COMMISSION IMPLEMENTING REGULATION (EU) 2021/1930

of 8 November 2021

imposing a definitive anti-dumping duty and definitively collecting the provisional duty imposed on imports of birch plywood originating in Russia

THE EUROPEAN COMMISSION,

Having regard to the Treaty on the Functioning of the European Union,

Having regard to Regulation (EU) 2016/1036 of the European Parliament and of the Council of 8 June 2016 on protection against dumped imports from countries not members of the European Union (1) (‘the basic Regulation’), and in particular Article 9(4) thereof,

Whereas:

1. PROCEDURE

1.1. Initiation

(1) On 14 October 2020, the European Commission (‘the Commission’) initiated an anti-dumping investigation with regard to imports of birch plywood originating in Russia (‘the country concerned’) on the basis of Article 5 of the basic Regulation. It published a Notice of Initiation in the Official Journal of the European Union (‘the Notice of Initiation’).

(2) The Commission initiated the investigation following a complaint lodged on 31 August 2020 by the Woodstock Consortium (‘the complainant’). The complaint was made by the Union industry of birch plywood in the sense of Article 5(4) of the basic Regulation. The complaint contained evidence of dumping and of resulting material injury that was sufficient to justify the initiation of the investigation.

1.2. Amendment to the Notice of initiation

(3) The Notice of Initiation inadvertently omitted a section concerning the procedure for the assessment of Union interest. While this omission did not affect interested parties’ right to make submissions regarding the Union interest, it was considered appropriate to address this omission as a matter of procedural transparency. It was therefore amended on 11 December 2020 (2).

1.3. Registration

(4) Since the conditions laid down in Article 14(5a) of the basic Regulation were not met, imports of the product concerned were not made subject to registration. No party made any comments on this point.

1.4. Provisional measures

(5) In accordance with Article 19a of the basic Regulation, on 12 May 2021 the Commission provided parties with a summary of the proposed provisional duties and details about the calculation of the dumping margins and the margins adequate to remove the injury to the Union industry. One party submitted valid comments which were taken into account.

(6) On 11 June 2021, the Commission imposed a provisional anti-dumping duty on imports of birch plywood originating in Russia by Commission Implementing Regulation (EU) 2021/940 (3) (‘the provisional Regulation’).

(7) The investigation of dumping and injury covered the period from 1 July 2019 to 30 June 2020 (‘the investigation period’). The examination of trends relevant for the assessment of injury covered the period from 1 January 2017 to the end of the investigation period (‘the period considered’).

1.5. Subsequent procedure

(8) Following the disclosure of the essential facts and considerations on the basis of which a provisional anti-dumping duty was imposed (‘the provisional disclosure’), the complainants, other Union producers, the sampled exporting producers, two non-sampled exporting producers, and numerous other interested parties made written submissions making their views known on the provisional findings.

(9) The parties who so requested were granted an opportunity to be heard. Hearings took place with the three sampled exporting producers, two non-sampled exporting producers, a non-sampled Union producer, the complainants and seventeen importers and users.

(10) After provisional disclosure, Sveza Group made a request for additional disclosure arguing that the provisional disclosure was not sufficiently detailed and lacked explanations on a number of points regarding the calculation of the dumping margin and import statistics. Contrary to the allegations in the request and as explained in its reply dated 21 June 2021, the Commission considered that the provisional disclosure, including the company specific pre-disclosure, provided a complete set of information allowing the company to comment on the provisional disclosure as well as to exercise its rights of defence.

(11) The Commission continued to seek and verify all the information it deemed necessary for its final findings. When reaching its definitive findings, the Commission considered the comments submitted by interested parties and revised its provisional conclusions where appropriate.

(12) The Commission informed all interested parties of the essential facts and considerations on the basis of which it intended to impose a definitive anti-dumping duty on imports of birch plywood originating in Russia (‘final disclosure’). All parties were granted a period within which they could make comments on the final disclosure.

(13) The comments submitted by the interested parties were considered and taken into account where appropriate in this regulation.

(14) After final disclosure, Sveza Group reiterated its claims that its rights of defence had not been observed at provisional stage as the calculation of the provisional anti-dumping duty lacked sufficient reasoning. The Commission considered that the company was able to fully exercise its rights of defence on the basis of the information it had received in the provisional disclosure, coupled with the pre-disclosure. In any case, the company had ample opportunities to comment on the pre-disclosure, provisional and definitive disclosures and in all of these occasions it submitted comments which were duly addressed in this regulation. Consequently, the claim was rejected.

1.5.1. Request for suspension of duties

(15) Following final disclosure several interested parties requested the suspension of the anti-dumping measures pursuant Article 14(4) of the basic Regulation alleging market changes after the end of the investigation period.

(16) In this respect, the Commission noted that it had already prior to the final disclosure, on 18 August 2021, on its own initiative requested post-IP information from the Union industry and other interested parties. The Commission noted that the decision whether a suspension of measures under Article 14(4) is warranted or not will be taken in due course.

1.5.2. Request not to collect provisional duties

(17) Following the final disclosure, Emiliana Imballagi, No-Nail Boxes and Industria Compensati Moglia, users and importers of birch plywood, requested the Commission to apply Article 10(2) of the basic Regulation and not to collect provisional duties for imports of square shaped plywood due to the lack of capacity of the Union’s industry to supply square shaped plywood. The request of Industria Compensati Moglia included all types of birch plywood due to the general lack of capacity of the Union industry to satisfy Union’s consumption.

(18) With regard to the alleged lack of supply, the Commission noted, as established in recital (224), that the Union market can be sufficiently supplied from various sources including union industry and Russian imposts. Therefore, in view of the established material injury caused by Russian dumped imports, the conclusions set out in section 4.5, the Commission determined that provisional duties were to be collected in full and, therefore, the request was rejected.

1.6. Sampling

(19) In the absence of comments concerning sampling, recitals (12) to (23) of the provisional Regulation were confirmed.

1.7. Individual examination

(20) Regarding the individual examination requests as mentioned in recital (24) of the provisional Regulation, one exporting producer reiterated that the Commission can carry out the individual examination or as a last option establish an individual injury margin. (4) The resources required for such an assessment would be limited: the verification would be limited to export prices and the analysis is not the same as the analysis of the dumping margin. This party also claimed that the Commission has the obligation to carry out the individual examination.

(21) In this respect, the Commission noted that Article 17(3) of the basic Regulation does not provide for individual injury margin calculations as it states that “an individual margin of dumping shall (…) be calculated for any exporter or producer” [emphasis added].

(22) As explained in recital (24) of the provisional Regulation, the Commission received three complete replies within the deadline of companies that requested individual examination. However, the Commission concluded that the examination of these requests, also at definitive stage, of the investigation would have been unduly burdensome, in view of the several exporting producers already included in the sample, and would prevent the proper completion of the investigation in good time. Therefore, the Commission decided not to grant individual examination to any of the companies in question.

1.8. Investigation period and period considered

(23) In the absence of comments concerning the investigation period ('IP') and the period considered, recital (28) of the provisional Regulation was confirmed.

2. PRODUCT CONCERNED AND LIKE PRODUCT

2.1. Claims regarding the product scope

(24) As explained in recital (38) and (39) of the provisional Regulation, a Russian producer, Segezha, claimed that the product scope should be extended to include not only birch plywood but also pine, poplar, okoumé and beech plywood. It was argued that there is direct competition and interchangeability between the said woods, plywood and birch plywood. Following provisional disclosure, the same party reiterated its request and claimed that the Commission failed to analysis available information, submitted by national plywood associations of other types of wood, concerning the degree of substitution.

(25) The Commission recalled, as already mentioned in recital (201) of the provisional Regulation, that the national associations (of France, Italy and Spain) representing plywood producers of poplar, pine and other types of wood, in their submissions emphasize that plywood made of different woods are different products, which cannot be considered or grouped as a single product.

(26) Similarly, the Commission reiterated its position and rejected the claim given that pine, poplar, okoumé and beech plywood do not share the same basic physical, technical and chemical characteristics with birch plywood. The fact that in some applications, alternative products and materials could be used, with an undetermined degree of substitution capacity, does not change the nature of the physical, technical and chemical differences between the product concerned and the said products.

2.2. Claims regarding product exclusion

(27) At provisional stage, one user, Emiliana Imballaggi S.p.A., and two Russian exporting producers, Sveza Group and Vlas Truda, requested the exclusion of square-shaped birch plywood with the length and width of five feet (1 525 × 1 525 mm). The Commission, rejected the exclusion requests as explained in recital (37) of the provisional Regulation.

(28) Following provisional disclosure, further comments were received concerning the decision of rejecting the exclusion request. Specifically it was argued that i) a difference in shape is already a difference in physical and technical characteristics, ii) square-shaped plywood and rectangular-shape plywood are not interchangeable since square-shaped cannot be used for applications where rectangular shaped is needed and square-shaped cannot be processed into rectangular-shaped and iii) Union producers do not manufacture square-shaped plywood. These arguments were repeated by several parties after the final disclosure. Emiliana Imballagi and No-Nail Boxes, users of birch plywood, also claimed the Union interest as basis for the exclusion, without which the viability of user’s businesses (eg. foldable wooden boxes and crates producers) would not be guaranteed.

(29) The Commission confirmed its decision that square-shaped plywood cannot be excluded from the product scope since it, notwithstanding a difference in dimensions and shape, shares the same basic physical, technical and chemical characteristics with the rectangular shaped plywood. As regards the use, while for certain specific applications there is no immediate interchangeability, there are many other applications in which square and rectangular plywood is further cut and thus the original shape is modified, where there is a degree of substitutability in which square-shape exercises competitive pressure on rectangular-shaped birch plywood. Finally, the investigation confirmed that the Union industry does manufacture and sell square-shaped plywood, albeit in relatively small volumes and generally not as a commodity but rather as a niche product on specific orders. Given these findings, the Commission concluded that the claim that the exclusion would be in interest of the Union was without merit. Therefore, the Commission rejected this claim.

2.3. Conclusion

(30) In the absence of any other comments with respect to the product scope, the Commission confirmed the conclusions set out in recitals (32) to (33) of the provisional Regulation.

3. DUMPING

(31) Following provisional disclosure, the Commission received written comments from the three sampled exporting producers and from the complainant on the provisional dumping findings.

3.1. Normal value

(32) The details of the calculation of the normal value were set out in recitals (44) to (57) of the provisional Regulation. In the absence of any comments with respect to this section, the Commission confirmed its provisional conclusions.

3.2. Export price

(33) The details of the calculation of the export price were set out in recitals (58) and (60) of the provisional Regulation. In the absence of any comments with respect to this section, the Commission confirmed its provisional conclusions.

3.3. Comparison

(34) The details concerning the comparison of the normal value and the export price were set out in recitals (61) to (71) of the provisional Regulation.

(35) The exporting producer UPG reiterated its claim for an adjustment increasing the export price in order to reflect the amounts reimbursed under the Scheme described in recital (63) of the provisional Regulation.

(36) The Commission concluded that, since the party did not provide any new evidence substantiating their claim that would change the Commission’s assessment, the provisional findings set out in recital (64) of the provisional Regulation were confirmed and the claim was rejected.

(37) Following final disclosure, the exporting producer reiterated the claim that the transport costs reimbursed under the Scheme should have been considered when adjusting the export price under Article 2(10)(e) of the basic Regulation.

(38) The Commission considered that it complied with the provisions of Article 2(10)(e) of the basic Regulation as it deducted, among others, directly related transport costs incurred when delivering the product concerned to the first independent customer. Whether those costs were subsequently reimbursed or not does not fall within the scope of Article 2(10)(e) of the basic Regulation. Therefore, the claim was rejected.

(39) The exporting producer further argued that Article 2(10)(k) of the basic Regulation does not preclude the Commission from taking into consideration an export subsidy. The exporting producer reiterated that pricing decisions on the export markets and the profitability of those sales were impacted by the subsidy. Therefore, the Commission allegedly committed a manifest error of assessment and acted in breach of Article 2(10)(k) of the basic Regulation.

(40) The Commission noted that the party did not provide any new evidence substantiating its claim. In any case, the Commission re-examined carefully the file and it did not find any evidence showing that the exporting producer’s customers consistently paid different prices on the domestic market because of the alleged difference in reimbursement of transport costs by the Government of the Russian Federation between domestic and export sales, in accordance with Article 2(10)(k) of the basic Regulation.

(41) Furthermore, the Commission did not address the issue of the subsidy as such but considered whether the scheme impacted the comparability between export and domestic prices in a way that the domestic price should be adjusted. Therefore, the Commission rejected the claim that the reimbursement of transport costs of the export prices should be considered for comparison purposes.

(42) Moreover, the same exporting producer assumed that the Commission accepted its claim by not removing the reimbursement of transportation costs from table G of the anti-dumping questionnaire (i.e. the profit and loss table).

(43) The Commission considered that, irrespective of the removal of the reimbursement of transportation costs in the relevant tables that were submitted by UPG, the rejection of the claim was clearly explained both in the specific company disclosure and in recital (64) of the provisional Regulation. Therefore, the claim was rejected.

(44) Following final disclosure, the exporting producer claimed that the Commission incorrectly adjusted table G of the anti-dumping questionnaire. The party reiterated that the reimbursement of transport costs on exports should be allocated to the export sales as it is conditional upon incurring transport costs when exporting.

(45) As described in recital (43) above, the purpose of table G is to establish the profitability for each market segment. However, for this issue there is no direct link between table G and the assessment made under Article 2(10)(e) and (k) of the basic Regulation. As described in recitals (38)-(41) above, the Commission did not consider that the adjustment was warranted. Therefore, the fact that the subsidy is reported or not in Table G for export sales has no bearing. Therefore, the claim was rejected.

(46) UPG also claimed that the Commission made a manifest error by allocating the commission paid to its related trader to the actual services provided (i.e. the related trader claimed that its tasks concerned all type of sales and not only domestic sales). The Commission should have allocated the commission only to the domestic sales in accordance with the commission agreement.

(47) The Commission took into consideration the factual situation between the two related parties. The commission paid concerned all type of sales. Since the party did not provide any new evidence substantiating its claim, the provisional findings set out in recital (65) of the provisional Regulation were confirmed.

(48) Finally, UPG claimed in case the Commission would maintain its decision to allocate the amount of commissions paid to both domestic and export sales, also the sales to third countries and not only the sales to the EU should be used for the allocation of the commissions. The Commission accepted that claim and allocated the commissions paid to all sales, including the sales to third countries.

(49) Following final disclosure, UPG reiterated the claim that the re-allocation of commissions paid to a related party distorted the facts. Moreover, UPG claimed that the Commission did not substantiate its allegation with evidence.

(50) With regard to the evidence, the Commission referred to two submissions made by UPG where it was stated that a significant proportion of the EU sales (between 75 and 95 %) were made through a related party, which however received no commission for such sales, though it had the same selling functions on the domestic and EU markets. (5) Moreover, following final disclosure, UPG reiterated that the commissions received based on domestic sales were sufficient to cover all functions carried out by the related party on the domestic and export markets. The Commission thus considered that the functions of the related party covered not only the domestic sales but also export sales. Therefore, the commissions paid were rightly re-allocated to all type of sales. On that basis, the claim was rejected.

(51) UPG claimed that the Commission committed a manifest error by confusing the scope of the services rendered by the related party and the scope of application of the commissions paid to the related party.

(52) The Commission considered that the commission contract in force between UPG and its related party did not reflect the factual situation as shown in the evidence contained in the file. Therefore, the claim was rejected.

(53) UPG claimed that the Commission, by re-allocating commissions to export sales, double counted them in view of the actual commission fees paid to unrelated parties in the EU. UPG also claimed that the re-allocation of the commissions was discriminatory in particular when considering the commission adjustment made to the export price of another exporting producer (Sveza Group) under Article 2(10)(i) of the basic Regulation.

(54) The Commission considered carefully the claim and did not find any discrimination between the two exporting producers as the factual situation between the two parties differed significantly:

(55) The Sveza exporting producers had commission agreements with the related trader Sveza-Les which, on its turn, paid fees to unrelated EU agents. As described in recitals (114)-(115) below, the fees paid to the unrelated EU agents were considered as expenses incurred in the framework of the commission agreements in question.

(56) As far as UPG is concerned, UPG itself and not the related trader was invoicing fees to the unrelated EU agents.

(57) Consequently, the related trader could not claim that the fees paid by UPG to the unrelated EU agents were part of its expenses and, as a result, double counted. In any case, the party did not substantiate its claim and as a matter of fact, the commission fees paid to unrelated parties in the EU were not reinvoiced by UPG to its related party. Therefore, the claim was rejected.

(58) UPG also made a claim regarding the scope of services rendered by the related party on domestic and export markets. In particular, the related party allegedly provided limited services to UPG export sales and thus the re-allocation of commission to the sales to the EU was incorrect.

(59) The Commission observed that the claim was not substantiated and could not be verified. Therefore, the claim was rejected.

(60) The exporting producer SPM claimed that the Commission wrongly established the credit costs in its export sales by using the interest rate published by the Russian Central Bank and not the official rate of the invoice currency under the Article 2(10)(g) of the basic Regulation (6).

(61) The Commission considered that the credit costs could be expressed in the currency of the invoice only if the party could demonstrate that there is a need for such currency in its daily business. In all other cases, the credit costs should be expressed in the currency of the country where the company is established.

(62) The party did not provide any evidence that it held loans in EUR nor that it incurred credit costs in EUR, and thus the Commission rejected the claim.

(63) Following final disclosure, SPM reiterated its claim that credit costs should be established based on the official rate of the invoice currency as SPM incurred risks in the invoice currency and not in RUB. Moreover, SPM claimed that this approach was a constant practice of the Commission.

(64) The Commission noted that SPM did not substantiate its claim with evidence regarding the financial risk described and failed to provide evidence that its methodology is a constant practice of the Commission. Moreover, the Commission considered that there is no direct link between the risk described and the establishment of the credit costs. Credit costs relate to the invoice payment terms and are a necessity for the company to finance the costs resulting from the difference in time between the invoice date and the actual payment. SPM did not finance its daily operations with loans in euro. Therefore, there was no evidence that the credit costs should be established based on EUR rate. The claim was therefore rejected.

(65) The same party claimed that the Commission has to apply the currency conversion requested as the exchange EUR/RUB fluctuated significantly in the investigation period (i.e. + 33 % when considering the daily extremum during the investigation period).

(66) During the investigation period, the analysis conducted by the Commission shows that the fluctuation of the monthly exchange rate EUR/RUB between July 2019 to February 2020, was rather stable, in a range -3 %/+3 % around the average exchange rate for that period (i.e. EUR/RUB 70,7). (7)

(67) The Commission considered that the exchange rate fluctuation is not significant and sustained over the investigation period. The Commission considered that the conditions set out in Article 2(10)(j) of the basic Regulation are not met as the exchange rate did not move significantly or in a sustained way. Therefore, the claim was rejected.

(68) Following final disclosure, SPM reiterated its claim regarding the exchange rate fluctuation and that the exchange rate fluctuated by 18 % in March 2020. SPM claimed that an examination over a period longer than the investigation period showed a sustained movement in the exchange rate during the investigation period.

(69) The Commission analysed the evolution of the exchange rate during the investigation period. Information obtained outside of the investigation period is not relevant for the purpose of the investigation. While in March 2020, the exchange rate EUR/RUB increased by + 16,5 % in relation to the weighted average of the previous months (8), it decreased during the next months. Therefore, the Commission considered that the conditions set out in Article 2(10)(j) of the basic Regulation were not met as the exchange rate did not move significantly or in a sustained way. The claim was rejected.

(70) The same exporting producer claimed, both after provisional and final disclosure, that the Commission did not provide clear instructions regarding the situation of the United Kingdom in the investigation. The party did not remove from it costs data in relation with the products sold to the UK. However, as explained in Section 1.10 of the provisional Regulation, on 19 January 2021 the Commission put a note to the file making interested parties aware of the consequences of the UK withdrawal. In addition, the party could have made a specific request backed with evidence in its comments to the provisional disclosure. However, the party did not provide any evidence explaining how the costs data could have been impacted by the sales to the UK. In this respect, the Commission analysed the dataset and found that only one product code number representing 0,04 % of their total export quantity into the EU may have been impacted by the insertion of UK data within the EUCOP file (9). Therefore, the Commission rejected this claim since the removal of such costs data in relation with the products sold to the UK would not appear to have any impact in this case.

(71) SPM clarified that most of the packing costs initially reported included also warehouse costs incurred by the related traders for selling domestically. It further requested to keep the adjustment for those costs which were initially declared as packing costs and for which the Commission did an adjustment as packing costs. The Commission considered that warehouse costs (such as payment of rent for a warehouse) are born as costs of production and contained in the SG&A of the company. Therefore, as such they do not directly affect the prices charged by related traders to the first independent customer. As result, the Commission rejected this claim.

(72) Following final disclosure, SPM claimed that the warehouse costs reported were those of the related distribution companies for domestic sales and not those of the producer. The related distribution companies did not produce birch plywood and therefore did not have any costs of production. Therefore, the normal value should be established at ex-works level excluding the costs of the distribution companies in the same way as the construction of the export price pursuant to Article 2(9) of the basic Regulation.

(73) The Commission considered that no evidence was provided by the company that the related distribution companies’ costs for selling on the domestic market should not be taken into account for the purposes of fair comparison and that the related distribution companies should not be treated as a single economic entity. In addition, Article 2(1) of the basic Regulation stipulates that the normal value should be based on the prices to the first independent customers. This would not be the case if costs incurred by the related distribution companies were deducted. Consequently, the claim was rejected.

(74) The exporting producer Sveza Group claimed that the Commission made a manifest error when dealing with dividends and managements fees issues. The methodology used was explained in the specific provisional disclosure sent to the party.

(75) During the investigation period, one company of the group of exporting producers distributed a dividend to its shareholder, Sveza-Les. Sveza-Les reported the dividend received in the item Financial Income of the anti-dumping questionnaire’s table G. This dividend was also allocated to all type of revenues, including the revenue originating from the sales of the product concerned. The methodology used had for consequence a decrease of the SG&A percentage calculated for all type of revenues. The Commission considered that there is no link between the sales reported and the dividend and thus decided to reject the dividend allocation.

(76) For the investigation period, the total revenue was divided between revenue generated by sales of: product concerned and not concerned, related customers and unrelated customers and by type of market (i.e. domestic, sales to the Union and sales to other third countries). For each of the items listed above, the Sveza Group was required to establish its profitability (or loss). The profitability was obtained by removing all the expenses linked to those revenues (i.e. costs of goods sold, selling, general and administrative costs, gain/loss from foreign exchange rate and gain or loss from financial income).

(77) In its comments to the provisional disclosure, Sveza Group claimed that there is no basic accounting principle allowing the Commission to disregard some data originating from audited financial statements. Moreover, the dividend was paid during the first half of 2020 and corresponded to profit earned as of 31 December 2019, and thus the party was entitled to report it during the investigation period.

(78) The Commission did not disregard the audited financial statements but considered that the dividend earned from an investment cannot be allocated to other type of revenues when establishing the profitability of those sales. In the same way, the profit distributed was not allocated to other type of revenues. As mentioned above in recital (76), the purpose of the anti-dumping questionnaire’s Table G is to establish the profitability of various type of revenue/income during the investigation period. Therefore, the Commission rejected the claim.

(79) The party claimed that the methodology used for the establishment of the profitability of sales is not reliable as the Commission accepted certain types of incomes (i.e. for foreign exchange gain and financial income) but also some profits and losses reported from previous years (i.e. outside of the investigation period).

(80) As correctly mentioned by the party, foreign exchange gains and financial incomes can be reported when they are linked to the normal business activity of the party. In that case, the exchange gains could result from the exports of birch plywood and the financial incomes from the cash generated by the sales of birch plywood. Dividend is another matter though, as the profit distributed was generated by another company. The Commission considered that there was no relationship between the dividend and other revenues of Sveza-Les, including the sales of the product concerned. Therefore, the Commission rejected the claim.

(81) Following final disclosure, the Sveza Group reiterated that there was 100 % relationship between the dividend and other revenues of Sveza-Les. Moreover, the party stated that the exporting producer owned by Sveza-Les earned profit from the sales of plywood either on the domestic market or on the export market.

(82) The Commission considered the arguments and agreed with the party. The profit and thus the dividend originated from the entire business of the exporting producer. However, there was no link between the cash transferred to Sveza-Les and the activities of Sveza-Les (and the associated costs) which were directly linked to the product concerned during the investigation period. The claim was therefore rejected.

(83) Regarding the profits and losses of previous years and reported in table G, the Commission decided to remove these amounts from the dataset used to establish the profitability of sales during the investigation period as it was not linked to the normal business activity of the party during the investigation period. The items listed represented less than 0,5 % of the total SG&A reported.

(84) The management fees, mentioned above in recital (74), concern a management fee paid by each of the exporting producers to Sveza-Les. Sveza-Les reported, in the anti-dumping questionnaire’s table G, the management fee as a revenue and allocated expenses to the management contracts for which it received the fee in question. However, Sveza-Les did not trace back the costs generated by these management contracts. Based on the absence of evidence, the Commission decided at provisional stage, to disregard the costs reported as linked to the revenues from the management contracts and to re-allocate these costs to other types of revenues.

(85) Sveza Group claimed that the Commission’s decision to eliminate the revenue earned (i.e. management fees), to disregard the expenses reported and to reallocate them to other revenues was manifestly erroneous and illegal.

(86) The Commission noted that the company did not provide any further evidence supporting its claim.

(87) Moreover, it is recalled that the management fee revenues were not disregarded from table G. The Commission re-allocated to other type of revenues the expenses allocated by the party to the management fee revenues as the party did not provide any evidence supporting the allocation. Therefore, the claim was rejected.

(88) Furthermore, the party claimed that the Commission used an incoherent and inaccurate methodology for the re-allocation of the expenses. While the party did not substantiate its claim, the Commission used the same methodology as the party for the allocation of expenses. Therefore, the claim was rejected.

(89) Finally, the party claimed that the management fees should be removed from the expenses reported by the exporting producers in their own table G in case the Commission decides to maintain its decision to remove from the related party’s table G of the expenses reported.

(90) The Commission examined the claim and did not find any grounds for removing the management fees expenses reported by the exporting producers as these costs were supported by the accounting documents. Therefore, the claim was rejected.

(91) Following final disclosure, the Sveza Group claimed, by referring to the SG&A accounts of Sveza-Les, that it was possible to trace back the expenses generated by the management fee contracts.

(92) The Commission analysed the arguments and did not find in the submission any information allowing to conclude with certainty that the management fee contracts generated any expenses which could be directly related to the contracts. In addition, the Commission also requested during the RCC supporting documents for the expenses allocated to these contracts but the company failed to provide them. Therefore, the claim was rejected.

(93) After provisional and final disclosure, Sveza Group claimed that the Commission’s assessment on single economic entity (‘SEE’) was affected by manifest errors of assessment. The party reiterated that Sveza-Les performed the same selling functions on the domestic and export markets, with the only difference relating to the remuneration of its activities. On that issue, the party claimed that extensive evidence was provided with its questionnaire reply.

(94) First, after provisional and final disclosure, the group referred to the part of the questionnaire replies of the mills where it was explained that Sveza-Les performs the same selling functions on the domestic and export markets, with the only difference relating to the remuneration of Sveza-Les’ activities. One of the elements emphasised therein is the fact that as per the management agreements concluded between Sveza-Les and each mill, the powers of the sole executive body of the Sveza producers are transferred to Sveza-Les, acting as a management company. According to the management contracts, Sveza-Les performs a wide range of management activities on behalf of the mills, including tax accounting and reporting. Consequently, according to the company, from an operational perspective, Sveza-Les and the mills are not operated independently. The mills operate under the direction of and in accordance with the policy operated by Sveza-Les.

(95) The Commission observed that Sveza-Les provides its management services against remuneration and it invoices regularly the mills listing the services rendered to them. However, despite the wide range of services provided for in the management contracts, the legal entities have decided to regulate their sales in separate and very different types of contracts with respect to exports and domestic sales of the product under investigation, which affected how those sales were made. As explained in recital (67) of the provisional Regulation and further in the following recitals, the commission contracts signed between Sveza-Les and the mills affect solely the export sales and, as a result, called for an adjustment under Article 2(10)(i) of the basic Regulation.

(96) Second, after provisional and final disclosure, the company group challenged the Commission’s assessment in recital (68) of the provisional Regulation arguing that the Union Courts confirmed that the existence of a contract is a “relevant” element, but not a decisive element in order to assess whether or not there is a SEE. A SEE may therefore exist, notwithstanding the existence of a contract (10). The Commission must thus conduct a comprehensive assessment of all factors reflecting the economic reality of the relationships between the SVEZA mills and SVEZA-Les and cannot conclude to the absence of a SEE on the mere basis of the existence of a contract.

(97) The Commission considered that the judgement cited by the Sveza Group confirms the Commission’s position in this case. As concluded by the Court of Justice, the existence of a contract concluded between the producer and its related distributor, providing for the payment of commissions to the latter, is an important factor in the relationship between those two companies and to disregard it would be to obfuscate the economic reality of that relationship. The Commission indeed examined the relationships between the SVEZA mills and SVEZA-Les based on the contracts concluded between them with the title ‘commission agreement’ and came to the conclusion that these contracts, which are being executed, contain various provisions that are difficult to reconcile with the notion that those companies form a single economic entity for the reasons explained in recital (98) below (11).

(98) Third, the group claimed that while the Commission in recital (68) of the provisional Regulation referred to “numerous clauses, such as an arbitration clause, showing a lack of solidarity between the companies”, it mentioned only one: the “arbitration clause”. At the same time, in the judgment PT Musim Mas, the General Court did refer to several types of clauses as evidence of a lack of solidarity. The clause on arbitration is allegedly not sufficient for the Commission to conclude that no SEE exists. As explained in recital (68) of the provisional Regulation, the commission contracts between Sveza-Les and the mills contain numerous provisions showing lack of solidarity between the companies and was thus evidence of the existence of two economic entities with divergent interests (12). Other than the arbitration clause, the liability of the parties to the contract is limited only in case of force majeure whereas in all other situations the parties are responsible for non-performance or improper performance of obligations arising from the contracts in accordance with the generally applicable legislation of the Russian Federation. The contracts further contain provisions governing communications between Sveza-Les and the mills and their obligations in the event of a change of name or address. These non-exhaustive examples along with the arbitration clause mentioned in the provisional regulation constitute evidence that the relationship between the Sveza-Les and the producers as far as export sales are concerned is organised on the basis of normal commercial conditions. Consequently, the claim was rejected.

(99) After final disclosure, the Sveza Group reiterated that the provisions in the commission contracts referred to in the previous recital were not sufficient to show lack of solidarity. Pursuant to the management contracts, the SVEZA mills could not take any decision without the consent of Sveza-Les and they are fully dependent on Sveza-Les in practice and in law. The Commission noted that, as explained in recital (95) above, despite the wide range of services provided for in the management contracts the sales of the products produced by the mills were not covered by the management contracts. Indeed, the legal entities decided to regulate their sales in separate and very different types of contracts with respect to exports and domestic sales of the product under investigation, which affected how those sales were made and their price comparability. Consequently, this claim was rejected.

(100) Fourth, after provisional and final disclosure, the Sveza Group challenged the Commission’s findings that “some sales functions were retained by the exporting producers in view of their SG&A expenses” arguing that those functions are not related to sales but to other activities remotely relevant to sales functions. Even assuming the Commission’s allegation was correct (quod non), a SEE may exist where the producer assumes part of the sales functions complementary to those of the distribution company for its products (13).

(101) The Commission observed that the claim that the SG&A expenses in question do not relate to sales functions by the exporting producers but to other activities was not backed by any evidence on the file. No evidence was provided either after final disclosure. In fact, to the contrary, the producer had reported that at least some of those costs were linked to sales functions such as personnel costs. The Commission considered that this constituted a relevant element showing that the producers have not delegated all of their sales activities to Sveza-Les.

(102) Fifth, the exporting producer argued that the statement “the related trader issued the invoices in the name of the exporting producers to the first independent customers in the Union” is factually incorrect. Invoices to unrelated customers are issued by Sveza-Les, but not “in the name of the exporting producers”. The invoices simply mention the identity of the Sveza mill that manufactured the goods.

(103) The Commission noted that the property of the goods passes directly from the exporting producer to the buyer. These sales are booked as a revenue in the sales ledger of the exporting producer. Sveza-Les never owned the goods and thus did not book it in their accounts as a sales revenue. Only the commission paid by the exporting producers are booked as a revenue in Sveza-Les accounts. By contrast, on the domestic sales the exporting producers do not sell directly to the first independent customers but to Sveza-Les. In that case, the ownership is transferred to Sveza-Les. In addition, the payments from unrelated customers received by Sveza-Les in relation to the export transactions do not belong to it but are directly owned by exporting producers in question and transferred in their entirety to the latter. In other words, Sveza-Les acts as an agent for export sales effected by the mills and is compensated by a commission, while for the domestic market Sveza-Les is the relevant seller to the first independent customer within the meaning of Article 2(1) of the basic Regulation. Consequently, this claim was rejected.

(104) After final disclosure, the exporting producer argued that the Commission’s assessment described in the previous recital focused on the formal arrangements established between Sveza-Les and the mills, but did not address the economic reality of their relationship, in light of the functions actually performed by SVEZA-Les, which were those of an integrated sales department. In fact, the Commission’s formalistic approach to the economic reality of the relationship between Sveza-Les and the exporting producers was allegedly legally and factually incorrect.

(105) The Commission considered that there was no evidence on the file that the contractual arrangements did not reflect the economic reality in the relationships within the group. On the contrary, all documents showed that the contractual arrangements were followed in practice by the different legal entities when performing the export and domestic sales respectively. Consequently, this claim was rejected.

(106) Sixth, the Sveza Group argued that while written commission agreements are concluded for export sales, purchase and sale agreements are concluded for domestic sales. This is factually correct. However, the fact remains that, as acknowledged by the Sveza Group, domestic and export sales are organised differently and subject to contracts of a different nature as recalled below in recital (108). Thus, it is undisputed that export sales are governed by commission agreements and that such commissions are actually paid to remunerate the services provided for export transactions. This is not the case for domestic transactions.

(107) Seventh, the Sveza Group claimed that the Commission is requested to demonstrate that a price comparability issue exists as a result of commission paid on export sales. Article 2(10)(i) of the basic Regulation requires an adjustment for differences in commissions paid. The Sveza Group argued that the relationship between the Sveza mills and Sveza-Les achieves the same economic results, regardless of whether Sveza-Les receives a mark-up on domestic sales or a commission on export sales. Both the mark-up on domestic sales and the commissions on export sales must therefore be considered as a “commission” for the purpose of Article 2(10)(i) of the basic Regulation. That being the case, there is no difference in commissions paid which would affect price comparability and an adjustment under Article 2(10)(i) of the basic Regulation is not justified.

(108) The Commission disagreed. The purpose of the adjustment under Article 2(10)(i) is to offset any difference in commission paid between domestic sales and export sales. While it is uncontested, based on the contracts governing export sales, that commissions are being paid by the mills to Sveza-Les for export transactions, including sales to the Union, it was not demonstrated that, for domestic sales, Sveza-Les can be considered as an agent acting on a commission basis. Rather, the facts, as established by the Commission, are that all domestic sales effected by the group are indirect sales in the sense that the mills first sell the product concerned at transfer prices to Sveza-Les, which then resells at arm’s length to the first independent customers on the domestic market. There is no indication that, when doing so, Sveza-Les could be considered as an agent acting on a commission basis. Indeed, the Commission recalled the following features: all domestic sales are made by Sveza-Les and the sales contracts between Sveza-Les and the mills do not contain any clause that would suggest that Sveza-Les acts as an agent. In particular, certain of the sales contracts stipulate ‘In order to agree on the price of the goods for a certain period, the parties shall be entitled to sign the relevant annex hereto’. Such annexes were not provided as part of the verification, and other contracts containing payment and volume details were outdated. Consequently, the evidence on the file did not show how the purchase price or the remuneration of Sveza-Les was determined. (14) The contracts are also silent on other rights and obligations of the parties. For example, among others, there is no reporting obligation, there is no obligation to notify the other party in case of name change but also there is nothing about the liability of parties for the non-execution of the contract (15). The Commission noted that, in similar circumstances as those prevailing for the domestic sales made by Sveza-Les, the General Court ruled that the adjustment that the Commission carried out in relation to export sales in the Interpipe case was unjustified. (16) On that basis, the Commission confirmed that no adjustment pursuant to Article 2(10)(i) for domestic sales was warranted. By contrast, the contracts concluded between the mills and Sveza-Les for export sales clearly stipulate that Sveza-Les acts as an agent and is entitled to the receipt of a commission for such services, which was paid by the mills as a matter of fact. On this basis, the Commission concluded that an adjustment pursuant to Article 2(10)(i) was warranted for the export sales.

(109) Furthermore, the Commission examined the claim that the alleged mark-up for domestic sales and the actual commissions paid for export transactions would have the same economic consequences for the exporting producers. As further detailed in the company-specific disclosure, there were differences in profitability between sales on the domestic market and export sales. Therefore, the Commission considered that the payment of commissions to Sveza-Les for export sales does not achieve the same economic results for the group of exporting producers as the transfer prices charged to Sveza-Les for domestic sales effected by Sveza-Les to the first independent customers. The claim was therefore rejected.

(110) Eight, regarding recital (71) of the provisional Regulation, the Sveza Group claimed that the situation is similar to Articles 2(8) and 2(9) of the basic Regulation which provide that the price to the first independent customer may be adjusted for all costs incurred between the importation and resale. In addition, Article 2(1) of the basic Regulation is in no way an impediment to the application of an adjustment under Article 2(10)(i) of the basic Regulation. Any other interpretation would deprive Article 2(10)(i), including its second paragraph, of any effet utile.

(111) The Commission observed that the wording of Article 2(1) of the basic Regulation, on the one hand, and Articles 2(8) and 2(9) of the basic Regulation, on the other hand, is different. Whereas Article 2(1) mandates that the normal value shall normally be based on the prices paid or payable, in the ordinary course of trade, by independent customers in the exporting country, Article 2(9) provides for construction of export price based on the price at which the imported products are fist resold.

(112) It should also be noted that as explained in recital (108) above, the Sveza Group did not provide supporting evidence regarding the amount of the claimed adjustment to the normal value based on Article 2(10)(i) of the basic Regulation. The alleged difference between the purchase and re-sale price and how this was calculated was not set out in writing in any of the agreements provided to the Commission. According to the Sveza Group, it also appeared to vary among the mills and was changing during the investigation period. Furthermore, as explained in recital (71) of the provisional Regulation, if an adjustment for mark-up pursuant to Article 2(10)(i) is to be quantified as a deduction of the alleged mark-up charged by Sveza-Les when reselling the product, this would de facto bring the price to the level of the relevant sale between the mills and Sveza-Les. In other words, if the alleged mark-up is deducted, the basis for the establishment of the normal value would be the sale between the mills and Sveza-Les. However, Article 2(1) of the basic Regulation stipulates that the normal value should be based on the prices to the first independent customer, which Sveza- Les is not.

(113) After definitive disclosure, the Sveza Group reiterated that if no SEE existed on the export markets, no SEE could be found to exist on the domestic market because Sveza-Les performs the same functions on the exports and domestic markets. The Commission disagreed. As explained in details in recitals (93)-(112) above, the Commission found that the economic relationship between Sveza-Les and the producers as far as export sales are concerned is that of the supplier selling through the intermediation of an agent and on the basis of normal commercial conditions: the producer retains the ownership and the liability of the goods sold, whereas Sveza-Les receives a sales commission as set out in the relevant contracts. In contrast, for domestic sales Sveza-Les assumes the ownership and liability of the goods sold and any alleged mark-up for those sales was not clearly defined in the contracts. Moreover, Sveza-Les issues the invoice as regards domestic sales to the mills usually on the same day an invoice is issued as regards the final customer, which further confirms the non-commercial relationship. The Commission also recalled that the concept of single economic entity in the context of adjustments under Article 2(10) of the basic Regulation was developed in the Court's case law (17) on ‘notional commissions’ including the mark-up received by a trader as referred to in the second subparagraph of Article 2(10)(i), and not for situations were actual commissions are clearly defined and de facto paid as in the case at hand. Consequently, the Commission rejected this claim.

(114) The Sveza Group claimed that the Commission double-counted some bonuses and commissions paid to unrelated customers in the Union by Sveza-Les as these amounts were not re-invoiced to the exporting producers. Therefore, Sveza-Les considered that these expenses are costs generated by the implementation of the commission agreements.

(115) The Commission considered the claim in parallel with its decision on single economy entity and decided not to deduct the bonuses and the commissions paid to unrelated customers in the Union from the export price. Therefore, the claim was granted.

(116) Following final disclosure, the Sveza Group claimed that as the Commission found a single economic entity on the domestic market, the Commission should have used a consolidated income statement of Sveza-Les and Sveza exporting producers when calculating SG&A costs. This is because the consolidated income statement eliminated intra-group payments and combines actual costs and actual revenues as for a single economy entity.

(117) With the initial questionnaire reply, the Commission requested the exporting producers within the group to provide both their audited accounts and the consolidated audited accounts (if any). None of the exporting producers provided such consolidated information, including Sveza-Les, which was nevertheless the main shareholder of one of the exporting producers. Within the Sveza Group, there were no audited consolidated accounts and thus such a document could not be reported for the purposes of this investigation. While Sveza-Les provided a consolidated income statement during the remote cross-checking, the Commission was not in a position to check its accurateness and reliability as the document in question was not properly audited by an independent audit firm. Therefore, the Commission rejected the claim.

(118) The Sveza Group claimed that that the adjustment for the commission fees paid on the export sales was discriminatory in particular when considering the commission adjustment made to the export price of another exporting producer (UPG).

(119) The Commission did not find any discrimination between the two cases as the factual circumstances of the two parties and in particular the contractual relationships between the related entities in their respective company groups differed. Whereas UPG admitted that the commission fee paid on domestic sales covered expenses and services related to export sales, within the Sveza Group domestic and export sales were arranged through distinct legal set-ups. Consequently, the claim was rejected.

3.4. Dumping margins

(120) As detailed in recitals (31) to (115) above, the Commission took into account interested parties’ comments submitted after provisional disclosure and recalculated the dumping margins accordingly.

(121) The definitive dumping margins expressed as a percentage of the cost, insurance and freight (CIF) Union frontier price, duty unpaid, are as follows: Company Definitive dumping margin Zheshartsky LРK LLC 15,80 % Sveza Group 14,40 % Syktyvkar Plywood Mill 15,72 % Other cooperating companies 14,85 % All other companies 15,80 %

(122) The calculations of the individual dumping margins, including corrections and adjustments made following comments by the interested parties submitted after provisional and final disclosures, were disclosed to the sampled exporting producers.

4. INJURY

4.1. Definition of the Union industry and Union production

(123) In the absence of any comments with respect to this section, the Commission confirmed its conclusions set out in recitals (80) to (82) of the provisional Regulation.

4.2. Union consumption

(124) The Commission established the Union consumption on the basis of (a) data submitted by the complainant concerning the Union industry’s sales of the like product to unrelated customers in the Union, as cross-checked with the sales volumes reported by the sampled Union producers; (b) imports of the product under investigation from all third countries as reported in Eurostat (18).

(125) Having taken into account the methodology for the identification of imports as set out below in section 4.3.1, the Union consumption developed as follows: Table 1 Union consumption cubic meters (m3) 2017 2018 2019 Investigation period Total Union consumption 1 755 656 1 855 185 1 829 570 1 762 318 Index 100 106 104 100 Source: Complainant, sampled Union producers and Eurostat.

(126) The consumption in the Union remained stable during the period considered. A detailed analysis shows an increase of 6 % from 2017 to 2018, attenuating in 2019 to an increase of 4 % with respect to 2017 and a final decrease which left the consumption at similar levels to the level in 2017.

4.3. Imports from the country concerned

4.3.1. Methodology for the identification of imports of the product concerned

(127) As set out in recital (86) of the provisional Regulation, prior to the initiation of the proceeding and the subsequent creation of a specific TARIC code (19), imports of the product concerned were recorded at CN level (20) including also products other than the product concerned. In order to estimate the volume of imports of the product concerned during the period considered, the Commission applied the same ratio (TARIC/CN) observed after initiation between the import volumes of the full CN code and the imports for the product concerned based on TARIC data. For imports from the country concerned, the ratio (21) was established at 78 %.

(128) After provisional disclosure, some interested parties claimed that the determination of the import statistics showed distorted results. Specifically it was argued that when comparing imports in cubic meters with imports in tonnes, the results were not compatible with the widely accepted average density of the product under investigation.

(129) The Commission analysed these claims and found distorted data in the reported statistics at the level of the supplementary unit (cubic meter in this case). The Commission therefore decided to convert the reported weight (tonnes), being a reliable and stable set of data, into cubic meters for the determination of the imports.

(130) To convert tonnes into cubic meters, the Commission used a conversion key established at 0,69. The conversion key was determined by the widely accepted density values of the product concerned. The conversion key was suggested by both exporting producers and Union producers, and also fell into the range proposed in the methodology contained in the complaint. Furthermore, the analysis of the average tonne and cubic meters sold in the Union by the sampled exporting producers confirmed the accurateness of the conversion key at 0,69. Following revision, the ratio for imports from the country concerned was revised upwards slightly, to 79 %.

(131) Following final disclosure, one Russian exporting producer (Sveza) claimed that the use of a ratio (TARIC /CN) based on imports after the initiation of the proceedings did not necessarily reflect the prevailing situation over the entire period considered, since the evolution of the CN code may have been influenced by other types of plywood not subject to the investigation. It was also claimed that, following the initiation of the investigation, imports from Russia could have experienced a substantial increase and as a consequence imports of the product concerned prior to the initiation could have been overestimated. Sveza Group also claimed that the use of Russian statistics for the determination of the imports would be more reliable than Eurostat.

(132) The Commission considered that the methodology it had used allowed for a reasonable and reliable estimation, given that the product concerned was part of a bigger basket of plywood products at statistical level. In the Commission’s view, the use of Russian export statistics would not provide more reliability than Eurostat data as they also include products other than the product concerned. Also, Sveza Group did not provide any evidence substantiating that imports of other types of plywood as a group increased more than birch plywood. Therefore, the claim was rejected.

4.3.2. Volume and market share of the imports from the country concerned

(133) By using the above mentioned methodology, the Commission established the volume of imports on the basis of Eurostat data. The market share of the imports was established by comparing the volume of imports with the Union consumption.

(134) Imports from the country concerned developed as follows: Table 2 Import volume (m3) and market share 2017 2018 2019 Investigation period Volume of imports from Russia (m3) 710 163 773 521 809 267 812 521 Index 100 109 114 114 Market share 40 % 42 % 44 % 46 % Index 100 103 109 114 Source: Eurostat.

(135) Imports from the country concerned increased from around 710 163 cubic meters to around 812 521 cubic meters over the period considered, an increase of 14 %. The market share of those imports increased from 40 % to 46 % over the period considered.

4.3.3. Prices of the imports from the country concerned and price undercutting

(136) The Commission established the prices of imports based on EUR/tonne Eurostat statistic at CN level. Even though, as explained in section 4.3.1 above, the imports of the product concerned were recorded together with a bigger basket of products, this methodology provided a reliable estimation of prices and its evolution over time, as the large majority of imports under this CN code were product concerned, and therefore enabled a comparison of price developments between different exporting countries.

(137) Following final disclosure, Sveza Group contested the use of statistical data at CN level to establish import prices given that the product concerned falls under a CN code that also includes other types of plywood, which made the data unreliable. It further claimed that Eurostat data was disconnected from market realities and prices actually observed on the market, which further accentuated the unreliability of the Commission’s methodology.

(138) The Commission disagreed. As explained above it considered that its methodology to assess the volume and prices of Russian imports of birch plywood allowed for a reasonable and reliable estimation. As regards the reliability of Eurostat prices, recitals (140) and (141) below confirm that prices obtained from Eurostat statistics followed the same trend as the weighted average export prices of the sampled Russian exporting producers. This showed that Eurostat statistics did not deviate from verified data related specifically to the product concerned and thus confirmed the reliability of the data to establish import prices.

(139) The average price of imports from the country concerned developed as follows: Table 3 Import prices (EUR/ tonne) 2017 2018 2019 Investigation period Russia 646 681 608 584 Index 100 105 94 90 Source: Eurostat.

(140) The average prices of the imports from Russia decreased from 646 EUR/tonne in 2017 to 584 EUR/tonne during the investigation period, a decrease by 10 %. The average price of the imports went up in 2018 by 5 % and then decreased in the subsequent periods by 14 %.

(141) The same trend could be observed when using the weighted average export prices as reported by the sampled exporting producers, showing a price of 434 EUR/m3 in the IP for the product concerned. Following provisional disclosure, UPM claimed that the undercutting and underselling calculations were not in line with the Court’s jurisprudence as they were based on an export price that had been adjusted under Article 2(9), while a similar adjustment had not been made to the sale price of the Union industry. The Commission considered that since only a limited percentage, 4 % to 7 %, of the Russian exports were sold via a related company, the impact of this issue on the undercutting calculation is marginal and would not change the fact that Russian imports significantly undercut Union industry prices. Moreover, as far as underselling (injury margin) calculations are concerned, the Union non-injurious price was based on the cost of production plus a target profit, and hence excluded any possible costs of related traders in the Union similar to the situation of the Russian exports.

(142) Following provisional disclosure, several parties challenged the grouping performed by the Commission to compare different product types. Specifically, it was claimed that unifying the surface for each plywood sheet, by multiplying width and length, disregarded the direction of the fibre of the wood, and thus failed to consider a major driver of manufacturing costs and prices. This therefore affected the validity of the undercutting and underselling calculations.

(143) With regard to the exercise of grouping, the Commission recalled, as noted in recital (95) of the provisional Regulation, that birch plywood is sold in a large variety of dimensions, qualities and according to specific customer specifications. Therefore, as already explained in recital (95) of the provisional Regulation, with the aim to conduct a proper comparison of the products sold by the Union industry with the equivalent product types sold by the Russian exporting producers, the Commission carried out an approximation by grouping some closely resembling product types, though maintained the large majority of product types. Given the wide variety of PCNs that only varied slightly in terms of dimensions, thickness and/or coating, a grouping of closely similar PCNs was possible without unduly affecting the accurateness of the comparison. This methodology allowed the Commission to compare a critical mass of imports with sales by the Union industry. Specifically, the Commission took the following actions to allow a proper comparison of the products concerned: 1) three types of phenolic film coating were grouped (F-W-HT as described in the questionnaire); 2) two types of non-coated but similar surface qualities were grouped (CP and WG); and 3) the Commission calculated the surface for each plywood sheet, by multiplying width and length. This calculation was done in square millimetres to allow the comparison of similar dimensions positioned differently and/or reported differently. One interested party claimed that the price difference between the various product types grouped together was [4 % to 7 %]. Even if the alleged price difference would be accepted, the Commission did not consider this difference to be significant. Indeed, it showed that the grouping carried out by the Commission did not prevent an accurate price comparison. As a result, the Commission considered that the grouping performed at provisional stage allowed for a reasonable and reliable price comparison and product comparability of equivalent product types.

(144) After provisional disclosure, some parties provided comments relating to the calculation of the undercutting margin as indicated in recital (100) of the provisional Regulation. Further to those comments and slight changes made to the weighted average undercutting margin, the margin for the cooperating sampled exporting producers was revised and now ranges from 9,6 % to 18,4 % for the imports from the country concerned on the Union market. The weighted average undercutting found on the basis of the data provided by the sampled exporting producers was 12,6 %.

(145) Following final disclosure, Sveza Group claimed that the undercutting and underselling calculations were flawed for the following reasons: (i) given the significant lack of competitive overlap between product types originating in Russia and product types produced and sold by the Union industry, the calculations were not representative; (ii) the grouping of different product types was flawed as it failed to take into account variations in dimensions, which has an impact on prices due to, among other factors, different fiber directions; and (iii) the Commission failed to take into account SG&A and profits of related importers when carrying out its calculations.

(146) With regard to the competitive overlap, the Commission, contrary to the claim, found a significant level of matching between Union and Russian sales. It was similarly established that birch plywood sold by the Union and Russian producers shared the same basic physical and technical characteristics, and that both the Union industry and the exporting producers compete in the same sectors and for the same final users. As to the second claim, the Commission maintained its position as explained in recital (143) that the grouping of some product types and the conversion into surface area were both appropriate and necessary to allow for a reasonable price comparison of equivalent product types given the numerous slight variations between different PCNs. The Commission also noted that Sveza Group did not put forward any other alternative method to allow for a proper price comparison. With regard to the third claim, the Commission maintained its position as set out in recital (141) and recalled the following.

(147) As regards the calculation of undercutting, the Commission considered the point at which Russian imports entered into competition with the products of the Union producers in the Union market, and therefore looked at the purchasing price of the first unrelated party because that party had the choice to source either from the Union industry or from Russian suppliers. In case of export prices to related importers, the methodology as set in Article 2(9) of the basic Regulation was used. The application by analogy of Article 2(9) of the basic Regulation allows the establishment of a price that is fully comparable to the price that is used when examining sales made to unrelated customers and also comparable to the sales price of the Union industry and therefore a deduction of SG&A and profit from the resale price to unrelated customers made by the related importer was warranted.

(148) Such a deduction was also needed to allow for an accurate calculation of underselling. The target price of the Union industry was based on its cost of production plus the target profit, without taking into consideration whether products were then sold in the Union to related or unrelated customers and, accordingly did not include any SG&A and profit of related selling entities in the Union either.

4.4. Economic situation of the Union industry

4.4.1. General remarks

(149) In the absence of any comments with respect to this section, the Commission confirmed its conclusions set out in recitals (101) to (105) of the provisional Regulation.

4.4.2. Macroeconomic indicators

4.4.2.1. Production, production capacity and capacity utilisation

(150) In the absence of any comments with respect to this section, the Commission confirmed its conclusions set out in recitals (106) to (109) of the provisional Regulation.

4.4.2.2. Sales volume and market share

(151) The Union industry’s sales volume and market share developed over the period considered as follows, having taken into account the methodology for the identification of imports as set out above in section 4.3.1: Table 4 Sales volume and market share 2017 2018 2019 IP Total sales volume on the Union market (m3) 821 341 818 621 757 103 680 243 Index 100 100 92 83 Market share 47 % 44 % 41 % 39 % Index 100 94 88 83 Source: Complainant, sampled Union producers and Eurostat.

(152) Throughout the period considered the total Union industry’s sales volume decreased significantly by 17 %. Union sales volume remained at the same level from 2017 to 2018, but showed in 2019 a decrease of 8 % and a further decrease of 10 % from 2019 to the IP.

(153) The Union industry’s market share was similarly reduced by 17 %, showing an invariably declining trend that reduced the presence of Union industry in the market from 47 % of market share in 2017 to 39 % in the IP.

4.4.2.3. Growth

(154) In a context of a sound market with stable Union consumption, the above figures showed that the Union industry experienced substantial decreases in respect of production, sales volume and market share.

4.4.2.4. Employment and productivity

(155) In the absence of any comments with respect to this section, the Commission confirmed its conclusions set out in recitals (114) to (116) of the provisional Regulation.

4.4.2.5. Magnitude of the dumping margin and recovery from past dumping

(156) In the absence of any comments with respect to this section, the Commission confirmed its conclusions set out in recitals (117) to (118) of the provisional Regulation.

4.4.3. Microeconomic indicators

(157) In the absence of any comments with respect to this section, the Commission confirmed its conclusions set out in recitals (119) to (131) of the provisional Regulation.

4.5. Conclusion on injury

(158) In a context of a stable Union consumption, imports from Russia increased during the period considered (+ 14 %), at prices which significantly undercut those of the Union industry. This allowed Russian exporting producers to reach a market share of 46 % in the IP (up from 40 % in 2017).

(159) In these circumstances, the economic situation of the Union industry worsened as shown by all major macro-indicators presenting a negative trend: production (- 14 %), EU sales (- 17 %) and a significant reduction of its market share (from 47 % to 39 %) in the period considered.

(160) In reaction to the pressure of low Russian prices, the Union industry tried to reduce cost and adjustments in employment (- 12 %) were undertaken, as shown in table 6 of the provisional Regulation. However, as a result of the pressure exerted by dumped Russian imports in terms of increased volumes and low prices, EU sales dropped and stocks increased rapidly (+ 22 %) in the period considered, reaching their maximum level (+ 41 %) in 2018, as shown in table 9 of the provisional Regulation.

(161) The cost of production of the Union industry went up significantly during the period considered (+ 10 %), as shown in table 7 of the provisional Regulation, mainly because of a strong increase in the raw material prices.

(162) The Union industry’s cost increased more than sales prices in view of the pressure made by the dumped imports. Consequently, profitability collapsed in the period considered, from a healthy situation (+ 9,7 %) in 2017 to an unsustainable loss making scenario (- 2,8 %) in the IP, as shown in table 10 of the provisional Regulation.

(163) On the basis of the above, the Commission concluded that the Union industry suffered material injury within the meaning of Article 3(5) of the basic Regulation.

5. CAUSATION

5.1. Effects of the dumped imports

(164) Following provisional disclosure, some parties claimed that Russian imports could not have been the cause of injury since they operate in different segment of the market.

(165) As described in section 5.2.7 below, the investigation established that the Union industry and the exporting producers compete in the same sectors and supply the same final users.

(166) In the absence of any other comments with respect to this section, the Commission confirmed its conclusions set out in recitals (138) to (141) of the provisional Regulation.

5.2. Effects of other factors

5.2.1. Imports from third countries

(167) To determine the volume of imports from third countries, the Commission, as explained in section 4.3.1 above, applied the same ratio (TARIC/CN) observed after initiation between the import volumes in tonnes of the full CN code and the imports for the product concerned based on TARIC data. To convert tonnes into cubic meters, the Commission used a conversion key of 0,69.

(168) The only third countries which imported significant volumes to the Union were Belarus and Ukraine. For Belarus, the ratio (TARIC/CN) observed after initiation has been established at 39 % and for Ukraine at 61 %.

(169) The Commission established the prices of imports based on EUR / tonne at CN level, as explained in section 4.3.2 above.

(170) The volume of imports from other third countries developed over the period considered as follows: Table 5 Imports from third countries Country 2017 2018 2019 Investigation period Ukraine Volume (m3) 67 831 83 465 86 795 88 303 Index 100 123 128 130 Market share 4 % 4 % 5 % 5 % Average price (EUR / tonne) 651 725 641 616 Index 100 111 98 95 Belarus Volume (m3) 124 561 141 310 138 307 145 731 Index 100 113 111 117 Market share 7 % 8 % 8 % 8 % Average price (EUR / tonne) 403 481 387 363 Index 100 119 96 90 Other third countries (22) Volume (m3) 31 760 38 267 38 097 35 520 Index 100 120 120 112 Market share 2 % 2 % 2 % 2 % Average price (EUR / tonne) 566 576 565 561 Index 100 102 100 99 Total of all third countries except Russia Volume (m3) 224 153 263 043 263 199 269 555 Index 100 117 117 120 Market share 13 % 14 % 14 % 15 % Average price (EUR / tonne) 537 574 535 520 Index 100 107 100 97 Source: Eurostat.

(171) Compared to Russia, Belarus and the Ukraine had a limited presence on the Union market. In the period considered their market shares remained relatively stable, with minimal increase of 1 percentage point over the period considered, at a level of 8 % and 5 % respectively during the IP. All the other third countries slightly increased their presence, but their market share remained low at 2 %. The combined market share of imports from all third countries except Russia increased by 1 % from 2017 to 2018, and 1 % from 2019 to the IP, reaching a level of 15 %.

(172) In terms of prices during the period considered, Ukraine sold at prices slightly higher than Russia, and Belarus at lower prices. The lower prices from Belarus were explained, both by importers and complainants, by its limited technology that only allows producing a very specific and cheaper quality product type. In contrast to Belarus, imports from Russia concerned a wider variety of products and also concerned higher quality birch plywood, thus showing higher average prices.

(173) On that basis, the Commission concluded that the impact of imports from other countries did not attenuate the causal link between dumped Russian imports and the material injury suffered by Union producers.

(174) After final disclosure, Sveza Group argued that the Commission ignored the fact that imports from Belarus and Ukraine both increased in volume and at lower prices (after adjustment for customs duty) than Russian exports to the Union, thus contributing to the injury. By failing to consider those elements the Commission committed a manifest error in it analysis of imports from third countries. Also, the Government of the Russian Federation (‘GOR’) claimed that the Commission had not properly assessed the impact of imports from third countries on the Union industry

(175) The Commission rejected this claim. First, concerning Ukrainian imports, it recalled that the import prices were based on Eurostat data at CIF level and thus before any application of customs duty. Thus, the Commission confirmed that prices from Ukraine were higher than Russian import prices. In any case, should the Commission compare Russian and Ukrainian imports after the custom duty (only applying to Russian imports), prices from both countries would be in the same range. Given their limited volume and market share, imports from Ukraine did not attenuate the causal link between dumped Russian imports and the material injury suffered by Union producers.

(176) Second, whilst the volumes from both Ukraine and Belarus increased, they increased from a relatively small starting point and their impact on the Union market was marginal as their respective market shares only increased by 1 percentage point, whereas Russian imports increased its market share with 6 percentage points. The Commission therefore confirmed its provisional finding that imports from other countries did not attenuate the causal link.

(177) Finally, the Commission recalled that imports from third countries other than Ukraine and Belarus only accounted for around 2 % of the Union market and remained at that level during the period considered. Similarly, the price level also remained stable during the period considered. Those imports were thus not considered susceptible to cause injury to the Union industry. This claim was therefore rejected.

5.2.2. Export performance of the Union industry

(178) Following provisional disclosure, one exporting producer, the Sveza Group, claimed that the positive export performance of the Union industry contributed to the injury, since allegedly, the increase in export sales would have been to the detriment of the domestic sales. After final disclosure also the GOR claimed that the export performance of the Union industry (increased exports at low prices) had been a cause of injury.

(179) During the IP the Union industry had sufficient production capacity to cover the increase in export sales. The same applied to the sampled Union producers. Furthermore the increase in the volume of exports represented only a small part of the decrease of 17 %, as shown in table 4 above, suffered in the volume of domestic sales. As a result, the increase of exports of the Union industry does not contribute to the injury suffered by Union industry.

(180) Following provisional disclosure, the exporter producer UPM noted that the analysis of the export performance in the provisional Regulation relied on the data for the sampled Union producers, which showed an increase, contrary to the export performance for the Union industry as a whole as estimated by the complainants, which showed a decrease.

(181) The exports for the entire Union industry provided by the complainant showed a decrease of 4 % during the period considered. While export volumes decreased by 12 % from 2017 to 2019, export volumes increased by 8 % from 2019 to the IP, which resulted in an increase of exports as a percentage of its total sales. Accordingly, the export performance of the entire Union industry could not have contributed to the injury suffered by the Union industry.

(182) In the absence of any other comments with respect to this section, the Commission confirmed its conclusions set out in recitals (150) to (152) of the provisional Regulation.

5.2.3. Competitive disadvantage in access to the main raw material

(183) Following provisional disclosure, some parties claimed that the Union industry suffers from a limited availability of the main raw material, i.e. birch wood logs, which would be the origin of lower production volumes, costs increases and therefore be the cause of injury.

(184) As explained in recital (154) of the provisional Regulation, access to the main raw material, birch wood logs, did not explain the injury, since Union producers had sufficient access to supplies of birch logs. Table 9 of the provisional Regulation showed that stocks of sampled union producers increased by 22 % over the period considered, and specifically by 6 % from 2019 to the IP. The evolution of stocks indicated that the problem did not reside in the production, but rather in its commercialization. As a result, the decrease in production during the period considered was not explained by the availability of wood.

(185) The investigation also established that the cost of raw material did not attenuate the causal link. The problem resided rather in the limited ability of the Union industry to raise prices to the same extent as costs increases due to the pressure exerted by dumped imports from Russia, both in terms of volumes and prices. Specifically this could be observed, as explained in recital (155) of the provisional Regulation, by the fact that between 2019 and the IP the cost of production of the Union industry decreased, whereas this did not result in an improvement of its profitability. Therefore, the Commission dismissed these claims.

5.2.4. Self-inflected injury

(186) After final disclosure the GOR claimed that capacity expansions to accommodate increased production, which were not materialized, was a cause of Injury.

(187) The Commission, contrary to the claim, found, that annual investments, as shown in table 10 and explained in recital (130) of the provisional Regulation, decreased over the period considered by 1 %. Similarly, as explained in recital (108) of the provisional Regulation, Union production capacity was reduced by overall 3 % in the period considered.

(188) The Commission therefore concluded that the claim that expansion capacity investments were a source of injury was thus unfounded, as was also set out in recitals (156) to (157) of the provisional Regulation.

5.2.5. Strikes in Finland

(189) Following provisional disclosure, several interested parties claimed that the strikes in Finland affected negatively to the Union industry resulting in lower production volumes and consequently in lower sales volumes. The strikes allegedly would have also result in an increase of cost resulting in lower profitability.

(190) The increase in stocks, as shown in table 9 of the provisional Regulation, evidenced that the problems did not reside in the production. Concerning the increase in cost, contrary to the allegations, table 7 of the provisional Regulation showed a decrease of costs during the period when the strikes took place. Therefore the Commission concluded that the strikes of the mills in Finland did not contribute to the injury suffered by the Union industry.

5.2.6. COVID-19 effects

(191) Following provisional disclosure, some parties claimed that the lockdowns imposed as a result of the COVID-19 might have resulted in production stoppages which might have affected production volumes, employment and costs. After final disclosure also the GOR claimed that the COVID-19 pandemic was the main reason for the injurious situation of the Union industry.

(192) As explained in recital (128) the evolution of the stocks and the cost contradicted the allegations. The COVID-19 crisis did not negatively affect production volumes and employment in the IP. The Commission, thus, dismissed these claims and concluded that effects of the COVID-19 did not attenuate the causal link.

5.2.7. Product comparability

(193) Following provisional disclosure, some parties claimed a lack of competitive overlap between the birch plywood produced by the Russian industry and the plywood produced by the Union industry, since they allegedly produce different qualities destined to different segments, and that therefore, Russian imports were not the cause of injury.

(194) The Commission, nonetheless, compared thousands of different types of plywood products and established a significant level of matching (over 68 %) between Union sales and Russian imported products. Furthermore, the investigation established that not only the imported and like Union products shared the same basic physical and technical characteristics, but also, that both the Union industry and the exporting producers compete in the same sectors and for the same final users. The Commission, thus, concluded that the alleged lack of product comparability and competition did not attenuate the causal link.

(195) Following final disclosure, Sveza Group insisted that there was a significant lack of product comparability and hence competitive overlap that must be considered for the causation analysis. It further claimed that the Commission argument that product comparability was not an issue for causation purposes was flawed and inconsistent with WTO rules. Also the GOR claimed that the Commission had not sufficiently analysed product comparability and the competitive overlap between product types with different characteristics.

(196) The Commission disagreed with the claim that it had not considered product comparability for causation purposes, and considered it to be a misinterpretation of its findings. As described in recital (194) the Commission found, contrary to the claim by the exporting producer, that, given the significant level of product matching and competition in the same sectors and for the same users, there was both product comparability and competition. Accordingly, the allegation concerning a lack of product comparability and competition was unfounded and could not attenuate the causal link.

(197) Another exporting producer (SPM) also referred to the alleged lack of product comparability and competition and requested that product types that were not produced by the Union industry should be excluded from the product scope.

(198) The Commission rejected this claim for the reasons set out in recital (196) above. Furthermore, the Commission recalled that it, as described in recital (143), the Commission had grouped closely resembling product types to ensure that a fair price comparison, based on representative volumes, could be made between Russian imports and the product sold by the Union industry.

(199) In the absence of any other comments with respect to this section, the Commission confirmed its conclusions set out in recitals (162) to (163) of the provisional Regulation.

(200) Following final disclosure, Sveza Group claimed that the Commission failed to take due account of information concerning the post-IP data, which in its view demonstrated that Russian imports could not cause injury to the Union industry. In particular, it referred to certain statements by the complainant that they had not been able to pass on global price increases due to agreed contracts and that in the post-IP period there was neither any undercutting or underselling. Instead, long-term contracts and variations in raw material prices were the source of any alleged injury.

(201) Also, SPM claimed that the Commission has failed to properly take into account post-IP developments in the assessment of injury and causation, which according to SPM is a requirement when post-IP developments are manifest, undisputed and lasting.

(202) The Commission considered for its injury and causation analysis the situation as established during the IP. The Commission recalled that, as provided in Article 6(1) of the basic Regulation, information relating to a period subsequent to the investigation period shall, normally, not be taken into account. It further considered that the situation post-IP is of a temporary character and the result of an unexpected and rapid post-COVID recovery. Therefore, it was not considered that those temporary circumstances were of such a character that they would made the proposed imposition of definitive anti-dumping duties inappropriate, even in light of post-IP developments. Nevertheless, as explained in recital (16), the Commission will analyse the post-IP situation in the context of a possible suspension of the duties due to a temporary change of market conditions. That analysis will however be carried out in due course and concluded in a separate decision.

5.3. Conclusion on causation

(203) On the basis of the above and in the absence of any other comments, the Commission concluded that none of the factors, analysed either individually or collectively, attenuated the causal link between the dumped imports and the injury suffered by the Union industry to the effect that such link would no longer be genuine and substantial, confirming the conclusion in recitals (164) to (166) of the provisional Regulation.

6. LEVEL OF MEASURES

6.1. Injury margin

(204) The claims made by UPM and Sveza Group concerning adjustments under Article 2(9) of the basis Regulation in the undercutting calculations also apply to the calculation of the injury elimination level. Those claims were rejected by the Commission as set out in section 4.3.3 above.

(205) Following final disclosure Sveza Group also claimed that the Commission had wrongly computed the injury margin as it had not deducted the injurious effects of other factors. According to Sveza Group, the Commission must ensure that the amount of the anti-dumping duty imposed (if any) does not exceed that which is necessary to counter the injurious effects of the dumped imports, including by ensuring that the amount of the anti-dumping duty does not take into account injurious effects caused by factors other than those imports. Therefore, Commission must adjust the injury margin to exclude the injury caused by factors other than Russian imports.

(206) First, the Commission recalled that the anti-dumping duty was based on the established dumping margin. Therefore, the imposed duty does not exceed what is necessary to counteract the injurious effects of the dumped imports, notwithstanding the fact that the established injury margin is significantly higher than the dumping margin. In this respect the Commission also recalled that, as described in Section 5.2 above, the Commission examined several other factors possibly contributing to the injury and found that none of those factors, either individually or taking together were able to attenuate the causal link between the dumped imports and the injury suffered. Finally, the injury margin determination must be done according to the provisions of Article 7(2c) and (2d) of the basic Regulation. Therefore, the Commission established the target price and level of profitability by taking into account the factors listed.

(207) As provided by Article 9(4), third subparagraph, of the basic Regulation, and given that the Commission did not register imports during the period of pre-disclosure, it analysed the development of import volumes to establish if there had been a further substantial rise in imports subject to the investigation during the period of pre-disclosure and therefore reflect the additional injury resulting from such increase in the determination of the injury margin.

(208) Based on data from the Surveillance 2 database, import volumes from Russia during the four weeks period of pre-disclosure were 98,6 % higher than the average import volumes in the investigation period on a four-week basis. On that basis, the Commission concluded that there had been a substantial rise in imports subject to the investigation during the period of pre-disclosure.

(209) To reflect the additional injury caused by the increase of imports, the Commission decided to adjust the injury elimination level based on the rise in import volume, which is considered the relevant weighting factor based on the wording of Article 9(4) of the basic Regulation. It therefore calculated a multiplying factor established by dividing the sum of the volume of imports during the four weeks of the pre-disclosure period of 85 449 tonnes and the 52 weeks of the IP, by the import volume in the IP extrapolated to 56 weeks. The resulting figure, 1,02, reflects the additional injury caused by the further increase of imports. The injury margin was thus multiplied by this factor. Therefore, the final injury elimination level is as follows: Country Company Injury margin Russia Zheshartsky LРK LLC 58,3 % Sveza Group 32,2 % Syktyvkar Plywood Mill 43,8 % Other cooperating companies 39,9 % All other companies 58,3 %

(210) Following final disclosure, Sveza Group claimed that the Commission was not entitled to make an adjustment to the injury margin under Article 9(4). First, it claimed that the Commission used two different sources of data, namely the Surveillance 2 database and Eurostat, to establish the existence of a substantial rise of imports. This was based on the use of one source to establish imports during the pre-disclosure period and another source coupled with an allegedly unreliable method to establish the import volume during the IP. Therefore, the finding of a substantial rise of imports was not based on an objective examination of positive evidence. In addition, Sveza Group argued that the imports during the pre-disclosure period were neither undercutting, nor underselling, the Union prices and no additional injury could therefore have been caused by those imports.

(211) As explained in recital (207) it is the import volumes, not the prices, which were decisive for considering whether any additional injury was caused by the rise of imports. Indeed, article 9(4), third subparagraph of the basic Regulation requires the Commission to reflect the additional injury resulting from a further substantial rise in imports subject to the investigation, when no registration has taken place during the period of pre-disclosure. As the increase in imports from Russia during the period was objectively very significant, according to this provision the Commission adjusted the injury margins accordingly as the text of the Article reads ‘shall reflect’. As regards the use of different sources of data, the Commission recalled that the analysis was based on a common source, which is the information collected by custom administrations, regardles