ORDER OF THE GENERAL COURT (Second Chamber)
17 February 2023 (*)
(Dumping – Imports of certain heavyweight thermal paper originating in South Korea – Definitive anti-dumping duty – Regulation (EU) 2016/1036 – Sales through related companies – Construction of the export price – Injury to the Union industry – Calculation of price undercutting – Calculation of the injury margin – Action manifestly lacking any foundation in law)
In Case T‑693/20,
Hansol Paper Co. Ltd, established in Seoul (South Korea), represented by B. Servais and V. Crochet, lawyers,
applicant,
v
European Commission, represented by K. Blanck and G. Luengo, acting as Agents,
defendant,
supported by
European Thermal Paper Association (ETPA), established in Zurich (Switzerland), represented by H. Hobbelen and B. Vleeshouwers, lawyers,
intervener,
THE GENERAL COURT (Second Chamber),
composed of A. Marcoulli (Rapporteur), President, S. Frimodt Nielsen and R. Norkus, Judges,
Registrar: E. Coulon,
having regard to the written part of the procedure,
makes the following
Order
1        By its action under Article 263 TFEU, the applicant, Hansol Paper Co. Ltd, seeks the annulment of Commission Implementing Regulation (EU) 2020/1524 of 19 October 2020 imposing a definitive anti-dumping duty and definitively collecting the provisional duty imposed on imports of certain heavyweight thermal paper originating in the Republic of Korea (OJ 2020 L 346, p. 19; ‘the contested regulation’), in so far as it concerns the applicant.
Background to the dispute
2        Following a complaint lodged on 26 August 2019 by the intervener, European Thermal Paper Association (ETPA), the European Commission published, on 10 October 2019, a Notice of initiation of an anti-dumping proceeding concerning imports of certain heavyweight thermal paper originating in the Republic of Korea (OJ 2019 C 342, p. 8).
3        The product under investigation corresponded to heavyweight thermal paper weighing more than 65 g/m2; presented in rolls of a width of 20 cm or more, weighing 50 kg or more (including paper) and with a diameter of 40 cm or more; with or without a base coat on one or both sides; coated with a thermo-sensitive substance (that is, a mixture of dye and a developer that reacts and forms an image when heat is applied) on one or both sides; and with or without a top coat, originating in South Korea, and falling under CN codes ex 4809 90 00, ex 4811 59 00 and ex 4811 90 00 (‘the product concerned’).
4        The investigation of dumping and injury covered the period from 1 July 2018 to 30 June 2019 (‘the investigation period’). The examination of trends relevant for the assessment of injury covered the period from 1 January 2016 to the end of the investigation period (‘the period considered’).
5        The applicant, established in South Korea, is active in the production and export of the product concerned, inter alia to the European Union. Its sales of that product were made in the European Union, during the investigation period, to independent customers and to a related entity, Hansol Europe BV, which subsequently resold that product to independent customers.
6        The applicant, which was the only exporting producer of the product concerned in South Korea during the investigation period, and Hansol Europe responded to the anti-dumping questionnaire.
7        On 26 May 2020, the Commission adopted Implementing Regulation (EU) 2020/705 imposing a provisional anti-dumping duty on imports of certain heavyweight thermal paper originating in the Republic of Korea (OJ 2020 L 164, p. 28; ‘the provisional regulation’). That regulation imposed a provisional anti-dumping duty of 22.3% on imports of the product concerned originating in South Korea.
8        On 19 October 2020, the Commission adopted the contested regulation. Article 1 of that regulation provides for the imposition of a definitive anti-dumping duty on imports of the product concerned originating in South Korea at a rate of 15.8%.
Forms of order sought
9        The applicant claims that the Court should:
–        annul the contested regulation in so far as it concerns the applicant;
–        order the Commission and the intervener to pay the costs.
10      The Commission contends that the Court should:
–        dismiss the action;
–        in the alternative, annul the contested regulation as regards the applicant only in so far as it imposes on the applicant an anti-dumping duty exceeding the rate which would be applicable in the absence of the error found;
–        order the applicant to pay the costs.
11      The intervener contends that the Court should:
–        dismiss the action;
–        order the applicant to pay the costs.
Law
12      Under Article 126 of the Rules of Procedure of the General Court, where an action is manifestly inadmissible or manifestly lacking any foundation in law, the General Court may, on a proposal from the Judge-Rapporteur, at any time decide to give a decision by reasoned order without taking further steps in the proceedings.
13      In the present case, the Court considers that it has sufficient information from the documents in the file and has decided, pursuant to Article 126 of the Rules of Procedure, to give a decision without taking further steps in the proceedings.
14      In support of the action, the applicant relies on a single plea in law, alleging that the methodology followed by the Commission for the purposes of determining the price undercutting and underselling margins infringes Article 3(1), (2), (3) and (6) and Article 9(4) of Regulation (EU) 2016/1036 of the European Parliament and of the Council of 8 June 2016 on protection against dumped imports from countries not members of the European Union (OJ 2016 L 176, p. 21), in the version applicable to the present case, namely the version as last amended by Regulation (EU) 2018/825 of the European Parliament and of the Council of 30 May 2018 amending Regulation 2016/1036 and Regulation (EU) 2016/1037 on protection against subsidised imports from countries not members of the European Union (OJ 2018 L 143, p. 1; ‘the basic regulation’). The plea is divided into four parts.
15      By the first part of the plea, the applicant submits that the application by analogy of Article 2(9) of the basic regulation for the purposes of determining the export price to be taken into account in calculating the price undercutting and underselling margins infringes Article 3(1) of that regulation, as it is worded. According to the applicant, Article 2(9) of that regulation allows the export price to be constructed ‘at the Union frontier level’, in particular where that price is unreliable for the purposes of calculating the dumping margin. The rationale for the construction of that export price does not apply to the determination of the injury margin, since the prices to be compared are prices charged by the exporting producers and by the Union industry, which are in competition. In the present case, the prices charged by Hansol Europe are, by definition, reliable, since they are applied between parties which are unrelated.
16      By the second part of the plea, the applicant submits that the Commission committed a manifest error of assessment in the determination of injury.
17      In the first place, the applicant complains that the Commission, in disregard of the case-law of the Court, ignored the prices negotiated with independent buyers, which constitute the reference point for calculating price undercutting since it was those prices, and not theoretical constructed prices, which led those buyers to decide whether to purchase the products of the Union industry or the imported products. It also maintains that the Commission infringed the principle of equal treatment by treating sales made through related companies in the same way as direct sales.
18      In the second place, the applicant submits that, by comparing hypothetical prices of the product concerned at the Union frontier with the prices charged by the Union producers to independent customers, the Commission did not compare prices at the same level of trade, contrary to the case-law of the Court and to the decisions of the World Trade Organization (WTO). It argues that, in so doing, the Commission erroneously relied, vis-à-vis the applicant, on a sales price further up the distribution chain than the sales made by the Union industry to its independent customers.
19      In the reply, first, the applicant adds that the Commission misapplied the concepts of ‘reference point’ and ‘point of competition’. It submits that it is not apparent from Article 3(3) of the basic regulation that the existence of price undercutting must be examined at the level of the dumped imports. Moreover, since the sales price charged to Hansol Europe is, by definition, unknown to the independent customers, it cannot constitute the ‘reference point’.
20      Secondly, the applicant submits that the Commission applies a moving definition of the concept of ‘level of trade’, whereas that concept should be based solely on the nature and functions of the customers. It argues that, in the present case, while the sales were made at the same level of trade, the Commission compared the sales prices charged by the Union producers to independent converters, adjusted ‘ex-works’, with the theoretical prices which the applicant charged to Hansol Europe, which is not an independent buyer or converter. According to the applicant, that asymmetry also applies with respect to the calculation of the price underselling margin.
21      In the third place, the applicant maintains that the manifest error of assessment committed by the Commission in determining the export price vitiates its findings relating to the existence of injury, including its finding of price suppression.
22      By the third part of the plea, the applicant submits that the Commission committed a manifest error in its assessment of the causal link since that assessment is based on its analysis of price undercutting and price suppression, which is itself vitiated by a manifest error of assessment.
23      By the fourth part of the plea, the applicant submits that the Commission used the same export price to determine the price undercutting margin and the price underselling margin. It follows, according to the applicant, that it cannot be ruled out that, if the Commission had correctly established that export price, the price underselling margin would have been lower than the dumping margin.
24      Thus, in essence, the applicant disputes the price of the imports taken into account by the Commission for the purposes of calculating the price undercutting and underselling margins, since that error, in its submission, affects the Commission’s findings regarding the existence of injury to the Union industry, the existence of a causal link between that injury and the dumped imports, and the determination of the amount of the anti-dumping duty imposed.
25      The Commission, supported by the intervener, disputes the effectiveness and the merits of the applicant’s arguments.
Preliminary observations
26      Under Article 1(1) of the basic regulation, in order for it to be possible to impose an anti-dumping duty on a dumped product, it is necessary that its release for free circulation in the European Union causes injury.
27      For the purposes of determining that injury, Article 3(2) of the basic regulation provides that it is necessary to carry out an objective examination of the volume of the dumped imports and their effect on prices in the Union market for like products, and of the consequent impact of those imports on the Union industry.
28      With regard in particular to the effect of the dumped imports on prices, the second sentence of Article 3(3) of the basic regulation specifies that consideration is to be given to whether there has been significant price undercutting by those imports as compared with the price of a like product of the Union industry, or whether the effect of such imports is otherwise to depress prices to a significant degree or prevent price increases, which would otherwise have occurred, to a significant degree.
29      The basic regulation does not lay down any particular method for determining the price undercutting of imports (see, by analogy, judgment of 10 April 2019, Jindal Saw and Jindal Saw Italia v Commission, T‑301/16, EU:T:2019:234, paragraph 175).
30      The same applies to the method for calculating the injury margin used to determine whether it is necessary to set, pursuant to Article 9(4) of the basic regulation, an anti-dumping duty which is lower than the dumping margin and which is adequate to remove the injury to the Union industry.
31      In the present case, in its examination of the existence of injury, in recital 58 of the provisional regulation, the Commission stated that it had determined the price undercutting during the investigation period by comparing:
‘–      the weighted average prices per product type of the imports from the [applicant] to the first independent customer on the Union market, established on a cost, insurance, freight (CIF) basis, with appropriate adjustments for post-importation costs; and
–      the corresponding weighted average sales prices per product type of the sampled Union producers charged to unrelated customers on the Union market, adjusted to an ex-works level.’
32      The resulting difference was then extrapolated to the hypothetical turnover which the sampled Union producers would have achieved during the investigation period in the absence of the exports in question originating in South Korea. That resulted in a weighted average price undercutting margin of 11.1% in the provisional regulation, which was reduced to 5.1% in the contested regulation following the comments submitted by the interested parties.
33      As regards the import price, it should be noted that, during the investigation period, the applicant sold the product concerned directly to independent buyers in 70% of cases and through Hansol Europe in 30% of cases. As regards direct sales, the Commission took into account the prices actually charged by the applicant. As regards sales through Hansol Europe, the Commission took into account the export prices constructed in accordance with Article 2(9) of the basic regulation, which were used to determine the dumping margin. According to the first subparagraph of Article 2(9), where it appears that the export price is unreliable because of an association or a compensatory arrangement between the exporter and the importer or a third party, the export price may be constructed, inter alia, on the basis of the price at which the imported products are first resold to an independent buyer. The second subparagraph of Article 2(9) of the basic regulation provides that adjustment for all costs, including duties and taxes, incurred between the importation and resale, and for profits accruing, are to be made so as to establish a reliable export price, at the Union frontier level. The Commission thus took into account the prices charged by Hansol Europe to its independent customers, from which it deducted, first, the selling, general and administrative costs (‘SG&A costs’) of Hansol Europe, secondly, a reasonable amount of profit and, thirdly, transport costs.
34      In recitals 46 and 47 of the contested regulation, the Commission justified its choice by explaining, in essence, that, given the silence of the basic regulation, as regards the export price, it had to identify the first point at which competition took place or could take place with Union producers on the Union market. According to the Commission, that point was the price of the purchase by the first unrelated importer, since a company in principle had the choice of sourcing either from the Union industry or from overseas suppliers. Indeed, once the exporting producer had established its system of related companies in the European Union, those companies had already decided that their goods would be sourced from overseas. The Commission concluded from this that the point of comparison had to be located right after the goods had crossed the Union frontier, and not at a later stage in the distribution chain, for instance when selling to the final user of the goods. The Commission added that that approach also ensured coherence in cases where an exporting producer was selling the goods directly to an independent customer (whether an importer or final user) since, under that scenario, resale prices were, by definition, not used.
35      In recitals 48 and 49 of the contested regulation, the Commission explained that, in the present case, in respect of export sales to an importer related to the applicant, the import price was unreliable and therefore had to be constructed by using the price of the resale by the related importer to the first independent buyer as a starting point. It stated that the rules relating to the construction of the export price, as set out in Article 2(9) of the basic regulation, were relevant and were applied by analogy.
36      Furthermore, in order to determine the injury margin, the Commission made a comparison between the applicant’s weighted average import price used to establish price undercutting, and the weighted average non-injurious price of the like product sold by the sampled Union producers on the Union market during the investigation period. That non-injurious price was constructed by adding together the costs of production, including the future costs resulting from multilateral environmental agreements, and a reasonable amount of profit. The Commission inferred from this that there had been price underselling, on the basis of which it determined the existence of an injury margin, expressed as a percentage of the cost, insurance, freight (CIF) value of the import transactions, established at 22.5% in the provisional regulation and reduced to 17.6% in the contested regulation following the comments submitted by the interested parties.
37      In the present case, the parties disagree as to the exporting producer’s price to be taken into account for the purpose of determining whether there has been price undercutting and price underselling. In essence, the applicant puts forward two complaints, alleging, first, the unlawfulness of the use of constructed export prices and, secondly, failure to compare prices at the same level of trade. It submits that the errors thus committed by the Commission vitiate its analysis concerning the existence of injury to the Union industry, the existence of a causal link between that injury and the dumped imports, and the determination of the anti-dumping duty imposed.
The first complaint, alleging that constructed export prices should not have been used
38      The applicant submits that price undercutting can be calculated only on the basis of the prices actually charged by the exporting producers and by the Union industry, which precludes, as a matter of principle, the use of prices constructed through the application, by analogy, of Article 2(9) of the basic regulation.
39      It should be borne in mind that, in the sphere of the common commercial policy and, most particularly, in the realm of measures to protect trade, the EU institutions enjoy a broad discretion by reason of the complexity of the economic and political situations which they have to examine, with the result that the judicial review of that broad discretion must be limited to verifying whether relevant procedural rules have been complied with, whether the facts relied on have been accurately stated, and whether there has been a manifest error in the appraisal of those facts or a misuse of powers (see judgment of 12 May 2022, Commission v Hansol Paper, C‑260/20 P, EU:C:2022:370, paragraph 58 and the case-law cited).
40      Since the assessment of whether there has been price undercutting is an economically complex issue in respect of which the basic regulation does not lay down any particular methodology, the Commission enjoys a broad discretion in that regard (judgment of 12 May 2022, Commission v Hansol Paper, C‑260/20 P, EU:C:2022:370, paragraph 99).
41      Contrary to what the applicant submits, neither the absence, in Article 3 of the basic regulation, of a reference to Article 2(9) of that regulation nor the fact that the term ‘injury’, according to Article 3(1) of that regulation, is to be interpreted in accordance with the provisions of Article 3 thereof, are such as to preclude, as a matter of principle, the Commission from being guided by the methodologies contained in other provisions of that regulation in order to assess whether there has been price undercutting.
42      Thus, in accordance with the case-law cited in paragraph 39 above, the application, by analogy, of the price construction method referred to in Article 2(9) of the basic regulation in order to assess price undercutting may be considered, provided that that method is consistent with the legal framework laid down by the basic regulation and does not lead to a manifestly incorrect result (judgment of 12 May 2022, Commission v Hansol Paper, C‑260/20 P, EU:C:2022:370, paragraph 99).
43      In addition, it follows from a combined reading of Article 1(1) and Article 3(2) of the basic regulation that the injury must be assessed at the time of the dumped product’s ‘release for free circulation in the Union’. Consequently, the calculation of price undercutting must, in principle, be made at the level of the dumped imports (judgment of 12 May 2022, Commission v Hansol Paper, C‑260/20 P, EU:C:2022:370, paragraph 102). In that context, the Court of Justice held that it was open to the Commission, in order to ensure an objective comparison of the prices at the level of the first release for free circulation in the European Union of the product concerned, to construct the CIF Union frontier price by deducting SG&A costs and a profit margin from the price of resale of the product concerned by a related importer to independent customers. The Court noted that that application, by analogy, of Article 2(9) of the basic regulation was within the broad discretion which the Commission enjoyed when implementing Article 3(2) of that regulation and could not therefore be regarded, in itself, as vitiated by a manifest error of assessment (judgment of 12 May 2022, Commission v Hansol Paper, C‑260/20 P, EU:C:2022:370, paragraph 105).
44      That is precisely the method which was applied in the present case by the Commission in respect of products imported into the European Union by the applicant and sold to independent buyers through Hansol Europe. Since the export price declared to customs by the applicant was unreliable because of the existence of an intra-group relationship, the Commission assessed whether there was price undercutting by taking into account the prices of the imported products at the Union frontier level, by deducting post-importation costs from the prices charged by Hansol Europe to the first independent buyer.
45      Such a deduction cannot constitute a breach of the principle of equal treatment allegedly resulting from the Commission’s identical treatment of different situations, namely sales made directly in the European Union by exporting producers, on the one hand, and sales made through companies related to those producers, on the other. As is apparent from paragraph 43 above, the Court of Justice held that the Commission was entitled to make that deduction in order to bring the prices back to the Union frontier level and, therefore, to neutralise differences that would arise at a later stage due to the sales methods used by exporting producers in the European Union.
46      Accordingly, by using artificially constructed prices and not the prices actually charged by the applicant and by Hansol Europe to independent customers for the purposes of calculating price undercutting, the Commission did not err in law or commit any manifest error of assessment and did not infringe the principle of equal treatment.
47      The first complaint must therefore be rejected as manifestly unfounded.
The second complaint, alleging failure to compare prices at the same level of trade
48      The applicant submits that the Commission failed to compare prices at the same level of trade.
49      In that regard, it should be noted that Article 3(2) of the basic regulation requires that a determination of injury be made by objectively examining the effects of the imports on prices. That requirement itself requires that the comparison of the prices be carried out at the same level of trade of the goods in question. It is only on that condition that (i) the actual effect of the imports on the prices of a like product of the Union industry can properly be taken into account, (ii) the sales of the product concerned and the sales of the like product of the Union industry can be considered as having the same ‘reference point’, (iii) the prices of sales of the products in question to the first independent customers can objectively be taken into consideration for the purpose of calculating undercutting, and (iv) the comparison of the prices at the level where competition in the European Union takes place can be relevant (judgment of 12 May 2022, Commission v Hansol Paper, C‑260/20 P, EU:C:2022:370, paragraph 101).
50      In the present case, it is common ground that both the sampled Union producers and the applicant, directly or through Hansol Europe, sold the product concerned almost exclusively (approximately 98% of the sales) to converters.
51      Furthermore, it should be recalled that, in order to assess whether there was price undercutting, the Commission compared the weighted average prices per product type charged by the applicant to the first independent buyer on the Union market, established on a CIF basis with appropriate adjustments for post-importation costs, with the corresponding weighted average sales prices per product type charged by the sampled Union producers to independent buyers on the Union market, adjusted to an ex-works level (see paragraph 31 above).
52      Thus, it should be noted at the outset that, contrary to what the applicant submits, the Commission did not in any way compare the price of the Union industry’s sales to independent customers, on the one hand, with the applicant’s sales to Hansol Europe on the other, since it took into account the sales made by the applicant, through Hansol Europe, to independent customers, those prices being duly adjusted to the CIF Union frontier level.
53      Next, as regards the price of products equivalent to the product concerned sold by the Union producers, the Commission took into account the adjusted ‘ex-works’ prices of the sales made by the Union industry directly to independent customers, which represented more than 96% of the sales. With respect to other sales, made through a company related to the Union producers, the Commission did not deduct the SG&A costs and the profits of the related selling entities. In so doing, it took into account a sales price which was higher than the CIF Union frontier price of the product concerned and, consequently, unfavourable to the applicant. However, in recital 53 of the contested regulation, the Commission stated that even if the SG&A costs and the profits of the selling entities related to those Union producers were deducted, that would scarcely change the level of undercutting found due to the limited number of transactions concerned. That assertion is not disputed by the applicant.
54      The very small proportion of sales made through a company related to the Union producers (less than 4%) distinguishes the present case from those which gave rise to the judgments of 27 April 2022, Giant Electric Vehicle Kunshan v Commission (T‑242/19, not published, EU:T:2022:259), and of 4 May 2022, CRIA and CCCMC v Commission (T‑30/19 and T‑72/19, EU:T:2022:266), cited by the applicant. In those judgments, the General Court held that, in the context of the price undercutting calculation, the Commission had carried out an unfair comparison of prices since, with respect to sales made through related companies, it had taken into account, as regards the exporter, a price excluding the SG&A costs and the profits of those related entities and, as regards the Union producers, the prices of the related selling entities, which included those same costs. However, in those cases, the sales made through related companies represented a substantial portion of the sales in question, in particular those made by the sampled Union producers.
55      Thus, in view of the marginal portion of sales made by the sampled Union producers through a related company, and while the applicant does not dispute the assertion that, if the SG&A costs and the profits of those related companies had been deducted from the Union sales price, the level of undercutting would scarcely have been changed, it must be held that the methodology used by the Commission to determine whether there has been price undercutting enabled an objective examination of the effects of the imports on prices.
56      It should also be noted that, as regards the calculation of the injury margin, it is apparent from recital 146 of the provisional regulation that that margin was determined, not by using the Union producers’ adjusted ‘ex-works’ sales price, but the Union industry’s cost of production, to which a target profit was added. As the Commission contends, without being contradicted by the applicant, the costs and profits of the selling companies related to the sampled Union producers were therefore not taken into account in the calculation of the injury margin.
57      Lastly, it should be added that consideration of the price of the first resale by Hansol Europe of the product concerned to an independent customer on the Union market does not correspond to the ex-works level of trade of the like product of the Union industry, but to a later level of trade of that product. The price of the sale made by Hansol Europe to the first independent customer, or, in other words, the price of the first sale made by Hansol Europe to converters, is not the import price but rather a resale price. Accordingly, if the Commission had compared the ‘ex-works’ prices of the Union producers with the prices actually charged by Hansol Europe to its independent customers, that comparison would have related to prices further down the applicant’s distribution chain, that is to say, prices which were higher due to the existence of costs and a profit margin specific to Hansol Europe (see, to that effect, judgment of 12 May 2022, Commission v Hansol Paper, C‑260/20 P, EU:C:2022:370, paragraph 106).
58      Accordingly, it must be held that the Commission compared the prices charged by the Union producers and by the applicant at the same level of trade of the products at issue, that is to say, in the present case, at the initial level of trade of those products.
59      The second complaint must therefore be rejected as manifestly unfounded.
60      It follows that the applicant is not justified in claiming that the Commission took into account a manifestly incorrect export price for the purposes of calculating the price undercutting and underselling margins. Therefore, since its argument is based exclusively on that alleged error, the applicant is also not justified in claiming that the Commission’s findings concerning the existence of injury to the Union industry, the existence of a causal link between that injury and the dumped imports, and the determination of the anti-dumping duty imposed are manifestly incorrect.
61      It follows from all of the foregoing that the single plea in law must be rejected as manifestly lacking any foundation in law, without there being any need to examine whether it is effective.
62      Accordingly, the action must be dismissed as manifestly lacking any foundation in law, without there being any need to take further steps in the proceedings.
Costs
63      Under Article 134(1) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. Since the applicant has been unsuccessful, it must be ordered to pay the costs, in accordance with the forms of order sought by the Commission and the intervener.
On those grounds,
THE GENERAL COURT (Second Chamber)
hereby orders:
1.      The action is dismissed as manifestly lacking any foundation in law.
2.      Hansol Paper Co. Ltd shall pay the costs.
Luxembourg, 17 February 2023.
E. Coulon
A. Marcoulli
Registrar
President
*      Language of the case: English.