COMMISSION OF THE EUROPEAN COMMUNITIES 
C0M(91) 118 final 
Brussels, 12 April 1991 
Proposal for a 
COUNCIL REGULATION (EEC) 
imposing a definitive anti-dumping duty on imports 
of audio tapes in cassettes originating in Japan 
and the Republic of Korea, collecting definitively 
the provisional duty and terminating the 
proceeding concerning Hong Kong 
(presented by the Commission) 
v, i" 
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EXPLANATORY MEMORANDUM 
The Commission, by Regulation (EEC) No 3262/90^1), imposed a 
provisional anti-dumping duty on imports into the Community of audio 
tapes in cassettes (hereafter referred to as audio cassettes) 
originating in Japan, the Republic of Korea and Hong Kong. The duty 
was extended for a maximum period of two months by Council 
Regulation (EEC) No 578/91<2> 
In its provisional findings, the Commission found that although 
there are various models of audio cassettes differing in length and 
coating of tape and design of the cartridge, these models have the 
same basic physical characteristics, application, use and channels 
of distribution. It is proposed that this provisional finding be 
confirmed. 
For the purpose of definitive findings, normal value was, in 
general, established on the basis of the same methods as those used 
in the provisional determination of dumping, after talcing into 
consideration new facts and arguments presented by the parties. 
- As previously stated in its provisional findings, the Commission 
considered that giveaway goods, which, by their nature were 
unconnected with the product under consideration, did not have 
the effect of reducing the price of audio cassettes sold on the 
domestic market but were promotional expenses for which no 
deduction can be made. 
(1) OJ No L 313, 13.11.1990, p. 5. 
(2) OJ No L 65, 12.3.1991, p. 20. 
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- Since it was established that for one exporter there were neither 
sufficient sales on the domestic market of audio cassette models 
suitable for direct comparison to those sold for export to the 
Community nor sales at prices which permitted recovery of all 
costs reasonably allocated, normal value was determined on the 
basis of a constructed value of each model concerned. 
- One exporter maintained its claim that there were no comparable 
prices, since it made no sales to OEM customers on the domestic 
market, whereas its export sales to the Community were made on an 
OEM basis 
For the purpose of definitive determination, the Commission 
considered that, given the limited nature of the costs assumed by 
the importer (for instance absence of after sales service), the 
profit rate of the manufacturer's own brand sales used for 
constructing normal value should be reduced by 50%. 
It is proposed to confirm the above findings. 
4. The final examination of the facts showed the existence of dumping 
in respect of audio-cassettes in Japan, the Republic of Korea and 
Hong Kong on the part of eight exporters concerned. 
The weighted average margins varied according the exporters as 
fol lows : 
Japanese exporters : 
Fuji 64.2% 
TDK 48.2% 
Maxell 47 % 
Denon Columbia 44.5% 
-Korean exporters 
- Goldstar 9.2% 
- Sunkyong Magnetics : 2.6% 
-Hong Kong exporters 
-Yee Keung 2.4% 
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As far as Saehan Media, Sungnam, Keum Sahn Electronics (Korea), 
Tomei Magnetics, Swire, Magnetic Enterprise and Forward Electronics 
(Hong Kong) are concerned, no dumping was found. 
5. As far as injury is concerned, the Commission considered, in its 
provisional findings, that the effects of Japanese, Korean and Hong 
Kong imports had to be analysed cumulatively. It is proposed to 
confirm this finding except for audio cassettes imported from Hong 
Kong since they had no discernible impact on the Community industry. 
6. In addition, it is considered that the Community industry had 
suffered material injury which manifested itself, in particular, by 
a loss of market share, price erosion, insufficient profitability 
and employment losses. This finding is based on the following 
facts : 
imports of audio cassettes from Japan and Korea have increased at 
a more rapid rate than the rate of Community consumption. 
- the market share of the total dumped imports from Korea and Japan 
increased by 3%, namely from 43.5% to 46.4% from 1985 to 1988. 
As far as Hong Kong is concerned, its market share remained 
stable (1.5% in 1985; 1.6% in 1988); 
- the complainant producers' selling prices in the Community 
suffered a significant erosion between 1985 and 1988; 
- Community producers were unable to increase, significantly, their 
production between 1985 and 1988 and their sales fell by 8.5% 
over this period, despite an increase in total consumption of 
30%; 
- between 1985 and 1988 return on sales of the Community industry 
showed a constant negative trend. 
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- large price undercutting was found on the part of Korean 
exporters and significant price undercutting on the part of 
Japanese exporters on the German market where the Community 
industry still retained a large market share. 
As far as Hong Kong imports are concerned, the Council considers 
that in view of the small amount of dumped imports from Hong Kong 
and of the absence of their brand recognition on the Community 
market, these could not have caused material injury to the Community 
industry. 
7. Finally, it is proposed to confirm that the Community industry was 
unable to defend its price, brand image and volume of sales against 
the Japanese exporters : these were able to finance large selling 
expenditure thanks to their high domestic profits. It is also 
considered that the Community industry had to face the effect of 
dumped imports from Korea, and was not able to meet the low prices 
of these imports. 
In conclusion, Korean and Japanese imports, taken in isolation, have 
caused material injury. 
8. In its provisional findings, the Commission considered and balanced 
the interests of the Community industry, of the consumers and of 
other industries and activities concerned, and it concluded that the 
Community interests called, on balance, for granting protection to 
the Community industry against unfair competition due to dumped 
imports. It is proposed to confirm this finding. 
9. The provisional findings of the Commission with regard to duty 
calculation were also confirmed. 
In addition, it is considered that, in order to establish the rate 
of the definitive duties to be imposed, the individual injury 
margins determined provisionally have to be expressed as a 
percentage of the CIF value of the imports. 
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The result of this calculation is the price increase at the 
Community frontier necessary to remove the injury caused by each 
exporter. 
The duties to be imposed should thus be at the level of the dumping 
margin for all exporters except for the exporters whose dumping 
margins exceed the injury level and are as follows : 
(a) 27.4% for audio cassettes originating in Japan , with the 
exception : 
Sony 
MaxelI 
Denon 
Fuji 23.4% 
21.8% 
18.7% 
15.2% 
(b) 9.2% for audio cassettes originating in the Republic of 
Korea , with the exception of : 
Sunkyong Magnetics Ltd (SKM) : 2.6% (Taric additional code : 
8489) 
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Proposal for a 
COUNCIL REGULATION (EEC) 
imposing a definitive anti-dumping duty on imports 
of audio tapes in cassettes originating in Japan 
and the Republic of Korea, collecting definitively 
the provisional duty and terminating the 
proceeding concerning Hong Kong 
THE COUNCIL OF THE EUROPEAN COMMUNITIES, 
Having regard to the Treaty establishing the European Economic Community, 
Having regard to Council Regulation (EEC) No 2423/88 of 11 July 1988 on 
protection against dumped or subsidized imports from countries not 
members of the European Economic Community<1), and in particular 
Articles 9 and 12 thereof, 
Having regard to the proposal submitted by the Commission after 
consultation within the Advisory Committee as provided for under the 
above Régulât ion, 
Whereas: 
A. PROVISIONAL MEASURES 
The Commission, by Regulation (EEC) No 3262/90(2), imposed a 
provisional anti-dumping duty on imports into the Community of audio 
tapes in cassettes (hereinafter referred to as audio cassettes) 
originating in Japan, the Republic of Korea and Hong Kong and 
falling within CN code 8523 11 00. The duty was extended for a 
maximum period of two months by Council Regulation (EEC) 
No 578/91(3>. 
(1) OJ No L 209, 2.8.1988, p. 1. 
(2) OJ No L 313, 13.11.1990, p. 5. 
(3) OJ No L 65, 12.3.1991, p. 20. 
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B. SUBSEQUENT PROCEDURE 
2. Following the imposition of the provisional anti-dumping duty, all 
the exporters mentioned by name in Regulation (EEC) No 3262/90, as 
well as the representatives of the complainants, requested and were 
granted an opportunity to be heard by the Commission. They, as well 
as one importer, also made written submissions making their views 
known on the findings. 
3. The Commission continued to seek and verify all information it 
deemed to be necessary for its determinations. For this purpose, an 
investigation was carried out at the premises of the following 
exporter : 
- Hitachi Maxell, Tokyo, Japan 
4. Upon request, the parties were informed of the essential facts and 
considerations on the basis of which it was intended to recommend 
the imposition of definitive duties and the definitive collection of 
amounts secured by way of a provisional duty. They were also 
granted a period within which to make representations subsequent to 
these disclosures. Their oral and written comments were considered 
and, where appropriate, the Commission's findings were modified to 
take account of them. 
5. Owing to the complexity of the proceeding, in particular to the 
detailed verification of the voluminous data involved and the 
numerous arguments put forward, the investigation could not be 
concluded within the time limit provided for in Article 7(9) (a) of 
Regulation (EEC) No 2423/88. 
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C. PRODUCT UNDER CONSIDERATION, LIKE PRODUCT, 
COMMUNITY INDUSTRY 
6. In its provisional findings, (recitals 9 to 12 of Regulation (EEC) 
No 3262/90) the Commission found that although there are various 
models of audio cassettes differing in length and coating of tape 
and design of the cartridge, these models have the same basic 
physical characteristics, application, use and channels of 
distr ibut ion. 
7. This finding was questioned by one exporter who requested that audio 
cassettes whose tapes were coated with a metal pigment (hereinafter 
referred to as metal audio cassettes) should be excluded from the 
scope of the proceeding. This exporter submitted that metal audio 
cassettes are extremely high quality cassettes bought by specialist 
consumers and require a cassette recorder with a specific key-
function to appreciate their true quality. A similar claim was 
submitted by an importer requesting the exclusion of audio 
cassettes for answering machines from the scope of the proceeding. 
8. However, while the Commission accepts that there are minor 
differences in quality or use of audio cassettes, it considers that 
these are actually outweighed by the similarity of characteristics 
and functions which give them a high degree of interchangeabiIity. 
The Commission notes in this respect that metal audio cassettes can 
be used on a cassette recorder without a specific key-function 
(giving thus a sound of a lower quality) and that cassettes for 
answering machines can be used on any other cassette recorder or 
player to record or play any sound. In these circumstances, the 
Commission concludes that metal audio cassettes and standard 
cassettes for answering machines should not be excluded from the 
scope of the proceeding. 
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9. The Council confirms the above conclusions and confirms that, in 
contrast, audio cassettes which have important physical differences 
in size, components and use such as micro cassettes, small endless 
cassettes for answering machines, computer cassettes or digital 
audio tapes (DAT) cassettes are not covered by the scope of the 
present proceeding. In addition, the Council confirms the findings 
of the Commission with regard to the like product and the Community 
Industry set out in recitals 15 and 16 (on the content of which 
there was no comment by the interested parties) of Regulation (EEC) 
No 3262/90. 
D. NORMAL VALUE 
10. For the purpose of definitive findings, normal value was, in 
general, established on the basis of the same methods as those used 
in the provisional determination of dumping, after taking into 
consideration new facts and arguments presented by the parties. 
1) Normal value based on prices in the exporting country 
11. In recital 20 of Regulation (EEC) No 3262/90, the value of giveaway 
goods (e.g. index cards, photographs, ...) granted by two exporters 
was* disallowed for the purpose of provisional findings as a 
deduction from domestic sales prices in establishing normal value. 
The exporters concerned have reacted to the Commission's provisional 
findings and have argued that the value of these giveaway goods 
should be treated as a discount and as such, be deducted from the 
domestic selling price. 
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As previously stated in its provisional findings, the Commission 
considers that these giveaway goods, which, by their nature are 
unconnected with the product under consideration, do not have the 
effect of reducing the price of audio cassettes sold on the domestic 
market but are promotional expenses for which no deduction can be 
made in conformity with the provision of Article 2(3) (a) of 
Regulation (EEC) No 2423/88. This view is confirmed by the Council. 
2) Normal value based on constructed value 
a) models grouped together in series 
12. As explained in recital 22 of Regulation (EEC) No 3262/90, the 
Commission provisionally established normal value for one exporter 
on the basis of the weighted average price of series of models of 
audio cassettes. Subsequent investigation led the Commission to 
believe that this average price could not be relied upon to form 
accurate data for the establishment of normal value. 
13. Since this subsequent investigation established that there were 
neither sufficient sales on the domestic market of audio cassette 
models suitable for direct comparison to those sold for export to 
the Community nor sales at prices which permitted recovery of all 
costs reasonably allocated, normal value was determined on the basis 
of a constructed value of each model concerned. This constructed 
value was established on the same basis as described in recital 23 
of Regulation (EEC) No 3262/90. 
b) OEM sales 
14. One exporter maintained its claim that there were no comparable 
prices, since it made no sales to OEM customers on the domestic 
market, whereas its export sales to the Community were made on an 
OEM basis; this exporter thus required that the Commission establish 
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a constructed value including a reduced profit margin for the 
purpose of comparison with its export sales made on an OEM basis and 
submitted new facts to substantiate its request. 
In view of this evidence, the Commission considers that the 
Community customers of this Korean exporter are buying on an OEM 
basis : indeed, they are purchasing audio cassettes made to their 
own specifications (which differ in some aspects from the Korean 
producer's own specifications) in order to supplement their own 
production and resell them while assuming the full responsibility of 
a manufacturer with regard to the product. In addition, the 
difference claimed was clearly reflected in the quantities sold and 
the pattern of price charged. 
For the purpose of definitive determination, the Commission 
considers that, given the limited nature of the costs assumed by the 
importer (for instance absence of after sales service), the profit 
rate of the manufacturer's own brand sales used for constructing 
normal value shall be reduced by 50% : indeed this constitutes the 
difference which exists between own-brand and OEM profits if sales 
of the latter had taken place on the Korean market. 
In the light of the Commission's considerations set out above, the 
Council confirms the Commission's findings and conclusions. 
c) Profit 
15. As explained in recital 30 of Regulation (EEC) No 3262/90, where 
insufficient profitable sales took place on the domestic market, the 
addition of profit to be included in the constructed value was based 
on the weighted average profits realized by other exporters on 
profitable sales on the domestic market. 
16. Two Hong Kong exporters contested the profit figure used by the 
Commission since, according to them, this figure was based on the 
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profits achieved by a fully-integrated producer in Hong Kong whereas 
they were not integrated and actually mainly involved in the 
assembling of audio cassettes. They alleged that a lower profit 
margin should thus be applied to reflect this difference. 
In these circumstances, the Council considers reasonable to base the 
profit figure for these Hong Kong exporters on the rate of profit 
determined for the manufacturing of a product in the same business 
sector, namely video cassettes, where these exporters performed 
similar activities (see Council Regulation (EEC) No l768/89)(4). 
E. EXPORT PRICE 
17. The Council confirms the findings and conclusions of the Commission, 
as well as those set out in recitals 31 to 39 of Regulation (EEC) f 
No 3262/90 on the content of which recitals there was no substantial 
comment by the interested parties. 
F. COMPARISON 
18. One exporter contested the amount of credit costs deducted from the 
domestic selling price for the establishment of normal value and 
claimed that it was lower than its actual expenses. 
The Commission considers that the credit expenses claimed are partly 
related to sales of products other than audio cassettes and should 
thus be reduced to the proportion of sales of audio cassettes only, 
in conformity with the provisions of Article 2(11) of Regulation 
(EEC) No 2423/88. 
(4) OJ No L 174, 22.6.1989, p. 1 
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G. DUMPING MARGIN 
19. On comparing normal values for domestically sold models of the 
producers/exporters which were investigated with the export prices 
of comparable models on a transaction-by-transaction basis, the 
final examination of the facts shows the existence of dumping in 
respect of audio-cassettes in Japan, the Republic of Korea and Hong 
Kong on the part of eight exporters concerned, the margin of dumping 
being equal to the amount by which the normal value as established 
exceeds the price for export to the Community. 
20. The weighted average margins, expressed as a percentage of CIF 
frontier prices, varied according the exporters as follows : 
Japanese exporters : 
Fuji 64.2% 
TDK 48.2% 
Maxell 47 % 
Denon Columbia 44.5% 
-Korean exporters 
- Goldstar 9.2% 
- Sunkyong Magnetics : 2.6% 
-Hong Kong exporters 
-Yee Keung 2.4% 
21. As far as Saehan Media, Sungnam, Keum Sahn Electronics (Korea), 
Tomei Magnetics, Swire, Magnetic Enterprise and Forward Electronics 
(Hong Kong) are concerned, no dumping was found. 
22. For those exporters who did not make themselves known in the course 
of investigation, or cooperated only partly with the Commission, a 
dumping margin was determined on the basis of the facts available as 
explained in recitals 50 and 51 of Regulation (EEC) No 3262/90 and 
it is considered appropriate to use the highest dumping margin of 
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64.2% for Japan and 9.2% for Korea and 2.4% for Hong Kong for these 
groups of exporters. 
The Council confirms the above findings and conclusions. 
H. INJURY 
1. Cumulât ion 
23. In its provisional findings, the Commission considered that the 
effects of Japanese, Korean and Hong Kong imports had to be analysed 
cumulatively. The exporters reacted extensively to the Commission's 
provisional findings. They argued that the difference in consumer 
recognition, market segment and pricing pattern acknowledged in the 
provisional findings between Japanese and Korean exports should have 
led the Commission to rule out the cumulation of imports from Japan, 
Korea and Hong Kong for the purpose of assessing injury. 
24. The Commission confirms its finding set out in recital 78 of 
Regulation (EEC) No 3262/90 that, on one hand, the Korean exporters 
compete to a very large extent on price alone, with products of 
comparatively standard technology and no significant difference in 
features and quality, while on the other hand, the Japanese 
exporters now tend also to concentrate on non-price elements, such 
as brand name, marketing features and styling as their main 
market ing strategy. 
However, it is standard practice for the Community institutions to 
cumulate imports from several countries when these imported products 
and the like product of the Community industry meet the following 
criteria : 
- they are interchangeable, 
- they are sold or offered for sale in the same geographical 
markets, 
- they have common or similar channels of distribution, 
- they are simultaneously present in the market, 
- they are not negligible as such. 
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25. The application of these criteria does not permit the establishment 
of a clear dividing line, separating audio cassettes either from 
Japan or from Korea. Indeed, besides the identity of the basic 
physical characteristics, application and use of audio cassettes 
whatever their source, there is to a very large extent, commercial 
interchangeabiIity and competition between the various models of 
audio cassettes; this is shown by the fact that Japanese exporters 
are selling in the Community audio cassettes manufactured both in 
Japan and Korea, with no difference in the consumer's perception of 
these products by reason of their different sources. 
In contrast, given the small amount of audio cassettes imported from 
Hong Kong which were found to be dumped, they had no discernible 
impact on the Community industry. Indeed, dumped imports from Hong 
Kong represented in 1988 a very small share of the Community market 
and their brand recognition was almost inexistant. Accordingly, 
since they did not bear any contribution to material injury, imports 
from Hong Kong should not be cumulated. 
The Council confirms the above findings and concludes therefore that 
the effects of Japanese and Korean imports have to be analysed 
accumulatively. 
2) Effect on the dumped imports 
26. The Commission concluded in its provisional findings that the 
Community industry had suffered material injury which manifested 
itself, in particular, by a loss of market share, price erosion, 
insufficient profitability and employment losses. It based this 
finding on the following facts : 
imports of audio cassettes from Japan and Korea have increased at 
a more rapid rate than the rate of Community consumption, from 
149 million units in 1985 to 205 million units in 1988, i.e. by 
38%. Imports from Japan increased from 142 million units to 
154 million units over this period, while imports from Korea 
increased from 7 million units to 51 million units; 
- 17 -
- imports of audio cassettes from Hong Kong have increased from 
4.9 million units in 1985 to 7 million units in 1988; 
- the market share of the total dumped imports from Korea and Japan 
increased by 3%, namely from 43.5% to 46.4% from 1985 to 1988. 
As far as Hong Kong is concerned, its market share remained 
stable (1.5% in 1985; 1.6% in 1988); 
- the complainant producers' selling prices in the Community 
suffered a significant erosion between 1985 and 1988; 
- Community producers were unable to increase, significantly, their 
production between 1985 and 1988 and their sales fell by 8.5% 
over this period, despite an increase in total consumption of 
30%; 
- between 1985 and 1988 return on sales of the Community industry 
showed a constant negative trend. The slight improvement of its 
profit in 1988 appears to be the result of the withdrawal of 
loss-making models, which involves a further shrinking of its 
sales and presence on the market; 
- cost-saving measures involved a decline of employment in the 
Community of some 23% of the audio cassettes workforce between 
1985 and 1988; 
- for a large number of transactions, large price undercutting was 
found on the part of Korean exporters and significant price 
undercutting on the part of Japanese exporters on the German 
market where the Community industry still retained a large market 
share. 
27. No new facts concerning these findings were submitted to the 
Commission but the exporters concerned challenged injury findings on 
a number of points. 
- 18 
28. One exporter argued that the use of average figures for the whole of 
Community industry was misleading since they mask conflicting 
underlying trends by the two major Community producers which should 
have led to a separate determination of injury for each of them. 
The Council cannot accept this argument since when determining 
whether material injury has been caused to the Community industry, 
this term shall be interpreted in conformity with Article 4(5) of 
Regulation (EEC) No 2423/88 as referring to the production of the 
Community producers as a whole. 
29. One exporter also argued that one of the Community producers was not 
experiencing material injury and should have been excluded from the 
injury assessment owing to an alleged healthy profit situation. The 
Council cannot accept this view and recalls, as noted in recital 26, 
that the injury suffered by the Community industry is determined 
globally, on the basis of economic factors relating to its situation 
as a whole. 
In addition it notes that several factors concerning this Community 
producer were a clear indication of the existence of material 
injury, such as a profit rate which was in fact below the average, 
and a low global profitability achieved at the expense of 
withdrawing loss-making models from the market. 
30. It was also argued that the Commission's findings with regard to 
production, capacity, utilization of capacity, and sales not only 
referred to production in the Community but also included audio 
cassettes manufactured by the Community industry in its overseas 
facilities, and sold in the Community. 
As noted in the provisional findings of the Commission, this 
activity has completely ceased in 1988, which is a further 
indication of the existence of material injury. Indeed, while in 
1985 the Community industry was operating at full capacity and thus 
decided, in order to meet the demand, to increase its capacity of 
production in the Community and simultaneously to supply the 
- 19 -
Community market with products manufactured in overseas facilities, 
the subsequent decrease of its sales in clear contrast with the 
buoyancy of the market led it to close these overseas facilities and 
to bear the costs of increasingly idle production facilities. 
31. Several exporters contested the Commission's analysis of price 
undercutting. 
One exporter argued that the price undercutting analysis for the 
German market was based on data involving the resale by its 
subsidiary of audio cassettes to other Community markets and 
submitted new data at the end of the investigation. 
However, the Commission considers that these new data should be 
disregarded : indeed, they show discrepancies when the Commission 
cross-checked these with other data supplied by this exporter, 
whilst the data used for the undercutting analysis were submitted by 
the exporter itself as referring unequivocally and exclusively to 
the German market and were verified as correct at the premises of 
this company. 
In addition, these new data appear to show that price undercutting 
has been merely shifted to other geographical markets in the 
Community. Finally, the necessary verification of these new data 
would have inadmissably delayed the course of the proceeding. 
The Council confirms the above finding of the Commission. 
32. Another exporter argued that the Italian market should have been 
taken into account in the price undercutting analysis since it was 
in Italy that it sold its most important volume of audio cassettes. 
However, it has to be noted that, as explained in recital 66 of 
Regulation (EEC) No 3262/90, the Commission selected three major 
Community markets covering more than 70% of the Community sales 
which are the most representative of all sales of audio cassettes in 
the Community. The Commission found in contrast that the volume of 
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sales and price patterns of the exporters and Community producers on 
other markets were not representative of the Community market as a 
who Ie. 
33. The above conclusion, in addition to the findings of the Commission 
set out in recitals 55 to 77 of Regulation (EEC) No 3262/90 lead the 
Council to consider that the Community industry is suffering 
material injury within the meaning of Article 4(1) of Regulation 
(EEC) No 2423/88. 
3. Causât ion of injury 
a) Effect of dumped imports 
34. In its provisional findings, the Commission found that the increased 
influx of dumped imports coincided with a significant loss of market 
share and reduced profitability on the part of the Community 
industry, together with price erosion, and price undercutting of the 
audio cassettes produced by the Community industry. In particular, 
it was noted that the Community industry was in a dilemma since it 
had simultaneously to resist the dumped imports from Japan in the 
high segment of the market, and the dumped imports from Korea in the 
lower segment of the market where competition is led mainly by 
price. As a result, the Commission concluded that dumped imports 
had, taken in isolation, caused material injury to the Community 
industry. 
35. As far as Hong Kong imports are concerned, the Council considers 
that in view of the small amount of dumped imports from Hong Kong 
and of the absence of their brand recognition on the Community 
market, these could not have caused material injury to the Community 
industry. 
36. As far as Japanese and Korean imports were concerned, several 
arguments were raised, mostly by Japanese exporters. These 
contested the provisional finding of the Commission and argued that 
their exports could not be held responsible for causing injury since 
, .!=;•. »!,•. :^A«l..il4t..^ -V. . • ^. ^ft/,.'^ 
- 21 -
the market share of their exports decreased from 42% to 35% between 
1985 and 1988 and have been mainly replaced by products manufactured 
by their subsidiaries in the Community. According to these 
exporters, material injury could only be attributed to dumped 
imports from Korea, or to the effect of non-dumped sales in the 
Community which had been overlooked by the Commission, such as the 
sales of the audio cassettes manufactured by their production 
subsidiaries in the Community. 
37. The Council cannot accept these arguments. If Japanese dumped 
exports were isolated from the other dumped exports, the arguments 
raised are not corroborated by the facts. Indeed, while there is a 
certain decrease of the market share of dumped exports from Japan 
the Japanese exporters in 1988 retained a very large share of the 
Community market (35%, which is almost double the Community 
industry's market share) and have increased in absolute terms their 
volume of dumped imports by 8%. 
In addition, as explained in recital 27, the Council considers that 
the effect of dumped imports from Japan and Korea should be analysed 
cumulatively. This analysis shows an increase in volume of the 
dumped imports by 38% and in market share by 3%. 
38. Finally, the effect of the dumped exports from Japan could not be 
analysed without reference to the real weight that they have on this 
market. It should be pointed out that, as described in recital 81 
of Regulation (EEC) No 3262/90, the Japanese exporters have between 
1985 and 1988 retained their market presence at about 70% of the 
Community market including audio cassettes produced in the Community 
and in Korea by related companies. They diversified their supply 
channels in particular by increasing the output of their production 
subsidiaries in the Community, but dumped imports from Japan remain 
their main source of supply. In this respect, the Council notes 
that dumped imports of audio cassettes and sales of audio cassettes 
from other sources are part of the same commercial strategy In which 
dumping is the driving element. 
22 -
°) Effects of other factors 
39. One exporter argued that the Commission did not consider in its 
provisional findings, the effect of the audio cassettes manufactured 
by the Community industry and sold for export to third countries. 
The Commission notes that between 1985 and 1988, while Community 
sales decreased from 94 million units to 86 million units, export 
sales of audio cassettes increased from 11 million units to 
21 million units however, this only shows that the Community 
industry has reacted in an efficient manner to the effect of dumping 
by developing new markets which were not affected by unfair 
competition. A further indication of injury is shown by the fact 
that the production of the Community industry, after deduction of 
the production destined for export, was actually declining over the 
per iod considered, 
40. It was also argued that the injury suffered by one of the 
complainants was the result of a wrong commercial decision when it 
cut its prices in an attempt to sell on the low end of the market. 
The Council cannot accept this argument the good performances 
achieved by this Community producer in other sectors show that, for 
lack of contrary proof, its commercial policy was adequate in so far 
as it decided to decrease its prices in an attempt to retain its 
market share against the pressure of the dumped imports. 
41. In conclusion, the Council recognizes that oth^r factors, including 
the sales of the production subsidiaries of the Japanese exporters, 
may have had a negative effect on the situation of the Community 
industry. However, this does not detract from the fact that the 
dumped imports had a clear detrimental impact on the situation of 
the Community industry and that this impact, taken in isolation, has 
to be considered as material. 
Indeed, given the facts described in recitals 30 to 32, the Council 
confirms the Commission's findings that the Community industry was 
- 23 -
unable to defend its price, brand image and volume of sales against 
the Japanese exporters : these were able to finance large selling 
expenditure thanks to high profits on a domestic market without 
foreign competition and large volume of sales resulting from dumping 
and were in a position to force down the prices of the Community 
industry in particular in its most important national market where a 
significant price undercutting was found. 
The council also considers that the Community industry had to face 
the effect of dumped imports from Korea, and was not able to meet 
the low prices of these imports without definitively undermining its 
profit situation and jeopardizing any possibility of competition 
with the Japanese products in the high segment of the market. 
Therefore, the Council adopts the findings of the Commission set out 
in recitals 78 to 94 of Regulation (EEC) No 3262/90 pertaining to 
Korean and Japanese imports and concludes that these, taken in 
isolation, have caused material injury. 
I. COMMUNITY INTEREST 
42. In its provisional findings, the Commission considered and balanced 
the interests of the Community industry, of the consumers and of 
other industries and activities concerned. For the reasons given in 
recitals 95 to 104 of Regulation (EEC) No 3262/90, it concluded that 
the interests of the Community call, on balance, for granting 
protection to the Community industry against unfair competition due 
to dumped imports. 
43. One exporter submitted that the withdrawal of one of the 
complainants, AGFA, from this sector in 1990, and the takeover of 
its activities by another complainant, BASF, will lead to cost-
savings and rationalization which could not fail to improve the 
profit situation of the Community industry, and thus render 
protective measures unnecessary and contrary to Community interest. 
- 24 -
The samo exporter also argued that the creation of manufacturing 
subsidiaries in the Community by some Japanese exporters has 
actually offset the loss of Jobs incurred in the Community 
industry's plants. 
44. The Council considers on the contrary that these facts strengthen 
the case for the adoption of protective measures in order to prevent 
other Community producers from disappearing, and considers that the 
creation of jobs by non-integrated subsidiaries of the Japanese 
exporters could not be considered as a fair substitute for a global 
loss of employment in fully integrated producers. 
Therefore the Council confirms the Commission's findings that it is 
in the Community interest to impose ant I-dumping measures to 
eliminate the injurious effects of imports originating in Japan and 
In Korea. 
J. DUTY 
Sovera! exporters contested the methodoiogy applied by the 
Commission to determine the individual injury margin of each 
exporter. They argued that the effect of the determination of the 
price increase of the Community industry was to compensate for past 
lose of market share and not to eliminate present injury. 
In addition, they alleged that this determination took no account of 
the other factors which may have contributed to ths current 
unsatisfactory state of the Community industry. 
The Commission cannot accept these arguments. 
Firstly, the Commission recalls that the very purpose of the 
Commun i ty's ant i-dump i no ! eg i G 1 at i on is to counter act dump i ng and 
material injury caused thereby. Consequently, the Community 
institutions are empowered to impose anti-dumping duties to the 
extent of the dumping found. There is, however, an additional 
- 25 -
responsibility on the institutions to avoid measures which can have 
excessive consequences. Indeed, Article 13(3) of Regulation (EEC) 
No 2423/88 states that the measures "should be less" than the 
dumping margin "if such lesser duties would be adequate to remove 
the injury". This entails an assessment and a forecast of the 
future effects on the Community market of any anti-dumping measures 
which by its very nature is Judgemental. This assessment, for which 
the legislation gives no guidance, has to be reasonable and take 
account of the particularities of each case. 
In fulfilling this responsibility the Commission considered that it 
is reasonable to assess, in this case, that the elimination of the 
full dumping margin for some exporters would probably be excessive 
since the consequent price increase would place them at too much of 
a disadvantage and possibly eliminate them from the market. 
The Commission therefore concluded, given the serious injury 
inflicted on the Community industry over the years and its present 
weakened situation, that the minimum necessary for its recovery from 
the injurious effects of dumping would be to ensure that it is able 
to achieve a reasonable rate of profit in combination with a 
reasonable quantity of sales. 
46. As far as this rate of profit is concerned, the Commissioan, in its 
preliminary findings, has established 12% as reasonable. 
One exporter contested the rate of the target profit of 12% 
determined by the Commission, arguing that an audio cassette is a 
mature product which does not necessitate large research and 
development expenditures which have to be financed by profits. The 
Commission considers that, on the contrary, in view of the 
importance of the marketing and promotion expenditures on this 
Community market, and of the need for constantly upgrading the 
features and styling of audio cassettes to attract consumers, a rate 
of profit of 12% is reasonable. This is supported by the fact that 
profits achieved by several of the exporters concerned on their 
domestic markets are far higher than this rate. This view is 
confirmed by the Council. 
26 -
As far as a reasonable turnover is concerned the Commission 
considers it inappropriate, as explained in its preliminary 
findings, to take the turnover of the Community industry in the 
reference psriod (i.e. tho year 1988) since this turnover was 
particularly heavily affected by the dumping practices found. 
Therefore, calculations of the necessary amounts of duty were based 
on tho quantity of sales achieved by tho Community industry in 1985, 
a year which i«j considered closer to a normal situation, 
notwithstanding tho fact that the sales volume In that period may 
also have been adversely affected by dumped imports or other factors 
and that the trarket has evolved with the appearance of new 
suppiiers. 
47. Several exporters, atso contested tho use of an adjustment of the 
injury margin of each exporter according to the relative volume of 
dumped imports of each exporter in relation to the others. It was 
ajrgue/d; that, the comparât i ve volume of dumped Imports bears no 
relationship to the injury suffered by the Community industry, and 
that the adjustment was based on an arbitrary factor which does not 
reflect the real position of each exporter. 
48. The Gouncii cannot accept this view. Indeed, as shown in 
recitals 55 to 61 and 80 to 87 of Regulation (EEC) No 3262/90 tho 
volume of dumped import;? has been identified as one of the critical 
factors of injury and it had thus to be taken into account when 
detera&taP/ig which duty, iower than the dumping margin, would be 
acteQUattt to remove the injury in conformity with Article 13(3) of 
Rsgula'tion (EEC) No 242 3/88. In addition, tho factor used for this 
adjustment, namely a variation of 20% of tho injury margin above and 
below the average according to the volume of exports of each 
exporter, far from being unreasonab!e has been determined by the 
Commission according to its injury findings (such as evolution of 
volume and market share of dumped imports and of tho Community 
industry) as a reasonable estimate of the effect of tho volume of 
CiUmped imports on tho injury suffered. 
- 27 -
49. It was also submitted that this adjustment should be based on the 
volume of sales of dumped audio cassettes in the Community rather 
than the volume of dumped imports. The Council considers however 
that this adjustment can be based only on the volume of imports, 
since the volume of sales of these imports in the Community may vary 
during a period for inventory reasons, or because of transfers 
between subsidiaries, and thus not be representative of the 
injurious effect of the volume of dumped imports. 
50. Finally, the Commission considers that, in order to establish the 
rate of the definitive duties to be imposed, the Individual injury 
margins determined provisionally have to bo expressed as a 
percentage of the CIF value of the imports. 
To do this, for each exporter the weighted average selling price of 
its sales to the first unrelated buyer has been converted to the 
average CIF value of these sales. The individual injury threshold 
was then expressed as a percentage of the weighted average resale 
price of each exporter at CIF level. The result of this calculation 
is the price increase at the Community frontier necessary to remove 
the injury caused by each exporter. 
51. The Council confirms the above findings of the Commission, and 
concludes that on the basis of the injury calculation method 
described in recitals 105 to 109 of Regulation (EEC) No 3262/90 and 
for the abovement ioned reasons, the duty to be imposed should be at 
the level of the dumping margin for all exporters mentioned in 
recital 21, except for the exporters whose dumping margins exceed 
the injury level and for which the following anti-dumping duties are 
required to eliminate the injury suffered : 
• . •1<C-L. , *.--'. . 
- 28 -
Fuji 
Denon Columbia 
Maxel 2 
Sony 
TDK 15.2% 
18.7% 
21.8% 
23.4% 
27.4% 
52. For other companies which neither replied to the Commission's 
questionnaire nor otherwise made themselves known or refused full 
access to information deemed to be necessary by the Commission for 
its verification of the company's records, the Council considers it 
appropriate to impose the highest duty calculated, i.o. 27.4% for 
products originating in Japan and 9.2% for products originating in 
Korea. Indeed, it would constitute a bonus for non-cooperation to 
hold that tho duties for these producers/exporters woro any lower 
than the highest anti-dumping duty determined. 
Tho duty to be imposed should apply to all audio cassettes from 
Japan and Korea. 
K. COLLECTION OF PROVISIONAL DUTIES 
53. in view of the dumping margins established, and the seriousness of 
the injury caused to the Community industry, tho Council considers 
it necessary that amounts collected by way of provisional anti­
dumping duties should be definitively collected to the extent of the 
amount of the duty definitively imposed. 
54. !n respect of tho exporters whose dumping did not cause material 
injury, the provisional duty coilected has to be released entirely. 
Provisional anti-dumping duties collected or securities received for 
audio cassettes not covered by the definition anti-dumping duties 
should also be released. 
- 29 -
HAS ADOPTED THIS REGULATION 
Article 1 
(1) A definitive anti-dumping duty is hereby imposed on imports of audio 
tapes in cassettes falling within CN code ex 8523 11 00 (Taric 
code 8523 11 00 *10) and originating in Japan and the Republic of 
Korea. 
(2) The rate of the duty applicable to the net-free-at-Community-
frontier price before duty, is set as follows : 
(a) 27.4% for audio tapes in cassettes originating in Japan 
(Taric additional code 8487), with the exception of 
imports which are manufactured and sold for export to the 
Community by the following companies. These companies shall 
be subject to the rate of duty mentioned hereunder : 
Sony 
MaxelI 
Denon 
Fuji 23.4% (Taric additional code : 8483) 
21.8% (Taric additional code : 8484) 
18.7% (Taric additional code : 8486) 
15.2% (Taric additional code : 8485) 
(b) 9.2% for audio tapes in cassettes originating in the 
Republic of Korea (Taric additional code : 8488), with the 
exception of imports which are manufactured and sold for 
export to the Community by the following company. This 
company shall be subject to the rate of duty mentioned 
hereunder : 
Sunkyong Magnetics Ltd (SKM) : 2.6% (Taric additional code : 
8489) 
- 30 -
(3) None of tho duties shall apply to Imports of tho products specified 
in paragraph 1 manufactured and sold for export by the following 
Korean companies : 
- Saehan Media Co. Seoul (Taric additional code : 8490) 
- Sungnam Ltd. Seoul (Taric additional code : 8490) 
- Keum Sahn Electronics Co. Ltd, Kyung Do (Taric additional 
code : 8490) 
(4) For the purpose of this Regulation, audio tapes in cassettes mean 
audio cassettes of a length of 100 millimetres, a height of 
64 millimetres and a depth of 12 millimetres and with a tolerance of 
approximately +/- 2 millimetres. 
(5) In cases where the exporting company is not the same as the 
producing company the rate applicable to the producing company shall 
apply. 
(6) The provisions in force concerning customs duties shall apply. 
Article 2 
The amounts secured by way of provisional anti-dumping duty under 
Regulation (EEC) No 3262/90 shall be definitively collected at the duty 
rate definitively imposed. Amounts secured in excess of the definitive 
rate of duty shall be released. 
Article 3 
The anti-dumping proceeding concerning imports of audio tapes in 
cassettes originating In Hong Kong is terminated. The amounts secured by 
way of provisional anti-dumping duty under Regulation (EEC) No 3262/90 
shalI be released. 
- 31 -
Article 4 
This Regulation shall enter into force on the day following that of its 
publication in the Official Journal of the European Communities. 
This Regulation shall be binding in its entirety and directly applicable 
in all Member States. 
Done at Brussels, For the Council 
The President 

- 32 -
ISSN 0254-1475 
COM(91) 118 final 
DOCUMENTS 
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ISBN 92-77-71038-1 
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