2013R0513 — EN — 06.08.2013 — 001.001

This document is meant purely as a documentation tool and the institutions do not assume any liability for its contents

Amended by:





Corrected by:









▼B

COMMISSION REGULATION (EU) No 513/2013

of 4 June 2013

imposing a provisional anti-dumping duty on imports of crystalline silicon photovoltaic modules and key components (i.e. cells and wafers) originating in or consigned from the People’s Republic of China and amending Regulation (EU) No 182/2013 making these imports originating in or consigned from the People’s Republic of China subject to registration







THE EUROPEAN COMMISSION, Having regard to the Treaty on the Functioning of the European Union, Having regard to Council Regulation (EC) No 1225/2009 of 30 November 2009 on protection against dumped imports from countries not members of the European Community ( 1 ) (‘the basic Regulation’), and in particular Article 7 and Article 14(5) thereof, After consulting the Advisory Committee, Whereas: PROCEDURE Initiation (1) On 6 September 2012, the European Commission (‘the Commission’) announced, by a notice published in the Official Journal of the European Union ( 2 ) (‘Notice of Initiation’), the initiation of an anti-dumping proceeding with regard to imports into the European Union (‘the Union’) of crystalline silicon photovoltaic modules and key components (i.e. cells and wafers) originating in the People’s Republic of China (‘the PRC’ or the ‘country concerned’). (2) The investigation was initiated following a complaint lodged on 25 July 2012 by EU ProSun (‘the complainant’) on behalf of producers representing more than 25 % of the total Union production of crystalline silicon photovoltaic (‘PV’) modules and key components. The complaint contained prima facie evidence of dumping of the said product and of material injury resulting therefrom, which was considered sufficient to justify the initiation of an investigation. Registration (3) Following a request by the complainant supported by the required evidence the Commission adopted on 1 March 2013 Regulation (EU) No 182/2013 ( 3 ) making imports of crystalline silicon PV modules and key components (i.e. cells and wafers) originating in or consigned from the PRC subject to registration as of 6 March 2013. Parties concerned by the proceeding (4) The Commission officially advised the complainant, other known Union producers, the known exporting producers, the PRC authorities and known importers of the initiation of the investigation. The Commission also advised producers in the USA, which was envisaged as a possible analogue country. (5) Interested parties were given the opportunity to make their views known in writing and to request a hearing within the time limit set in the Notice of Initiation. All interested parties, who so requested and showed that there were particular reasons why they should be heard, were granted a hearing. (6) In view of the large number of exporting producers in the country concerned, unrelated importers and Union producers involved in the investigation, and in order to complete the investigation within the statutory time limits, the Commission announced in the Notice of Initiation that it had decided to limit to a reasonable number the exporting producers in the country concerned, unrelated importers and Union producers that would be investigated by selecting a sample in accordance with Article 17 of the basic Regulation (this process is also referred to as ‘sampling’). Sampling of Union producers (7) The Commission announced in the Notice of Initiation that it had provisionally selected a sample of Union producers. All known Union producers and known producers’ association were informed about the selection of the provisional sample of Union producers. This provisional sample consisted of 9 Union producers out of the around 220 Union producers that were known prior to the initiation of the investigation to produce the like product (see recital 26 below), selected on the basis of the largest representative volume of production, taking into account the sales volume and the geographical location that could reasonably be investigated within the time available. It was ensured that the sample covers both vertically integrated and non-integrated Union producers. Interested parties were also invited to make their views known on the provisional sample. A number of interested parties commented on the provisional sample and one party requested a hearing with the Hearing Officer. (8) Several interested parties raised the following objections concerning the provisional sample of Union producers: (i) Some parties submitted that the limited information provided with regard to the provisionally selected sample was insufficient and prevented them from making any meaningful comments on the proposed sample. In particular, they criticised that the identity of the Union producers was kept confidential and requested that the Member States where the sampled Union producers were located should be disclosed, as well as the selected Union producers’ share of production in the total production volume of PV modules, cells and wafers and the percentage of production and sales represented by the sampled companies individually and by the sample as a whole. (ii) The method used for selection of the sample was contested on the grounds that it ‘confuses three different steps’, namely the support for the initiation of the investigation, definition of the Union industry and sampling. Therefore, it was claimed that it was unclear whether the Union industry was already defined at the time of the selection of the sample, and therefore whether the sample could be considered as representative. Without defining the Union industry at sampling stage, interested parties were prevented from verifying whether the provisional sample was representative, and thus whether on the basis of the sample, the situation of the Union industry during the investigation period as defined in recital 19 below could be correctly assessed. Furthermore, it was claimed that it was inappropriate to select the provisional sample on the basis of the replies of the Union producers to the examination of the support for the initiation of the investigation. (iii) It was also claimed that the provisional sample was selected merely on the basis of companies which have expressed their support to the present investigation. (iv) One party claimed that since vertically integrated companies are included in the provisional sample, the production volume of wafers and cells may be double or triple counted which casts doubts on the overall representativity of the sample. It was requested that for vertically integrated producers only the production volume of modules should be counted, but not the volume of cells and wafers. (v) The same party alleged that the data on which the selection of the sample was based were at least partly unreliable which could have an impact on the representativity of the provisional sample as a whole. (vi) One party provided a list containing allegedly around 150 additional Union producers of the like product, claiming that they should have been taken into consideration for the purposes of selecting a sample of Union producers. (9) The arguments raised by the parties were addressed as follows: (i) The Union producers requested that their names be kept confidential due to the risk of retaliation. There were indeed real threats against Union producers to harm their business both in the Union and outside. The Commission considered that these requests were sufficiently substantiated to be granted. The disclosure of the location or share in production and sales of individual Union producers selected in the sample could easily reveal the identity of the producer concerned and the requests in this regard had to be rejected. (ii) The Commission did not ‘confuse’ the determination of the support for the initiation of the investigation, the determination of the Union industry and the selection of provisional sample as these steps remained independent from each other and were decided upon separately. It was not demonstrated to what extent the use of production and sales data provided by the Union producers in the context of the examination of the support for the initiation of the investigation had affected the representativity of the sample. At initiation the Union industry had indeed been provisionally defined. All available information concerning the Union producers, including information provided in the complaint and data collected from Union producers and other parties before the initiation of the investigation, was used in order to provisionally establish the total Union production for the investigation period, as defined in recital 19 below. (iii) All Union producers that replied to questions related to the support for the initiation of the investigation were considered for the sample, regardless of whether they supported, opposed or expressed no opinion on the investigation; this claim was therefore rejected. (iv) The question of double/triple counting has been considered when the provisional sample was selected. It appeared that excluding production and sales of wafers and cells of the vertically integrated Union producers would not take into consideration the part of the production of wafers and cells sold on the free market. It was therefore considered that excluding sales of wafers and cells from the total production volume would not necessarily lead to a more representative sample. Furthermore, the representativity of the sample was established not only on the basis of the production volume but also on the basis of the geographical spread and a balanced representation of vertically integrated and non-integrated producers. The relative representativeness of the production volume was calculated at the level of each type of the like product. On this basis, it was considered that the methodology to select the provisional sample was reasonable and the sample is therefore considered representative for the Union industry of the product under investigation as a whole. Therefore, this claim was rejected. (v) As far as the reliability of data is concerned, the sample was selected on the basis of the information available at the time of the selection of the sample as provided for in Article 17(1) of the basic Regulation. Concerning the reliability of data used in the support of the initiation of the investigation, the investigation found no evidence that the data collected prior to the initiation was significantly deficient. Therefore, it can be reasonably assumed that the basis on which the provisional sample was selected was sufficiently reliable. Therefore, this claim was rejected. (vi) Concerning the list of around 150 additional Union producers, it should be noted that this information was submitted far outside the deadline set for interested parties to comment on the selection of the provisional sample and for Union producers to come forward and to request to be selected in the sample. Moreover, about 30 of the Union producers contained in this list were in fact known to the Commission at the time of the selection of the sample. Furthermore, all Union producers that made themselves known after the publication of the Notice of Initiation were considered when selecting the sample. On this basis, the representativity of the sample has not been affected. Therefore, this claim was rejected. (10) Following receipt of comments, the composition of the sample was revised on the ground that there were indications that one of the selected companies would not have been in the position to fully cooperate. In order to maintain the level of representativity of the sample an additional Union producer was selected. This revised sample consisted thus of 10 companies, selected on the basis of the largest representative volume for each level of production, taking into account sales volume on the EU market and geographical location that could reasonably be investigated within the time available. As a result, the revised sample of Union producers accounted, expressed as a percentage of out of the total Union production, between 18 and 21 % for modules, between 17 and 24 % for cells and between 28 and 35 % for wafers and covered vertically integrated and non-integrated producers. Given that a precise percentage would allow calculating the production volume of the above mentioned additional Union producer and thus its identity could be determined, no such precise percentages could be disclosed. Sampling of unrelated importers (11) In view of the potentially high number of unrelated importers, sampling was envisaged in the Notice of Initiation in accordance with Article 17 of the basic Regulation. In order to enable the Commission to decide whether sampling would be necessary and, if so, to select a sample, all importers were asked to make themselves known to the Commission and to provide, as specified in the Notice of Initiation, basic information on their activities related to the product under investigation during the investigation period, as defined in recital 19 below. (12) Of the around 250 unrelated importers put forward by the complainant, that the Commission contacted, 36 parties replied to the sampling form attached to the Notice of Initiation, 35 for modules, only 1 reply for cells and no reply for wafers. The sample was selected in accordance with Article 17 of the basic Regulation to cover the largest representative volume of imports which can reasonably be investigated within the time available. On this basis, the Commission selected a sample of three unrelated importers for modules and one for cells. Further to the comments received, the Commission decided to include one more unrelated importer for modules in the sample. This company came forward and argued that its level of activity would justify the inclusion in the sample. Their initial submission was therefore re-examined and it became apparent that a clerical error occurred in relation to the volume of imports reported by the importer concerned. On these grounds, the company in question was included in the sample of unrelated importers. Moreover, two companies that were initially selected in the sample did not reply to the questionnaires and were therefore considered as non-cooperating with the investigation and excluded from the sample of unrelated importers. Therefore, the sample of the unrelated importers consisted of two importers for modules and one importer for cells, representing around 2-5 % of the total imports from the country concerned. After the receipt of the questionnaire reply, it became, however, apparent that the core activity of two out of three importers was in fact solar installations and not trading of the product concerned. The investigation revealed that a majority of imports of the product concerned enter the Union market through companies related to the exporting producers in the PRC or through installers or project developers. In the circumstances, the sample was provisionally considered to be representative. The Commission will, however, in the course of the further investigation contact additional cooperating unrelated importers in order to verify whether they qualify as importers and to see whether the size of the sample can be increased. Sampling of exporting producers (13) In view of the apparently high number of exporting producers, sampling was envisaged in the Notice of Initiation for the determination of dumping, in accordance with Article 17 of the basic Regulation. In order to enable the Commission to decide whether sampling would be necessary and, if so, to select a sample, all exporting producers were asked to make themselves known to the Commission and to provide, as specified in the Notice of Initiation, basic information on their activities related to the product under investigation during the investigation period, as defined in recital 19 below. The authorities of the country concerned were also consulted. (14) As many as 135 exporting Chinese producers (often groups of several companies) made themselves known in the sampling exercise. The cooperating companies represent 80 % of the total Chinese export value. The selected sample of seven groups of companies consists of the three cooperating exporters with the largest volume of exports of modules, the two cooperating exporters with the largest volume of exports of cells and the two cooperating exporters with the largest volume of exports of wafers. Questionnaire replies and verifications (15) The Commission sent questionnaires to all sampled Chinese exporting producers as well as to the sampled Union producers, the sampled unrelated importers and upstream and downstream operators and their associations that made themselves known within the time limits set out in the Notice of Initiation. The Commission also contacted a representative consumer association. (16) Questionnaire replies were received from all sampled Chinese exporting producers, from all sampled Union producers, 3 sampled unrelated Union importers and 21 upstream and downstream operators and 3 of their associations. (17) The Commission sought and verified all the information deemed necessary for the purpose of a provisional determination of dumping, resulting injury and Union interest. Verification visits were carried out at the premises of the following (groups of) companies. (a) Union producers — Verifications visits were carried out at the premises of the 10 sampled Union producers (b) Exporting producers in the PRC — Changzhou Trina Solar Energy Co. Ltd, PRC — Delsolar (Wujiang) Co. Ltd, PRC — Jiangxi LDK Solar Hi-Tech Co. Ltd, PRC — JingAo Group, PRC — Jinzhou Yangguang Energy, PRC — Wuxi Suntech Power Co. Ltd, PRC — Yingli Green Energy Holding Company, PRC (c) Related importers in the Union — Yingli Green Energy Greece Sales GmbH, Munich, Germany — LDK Solar Italia S.r.l., San Zenone degli Ezzelini (TV), Italy — Delta Energy Systems S.r.l., Rome, Italy — Sunways AG, Konstanz, Germany — JA Solar GmbH, Munich, Germany (d) Related traders/importers outside the Union — Delsolar Co. Ltd, Zhunan City, Taiwan — JA Solar Hong Kong Ltd, Hong Kong SAR — Wealthy Rise International Ltd, Hong Kong SAR — Suntech Power International Ltd, Schaffhausen, Switzerland — Trina Solar (Schweiz) AG, Wallisellen, Switzerland (e) Unrelated importer in the Union — IBC AG, Bad Staffelstein, Germany (f) Upstream Operators — Roth & Rau AG, Hohenstein-Ernsthal, Germany — WACKER Chemie AG, Burghausen, Germany (g) Downstream Operators — Juwi Solar GmbH, Worrstadt, Germany — ValSolar SL, Badajoz, Spain (h) Associations — EPIA, Brussels, Belgium (18) In view of the need to establish a normal value for the exporting producers in the PRC in case MET is not granted to them, a verification to establish normal value on the basis of data from India as analogue country took place at the premises of the following companies: — EMMVEE Photovoltaic Power Private Limited, Bengaluru, India — Tata Power Solar Systems Limited, Bengaluru, India Investigation period and period considered (19) The investigation of dumping and injury covered the period from 1 July 2011 to 30 June 2012 (‘the investigation period’ or ‘IP’). The examination of trends relevant for the assessment of injury covered the period from 2009 to the end of the investigation period (‘the period considered’). PRODUCT CONCERNED AND LIKE PRODUCT Product concerned (20) The product concerned is crystalline silicon PV modules or panels and cells and wafers of the type used in crystalline silicon PV modules or panels, originating in or consigned from the PRC. The cells and wafers have a thickness not exceeding 400 micrometres. This product is currently falling within CN codes ex381800 10, ex850131 00, ex850132 00, ex850133 00, ex850134 00, ex850161 20, ex850161 80, ex850162 00, ex850163 00, ex850164 00 and ex854140 90 (‘the product concerned’). (21) The following product types are excluded from the definition of the product concerned: — solar chargers that consist of less than six cells, are portable and supply electricity to devices or charge batteries, — thin film PV products, — crystalline silicon PV products that are permanently integrated into electrical goods, where the function of the electrical goods is other than power generation, and where these electrical goods consume the electricity generated by the integrated crystalline silicon PV cell(s). (22) The PV modules, cells and wafers convert sunlight into electricity. The conversion is operated by cells which absorb light and convert it into electricity through crystalline silicon. (23) Wafers are the first step of the production process. They are made of crystalline silicon and they are the key component for cells production. (24) First the crystalline silicon has to be molten to obtain the crystalline silicon ingots which are sawed into wafers. Wafers are treated through a high technology semiconductor processing sequence to create working solar cells. Cells are the second step of the production process. They have a positive-negative junction to collect and forward the electricity that is generated by the cell. (25) The modules are the third step of the production process. To assemble the modules, cells are soldered together with flat wires or metal ribbons to produce a string of cells. Those are laminated between sheets. Mostly glass is used on top and a polymeric backing sheet to the bottom. Frames are usually created to allow the mounting in the field (e.g. on rooftops). The module may or may not have an inverter. Like product (26) The investigation has shown that the product concerned and the product produced and sold in the domestic market of India, which served as an analogue country for the purpose of establishing the normal value, as well as the product produced and sold in the Union by the Union industry have the same basic physical, chemical and technical characteristics as well as the same basic end uses. They are therefore provisionally considered as alike within the meaning of Article 1(4) of the basic Regulation. Claims regarding product scope Physical, chemical and technical characteristics and end uses (27) Several interested parties claimed that the investigation cannot cover three products with different physical, chemical and technical characteristics, and therefore modules, cells and wafers should be subject to three separate investigations. Moreover, they claimed that it is unclear whether the investigation covers one single product or three separate products and therefore they have no full opportunity to defend their interests. It was also claimed to exclude wafers from the investigation as an alternative if monowafers would not be excluded (see recitals 42 to 44 below). (28) The wafer-cell-module production is one single production process with different production steps. Modules, cells and wafers determine together the characteristics of the finished product (i.e. modules). The investigation showed that the wafers and cells production is directly and exclusively dedicated to produce modules; modules, cells and wafers share the same physical, chemical and technical characteristics (determined by the raw material used) and have the same basic end uses, i.e. are sold for integration into PV solar systems. The modules performance is directly linked to the performance of the wafers and cells. (29) The Notice of Initiation of the investigation clearly expressed that modules, cells and wafers constitute the product under investigation. Interested parties had therefore full opportunity to defend their interests on the basis of the product concerned as defined. On these grounds, the arguments were rejected. Different nomenclature (30) It was further claimed that modules, cells and wafers could not be considered as a single product as they have several different eight-digit CN codes, six-digit subheading, four-digit HS heading and two-digit chapter levels, and they are also found in different sections of the HS Nomenclature. This argument is, as such, irrelevant in order to determine the product scope of an anti-dumping investigation which is based on the physical characteristics of the product concerned. Value added of cells (31) Several parties claimed that the value added in the cell conversion process accounts for the largest part of the value of a module and therefore cells must be considered as a separate product. (32) The investigation revealed that the cells production is the most technologically sophisticated part in the production process. However, it also showed that the three processing steps are linked to each other and the value added is not concentrated in a particular stage of the production process but is spread over the whole production process. On these grounds, the claim was rejected. Separate merchant markets (33) Some interested parties claimed that modules, cells and wafers have separate merchant markets and therefore they should be treated as different products which would also be demonstrated by the fact that a large number of producers are not vertically integrated. (34) Modules, cells and wafers cannot be considered as separate products whose prices fluctuate only depending on market factors. As a matter of fact their prices are strictly interconnected and affected by the polysilicon price. Likewise, as it has been explained above in recitals 23 to 25 above, the product concerned is produced in one single production process with different steps. The fact that some producers are not vertically integrated is due only to business decision and economies of scale and does not reverse this conclusion. On these grounds, this argument had to be rejected. End use and interchangeability (35) Several interested parties claimed that modules, cells and wafers must be treated as different products given that they have different end uses and they were not interchangeable. (36) As mentioned above the investigation showed that the wafer-cell-module production process is one single production process and therefore the question of interchangeability between different steps of a single production process is not applicable. Moreover, modules, cells and wafers have the same end use, converting sunlight into electricity and therefore cannot be used in other applications. Distribution channels (37) One interested party claimed that modules, cells and wafers do not share the same distribution channels and should therefore not be considered as one single product. The investigation showed that modules, cells and wafers can be distributed within different or similar distribution channels. However, the main criteria to define a single product are the same physical, chemical and technical characteristics and end uses. Considering recitals 27 to 29 above, it is concluded that therefore different distribution channels are not considered as a determining element. The argument should therefore be rejected. Consumer perception (38) It was claimed that modules, cells and wafers differ substantially in terms of consumer perception and therefore they should not be considered as one single product. (39) Likewise as above the main criteria to define a single product are the same physical, chemical and technical characteristics and end uses. Considering recitals 27 to 29 above it is concluded that therefore different consumer perception is not considered as a determining element. The argument should therefore be rejected. Thin film products (40) One interested party claimed that thin film PV products should be included in the definition of product concerned, arguing that they share the same basic physical, chemical and technical characteristics and the same basic end uses. (41) Thin film PV products are clearly excluded from the product definition (see recital 21 above). Indeed, thin film PV products have different physical, chemical and technical characteristics compared to the product concerned. They are produced via a different production process and not from crystalline silicon which is the main raw material to produce modules, cells and wafers. They have lower conversion efficiency and a lower wattage output and therefore they are not suitable for the same types of applications than those of the product concerned. On these grounds, the arguments had to be rejected. Exclusion of monowafers (42) One interested party claimed that monowafers should be excluded from the definition of the product concerned, as they have different physical, chemical and technical characteristics than multiwafers. It was claimed that they have differences in the crystal structure, in the shape and in the aspect. Moreover, it was claimed that there was no Union production of monowafers. (43) The investigation found that monowafers are of a higher quality than multiwafers, albeit issued from similar production processes using the same main raw material (polysilicon). Therefore it is concluded that monowafers and multiwafers have the same basic physical, chemical and technical characteristics. (44) The investigation showed that the basic end uses are the same, as both monowafers and multiwafers are exclusively dedicated to the production of solar cells (mono and multi accordingly) and resulting in the production of solar modules (mono and multi accordingly). There are no substantial differences between the two types of wafers and they are interchangeable, they both can be used to produce cells. In addition, as to the claim that there was no production of monowafers in the Union, the investigation showed that both monowafers and multiwafers are produced in the Union. On these grounds, this argument has to be rejected. Semi-finished products (45) Furthermore it was claimed that wafers and cells should be considered as two semi-finished feeder products while modules are end products, therefore they should not be considered as one single product. (46) As mentioned above, the main criteria to define a single product are the same physical, chemical and technical characteristics and end uses. Considering recitals 27 to 29 above it is concluded that therefore the difference between semi-finished or finished products is not considered as a determining element. The argument should therefore be rejected. Solar chargers (47) One interested party requested the exclusion of solar panels dedicated solely to 12V battery charging on the basis that they have a different end use than the modules for grid connection due to the fact that they generate much lower voltage and therefore are not suitable for grid connection. (48) According to the Notice of Initiation solar chargers that consist of less than six cells, are portable and supply electricity to devices or charge batteries are excluded from the product under investigation. Modules of more than six cells dedicated only to battery charging have the same basic characteristics and performance as the modules for grid connection. They use an open voltage circuit which has a lower voltage than the circuit used in modules for grid connection. Despite this difference the investigation has revealed that this type of modules can be connected to the grid. The lower voltage can be easily compensated by an increase in dimension and/or number of cells. Therefore modules dedicated to battery charging, and consisting of more than six cells, fall within the definition of the product concerned. Conclusion (49) On the basis of the above, it is provisionally concluded that crystalline silicon PV modules or panels and cells and wafers, of the type used in crystalline silicon PV modules or panels, as described above, constitute a single product. However, the Commission will further investigate the question as to whether modules, cells and wafers constitute one single or two or three separate products. It therefore invites all interested parties to make their views known on this question, taking into account the provisional conclusion reached by the Commission at this stage. In any event, even if they were ultimately found to constitute two or three different products, the current investigation would cover all of these different products, and definitive measures could be imposed on modules, cells and wafers independently of the question whether they constitute one or several products. DUMPING The PRC Market economy treatment (50) Pursuant to Article 2(7)(b) of the basic Regulation, in anti-dumping investigations concerning imports originating in the PRC, normal value shall be determined in accordance with Article 2(1) to (6) for those producers which were found to meet the criteria laid down in Article 2(7)(c) of the basic Regulation. (51) Briefly, and for ease of reference only, these criteria are set out below: (i) business decisions are made in response to market conditions and without significant State interference, and costs reflect market values; (ii) firms have one clear set of basic accounting records, which are independently audited, in line with international accounting standards and applied for all purposes; (iii) there are no significant distortions carried over from the former non-market economy system; (iv) legal certainty and stability is provided by bankruptcy and property laws; and (v) currency exchanges are carried out at the market rate. (52) In the present investigation all sampled exporting producers requested MET pursuant to Article 2(7)(b) of the basic Regulation and replied to the MET claim form within the given deadlines. (53) The Commission sought all the information deemed necessary and verified all the information submitted in the MET claims at the premises of the companies in question. (54) The verification established that all seven exporting producers (groups of companies) claiming MET did not meet the requirements of the criteria laid down in Article 2(7)(c) of the basic Regulation. (55) All seven groups of companies benefited from preferential tax regime(s) and grants and consequently have failed to demonstrate not to be subject to significant distortions carried over from the non-market economy system and therefore did not fulfil the requirements of criterion 3 of the MET assessment. (56) Six groups of companies failed to demonstrate that their accounts would be independently audited in line with international accounting standards and therefore did not fulfil the requirements of criterion 2 of the MET assessment. (57) One group of companies failed to demonstrate that all its companies would be subject to bankruptcy laws and did not fulfil the requirements of criterion 4 of the MET assessment. (58) In addition, three groups of companies have not been in a position to demonstrate that they are free from significant State interference and did not fulfil the requirements of criterion 1 of the MET assessment. (59) Following the disclosure of MET findings, comments were received from all sampled companies. (60) Two groups of companies made a procedural comment and claimed that the MET determination was made out of time, i.e. after the three-month period laid down in Article 2(7)(c) of the basic Regulation and that the investigation therefore should be terminated without delay. In support of the claim they relied on the Court of Justice’s judgments in the Brosmann ( 4 ) and Aokang ( 5 ) shoes cases. (61) First, it is recalled that the Brosmann and Aokang cases are not pertinent for the assessment of the legality of the MET analysis in the investigation at hand since those cases, contrary to this investigation, relate to situations where the MET assessments were not conducted at all. (62) Furthermore, the Brosmann and Aokang cases are not relevant for the assessment of the legality of the investigation at hand, as the basic Regulation has meanwhile been amended. Article 2(7) of the basic Regulation, as amended, provides that the Commission shall only make MET determinations in respect of companies included in a sample pursuant to Article 17 of the basic Regulation and that it shall make such a determination within seven, and in any event within eight, months of the initiation of the investigation. This amended Article is applicable to all new and pending investigations as from 15 December 2012, including therefore the present one. (63) In any event, the interpretation of the standing case-law that there was no infringement per se of the right to a MET determination, notwithstanding the fact that the three month time limit was not respected, must be upheld. (64) The main substantial comments received concerned the preferential tax regime and grants. Exporters did not contest the facts established, but questioned their importance for the fulfilment of the MET criterion 3. In particular, they argued that State benefits do not represent a significant proportion of their respective turnovers. (65) It is noted in this regard that an income tax system that treats favourably certain companies deemed strategic by the Government is clearly not one of a market economy. Such a system is still heavily influenced by State planning. It is also noted that distortions introduced by income tax reductions are significant, as they completely change the amount of pre-tax profits the company has to achieve in order to be attractive to investors. The distortions are also permanent, and the absolute benefit received during the investigation period is, because of the nature of the advantage, irrelevant for assessing whether the distortion is ‘significant’. Rather, the assessment of the significance has to be based on the overall impact of the measure on financial and economic situation of the company. (66) With regard to criterion 2, three groups of companies claimed that they complied with the respective rules of the international accounting standards since their US consolidated accounts were fully in line with those standards. Some companies also claimed that, in general, their accounts were in compliance with Chinese accounting standards, which they consider to be equivalent to the international ones. This issue at hand, however, is not whether Chinese accounting standards are in line with international accounting standards. The issue at hand is whether the accounts comply with the applicable accounting standards or not. In particular, those comments failed to address the fact that, with regard to the individual financial statements of the Chinese companies in question, a number of international accounting standards (and the corresponding Chinese equivalent), including in particular inventory depreciation and disclosure of related parties’ transactions, were found to be violated. (67) With regard to criterion 1, taking into account comments received from the parties and in the light of the judgment Case C-337/09 P ( 6 ), it is concluded that this criterion is met by all companies. However, overall MET determination for all sampled exporters remains unchanged since they still fail to meet the requirements of criteria 2 and 3. (68) With regard to criterion 4, the company group referred to in recital 57 above could demonstrate that a bankruptcy proceeding was initiated against the main Chinese group company in the meantime. It is therefore concluded that this criterion is met by this company group. However, overall MET determination for this company group remains unchanged since they fail to meet the requirements of criteria 2 and 3. (69) In conclusion, it has not been shown that MET criteria 2 and/or 3 were fulfilled by either of the sampled exporting producers. Therefore, MET cannot be granted to any of these companies. Individual examination (70) Claims for individual examination pursuant to Article 17(3) of the basic Regulation were submitted by 18 cooperating exporting producers or groups of exporting producers not selected in in the sample. (71) Given the high number of the claims received, the Commission has provisionally concluded that individual examinations would be unduly burdensome and would prevent completion of the investigation in good time. Consequently, it was provisionally decided not to accept any of the claims for individual examination. Analogue country (72) According to Article 2(7)(a) of the basic Regulation, normal value for the exporting producers not granted MET shall be established on the basis of the price or constructed value in a market economy third country (‘analogue country’). (73) In the Notice of Initiation the Commission indicated its intention to use the USA as an appropriate analogue country for the purpose of establishing normal value for the PRC and invited all interested parties to comment thereon. (74) A number of exporters and importers have submitted comments on the choice of the analogue country arguing that the USA would not be a suitable analogue country, mainly due to the fact that the US market was protected from Chinese imports during part of the IP by anti-dumping and anti-subsidy measures. (75) Interested parties proposed Taiwan, India and South Korea as more suitable analogue countries. Following those comments, it was decided to broaden the analysis regarding the identification of a suitable analogue country. As a result, all major producers of solar panels were approached. In total 34 companies in India, 9 companies in Japan, 15 companies in Malaysia, 2 companies in Mexico, 34 companies in Korea, 9 companies in Singapore, 43 companies in Taiwan and 21 companies in the USA were contacted. (76) Replies were received from two companies in India, two in Taiwan and two in the USA. As the companies in Taiwan almost exclusively produced PV cells while the Chinese exports are mainly in the form of modules, and the USA was considered unsuitable in light of the comments received, it was provisionally decided to use India as analogue country. It should be noted that the Commission may revisit this issue if the further investigation reveals that modules, cells and wafers constitute two or three different products. In particular, as India does not produce wafers, a different analogue country may have to be chosen for wafers. (77) One Indian producer provided an incomplete reply. Therefore, the information submitted by this company could not be used to establish normal value. However, the information submitted by that company and verified could be used to confirm that the information submitted by the fully cooperating analogue country producer was indeed representative of the Indian market. Normal Value (78) Since no sampled Chinese exporter was granted MET, normal value was established pursuant to the provisions of Article 2(7)(a) of the basic Regulation, using India as analogue market economy third country. (79) First, the product types sold domestically by the analogue country producer that were identical or directly comparable with the types sold for export to the Union were identified. (80) The Commission subsequently examined for the analogue country producer whether each type of the like product sold domestically could be considered as being sold in the ordinary course of trade. This was done by establishing for each product type the proportion of profitable sales to independent customers on the domestic market during the IP. (81) Where the sales volume of a product type, sold at a net sales price equal to or above the calculated cost of production, represented more than 80 % of the total sales volume of that type, and where the weighted average sales price of that type was equal to or higher than the cost of production, normal value was based on the actual domestic price. This price was calculated as a weighted average of the prices of all domestic sales of that type made during the IP. (82) Where the volume of profitable sales of a product type represented 80 % or less of the total sales volume of that type, or where the weighted average price of that type was below the cost of production, normal value was based on the actual domestic price, calculated as a weighted average of profitable sales of that type only. (83) Where the product types were all sold at a loss, it was considered that they were not sold in the ordinary course of trade. (84) For sales of product types not made in the ordinary course of trade, as well as for product types which were not sold on the domestic market, a constructed normal value was used. (85) To construct normal value, the weighted average selling, general and administrative (‘SG&A’) expenses incurred and the weighted average profit realised by the sole fully cooperating analogue country producer on domestic sales of the like product, in the ordinary course of trade during the investigation period, was added to its own average cost of production during the investigation period. Where necessary, the costs of production and SG&A expenses were adjusted, before being used in the ordinary course of trade test and in constructing normal values. (86) For solar wafers, normal value could not be established using the methodology described in recitals 79 to 85 above since none of the cooperating Indian producers produced solar wafers. It was verified whether the normal value could be established on the basis of a closely resembling product, applying necessary adjustments for differences in physical properties, if necessary. In the case of solar wafers, the closest resembling product would be a solar cell. However, wafers need to undergo significant processing to become cells. Moreover, following this method would require significant adjustments which cannot be reliably quantified. Therefore, the normal value of a cell cannot be used as a basis for calculating a normal value for a wafer. As an alternative, it was considered to use prices of wafers sold by producers from market economy countries on the Indian market, as these prices are representative for the market conditions prevailing on the market for wafers in India. As South Korea is the largest market economy supplier of wafers to the analogue country producers, normal value is established on the basis of the prices of South Korean wafers on the Indian market. Export price (87) The exporting producers made export sales to the Union either directly to independent customers or through related companies located in the Union. (88) Where export sales to the Union were made directly to independent customers in the Union, export prices were established on the basis of the prices actually paid or payable for the product concerned in accordance with Article 2(8) of the basic Regulation. (89) Where export sales to the Union were made through related companies located in the Union, export prices were established on the basis of the first resale prices of these related companies to independent customers in the Union, pursuant to Article 2(9) of the basic Regulation. Adjustments were made for all costs incurred between importation and resale including sales, general and administrative expenses and profit. With respect to profit margin, the profit realised by the cooperating unrelated importer of the product concerned was used since the actual profit of the related importer was not considered reliable because of the relationship between the exporting producer and the related importer. Comparison (90) The comparison between normal value and export price was made on an ex-works basis. (91) For the purpose of ensuring a fair comparison between the normal value and the export price, due allowance in the form of adjustments was made for differences affecting prices and price comparability in accordance with Article 2(10) of the basic Regulation. (92) Appropriate adjustments for physical characteristics, indirect taxes, transport, insurance, handling loading and ancillary costs, packing, credit, commissions and bank charges were made in all cases where they were found to be reasonable, accurate and supported by verified evidence. Dumping margins (93) For the sampled companies, the weighted average normal value of each type of the like product established for the analogue country was compared with the weighted average export price of the corresponding type of the product concerned, as provided for in Article 2(11) and (12) of the basic Regulation. (94) The weighted average dumping margin of the cooperating exporting producers not included in the sample was calculated in accordance with the provisions of Article 9(6) of the basic Regulation. This margin was established as a weighted average of the margins established for the sampled exporting producers. (95) With regard to all other exporting producers in the PRC, the dumping margins were established on the basis of the facts available in accordance with Article 18 of the basic Regulation. To this end the level of cooperation was first established by comparing the volume of exports to the Union reported by the cooperating exporting producers with the total volume of Chinese imports into the Union. (96) As the cooperation accounted for more than 80 % of total Chinese exports to the Union, the level of cooperation can be considered high. Since there was no reason to believe that any exporting producer deliberately abstained from cooperating, the residual dumping margin was set at the level of the sampled company with the highest dumping margin. This was considered appropriate since there were no indications that the non-cooperating companies were dumping at a lower level, and in order to ensure the effectiveness of any measures. (97) On this basis the provisional weighted average dumping margins expressed as a percentage of the CIF Union frontier price, duty unpaid, are as follows:



Company Dumping Margin Changzhou Trina Solar Energy Co. Ltd; Trina Solar (Changzhou) Science and Technology Co. Ltd, 93,3 % Delsolar (Wujiang) Co. Ltd, 112,6 % Jiangxi LDK Solar Hi-Tech Co. Ltd; LDK Solar Hi-Tech (Hefei) Co. Ltd; LDK Solar Hi-Tech (Nanchang) Co. Ltd; LDK Solar Hi-Tech (Suzhou) Co. Ltd, 88,4 % JingAo Solar Co. Ltd; Shanghai JA Solar Technology Co. Ltd, JA Solar Technology Yangzhou Co. Ltd; Shanghai Jinglong Solar Energy Technology Co. Ltd; Hefei JA Solar Technology Co. Ltd, 99,0 % Jinzhou Yangguang Energy Co. Ltd; Jinzhou Rixin Silicon Materials Co. Ltd; Jinzhou Youhua Silicon Materials Co. Ltd; Jinzhou Huachang Photovoltaic Technology Co. Ltd; Jinzhou Jinmao Photovoltaic Technology Co. Ltd, 48,1 % Wuxi Suntech Power Co. Ltd; Luoyang Suntech Power Co. Ltd; Suntech Power Co. Ltd; Wuxi Sun-Shine Power Co. Ltd; Zhenjiang Ren De New Energy Science Technology Co. Ltd; Zhenjiang Rietech New Energy Science Technology Co. Ltd, 71,5 % Yingli Energy (China) Co. Ltd; Hainan Yingli New Energy Resources Co. Ltd; Baoding Tianwei Yingli New Energy Resources Co. Ltd, 96,2 % Other cooperating companies (Annex) 88,5 % All other companies 112,6 % INJURY Definition of the Union industry and Union production (98) The like product was manufactured by around 220 producers in the Union. They constitute the Union industry within the meaning of Article 4(1) of the basic Regulation and will hereafter be referred to as ‘the Union industry’. (99) All available information concerning the Union industry, including information provided in the complaint, macroeconomic data provided by Europressedienst, an independent consultancy firm (‘the consultant’) and the verified questionnaire responses of the sampled Union producers were used to establish the total Union production for the IP since complete public information on production was not available. As modules, cells and wafers are imported into the Union under customs headings covering other products not subject to the present investigation, Eurostat could not be used to determine import volumes and values. Import volumes and values were based on the data provided by the consultant. When possible, the data received from the consultant was cross-checked with public sources and with the verified questionnaire replies. (100) On this basis, the total Union production was estimated to be around 4 GW for modules, 2 GW for cells and 2 GW for wafers during the IP. (101) As indicated in recital 10 above, 10 Union producers were selected in the sample representing 18-21 % of the total Union production of modules, 17-24 % of total Union production of cells and 28-35 % of total Union production of wafers. Determination of the relevant Union market (102) Part of the Union industry is vertically integrated and a substantial part of the Union industry’s production was destined for captive use, in particular the production of cells and wafers. (103) In order to establish whether or not the Union industry suffered material injury and to determine consumption and other economic indicators, it was examined whether and to what extent the subsequent use of the Union industry’s production of the like product (‘captive’ use) had to be taken into account. (104) In order to provide a picture as complete as possible of the situation of the Union industry, data have been analysed for the entire activity of the like product and it was subsequently determined whether the production was destined for captive use or free market. (105) It was found that the following economic indicators related to the Union industry should be examined by referring to the total activity (including the captive use of the industry): consumption, sales volume, production, production capacity, capacity utilisation, growth, investments, stocks, employment, productivity, cash flow, return on investment, ability to raise capital and magnitude of the dumping margin. This is because the investigation showed that those indicators could reasonably be examined by referring to the whole activity as the production destined for captive use was equally affected by the competition of imports from the country concerned. Hereinafter the captive and the free market together are referred to as ‘total market’. (106) As regards profitability, the analysis focused on the free market since prices in the captive market were found not to always reflect market prices and had an impact on this indicator. Union consumption (107) The Union consumption comprised the total volume of imports of the product concerned and the volume of total sales of the like product in the Union, including those destined for captive use. No complete data for the total sales of the Union industry on the Union market were available. Furthermore, imports into the Union were registered under customs headings covering other products not subject to the present investigation. Consequently, Eurostat could not be used to determine import volumes and values. Therefore, the Union consumption was based on data provided by the consultant mentioned in recital 99 above and cross-checked with public sources such as market researches and publicly available studies and with the verified questionnaire replies. (108) Union consumption developed as follows:



Table 1-a Union consumption for modules (in MW) 2009 2010 2011 IP Total market 5 465 12 198 19 878 17 538 Index (2009 = 100) 100 223 364 321 Source: Europressedienst



Table 1-b Union consumption for cells (in MW) 2009 2010 2011 IP Total market 2 155 3 327 4 315 4 021 Index (2009 = 100) 100 154 200 187 Source: Europressedienst



Table 1-c Union Consumption for wafers (in MW) 2009 2010 2011 IP Total market 1 683 2 376 2 723 2 163 Index (2009 = 100) 100 141 162 129 Source: Europressedienst (109) In the period considered, the total Union consumption increased by 221 % for modules, 87 % for cells and 29 % for wafers between 2009 and the IP, but decreased in the IP compared to 2011. In overall terms the Union consumption of the product under investigation grew significantly when compared to its 2009 level. Imports from the country concerned Volume and market share of the imports from the country concerned (110) Imports into the Union from the country concerned developed as follows:



Table 2-a Imports of modules from the PRC (in MW) 2009 2010 2011 IP Import volumes from the PRC 3 425 8 606 15 810 13 986 Index (2009 = 100) 100 251 462 408 Market share in total market 63 % 71 % 80 % 80 % Source: Europressedienst



Table 2-b Imports of cells from the PRC (in MW) 2009 2010 2011 IP Import volumes from the PRC 175 530 970 1 019 Index (2009 = 100) 100 303 554 582 Market share in total market 8 % 16 % 22 % 25 % Source: Europressedienst



Table 2-c Imports of wafers from the PRC (MW) 2009 2010 2011 IP Import volumes from the PRC 95 523 880 711 Index (2009 = 100) 100 551 926 748 Market share in total market 6 % 22 % 32 % 33 % Source: Europressedienst (111) Over the period considered, import volumes to the Union from the country concerned increased considerably by 308 % for modules, 482 % for cells and 648 % for wafers. This led to significant market share increases of the imports from the country concerned into the Union. More specifically, the market shares of imports from the country concerned increased from 63 to 80 % for modules, from 8 to 25 % for cells and from 6 to 33 % for wafers. In overall terms the imports of the product concerned from the PRC increased significantly in volume and market share between 2009 and the IP. (112) It should be noted that the increase in imports from the country concerned was much higher than the increase in the Union consumption for the product concerned. Consequently, the exporting producers were able to benefit from Union’s growing consumption and their position on the market became stronger due to larger market shares. Prices of imports and price undercutting (113) The average price of imports into the Union from the country concerned developed as follows:



Table 3-a Import price of modules from the PRC (in EUR/kW) 2009 2010 2011 IP Import prices 2 100 1 660 1 350 764 Index (2009 = 100) 100 79 64 36 Source: Europressedienst and verified sample questionnaire replies



Table 3-b Import price of cells from the PRC (in EUR/kW) 2009 2010 2011 IP Import prices 890 650 620 516 Index (2009 = 100) 100 73 70 58 Source: Europressedienst and verified questionnaire replies



Table 3-c Import price of wafers from the PRC (in EUR/kW) 2009 2010 2011 IP Import prices 550 400 400 333 Index (2009 = 100) 100 73 73 60 Source: Europressedienst and verified questionnaire replies (114) The average import price from the PRC dropped significantly over the period considered for modules, cells and wafers. For modules, the average import price decreased by 64 %, from 2 100 EUR/kW in 2009 to 764 EUR/kW in the IP. Likewise, the average import price of cells from the PRC dropped by 42 %, from 890 EUR/kW to 516 EUR/kW. Over the period considered, the average import price of wafers decreased by 40 %, from 550 EUR/kW to 333 EUR/kW. (115) In overall terms, the price of the product concerned decreased significantly between 2009 and IP. (116) In order to determine price undercutting during the IP, the 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, were compared to the corresponding weighted average prices per product type of the imports from the cooperating Chinese exporting producers to the first independent customer on the Union market, established on a CIF basis, with appropriate adjustments for post-importation costs, i.e. custom clearance, handling and loading costs. The average post-importation costs of two sampled importers of modules were used. The fact that their main activity was not imports, but installation of modules did not have as a consequence to render the data unrepresentative. (117) The price comparison was made on a type-by-type basis for transactions at the same level of trade, duly adjusted where necessary, and after deduction of rebates and discounts. The result of the comparison, when expressed as a percentage of the sampled Union producers’ turnover during the IP, showed weighted average undercutting margins within the ranges of 17,5-30,7 % for modules, 4-24,2 % for cells, 16,6-21,6 % for wafers and 11,2-27,5 % in overall terms for the product concerned. Economic situation of the Union industry General (118) Pursuant to Article 3(5) of the basic Regulation, the Commission examined all relevant economic factors and indices having a bearing on the state of the Union industry. (119) As mentioned in recitals 7 to 10 above, sampling was used for the examination of injury suffered by the Union industry. (120) For the purpose of the injury analysis, the Commission distinguished between macroeconomic and microeconomic injury indicators. The Commission analysed the macroeconomic indicators for the period considered on the basis of the data obtained from the independent consultant mentioned in the recital 99 above relating to all Union producers. The Commission analysed the microeconomic indicators on the basis of the sampled Union producers’ verified questionnaire responses. (121) For the purpose of this investigation, the following macroeconomic indicators were assessed on the basis of information relating to all producers of the like product in the Union: production, production capacity, capacity utilisation, sales volume, market share, growth, employment, productivity, magnitude of the dumping margin and recovery from past dumping. (122) The following microeconomic indicators were assessed on the basis of information relating to the sampled producers of the like product in the Union: average unit prices, unit cost, labour costs, inventories, profitability, cash flow, investments, return on investments and ability to raise capital. (123) One interested party claimed that market conditions of the product concerned differ per Member State and that therefore the injury analysis should be made at the level of each Member State separately. This allegation was not substantiated. In addition, the investigation did not reveal any particular circumstances justifying an injury analysis per Member State. This claim was therefore rejected. Macroeconomic indicators Production, production capacity and capacity utilisation (124) The total Union production, production capacity and capacity utilisation developed as follows over the period considered:



Table 4-a Modules — production, production capacity and capacity utilisation (MW) 2009 2010 2011 IP Production volume 2 155 3 327 4 315 4 021 Index (2009 = 100) 100 154 200 187 Production capacity 4 739 6 983 9 500 9 740 Index (2009 = 100) 100 147 200 206 Capacity utilisation 45 % 48 % 45 % 41 % Source: Europressedienst



Table 4-b Cells — production, production capacity and capacity utilisation (MW) 2009 2010 2011 IP Production volume 1 683 2 376 2 723 2 024 Index (2009 = 100) 100 141 162 120 Production capacity 2 324 3 264 3 498 3 231 Index (2009 = 100) 100 140 151 139 Capacity utilisation 72 % 73 % 78 % 63 % Source: Europressedienst



Table 4-c Wafers — production, production capacity and capacity utilisation (MW) 2009 2010 2011 IP Production volume 1 600 2 677 2 553 2 017 Index (2009 = 100) 100 167 160 126 Production capacity 2 600 3 410 3 945 3 636 Index (2009 = 100) 100 131 152 140 Capacity utilisation 62 % 79 % 65 % 55 % Source: Europressedienst (125) The overall Union production of modules increased by 87 % during the period considered. Production reached a peak in 2011 and then dropped in the IP. The Union production of modules increased at a much slower pace than the growth in consumption, which more than tripled during the same period. Against the background of a significant increase in consumption, the Union producers doubled their production capacity for modules during the period considered. However, in spite of higher production levels, the Union industry’s capacity utilisation rate decreased by 4 percentage points, reaching only 41 % during the IP. (126) The Union production of cells increased by 20 % in overall terms during the period considered. It reached a peak in 2011 and decreased after that in the IP. The Union production of cells followed the trend of Union consumption with a slower increase until 2011 and then a more pronounced fall in the IP. In line with the evolution of Union consumption, the Union industry first increased their capacity by 51 % until 2011 and then this decreased during the IP. In overall terms, the capacity increased by 39 % during the period considered. The capacity utilisation rate increased until 2011 reaching a peak of 78 % and then decreased by 15 percentage points during the IP. Overall, the capacity utilisation of the Union industry of cells decreased over the period considered reaching 63 % during the IP. (127) Over the period considered, the Union production of wafers increased by 26 % in overall terms. The Union production reached a peak in 2010 and then continuously decreased in 2011 and to even lower levels in the IP. In response to an increased Union consumption, the Union producers of wafers expanded their production capacity by 52 % until 2011 and then their capacity decreased in the IP. Nevertheless, the capacity production for wafers of the Union industry increased by 40 % in overall terms over the period considered. In spite of the increase in production, the rate of capacity utilisation of the Union industry of wafers increased until 2010 and then continuously decreased after that period, translating into an overall decrease of 7 percentage points over the period considered, reaching 55 % during the IP. (128) Therefore, the Union industry expanded their capacity in response to an increased consumption. However, the Union industry’s production levels increased at a much slower pace than the consumption, which led to a decrease of the capacity utilisation rates for the product concerned during the period considered. Sales volumes and market share (129) The Union industry’s sales volume and market share developed as follows over the period considered:



Table 5-a Modules — sales volume and market share (in MW) 2009 2010 2011 IP Sales volume on the Union market 1 037 1 890 2 683 2 357 Index (2009 = 100) 100 182 259 227 Market share 19 % 15 % 13 % 13 % Source: Europressedienst



Table 5-b Cells — sales volume and market share (in MW) 2009 2010 2011 IP Sales volume total market 1 470 1 913 2 245 1 545 Index (2009 = 100) 100 130 153 105 Market share 68 % 57 % 52 % 38 % Source: Europressedienst



Table 5-c Wafers — sales volume and market share (in MW) 2009 2010 2011 IP Sales volume total market 1 363 1 520 1 608 1 269 Index (2009 = 100) 100 112 118 93 Market share 81 % 64 % 59 % 59 % Source: Europressedienst (130) During the period considered, the sales volume of modules increased by 127 %. However, in the context of an increase in consumption of 221 %, this was translated into a decrease of the Union industry’s market share from 19 % in 2009 to 13 % during the IP. As regards cells, the Union industry’s sales increased only marginally by 5 % while consumption increased by 87 % resulting in a market share reduction from 68 % in 2009 to 38 % in the IP. As regards wafers total volume of sales decreased by 7 % against an increased consumption, which translated into a decrease in market share for wafers from 81 % in 2009 to 59 % in the IP. (131) In response to a growing consumption, the Union industry’s sales of modules and cells grew much less than the imports from the country concerned while the sales of wafers decreased. Thus, the Union industry could not benefit from the growing consumption. As a consequence, the market shares for all three segments decreased over the period considered. Employment and productivity (132) Employment and productivity developed as follows during the period considered:



Table 6-a Modules — employment and productivity 2009 2010 2011 IP Number of employees 11 779 15 792 17 505 16 419 (Index 2009 = 100) 100 134 149 139 Productivity (kW/employee) 183 211 247 245 (Index 2009 = 100) 100 115 135 134 Source: Europressedienst



Table 6-b Cells — employment and productivity 2009 2010 2011 IP Number of employees 5 281 5 937 5 641 4 782 (Index 2009 = 100) 100 112 107 91 Productivity (kW/employee) 319 400 483 423 (Index 2009 = 100) 100 126 151 133 Source: Europressedienst



Table 6-c Wafers — employment and productivity 2009 2010 2011 IP Number of employees 1 944 3 853 4 291 3 920 (Index 2009 = 100) 100 198 221 202 Productivity (kW/employee) 823 695 595 515 (Index 2009 = 100) 100 84 72 63 Source: Europressedienst (133) Employment increased between 2009 and the IP for modules and wafers by 39 % and 102 %, respectively, while it decreased by 9 % for cells. However, it is noted that employment increased until 2011 and then decreased during the IP for modules and wafers. For cells, employment increased until 2010 and then decreased during 2011 and IP. The total productivity showed positive trends for modules and cells increasing by 34 % and 33 %. This is partly due to the efforts of the Union industry to respond to the pressure of the dumped imports from the PRC. However, the total productivity for wafers decreased by 37 % over the period considered. (134) Therefore, in line with the decrease in Union production of modules and wafers between 2011 and the IP, employment for modules and wafers also decreased during the same period. For cells, the employment increased until 2010 and then decreased in 2011 and in the IP while the Union production of cells grew steadily until 2011 and then started to fall. Magnitude of the dumping margin and recovery from past dumping (135) All dumping margins are significantly above the de minimis level. As regards the impact of the magnitude of the actual margins of dumping on the Union industry, given the volume and prices of imports from the country concerned, the impact can be considered substantial. (136) Since this is the first anti-dumping investigation regarding the product concerned, recovery from past dumping is not relevant. Microeconomic indicators Prices and factors affecting prices (137) The average sales prices of the sampled Union producers to unrelated customers in the Union developed as follows over the period considered:



Table 7-a Modules — average sales prices in the Union 2009 2010 2011 IP Average sales price in the Union on free market (EUR/kW) 2 198,75 1 777,15 1 359,35 1 030,83 (Index 2009 = 100) 100 81 62 47 Cost of production (EUR/kW) 2 155,02 1 599,44 1 400,13 1 123,60 (Index 2009 = 100) 100 74 65 52 Source: verified questionnaire replies



Table 7-b Cells — average sales prices in the Union 2009 2010 2011 IP Average sales price in the Union on free market (EUR/kW) 1 525,09 1 160,99 777,62 474,91 (Index 2009 = 100) 100 76 51 31 Cost of production (EUR/kW) 1 647,10 1 021,67 1 057,56 745,61 (Index 2009 = 100) 100 62 64 45 Source: verified questionnaire replies



Table 7-c Wafers — average sales prices in the Union 2009 2010 2011 IP Average sales price in the Union on free market (EUR/kW) 709 564 515 426 (Index 2009 = 100) 100 80 73 60 Cost of production (EUR/kW) 631 496 520 648 (Index 2009 = 100) 100 78 82 103 Source: verified questionnaire replies (138) Sales prices fell sharply i.e. by 53 % for modules, by 69 % for cells and by 40 % for wafers during the period considered. Sales prices fell continuously throughout the period considered, but the decrease in prices was particularly pronounced during the IP where they collapsed to unsustainable levels. Over the period considered the cost of production fell by 48 % for modules and by 55 % for cells. For wafers, cost of production fell in 2010 as compared to 2009, but increased in 2011 while still remaining below the level of 2009. In the IP costs increased further and reached slightly higher levels than in 2009 which can be mainly explained by a production stop during the IP. The Union industry could neither benefit from its continuous efforts to increase its cost efficiency nor from the impact of the decrease in cost of the main raw material, polysilicon. This was mainly due to the increasing price pressure of the dumped imports which had a negative effect on the sales prices of the Union industry which decreased even more than efficiency gains. This can be seen in the negative trend of the Union industry’s profitability as described in recital 144 below. Overall there was a significant decrease of the average sales price and the cost of production of the like product (except for wafers) with devastating effect on Union industry’s profitability. Labour costs (139) The average labour costs of the sampled Union producers developed as follows over the period considered:



Table 8-a Modules — average labour costs per employee 2009 2010 2011 IP Average labour cost per employee (EUR) 38 194 40 793 41 781 42 977 (Index 2009 = 100) 100 107 110 113 Source: verified questionnaire replies



Table 8-b Cells — average labour cost per employee 2009 2010 2011 IP Average labour cost per employee (EUR) 49 677 49 357 49 140 49 350 (Index 2009 = 100) 100 99 99 99 Source: verified questionnaire replies



Table 8-c Wafers — average labour cost per employee 2009 2010 2011 IP Average labour cost per employee (EUR) 39 409 40 933 39 323 46 060 (Index 2009 = 100) 100 104 100 117 Source: verified questionnaire replies (140) Between 2009 and the IP, the average labour cost per employee for modules continuously increased overall by 13 %. Regarding cells, the average labour cost remained stable throughout the period considered and slightly decreased by 1 % between 2009 and 2010 but then remained stable until the IP. Regarding wafers, the average labour cost per employee varied, increased between 2009 and 2010, decreased in 2011, but increased during the period considered overall by 17 % for the period considered. The overall increase of labour cost can be partly explained by the simultaneous increase in productivity (modules), the evolution of inflation and the social costs of some Union producers (wafers) linked to the downsizing of the industry between 2011 and the IP. Inventories (141) Stock levels of the sampled Union producers developed as follows over the period considered:



Table 9-a Modules — inventories 2009 2010 2011 IP Closing Stocks (in kW) 28 612 40 479 74 502 65 415 (Index 2009 = 100) 100 141 260 229 Source: verified questionnaire replies



Table 9-b Cells — inventories 2009 2010 2011 IP Closing Stocks (in kW) 16 995 23 829 76 889 68 236 (Index 2009 = 100) 100 140 452 402 Source: verified questionnaire replies



Table 9-c Wafers — inventories 2009 2010 2011 IP Closing Stocks (in kW) 34 891 5 601 36 697 59 340 (Index 2009 = 100) 100 16 105 170 Source: verified questionnaire replies (142) Stocks increased significantly, i.e. by 129 % for modules, by 302 % for cells and by 70 % for wafers over the period considered. Concerning modules, stocks increased continuously reaching very high levels in 2011 (by 160 %), while it decreased in the IP but still remaining at very high levels in comparison with the beginning of the period considered. Concerning cells, the development was even more pronounced, with an increase in stocks between 2009 and 2011 more than 350 %. Likewise, the stocks decreased during the IP but remained at very high levels in comparison with the beginning of the period considered. Concerning wafers, while the Union industry decreased its stocks between 2009 and 2010 by more than 80 % caused by the increase of their sales, closing stocks increased rapidly and reached levels beyond the level of 2009 and further increased by 65 percentage points in the IP. (143) The investigation showed that given the adverse current situation, Union producers would tend to hold limited stocks for the like product, basing their production on orders. Therefore, the increase in stocks for the like product over the period considered is a relevant factor in establishing if the Union industry suffered material injury. Profitability, cash flow, investments and return on investments, ability to raise capital (144) Profitability and cash flow developed as follows over the period considered:



Table 10-a Modules — profitability and cash flow 2009 2010 2011 IP Profitability of sales in the Union to unrelated customers (% of sales turnover) 2 % 10 % – 3 % – 9 % Cash flow 13 % 10 % 12 % 3 % Source: verified questionnaire replies



Table 10-b Cells — profitability and cash flow 2009 2010 2011 IP Profitability of sales in the Union to unrelated customers (% of sales turnover) – 8 % 12 % – 36 % – 57 % Cash flow 75 % 52 % – 0,3 % – 46 % Source: verified questionnaire replies



Table 10-c Wafers — profitability and cash flow 2009 2010 2011 IP Profitability of sales in the Union to unrelated customers (% of sales turnover) 11 % 12 % – 1 % – 52 % Cash flow 39 % 47 % 32 % – 19 % Source: verified questionnaire replies (145) Profitability of the sampled Union producers was established by expressing the pre-tax net profit of the sales of the like product to unrelated customers in the Union, as the percentage of the turnover of such sales. (146) The profitability decreased sharply and turned to losses over the period considered for the like product. The profitability dropped by 11 percentage points for modules, by 49 percentage points for cells and by 63 percentage points for wafers. (147) Profitability for the like product increased between 2009 and 2010 but then decreased significantly in 2011 where Union industry realised losses and further decreased significantly in the IP. Losses were particularly high for cells and wafers. (148) The trend of net cash flow, which is the ability of the sampled Union producers to self-finance their activities, likewise followed a progressively negative trend between 2009 and the IP. Thus, decreasing by 10 percentage points for modules with a slight increase in 2011, the highest decrease of the cash flow occurred between 2011 and the IP. The decline of cash flow for cells and wafers was more pronounced than modules and reached significantly negative levels during the IP. Therefore, the cash flow for the like product decreased over the period considered. (149) The figures below represent the evolution of investments and return on investments of the sampled Union producers in relation to the total market during the period considered:



Table 11-a Modules — investments and return on investments 2009 2010 2011 IP Investments (EUR) 12 081 999 50 105 017 64 643 322 32 730 559 (Index 2009 = 100) 100 415 535 271 Return on investments – 15 % 19 % – 15 % – 17 % Source: verified questionnaire replies



Table 11-b Cells — investments and return on investment 2009 2010 2011 IP Investments (EUR) 31 448 407 34 451 675 10 234 050 6 986 347 (Index 2009 = 100) 100 110 33 22 Return on investments – 4 % 10 % – 20 % – 19 % Source: verified questionnaire replies



Table 11-c Wafers — investments and return on investment 2009 2010 2011 IP Investments (EUR) 201 911 346 83 802 212 74 166 331 39 938 349 (Index 2009 = 100) 100 42 37 20 Return on investments 10 % 8 % 0 % – 7 % Source: verified questionnaire replies (150) The table above shows that the Union industry increased its investments by 171 % for modules between 2009 and the IP. This was mainly linked to the significant additions of capacity. However, during the same period, the Union industry decreased its investments by 78 % for cells and 80 % for wafers; the investments made were mainly linked to R & D as well as improving and maintaining production technology and process in order to improve efficiency. Since the Union industry could not afford making additional investments for cells and wafers during the period considered, the level of investments during the IP was rather low. As investments were financed basically by cash flow and intercompany loans, the decrease in the cash flow had immediate effect on the level of investments made. (151) The return on investments (‘ROI’) was expressed as the profit in per cent of the net book value of investments. ROI of the like product followed the similar negative trends as the other financial performance indicators between 2009 and the IP for all the three types of product. For cells and wafers, while there was an increase in 2009 and 2010, ROI decreased significantly in 2011 reaching negative levels. For modules, ROI was at negative levels throughout the period considered, except in 2010 where it reached 19 %. Overall, it decreased during the period considered reaching – 17 % in the IP for cells, i.e. by 1 %, however still remaining at significant negative levels, i.e. – 19 %. As for wafers ROI followed a continuously negative trend reaching – 7 % during the IP. Overall ROI for the like product showed negative trends during the period considered. (152) The ability to raise capital was analysed in relation to the total market and it has been found that there was a constant deterioration of the ability of the Union industry to generate cash for the like product and, consequently, a weakening of the financial situation of the Union industry. Conclusion on injury (153) The analysis of the situation of the Union industry showed a clear downward trend of all the main injury indicators. Against a generally increasing consumption, overall production increased for modules and cells in the period considered. Although the volume of sales increased, the market share of the Union industry shrank in the IP due to the higher increase of the consumption during the period considered. Average sales price fell sharply throughout the period considered, negatively impacting on all the financial performance indicators such as profitability, cash flow, return on investments and ability to raise capital. (154) Over the period considered, the overall Union industry’s sales volume increased. However, the increase in sales volumes of the Union industry was accompanied by a tremendous decrease in average sales price. (155) During the period considered, imports of the interested parties from the PRC increased in terms of volumes and market share. At the same time, import prices continuously decreased, undercutting significantly the Union industry’s average price on the Union market. (156) Several interested parties claimed that the Union industry and in specific the sampled Union producers were performing well. It was claimed that the evolution of certain injury indicators, namely production volume, production capacity, sales and employment but even in some sampled producers’ profitability, were increasing and would not show material injury. These allegations were not confirmed by the results of the investigation, which has shown clear downward trends of many injury indicators, relevant for the conclusion that the Union industry suffered material injury. (157) In view of the above, the investigation confirmed in particular the fact that the sales prices are below the production costs, thus having a negative effect on the Union industry’s profitability, reaching negative levels during the IP. It is concluded that should dumped imports continue to enter the Union market, the losses of the Union industry would be likely to lead to the permanent discontinuation of any sizeable Union production of the like product. This seems to be confirmed by the developments during and after the IP, i.e. some companies has declared insolvency and/or stopped temporarily or permanently production. (158) In the light of the foregoing, it is provisionally concluded that the Union industry suffered material injury within the meaning of Article 3(5) of the basic Regulation. CAUSATION Introduction (159) In accordance with Article 3(6) and (7) of the basic Regulation it was examined whether the material injury suffered by the Union industry was caused by the dumped imports from the country concerned. Furthermore, known factors other than dumped imports, which might have injured the Union industry, were examined to ensure that any injury caused by those factors was not attributed to dumped imports. (160) One interested party claimed that market conditions of the product concerned differ per Member State and that therefore the causality analysis should be made at the level of each Member State separately. National support schemes determine to a certain extent the size of the Member States’ markets. The investigation has however also revealed that demand does not exclusively depend on support schemes. Depending on geographical location (sun exposure) and the electricity price at a given location, solar panels appear to have reached, or were at least close to, grid parity, which means that certain investments take place independently of support schemes. Therefore, it could not be established that market conditions depend exclusively on support schemes and this claim was therefore rejected. Effect of dumped imports (161) The investigation showed that dumped imports from the PRC increased dramatically over the period considered, increasing their volumes significantly by more than 300 % for modules and of 482 % for cells and 648 % for wafers and their market share by 17 percentage points for modules, by 17 percentage points for cells and by 27 percentage points for wafers. Therefore, it is confirmed that volume of imports and market share for the product concerned increased dramatically during the period considered. There was a clear coincidence in time between the increase in dumped imports and the loss of market share of the Union industry. The investigation also established that as mentioned in recital 117 above, the dumped imports undercut the prices of the Union industry during the IP. (162) The investigation showed that the prices of the dumped imports decreased by 64 % for modules, by 42 % for cells and by 40 % for wafers during the period considered and led to an increase of undercutting. Against this price pressure, the Union industry underwent considerable effort to decrease its production costs. Despite these efforts the exceptionally low level of Chinese import prices forced the Union industry to further decrease its sales price to unprofitable levels. Thus, the profitability of the Union industry decreased dramatically during the period considered and showed losses during the IP. (163) Based on the above, it is concluded that the presence of Chinese imports and the increase of the market share of dumped imports from the PRC at prices constantly undercutting those of the Union industry have had a determining role in the material injury suffered by the Union industry, which is reflected in particular in its poor financial situation and in the deterioration of most of the injury indicators. Effect of other factors Imports from other third countries (164) The volume of imports from other third countries during the period considered for modules increased by 19 % while the market share decreased over the period considered from 18,4 to 6,8 %. Taiwan is the second largest exporter after the PRC. (165) The volume of imports from other third countries for cells increased by 186 % during the period considered which translated in an increase of market share from around 24 % in 2009 to around 36 % during the IP. As for cells, Taiwan is second largest exporter after the PRC, by far exceeding import quantities and market shares from the other third countries, but still below those from the PRC. (166) The volume of imports from other third countries for wafers decreased by 19 % during the period considered and market share from 13,4 % in 2009 to 8,5 % in the IP. As above, Taiwan is second largest exporter of wafers after the PRC. However, import levels and market share of Taiwan did not show significant increases and remained at low levels during the period considered. (167) The import prices of third countries of modules, cells and wafers were on average higher than the average unit price of the Chinese imports. The information available as regards imports from Taiwan shows that the average import price for modules and wafers was higher than the average Chinese import price for modules and wafers, while the average import price for cells was in the same range as the average Chinese import price for cells. However, since no detailed price information per product type was available, the price comparison on an average basis can only be used as an indication but no firm conclusions can be drawn on this basis. Throughout the period considered, volume of imports of cells from Taiwan increased continuously, resulting in a gain of market share of around 14 percentage points. However, overall for the product under investigation, despite their increase in market share, the volumes were lower than PRC and their price levels were generally higher with the exception of cells during the IP. On these grounds, in particular in view of the import volumes and market shares from other third countries as well as their price levels, which are on average similar or higher than those from the Union industry it can be provisionally concluded that third country imports did not break the causal link between the dumped imports and the injury suffered by the Union industry. Table 12 Imports and market shares from other third countries



Modules 2009 2010 2011 IP Volume of imports from all other third countries (MW) 1 003 1 702 1 385 1 195 (Index 2009 = 100) 100 169 138 119 Market share of imports from all other third countries 18,4 % 14,0 % 7,0 % 6,8 % Average import price EUR/kW 2 385,34 1 852,23 1 430,90 1 218,41 (Index 2009 = 100) 100 78 60 51 Volume of imports from Taiwan (MW) 49 144 140 135 (Index 2009 = 100) 100 294 286 276 Market share of imports from Taiwan 0,9 % 1,2 % 0,7 % 0,8 % Average import price EUR/kW 2 102,04 1 659,72 1 350,00 1 125,93 (Index 2009 = 100) 100 79 64 54 Volume of imports from USA (MW) 140 180 51 60 (Index 2009 = 100) 100 129 36 43 Market share of imports from USA 2,6 % 1,5 % 0,3 % 0,3 % Average import price EUR/kW 2 400,00 1 872,22 1 431,37 1 233,33 (Index 2009 = 100) 100 78 60 51 Volume of imports from rest of Asia (MW) 720 1 140 1 029 879 (Index 2009 = 100) 100 158 143 122 Market share of imports from rest of Asia 13,2 % 9,3 % 5,2 % 5,0 % Average import price EUR/kW 2 400,00 1 870,18 1 440,23 1 229,81 (Index 2009 = 100) 100 78 60 51 Volume of imports from rest of the World (MW) 94 238 165 121 (Index 2009 = 100) 100 253 176 129 Market share of imports from rest of the World 1,7 % 2,0 % 0,8 % 0,7 % Average import price EUR/kW 2 404,26 1 869,75 1 442,42 1 231,40 (Index 2009 = 100) 100 78 60 51 Source: Europressedienst



Cells 2009 2010 2011 IP Volume of imports from all other third countries (MW) 510 884 1 100 1 457 (Index 2009 = 100) 100 173 216 286 Market share of imports from all other third countries 23,7 % 26,6 % 25,5 % 36,2 % Average import price EUR/kW 1 166,67 1 072,40 751,82 553,88 (Index 2009 = 100) 100 92 64 47 Volume of imports from Taiwan (MW) 235 400 540 997 (Index 2009 = 100) 100 170 230 424 Market share of imports from Taiwan 10,9 % 12,0 % 12,5 % 24,8 % Average import price EUR/kW 948,94 1 100,00 670,37 514,54 (Index 2009 = 100) 100 116 71 54 Volume of imports from USA (MW) 40 40 40 33 (Index 2009 = 100) 100 100 100 83 Market share of imports from USA 1,9 % 1,2 % 0,9 % 0,8 % Average import price EUR/kW 1 350,00 1 050,00 825,00 636,36 (Index 2009 = 100) 100 78 61 47 Volume of imports from Japan (MW) 60 154 170 145 (Index 2009 = 100) 100 257 283 242 Market share of imports from Japan 2,8 % 4,6 % 3,9 % 3,6 % Average import price EUR/kW 1 350,00 1 051,95 829,41 641,38 (Index 2009 = 100) 100 78 61 48 Volume of imports from rest of the world (MW) 175 290 350 282 (Index 2009 = 100) 100 166 200 161 Market share of imports from rest of the world 8,1 % 8,7 % 8,1 % 7,0 % Average import price EUR/kW 1 348,57 1 051,72 831,43 638,30 (Index 2009 = 100) 100 78 62 47 Source: Europressedienst



Wafers 2009 2010 2011 IP Volume of imports from all other third countries (MW) 225 333 235 183 (Index 2009 = 100) 100 148 104 81 Market share of imports from all other third countries 13,4 % 14,0 % 8,6 % 8,5 % Average import price EUR/kW 800,00 588,59 43,30 420,77 (Index 2009 = 100) 100 74 55 52 Volume of imports from Taiwan (MW) 20 50 50 36 (Index 2009 = 100) 100 250 250 180 Market share of imports from Taiwan 1,2 % 2,1 % 1,8 % 1,7 % Average import price EUR/kW 800,00 580,00 440,00 416,67 (Index 2009 = 100) 100 73 55 52 Volume of imports from USA (MW) 50 55 40 28 (Index 2009 = 100) 100 110 80 56 Market share of imports from USA 3,0 % 2,3 % 1,5 % 1,3 % Average import price EUR/kW 800,00 581,82 450,00 428,57 (Index 2009 = 100) 100 73 56 54 Volume of imports from Japan (MW) 55 50 30 26 (Index 2009 = 100) 100 91 55 47 Market share of imports from Japan 3,3 % 2,1 % 1,1 % 1,2 % Average import price EUR/kW 800,00 580,00 433,33 423,08 (Index 2009 = 100) 100 73 54 53 Volume of imports from rest of the World (MW) 100 178 115 93 (Index 2009 = 100) 100 178 115 93 Market share of imports from rest of the World 5,9 % 7,5 % 4,2 % 4,3 % Average import price EUR/kW 800,00 589,89 434,78 419,35 (Index 2009 = 100) 100 74 54 52 Source: Europressedienst Whereas:Physical, chemical and technical characteristics and end usesDifferent nomenclatureValue added of cellsSeparate merchant marketsEnd use and interchangeabilityDistribution channelsConsumer perceptionThin film productsExclusion of monowafersSemi-finished productsSolar chargersConclusionProduction, production capacity and capacity utilisationSales volumes and market shareEmployment and productivityMagnitude of the dumping margin and recovery from past dumpingPrices and factors affecting pricesLabour costsInventoriesProfitability, cash flow, investments and return on investments, ability to raise capitalConclusion on injury Development of the Union consumption (168) As mentioned in recital 108 above, Union consumption increased by 221 % for modules, 87 % for cells and 29 % for wafers during the period considered. Consumption reached a peak in 2011 and dropped during the IP while still remaining far above the level at the beginning of the period considered in 2009. The Union industry could not benefit from this increase in consumption as its market share fell from 19 to 13 % for modules, from 68 to 38 % for cells and from 81 to 59 % for wafers during the same period. At the same time, the market share of the PRC was increasing sharply, until 2011 and then remained stable at significant high level during the IP, when consumption fell. Therefore, in view of the fact that, despite a decrease in Union consumption in the IP, the dumped imports from the PRC either maintained their market share (modules) or increased it (cells and wafers) to the detriment of the Union industry over the period considered, it cannot be concluded that the decrease in consumption was such as to break the causal link between the dumped imports and the injury suffered by the Union industry. (169) Based on the information available it is difficult to establish to what extend the demand is driven by the Member States support schemes. Indeed, as mentioned below in recital 171 a variety of support schemes exists and interaction between those and demand is highly complex and therefore their precise impact is difficult to quantify. However, the evidence available also indicates that even in the absence of support schemes the demand for solar energy will continue to exist and will even grow over time, albeit at lower levels than in the context of support schemes. In this context, several parties argued that ‘grid parity’ (i.e. when the cost to produce solar energy equals the cost to produce conventional energy) had already been reached or nearly reached in some regions of the Union. These claims could not be confirmed by the investigation so far and will be further investigated. Feed-in-tariffs (‘FITs’) as the main example of support schemes (170) It has been claimed by several interested parties that the cause of the injury suffered by the Union industry was linked to the reductions in the feed-in-tariffs implemented by the Member States. Those cuts had allegedly led to a decrease of the solar installations and reduced demand for the product under investigation in the Union market, thus causing material injury to the Union industry. (171) Member States introduced FITs, quota obligations with tradable green certificates, investment grants and tax incentives to support renewable energy generation. Support is also granted in certain Member States from EU structural funds. The most frequently implemented support instrument for solar energy were FITs. At this stage, the analysis of the Commission focused on this type of support scheme. (172) FITs are a financial support instrument aiming to achieve mandatory national targets for the use of renewable energy, as prescribed by the Directive 2009/28/EC of the European Parliament and of the Council ( 7 ) on the promotion of the use of energy from renewable sources. The level of support and the way FITs operate vary by Member State. By means of FITs grid operators are bound to buy solar energy at prices which ensure that solar energy producers (usually the owners of the solar installations) recover their costs and earn reasonable rates of return. FITs, as other support schemes, are in most cases also subject to State aid control pursuant to Articles 107 and 108 TFEU, which ensures the absence of overcompensation for electricity producers. (173) In spite of the national differences, three phenomena could be observed as regards the evolution of FITs in the Union: (i) the reduction of the FIT rates, (ii) the suspension of the FIT scheme as a whole (Spain) and (iii) the introduction of capacity thresholds (‘caps’) for the installations eligible for financing as well as overall caps on the yearly installed new supported capacity at the Member State level. As regards the caps, they appear to have been introduced mainly during 2012 and, most likely, do therefore not have any effect on the consumption during the IP. Consequently, the analysis focused on the recent FIT suspensions in Spain and reductions of FIT rates in most Member States. It was analysed whether they had an impact on the demand in the Union market and whether this could have caused the material injury suffered by the Union industry. In this regard, it was considered that the impact of the evolution of FITs with regard to the demand of modules was also representative for the situation with regards to cells and wafers. Indeed, as cells and wafers are indispensable for the production of modules and as they are not used in other production processes, a decrease in demand for modules triggers automatically a decrease in demand for cells and wafers. (174) While the investigation confirmed the link between the evolution of FIT and consumption, the investigation established that the decrease in consumption between 2011 and the IP did not contribute to break the causal link between the dumped imports from the PRC and the material injury suffered by the Union industry as described in detail in recital 163 above. Indeed, the investigation showed that while the situation of the Union industry was deteriorating, the exporting producers were able to maintain their high market shares for modules (80 %) and even increased their market shares slightly for cells (from 22 % in 2011 to 25 % during the IP) and wafers (from 32 % in 2011 to 33 % during the IP). In addition it should be noted that the average price of modules charged by the Union industry dropped by 53 % over the period considered, mainly due to the significant increase of dumped imports and the substantial price pressure they exerted on the Union market. Therefore, the loss in profitability suffered by the Union industry cannot be mainly attributed to the FIT cutbacks. (175) Consequently, it is acknowledged that FITs generated demand for solar energy and that recent FIT suspen