Joined Cases T-407/06 and T-408/06

Zhejiang Aokang Shoes Co., Ltd and Wenzhou Taima Shoes Co., Ltd

v

Council of the European Union

(Dumping – Imports of footwear with uppers of leather originating in China and Vietnam – Market economy treatment – Individual treatment – Sampling – Rights of the defence – Equal treatment – Injury – Legitimate expectations – Duty to state reasons)

Summary of the Judgment

1. Common commercial policy – Protection against dumping – Dumping margin – Determination of the normal value – Sampling

(Council Regulation No 384/96, Arts 9(6), and 17(1), (2) and (3))

2. Common commercial policy – Protection against dumping – Dumping margin – Determination of the normal value – Imports from countries not having a market economy as referred to in Article 2(7)(b) of Regulation No 384/96 – Sampling

(Council Regulation No 384/96, Arts 2(7)(b), 9,(6), and 17(1) and (3))

3. Common commercial policy – Protection against dumping – Anti-dumping proceeding – Rights of the defence – Final disclosure by the Commission to undertakings

(Council Regulation No 384/96, Art. 20(2) and (4))

4. Community law – Principles – Rights of the defence – Observance thereof in the context of administrative proceedings – Antidumping – Obligation of the institutions to ensure that the parties concerned are informed – Additional final disclosure document

(Council Regulation No 384/96, Art. 20(5))

5. Common commercial policy – Protection against dumping – Injury – Period to be taken into consideration

(Council Regulation No 384/96, Art. 3(2))

1. According to the wording of Article 17(1) and (3) of the basic anti-dumping regulation No 384/96, the use of sampling as a technique in order to deal with a large number of complainants, exporters, importers, types of product or transactions constitutes a limitation of the investigation. That assessment is borne out by Article 9(6) of the basic regulation under which producers who are not part of the sample are not included in the investigation.

However, the basic regulation provides that where there is such a limitation the Community institutions must comply with two obligations. First, the sample must be representative within the meaning of Article 17(1) and (2) of the basic regulation. Secondly, Article 9(6) of that regulation provides that the dumping margin established for producers who are not included in the sample is not to exceed the weighted average margin of dumping established for the parties in the sample.

(see paras 83-84)

2. Where sampling, as provided for by Article 17 of the basic anti-dumping regulation No 384/96, is used, producers who are not included in the sample may request that an individual dumping margin be calculated – which presupposes the acceptance of a claim for market economy treatment or individual treatment where countries concerned by Article 2(7)(b) of the basic regulation are involved – only on the basis of Article 17(3) of that regulation. However, Article 17(3) gives the Commission the power to assess whether, having regard to the number of such claims, examining them would be unduly burdensome and would prevent completion of the investigation in good time.

It follows that the basic anti-dumping regulation does not give traders who are not included in the sample an unconditional right to the calculation of an individual dumping margin. The acceptance of such a claim depends on the Commission’s decision as to the application of Article 17(3) of the basic regulation. Furthermore, as the grant of market economy treatment or individual treatment serves, pursuant to Article 2(7)(b) of that regulation, only to establish the method for calculating normal value with a view to the calculation of individual dumping margins, the Commission is not required to examine claims from traders who are not included in the sample, where it has concluded, in applying Article 17(3) of the basic regulation, that the calculation of such margins would be unduly burdensome and would prevent it from completing the investigation in good time.

The application of those rules does not constitute a breach of the principle of equal treatment in respect of the companies included in the sample and those who are not as those two groups of companies are in different situations since the Commission must necessarily calculate an individual margin of dumping for the former, and that presupposes the examination and acceptance of such a claim for market economy treatment or individual treatment, whereas it is not obliged to establish an individual margin for the latter.

Furthermore, the principle of equal treatment in respect of the companies which are not included in the sample does not require the Commission to decide on all the claims which have been submitted to it, with the result that the producers or exporters not included in the sample, but to whom such market economy treatment or individual treatment is granted, may have applied to them the average dumping margin of the sampled companies to which such market economy treatment or individual treatment has been granted.

If the number of claims is so large that examining them would prevent the Community institutions from completing the investigation in good time, the institutions are not required, under Article 17(3) of the basic regulation, to decide on all of those claims, even for the sole purpose of distinguishing, among the non-sampled companies, between those which may or may not be entitled to market economy treatment or individual treatment, with a view to applying to them the average dumping margin of the sampled companies to which market economy treatment or individual treatment has been granted, but without calculating an individual dumping margin.

(see paras 87-89, 92-94)

3. The undertakings affected by an investigation preceding the adoption of an anti-dumping regulation must be placed in a position during the administrative procedure in which they can effectively make known their views on the correctness and relevance of the facts and circumstances alleged and on the evidence presented by the Commission in support of its assessment of the existence of dumping and the resultant injury.

In this connection, the fact that final disclosure requested by the parties pursuant to Article 20(2) of the basic anti-dumping regulation No 384/96 is incomplete renders the regulation imposing definitive anti-dumping duties unlawful only if, as a result of the omission, the interested parties were not in a position to defend their interests effectively. That is inter alia the case where the omission relates to facts or considerations which are different from those used for any provisional measures, to which particular attention must be paid in final disclosure pursuant to that provision. That is also the case where the omission relates to facts or considerations which are different from those on which the Commission or Council bases a decision subsequent to the communication of the final disclosure document, as is apparent from the last sentence of Article 20(4) of the basic regulation.

The fact that the Commission amended its analysis after comments made on the final disclosure document by the parties concerned does not however, in itself, constitute infringement of the rights of the defence. As is apparent from the last sentence of Article 20(4) of the basic regulation, the final disclosure document does not prejudice any subsequent decision by the Commission or the Council. That provision merely requires the Commission to disclose, as soon as possible, the facts and considerations which are different from those which formed the basis for its initial approach in the final disclosure document. Consequently, in order to establish whether the Commission complied with the rights of the parties concerned deriving from the last sentence of Article 20(4) of the basic regulation, it must also be ascertained whether the Commission communicated to them the facts and considerations taken into account for the purpose of the new analysis of the injury and the form of measures necessary to eliminate it, in so far as those facts and considerations differ from those taken into account in the final disclosure document.

(see paras 108, 132-133, 138-139)

4. The Commission breaches Article 20(5) of the basic anti-dumping regulation No 384/96 by granting a producer who is subject to an anti-dumping investigation a period of less than 10 days to comment on the additional final disclosure document. However, that fact cannot, in itself, lead to annulment of the contested regulation. It is also necessary to establish that the granting of a period shorter than the prescribed period was actually capable of affecting its rights of defence in the procedure in question.

(see para. 145)

5. The adoption of anti-dumping duties is not a penalty for earlier behaviour but a protective and preventive measure against unfair competition resulting from dumping practices. In order to be able to determine the anti-dumping duties appropriate for protecting the Community industry against dumping, it is therefore necessary to carry out the investigation on the basis of information which is as recent as possible.

Where the Community institutions find that imports of a product which has until then been subject to quantitative restrictions increase after those restrictions have lapsed, they may take that increase into account for the purposes of their assessment of the injury sustained by the Community industry.

(see paras 155-156)

JUDGMENT OF THE GENERAL COURT (Eighth Chamber)

4 March 2010 ( )

(Dumping – Imports of footwear with uppers of leather originating in China and Vietnam – Market economy treatment – Individual treatment – Sampling – Rights of the defence – Equal treatment – Injury – Legitimate expectations – Obligation to state the reasons on which the decision is based)

In Joined Cases T‑407/06 and T‑408/06,

Zhejiang Aokang Shoes Co., Ltd, established in Yongjia (China),

applicant in Case T‑407/06,

Wenzhou Taima Shoes Co., Ltd, established in Wenzhou (China),

applicant in Case T‑408/06,

represented by I. MacVay, Solicitor, R. Thompson QC, and K. Beal, Barrister,

v

Council of the European Union, represented by J.-P. Hix, acting as Agent, assisted by G. Berrisch, lawyer,

defendant,

supported by

European Commission, represented by H. van Vliet and T. Scharf, acting as Agents,

by

Confédération européenne de l’industrie de la chaussure (CEC), established in Brussels (Belgium), represented initially by P. Vlaemminck, G. Zonnekeyn and S. Verhulst, and subsequently by P. Vlaemminck and A. Hubert, lawyers,

and by

BA.LA. di Lanciotti Vittorio & C. Sas, established in Monte Urano (Italy), and the 16 other interveners listed in the Annex, represented by G. Celona, P. Tabellini and C. Cavaliere, lawyers,

interveners,

APPLICATIONS for partial annulment of Council Regulation (EC) No 1472/2006 of 5 October 2006 imposing a definitive anti-dumping duty and collecting definitely the provisional duty imposed on imports of certain footwear with uppers of leather originating in the People’s Republic of China and Vietnam (OJ 2006 L 275, p. 1), in so far as it concerns the applicants,

THE GENERAL COURT (Eighth Chamber),

composed of M.E. Martins Ribeiro, President, S. Papasavvas (Rapporteur) and A. Dittrich, Judges,

Registrar: C. Kantza, Administrator,

having regard to the written procedure and further to the hearing on 11 February 2009,

gives the following

Judgment

Legal context

1 Article 1(1) and (2) of Council Regulation (EC) No 384/96 of 22 December 1995 on protection against dumped imports from countries not members of the European Community (OJ 1996 L 56, p. 1), as amended (‘the basic regulation’), provides:

‘1. An anti-dumping duty may be applied to any dumped product whose release for free circulation in the Community causes injury.

2. A product is to be considered as being dumped if its export price to the Community is less than a comparable price for the like product, in the ordinary course of trade, as established for the exporting country.’

2 The first subparagraph of Article 2(1) of the basic regulation provides that ‘[t]he 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.’

3 As regards the conditions for the grant of market economy treatment, Article 2(7)(b) of the basic regulation provides:

‘In anti-dumping investigations concerning imports from … the People’s Republic of China …, normal value will be determined in accordance with paragraphs 1 to 6, if it is shown, on the basis of properly substantiated claims by one or more producers subject to the investigation …, that market economy conditions prevail for this producer or producers in respect of the manufacture and sale of the like product concerned. When this is not the case, the rules set out under subparagraph (a) shall apply.’

4 According to Article 9(6) of the basic regulation:

‘When the Commission has limited its examination in accordance with Article 17, any anti-dumping duty applied to imports from exporters or producers which have made themselves known in accordance with Article 17 but were not included in the examination shall not exceed the weighted average margin of dumping established for the parties in the sample. … Individual duties shall be applied to imports from any exporter or producer which is granted individual treatment, as provided for in Article 17.’

5 As regards sampling, Article 17(1) and (3) of the basic regulation provides:

‘1. In cases where the number of complainants, exporters or importers, types of product or transactions is large, the investigation may be limited to a reasonable number of parties, products or transactions by using samples which are statistically valid on the basis of information available at the time of the selection, or to the largest representative volume of production, sales or exports which can reasonably be investigated within the time available.

…

3. In cases where the examination has been limited in accordance with this Article, an individual margin of dumping shall, nevertheless, be calculated for any exporter or producer not initially selected who submits the necessary information within the time limits provided for in this Regulation, except where the number of exporters or producers is so large that individual examinations would be unduly burdensome and would prevent completion of the investigation in good time.’

6 As regards the determination of injury, Article 3(1), (2) and (6) of the basic regulation provides:

‘1. Pursuant to this Regulation, the term “injury” shall, unless otherwise specified, be taken to mean material injury to the Community industry, threat of material injury to the Community industry or material retardation of the establishment of such an industry and shall be interpreted in accordance with the provisions of this Article.

2. A determination of injury shall be based on positive evidence and shall involve an objective examination of both (a) the volume of the dumped imports and the effect of the dumped imports on prices in the Community market for like products; and (b) the consequent impact of those imports on the Community industry.

…

6. It must be demonstrated, from all the relevant evidence presented in relation to paragraph 2, that the dumped imports are causing injury within the meaning of this Regulation. Specifically, this shall entail a demonstration that the volume and/or price levels identified pursuant to paragraph 3 are responsible for an impact on the Community industry as provided for in paragraph 5, and that this impact exists to a degree which enables it to be classified as material.’

7 According to the final sentence of Article 9(4) of the basic regulation, ‘[t]he amount of the anti-dumping duty shall not exceed the margin of dumping established but it should be less than the margin if such lesser duty would be adequate to remove the injury to the Community industry’.

8 Under Article 18(3) and (4) of the basic regulation:

‘3. Where the information submitted by an interested party is not ideal in all respects it should nevertheless not be disregarded, provided that any deficiencies are not such as to cause undue difficulty in arriving at a reasonably accurate finding and that the information is appropriately submitted in good time and is verifiable, and that the party has acted to the best of its ability.

4. If evidence or information is not accepted, the supplying party shall be informed forthwith of the reasons therefor and shall be granted an opportunity to provide further explanations within the time limit specified. If the explanations are considered unsatisfactory, the reasons for [the] reject[ion] of such evidence or information shall be disclosed and given in published findings.’

9 Article 20(1), (2), (4) and (5) of the basic regulation provides:

‘1. The complainants, importers and exporters and their representative associations, and representatives of the exporting country, may request disclosure of the details underlying the essential facts and considerations on the basis of which provisional measures have been imposed. Requests for such disclosure shall be made in writing immediately following the imposition of provisional measures, and the disclosure shall be made in writing as soon as possible thereafter.

2. The parties mentioned in paragraph 1 may request final disclosure of the essential facts and considerations on the basis of which it is intended to recommend the imposition of definitive measures, or the termination of an investigation or proceedings without the imposition of measures, particular attention being paid to the disclosure of any facts or considerations which are different from those used for any provisional measures.

…

4. Final disclosure shall be given in writing. It shall be made, due regard being had to the protection of confidential information, as soon as possible and, normally, not later than one month prior to a definitive decision or the submission by the Commission of any proposal for final action pursuant to Article 9. Where the Commission is not in a position to disclose certain facts or considerations at that time, these shall be disclosed as soon as possible thereafter. Disclosure shall not prejudice any subsequent decision which may be taken by the Commission or the Council but where such decision is based on any different facts and considerations, these shall be disclosed as soon as possible.

5. Representations made after final disclosure is given shall be taken into consideration only if received within a period to be set by the Commission in each case, which shall be at least 10 days, due consideration being given to the urgency of the matter.’

10 According to Article 6.9 of the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 (GATT) (OJ 1994 L 336, p. 103) (‘the 1994 Anti-dumping Code’) in Annex 1A to the Agreement establishing the World Trade Organisation (‘the WTO’) (OJ 1994 L 336, p. 3):

‘The authorities shall, before a final determination is made, inform all interested parties of the essential facts under consideration which form the basis for the decision whether to apply definitive measures. Such disclosure should take place in sufficient time for the parties to defend their interests.’

Background to the dispute and the contested regulation

11 The applicants, Zhejiang Aokang Shoes Co., Ltd and Wenzhou Taima Shoes Co., Ltd, are footwear-producing and exporting companies established in China.

12 Imports of footwear from China falling within certain categories of the combined nomenclature were subject to a quantitative quota regime which lapsed on 1 January 2005.

13 Following a complaint lodged on 30 May 2005 by the Confédération européenne de l’industrie de la chaussure (‘CEC’), the Commission of the European Communities initiated an anti-dumping proceeding concerning imports of certain footwear with uppers of leather originating in China and Vietnam. The notice of initiation of that proceeding was published in the Official Journal of the European Union of 7 July 2005 (OJ 2005 C 166, p. 14) (‘the notice of initiation’).

14 In view of the large number of parties involved, it was envisaged, at point 5.1(a) of the notice of initiation, to apply sampling, in accordance with Article 17 of the basic regulation.

15 The applicants contacted the Commission and on 25 July 2005 provided it with the information required by point 5.1(e) of the notice of initiation in order to be granted market economy treatment (‘MET’) or, failing that, to be given individual treatment (‘IT’). By email of 13 January 2006, counsel for the applicants requested the Commission to state its intentions concerning the procedure to be followed in response to the MET/IT claims submitted by exporters not forming part of the sample and whose claims had not been individually examined. By email of 17 January 2006, the Commission stated that as the investigation was in progress it was unable to comment.

16 On 23 March 2006, the Commission adopted Regulation (EC) No 553/2006 imposing a provisional anti-dumping duty on imports of certain footwear with uppers of leather originating in the People’s Republic of China and Vietnam (OJ 2006 L 98, p. 3) (‘the provisional regulation’).

17 According to recital 9 to the provisional regulation, the investigation of dumping and injury covered the period from 1 April 2004 to 31 March 2005 (‘the investigation period’). The examination of factors relevant for the assessment of injury covered the period from 1 January 2001 to 31 March 2005 (‘the period considered’).

18 In light of the need to establish a normal value for the products of the Chinese and Vietnamese exporting producers which could not be granted MET, a verification to establish normal value on the basis of data from an analogue country, in this case the Federative Republic of Brazil, took place at the premises of three Brazilian companies (recital 8 to the provisional regulation).

19 As regards the product concerned, it follows from recitals 10, 11, 40 and 41 to the provisional regulation that that regulation covered essentially sandals, boots, urban footwear and city shoes, all manufactured with uppers of leather or composition leather. It follows, moreover, from recitals 12 to 31 to the provisional regulation that the Commission excluded Special Technology Athletic Footwear (‘STAF’) from the definition of the product concerned and that it included children’s footwear.

20 In ascertaining whether there had been dumping, the Commission applied sampling. Of the Chinese exporting producers which came forward in order to be included in the sample, 154 exported to the Community during the investigation period, according to recital 55 to the provisional regulation. According to the same recital, those companies were initially considered to be cooperating companies and were taken into account in the selection of the sample.

21 It follows from recital 57 to the provisional regulation that the Commission finally selected a sample consisting of 13 Chinese exporting producers representing more than 20% of the Chinese export volume to the Community. According to recital 59 to that regulation, the criteria taken into account in the selection of the sample were, first, the size of the exporting producer in terms of export sales to the Community and, second, the size of the exporting producer in terms of domestic sales. With respect to the latter criterion, the Commission stated at recital 60 to the provisional regulation that domestic sales figures would make the sample more representative by providing information on prices and costs associated with producing and selling the product concerned on the domestic markets. According to recital 61 to the provisional regulation, the Chinese companies selected for the sample represented 25% of export quantities to the Community and 42% of domestic market sales by producers which had cooperated in the investigation. According to the same recital, the exclusion of STAF did not significantly influence the representativeness of the sample.

22 According to recital 62 to the provisional regulation, exporting producers which were not finally retained in the sample were informed that any anti-dumping duty on their exports would be calculated in accordance with the provisions of Article 9(6) of the basic regulation. As regards the requests presented by those exporting producers which sought an individual dumping margin pursuant to Article 9(6) and Article 17(3) of the basic regulation, the Commission considered, at recital 64 to the basic regulation, that individual examination of those exporting producers would be unduly burdensome and prevent it from completing the investigation in good time. In those circumstances, the dumping margin of those producers was determined on the basis of the weighted average of the dumping margins of the companies in the sample (recitals 135 and 143 to the provisional regulation).

23 By letter of 7 April 2006, the Commission sent the applicants, pursuant to Article 14(2) and Article 20(1) of the basic regulation, respectively, a copy of the provisional regulation and a document containing information on the details underlying the essential facts and considerations on the basis of which the anti‑dumping duties were imposed (‘the general disclosure document’). The Commission invited the applicants to submit any comments which they might have on those documents by 8 May 2006.

24 By fax of 7 July 2006, the Commission sent the applicants, pursuant to Article 20(2) to (4) of the basic regulation, a final disclosure document setting out the essential facts and considerations on which the proposal to impose definitive anti-dumping duties was based.

25 In section H of that document, the Commission set out its considerations concerning the definitive anti-dumping measures which were proposed to the Council of the European Union. As regards the type of measures, the Commission explained, first, that undertakings given by producers not to sell at below the price level which would have eliminated the significant injury sustained by the Community industry did not constitute appropriate measures and, second, that it was appropriate to apply a delayed duty system (paragraphs 278 to 291 of the final disclosure document).

26 As regards the delayed duty system, the Commission observed that the volume of imports had had a significant injurious effect on the Community industry as from 1 January 2005, the date on which the quota regime lapsed (see paragraph 12 above). During the first quarter of 2005, which was included in the investigation period (see paragraph 17 above), the Community industry underwent, proportionally, the most significant decline during the period considered with respect to a number of economic indicators such as profitability, sales prices, market share, sales, employment and production. In those circumstances, the Commission paid special attention to the quantitative element of dumping practices in determining whether there was injury. It thus considered that only imports above a certain volume threshold were injurious and that, therefore, intervention in the form of ad valorem duties was not necessary to ensure fair competition. Therefore, anti-dumping duties should be applied only to quantities of imported products above certain annual volume thresholds. In the present case, such a delayed duty system would be adequate to remove the injury in so far as it would take the effect of the quota regime into consideration and would balance the concerns of the interested parties. The proposed anti-dumping duties should therefore apply to imports from China in excess of a threshold of 140 million pairs of shoes per annum. That volume reflected the Commission’s assessment on imports from China in 2005 and took account of the quantities imported in 2004 (paragraphs 285 to 287 and 291 of the final disclosure document).

27 Therefore, the Commission proposed the imposition of a definitive anti-dumping duty, equal to the injury elimination level, on imports above the threshold of 140 million pairs of shoes per annum originating in China. That margin was fixed at the level of the underselling margin, namely 23% (paragraph 293 of the final disclosure document).

28 The Commission invited the applicant to submit its comments on the final disclosure document by 17 July 2006.

29 By letter of 28 July 2006, the Commission sent the applicants an additional final disclosure document. According to its first two paragraphs, the purpose of that document was to provide interested parties with information about a change with regard to the envisaged form of the definitive anti-dumping duties. The Commission’s Directorate General (DG) ‘Trade’ had considered the comments submitted by certain interested parties with regard to the originally envisaged delayed duty system (see paragraphs 25 to 27 above). By that document, the Commission gave up the idea of such a system. In its new approach, the Commission stated that the real materially injurious increase in imports took place in 2004 and until the end of the investigation period, and that 2005 had been the first year in which imports of footwear from China were no longer subject to a quota regime. Furthermore, the Commission established a volume of non‑materially injurious imports on the basis of imports originating in China and Vietnam in 2003, namely 109 million pairs of shoes. Under that new approach, the economic impact of that volume needed to be taken into consideration in establishing the injury elimination level. Consequently, first, the injury elimination level was lowered to take account of the volume of non-materially injurious imports and, secondly, definitive duties were applied as from the first pair of shoes imported. According to that methodology, which provides for four stages set out in that document, the Commission concluded, for imports from China, on the basis of the ‘lesser duty rule’, that a definitive anti-dumping duty equal to the level required to eliminate injury should be imposed, in this case 16.5%.

30 In order to formalise that new proposal, the Commission annexed to its letter of 28 July 2006 the paragraphs which were to be included in the new section H of the final disclosure document and replace those in the corresponding section of the original final disclosure document (see paragraph 25 above). The Commission stated, in the paragraphs 278 and 279 which were to be included in the new section H of the final disclosure document, that only imports above a certain volume threshold prior to the lapsing of the quota regime could cause material injury so that the injury threshold determined on the basis of the results of the investigation period had to reflect the fact that certain import quantities had not caused such material injury. Consequently, the non-materially injurious import quantities had to be reflected in the injury elimination levels. In paragraph 280 of that document, the Commission set out the methodology which had been used.

31 The Commission invited the applicants to submit their comments on the final disclosure document by 2 August 2006. The applicants submitted their comments on that date.

32 On 5 October 2006, the Council adopted Regulation (EC) No 1472/2006 imposing a definitive anti-dumping duty and collecting definitely the provisional duty imposed on imports of certain footwear with uppers of leather originating in the People’s Republic of China and Vietnam (OJ 2006 L 275, p. 1) (‘the contested regulation’). By the contested regulation, the Council imposed a definitive anti-dumping duty on imports of footwear with uppers of leather or composition leather, excluding sports footwear, STAF, slippers and other indoor footwear and footwear with a protective toecap, originating in China and falling within a number of combined nomenclature codes (Article 1 of the contested regulation). The rate of the definitive anti-dumping duty applicable, before duty, to the net free-at-Community-frontier price was established, for footwear produced by the applicants, at 16.5%. Pursuant to Article 3 of the contested regulation, the contested regulation was to remain in force for a period of two years.

33 The Council dealt with the questions connected with the claims of a number of companies to be granted MET, on which the Commission had not ruled, at recitals 60 to 65 to the contested regulation.

34 According to those recitals, the fact that the Commission did not respond individually to each MET claim submitted to it does not constitute a breach of the basic regulation. It is, on the contrary, consistent with Article 17 of that regulation. The sampling methodology provided for in that article also applies where a high number of companies concerned request MET or IT. In the present case, the exceptionally high number of claims by the companies concerned left the administration with no alternative other than to examine only those from the companies which were part of the sample in order to balance necessities resulting from an as individualised as possible case assessment within the margin of mandatory deadlines. That entailed the application to all non-sampled companies of the weighted average margin resulting from the undertakings in the sample. It follows that the complaints formulated during the administrative procedure, according to which the dumping calculation is not representative, must also be rejected.

35 Those considerations also applied to claims for IT.

36 As regards the level of duties necessary to eliminate the injury caused by imports from China, the Council stated at recitals 296 to 301 to the contested regulation, reiterating paragraphs 275 to 280 of the new section H of the final disclosure document attached as an annex to the additional final disclosure document (see paragraph 30 above), that it was appropriate to take account of the particularities of the present proceeding and in particular of the fact that a quota regime had been in force until 1 January 2005. As that quota regime had prevented any material injury being caused to the Community industry, whereas the increase in imports after the lapse of that regime had had a particularly decisive injurious effect on the Community industry, the Council considered that only imports above a certain volume before the lapsing of the quota regime could cause injury. Consequently, the injury threshold determined on the basis of the results of the investigation period had to take into account the fact that certain import quantities had not caused such material injury. That operation, which was based on the value of import volumes in 2003, led, for imports from China, to an injury threshold of 16.5%, whereas a threshold of 23% would have been applied, according to recital 295 to the contested regulation, if the Council had not taken account of the particularities of the present case.

Procedure and forms of order sought

37 By applications lodged at the Registry of the Court on 21 December 2006, the applicants brought the present actions.

38 By documents lodged at the Court Registry on 2 April 2007, the Commission sought leave to intervene in the present cases in support of the form of order sought by the Council. By letters of 4 October 2007, the Commission informed the Court that it waived the right to lodge a statement in intervention, but that it would take part in the hearings.

39 By documents lodged at the Court Registry on 5 April 2007, CEC sought leave to intervene in the present cases in support of the form of order sought by the Council.

40 By documents lodged at the Court Registry on 13 April 2007, the Provincia di Ascoli Piceno (Italy), the Comune di Monte Urano (Italy), BA.LA. di Lanciotti Vittorio & C. Sas and 16 other Italian footwear-producing companies listed in the Annex sought leave to intervene in the present cases in support of the form of order sought by the Council.

41 By order of 4 September 2007, the President of the Second Chamber of the Court granted the applications for leave to intervene lodged by the Commission and CEC and also by BA.LA. di Lanciotti Vittorio & C. and the other 16 Italian footwear-producing companies (‘the Italian producers’). However, the applications of the Provincia di Ascoli Piceno and the Comune di Monte Urano were dismissed.

42 As the composition of the Chambers of the Court had been altered, the Judge-Rapporteur was assigned to the Eighth Chamber, to which the present cases were therefore assigned.

43 By applications lodged at the Registry of the Court of Justice on 4 October 2007, the Provincia di Ascoli Piceno and the Comune di Monte Urano lodged an appeal under the first paragraph of Article 57 of the Statute of the Court of Justice, seeking to have the order of 4 September 2007 set aside in so far as it dismissed their applications to intervene. By two orders of 25 January 2008 in Case C‑463/07 P(I) and Case C-462/07 P(I) Provincia di Ascoli Piceno and Comune di Monte Urano v Council, not published in the ECR, the President of the Court of Justice dismissed those appeals.

44 CEC and the Italian producers lodged their statements in intervention on 15 and 18 October 2007 respectively.

45 By order of 8 January 2009, the President of the Eighth Chamber of the Court decided, after hearing the parties, to join Cases T‑407/06 and T‑408/06 for the purposes of the oral procedure and the judgment, in accordance with Article 50 of the Court’s Rules of Procedure.

46 Upon hearing the report of the Judge-Rapporteur, the Court decided to open the oral procedure.

47 The parties presented oral argument and replied to the questions put by the Court at the hearing on 11 February 2009.

48 The applicants claim that the Court should:

– annul the contested regulation in so far as it concerns the applicants;

– order the Council to pay the costs;

– order the interveners to bear their own costs.

49 The Council contends that the Court should:

– dismiss the actions as inadmissible or unfounded;

– order the applicants to pay the costs.

50 The Commission claims that the Court should dismiss the actions.

51 CEC and the Italian producers claim that the Court should:

– dismiss the actions;

– order the applicants to pay the costs.

Law

52 In support of their actions, the applicants raise seven pleas in law, alleging:

– breach of Article 2(7)(b) and (c) of the basic regulation and of the principle of equal treatment;

– breach of Article 9(5) of the basic regulation;

– breach of the principle of protection of legitimate expectations;

– breach of the rights of the defence, breach of the obligation to state reasons and of the right to proper judicial protection;

– incorrect calculation of their dumping margin;

– breach of Article 20 of the basic regulation, breach of the rights of the defence and failure to state reasons concerning the injury sustained by the Community industry;

– error of law and manifest error of assessment concerning the injury caused to the Community industry.

53 By their first three pleas and by the fifth plea the applicants maintain that the Commission made various errors of law in so far as it refused to grant them MET or IT, without examining their MET/IT claims.

54 All those pleas will be examined together below.

The first three pleas and the fifth plea, alleging breach of Articles 2(7)(b) and (c) and 9(5) of the basic regulation, breach of the principle of equal treatment and of the principle of protection of legitimate expectations and incorrect calculation of the applicants’ dumping margin

Arguments of the parties

55 The applicants claim that the provisions of Article 2(7)(b) and (c) of the basic regulation do not permit Article 17 of that regulation to be used to deny an exporter the right to lodge a MET claim and to have it examined by the Commission.

56 That follows, first of all, from a literal interpretation of Article 2(7) of the basic regulation. According to the wording of that provision, a MET claim must be submitted by and examined with respect to each individual producer and the Community institutions are required to respond, on the basis of the evidence submitted by the applicant, to the question whether the applicant satisfies the relevant criteria. Article 17 of the basic regulation makes no exception in that regard. Thus, the Council has no power to determine the dumping margin or deal with questions relating to injury without having first decided on the MET claims.

57 That approach is confirmed by considerations linked with the legislative history of Article 2(7)(b) and (c) of the basic regulation, and also with the objective of that provision, which is the individual examination of the conduct and operating conditions of the various undertakings in light of the economic reforms achieved in China. The ‘MET/IT claim form’ confirms that the Commission is required to examine that claim and makes no provision for any exception in that regard.

58 The Council’s position is also contrary to the case-law, which has already confirmed, first, that MET can be granted only to exporters who have made a claim and meet the relevant conditions and, second, that the result of the analysis of that claim cannot be applied more generally. The case-law has also confirmed that the procedure for the grant of MET is separate from the procedure concerning the adoption of definitive anti-dumping duties and that the institutions are required to carry out an individual examination of each application for MET. In the present case, however, the applicants do not even have the opportunity to challenge the findings of the institutions on the question whether they satisfy the conditions for the grant of MET.

59 The applicants’ analysis is also supported by the administrative practice of the institutions, since they have never refused to examine an MET claim, even where there was a large number of claimants and in spite of the use of sampling.

60 Likewise, the principle of equal treatment requires that the institutions examine all MET claims and not only those submitted by the sampled companies. There can be no objective justification for that ‘discrimination’ and Article 17 of the basic regulation cannot be used to permit such unequal treatment of the operators concerned. On the contrary, the case-law has precluded the possibility of using sampling for the purpose of deciding on MET/IT applications. Furthermore, contrary to the Council’s contentions, the representativeness of the sample is compromised where it is constituted in a manner that disregards the percentage of Chinese operators eligible for MET.

61 Thus, where sampling is used, the institutions must apply to non-sampled companies which have been granted MET/IT the weighted average dumping margin established for the sampled companies which have been granted MET or IT, as appropriate. That operation, which would not entail the calculation of an individual dumping margin for each non-sampled exporter which has been granted MET, would not give rise to any administrative burden that the Council would be unable to bear.

62 By contrast, the effect of the methodology applied by the institutions was to treat all non-sampled operators in the same way without distinguishing between those which merited MET and those which did not.

63 Those arguments and points also apply to IT claims under Article 9(5) of the basic regulation. The applicants submitted a claim for IT in case their MET claim was rejected. Article 9(5) of the basic regulation sets out specific criteria against which claims must be assessed by the Commission. However, the Commission examined only the IT claims submitted by the sampled exporters, without informing the applicants in advance that it proposed to do so.

64 The applicants contend that a literal and teleological analysis of Article 9(5) of the basic regulation, the principle of equal treatment and past administrative practice argue in favour of their submission.

65 In case the Court should reject the first two pleas, the applicants claim that, by not examining their MET/IT claims, the institutions breached the principle of legitimate expectations. The notice of initiation invited the applicants, and all the exporters concerned, to submit MET/IT claims within a specified time-limit and stated that, for producers whose applications were accepted, the determination of normal value would be made in accordance with Article 2(7)(b) of the basic regulation. According to the applicants, the Commission could not therefore amend its position retroactively and refuse to examine properly-submitted claims. Furthermore, in the notice of initiation the Commission envisaged implementing separate provisions and procedures for sampling and examining the MET/IT claims. The ‘MET/IT claim form’ states unambiguously that every claim will be examined.

66 According to the applicants, it was therefore incumbent on the institutions to notify the exporters concerned that they proposed to alter the procedures which had long been followed. In the absence of such notification, the applicants had a legitimate expectation that the Commission would examine their MET/IT claims and that the Council would proceed as described at paragraph 61 above. In those circumstances, the applicants were also deprived of the opportunity to argue their case on the merits of their claim during the administrative procedure and also of the opportunity to challenge the assessment of the institutions before the Community judicature. Considerations of administrative convenience cannot override the applicants’ assessment.

67 Lastly, the applicants contend that, by applying Article 17 of the basic regulation instead of Article 2(7) and Article 9(5) of that regulation, the Council departed from its previous practice and made an incorrect calculation of the dumping margin. According to that practice, the weighted average margin of operators in the sample which had been granted MET or IT was applied to operators not included in the sample which had been granted MET or IT. On the basis of that methodology, the applicants ought to have received the dumping margin of Foshan City Nanhai Golden Step Industrial Co., Ltd (‘Golden Step’), a sampled company which was granted MET. In the present case, a dumping margin of 28.9% was applied to the applicants, corresponding to the weighted average margin of sampled companies whose MET/IT applications were rejected, that is to say, without taking account of the 9.7% margin calculated for Golden Step. Even on the assumption that the Council was correct to intend to apply to all companies not included in the sample the weighted average margin of sampled companies, it did not do so in this case.

68 The Council points out, first of all, that the review by the Community judicature of the assessments made by the Community institutions in relation to trade defence measures against dumped imports must be limited to verifying whether the relevant procedural rules have been complied with, whether the facts on which the contested choice is based have been accurately stated and whether there has been a manifest error of assessment of those facts or a misuse of powers.

69 Next, the Council observes that the grant of MET or IT is not an end in itself but a step in the calculation of the dumping margin. The institutions therefore used sampling not in order to decide on the MET/IT claims but in order to determine the exporters’ dumping margins, an approach permitted by Article 17 of the basic regulation. Accordingly, the allegation that the basic regulation contains no provision that allows sampled exporters to be treated differently from non‑sampled exporters must be rejected.

70 As regards the procedure followed, the Council explains that when the institutions use sampling of exporters from non-market economy countries, they investigate the individual situation of each sampled exporter and, where appropriate, examine that exporter’s MET/IT claim. As concerns non-sampled exporters, the institutions apply to them the weighted average dumping margin determined for the sampled parties (in the present case 28.9%). However, the non-sampled exporters can submit the information necessary for the calculation of an individual dumping margin, as provided for in Article 17(3) of the basic regulation. That provision leaves a broad discretion to the institutions in that regard, since they are not required to examine those requests where the number of exporters or producers is so large that individual examinations would be unduly burdensome and would prevent completion of the investigation in good time. It follows that the grant of MET to a non-sampled exporter has no impact on that exporter’s situation where the Commission decides not to calculate an individual dumping margin for it pursuant to Article 17(3) of the basic regulation.

71 In the present case, 141 Chinese exporters and 73 Vietnamese exporters not selected for the sample submitted MET/IT claims. The institutions were therefore correct when, in application of Article 17(3) of the basic regulation, they did not examine those claims, since such an examination, even in the form of a desk analysis, would have made it impossible to complete the investigation in good time. In those circumstances, the Council applied to the exporters not selected for the sample the weighted average dumping margin of all the sampled exporters.

72 In the Council’s submission, the case-law on which the applicants rely does not concern the way in which the institutions must employ sampling for the purposes of calculating dumping margins in the case of exports from non-market economy countries, nor does it say anything about the assessment of MET claims from non-sampled companies. It is therefore of no avail to the applicants.

73 Furthermore, it is irrelevant that in previous investigations involving a much lower number of companies the institutions examined MET/IT claims submitted by non-sampled operators, since, first, the procedure followed in the present case is consistent with Article 17(3) of the basic regulation and, second, the purpose of the margin of discretion left to the institutions is to allow them to adapt their practice according to the specific features of each particular case. It follows that the institutions did not breach the ‘principle of non-discrimination’. Furthermore, the difference in treatment between sampled companies, on the one hand, and non-sampled companies, on the other, is objectively justified by the exceptionally high number of claims, individual examination of which would have had the effect that the investigation would not have been completed within the time-limit.

74 Furthermore, the application, to non-sampled companies whose MET/IT claim was granted, of the weighted average dumping margin determined for sampled companies granted MET or IT, as the case may be, is only one possibility for the institutions. The basic regulation does not require them to adopt that approach. Nor have the applicants shown that the application of Article 17 of the basic regulation gave rise, in the present case, to a manifestly inappropriate result.

75 The Council maintains that, for the same reasons, the second plea must be rejected given that the procedural framework governing the examination of the MET is the same as that governing the examination of IT claims.

76 As regards the third plea, the Council observes that successful reliance on the principle of the protection of legitimate expectations presupposes, first, that the administration has given the person concerned precise and unconditional assurances and, second, that those assurances must have caused that person to entertain justified expectations. Neither of those conditions is satisfied in the present case.

77 The Commission did not at any time give a precise and unconditional assurance that it would assess the applicants’ MET/IT claims even if the applicants were not selected for the sample. The notice of initiation stated in that regard, at point 5.1(b), that if the Commission constituted a sample for exporting producers, it might none the less decide not to calculate an individual dumping margin for those not forming part of the sample if the number was so large that individual examination would be unduly burdensome and would prevent the timely completion of the investigation.

78 Any diligent operator must understand that, unless it forms part of the sample, or unless the number of exporting producers was lower than expected, the Commission would not determine an individual dumping margin, would not calculate the normal value on the basis of data taken from the operator’s accounts and, therefore, would not decide on its MET/IT claim. The same applies to the ‘MET/IT claim form’, since, at the time that form was sent to the producers, the Commission did not know how many claims it would receive or the number or identities of the companies that would form part of the sample. That form cannot therefore be interpreted as giving a precise assurance that all MET/IT claims would be examined.

79 Furthermore, the applicants have not shown that they suffered prejudice because their legitimate expectations were allegedly dashed. Lastly, in acting as they did, the institutions did not depart from a previous practice or exceed the bounds of their discretion.

80 As regards the fifth plea, the Council contends that the arguments put forward in the context of that plea are based on the incorrect premiss that the institutions used sampling in order to determine the MET/IT claims. Furthermore, the Council applied to the applicants the average weighted dumping margin of all the sampled companies (including Golden Step).

81 CEC endorses the Council’s arguments and emphasises that the Commission used sampling in order to calculate the dumping margins and not in order to decide on the MET/IT claims. In light of the number of exporters that had applied for MET or IT, the conditions for the application of sampling were clearly satisfied. The institutions were therefore not required, pursuant to Article 17(3) of the basic regulation, to decide on the MET/IT claims submitted by non-sampled exporters, since such an examination would have prevented completion of the investigation in good time. Furthermore, such an obligation would be contrary to the objective of Article 17(3) of the basic regulation.

82 As regards the alleged breach of the principle of protection of legitimate expectations, CEC adds that economic operators are not justified in having a legitimate expectation that an existing situation which is capable of being altered by the Community institutions in the exercise of their discretionary power will be maintained.

Findings of the Court

83 First, it must be pointed out that, according to the wording of Article 17(1) and (3) of the basic regulation, the use of sampling as a technique in order to deal with a large number of complainants, exporters, importers, types of product or transactions constitutes a limitation of the investigation. That assessment is borne out by Article 9(6) of the basic regulation under which producers who are not part of the sample are not included in the investigation.

84 However, the basic regulation provides that where there is such a limitation the institutions must comply with two obligations. First, the sample must be representative within the meaning of Article 17(1) and (2) of the basic regulation. Secondly, Article 9(6) of the basic regulation provides that the dumping margin established for producers who are not included in the sample is not to exceed the weighted average margin of dumping established for the parties in the sample.

85 Secondly, Article 9(6), read in conjunction with Article 17(3) of the basic regulation, to which it refers, gives each producer who is not included in the sample the possibility of requesting the calculation of an individual dumping margin, provided that he submits all the necessary information within the time limits provided for and that that process is not unduly burdensome to the Commission or prevents the investigation from being completed in good time.

86 Thirdly, Article 2(7)(b) of the basic regulation provides that normal value is to be determined in accordance with paragraphs 1 to 6 of that provision, if it is shown, on the basis of claims by one or more producers subject to the investigation, that the conditions set out in Article 2(7)(c) are fulfilled.

87 Therefore, as the Council submits, producers who are not included in the sample may request that an individual dumping margin be calculated – which presupposes the acceptance of an MET/IT claim where countries concerned by Article 2(7)(b) of the basic regulation are involved – only on the basis of Article 17(3) of that regulation. However, Article 17(3) gives the Commission the power to assess whether, having regard to the number of MET/IT claims, examining them would be unduly burdensome and would prevent completion of the investigation in good time.

88 It follows from the above considerations, first, that, where sampling is used, the basic regulation does not give traders who are not included in the sample an unconditional right to the calculation of an individual dumping margin. The acceptance of such a claim depends on the Commission’s decision as to the application of Article 17(3) of the basic regulation.

89 Secondly, as the grant of MET or IT serves, pursuant to Article 2(7)(b) of the basic regulation, only to establish the method for calculating normal value with a view to the calculation of individual dumping margins, the Commission is not required to examine MET/IT claims from traders who are not included in the sample, where it has concluded, in applying Article 17(3) of the basic regulation, that the calculation of such margins would be unduly burdensome and would prevent it from completing the investigation in good time.

90 Lastly, in the present case, it is not disputed that the calculation of individual dumping margins in respect of all non-sampled traders who made claims to that effect would be unduly burdensome to the institutions and would prevent completion of the investigation in good time.

91 Consequently, the applicants’ argument that Article 2(7)(b) and (c) of the basic regulation obliged the Commission to examine MET/IT claims from non-sampled traders, including those to whom an individual dumping margin is not applied, must be rejected. In that regard, it must be added that the case-law relied on by the applicants, according to which the Commission decides whether to grant MET or IT on the basis of an examination of each claim submitted to it, does not imply that that institution has to examine each claim even where it does not intend to calculate individual dumping margins pursuant to Article 17(3) of the basic regulation.

92 The same is true of the applicants’ argument alleging a breach of the principle of equal treatment in respect of the companies included in the sample and those who are not (see paragraph 60 above). Those two groups of companies are in different situations since the Commission must necessarily calculate an individual margin of dumping for the former, and that presupposes the examination and acceptance of an MET/IT claim, whereas it is not obliged to establish an individual margin for the latter. Consequently, observance of the principle of equal treatment, which prohibits treating similar situations differently and treating different situations in the same way unless there are objective reasons for such treatment, does not require that those two groups of companies be treated identically.

93 As regards the argument alleging a breach of the principle of equal treatment in respect of the companies which were not included in the sample, it cannot, contrary to what the applicants maintain, in the present case be held that that principle required the Commission to decide on all the MET/IT claims which were submitted to it, with the result that the producers or exporters not included in the sample, but to whom MET or IT is granted, may have applied to them the average dumping margin of the sampled companies to which MET or IT has been granted.

94 As has been pointed out in paragraphs 87 to 91 above, if the number of MET/IT claims is so large that examining them would prevent the institutions from completing the investigation in good time, the institutions are not required, under Article 17(3) of the basic regulation, to decide on all of those claims, even for the sole purpose of distinguishing, among the non-sampled companies, between those which may or may not be entitled to MET or IT, with a view to applying to them the average dumping margin of the sampled companies to which MET or IT has been granted, but without calculating an individual dumping margin.

95 In the present case, 141 MET/IT claims from Chinese exporting producers were submitted to the Commission, and thus, even if it had been possible to examine them solely on a documentary basis without the necessity of verifying that data by on-site verification visits at the producers or exporters concerned, the Commission was right to find that the number of claims was manifestly too high to enable them to be examined without compromising the completion of the investigation in good time.

96 Consequently, the Court finds that the difference in treatment pleaded by the applicants, which is inherent in the sampling provided for in Article 17 of the basic regulation, is, in the present case, objectively justified by the particularly high number of MET/IT claims which were submitted to the Commission.

97 Therefore, although the Commission was entitled to act in the way described by the applicants in paragraph 61 above, neither the basic regulation nor the principle of equal treatment obliged it to do so.

98 The second plea must be rejected on the same grounds since the same considerations are valid as regards the examination of IT claims from companies which were not included in the sample.

99 As regards the alleged breach of the principle of protection of legitimate expectations, it is settled case-law that that principle extends to any person in a situation where a Community authority has caused him to entertain expectations which are justified. Moreover, a person may not plead infringement of the principle unless he has been given precise assurances by the administration (Joined Cases C-182/03 and C‑217/03 Belgium and Forum 187 v Commission [2006] ECR I-5479, paragraph 147).

100 It is apparent from the fourth indent of point 5.1(a)(i) of the notice of initiation, and in particular from footnote No 1 to that point, that the Commission informed the traders concerned that it might apply sampling in accordance with Article 17 of the basic regulation and that, in such a case, individual margins could be claimed pursuant to Article 17(3) of the basic regulation for companies not included in the sample. That information was repeated in point 5.1(b) of the notice of initiation. Therefore, the fact that the operators concerned were invited to submit an MET/IT claim is not tantamount to a precise, unconditional and consistent assurance that it would be examined.

101 In that connection, it must also be accepted that the absence of a reaction from the Commission for a significant length of time cannot constitute an assurance which causes the applicants to entertain legitimate expectations. That absence of reaction does not affect the meaning of the clear terms used in the notice of initiation.

102 As regards the head of claim alleging a departure from a practice which the institutions followed in earlier investigations, it must be pointed out that the Commission did not exceed the discretion granted to it by Article 17(3) of the basic regulation in taking the view that examining all the MET/IT claims from the non-sampled Chinese exporting producers would have prevented it from completing the investigation within the time-limits provided for by the basic regulation. It is settled case-law that where the Community institutions enjoy a margin of discretion in the choice of the means needed to achieve their policies, traders are unable to claim that they have a legitimate expectation that the means initially chosen will continue to be employed, since those means may be altered by the institutions in the exercise of their powers (Case 258/84 Nippon Seiko v Council [1987] ECR 1923, paragraph 34, and Case C-171/87 Canon v Council [1992] ECR I‑1237, paragraph 41).

103 Lastly, as regards the fifth plea, it must be pointed out that, as the institutions did not err in law by not examining the MET/IT claims from the non-sampled traders and by applying to those traders the average dumping margin of the sampled companies, they did not, for that reason, incorrectly calculate the applicants’ dumping margin. It must be added in that regard that, as the Council states, Golden Step’s dumping margin was taken into account in calculating the weighted average margin of dumping for the sample.

104 It follows that the first three pleas and the fifth plea must be rejected.

The fourth plea, alleging breach of the rights of the defence, breach of the obligation to state reasons and of the right to proper judicial protection

Arguments of the parties

105 The applicants maintain that, by not informing them until July 2006 that they did not intend to assess their MET/IT claims, the Community institutions breached their rights of defence and also Article 19(4) of the basic regulation and failed to fulfil their obligation to state the reasons on which their decision was based. While it is true that the applicants were informed, by the final disclosure document, that their MET/IT claims would not be examined because the applicants had not been included in the sample, the fact remains that at that stage they were no longer able to challenge the decision on the constitution of the sample. The provisional regulation did not state that the MET/IT claims submitted by non-sampled producers would not be examined or that the sample had been constituted by reference to the percentage of Chinese operators eligible for MET. The applicants also invite the Council to produce the communication from the Chinese Government contesting the representativeness of the sample.

106 Since the Commission did not communicate the methodology relating to the constitution of the sample during the first 11 months of the investigation, the applicants were deprived of the opportunity to request the Commission to constitute the sample on the basis of the MET qualifications of the candidates. That circumstance also constitutes a breach of Article 6.9 of the 1994 Anti‑dumping Code (see paragraph 10 above). Nor can it be ruled out that the Chinese authorities would have challenged the composition of the sample had they been aware that the institutions did not intend to examine the MET/IT claims of companies not included in the sample. In those circumstances, the applicants’ right to proper judicial protection is also in jeopardy, since they did not have the opportunity of presenting their arguments concerning the rejection of their MET/IT claims.

107 The Council, supported by the Commission, CEC and the Italian producers, disputes the merits of the applicants’ arguments.

Findings of the Court

108 It should be noted as a preliminary point that, according to settled case-law, pursuant to the principle of respect for the rights of the defence the undertakings affected by an investigation preceding the adoption of an anti-dumping regulation must be placed in a position during the administrative procedure in which they can effectively make known their views on the correctness and relevance of the facts and circumstances alleged and on the evidence presented by the Commission in support of its assessment of the existence of dumping and the resultant injury (Case C-49/88 Al-Jubail Fertilizer v Council [1991] ECR I-3187, paragraph 17; Case C-458/98 P Industrie des poudres sphériques v Council [2000] ECR I-8147, paragraph 99; Case T-147/97 Champion Stationery and Others v Council [1998] ECR II-4137, paragraph 55; and Case T‑88/98 Kundun and Tata v Council [2002] ECR II-4897, paragraph 132).

109 In the present case, it must be pointed out that, as is apparent from recitals 62, 64, 135 and 143 of the provisional regulation, the Commission stated that any anti‑dumping duty relating to the producers which were not included in the sample would be calculated in accordance with the provisions of Article 9(6) of the basic regulation and that the dumping margin of those producers had been determined on the basis of the weighted average of the dumping margins of the companies in the sample.

110 In the provisional regulation the Commission therefore explained its position as regards the methodology for calculating the dumping margin in respect of the traders who were not included in the sample, which consisted of applying the average dumping margin of the companies constituting the sample. That methodology implied that MET/IT claims from those traders would not be examined as such an examination was of no use in the procedure in question.

111 It follows that, as from the stage of the communication of the provisional regulation and the general disclosure document (see paragraph 23 above), the applicants had the opportunity to state their views on the methodology the Commission used to calculate their dumping margin. For those reasons, the head of claim alleging a breach of Article 6.9 of the 1994 Anti-dumping Code must be rejected since that provision merely requires that the investigating authorities set out the facts and considerations on the basis of which the definitive duties are imposed.

112 As regards the head of claim alleging that the Commission should have notified the applicants of its intention not to examine their MET/IT claims at a stage which made it possible for them to contest effectively the representativeness of the sample, it must be pointed out that, as was stated in paragraph 100 above, in the notice of initiation the Commission informed the traders concerned that it might use the technique of sampling pursuant to Article 17 of the basic regulation and that, in such a case, individual margins could be claimed for companies not included in the sample pursuant to Article 17(3) of the basic regulation.

113 In the light of the fact that the non-examination of MET/IT claims from undertakings which were not included in the sample complies with Article 2(7)(b) and Article 17 of the basic regulation (see paragraphs 88 to 91 above), the applicants were, as from the initiation of the investigation, in a position to know that the Commission could refrain from an examination of such claims if the conditions of Article 17(3) of that regulation were fulfilled. Furthermore, the Commission was not required to take a definitive view in that regard as from the initiation of the investigation because at that time it was not in possession of information with which to assess whether it was able to calculate individual dumping margins for the traders not included in the sample. Therefore that head of claim must be rejected.

114 As the heads of claim set out in paragraph 106 above are based on the premiss that the institutions breached their obligations concerning the protection of the applicants’ rights of defence, they must also be rejected.

115 It follows that the fourth plea must be rejected.

The sixth plea, alleging breach of Article 20 of the basic regulation, breach of the rights of the defence and failure to state reasons

Arguments of the parties

116 The applicants claim that the institutions did not adequately inform them of the new factual analysis concerning the injury sustained by the Community industry or give them the opportunity to comment on that new assessment relating to the form of the definitive duties (see paragraphs 24 to 30 above). Furthermore, the Commission failed to provide an adequate explanation of its reasons for changing its analysis and using different data from those used in its initial proposal.

117 Whereas the Commission considered in the final disclosure document of 7 July 2006 that imports of 140 million pairs of footwear per annum had not caused injury to the Community industry, it significantly reduced that figure to 41.5 million pairs in the additional final disclosure document which it adopted on 28 July 2006 and did so without explaining its reasons for changing that figure, which had the ‘perverse effect’ of reversing, by a manipulation on the basis of the reference years, the value of the duties imposed between China and Vietnam. As regards their economic rationale, the quotas established by a delayed duty system are intended to deal with import volume pressures which are not, however, deemed to comprise unfair practices, whereas anti-dumping measures are designed to deal with unfair dumping practices. The differences between the two systems is also significant at the level of international trade since a delayed duty system implies that a volume of imports is exempted from any duty whereas the system finally adopted affects all the imports. In view of those differences, the period of five days within which the Commission allowed the applicants to submit their comments on the new proposal is inadequate, and the applicants complained of this during the administrative procedure.

118 The contested regulation, recital 301 to which followed the Commission’s final proposal, does not contain sufficient reasoning with respect to that discrepancy and does not state the reasons why the institutions followed the new methodology. By contrast, recital 301 to the contested regulation merely reproduces the wording of point 280 of the additional final disclosure document, which does not contain any additional information. Furthermore, the additional final disclosure document does not contain any figures or calculations to support the methodology described at recital 301 to the contested regulation and does not serve to explain the use of different years, values and volumes from those used in the first proposal. In addition, the institutions breached Article 20 of the basic regulation, which requires the disclosure of details underlying the essential facts and considerations on the basis of which the Commission intends to propose the adoption of the definitive measures. The factual assessment underlying the Commission’s new approach was not explained or justified.

119 In addition, the Commission breached the applicants’ rights of defence inasmuch as it did not allow them to make their views known effectively on a number of significant matters, such as the reasonableness of the new proposal, the correctness and relevance of the facts and circumstances alleged, the calculations carried out and the evidence put forward by the Commission to support its determinations on dumping and the injury suffered by the Community industry. The two systems are characterised by fundamental differences in the factual analysis on which they are based. Those differences gave rise to radically different consequences for Chinese and Vietnamese producers, without any explanation from the Commission as to how it had arrived at that outcome or any opportunity being given to the parties concerned to exercise their rights of defence.

120 The Council’s attempt to minimise the differences between the two proposals by stating that the system adopted took into account the fact that only imports above certain volume thresholds were injurious entails the imposition of anti-dumping duties on imports which cause no injury, which constitutes a breach of Article 1(1) of the basic regulation. The fact that the applicants were able to make some comments with respect to that system, within a period shorter than the minimum period of 10 days provided for by Article 20(5) of the basic regulation, cannot, moreover, be held against them nor can it compensate for the inadequacy of the information provided by the Commission. The question whether the time given by the Commission was adequate for the purposes of complying with the applicants’ rights of defence has to be assessed in the light of the extent of the change in the methodology adopted by the Commission and the lack of data or explanation of the new legal and factual assessment. In that regard, the applicants state that, where the institutions offer no adequate explanation of the methodology and the factual assessment which they are using, the fact that the applicants were able to make some comments is of limited value and does not imply that the requirements of Article 20 of the basic regulation and the general principles of Community or WTO law have been satisfied. In addition, the Commission itself adopted a very restrictive timetable, which precluded any extension to the deadline allowed for submitting comments on the additional final disclosure document. Furthermore, the discussions which took place over many months concerned the delayed duty system and not the system eventually adopted.

121 The applicants submit that as a result of the shortcomings of the additional final disclosure document and of the insufficient period given, they did not have the opportunity to explain to the Commission the reasons why the approach adopted was inappropriate and unreasonable or to put forward their views on the methodology or the figures underlying the proposal contained in that document. The institutions therefore infringed Article 20 of the basic regulation by failing to disclose to the applicants the essential facts and considerations underlying the contested regulation.

122 Lastly, the applicants add that, if they had been given an opportunity properly to submit comments on the additional final disclosure document, they would have submitted, first, that the proposed system was tantamount to an infringement of Article 1(1) of the basic regulation in so far as it resulted in the imposition of anti-dumping duties on imports which do not cause injury, secondly, that an individual injury margin should have been calculated for each of them and, thirdly, that the Commission’s final proposal was unreasonable and disproportionate inasmuch as the revised factual assessment, which was not explained or justified, had the ‘perverse effect’ of reversing the respective burden of the anti-dumping measures as between China and Vietnam.

123 The Council observes that both the delayed duty system and the method ultimately used are based on the idea that in the present case only imports above a certain volume caused significant injury and that that circumstance ought to have been taken into account in the method used to determine the rate of definitive duties. It is only the way in which that circumstance is taken into account that differs according to the method of calculating the definitive duties that is ultimately chosen.

124 The Council emphasises that, by adopting the additional final disclosure document, the Commission did not employ a ‘non-injurious value’, which the applicants claim to be unable to calculate on the basis of the information disclosed to it. On the contrary, the quantitative element of the dumping, that is to say, the volume of dumped imports, continued to be the key issue of the new methodology, while any reference to the value of imports for a particular year could be calculated on the basis of the information set out in paragraphs 157 and 159 of the final disclosure document.

125 Furthermore, the explanation of the methodology whereby the economic impact of the volume of imports which had not had an injurious effect was taken into consideration in establishing the injury elimination level (see paragraph 29 above) allowed the applicants to submit detailed comments on that point in their email of 2 August 2006. If the applicants needed further information in order to exercise their rights, they were under an obligation to submit a specific request to that effect.

126 The Council, supported by CEC, also refutes the assertion that there was a breach of the rights of the defence on account of the fact that the applicants had only five days within which to express their views on the additional final disclosure document. Since, first, the applicants submitted no comments on the additional final disclosure document and did not request further time within which to do so; second, the procedure was already at a very advanced stage; and, third, the taking into consideration of the quantitative element of the dumping had been under discussion for several months, the period in question must be deemed sufficient. In any event, the applicants have not shown that they were unable to defend their interests as a consequence of that period, since they submitted detailed comments and the application makes no mention of other evidence which they might have submitted. The Council submits that, in those circumstances, there is no need to comment on the arguments which the applicants claim they would have submitted had they had further time within which to do so.

127 As regards, lastly, the arguments relating to the lawfulness of the system ultimately adopted under Article 1(1) of the basic regulation, the Council claims that they should be ignored, as the present plea concerns only breach of the applicant’s rights of defence.

Findings of the Court

128 By their sixth plea, first, the applicants claim that the institutions breached Article 20 of the basic regulation on the grounds that the Commission did not communicate the information on which it based the calculations made in the additional final disclosure document and did not allow them a sufficient period consistent with Article 20(5) of that regulation to submit full comments on its new approach.

129 Secondly, the applicants maintain that the institutions did not set out in the final disclosure document, the additional final disclosure document or the contested regulation the grounds for the methodology which was applied in order to take into account the existence of a volume of imports which caused no injury and which reduced the injury margin instead of exempting the non-injurious imports from the imposition of anti-dumping duties. Those circumstances constitute a breach of the applicants’ rights of defence and a failure to state reasons.

130 It should be noted at the outset that Article 20 of the basic regulation sets out detailed rules relating to the exercise of the right of interested parties, in particular exporters, to be heard. That right constitutes one of the fundamental rights recognised by the Community legal order and includes the right to be informed of the main facts and considerations on the basis of which it is intended to recommend the imposition of definitive anti-dumping duties (see, to that effect, Al-Jubail Fertilizer v Council, paragraph 108 above, paragraph 15, and Champion Stationery and Others v Council, paragraph 108 above, paragraph 55).

131 Accordingly, the applicants’ arguments relating to breach of Article 20 of the basic regulation must be interpreted as referring to breach of their rights of defence, which are guaranteed by the Community legal order and by that provision (see, to that effect, Kundun and Tata v Council, paragraph 108 above, paragraph 131).

132 In that regard, it must be borne in mind that, according to the case-law cited in paragraph 108 above, the undertakings affected by an investigation preceding the adoption of an anti-dumping regulation must be placed in a position during the administrative procedure in which they can effectively make known their views on the correctness and relevance of the facts and circumstances alleged and on the evidence presented by the Commission in support of its assessment of the existence of dumping and the resultant injury.

133 It must also be pointed out, in this connection, that the fact that final disclosure is incomplete renders the regulation imposing definitive anti-dumping duties unlawful only if, as a result of the omission, the interested parties were not in a position to defend their interests effectively. That is inter alia the case where the omission relates to facts or considerations which are different from those used for any provisional measures, to which particular attention must be paid in final disclosure pursuant to Article 20(2) of the basic regulation. That is also the case, on the same grounds, where the omission relates to facts or considerations which are different from those on which the Commission or Council bases a decision subsequent to the communication of the final disclosure document, as is apparent from the last sentence of Article 20(4) of the basic regulation.

134 In the present case, as was pointed out in paragraphs 25 to 27 above, the Commission first advocated, in the final disclosure document, a delayed duty system, based on the fact that only imports in excess of 140 million pairs of shoes per annum caused injury within the meaning of Article 3 of the basic regulation. That assessment was based on the fact that there had been a quantitative quota regime until 1 January 2005, which precluded such injury, and on a calculation of the quantities imported from China in 2005. According to that proposal, a definitive anti-dumping duty was to be imposed on imports originating in China in excess of 140 million pairs of shoes per annum. That duty was equal to the underselling margin, in this case 23%.

135 However, as was stated in paragraphs 29 and 30 above, in the additional final disclosure document the Commission amended its proposal concerning the form of duties necessary to eliminate the injury. That new approach was also based on the fact that there was a volume of imports which does not cause injury within the meaning of Article 3 of the basic regulation. However, in the additional final disclosure document, both the method for calculating that non-materially injurious volume of imports and the impact of that volume on the form of the proposed definitive duties differed from those mentioned in the final disclosure document.

136 More specifically, in the additional final disclosure document, first, the Commission stated that the underselling margin for imports from China was 23%. Secondly, it established that the volume of imports from that country during the investigation period was 38% of the imports from the two countries concerned. That percentage, applied to all the imports from China and Vietnam in 2003 (109 million pairs of shoes), corresponded to some 41.5 million pairs of shoes, a volume which was regarded as non-materially injurious to the Community industry. Thirdly, the Commission took the view that that volume represented 28.6% of imports from China in 2005. Fourthly and lastly, it reduced the injury margin initially established (23%) by 28.26%, which gave rise to a ‘weighted’ injury margin of 16.5%.

137 It is apparent from the above that the differences between the methodology set out in the final disclosure document and that set out in the additional final disclosure document are the following. First, instead of establishing the annual volume of non-materially injurious imports at the level of imports from China in 2005, the Commission established that annual volume by multiplying the 109 million pairs of shoes imported in 2003 by 38%. That figure represented imports originating in that country as a percentage of all imports from the two countries concerned during the investigation period. Secondly, instead of exempting that annual volume, categorised as non-materially injurious in paragraphs 278 to 280 of the additional final disclosure document, from the application of anti-dumping duty, the Commission chose to take that volume into account by lowering the injury elimination level and by applying anti-dumping duties as from the first pair of shoes imported.

138 In that regard, it must be held that the fact that the Commission amended its analysis after comments made on the final disclosure document by the parties concerned does not, in itself, constitute infringement of the rights of the defence. As is apparent from the last sentence of Article 20(4) of the basic regulation, the final disclosure document does not prejudice any subsequent decision by the Commission or the Council. That provision merely requires the Commission to disclose, as soon as possible, the facts and considerations which are different from those which formed the basis for its initial approach in the final disclosure document. It is through that disclosure that the parties concerned are in a position to understand the grounds which led the institutions to adopt a different view.

139 Consequently, in order to establish whether the Commission complied with the applicants’ rights deriving from the last sentence of Article 20(4) of the basic regulation, it must also be ascertained whether the Commission communicated to them the facts and considerations taken into account for the purpose of the new analysis of the injury and the form of measures necessary to eliminate it, in so far as those facts and considerations differ from those taken into account in the final disclosure document (see paragraph 133 above).

140 In that regard, first, the Commission stated in the additional final disclosure document that its new proposal made it possible to avoid distinctions between different types of importers.

141 Secondly, the applicants’ argument that they did not have access to the information on the basis of which the Commission adjusted the injury margin from 23% to 16.5% is incorrect. The methodology described in paragraph 136 above concerning the adjustment of the injury margin by allowing for a non-materially injurious volume of imports is set out in the additional final disclosure document. It is true that that document provides no information on the exact volume of imports from China in 2005 which would make it possible to establish that the percentage of 28.26% is in fact correct. However, given that, according to the Commission, 41.5 million pairs of shoes represent 28.26% of all the imports from China in 2005, it may be deduced that those imports amounted to 146.85 million pairs of shoes. That calculation was moreover mentioned by the applicants themselves in their email of 2 August 2006 (see paragraph 31 above).

142 It follows from the foregoing that the Commission communicated to the applicants the reasoning which it followed to calculate the injury margin by allowing for a non-materially injurious volume of imports. It also set out all the figures which it considered to be relevant for that purpose, with the result that the applicants’ rights of defence have not been breached in that regard.

143 It must also be pointed out, as noted by the Council (see paragraph 127 above), that the applicants’ plea, as set out in the applications, relates to breach of their rights of defence and not to breach of Article 1(1) of the basic regulation. It follows that the question whether the system adopted in the contested regulation is compatible with Article 1(1) of the basic regulation in so far as it imposes anti-dumping duties on imports below the annual threshold regarded as non-materially injurious has not as such been submitted for review by the Court.

144 The parties agree that the period given expired on 2 August 2006.

145 The Commission breached Article 20(5) of the basic regulation by granting the applicants a period of less than 10 days to comment on the additional final disclosure document (Champion Stationery and Others v Council, paragraph 108 above, paragraph 80). However, that fact cannot, in itself, lead to annulment of the contested regulation. It is also necessary to establish that the granting of a period shorter than the prescribed period was actually capable of affecting their rights of defence in the procedure in question (Case T-35/01 Shanghai Teraoka Electronic v Council [2004] ECR II-3663, paragraph 331).

146 In that regard, it must be pointed out that the applicants reiterated the Commission’s calculations in their email of 2 August 2006 and that they submitted an alternative calculation which would have led to a different, and, in their opinion, equitable outcome. Therefore, the applicants understood the Commission’s reasoning and were in a position to suggest an alternative approach. Furthermore, the applicants have not explained why they were not in a position to assert a breach of Article 1(1) of the basic regulation within the period which the Commission gave them. In those circumstances, it must be held that they were in a position in which they could effectively make known their views.

147 It follows that there was no breach of the applicants’ rights of defence.

148 On the same grounds, the applicants’ argument alleging failure to state the reasons for the methodology used to calculate the injury elimination level must be rejected. The statement of reasons for the contested regulation must be appraised having regard, in particular, to the information disclosed to the applicants and to the observations which they have made during the administrative procedure (Joined Cases T-33/98 and T‑34/98 Petrotub and Republica v Council [1999] ECR II-3837, paragraph 107).

149 In the present case, as pointed out in paragraph 36 above, recitals 296 to 301 to the contested regulation contain the findings which led the Council to adopt the system which was finally implemented. Consequently, in light of the fact that the Commission communicated to the applicants the reasoning which it had followed in calculating the injury margin by taking account of a non-injurious volume of imports and of the fact that it also informed them of all the figures which it regarded as relevant for that purpose (see paragraphs 140 to 142 above), it must be held that the statement of the reasons of the contested regulation is sufficient in law.

150 Therefore the sixth plea must be rejected.

The seventh plea, alleging an error of law and a manifest error of assessment concerning the injury caused to the Community industry

Arguments of the parties

151 The applicants contend that the injury determination is not based on a sufficient period of normal imports and is not therefore supported by reliable and objective data. Since the investigation period lasted from 1 April 2004 to 31 March 2005, the Commission’s conviction that the increase in imports after the lapse of the quota regime had a particularly decisive injurious effect for the Community industry was based solely on the first quarter of 2005. The clear indications of significant injury in 2004 to which the Commission refers at paragraph 277 of the new section H of the additional final disclosure document do not mean that significant injury was actually caused in 2004. The fact that no significant injury was caused in 2004 is borne out by the fact that imports increased only slightly in that year by comparison with 2003 and by paragraph 285 of the final disclosure document.

152 The first three months of 2005 were the initial period of an open market which for more than 12 years had been subject to a regime of strict quantitative quotas. As the Commission observed in the final disclosure document, that period following the lapse of the quota regime was artificially distorted by expectations linked with that event. The contested regulation is therefore based on data relating to a short period which could not provide reliable material owing to the lifting of the quotas. It follows that the Council has breached Article 3(2) of the basic regulation. Nor is there any proof that the Commission examined the injury factors during the entire period considered.

153 Lastly, the applicants observe that the quota regime was not intended to remedy the consequences of dumped imports.

154 The Council, supported by the Commission, CEC and the Italian producers, disputes the merits of the applicants’ arguments.

Findings of the Court

155 First, it must be pointed out that the adoption of anti-dumping duties is not a penalty for earlier behaviour but a protective and preventive measure against unfair competition resulting from dumping practices. In order to be able to determine the anti-dumping duties appropriate for protecting the Community industry against dumping, it is therefore necessary to carry out the investigation on the basis of information which is as recent as possible (Industrie des poudres sphériques v Council, paragraph 108 above, paragraphs 91 and 92, and Case T‑138/02 Nanjing Metalink v Council [2006] ECR II-4347, paragraph 60).

156 Therefore, where the institutions find that imports of a product which has until then been subject to quantitative restrictions increase after those restrictions have lapsed, they may take that increase into account for the purposes of their assessment of the injury sustained by the Community industry.

157 Secondly, the Commission’s assessment in paragraph 283 of the final disclosure document that the volume of imported products increased after the lapse of the quota regime does not establish that the institutions based their decision solely on that quantitative aspect in finding that there was injury.

158 Lastly, as is apparent from recitals 162, 168 to 170, 187 to 206 and 216 to 240 to the contested regulation, the institutions took into account a number of factors, concerning the injury and the causal connection, relating not only to the last quarter of the investigation period, but also to the period considered.

159 It follows that the seventh plea must be rejected.

160 In those circumstances, the action must be dismissed in its entirety.

Costs

161 Under Article 87(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. As the applicants have been unsuccessful, they must be ordered to pay the costs, in accordance with the form of order sought by the Council.

162 In accordance with Article 87(4) of the Rules of Procedure, the Commission, CEC and the Italian producers must bear their own costs.

On those grounds,

THE GENERAL COURT (Eighth Chamber)

hereby:

1. Dismisses the actions;

2. Orders Zhejiang Aokang Shoes Co., Ltd and Wenzhou Taima Shoes Co., Ltd to bear their own costs as well as those incurred by the Council of the European Union;

3. Orders the European Commission, the Confédération européenne de l’industrie de la chaussure (CEC), BA.LA. di Lanciotti Vittorio & C. Sas and the 16 other interveners listed in the Annex to bear their own costs.

Martins Ribeiro Papasavvas Dittrich

Delivered in open court in Luxembourg on 4 March 2010.

[Signatures]













Table of contents





Legal context

Background to the dispute and the contested regulation

Procedure and forms of order sought

Law

The first three pleas and the fifth plea, alleging breach of Articles 2(7)(b) and (c) and 9(5) of the basic regulation, breach of the principle of equal treatment and of the principle of protection of legitimate expectations and incorrect calculation of the applicants’ dumping margin

Arguments of the parties

Findings of the Court

The fourth plea, alleging breach of the rights of the defence, brea