OPINION OF MR ADVOCATE GENERAL

VERLOREN VAN THEMAAT

delivered on 21 November 1984 ( *1 )

Mr President,

Members of the Court,

1. Introduction

1.1. Subject-matter of the action

This action brought by Allied Corporation, Demufert SA, Kaiser Aluminum Domestic and International Sales Corporation (‘Kaiser’) and Transcontinental Fertilizer Company (‘Transcontinental’) concerns the definitive antidumping duties imposed by Council Regulation (EEC) No 101/83 of 17 January 1983 (Official Journal 1983, L 15, p. 1) on the importation by the applicants of urea ammonium nitrate solution fertilizer (UAN) originating in the United States of America. The applicants ask the Court to declare the regulation void. The definitive antidumping duties imposed — 19.05% on Allied Corporation, 12.13% on Kaiser and 12.01% on Transcontinental — are about three times as high and twice as high as the respective provisional antidumping duties — 6.5% and (in Kaiser's case) 5% imposed by Commission Regulation No 1976/82 (Official Journal 1982, L 214) and No 2302/82 (Official Journal 1982, L 246), which were the subject of the Court's judgment of 21 February 1984 in Joined Cases 239 and 275/82, Allied Corporation and Others v Commission [1984] ECR 1005.

1.2. Admissibility

The liquidator of Demufert SA withdrew the application made by this importer of the products of Allied Corporation after his application in Joined Cases 239 and 275/82 was declared inadmissible by the Court. The Council raises no objection of inadmissibility against the action of the other parties. For the reasons given in the Court's judgment of 21 February 1984 in the earlier Allied Corporation case and in my opinion in that case, this action must undoubtedly be regarded as admissible.

1.3. History of the case and course of the procedure

For the essential facts and the course of the proceedings I refer to the first twelve recitals of the preamble to the contested regulation and to the Report for the Hearing. The Commission has intervened in the cases in support of the Council. The contested regulation is in fact mainly based on the results of the fresh investigation which the Commission began on 16 July 1982 (prior to adopting provisional measures on 19 July and 18 August 1982 after the applicants Allied Corporation, Transcontinental and Kaiser revoked the price undertakings they had given).

As the notice published in Official Journal C 179 of 16 July 1982, p. 4 (Annex 4 to the application) indicates, the fresh investigation was started in response to the requests of two of the applicants, which were initially refused, and the request of a committee representing nearly all European producers of the products concerned. That fact is of some significance because the applicants have made it appear that the Commission decided to carry out a fresh investigation solely at the request of the European producers. The range of the Commission's review may be judged from, inter alia, the eleventh and twelfth recitals of the preamble to the contested regulation and from the fact that, according to the tenth recital, the validity of the provisional antidumping duties was prolonged by two months on 18 November 1982.

1.4. How this case differs from the first case

An important factor in the Court's dismissal of the action brought by the applicants against the imposition of provisional antidumping duties was the fact that such a provisional measure must naturally be adopted quickly once a price has been revoked. I refer in this regard to paragraphs 18 to 24 of the judgment of 21 February 1984. Moreover, such measures are subject to different provisions of the ‘basic’ regulation, Council Regulation (EEC) No 3017/79 (Official Journal L 339 of 31 December 1979, p. 1), which are less stringent than those concerning the imposition of definitive antidumping duties. In the first case the crucial provision was Article 10 (6) of Regulation No 3017/79.

The new facts which the applicants adduced in the first case all concerned the requirement of injury; they were (i) the measures adopted by the French authorities as part of price and competition policy, (ii) the continuing rise in the value of the dollar and (iii) an alleged fall in imports of the products concerned. In this case the applicants eventually withdrew their arguments on the first point. In view of what the Court stated in paragraph 29 of its judgment in the previous case, the effect of the continuous rise in the value of the dollar as such need no longer be considered either. The applicants themselves have now reframed their submissions regarding the requirement of injury. The Court's findings with regard to the third point are no longer very relevant to this case since the reference period for determining imports now covers the first eight months of 1982 and not just the first quarter of that year, as it did in the first case.

As the following summary of the applicants' submissions in this case will show, they mainly concern the requirements laid down in Regulation No 3017/79 for the imposition of definitive antidumping duties. Those requirements are more stringent than the requirements which the Court inferred from Article 10 (6) of Regulation No 3017/79 in its judgment of 21 February 1984. In view of the submissions put forward, the Court's judgment in this case will first have to clarify the meaning of the term ‘dumping’ and the requirements laid down in Article 2 and Article 7 (7) (b) of Regulation No 3017/79 for its application. Secondly, the requirement of injury (Article 2 (1) and Article 4 of Regulation No 3017/79) plays an important part in this case. Thirdly, the requirement laid down in Article 12 (1) of Regulation No 3017/79 to the effect that the interests of the Community should ‘call for Community intervention’ appears to play a part. However, besides those three main substantive requirements for the imposition of definitive antidumping duties, issues of a more procedural nature are involved.

2. The applicants' submissions

The applicants' six submissions, which are summarized in the Report for the Hearing, partly overlap. I shall deal with them in the following order:

In the first part of my examination of the submissions (part 4.1.) I shall consider the complaints made in connection with the fifth and sixth submissions about the way in which the ‘normal value’ of the products in question was determined (Article 2 (3) to (7) and Article 7 (7) (b) of Regulation No 3017/79). In the same part of my Opinion I shall also deal with the complaint made in the fourth submission that the regulation does not contain an adequate statement of reasons on this point. I shall also consider the complaint raised in the third submission that the Commission did not recommence the investigation ab initio.

In part 4.2. I shall deal with the applicants' arguments set out in their fifth and sixth submissions regarding the requirement of injury (Article 4 of Regulation No 3017/79).

In part 4.3. I shall consider the arguments in the sixth submission regarding the requirement of a Community interest (Article 12 (1) of Regulation No 3017/79). I shall also consider the contention made in connection with the third submission (paragraph 50 of the application), the fifth submission (paragraphs 59, 79 and 86) and the sixth submission (paragraphs 104 and 107) to the effect that the duties imposed contained a penalty for the revocation of the price undertakings.

In part 4.4. I shall deal with the complaints raised in the first submission, namely that insufficient prior information was given to the applicants (Article 7 (4) (b) of Regulation No 3017/79.

Finally, in part 4.5., I shall examine the applicants' second submission in which they complain that the Council caused them to suffer arbitrary discrimination compared with other American exporters.

3. The principles of Regulation No 3017/79

3.1. For a proper understanding of the analysis of the applicants' submissions outlined above I think that a few general remarks on the principles of the ‘basic’ Regulation No 3017/79, considered in relation to one another, are necessary. The main principle of the regulation is embodied in Article 2 (1) and (2) and is so framed that in order for an antidumping duty to be applied, two conditions must be met. First, the relevant product must be ‘dumped’; this requirement is defined in Article 2 (2) to the effect that a product is to be considered to have been dumped if its export price to the Community is less than the normal value of the like product. Secondly, in order for an antidumping duty to be applied, the imports of the relevant product for consumption in the Community must cause injury.

3.2. Although Article 91 of the EEC Treaty does not expressly require injury to exist in the event of dumping within the Community, the existence of injury was also required when that provision was applied in practice. In applying that article in practice (for which, as Director-General of the Directorate-General for Competition, I was responsible during the transitional period), it was normally possible to manage with two simple rules of thumb as far as the two requirements were concerned. A product was considered to have been dumped when its export price was lower than the price normally charged in the exporting country (see the analogous point of departure in Article 2 (2) and (3) (a) of Regulation No 3017/79). In principle, injury was considered to have been caused in the importing country when the export price was also clearly below the normal market price in the importing country, whilst imports had to be of sufficient volume to cause appreciable injury to the relevant sector of the economy of the country of importation. This second rule of thumb also bears some likeness to the provisions of Regulation No 3017/79, in this instance Article 4 (2), with the qualification, however, that in those days when complaints under Article 91 of the EEC Treaty were investigated, the volume of imports was more of a secondary factor (for the purposes of determining the extent of the injury).

3.3. The importance of these price comparisons in the implementation of Article 91 of the EEC Treaty is also made clear by the fact that the sanction provided for in the second paragraph of Article 91 of the EEC Treaty and the purely temporary effect of that article (during the transitional period only) can be accounted for only on that basis. Apart from price discrimination under a restrictive agreement or by an undertaking holding a dominant position, the dumping of mass-produced goods at a dumping margin exceeding the cost of transport (except in the case of export subsidies) is conceivable only if customs duties or quantitative import restrictions or measures having equivalent effect exist. In the absence of such official restrictions on imports, the possibility of re-importation into the country of exportation seems to provide a sufficient safeguard against dumping. Moreover, in the EEC the alignment of prices to market prices in the importing country has always been regarded as a quite normal trade practice which as such could not be considered a source of injury in the importing country for the purposes of Article 91. It is not without significance in this regard that Article 91 appears in the chapter entitled ‘Rules on Competition’. Dumping also represents a form of price discrimination which prevents competition from operating as it should.

3.4. In my view it is also useful in this case to recall the background, in terms of the market economy, to intra-Community antidumping policy from 1958 to 1968. At page 41 of his book on the external antidumping law of the EEC, ( 1 ) which has been regularly quoted from in these proceedings, J. F. Beseler treats dumping as a particular form of price discrimination (resulting in distortion of competition) which in general can only be practised when barriers to international trade exist. In this regard the General Agreement on Tariffs and Trade (GATT) is based on premises, in regard to the market economy, comparable to those of the EEC Treaty, although in the case of GATT only a reduction of customs duties and other restrictions on international trade is envisaged, and not their total abolition as in the EEC. Normal commercial practices compatible with the principle of undistorted competition should therefore be respected in the implementation of Regulation No 3017/79, which is based on the GATT and the GATT Code, as is confirmed inter alia by the wording of Article 2 (3) (a) of the regulation.

3.5. That last conclusion seems relevant in this case first of all as regards any application of Article 2 (4) of the regulation for that reason alone, that provision must be applied with some caution because it does not, as such, have any basis in Article 2 (4) of the GATT Code. ( 2 ) The latter provision permits the criteria set out in Article 2 (4) of the regulation to be applied only in the circumstances referred to in Article 2 (3) (b) of the regulation and not where it is suspected that goods are being sold at a loss. Some caution in the application of the aforesaid provision is also desirable because otherwise, in a general recession (during which many businesses sell their goods at a loss in the sense of Article 2 (4)), nearly all limits on the imposition of antidumping duties disappear. Owing inter alia to the principle of reciprocity embodied in the GATT, the actual use of such an almost unrestricted possibility of applying Regulation No 3017/79 involves a considerable risk that countermeasures might be adopted against the Community. Finally, it must not be forgotten that during a recession the selling of products at a price which covers only a proportion of fixed production costs besides the variable production costs and definitely does not allow for any profit margin may be entirely justified from the business point of view (and from the socioeconomic point of view as well) in order to minimize losses and ensure the undertaking's survival. In conditions of crisis, such a practice may more often than not be regarded as an entirely justified and normal commercial practice. Unlike Article 2 (4) of Regulation No 3017/79, Article 2 (4) of the GATT Code moreover certainly does not allow for the application of a profit margin in such a general loss situation. It is therefore also significant that according to the wording and scheme of Article 91 of the EEC Treaty, described above, such practices are clearly not automatically treated as dumping. Therefore, even during a period of recession, goods may be considered to have been dumped only if exported at prices lower than those charged on the home market. Secondly, the market-economy aspect of the background of the antidumping regulation is, I think, relevant to the price alignment argument, which featured quite prominently in the discussion of the requirement of injury in this case. In itself, the adjustment of prices to the market prices prevailing in the importing country is normal commercial practice in international trade. If prices could not be adjusted, exports from countries having relatively high prices would become virtually impossible and the international trade of the exporting countries concerned could no longer be squared with efforts to achieve trade balances. Combined with a too ready application of Article 2 (4) of Regulation No 3017/79, the elimination of the possibility of aligning prices to the market prices prevailing in the importing country (that is, in general loss situations, again without any profit margin and even, in some circumstances, without full coverage of overheads) may undoubtedly conflict with efforts to achieve liberalization of international trade which underlie GATT and — as the sixth paragraph of the preamble to the EEC Treaty shows — the Community's common commercial policy as well.

3.6. To appreciate the weight placed by the Council in the contested regulation on the refusal of Allied Corporation in particular to permit inspection in the exporting country, one final preliminary remark is necessary. It follows from the principle of sovereignty that the Community cannot carry out such on-the-spot inspections without the approval of the authorities of the exporting country and the cooperation of the undertakings concerned. In this case, the refusal to cooperate as requested is relevant in two ways. First, it is necessary to establish the relationship between the ‘facts available’ referred to in Article 7 (7) (b) of Regulation No 3017/79 and the principles governing the calculation of the ‘normal value’ for the purposes of Article 2 (3) and (4). Secondly, having regard to the twenty-fourth recital, the requirements of injury and of Community interest and to the statement of reasons on which the rates of antidumping duty were based, it is necessary to consider the question of the extent to which a failure to cooperate as in this case may affect the rate of levy. That point is dealt with under the third submission in paragraph 50 of the application and in paragraphs 59, 79, 86, 104 and 107 dealing with the fifth and sixth submissions.

4. Consideration of the submission

4.1. Assessment of the normal value

The applicants' main complaint against the Commission and the Council is that, in accordance with the Commission's proposals, the contested regulation provides for the normal value to be calculated on the basis of the indexation formula which was incorporated in the cancelled price undertakings and applied to the agreed base price (fourteenth and fifteenth recitals of the preamble to the regulation). In the case of Kaiser and Transcontinental, since it was found that during the relevant period Kaiser had exported indirectly via Transcontinental in breach of its price undertaking, the ratio between their prices was adjusted (sixteenth to nineteenth recitals of the preamble to the regulation). In order to take account of a 5% profit margin for Transcontinental, Kaiser's dumping margin was fixed at a higher level than Transcontinental's. At the same time, because of the greater price difference in the price undertakings of those two companies, the normal value was further adjusted since an examination proved that during the reference period Transcontinental had only exported products manufactured by Kaiser, unlike what had happened in the past.

Although partly well-founded, the applicants' fifth and sixth submissions must be rejected in the last resort in so far as they concern the method of calculating the normal value. In that regard it must be pointed out at the outset that the Council and Commission rightly contend that all three applicants refused to cooperate in the new investigation, a situation provided for in Article 7 (7) (b) of Regulation No 3017/79. Allied Corporation simply refused to allow any on-the-spot inspection.

Transcontinental did allow inspection but refused to disclose purchase prices which were essential for the purpose of the investigation. Kaiser refused to cooperate in the investigation into its indirect exports to the Community during the reference period, which were discovered during the investigation of Transcontinental. As is shown by the documents produced to the Court, the cooperation provided by the applicants at a later stage of the investigation could not compensate for their refusal to cooperate in the investigation of the facts referred to in Article 2 B.

In principle the applicants are right in arguing that the ‘facts available’, referred to in Article 7 (7) (b), must be reasonably related to the methods of calculation prescribed in Article 2 B. Those facts must also enable the ‘normal value’ to be calculated as accurately as possible. Furthermore, I have already expressed considerable reservations about the decisive importance attached to the presumption in the thirteenth recital of the preamble to the contested regulation that Allied sold its products in the United States at prices which did not cover its costs. A reasonable interpretation of Article 7 (7) (b) undoubtedly required the Commission to take into account at the investigation stage all other information which it could obtain without going to inordinate lengths and not simply the indexation formula contained in the cancelled price undertakings. Moreover, in view of universal experience, the Commission ought not to have simply assumed that the general ‘implicit price deflator of gross national product’ which was applied in this case also provides reliable results in the case of raw or auxiliary materials such as those in question. Even the fact that the applicants agreed at the time to the indexation formula could not by itself justify the application of that formula after the price undertakings had been withdrawn. However, that omission cannot bring about the annulment of the regulation, since the Commission stated at the hearing without being contradicted that the other facts available at the time, obtained from information from European producers and investigations carried out at the premises of other American producers, showed that use of those facts would have produced a higher normal value. Finally, it was proved at the hearing that the use of the statistics on the movements in prices of the product concerned in the United States during the first six months of the reference period, which the applicants produced as alternative data in reply to a question asked by the Court, would also have made the normal value higher than that established by the Commission. So, even the application of the data regarded as most relevant by the applicants themselves could not have produced a result more favourable to them. Finally, the applicants have not argued and it has not been shown that the indexation formula which was used meant that a profit margin was added to the normal selling prices.

The argument put forward by Kaiser at the hearing to the effect that different normal values and dumping margins cannot be fixed for direct exports and indirect exports (through brokers) of its products must be rejected on the basis of Article 2 (3) (b), (9) and (10) (c). The view put forward by Kaiser would mean that it would be impossible to take separate action against dumping practised by an export business. There is no support for that view in Regulation No 3017/79, however. The fact that the dumping margin for Kaiser was calculated by comparing ‘ex-works’ prices is in accordance with the second sentence of Article 2 (9) of Regulation No 3017/79, whilst it was right that as regards exports carried out by the trader Transcontinental a reasonable profit margin was taken into account in the manner described in the seventeenth recital of the preamble to the contested regulation and as explained by Kaiser at the hearing by means of a price comparison diagram. The applicants' complaint in their fourth submission that insufficient reasons were given to explain the way in which the normal value was calculated is not entirely without foundation for the reasons I have already indicated. However, for the same reasons as those stated with regard to the fifth and sixth submissions, that submission cannot cause the regulation to be annulled. A more adequate statement of grounds would not necessarily have led to a different result.

The applicants' complaint contained in their third submission to the effect that the Commission did not reopen the investigation ab initio after the price undertakings were revoked must also be rejected. The applicants must attribute the fact that the Commission was unable to carry out a fresh on-the-spot examination of their accounts to establish in particular the prices at which they bought raw materials and sold their products on the American market to their own refusal to cooperate in such an investigation. In those circumstances the Commission was entitled under Article 7 (7) (b) of Regulation No 3017/79 to base its examination exclusively on the facts available at the administrative stage of the investigation. I have already explained why the unduly narrow interpretation which the Commission placed on the term ‘facts available’ cannot result in the annulment of the contested regulation.

4.2. The requirement of injury

The applicants' sixth submission in particular contains a number of arguments which, according to them, indicate that the existence of injury, within the meaning of Article 2 (1) and Article 4 of Regulation No 3017/79, has not been proved. Those arguments must be examined in the light of Article 4 of Regulation No 3017/79, the twenty-fifth to twenty-eighth recitals of the preamble to the contested regulation and the statistical data provided by the Council and the Commission in response to the written questions of the Court about production, intra-Community trade, import trade and import prices on the most important market for the products concerned, namely the French market (Annexes 2 and 3 to the Council's and Commission's answer of 17 July 1984).

In the first place, the applicants dispute that they imported 118850 tonnes of UAN into the Community during the reference period (the first eight months of 1982) as is stated in the twenty-fifth recital in the preamble to the contested regulation. In so far as their contention relates to the 20000 tonnes which Transcontinental imported indirectly during the first six months in breach of its price undertaking, it must be rejected, since an on-the-spot investigation established that this amount was in fact a prohibited indirect export by Kaiser. The applicants' contention that Allied imported about 100000 tonnes of UAN only in August 1982 is irrelevant because the month of August also fell within the reference period chosen.

The twenty-sixth and twenty-eighth recitals of the preamble to the regulation show that the contention that the contested regulation concentrates only on the injury to the French producers is wrong.

In the final analysis the two crucial questions are therefore whether Article 4 of Regulation No 3017/79 was applied correctly in the contested regulation and whether the statistical data now produced by the Council provide sufficient support for the findings made in the contested regulation.

According to Article 4 (1) of Regulation No 3017/79, the principle of the injury requirement is that ‘a determination of injury shall be made only if the dumped ... imports are ... causing injury, i.e. causing or threatening to cause material injury to an established Community industry or materially retarding the establishment of such an industry. Injuries caused by other factors, such as volume and price of imports which are not dumped or subsidized, or contraction in demand, which, individually or in combination, also adversely affect the Community industry, must not be attributed to the dumped or subsidized imports’.

Since it is stated in the twenty-sixth recital of the preamble to the contested regulation that the prices of the Community producers were being undercut, the question whether and to what extent the low export prices of Netherlands producers also contributed to the French producers' injury may be disregarded. The Court will recall that in the previous case the Commission gave more reason for assuming that in particular injury to the French producers was taken into account in its considerations; in my Opinion of 10 January 1984 I therefore dwelt at length on the effect of Netherlands export prices. In view of the wording of the twenty-sixth recital of the preamble to the contested regulation, it will be necessary, when examining the regulation with reference to Article 4 (2) (b) of Regulation No 3017/79, to look at the prices of all major producers within the Community which sell their products on the biggest market, namely the French market.

Especially when the twenty-fifth recital of the preamble to the contested regulation is considered with reference to Article 4 (2) (a) of Regulation No 3017/79, a large measure of respect must be shown for the discretion which the Commission enjoys and which was rightly emphasized by Mr Advocate General Warner in his Opinion in the ball-bearing case, Case 113/77 NTN Toyo Bearing Company v Council [1979] ECR 1185, p. 1266. Since this case involves, as I have already pointed out, an investigation in the field of competition law, I do not think that the Commission can be criticized for interpreting this factor as a kind of ‘appreciable effect’ test which it also applies in deciding not to apply Article 85 of the EEC Treaty to ‘minor agreements’. According to the information supplied by the Council, such an interpretation is also in accordance with American practice in this matter. When exercising its discretion and not forgetting the principle of reciprocity, which is very important in matters of trade policy, the Commission may indeed take American practice into account, although ‘upward’ harmonization at the international level might be desirable. Even if a question mark is placed beside the twenty-fifth recital of the preamble to the contested regulation in which the quantities imported during the first eight months of 1982 are extrapolated for the whole year, the established market share of the imports in question may, for the reasons already given, be considered sufficiently large for regarding the way in which the first factor referred to in Article 4 (2) of Regulation No 3017/79 was taken into account as reasonable. In my view, the method used was quite within the margin of discretion which the Commission and Council have in such matters. In this regard the question whether or not imports during the reference period were substantially lower than in previous years (as the applicants argue on the basis of statistics submitted to the Court) must not be regarded as decisive in itself.

I have already observed, however, that in view of the market-economic background of dumping law, more weight must be attached to the second factor referred to in Article 4 (2) (b). As the wording in Regulation No 3017/79 shows, the first factor has an independent meaning mainly in the case of a substantial increase in imports. Besides, as I have stated, its only significance is as an ‘appreciable effect’ test to be applied to the injury established in the light of factors (b) and (c). According to factor (b), it must be investigated in particular ‘whether there has been a significant price undercutting as compared with the price of a like product in the Community’. In my view, that price must be understood as meaning the comparable actual market price of the producers in the importing country. I do not consider it compatible with the wording of Article 4 or with the market-economic aspect of its background if, for the purpose of that price comparison, the Commission — according to the information provided by the Council at the hearing — determines a model market price for Community producers on the basis of production costs plus a normal profit margin. The Commission confirmed that the Council's information was correct when answering a question asked by a member of the Court at the end of the hearing. In the Commission's view, importers from nonmember countries may align their prices to those of Community producers only if their prices allow them to make a normal profit besides covering their costs. Since it must be assumed that the twenty-sixth recital of the preamble to the contested regulation is also based on that interpretation of Article 4 (2) (b), which, in my opinion, is untenable, that view could in my view provide a ground for declaring the regulation void if it is not also shown that the actual comparable prices within the Community have been undercut.

For the purposes of that price comparison, Annex 3 to the Council's and Commission's answer of 17 July 1984 to the Court's written questions can serve as starting point. As the President has already pointed out, when interposing to ask a question at the hearing, the Council did not however provide at the hearing an entirely satisfactory answer to the applicants' argument that the figures in that annex do not relate to the same marketing stage and are not therefore quite comparable. It is asserted in particular that French producers sell 70 to 80% of their products directly to the retail trade and to farming cooperatives and only 20 to 30% to the wholesale trade whereas the importers (at that time chiefly Demufert SA) sell 97% of the products they import to the wholesale trade. As far as imports were concerned, the Commission and the Council ought therefore to have compared wholesale prices with the ex works prices of the relevant Community producers, which, according to the applicants, would have resulted in an increase of 2 to 3% in the reported import prices.

In its answer the Council admitted that the prices which it had stated for Community producers were the prices charged upon delivery by the manufacturer to farming cooperatives. In its view, it followed that the CIF prices of the American producers had to be taken as the comparable import prices. The prices given for tne American imports are therefore not too low but too high in fact because they are based on the importer's prices.

It seems to me that the Council's answer completely misses the point of the applicants' argument. The point is that price competition from the imported products only makes itself felt at the level of the fertilizer user or on the purchase prices at the last marketing stage which are applied by Community producers and by importers, that is to say retailers or farming cooperatives. In this argument the applicants are, in my view, right.

Unfortunately that conclusion does not entirely resolve the question whether the figures produced are comparable. In view of the factual data provided by the applicants about the marketing channels used by European producers on the one hand and by importers on the other, which the Council has not disputed, an adjustment to the import prices of 7/10 of 2 to 3%, i.e. 1.5 to 2%, would be justified, ( 3 ) which would thus give an import price in the first six months of 1982 of FF 827 to 831 per tonne. In that case the import prices would still be lower than the prices of French producers but no longer beneath the prices of Netherlands producers. The ‘injury margin’ (not to be confused with the dumping margin) would then, however, be no more than 1.5 to 2%.

As Annex 2 to the Commission's and Council's answer shows, the share of the French market held by Netherlands producers in the 1982-1983 marketing year was substantially greater than the share of French producers on their domestic market, whilst in the previous marketing year it was somewhat smaller but already highly significant as far as price relations on that market were concerned. Moreover, the wording of the twenty-sixth recital of the preamble to the contested regulation makes a comparison with the prices of the Netherlands producers crucially important for the purposes of the Court's decision.

For the reasons I have already given and in view of the wording and market-economic context of Article 4 (2) (b), I would in principle consider it acceptable for import prices to be aligned to the prices of the competing Netherlands producers. Nevertheless, there are two reasons why in the final analysis a comparison with the actual prices of the Netherlands producers cannot, in my view, be of any avail to the applicants. In the first place, the figures in Annex 3 to the Council's and Commission's answer to the Court's question clearly show that in this case it is not so much a matter of the import prices being aligned to the prices of the Netherlands producers as, quite the reverse, the alignment of the latter prices to the import prices. The Netherlands prices are substantially lower than the French prices and much closer to the American import prices. This is still the case if the adjustments sought by the applicants are made to the import prices in the way I described. Secondly, I am very doubtful whether it is in fact justified to make those adjustments for the purposes of the relevant price comparison. In the explanatory note appearing below the statistics contained in Annex 3 it is expressly stated that the prices of the Community producers are either ‘ex works’ or wholesale prices. It seems reasonable to suppose that the Netherlands producers in particular sell their products in France through wholesalers, in which case the prices of Netherlands producers are quite comparable with the import prices even if the same wholesale margin of 2 to 3% has to be added to both prices. The import prices are therefore still about 1% lower than the actual prices of the Netherlands producers.

Since the established price differences are relatively small, there may still be some doubt whether there is any ‘significant price undercutting’ as mentioned in Article 4 (2) (b). Here again, however, a margin of discretion must, I think, be accorded to the Commission because it must also be able to take account of the practices of the Community's major trading partners. Furthermore, even relatively small price differences may lead to a considerable shift in market shares, especially during a period of recession. This is accurately illustrated by the figures in Annex 2 to the Commission's and Council's answer to the Court's questions (which has been quoted many times), relating to the growth in Netherlands exports to France. So Article 13 (3) of the Regulation No 3017/79 does require the amount of the price difference to be taken into account when the level of the antidumping duties is fixed. I shall come back to this point in another context.

For an assessment of the contested regulation with reference to the third factor mentioned in Article 4 (2) (c), the twenty-seventh and twenty-eighth recitals in the preamble to the regulation are particularly relevant, besides the statistics submitted to the Court. Those recitals support my earlier conclusion that the Netherlands producers adjusted these prices to the American import prices. Secondly, it is stated in the twenty-eighth recital that the prices of the Netherlands producers resulted in considerable losses, which is not disputed by the applicants. The twenty-seventh recital mentions the losses suffered by the entire Community industry. Therefore, the criteria laid down in the sixth and seventh indents of Article 4 (2) (c) are satisfied in any event inasmuch as the applicants' import prices exerted downward pressure on the prices of Community producers and had an adverse effect on profits. Consequently, consideration of the third factor mentioned in Article 4 also ultimately leads to a result which is unfavourable to the applicants. Even if the downward pressure on the prices of the French producers was mainly due to the prices of the Netherlands producers (as the applicants contend), this would still not help the applicants. As I have pointed out, the prices of the Netherlands producers are almost certainly exposed to downward pressure from the import prices in question so that downward pressure on the prices of the French producers also seems to come indirectly from the import prices of the applicants. In the context of the margin of discretion which must also be accorded to the Commission in interpreting Article 4 (1) of Regulation No 3017/79, that appears sufficient.

4.3. The requirement of Community interest

As I have already pointed out, Article 12 (1) of Regulation No 3017/79 requires that the interests of the Community should necessitate Community intervention. The necessity for imposing definitive antidumping duties is justified in the thirty-second recital of the preamble to the contested regulation which states that ‘in any case, it is not in the long-term interest of consumers in the Community to allow a Community industry to be weakened or have its activities reduced by persistent dumping’. With regard to the rate of the duties it is simply stated that ‘having regard to the extent of injury caused, the rates of these duties should be equal to the dumping margins found’.

In their sixth submission the applicants argue that the interests of the Community cannot simply be equated with the interests of certain producers and complain that no inquiry was made into the interests of consumers. Their first contention is not disputed by the Council, on the contrary, it agrees with it. In this regard the Council refers to a number of other aspects of Community interest of which, however, only the assumed interest of consumers is mentioned in the recital. Although it must undoubtedly be recognized that the Council has a wide discretion in defining the interests of the Community, it does not relieve it from its obligation to state, in the regulation too, the reasons why in its view intervention is necessary. The applicants' second contention is clearly supported by the opening words of the thirty-second recital in which it is stated that ‘no representations have been received by the Commission from consumers in the Community’. As a general remark the next statement in the recital, which I have quoted already, namely that ‘it is not in the long-term interest of consumers in the Community to allow a Community industry to be weakened or have its activities reduced by persistent dumping’, is indeed within the discretion which the Commission and the Council also have in this regard. However, since its applicability in this case is not substantiated, it cannot support the conclusion drawn from it that the interests of the Community require definitive antidumping duties to be imposed in this case. That the statement quoted is only a generalization and does not apply automatically in a specific case is underlined by the statistical information which the Council provided in reply to questions asked by the Court. Those statistics indicate that at any rate it cannot be argued that the Community industry has contracted. According to those statistics, Community production grew continuously from 1979/80 to 1982/83.

As was stated in answer to a question I asked at the hearing, evidence to substantiate the view that Community industry was weakened must be sought in the finding in the twenty-eighth recital that the Netherlands producers had suffered substantial losses. However, this implicit reference to the twenty-eighth recital contained in the thirty-second recital can in no way constitute a sufficient basis for the conclusion drawn in the thirty-second recital that the definitive duties should be equal to the dumping margins established.

In determining the consequences of the failure to provide reasons for the level of the definitive duties, Article 13 (3) is in my view decisive. It provides that ‘the amount of such duties shall not exceed the dumping margin provisionally estimated or finally established or the amount of the subsidy provisionally estimated or finally established; it should be less if such lesser duty would be adequate to remove the injury’ (my emphasis). In my view it must be inferred from that provision, which comes immediately after Article 12, that the requirement of Community interest laid down in Article 12 must be interpreted as meaning that, when the definitive antidumping duties are fixed, reasons must also be given for the rates of the levies imposed. It should be stated in particular that lower levies would not be sufficient to remove the injury. So, besides the dumping margin, the ‘injury margin’ also constitutes a limit which may not be exceeded.

It is in that light, I think, that the twenty-fourth recital in the preamble to the contested regulation and the arguments relating mainly, though not entirely, to that recital contained in paragraphs 50, 59, 79, 86, 104 and 107 of the application must be considered. In the fifth submission, in which those arguments appear in particular, it is also expressly alleged (in paragraph 58 (b)) that there was a breach of Article 13 (3) of Regulation No 3017/79 which I have just cited. This emerges even more clearly from paragraph 104 and the last sentence of the concluding paragraph of the application, paragraph 107. The twenty-fourth recital of the preamble to the regulation expresses the Commission's opinion that ‘the results of its investigation [i.e into the dumping margin] provided as accurate a basis for determination of the level of dumping as possible and that lower levels would constitute a bonus for Allied Corporation's withdrawal from its undertaking and subsequent non-cooperation, and the withdrawal from their undertakings by Kaiser and Transcontinental’.

Considered on its, own the statement contained in the Council's defence that the refusal to ‘reward’ the applicants for their revocation of the price undertakings and their subsequent non-cooperation is still not equivalent to a ‘sanction’ is correct. However, it must be stated in the first place that the passage cited from the twenty-fourth recital of the contested regulation is none the less objectionable. Considering the undisputed right of the applicant to withdraw from their price undertakings (certainly in the case of changes which are supposed, rightly or wrongly, to have occured in the market conditions originally assumed to exist), their withdrawal should not itself affect the care and objectivity with which the fresh investigation should be carried out. The right to refuse to cooperate in the investigation has a solid and generally recognized basis in public international law, as I have already pointed out. So it cannot in itself justify the passage in question either. However, I consider it more important that this passage is in fact the only recital in the preamble to the regulation which may possibly be regarded as an explanation of the non-application of the last phrase of Article 13 (3). In-this regard it is striking that in its defence the Council devotes hardly any attention to the allegation concerning the breach of that article. In the final analysis I consider it to be of decisive importance that in calculating the definitive duties and disregarding the last phrase of Article 13 (3) the Council and the Commission did not state any reasons regarding the extent of the injury found.

I consider that omission all the more serious since my analyses of the way in which the dumping margin was calculated and the way in which the finding of injury was substantiated show that a number of unacceptable views held by the Commission influenced both those findings. As far as the calculation of the dumping margin is concerned, my analysis has not led me to conclude that the method of calculation finally used was in the end unacceptable. On the question of injury, although I indeed came to the conclusion that Article 4 had not been applied in a legally unacceptable way, I went on to point out that the injury found was in fact much less than the Commission and the Council appear to have assumed it to be, to judge from the regulation and the explanations given in this regard. For the French producers I estimated the injury margin to be 1.5 to 2%. The losses which, according to the regulation, the Netherlands producers suffered as a result of aligning their prices to the import prices may at most justify an adjustment of their injury to the same level. Even with no American imports they would not have been able to charge higher prices on the French market than their French competitors. An increase in that injury margin might also be justified in view of the losses suffered by the French producers in so far as their losses on UAN were greater than their losses on fertilizers unaffected by dumping. According to the second sentence of Article 4 (1), the losses suffered by the French producers owing to the recession or imports from the Netherlands cannot, of course, be regarded as injury within the meaning of Article 13 (3). The effect of other American imports on the French producers' losses must also be eliminated. The antidumping duties imposed on the applicants should not therefore result in a higher level of import prices for the applicants than that which applied in the case of their American competitors at the time when the regulation was adopted. A considerably lower levy than the one imposed would therefore probably have been sufficient in this case to remove the injury caused by the dumping. In any event it seems highly improbable that it was necessary to double or to triple the provisional duty, so the probability is that it was wrong for the last phrase of Article 13 (3) not to be applied. The important point for the Court however is that the thirty-second recital of the preamble to the contested regulation gives no reasons explaining why the levy imposed is also within the second limit laid down in Article 13 (3) regarding the margin of injury or why the tripling or even the doubling of the provisional duties was justified.

To sum up, I therefore consider the applicants' third, fifth and sixth submissions well-founded in so far as they contend or imply that the interests of the Community do not justify the definitive duties imposed, or at any rate in so far as it has not been demonstrated that that requirement, considered in the light of the last phrase of Article 13 (3), has been observed. On this question I conclude that the complaints referred to are sufficiently serious to justify the annulment of the contested regulation.

4.4. The alleged failure to provide sufficient prior information to the applicants

In their first submission the applicants complain that the Commission failed adequately to comply with the obligation laid down in Article 7 (4) (b) of Regulation No 3017/79 to inform them at the beginning of the investigation (in this case at the beginning of the fresh investigation) of ‘the essential facts and considerations on the basis of which it is intended to recommend the imposition of definitive duties or the definitive collection of amounts secured by way of a provisional duty’. In considering their complaint the point whether or not the Council was correct in stating in its defence that the applicants did not request the Commission to provide such information may be disregarded. ( 4 ) The question whether Article 7 actually makes the submission of such a request a prerequisite in this case (as the Council contends) may also be disregarded here. It is in fact clear that the Commission complied with Article 7 (4) (b) by telex communications of 17 and 30 November 1982 (see Annex II and III to the defence). Those telex messages set out the essential facts on the basis of which the Commission intended to recommend the imposition of definitive antidumping duties on the applicants. It is for the Council to state the reasons on which a definitive decision is based and it should be possible for the counterarguments of the undertakings concerned to influence that definitive decision. The ‘essential facts and considerations’ referred to in Article 7 (4) (b) of Regulation No 3017/79 need not explain the reasons for the final decision or for the amount of the intended ‘sanction’ any more than this is necessary, according to the decisions of the Court, when a ‘statement of objections’ is served in competition cases. It is sufficient that the information communicated enables the persons concerned to exercise their right to present argument on the decisive points. The relevant documents submitted by the applicants (Annexes 12, 13 and 14 to the application) and by the Council (Annex 1 to its reply of 27 July 1984 to the Court's questions) show that the applicants were given the opportunity to present counterargument on all the points which they considered important. Since the applicants' right to a fair hearing does not therefore appear to have been infringed in any material respect during the administrative investigation procedure, this submission must be rejected.

4.5. The allegation of arbitrary discrimination

In their second submission the applicants complain that the Council adopted the contested regulation at a time when the new investigation concerning other exports from the United States was still in progress. The regulation is therefore arbitrary and discriminates against them in relation to other American exporters of the product in question.

In reply to that complaint the Council rightly points out that Articles 7 and 14 of Regulation No 3017/79 do not prevent the conducting of separate investigations into suspected cases of dumping by different undertakings differing from one another in material respects. The Council also rightly points out that Articles 7, 10 (6) and 14 do not prevent definitive measures differing as to the time when they are adopted and in their content from being adopted with regard to the different exporters concerned. This is particularly the case since a fresh investigation into the applicants' exports had to be concluded within four or at most six months owing to the provisional measures which had been taken with regard to them. I refer here to Article 11 (5) of Regulation No 3017/79. Time was not so pressing in the case of the other exports from the United States since they remained subject to a general measure and no comparable provisional measures had been adopted. I would also make the general point here that, as I have already explained, dumping practices are by their nature individual in character and may require investigations into individual production costs and sale prices (on the domestic market and export markets) which may differ. The applicants' second submission must therefore also be rejected.

Although the rejection of the second submission leaves open the possibility that the way in which the definitive antidumping duties were fixed in the applicants' regard not only conflicts with Articles 12 and 13 of Regulation No 3017/79, but also retrospectively discriminates against them in relation to other American exporters, that submission does not in my view concern that possibility. I think it is concerned entirely with the time when the investigation was ended, which, in the applicants' view, must be regarded as arbitrary and discriminatory in itself.

5. Summary and conclusion

5.1. Summary

The first conclusion which I reached in the preceding analyses was that considerations relating to the applicants' loss-making situation were wrongly taken into consideration when the dumping margins were determined. Secondly, the Commission appears to have interpreted the expression ‘the facts available’ appearing in Article 7 (7) (b) too narrowly. However, it was not shown at the hearing that the elimination of those errors would have led to a more favourable result for the applicants on this point. The applicants' arguments on this point cannot therefore lead to the annulment of the contested regulation.

My analyses then led me to conclude that the way in which it was determined that injury had been caused for the purposes of Article 4 of Regulation No 3017/79 remained within the limits of the Commission's discretion. Even if the flaws which I also found here in the Commission's and Council's reasoning are eliminated, it still does not warrant the conclusion that the existence of injury was not adequately demonstrated for the purposes of Article 4. The errors in the comparison of prices proved to be relevant only as regards the extent, of the injury established. However, if the contested regulation is examined with reference to Article 4 of Regulation No 3017/79, those errors cannot in this case constitute a ground of nullity based on that article.

On the other hand, my analyses did lead to the inescapable conclusion that, when examined with reference to Article 12 (1) of Regulation No 3017/79, the reasons given in the thirty-second recital of the preamble to the regulation for the imposition of definitive antidumping duties are not such as to support the conclusion drawn from them that the interests of the Community called for Community intervention in this case. My analyses further led me to conclude that, contrary to Article 12 (1) of Regulation No 3017/79 read with Article 13 (3) thereof, no reasons are stated for the conclusion arrived at in the thirty-second recital with regard to the amount of the definitive antidumping duties imposed. Finally, it must be concluded from my further examination of the established facts communicated by the Council and the Commission themselves that substantially lower antidumping duties would probably have been sufficient to make it impossible for the applicants to continue dumping in price competition, or at any rate that it has in no way been demonstrated that the levies imposed were in conformity with the mandatory provision constituted by the last phrase of Article 13 (3) of Regulation No 3017/79. The arguments advanced in paragraphs 59, 79, 86, 104 and the last sentence of paragraph 107 of the application regarding the total of the antidumping duties imposed must therefore also be regarded as well-founded. In my view, the arguments summarized in this section of my Opinion are of sufficient force to require the annulment of the regulation.

For the reasons stated, all the other arguments put forward by the applicants must be rejected.

5.2. Conclusion

I therefore propose that the Court should:

(a) declare void Council Regulation (EEC) No 101/83 of 17 January 1983 imposing a definitive antidumping duty on certain chemical fertilizer originating in the United States of America; and

(b) order the Council to pay the costs; the Commission, of course, must pay the costs of its intervention.

( *1 ) Translated from the Dutch.

( 1 ) J. F. Beseler, Die Abwehr von Damping und Interventionen durch die Europäische Gemeinchaft, Baden-Baden 1980.

( 2 ) For the text of the GATT Anti-Dumping Code, see Beseler, op cit., p. 233.

( 3 ) This takes account of the applicants' statement that producers also market up to 30 % of their production through wholesalers.

( 4 ) It appears from Annex 10 to the application that Allied Corporation at any rate certainly made such a request on 27 August 1982.