article 1 hereof.
Article 3
The amounts secured by way of provisional duty under the provisions of Regulation (EEC) No 261/77 extended by Regulation (EEC) No 944/77, in respect of products manufactured and exponed by the following producers, shall be definitively collected to the extent that they do not exceed the rate of duty fixed in this Regulation”:
and then the Big Four are named.
Those provisions call for two immediate comments.
The first relates to the scope of application of the Regulation. Article 3 of course applies only to the products of the Big Four. It was explained to us on behalf of the Council and of the Commission that that was because the injury caused to the European industry by the minor Japanese exporters was considered to have been negligible. But, if it was negligible, that-fact precluded the imposition of a definitive duty (albeit suspended) on the products of the minor exporters, just as much as it precluded the definitive collection of the provisional duty on their products. There was no suggestion that, in their case, the imposition of a definitive duty was justified by a “threat of injury”, nor indeed does the preamble to the Regulation anywhere refer to a threat of injury. It refers only to “existing injury” and injury that “has been caused”. It follows, in my opinion, that not only Article 3 of the Regulation, but Articles 1 and 2 also (despite their unqualified terms) can apply only to the products of the Big Four.
My second comment relates to the nature of the power or obligation of the Commission under Article 2 (2). In the Commission's Proposal of 4 July 1977, the text of Article 2 (2) was such that the Commission would have been bound to terminate the suspension of the application of the duty (in the event of evasion, non-observance or withdrawal of the undertakings) only if, after consulting the Member States, it concluded that protective measures were necessary. In the text of Article 2 (2) actually adopted by the Council, the wording was changed. It was provided that (in such an event) the Commission should, after consulting the Member States within the Advisory Committee, “forthwith … terminate the suspension of the application of the duty”. So it looks as though the Council deliberately decided that the Commission should have no discretion in the matter. Such a decision would be consistent with the provisions of Regulation No 459/68, none of which envisage that the Commission should exercise any discretion as to the imposition of a definitive duty.
VI — The present actions and the claims made in them
There are five actions now before the Court, all of which were brought in September or October 1977, namely.
Case 113/77:
This is an action by NTN, NTN Germany, NTN France, and NTN-GKN. Originally the action was described rather vaguely as brought by NTN “acting on its own behalf and on behalf of its subsidiaries and affiliates in the Common Market”.
The point was taken on behalf of the Council that such a vague description of the Applicants made the action inadmissible. That flaw was however cured in the early stages of the action when it was made clear that the subsidiaries and affiliates in question of NTN were those I have mentioned.
The only Defendant in this action is the Council. The only claim made in it is a claim under the second paragraph of Article 173 of the Treaty for a declaration that Article 3 of Regulation No 1778/77 “is inapplicable” to the Applicants — which, I apprehend, having regard to the wording of Article 174 of the Treaty, should be taken to mean a declaration that Article 3 is void.
Case 118/77:
This action is brought by ISO alone against the Council alone. ISO claims, under the second paragraph of Article 173, a declaration that the whole of Regulation No 1778/77 is void.
Case 119/77:
This is an action brought by NSK, NSK-UK, NSK Germany and NSK France against both the Council and the Commission. It is, of the five actions, that in which the claims are the most elaborate. At this stage I think it enough to say that they comprise, on the one hand, claims under the second paragraph of Article 173 going to the validity of the whole of Regulation No 1778/77 and (as I indicated at the outset) claims under Article 178 of the Treaty for compensation for damage. I propose, in this Opinion, to defer consideration of the latter claims until after I have entirely dealt with all the claims under Article 173.
Case 120/77:
This action is brought by KOYO, Deutsche Koyo, Koyo UK and Koyo France against both the Council and the Commission. The only claim is for a declaration that Regulation No 1778/77 (the whole of it) is void. One wonders why, that being so, the Commission was made a Defendant. However, the Commission has taken no objection to this and, since it is a matter of no practical importance — because the Commission could plainly have intervened in any of these actions in which it was not made a Defendant — I say no more about it.
Case 121/77:
This, the last of the actions, is brought under the second paragraph of Article 173 by NACHI, Nachi Deutschland and Nachi UK against the Council for a declaration that Regulation No 1778/77 is void or, in the alternative, a declaration that Article 3 of it is void.
In three of the actions (113/77, 119/77 and 121/77) there were applications for interim measures as a result of which my Lord the President ordered in effect the suspension, until the final judgment, of the collection under Article 3 of Regulation No 1778/77 of the provisional duty assessed on, but not yet paid by, Applicants in those actions so long as they continued to provide security for it.
In each of the actions the FEBMA has, by Order of the Court, been allowed to intervene in support of the Defendants.
Also in each of the actions preliminary objections to admissibility were lodged under Article 91 of the Rules of Procedure of the Court by the Defendants. By Orders dated 12 April 1978 the Court reserved its decision on the issues thus raised for the final judgment.
So I must now consider to what extent, if any, the claims made under the second paragraph of Article 173 of the Treaty are admissible.
VII — Admissibility of the claims under Article 173
On behalf of the Council it was contended that, anti-dumping measures being measures of commercial policy directed against undertakings outside the Community, such measures ought not to be regarded as open to review by this Court in the same way as individual administrative acts. The Council referred to the anti-dumping laws of Member States before anti-dumping became a Community matter and said that those laws “reflected the legislative and discretionary character of anti-dumping duties”, in contrast to the corresponding laws of the USA, which, if I understood the contention correctly, provide for administrative procedures open to judicial review.
To my mind the Applicants countered that contention convincingly when they analysed the legal position in each of the Member States before anti-dumping became a Community matter, and in particular when they cited the Judgment of the French Conseil d'État in the case of the Manufacture de Produits Chimiques de Tournon and the Judgment of Ackner J. in the Queen's Bench Division of the High Court of Justice of England in Leopold Lazarus Ltd v Secretary of State for Trade and Industry. (The texts of both those Judgments are to be found at Annex 1 to the Applicants' Answer to the Preliminary Objections of the Defendants as to Admissibility in Case 119/77).
In my opinion, however, tins Court ought not to concern itself overmuch with what the law may formerly have been in individual Member States, or with what it may be in the USA. Our duty is simply to give effect to Article 173 of the Treaty. As to that, it is clear that a person other than a Member State or a Community Institution, in order to be entitled, under the second paragraph of Article 173, to challenge the legality of an act of a Community Institution in the form of a regulation, must satisfy three conditions:
(1)
he must be able to show that, although in that form, the act is really (at all events in so far as it concerns him) a decision;
(2)
he must be able to show that it concerns him directly; and
(3)
he must be able to show that it concerns him individually.
It was argued on behalf of some of the Applicants that certain Judgments of this Court, in particular those in Case 100/74 CAM v Commission [1975] 2 ECR 1393 and in Case 88/76 Société pour l'Exportation des Sucres v Commission [1977] ECR 709, were authority for the view that it was enough if an applicant satisfied conditions (2) and (3). I can see that those Judgments, if looked at in isolation, are susceptible of being interpreted in that sense. But in my opinion it is not permissible to look at them in isolation. They must be interpreted consistently with earlier and later authorities that show that condition (1) is important. The earlier authorities to that effect I collected in my Opinion in CAM v Commission (see [1975] 2 ECR at p. 1411). Later ones include Case 101/76 Koninklijke Scholten Honig v Council and Commission [1977] ECR 797 and Cases 103 — 109/78 Société des Usines de Beaufort v Council (18 January 1979, not yet reported).
In truth I think that CAM v Commission and Société pour l'Exportation des Sucres v Commission were rather special cases. In each of them the act of the Commission that was in question determined the effect of certificates fixing export refunds in advance that had been embodied in export licences obtained between specified dates. That being so that act, although in the form of a regulation, could readily be regarded as constituting a series (or ‘bundle’) of individual decisions as to the fate of those particular licences, and so as being analogous to the act that was in question in Cases 41 to 44/70 the International Fruit Co. case [1971] ECR 411. That indeed is how Mr Advocate General Reischl saw the act in question in Société pour l'Exportation des Sucres v Commission (see [1977] ECR at p. 730).
With those principles in mind I turn to Regulation No 1778/77.
For present purposes the Applicants seem to me to fall into three categories:
(1)
The Big Four;
(2)
Subsidiaries and affiliates of the Big Four; and
(3)
ISO.
I will deal first with ISO.
ISO, which is an independent company not bound by any undertaking given to the Commission, is to my mind in no different a position under Regulation No 1778/77 from that of any other independent importer into the Community of products of the Big Four.
In my opinion that Regulation, in so far as it affects such independent importers, is precisely what it purports to be: a regulation and nothing else.
As regards Articles 1 and 2 of the Regulation that seems to me to be clear beyond question. Those Articles are capable of affecting anyone who may in the future import into the Community bearings to which the Regulation applies. In no way do they single out any particular importer or category of importers of such bearings.
Article 3 presents a more difficult problem. There is no doubt that that Article is of individual concern to a closed class of importers, namely those who, between 5 February 1977 and 4 August 1977, imported into the Community products manufactured by the Big Four and who, by virtue of Regulation No 261/77 (or by virtue of that Regulation as extended by Regulation No 944/77), were assessed to provisional duty on those imports and gave security for the amounts so assessed. Nor is there any doubt that Article 3 concerns those importers directly, for its effect is to require the customs authorities of the Member States to collect the amounts of duty so assessed and secured, without leaving any discretion to those authorities. But can it be said that Article 3 constitutes by its nature, in so far as it thus affects those importers, a series of decisions rather than a legislative measure? I think not. It seems to me to be a typical example of what I referred to in my Opinion in CAM v Commission as ‘legislation affecting a closed class’ [1975] 2 ECR at p. 1413). To my mind it would be odd if it were to be held that, in any anti-dumping case, the decision to impose a provisional duty was of a legislative nature, the decision to impose a definitive duty was of a legislative nature, but the decision to collect the provisional duty was not of a legislative nature. Moreover that odd conclusion would have this odd result that an importer who wished to challenge the validity of the collection from him of a definitive duty could do so only in the appropriate national court, whereas an importer who wished to challenge the validity of the collection from him of a provisional duty would have the choice of doing so either in the appropriate national court or by means of a direct action in this Court.
I conclude that ISO's action (Case 118/77) is inadmissible.
I do not overlook that, in one of the cases at least (Case 119/77), an attempt was made on behalf of the Applicants to demonstrate that the remedies available to importers in the relevant national courts was inadequate. But it seems to me that that attempt failed.
As regards the remedies available in the Federal Republic of Germany, the only criticism made seemed to be that the relevant period of limitation was very short (one month). That is of course something with which Your Lordships are familiar from other cases. It is not a reason for stretching the meaning of Article 173 so as to afford an alternative remedy in this Court.
The same applies as regards the only criticism that seemed to be made of the position in France, which was, not that the remedies available there were in themselves inadequate, but that, in the view of those Applicants, French appellate procedures are cumbersome.
Lastly, the Applicants' treatment of English law was, to say the least, sketchy. Among its shortcomings was its failure to mention what I should have thought was the most obvious remedy available in the English courts, namely an action for a declaration. That indeed was the remedy invoked in Leopold Lazarus Ltd v Secretary of State for Trade and Industry. Nor, although the Applicants purported to be dealing with the position in the whole of the United Kingdom, did they condescend to discuss the remedies available in Scottish courts.
The position of the Big Four themselves, in relation to Regulation No 1778/77, seems to me different. It is unlikely to be possible for any of them to challenge its validity, or the validity of any part of it, in a national court, unless it be, perhaps, under some national procedures, as an intervener, or, under others, as a person merely supporting, financially or otherwise, proceedings brought by an importer.
It does not of course follow from that alone that the Big Four (and each of them) must be held entitled to challenge the Regulation directly in this Court under the second paragraph of Article 173.
Nor do I think it necessary for Your Lordships to decide in this case the question, which was extensively argued, whether an exporter who has, as a result of an examination carried out under Article 10 of Regulation No 459/68, been found guilty of dumping leading to material injury to a Community industry, ought ipso facto to be held entitled to challenge, under the second paragraph of Article 173, any act of the Council or of the Commission embodying or giving effect to that finding. The arguments for and against an affirmative answer to that question are nicely balanced.
What seems to me evident is that, in relation to each of the Big Four, Regulation No 1778/77 goes further than that. For the reasons that I have already explained, each of its Articles applies only to their products. So the combined effect of Articles 1, 2 and 3 of the Regulation is that, on the twin bases of the findings of dumping leading to material injury made against each of the Big Four and of the undertakings given by each of them, a definitive duty on their products is imposed but suspended so long as the Commission's monitoring of their observance of their undertakings does not lead it to find that those undertakings are being evaded, are not being observed or have been withdrawn; and in the meantime the provisional duty assessed on imports of their products effected before the entry into force of the Regulation is to be definitively collected.
It is difficult to see in any of that, in so far as it affects the Big Four, anything legislative in nature, anything of ‘general application’, to use the words of Article 189 of the Treaty relating to a regulation. It seems to me essentially ad hominem. It has all the characteristics of a decision affecting particular persons on the basis of their own conduct. That it concerns each of the Big Four individually is manifest. I think it concerns each of them directly too, even though it is from the importers that the provisional duty is actually to be collected and that definitive duty will be collected if any of the Big Four fails to observe its undertaking. Any other view would seem to me to fly in the face of reality.
I conclude that the claims under Article 173 of the Treaty are admissible in so far as they are brought by the Big Four themselves. But I emphasize that that is due, to my mind, to the particular structure of Regulation No 1778/77. It does not mean that, every time a Regulation of the Council imposes a definitive anti-dumping duty or provides for the definitive collection of a provisional one, the exporters concerned will necessarily be entitled to challenge it under Article 173. What it means is that Regulation No 1778/77 is, in my opinion, a hybrid instrument, of a kind that the Court has not had to consider before, and may seldom have to consider. For everyone except the Big Four (and possibly their subsidiaries and affiliates, whose position I have yet to discuss) it is a regulation and nothing but a regulation. Quoad each of the Big Four, however, it constitutes a decision of direct and individual concern.
The question whether the claims under Article 173 of the subsidiaries and affiliates of the Big Four are admissible is, in the circumstances, of little practical importance. Clearly, if I am right in the view I have expressed, their status as importers does not make their claims admissible. But they are parties to the undertakings, which assimilates their position to that of the Big Four. In the case of NSK UK there is, in addition, the peculiar fact that Regulation No 1778/77 acts as a deterrent to any breach on its part of its undertaking to increase the prices of the bearings it manufactures at Peterlee. It is difficult to see what remedy it could claim for that in the English courts. I would hold that the claims of the Big Four's subsidiaries and affiliates were admissible.
VIII — The substance of the claims under Article 173
I have found it no easy task to marshal the points of substance taken by the Applicants in challenging the validity of Regulation No 1778/77 They number more than forty. A feature of them is that the same point is often taken, on the one hand, in the form of a direct criticism of what the Commission or the Council did and, on the other hand, in the form of a criticism of the preamble to the Regulation for not stating what the Institution concerned did or why it did it. For example the Commission is criticized for having held the Big Four's export prices to be ‘unreliable’ and the preamble to the Regulation is criticized for not stating why they were considered to be unreliable. In the first form the point amounts to a contention that there was a breach of a provision of Regulation No 459/68. In the second it amounts to a contention that there was a breach of Article 190 of the Treaty. In what follows I propose, so far as possible, to deal with the two forms of such a point together.
I have, as Your Lordships will see, in the end marshalled the points under nine headings.
1. Formal points going to the validity of the whole of Regulation No 1778/77
The Applicants in Cases 113/77 and 121/77 take the point that neither in the preamble to Regulation No 1778/77 nor anywhere else is it recorded that there was a qualified majority of the Council for the adoption of that Regulation. They submit that the Court should at least check that there was such a majority, which is required both by Article 113 (4) of the Treaty and by Article 17 (2) (a) of Regulation No 459/68. In my opinion this is a bad point. There is no provision of the Treaty or of any other relevant instrument, nor is there any rule of law, that requires the majority by which a Council Regulation has been adopted to be announced. Nor indeed is it the practice to make any such announcement. It is not in my opinion for the Court to check whether the requisite majority was obtained, at all events in the absence of evidence raising some doubt as to whether it was obtained. Omnia praesemuntur rite esse acta.
The Applicants in Case 120/77 submit that there was inconsistency between the attitude adopted by the Commission in the proceedings leading up to Regulation No 1778/77 and the attitude that it adopted in a Decision dated 29 November 1974 following proceedings under Article 85 of the Treaty about an agreement concluded in 1972 between the Big Four and representatives of the French bearing industry. Under that agreement the Big Four undertook to increase their prices in France so as to render them less competitive. The Commission held that the agreement constituted an infringement of Article 85. In my opinion there is no inconsistency between, on the one hand, a finding that such an agreement was forbidden by Article 85 and, on the other hand, a finding that the Big Four were guilty of dumping causing material injury to the European industry and justifying measures under Regulation No 459/68. The right remedy for dumping causing injury to a European industry is action by the Community Institutions under that Regulation, not ‘self-help’ by the industry in the form of agreements of a kind falling within Article 85. I leave aside the fact that the Commission's finding in its Decision of 29 November 1974 related to events that occurred in 1972, whereas its findings of dumping related to events four and five years later.
2. Points going to the lawfulness of the process of accepting undertakings and then imposing and suspending a definitive duty
I propose under this heading to consider only points going to the validity of Articles 1 and 2 of Regulation No 1778/77, and to leave for consideration under a later heading analogous points going to the validity of Article 3 of that Regulation, i.e. to the question whether it was lawful for the Council to order the definitive collection of the provisional duty despite the acceptance of the Big Four's undertakings.
It is contended on behalf of a number of the Applicants that ‘where, during the examination of the matter, the exporters give a voluntary undertaking to revise their prices so .that the margin of dumping is eliminated’ (the words are those of Article 14 (2) (a) of Regulation No 459/68) the Commission has a choice. It may, after hearing the opinions expressed in the Advisory Committee, consider that acceptance of the undertaking and termination of the proceeding would not be a satisfactory solution. In that case it must reject the undertaking. If on the other hand it comes to the conclusion that that would be a satisfactory solution, it must put in train the procedure prescribed by Article 14 (1) (a) for bringing about the termination of the proceeding. Rejection of the undertaking can only then lie with the Council. If the Council does not reject it, ‘the proceeding shall stand terminated’, subject only to the possibility, under Article 14 (2) (b), of continuing ‘the investigation of injury’. Where an undertaking is accepted the only sanctions for its observance are those in Article 14 (2) (d) and (e), which, Your Lordships remember, were added by Regulation No 2011/73 and provide for the Commission to monitor the effects of the undertaking and to re-open the proceeding if it ‘finds that the undertaking of exporters is being evaded or no longer observed or has been withdrawn and that, as a result, protective measures might be necessary’. The Applicants conclude that there was no power for the Community Institutions to accept the undertakings and impose, as a sanction for their observance, a suspended definitive duty.
I have come to the conclusion that the Applicants' interpretation of the provisions of Regulation No 459/68 is, in that respect, correct. Indeed, nothing that was said on behalf of the Council or of the Commission seemed to me to amount to a serious challenge to its correctness. The main argument put forward on their behalf in reliance particularly on the French, German and Italian texts of Article 14 (2) (a)) was that, since the Commission's choice was between accepting or rejecting, not the undertaking simpliciter, but a ‘solution’ consisting in the acceptance of the undertaking and the termination of the proceeding, it must be open to the Commission to accept the undertaking ‘with reservations’. That argument, it seems to me, has only to be stated to be rejected, because its very formulation acknowledges that the termination of the proceeding is inseparable from acceptance of the undertaking. Any ‘reservations’ leading to the imposition of a suspended duty as a sanction for the observance of the undertaking must be inconsistent with the provisions both of Article 14 (1) and of Article 14 (2) (d). It was sought, on behalf of the Council and of the Commission, to escape from the consequences of that interpretation in two ways.
First it was said that the Big Four's undertakings were not given ‘during the examination of the matter’ but after that examination had ended. That seems to me an untenable view. The undertakings were given on 20 June 1977. The Commission's Proposal to the Council for what became Regulation No 1778/77 was not made until 4 July 1977. We have before us the French text of that Proposal (which is Annex 14 to the Application in Case 119/77). Its ‘Exposé des motifs’, after mentioning the adoption of Regulations No 261/77 and No 944/77, recited
‘Depuis lors les services de la Commission ont continué leur enquête en collaboration avec les États membres
Entre-temps les quatre principaux producteurs japonais se sont engagé devant la Commission à reviser leurs prix, et ces engagements peuvent être considerés comme acceptables.’
Regulation No 1778/77 was not adopted until 26 July 1977, and we know that the Commission was still making calculations (albeit ‘verifying’ ones) after if had submitted its Proposal to the Council and before the Regulation was adopted. In any event, if the undertakings were given after ‘the examination of the matter’ had ended, there was no provision of Regulation No 459/68 that enabled them to be accepted.
Secondly, it was argued, more widely, particularly on behalf of the Council, that the latter derived its powers in antidumping matters directly from Article 113 of the Treaty and that, provided it did not contravene the Anti-Dumping Code, the Council was free in such matters to do what it thought fit and in particular to depart from the provisions of Regulation No 459/68. Reference was made in that connexion to Article 1 (2) of that Regulation.
As to the Anti-Dumping Code, it is not necessary, I think, in these cases, to express a concluded view as to what it permits and what it forbids. Article 7 of it is couched in terms much less clear than those of Article 14 of Regulation No 459/68; and I heed the Commission's warning that we should be wary of saving anything that might cast doubt on the validit) of any of the antidumping measures adopted under the ECSC Treaty. Two things about the latter I must however say. The first is that, whilst such researches as I have been able to make have evinced that a number of Recommendations issued by the Commission under Article 74 of that Treaty have used the device of suspended definitive duties, those researches have not elicited a single case where the suspension of a duty was linked to an undertaking given by manufacturers (as distinct from ‘arrangements’ made with foreign Governments). The second thing is that the provisions of Article 14 (2) (d) of Recommendation No 77/329 /ECSC (derived from Recommendation No 3004/77/ECSC) are so different from those of Article 14 (2) (d) of Regulation No 459/68 (derived from Regulation No 2011/73) that it is impossible to draw any parallel between what may be permissible under the former and what may be permissible under the latter.
In my opinion, in the present instance, the Council was bound by the provisions of Regulation No 459/68. I agree with the submission made on behalf of certain of the Applicants that the relevant principle is that expressed in the maxim Legem patere quam fecisti. I discussed that principle at length in my Opinion in Case 81/72 Commission v Council [1973] 1 ECR at pp. 592-595, and I will spare Your Lordships a repetition of what I there said. The principle is that a public authority that has, by a legislative act, laid down the rules to be applied in a particular category of cases, whilst it may always amend those rules by further legislation, may not depart from them in dealing with individual cases within that category. So here, the Council having, by Regulation No 459/68, laid down the rules to be applied in cases of the present kind, could not, by Regulation No 1778/77, depart from those rules in the actual cases of the undertakings given by the Big Four. Each of the Big Four was entitled to rely on Article 14 of Regulation No 459/68 being applied in relation to its undertaking. As to Article 1 (2) of that Regulation, the terms of which I have ventured to describe as cryptic, I think it enough to say that the Council never purported to act thereunder. Reliance upon it would, at the very least, have called for express mention and explanation in the preamble to Regulation No 1778/77.
If that view is correct, it is enough to dispose of the question of the validity of Articles 1 and 2 of Regulation No 1778/77. But I apprehend that, in cases of the importance of these, I should be doing less than my duty if, on that ground, I left aside other points bearing on that question.
Two points falling under the present heading were taken on behalf of ISO, which cannot, it seems to me, be wholly ignored even if, as I think, ISO's action is inadmissible.
Firstly it was contended on behalf of ISO that the mechanism provided for by Articles 1 and 2 of Regulation No 1778/77 could result in a retroactive imposition of duty, contrary to Article 19 (2) (a) of Regulation No 459/68. This was said to be because a failure by the Big Four to observe their undertakings would constitute a breach of the condition on which the definitive duty was suspended, which breach, ‘according to general principles of civil law’, would relate back to the date of entry into force of the Regulation. This point was, in my opinion, misconceived. Any termination by the Commission, under Article 2 (2) of Regulation No 1778/77, of the suspension of the definitive duty could only, particularly having regard to Article 19 (2) (a) of Regulation No 459/68, have effect for the future.
Secondly it was said on behalf of ISO that the adoption by the Council of Articles 1 and 2 of Regulation No 1778/77 constituted a misuse of power on its part, because its real purpose was to pave the way for the adoption by the Council of Article 3 of the Regulation. In my opinion this point too was misconceived, first because there is no evidence that that was the Council's real purpose and secondly because the point is founded on an erroneous premise. That premise is that the Council is precluded, under Regulation No 459/68, from deciding upon the definitive collection of a provisional duty unless it also decides upon the imposition of a definitive duty. There is nothing in Regulation No 459/68 to that effect. Indeed it would be illogical if there were. Suppose a case in which, after the imposition by the Commission of a provisional duty, the exporters concerned gave an undertaking to revise their prices for the future, but not for the past. It must then be open to the Council, while assenting to the acceptance of the undertaking, to decide the fate of the provisional duty.
Admittedly the relevant provisions of Regulation No 459/68 (in particular those of Articles 14 to 18) are not drawn so as to make it clear what the appropriate procedure would be in such a case. But neither are they drawn so as to suggest that the Council would have no choice but to let the provisional duty lapse.
A more weighty point, it seems to me, is made by the Applicants in Case 119/77. That point is that Articles 1 and 2 of Regulation No 1778/77, at all events if read literally, expose each of the Big Four to the risk that suspension of the definitive duty may be terminated if the Commission finds that any one of them is in breach of its undertaking. Coupled with this point is the point that the preamble to the Regulation fails to state the reason why a measure on the face of it so arbitrary should have been considered necessary.
I leave aside the point on the preamble.
The Council sought to answer the substantive point in three ways.
First the Council said that ‘if the undertakings are going to be broken or evaded or withdrawn, it is not unlikely that the Japanese exporters will act in concert, or (which would come to the same thing) that if one Japanese exporter broke the undertaking the others would feel bound to follow’. That is, if I may say so, an outrageous answer, for it suggests that one may prospectively impose a penalty on a person, not on the basis of what he will be shown to have done, but on the basis of what one thinks him likely to do. I do not overlook the oft-repeated assertion of the Council that antidumping duties are measures of commercial policy and not penalties. The reality is, however, that for a manufacturer whose products are subjected to such a duty it has the effect of a penalty.
Secondly the Council said (in apparent contradiction of its first answer) that it is ‘indulging in speculation’ to try to foresee how the Japanese exporters may seek to evade their undertakings and that ‘Article 2 is framed so as to permit exercise of the power to terminate the suspension in a manner to suit the specific circumstances pertaining at the moment of termination’. This could only be right if Article 2 conferred a discretion on the Commission, which, as I pointed out earlier, it does not.
Lastly the Council said that ‘in any event … it will be open to an importer to use the procedure set out under Article 19 (4) of Regulation No 459/68’. It seems to me, however, that that procedure, which draws its inspiration from the second sentence of Article 8 (c) of the Anti-Dumping Code, is intended to be exceptional. Article 19 (4) assumes that an anti-dumping duty has been lawfully imposed, but that, in the case of a particular importation or series of importations, the importer can show that some or all of the duty collected from him ought to be returned, either because in the case of that importation or of those importations there was no dumping or because the margin of dumping was lower than that on which the Council or Commission measure imposing the duty was based. Article 19 (4) is not intended as a general remedy for importers against the imposition by the Council or by the Commission of unlawful duties. Nor is it a remedy available to exporters at all.
So I think that the point made on behalf of the Applicants in Case 119/77 is valid. It has served to reinforce my opinion that Articles 1 and 2 of Regulation No 1778/77 are unlawful.
Finally under this heading I must mention that some of the Applicants have taken the point that the preamble to Regulation No 1778/77 does not explain why, despite the fact that acceptable undertakings had been given by the Big Four, the Council considered it necessary to provide for the imposition of a suspended definitive duty. This is the Article 190 facet, if I may so describe it, of the point that I dealt with at the outset under this heading, and as to which I expressed the view that the Applicants were right. I am not sure, however, that they are right on this facet of it. I think that the last four recitals in the preamble to the Regulation could be regarded as a sufficient statement of the reasons why the Council adopted the course it did. The point is, however, of little importance if, as I think, that course was unlawful.
3. Points going to the lawfulness of imposing the definitive duty at a flat rate of 15 %
Article 19 (3) of Regulation No 459/68 (reflecting on the one hand the first sentence of Article 8 (c) of the Anti-Dumping Code and on the other hand the spirit of the provisions of that Code relating to ‘injury’) provides, Your Lordships remember, that the amount of an anti-dumping duty ‘shall not exceed the margin of dumping established’ and ‘should be less than the margin if such lesser duty would be adequate to remove the injury’. So it is hardly surprising that the Applicants challenged in divers ways, the lawfulness of the imposition by the Council of the definitive duty at a flat rate of 15 %.
Pointing to the finding in the 12th recital to Regulation No 1778/77 that ‘dumping has taken place, the margin of which varies considerably from transaction to transaction but, on the average, exceeds 15 % in the major part of the Community’, some of the Applicants submit that the definitive duty should have been imposed at different rates, manufacturer by manufacturer, product by product, and country of importation by country of importation, according to the actual margin of dumping established in each case. The Applicants in Case 120/77 (the KOYO Group) particularly pressed this point, stressing the fact that they had been told by a Commission official that the margin of dumping established in their case was 12.24 %.
I think that, in order to decide whether that submission is sound, one must approach it as if there had been no undertakings and no suspension of the definitive duty.
On that footing (indeed on any footing) it seems to me that the submission is manifestly unsound in so far as it suggests that there should have been differentiation as between different importing countries, because, in that respect, the submission is inconsistent with the fact that the countries of the Community constitute a common market, not a collection of national markets.
Nor am I persuaded that there could have been differentiation product by product. We know that, owing to the thousands of different types of bearings involved, it was necessary for the Commission, as a practical matter, to conduct its investigations on the basis of ‘representative types’. That being so it is difficult to see how the Commission's findings could have been applied on a product by product basis. Averaging probably was the only possible sensible course.
Why there could not have been differentiation as between manufacturers is not clear. But that lack of clarity arises mainly from the fact that the Court has not been told precisely what margins of dumping were in fact established as a result of the Commission's investigations. All that we have to go on, apart from what was disclosed to representatives of NSK and of KOYO in the discussions leading up to the undertakings, is the 12th recital to Regulation No 1778/77. This may mean that, in the case of each of the Big Four, the average margin of dumping exceeded 15 %, but it may mean that the average margin of dumping practised by the Big Four taken together exceeded 15 %. In the latter case, the KOYO Group could well complain if in truth their own average margin of dumping was only 12.24 %. In saying this I do not, of course, mean to suggest that what may have been said by a Commission official at a particular meeting should be regarded as committing the Commission, or the Council. The real vice here, as it seems to me, lies in the lack of information given to the Applicants and to this Court. That however is something with which it will be appropriate for me to deal under a later heading.
A different but cognate submission put forward on behalf of some of the Applicants was that Articles 1 and 2 of Regulation No 1778/77 infringed Article 19 (3) of Regulation No 459/68 in so far as they provided for the imposition of a duty at the rate of 15 % as the result of any breach of the undertakings, regardless of the margin of dumping that might result from that breach.
The point was vividly made to us at the hearing by Counsel for the KOYO Group. Suppose, he said, that my clients, instead of increasing their prices by 20 % as required by their undertaking, increased them by only 19 %. The penalty would be a duty on their products of 15 %. The total uplift would then be 34 %.
That point seems to me a valid one. The imposition of a suspended definitive duty at a flat rate as a means of securing observance of the undertakings was an instrument so blunt as to be incompatible with Article 19 (3). So, again, my opinion is reinforced that Article 1 and 2 of Regulation No 1778/77 should be declared void.
4. Points going to the validity of the Commission's methods of constructing prices, including its selections of representative types
(a) The ‘construction’ of export prices
A number of the Applicants took the point that the Commission was not justified in treating the prices invoiced by the Big Four to their European subsidiaries and associates as ‘unreliable’ and, on that basis, ‘constructing’ export prices from the prices charged on first resale to an independent buyer. Nor, it was said, did the preamble to Regulation No 1778/77 (or, for that matter, the preamble to Regulation No 261/77) state, or state adequately, why that was done.
The point turns on the interpretation of Article 3 (3) of Regulation No 459/68, the provisions of which echo those of Article 2 (e) of the Anti-Dumping Code. Some of the Applicants went so far as to submit that the only situation in which it was permissible to construct export prices was where there had been ‘hidden dumping’ of the kind described in the interpretative notes to Article VI of the GATT. I do not think that that can be right. Those notes are permissive, not restrictive, in form. Moreover Article 2 (e) of the Anti-Dumping Code, which is also interpretative of Article VI of the GATT, clearly envisages the construction of export prices in a much wider range of situations.
So the question is whether, as the Commission and the Council submit, the mere fact of ‘association … between the exporter and the importer’ is enough to enable the Commission to treat the actual export prices as unreliable or whether, as is submitted on behalf of the Applicants, it must be found not only that there is association between the exporter and the importer but also that there are specific grounds for thinking that, as a result of that association, those prices are unreliable.
In my opinion, on this point, the Council and the Commission are right. The wording of Article 3 (3) does not lend itself to the interpretation put forward on behalf of the Applicants. As was pointed out on behalf of the Commission, the term used is ‘unreliable’, not ‘artificial’. What Article 3 (3) means, to my mind, is that the existence of association between the exporter and the importer is one of a number of reasons for which the actual export prices may be regarded as unreliable. I am therefore of the opinion that the Commission was entitled, in the case of sales by the Big Four to their respective subsidiaries and associates, to construct export prices from the prices charged on first resale to an independent buyer and that there is in that respect no flaw in the reasoning set out in the preamble either to Regulation No 261/77 or to Regulation No 1778/77.
(b) The NTN-GKN point
In Case 113/77 the special point was taken on behalf of the NTN Group that NTN-GKN, being 50 % owned by Guest, Keen & Nettlefolds Ltd., the latter would hardly agree to its making losses for the benefit of NTN. In my opinion the Council effectively countered this point when it pointed out that a purpose of dumping is to make losses in the short term so as to be able to make profits in the long term.
(c) The ISO point
I am more disturbed by a point taken in Case 121/77 on behalf of NACHI. This was to the effect that, since ISO was an independent company linked to NACHI only by a contract under which it was NACHI's sole distributor in France, Article 3 (3) could not be applied to it; and that, moreover, NACHI's prices to ISO, being negotiated at arm's length, were a true measure of NACHI's export prices. In its defence in Case 121/77 (at pp. 42 — 43) the Council sought to meet this point by saying that it was impossible to be sure that NACHI's prices to ISO had not been influenced by the circumstance that ISO was NACHI's sole distributor for France, but that in any event the margin of dumping in NACHI's case had been calculated essentially (in erster Linie) on the basis of its sales in the Federal Republic of Germany and in the United Kingdom, which was sufficient because those two countries constituted a major part of the Community. In its reply on the other hand (at pp. 22 — 23) the Council pleaded, somewhat differently, that the Commission had been right to apply Article 3 (3) to ISO, because contractual links could constitute a relevant ‘association’, but that in any event it would be enough to establish that there bad been dumping in the Federal Republic and in the United Kingdom. In one of its answers to the Court's written questions in Case 118/77, the Commission stated that it had some doubts as to ISO's independence, but that it had accepted ISO's assertions as to its independence and had made all the calculations on that basis. This suggested that it had taken into account NACHI's actual prices to ISO. At the hearing, however, Counsel for NACHI founded a substantial part of his submissions on the fact, which he took to be common ground, that the only export prices taken into account in the case of NACHI had been its prices for exports to the United Kingdom and to Germany. Noone, either on behalf of the Council or on behalf, of the Commission, contradicted him.
In my opinion the existence of a contractual link between an exponer and an importer does not warrant the application of Article 3 (3) unless that link constitutes or comprises a ‘compensatory arrangement’. I do not therefore think that it was open to the Commission to apply Article 3 (3) in respect of NACHI's sales to ISO. On the other hand I do not think that it was open to the Commission to leave those sales, which represented 67 % of NACHI's exports to the Community, out of account in determining NACHI's margin of dumping, because that margin was to be determined as an average and the duties to be imposed on the basis of it were to be applicable for the whole Community. I agree, of course, with the Council and the Commission that, if dumping is found to have taken place in a substantial part of the Community, an anti-dumping duty may be imposed for the whole Community. But that is not to say that, in investigating the margin of dumping for which an exporter may be responsible, two-thirds of his exports to the Community may be ignored. I therefore think that there was there a flaw in the Commission's calculations, which vitiates Regulation No 1778/77 (not only Articles 1 and 2, but also Article 3) in so far as it applies to NACHI's products.
(d) Comparison between export prices and domestic prices
A different point taken on behalf of a number of the Applicants was that the domestic prices with which the constructed export prices should have been compared were those ruling at the time of exportation, not those ruling at the time of the first independent resale. There was also criticism of the preamble to Regulation No 261/77 for not stating the basis of comparison.
On behalf of those Applicants it was explained that the substitution of prices constructed from resale prices for actual export prices caused a problem because the nature of the Applicants' business was such that a long time normally elapsed between the date when a product was imported and the date when it was resold. During that time there could be considerable movement in prices and in exchange rates. It was therefore unfair and unlawful to compare such constructed prices with prices ruling in the domestic market at the time of the resale, because:
(1)
it involved discrimination as between importers who were and those who were not associated with an exporter, inasmuch as the latter would have the dumping margins, if any, on their importations assessed on the basis of a comparison between the prices actually paid by them and the prices current in the exporting country at the time of importation;
(2)
it impeded the exercise by an importer associated with an exporter of its remedy under Article 19 (4) of Regulation No 459/68, in that, if the margin of dumping, if any, on its importations could not be ascertained until it had resold, the three-months time limit prescribed by paragraph (b) of that provision might have elapsed;
(3)
it meant that the associated importer could not, at the time of importation, know at what price he could safely resell in the Community and so could not enter into firm forward contracts with customers in the Community;
(4)
it infringed the requirements of Article 3 (4) (a) of Regulation No 459/68 that the comparison should be made ‘in respect of sales made as nearly as possible at the same time’; and
(5)
it ignored the requirement of Article 2 (f) of the Anti-Dumping Code (translated into Community law by Article 3 (4) (b) of Regulation No 459/68) that ‘due allowance’ should be made in each case, on its merits, for ‘differences affecting price comparability’.
Impressive though those arguments are at first sight, I have come to the conclusion that they ought to be rejected. According to the description given by the Applicants of their methods of business, everyone in the bearings industry sells from stock, and stock of particular bearings is held for varying periods, sometimes periods exceeding 12 months. Therefore, presumably, the Japanese manufacturers themselves sell on their home market from stock, so that their prices on that market at any particular time are strictly comparable to the prices of their European subsidiaries and associates selling from stock here. Independent European importers must bear the cost of holding stock, and their prices to their customers must reflect that cost, so that no unfairness to anyone is involved in determining the dumping margin, if any, on their importations by comparing the prices actually paid by them with prices on the Japanese market at the time of importation. It seems to me moreover plain that to require the Commission to assess, in every case, the length of time particular bearings had been held in stock would be to impose upon it an undue burden. Having regard to the standardization of types of bearings of which we were told and to the immense variety of those types, it would mean, so it seems to me, introducing into an anti-dumping investigation the kind of problem that is familiar in the context of stock valuation for accounting and fiscal purposes (e.g. whether to use the ‘First in, first out’ method, or the ‘Last in, first out’ method, or some more sophisticated method). I can see nothing either in the Anti-Dumping Code or in Regulation No 459/68 to warrant that. Nor do I think that the other points made by the Applicants are, on examination, valid. Article 19 (4) of Regulation No 459/68 merely requires an application for relief under that Article to be made within three months of importation. It does not require that the margin of dumping should be ascertainable during that period. An imponer associated with a Japanese manufacturer can clearly, assuming them both to be equipped with telex or with telephones, ascertain, when negotiating a contract with a European customer, what the current prices are on the Japanese market. Lastly, the method adopted by the Commission does, it seems to me, meet the requirement that the comparison should be ‘in respect of sales made as nearly as possible at the same time’ and does not exclude ‘due allowance … for … differences affecting price comparability’.
(e) The ‘construction’ of domestic prices
Your Lordships will remember that, in summarizing the events leading to these actions, I mentioned that the Commission, in calculating domestic prices, had made, to the prices actually charged by the Japanese manufacturers in their home market, an addition of 8 % for notional profit, and I mentioned briefly the reasons why the Commission had thought it right to do so.
Some of the Applicants challenged the validity of Regulation No 1778/77 on a number of grounds arising out of that. Those grounds were:
(1)
That the relevant sales by Japanese manufacturers in their home market had been sales to independent buyers at arm's length and that, even if those sales had been made at a loss, it was not open to the Commission, as a matter of law, to hold that they had been made otherwise than ‘in the ordinary course of trade’;
(2)
That the industries that the Commission took to be comparable to the bearings industry for the purpose of determining the appropriate rate of notional profit on sales were not in fact comparable;
(3)
That it was impossible to discern from the preamble to Regulation No 1778/77 that the Commission had constructed domestic prices in that way, so that the Regulation was inadequately reasoned, in breach of Article 190 of the Treaty;
(4)
That none of the Applicants had ever been told, during the investigation, that the Commission was minded so to construct those prices, much less why it was minded to do so, so that they were denied any opportunity to make representations on those matters.
In addition, the NSK Group challenged the Commission's finding that NSK had been trading at a loss in Japan. It alleged that it had been trading at a marginal profit.
As regards the first of those grounds, it was said on behalf of the Commission that the meaning of the phrase ‘in the ordinary course of trade’ in Article VI of the GATT and in the Anti-Dumping Code had been for many years the subject of discussion between the major parties to the GATT. Particularly discussed had been the question whether persistent selling at a loss could be considered to be ‘in the ordinary course of trade’. A consensus had been reached to the effect that it could not, because otherwise a country ‘would be able to export its recession’. It seems that, on 7 November 1978, an informal agreement to that effect was made at Geneva between Australia, Canada, the EEC, and the USA. The Commission, whilst mentioning that agreement, disclaimed reliance upon it — as well it might, not only because no copy of the agreement has been placed before the Court, but also because it was made after the material events in these cases had occurred, and because Japan is not a party to it. The Commission also referred to certain American, Australian and Canadian legislation. That legislation was mentioned in general terms in the Commission's answers to the Court's written questions. At the hearing we were specifically referred, on behalf of the Commission, to Section 5 of the Australian Customs Tariff (Anti-Dumping) Act 1975 and to Section 206 of the United States Anti-Dumping Act 1921 (as amended). Those sections appear to me, however, to be designed to prescribe, in the internal law of the countries concerned, the way in which there should be computed what Article 2 (d) of the Anti-Dumping Code calls ‘the cost of production in the country of origin plus a reasonable amount for administrative, selling and any other costs and for profits’ rather than to prescribe when such a computation should be made.
In my opinion, at the end of the day, the question is whether the Commission was empowered, in the circumstances of these cases, to hold that, within the meaning of those terms in Article 3 (2) of Regulation No 459/68 (echoing those of Article 2 (d) of the Anti-Dumping Code), there were ‘no sales of the like product in the ordinary course of trade in the domestic market of the exporting country’ or that there was ‘a particular market situation’ in which ‘such sales’ did not ‘permit a proper comparison’. For, if the Commission was empowered to hold that either of those sets of circumstances existed, it was empowered by Article 3 (2) to depart from actual prices in the domestic market of the exporting country and to construct domestic prices pursuant to Article 3 (2).
Whilst I do not disregard, in approaching that question, the Commission's warning that, if the Court were to give too narrow an interpretation to those provisions, it would weaken the Community's position vis-à-vis other parties to the GATT and might cast doubt on the lawfulness of the basic price system operated by the Community in the steel sector (which corresponds to the American ‘trigger price’ system), I think that the true answer to the question is to be found in the terms themselves of Article 3 (2). The generality of the expressions there used and the very nature of the subject-matter are such that it can, in my opinion, only be interpreted as conferring a very wide discretion on the Commission, a discretion with the exercise of which this Court cannot interfere except upon proof of manifest error or of misuse of power on the part of the Commission or, of course, upon proof that, despite the width of the discretion, the Commission clearly exceeded its bounds. Nor am I persuaded that there is anything to preclude the Commission from holding, in a given case, that persistent selling at a loss is not in the ordinary course of trade.
The very fact, however, that the discretion in question is so wide makes it imperative that the procedural safeguards afforded by the law to those who may suffer through its exercise should be strictly observed. The real vice, in my opinion, in these cases lies in the tardiness of the Commission's disclosure of the fact that it had constructed domestic prices. As I mentioned earlier that disclosure was made for the first time in the Commission's rejoinders in Cases 119/77 and 120/77; and it was only in its answers to the Court's written questions that the Commission disclosed what industries it had selected as comparable to the bearings industry for the purposes of establishing the appropriate rate of notional profit.
That tardiness had a twofold result. First it meant that the Japanese exporters never had an opportunity to make, during the investigation, relevant representations to the Commission. That is a matter with which I shall deal under a later heading. But secondly it meant that there could be no proper discussion of the relevant issues in the pleadings in these actions, such material as was relevant to them being put in at a very late stage and being incomplete. The consequence is that the Court is insufficiently informed to be able, in my opinion, to come to any conclusion on those issues.
That is the pudding of which the eating proves that the preamble to Regulation No 1778/77 was, in that respect, defective. It is now trite law in this Court that the main purposes for which Article 190 of the Treaty requires acts of the Council and of the Commission to state the reasons on which they are based are to enable persons who may be affected by them to challenge their validity, where appropriate, and to enable this Court to exercise its supervisory jurisdiction. The present seems to me a clear case where those purposes were defeated.
It was submitted on behalf of the Commission at the hearing that someone who had carefully compared the wording of the preamble to Regulation No1778/77 with that of the preamble to Regulation No 261/77 would have been afforded ‘at the least a very shrewd understanding’ as to what the Commission had done. The relevant recital in the preamble to Regulation No 1778/77 was the 9th, in which the way in which the Commission had ascertained domestic prices was described as follows:
‘Whereas the normal value of the products concerned was established on the basis of the actual domestic prices of those products in Japan.’
The wording of the relevant recital in Regulation No 261/77 had been:
‘Whereas, in order to examine the existence of dumping, the Commission compared the export prices to the Community with those effectively prevailing on the Japanese market.’
In my opinion that change of wording was insufficient to put even a discerning reader on enquiry. Indeed such a reader would be much more likely to contrast the wording of the 9th recital to Regulation No 1778/77 with that of the 10th recital to the same Regulation, which is about export prices and is in these terms: ‘Whereas, because of the association between the Japanese exporters and the majority of the importers in Europe, the export prices were constructed on the basis of the prices at which the imported products were first resold to an independent buyer, due allowance being made for costs and profits between importation and resale.’
In any case the duty of a Community Institution under Article 190 is not to give rise to conjecture, but to state unequivocally the reasons for the act in question. The 9th recital to Regulation No 1778/77 failed to state that the Commission had added to ‘the actual domestic prices’ in Japan an amount for notional profit, what that amount was, or why the addition had been made. That defect is, in my opinion, a reason for holding the whole of Regulation No 1778/77 void.
(f) The selection of ‘representative types’
I mentioned earlier that the Commission based its calculations for the purposes of the definitive determination of dumping on the prices for samples of types of bearings selected during visits made by its representatives to the Big Four's European subsidiaries. It appears that in the case of the NSK Group the selection was made during the visit to NSK Germany, which was subsequent to the visits to NSK UK and NSK France, and that 54 types were selected. It is contended on behalf of the NSK Group that the manner in which those 54 types were selected was unsatisfactory and that they did not constitute a statistically valid sample. The Commission, naturally, disputes this.
An account of the way in which the 54 types were selected is given in paragraphs 38 and 39 of the NSK Group's reply in Case 119/77. The Commission denies the accuracy of that account. That account does, however, at least show first that, in this instance, there was full discussion between the representatives of the Commission and those of the NSK Group, and no concealment by the Commission of what it was doing; and secondly — and this is a point strongly relied upon by the Commission — that, whilst disagreement may have been expressed by the representatives of NSK Germany as to the inclusion or exclusion of this or that particular type, at no stage did anyone on behalf of the NSK Group suggest an alternative sample.
In my opinion two things are clear. One is that, whatever the views of those speaking for the NSK Group may have been, the final decision as to what types the sample should consist of lay with the Commission. The other is that not a shred of evidence has been placed before this Court to show that the sample selected by the Commission was in fact statistically invalid. I would accordingly reject this particular point.
I would also reject a related point taken on behalf of the NSK Group that the 8th recital in the preamble to Regulation No 1778/77 was defective. That recital stated that ‘because of the multiplicity of types of the products concerned’ the examination of the matter ‘was based on a certain number of types representative of the price-structure of the products concerned’. In contrast to what has turned out to be true in the case of the 9th recital, it has not been shown that the wording of the 8th recital was inadequate to enable anyone effectively to challenge the validity of the selection of representative types or to enable this Court to review it.
5. Points about the right to be heard on whether there was dumping
It is a fundamental principle of Community law that, before any individual measure or decision is taken, of such a nature as directly to affect the interests of a particular person, that person has a right to be heard by the responsible authority; and it is part and parcel of that principle that, in order to enable him effectively to exercise that right, the person concerned is entitled to be informed of the facts and considerations on the basis of which the authority is minded to act. That principle, which is enshrined in many a Judgment of this Court, and which applies regardless of whether there is a specific legislative text requiring its application, was re-asserted by the Court only yesterday in Case 85/76 Hoffmann-La Roche & Co. AG v Commission.
Nor indeed was the existence of the principle questioned either by the Council or by the Commission. Their submission was that it was a principle of very limited application in an antidumping investigation, and that for five reasons:
(1)
Anti-dumping duties are imposed by legislation, not by individual decision, and the principle of the right to be heard does not have the same scope in the preparation of legislation as it does in the preparation of an administrative decision.
(2)
The complexity of an anti-dumping investigation and the speed with which it has to be carried out make it impracticable to give full effect to the principle.
(3)
The provisions of Articles 6 (b), (c) and (d) of the Anti-Dumping Code, and the corresponding provisions of Regulation No 459/68, relating to confidentiality, mean that the investigating authority is precluded from disclosing a great deal of the information available to it.
(4)
The provisions of Article 6 of the Anti-Dumping Code and the corresponding provisions of Regulation No 459/68 refer only to the presentation and disclosure of ‘information’, a word apt to describe factual material gathered by or supplied to the investigating authority, but not the way in which that material is used (in calculations or otherwise) by the investigating authority.
(5)
The imposition of an anti-dumping duty does not conclude the matter against any importer, because Article 19 (4) of Regulation No 459/68 enables him to recover the duty or an appropriate part of it if he can show that particular goods were not dumped or that the margin of dumping in their case was less than the margin on which the duty was calculated.
The first of those points is closely akin to points that were raised in connexion with the admissibility of these actions. I agree of course that, in general, noone has a right to be heard during the process of preparation of legislation such as he has in the process of preparation of an administrative decision affecting him individually and directly. But, just as it seems to me that an instrument such as Regulation No 1778/77 is to some extent a hybrid, so also it seems to me that an anti-dumping investigation may also be, for present purposes, a hybrid. In so far as it may lead to a finding that a particular exporter has been guilty of dumping and, on the basis of that finding, result in the imposition of an anti-dumping duty on his products nominatim, it has enough of the characteristics of a procedure preparatory to a decision of individual and direct concern to him.
As to the second point, there is no doubt that the right to be heard is subject to the general proviso that it must be compatible with the requirements of efficient administration — see, for instance, paragraph 18 of the Explanatory Memorandum appended to the Resolution on the Protection of the Individual in relation to the Acts of Administrative Authorities adopted by the Committee of Ministers of the Council of Europe on 28. September 1977 (No 77 (31)), which goes on to say: ‘If, for instance, the taking of the administrative act cannot be delayed, the person concerned need not be heard. The same applies whenever it is for other pertinent reasons impossible or impracticable to hear him’. The application of that exception must however, in my opinion, be kept within proper bounds. If, here, the Commission's case had been that it had done all that was reasonably possible in the time available, and having regard to the complexities of the investigation, to apprise each of the Japanese exporters of its tentative conclusions on the question of dumping by that exporter, and of the way in which it had reached those conclusions, and to give to each of those exporters an opportunity to make representations thereon, and if the facts as placed before this Court had been consistent with that case, I would have held that the Commission was entitled to succeed on the present issue. But the Commission's case was, as I have indicated, that the exporters were entitled to be apprised only of factual material and were not entitled to be told how the Commission had used that material. Indeed the Commission went so far as to contend, if I understood it correctly, that the exporters were not entitled even to be told what items in the mass of evidence available to the Commission it had actually used. In so far as such evidence had been supplied by an exporter himself he would, the Commission said, already know it and in so far as it consisted of published material, for instance press reports, it would also be available to him. There was therefore no need for the Commission to mention it to him. The Commission never sought to explain, or at all events to my mind never explained satisfactorily, why so restrictive an interpretation of the exporters' rights was necessitated by practical considerations.
The third point is certainly a pertinent one. The provisions of Article 6 of the Anti-Dumping Code about confidential information, and the corresponding provisions of Regulation No 459/68, are strict. They probably made it impossible for the Commission in the present instance to give the Japanese exporters any opportunity to make detailed representations on the questions of injury to the European industry, for much of the information as to that was supplied to the Commission in confidence by the European industry itself. Similarly those provisions probably made it impossible for any Japanese exporter to be given any opportunity to make representations on the question of dumping by any other Japanese exporter. But I cannot see how those provisions can have been an obstacle to each Japanese exporter being given, at least, an opportunity to make representations on the question of his own alleged dumping.
As to the fourth, point, it seems to me that the Commission's interpretation of the word ‘information’ as used in Article 6 of the Anti-Dumping Code (and in Article 10 (4) of Regulation No 459/68) is too narrow. In the first place that word must be interpreted in the light of the purpose mentioned in the preamble to the Agreement laying down the Anti-Dumping Code ‘to provide for equitable and open procedures as the basis for a full examination of dumping cases’. Secondly that word must be intended to have a wider meaning than the word ‘evidence’ used in paragraph (a) of Article 6. Thirdly the supply only of ‘information’ in the narrow sense contended for by the Commission would not normally (and clearly did not in the present instance) fulfil the requirement of paragraph (b) of Article 6 that those concerned should ‘see all information that is relevant to the presentation of their cases … and that is used by the authorities in an anti-dumping investigation’ or the requirement in the same paragraph that those persons should be provided with opportunities ‘to prepare presentations on the basis of this information’. Lastly, the Commission's interpretation seems to me inconsistent with the opening sentence of paragraph (g) of Article 6 which provides that ‘Throughout the anti-dumping investigation all parties shall have a full opportunity for the defence of their interests’. It was suggested on behalf of the Commission that that sentence was only an introduction to the next sentence, providing for meetings between ‘parties with adverse interests’. I see no reason, however, for thus limiting its scope. Such meetings appear to me to be merely one way in which the authors of the Code envisaged that parties would be afforded an opportunity to defend their interests.
In connexion with the present point we were referred on behalf of the Commission to Article 10 (c) of the Code, requiring the ‘authorities concerned’, when informing ‘the representatives of the exporting country and the directly interested parties’ of decisions regarding the imposition of provisional measures, to indicate ‘the reasons for such decisions and the criteria applied’. That provision implied, the Commission submitted, that no indication of those reasons or criteria need have been given to anyone before the announcement of a decision. It would have been more appropriate, I think, for the Commission to have referred to Article 6 (h) of the Code, which contains similar provisions applicable to decisions regarding the imposition of definitive duties. Article 6 (h), however, cannot be interpreted as contradicting all the previous provisions of Article 6 about the right to be heard.
Then it was submitted on behalf of the Commission that, the Anti-Dumping Code being an international instrument, the principle of reciprocity applied. We were referred to a translation of the Japanese legislation giving effect to the Code, from which, we were told, it was apparent that the Code had been interpreted and was applied in Japan in the same way as it had been interpreted and applied by the Commission. That was, in my opinion, a legitimate point to take in so far as Regulation No 459/68, which is the instrument with which this Court is directly concerned, must be interpreted consistently with the Code. But it is, I think, too much to ask this Court, on the basis only of a translation of the Japanese legislation and without any evidence as to how that legislation is in fact interpreted and applied in Japan, to come to a conclusion on that question and then, from that conclusion, and without reference to what may be happening in other countries bound by the Code, to deduce how the Code should be interpreted.
As to the fifth point, I have already expressed the view that the existence of Article 19 (4) of Regulation No 459/68 cannot be invoked as affording to the Council and the Commission a general exoneration from the duty to act lawfully in the imposition of anti-dumping measures. I do not think that I can usefully say more about that.
It is plain from what we have been told on behalf of the Applicants and on behalf of the Commission that the Commission did not afford to any of the Big Four an opportunity effectively to exercise its right to be heard. The Commission, by and large, did what it considered itself bound to do on its interpretation of the Code and of Regulation No 459/68, and no more. That is understandable enough. But it renders idle, if I may say so, such comments on the part of the Commission as that those who were concerned on behalf of the Big Four, and of their subsidiaries and associates, must have been able to infer, from the Commission's enquiries as to their prices, as to their costs, as to their profits and losses, and so forth, what it was that the Commission regarded as relevant. There again, if I am right about the law, it was not enough for the Commission to put those persons in a position to indulge in conjecture. The Commission's duty was to tell them, as clearly and as fully as the circumstances permitted, what its case against them was.
That being so I need not take up much time in discussing the various examples that were given to us behalf of the Applicants of matters that were relied upon by the Commission in reaching its findings but on which they were afforded no opportunity of making observations to the Commission. There is, of course, first and foremost, the glaring fact that, to this day, none of the Applicants (nor this Court) knows what actual margins of dumping the Commission, as a result of its investigations preceding the adoption of Regulation No 1778/77, found to have been practised by each of the Big Four nor whereabouts in the Community it found those margins to have been practised. Much less do any of the Applicants (or we) know how, precisely, those margins were calculated. Then there is the fact, which I dealt with under my last sub-heading, that, not until the Commission lodged its rejoinders in Cases 119/77 and 120/77, was anyone told that domestic prices had been ‘constructed’ by the addition of a notional profit. Nor did anyone know, until those rejoinders were lodged, that the Commission had up-dated the domestic prices, but not export prices, to January 1977.
There is the fact not until hearing did it become clear, and even then not absolutely clear, what the Commission had done about NACHI's prices to ISO. There is NSK's puzzlement as to how the costs of its European subsidiaries were calculated. The mystery about the ‘verifying calculations’ made by the Commission in July 1977 and the incident concerning Mr Otsu's speech may perhaps be left aside, since they occurred so late in the investigation and had no impact on the content of the Commission's formal Proposal to the Council. I am, however, left with lingering doubts as to whether those matters might not have been handled differently if the Commission had had a different conception of the relevant law, and also as to whether the ‘verifying calculations’ may not have played a part in discussions between officials of the Commission and officials of the Council in the period between the receipt by the Council of the Commission's Proposal and the adoption by the Council of Regulation No 1778/77.
In the result I would hold that there was, in the preparation of Regulation No 1778/77, an ‘infringement of an essential procedural requirement’ within the meaning of that phrase in Article 173 of the Treaty, constituting another reason for the Regulation to be declared void.
6. Points about ‘injury’
A number of points were taken on behalf of the Applicants on the question of injury to the European industry. The main ones were:
(1)
That the Applicants were never given access to the evidence supporting the finding that the European industry suffered injury and the finding that the alleged dumping was the principal cause of that injury;
(2)
That the preamble to Regulation No 1778/77 did not adequately state why it was considered that the sufferings of the European bearings industry were due to the alleged dumping and not to other factors;
(3)
That the Commission cannot have considered the question of injury properly, for, if it had, it could only have reached the conclusion that there was no injury or at all events none ‘demonstrably’ caused by the alleged dumping;
(4)
That there was nothing to show that the Commission and the Council had addressed their minds to the question of the amount of duty required to remove the alleged injury, which was not necessarily equal to the margin of dumping.
I am unimpressed by any of those points. The findings of injury and of its cause were necessarily based in large part on the confidential information supplied to the Commission by the European industry, which the Commission was precluded from disclosing. Moreover they were by their very nature findings that could only be based on an assessment of complex economic facts, not readily open to judicial review. The case made on behalf of the Applicants fell far short of showing that, in making that assessment, the Commission fell into manifest error or was actuated by improper motives. Nor do I think that the criticism of the preamble to the Regulation is, in this instance, justified. The preamble deals at some length and, in my opinion, in a manner adequate in the circumstances with the question of injury and of its causation: see the 13th to 17th recitals.
7. Points about bearings manufactured by NSK UK
The Applicants in Case 119/77 (the NSK Group) submit that Regulation No 1778/77 is unlawful in so far as it constitutes a sanction to compel them to comply with clause 5 of NSK's undertaking and for that purpose to raise the prices of bearings manufactured by NSK UK at Peterlee.
In my opinion that point is well taken. As was conceded on behalf of the Commission at the hearing, neither Article 113 of the Treaty nor Regulation No 459/68 authorizes the imposition of an anti-dumping duty on bearings manufactured within the Community and, indeed, it is noteworthy that, under Regulation No 1778/77, the sanction for any breach of NSK's undertaking does not include the imposition of duty on the bearings made at Peterlee. That being so, it was in my opinion ultra vires to use the powers conferred by Regulation No 459/68 to secure increases in the prices of those bearings.
The NSK Group submitted for good measure that the preamble to Regulation No 1778/77 was defective in so far as it did not explain why those powers were used in that way. I do not think that that really adds anything to the substantive point.
8. Points going only to the validity of Regulation No 261/77 and hence of Article 3 of Regulation No 1778/77
There is no doubt that, if Regulation No 261/77 was invalid, that would be a ground for holding that Article 3 of Regulation No 1778/77 was also void, because the Council could not order the definitive collection of a provisional duty that had not been validly imposed. For that reason points were taken on behalf of a number of the Applicants going to the validity of Regulation No 261/77.
The Council submitted that those points were not open to the Applicants.
Unquestionably the Applicants were out of time to challenge the validity of Regulation No 261/77 directly under Article 173. The question is whether it was open to them to challenge it under Article 184 of the Treaty.
As to that the Council submitted, first, that Article 184 only enabled ‘the invalidity of an underlying regulation’ to be invoked ‘in proceedings against a decision’. That, if I may say so, is plainly wrong. There is nothing in Article 184 to that effect. That Article may in invoked where the validity of a regulation is in issue in proceedings concerning the validity of a later regulation. But, in any case, the submission is beside the point, because these actions are admissible only inasmuch an Regulation No 1778/77 constituted, quoad the Applicants, a decision.
Secondly the Council submitted that Article 184 could be invoked only ‘to attack a “parent” regulation of a contested decision’. The authority relied on for that proposition was Case 32/65 Italy v Council and Commission [1966] ECR 389 at p. 409. That authority does not in my opinion support so narrow a proposition. It decides no more than that, where Article 184 is invoked, there must be a connexion between the earlier regulation and the later act such that the validity of the latter depends on the validity of the former. That requirement is undoubtedly fulfilled here.
Thirdly the Council submitted that the Applicants' case was inconsistent in so far as it asserted that Regulation No 1778/77 constituted a decision but that Regulation No 261/77 did not. The Applicants were so, the Council said, in a dilemma. Either Regulation No 1778/77 constituted a decision, in which case their actions were admissible, but then so must Regulation No 261/77 be a decision — and Article 184 does not enable the validity of decisions to be challenged — or they must accept that both Regulation No 261/77 and Regulation No 1778/77 were in fact regulations, in which case their actions were inadmissible. If the analysis that I made earlier of the reasons why, in my opinion, these actions are admissible is correct, there may be no such dilemma, for it is possible consistently with that analysis to hold that Regulation No 261/77 was nothing but a regulation. That depends upon the answer to the wider question which, in the course of that analysis, I said that I did not think it would be necessary for Your Lordships to decide in this case. I certainly do not think it necessary to decide it in the present context, because in my view the points raised by the Applicants as to the validity of Regulation No 261/77 cannot make any difference to the outcome of these actions.
Of those points the first was that the Council had no power under the Treaty to confer power on the Commission to make such a regulation. The distribution of competence between the Community Institutions ordained by the Treaty was such, the Applicants submitted, that only the Council might make an ‘independent decision’ having a ‘definite effect’ such as a decision to impose a provisional duty. That submission, in my opinion, flies in the face of the express terms of Article 155 of the Treaty, under which one of the functions of the Commission is to ‘exercise the powers conferred on it by the Council for the implementation of the rules laid down by the latter’.
The other points taken by the Applicants as to the validity of Regulation No 261/77 consisted in three criticisms of its preamble. They were that the preamble was inadequate in that it failed to state:
(1)
the margin of dumping provisionally determined;
(2)
why there was considered to be material injury to the European industry; and
(3)
why ‘emergency’ action on the part of the Community was necessary.
The first two of those criticisms correspond to criticisms made of the preamble to Regulation No 1778/77. The third seems to me misconceived. The whole of the preamble to Regulation No 261/77 was designed as a statement of the reasons why the Commission considered provisional measures to be necessary.
9. Other points going only to the validity of Article 3
(a) ‘Discrimination’ as between the Big Four
Your Lordships will remember that Regulation No 261/77, whilst imposing the provisional duty generally at the rate of 20 %, had fixed it exceptionally at the rate of 10 % for the products of KOYO and of NACHI, the reason being that the Commission's preliminary examination had made it appear that, in their cases, the margin of dumping was lower. Thus the provisions of Article 3 of Regulation No 1778/77 requiring the amounts secured by way of provisional duty to be ‘definitively collected to the extent that they do not exceed the rate of duty fixed in this Regulation’ had the effect that they were to be collected at the rate of 15 % on the products of NTN and NSK but at the rate of only 10 % on the products of KOYO and NACHI. NTN and NSK submitted that that constituted discrimination against them, of a kind forbidden both by Article 8 (b) of the Anti-Dumping Code and by a general principle of Community law, since it was clear that the Commission's definitive findings pointed to equal treatment of the Big Four. With that submission NSK coupled a submission that the preamble to Regulation No 1778/77 was defective in that it did not state the reasons for the discrimination.
In answer to those submissions the Council put forward what appear to me to be essentially three arguments:
(1)
That the discriminatory act, if any, was Regulation No 261/77, which the Applicants did not challenge in that respect;
(2)
That application under Article 19 (4) of Regulation No 459/68 could have been made where the collection of the higher duty was unjustified and
(3)
That the more lenient treatment of KOYO and NACHI was due not to discrimination in their favour but to their good fortune in that the Council was precluded from ordering collection of the duty on their products at a rate higher than 10 %.
The first two of those arguments seem to me manifestly misconceived. I think however that, on balance, the Council is entitled to succeed on the third. Discrimination, at all events as understood in Community law, involves, so far as here relevant, different treatment of persons in like situations. Here, owing to what the Council described as KOYO and NACHI's ‘good fortune’, their situation differed from that of NTN and NSK. It is clear that the Council would have ordered collection of the duty at 15 % on the products of KOYO and NACHI too if it had been able to do so.
Nor do I think that there is anything in NSK's related submission concerning the preamble to Regulation No 1778/77. The terms of Article 3 itself give the reason for the different treatment of the products of NTN and NSK on the one hand and those of KOYO and NACHI on the other.
(b) ‘Discrimination’ as between the Big Four and the minor Japanese exporters
NSK also took the related points that Article 3 discriminated as between the products of the Big Four and those of the minor Japanese exporters and that the preamble to the Regulation did not state why they were differently treated. The reason for the different treatment of the products of the minor exporters, as stated to us on behalf of the Council, I have already explained. But NSK is right in saying that that reason is in no way mentioned in the preamble to the Regulation. I doubt, however, whether that omission would, in itself, be sufficient to vitiate Article 3.
(c) Lawfulness of the collection of the provisional duty after acceptance of ‘retrospective’ undertakings
I have already expressed the view that, if the undertakings had been only as to future prices, it would have been open to the Council, whilst endorsing the Commission's acceptance of them, to have exercised its discretion as to the fate of the provisional duty. The point was taken however, on behalf of almost all the Applicants, that the Council and the Commission (in concert) could not, lawfully, accept undertakings that were in part retrospective and yet order collection of the provisional duty. With that was coupled the point that the preamble to Regulation No 1778/77 did not state why that course was adopted.
The latter point is unquestionably correct. The preamble to Regulation No 1778/77 gives no reason for the collection of the provisional duty. It is noteworthy that the Exposé des motifs of the Commission's Proposal to the Council suggested none either.
In approaching the substantive point I think one must bear in mind precisely what the ‘retrospective’ element was in the undertakings. It was, as I interpret, in the light of the texts of the undertakings themselves, the answers given by the Commission and by the Big Four to the Court's written question about it, that price increases of up to 10 % made by the Big Four between 5 February 1977 and 30 June 1977 should count towards the increases aggregating 20 % that they undertook to achieve by 31. December 1977. The undertakings were not retrospective in the sense that the prices obtained on sales already effected were to be in some way increased.
It appears from what we were told, particularly on behalf of the Council, that the imposition of a provisional anti-dumping duty has in general two main purposes. One is to prevent massive importations of dumped products during an antidumping investigation, in anticipation of the imposition of a definitive duty. The other is to induce immediate increases in the prices of those products. The two purposes are, plainly, inter-linked.
When the responsible authorities (in our case the Council and the Commission) come to decide upon the fate of a provisional duty in the light of their definitive findings as to dumping and injury, they may, so it seems to me, in theory, be confronted with any one of three situations.
Firstly they may find that no importation effected after the imposition of the provisional duty constituted dumping. This may be so for any number of reasons, such as that the margin of dumping finally established is negligible or nonexistent, or that the imposition of the provisional duty prevented any importation of the products concerned, or that, because of the imposition of that duty or for other reasons, price increases were made that eliminated the margin of dumping. In any such case it must, in my opinion, be the duty of the responsible authorities to decide against the collection of any of the provisional duty.
At the other extreme, those authorities may find that dumping has continued after the imposition of the provisional duty, and despite its imposition, at margins uniformly equalling or exceeding the margin finally established. This too may happen for any number of reasons, for instance because the margin finally established is much higher than that provisionally established, so that any price increases induced by the imposition of the provisional duty will have turned out to be insufficient, or because the exporters concerned have chosen to ignore the imposition of the provisional duty, perhaps in undue reliance on political pressure by the Government of their country. In any such case the responsible authorities must clearly, in my opinion, be entitled to order collection of the whole of the provisional duty.
The third possible situation is an intermediate one, in which the responsible authorities find, perhaps, that there have been, after the imposition of the provisional duty, some importations at prices sufficiently increased to eliminate the dumping margin, some at prices increased enough to eliminate it partly, and some at prices not eliminating it at all. Plainly, in that situation, the discretion to decide upon the fate of the provisional duty is not easy to exercise.
The difficulties inherent in its exercise are increased by the impossibility, in practice, for the responsible authorities to have complete, precise, up-to-date information as to the prices at which recent importations have taken place, or, where import prices have to be constructed, should be deemed to have taken place.
So, in exercising that discretion, the authorities cannot do better than rough justice.
There is, however, a difference between rough justice and arbitrariness. In the present case it seems to me that not even rough justice was done to the Big Four. Analysing as best I can the reasons given to this Court on behalf of the Council and of the Commission for the decision to order collection of the provisional duty, I conclude that there were three.
One was that the increases in prices made before 30 June 1977‘did not eliminate the margin of dumping found’, and affected only part of the period of application of the provisional duty. Assuming that the margin of dumping referred to was an average of 15 %, it is obvious that price increases of up to 10 % would not eliminate it entirely, and that increases made late in the period would not affect it much. But that could not justify the collection of provisional duties at flat rates of 10 % and 15 % for the whole period. The objection here is analogous to one that I have held to be valid in connexion with the imposition of definitive duty. The instrument used was too blunt to comply with Article 19 (3) of Regulation No 459/68.
The second reason was that the undertakings were not offered until a late stage in the proceedings and that, that being so, if the provisional duty had not been collected, ‘it could justifiably have been regarded as a reward to the Japanese companies for the delay which had occurred’. In my opinion, to order collection of the provisional duty for that reason was a clear breach of Article 14 (2) (c) of Regulation No 459/68.
The third reason was that it was the imposition of the provisional duty that had, at least in large part, induced the price increases and enabled the importers to justify those increases to their customers. But that means no more than that the imposition of the provisional duty had, to that extent, achieved one of its main purposes. It does not mean that collection of the full duty was called for despite the price increases.
In the result I am of the opinion that the Applicants are entitled to succeed on this part of the case.
IX — The claims for compensation for damage in Case 119/77
Claims for compensation for damage under Article 178 and the second paragraph of Article 215 of the Treaty are made by NSK-UK, NSK Germany and NSK France (to which alone in this part of my Opinion I refer as ‘the Applicants’). Those claims are put under what amounts to four heads:
(A)
Damage equal to amounts of provisional duty actually paid by the Applicants to the British, German and French customs authorities, seemingly on importations effected before it was possible to arrange bank guarantees to secure the provisional duty. The amounts paid in each country are specified.
(B)
Damage equal to interest on ‘the money of the use of which’ the Applicants ‘have been deprived’ through making those payments.
(C)
Damage equal to the cost of the bank guarantees.
(D)
Damage equal to the loss of profits resulting from the Applicants' being compelled to raise their prices for bearings manufactured by NSK-UK at Peterlee.
The claims under head (A) are clearly inadmissible. It is well established that an action for compensation for damage will not lie against a Community Institution where the claim is really for restitution of specific sums paid to national authorities, even though the claim is founded on an allegedly wrongful act or omission on the part of that Institution and even though the pursuit of the claim against the national authorities concerned may entail a ‘long march’ through proceedings in the appropriate national courts and a reference under Article 177 of the Treaty to this Court: see Case 96/71 Haegeman v Commission [1972] 2 ECR 1005, Case 46/75 IBC v Commission [1976] 1 ECR 65 and Case 26/74 Roquette v France, ibid. p. 677. It was strenuously argued on behalf of the Applicants that those cases were distinguishable, but in my opinion they are not. It was also argued that they had become unreliable authorities. The governing authority was now, it was submitted, Case 126/76 Dietz v Commission [1977] ECR 2431, which showed that the true test of jurisdiction in a case like the present was not the nature of the loss for which the claimant sought to recover, but the nature of the act or omission complained of and the identity of the person responsible for that act or omission. In my opinion the Dietz case is authority for no such proposition. It was, as I pointed out in my Opinion in that case itself ([1977] ECR at p. 2448), a case of a different kind from the kind exemplified by the Haegeman, IBC and Roquette cases.
The claims under head (B), for interest, are also clearly inadmissible; they are ancillary to the claims under head (A) and can only be brought before the appropriate national courts: see the Roquette case (already cited).
It was submitted on behalf of the Commission that the same was true of the claims under head (C), but in my opinion that is not so. These are independent claims. Their basis is that the wrongful acts of the Community Institutions put the Applicants to the expense of obtaining the bank guarantees. I cannot see against what defendant or on what basis a claim to be compensated for that could be made in a national court. The obstacle that lies in the Applicants' path, in my opinion, as regards these claims, is not that they are brought before the wrong Court, but that they do not appear to rest on any general principle of a kind mentioned in Article 215 of the Treaty. At all events no such principle was pleaded by the Applicants. The fact that there are circumstances in which an unlawful act of a Community Institution may cause damage to a private person without that person being entitled to compensation under Article 215 is illustrated bv Cases 83 and 94/76, 4, 15 and 40/77 HNL and others v Council and Commission [1978] ECR 1209.
The same obstacle seems to me to lie in the Applicants' path as regards their claims under head (D) for loss of profits on the bearings manufactured at Peterlee. Moreover I do not think that it could be held that any such loss was caused by any act or omission of the Council or of the Commission. If the loss occurred, it would have occurred just the same (assuming the Applicants complied with their undertaking) even if the Commission had simply accepted the undertaking and no suspended definitive duty had been imposed. The true cause of the loss (if any) was thus the giving of the undertaking, which, however much pressure the Applicants may have been under from the Commission to give it, was in law their ‘voluntary’ act. I do not see how there can be any scope here for the application of any equitable doctrine of ‘duress or undue influence’.
X — The outstanding applications in Case 119/77
On 30 November 1978, after the close of pleadings, three applications of a procedural nature were made on behalf of the Applicants in Case 119/77. The Commission was allowed to lodge submissions in answer to them, which it did on 20 December 1978. There has, as yet, been no decision as to the fate of those applications. Such a decision is unlikely to be now of much practical importance, except perhaps as regards costs. But Your Lordships may think that there are here loose ends that ought to be tied.
Firstly, there is an application under Article 91 of the Rules of Procedure of the Court to strike out pam of the Commission's rejoinder. Those are parts to which I have not referred in this Opinion. They contain information about dumping margins said to have been calculated by the Commission from data supplied by NSK under its undertaking. That information cannot have been before the Commission or the Council when Regulation No 1778/77 was adopted, so that it cannot (despite a spirited submission by the Commission to the contrary) be relevant to any issue in this case. In my view, a comment to that effect made on behalf of the Applicants at the hearing would have been enough. There was no need to use the sledgehammer of an application to strike out. On the other hand I disagree with a submission by the Commission that the Rules of Procedure did not entitle the Applicants to make the application. Article 91 authorizes an application to be made on ‘any … procedural issue’. So I think that the application should be formally allowed, but that the Applicants should be ordered to pay the costs of and occasioned by it, pursuant to the second sub-paragraph of Article 69 (3) of the Rules of Procedure.
Secondly there is an application, also under Article 91, for an order of the Court requiring the Commission (under Article 45 (2) (b) of the Rules of Procedure) to produce certain documents and to supply certain information ‘to the Court and to the Applicants (but not to the Interveners)’. The application does not comply with Article 91, in that it does not ‘state the grounds of fact and law relied on’, but leaves them to be inferred. The inference, from the nature of the documents and information of which disclosure is sought, is that the Applicants were goaded into making the application by the revelations contained in the Commission's rejoinder. Those revelations did not, however, in my opinion, justify the submission of an illconsidered application for disclosure of documents and information at such a late stage in the proceedings. This application should in my opinion be dismissed with costs.
The third application was made under the second sub-paragraph of Article 42 (2) of the Rules of Procedure. It treated the revelations in the Commission's rejoinder as raising fresh issues and in fact contained the Applicants' answers on such issues. According to the third subparagraph of Article 42 (2) Your Lordships now have to decide on the ‘admissibility’ of those issues. The Commission submits that they were not really ‘issues’ at all and that the application should be rejected. I have already dealt at length with the significance of the Commission's revelations. Assuming that Your Lordships' Judgment will deal with it too, I do not think that any distinct decision on this application will be called for.
XI — Conclusions
In the result I am of the opinion that Your Lordships should —
—
In Case 113/77 declare that Article 3 of Regulation No. 1778/77 is void and order the Council to pay the costs — although costs were not asked for in the Applicants' pleadings, owing, as their Counsel candidly told us at the hearing to an oversight on his part; he submitted then, and I agree, that omission by a party to ask for costs under paragraph (2) of Article 69 of the Rules of Procedure does not debar the Court from awarding them in the exercise of its discretion under paragraph (1);
—
In Case 118/77 dismiss the action with costs;
—
In Case 119/77 —
(a)
declare that Regulation No 1778/77 is void;
(b)
dismiss the claims for compensation for damage; and
(c)
as to the costs other than those of the outstanding applications under Article 91 of the Rules of Procedure order the Council and the Commission to bear their own and to pay a proportion of those of the Applicants reflecting the fact that (if Your Lordships share my view) the claims for compensation for damage will have failed — I suggest two-thirds;
—
In Case 120/77 declare that Regulation No 1778/77 is void and order the Council and the Commission to pay the costs;
—
In Case 121/77 declare that Regulation No 1778/77 is void and order the Council to pay the costs.
I should perhaps mention that, in Cases 113/77, 119/77 and 121/77, the costs should include those of the applications for interim measures, which were reserved, and that, in Case 119/77, they should (by virtue of an Order of my Lord the President dated 14 October 1977) include the costs of an intervention by the Applicants in the application for interim measures in Case 113/77.
The FEBMA must inevitably, if Your Lordships concur with me in the substantive result, share in the overall defeat of the Council and of the Commission, and so be ordered to pay the costs of and occasioned by its interventions, except in Case 118/77 and except that, in Case 119/77, it should perhaps be allowed to share to an appropriate extent in the victory of the Council and of the Commission on the claims for compensation for damage. This would mean, consistently with what I have suggested for the Council and the Commission, that in Case 119/77 the FEBMA should be exonerated from payment of one-third of the costs occasioned to the Applicants by its intervention.