Case T-119/06

Usha Martin Ltd

v

Council of the European Union and European Commission

(Dumping – Imports of steel ropes and cables originating, inter alia, in India – Breach of an undertaking – Principle of proportionality – Article 8(1), (7) and (9) of Regulation (EC) No 384/96 (now Article 8(1), (7) and (9) of Regulation (EC) No 1225/2009))

Summary of the Judgment

1. Community law – Principles – Proportionality – Regulation imposing definitive anti-dumping and countervailing duties

(Art. 5, third para., EC; Council Regulation No 384/96)

2. Common commercial policy – Protection against dumping – Price undertaking – Undertaking concerning the provision of reports and Undertaking Invoices – Breach by the trader

(Art. 5, third para., EC; Council Regulation No 384/96)

1. By virtue of the principle of proportionality, as expressed in the third paragraph of Article 5 EC, the legality of Community rules is subject to the condition that the means employed must be appropriate to attainment of the legitimate objective pursued by those rules and must not go further than is necessary to attain it, and, where there is a choice of appropriate measures, it is necessary, in principle, to choose the least onerous.

However, in an area such as the common commercial policy in which the Community legislature has a broad discretion which accords with the political responsibilities given to it by the Treaty, only if a measure is manifestly inappropriate having regard to the objective which the competent institution is required to pursue can its lawfulness be affected. The broad discretion enjoyed by the Community legislature in this area corresponds to the broad discretion which, according to settled case-law, the Community institutions have when adopting specific anti-dumping measures pursuant to the basic regulations.

It follows that review by the Community judicature must be limited, in the sphere of anti-dumping action, to determining whether the measures adopted by the Community legislature are manifestly inappropriate having regard to the objective pursued.

(see paras 44-47)

2. By withdrawing acceptance of an undertaking, because the exporter concerned has breached its obligation to provide quarterly reports of sales of a product not covered by the undertaking as well as its obligation not to issue Undertaking Invoices for products not covered by the undertaking, the Commission has not infringed the principle of proportionality. Any breach of an undertaking or obligation to cooperate in regard to the implementation and monitoring of that undertaking suffices to allow the Commission to withdraw its acceptance of the undertaking and impose a definitive anti-dumping duty on the basis of the facts established within the context of the investigation which led to the undertaking, provided that the investigation was concluded with a final determination that there was dumping and injury, and that the exporter concerned has been given an opportunity to comment. In addition, breach of an undertaking is, in itself, sufficient to trigger its withdrawal. Furthermore, whilst the principle of proportionality applies to the question whether the amount of anti-dumping duty imposed is appropriate in the light of the injury suffered by the Community industry, it does not, however, apply to the question of the imposition per se of those duties. However, the consequence of withdrawal of acceptance of the undertaking is the imposition of definitive anti-dumping duties on the imports in question of the exporting company. Consequently, and in accordance with Article 8(9) of the basic anti-dumping regulation No 384/96, the definitive anti‑dumping duty, imposed on the basis of the facts established in the context of the investigation which led to the undertaking, is applicable to the imports in question of that company and is therefore equivalent to the imposition per se of those duties. It follows that the lawfulness of the withdrawal of acceptance of an undertaking cannot, as such, be called into question by reference to the principle of proportionality.

(see paras 51-55)

JUDGMENT OF THE GENERAL COURT (Fifth Chamber)

9 September 2010 ( )

(Dumping – Imports of steel ropes and cables originating, inter alia, in India – Breach of an undertaking – Principle of proportionality – Article 8(1), (7) and (9) of Regulation (EC) No 384/96 (now Article 8(1), (7) and (9) of Regulation (EC) No 1225/2009))

In Case T‑119/06,

Usha Martin Ltd, established in Kolkata (India), represented by K. Adamantopoulos, lawyer, and J. Branton, Solicitor, V. Akritidis and Y. Melin, lawyers,

applicant,

v

Council of the European Union, represented by J.-P. Hix and B. Driessen, acting as Agents, and by G. Berrisch, lawyer,

and

European Commission, represented by P. Stancanelli and T. Scharf, acting as Agents,

defendants,

APPLICATION for annulment of Commission Decision 2006/38/EC of 22 December 2005 amending Commission Decision 1999/572/EC accepting undertakings offered in connection with the anti-dumping proceedings concerning imports of steel wire ropes and cables originating, inter alia, in India (OJ 2006 L 22, p. 54), and Council Regulation (EC) No 121/2006 of 23 January 2006 amending Regulation (EC) No 1858/2005 imposing a definitive anti-dumping duty on imports of steel ropes and cables originating, inter alia, in India (OJ 2006 L 22, p. 1),

THE GENERAL COURT (Fifth Chamber),

composed of M. Vilaras, President, M. Prek and V.M. Ciucă (Rapporteur), Judges,

Registrar: K. Pocheć, Administrator,

having regard to the written procedure and further to the hearing on 25 March 2010,

gives the following

Judgment

Legal context

1 The basic anti-dumping regulation is 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 156, p. 1), as amended (‘the Basic Regulation’) (replaced by Council Regulation (EC) No 1225/2009 of 30 November 2009 on protection against dumped imports from countries not members of the European Community (OJ 2009 L 343, p. 5, corrigendum OJ 2010 L 7, p. 22)). Article 8(1), (7) and (9) of the Basic Regulation (now Article 8(1), (7) and (9) of Regulation No 1225/2009) provide:

‘1. Upon condition that a provisional affirmative determination of dumping and injury has been made, the Commission may accept satisfactory voluntary undertaking offers submitted by any exporter to revise its prices or to cease exports at dumped prices, if, after specific consultation of the Advisory Committee, it is satisfied that the injurious effect of the dumping is thereby eliminated. In such a case and as long as such undertakings are in force, the provisional duties imposed by the Commission in accordance with Article 7(1) or the definitive duties imposed by the Council in accordance with Article 9(4) as the case may be shall not apply to the relevant imports of the product concerned manufactured by the companies referred to in the Commission decision accepting undertakings, as subsequently amended. Price increases under such undertakings shall not be higher than necessary to eliminate the margin of dumping and they should be less than the margin of dumping if such increases would be adequate to remove the injury to the Community industry.

…

7. The Commission shall require any exporter from which an undertaking has been accepted to provide, periodically, information relevant to the fulfilment of such undertaking, and to permit verification of pertinent data. Non-compliance with such requirements shall be construed as a breach of the undertaking.

…

9. In case of breach or withdrawal of undertakings by any party to the undertaking, or in case of withdrawal of acceptance of the undertaking by the Commission, the acceptance of the undertaking shall, after consultation, be withdrawn by Commission Decision or Commission Regulation, as appropriate, and the provisional duty which has been imposed by the Commission in accordance with Article 7 or the definitive duty which has been imposed by the Council in accordance with Article 9(4) shall automatically apply, provided that the exporter concerned has, except where he himself has withdrawn the undertaking, been given an opportunity to comment.

Any interested party or Member State may submit information showing prima facie evidence of a breach of an undertaking. The subsequent assessment of whether or not a breach of an undertaking has occurred shall normally be concluded within six months, but in no case later than nine months following a duly substantiated request. The Commission may request the assistance of the competent authorities of the Member States in the monitoring of undertakings.’

Facts

2 The applicant Usha Martin Ltd is a company governed by Indian law which manufactures steel wire ropes and exports them, inter alia, to the European Union. The applicant and the Wolf company established a joint undertaking, Brunton Wolf Wire & Ropes, established in Dubai (United Arab Emirates). Brunton Wolf Wire & Ropes also manufactures steel wire ropes and cables which it exports to the European Union.

3 On 12 August 1999, the Council of the European Union adopted Regulation (EC) No 1796/1999 imposing a definitive anti-dumping duty, and collecting definitively the provisional duty imposed, on imports of steel ropes and cables originating in the People’s Republic of China, Hungary, India, Mexico, Poland, South Africa and Ukraine and terminating the anti-dumping proceeding in respect of imports originating in the Republic of Korea (OJ 1999 L 217, p. 1).

4 The product concerned by Regulation No 1796/1999 is constituted by any steel ropes and cables, including locked coil ropes, excluding ropes and cables of stainless steel, with a maximum dimension exceeding 3 millimetres. Given that all steel wire ropes were found to have the same basic physical and technical characteristics and the same use, even if differences existed between the products in the top end and bottom end of a range, since competition exists between steel wire ropes in adjacent groups, the institutions concluded that all products in the range formed one single product inasmuch as competition exists between steel wire ropes in adjoining groups.

5 The individual rate of the anti-dumping duty imposed on the applicant in recital 86 of Regulation No 1796/1999 and in Article 1(2) thereof was 23.8%. Under Article 2 of Regulation No 1796/1999, steel ropes and cables exported by the companies from which price undertakings had been accepted by the European Commission, including the applicant, were exempted from the anti-dumping duties at issue.

6 In its undertaking offered in accordance with Article 8(1) of the Basic Regulation, the applicant undertook inter alia to apply the minimum prices fixed for exports of steel wire ropes to the European Union, in order to eliminate the injurious effects of dumping.

7 The applicant also undertook to ensure that any sale of the product concerned was covered by an invoice which complied with the undertaking (‘the Undertaking Invoice’) showing the information described in Annex VI to the undertaking (paragraph 4.1 of the undertaking). Under paragraph 4.2 of the undertaking, the applicant undertook not to issue Undertaking Invoices for ‘products not covered by the undertaking’. According to paragraph 4.3 of the undertaking, the applicant ‘is aware that where it appears that it has issued Undertaking Invoices which were not in conformity with the terms of [the said] undertaking, the Commission may declare the declaration of conformity made by [it] on the Undertaking Invoices concerned invalid, and accordingly inform the competent customs authorities of the Member States. This would not prevent the Community institutions from taking any action warranted pursuant to Section 8 of [the said] undertaking’.

8 The applicant also undertook to notify the Commission, in detailed quarterly reports, in accordance with the required technical specifications, of all its sales of steel wire ropes in the European Union, including the sale of steel wire ropes not covered by the undertaking, and to cooperate with the Commission by providing any information considered relevant by the Commission to ensure fulfilment of the undertaking (paragraph 5 of and Annexes II, III, IV and V to the undertaking).

9 In addition, under paragraph 6 of the undertaking, the applicant undertook not to circumvent the provisions of the undertaking by, for example, making compensatory arrangements, either directly or indirectly, with customers in the European Union.

10 Finally, so far as concerns breach of the undertaking, Section 8, entitled ‘Breaches or withdrawals’, provides:

‘The [applicant] is aware that, without prejudice to paragraph 8.3:

– circumvention of this undertaking or failure to cooperate with the … Commission in monitoring this undertaking shall be considered as a breach of this undertaking. This shall include failure to submit the reports required under paragraph 5 within the prescribed time-limits except in the cases of force majeure;

– the … Commission may, where it has reason to believe that the undertaking is being breached, immediately impose a provisional anti-dumping duty on the basis of best information available pursuant to Article 8(10) of the Basic Regulation;

– pursuant to Article 8(9) of the Basic Regulation, where the undertaking has been breached, or withdrawn either by the … Commission or by the [applicant], a definitive anti-dumping duty may be imposed on the basis of the facts established within the context of the investigation which led to the undertaking, provided that the [applicant], except in the case of withdrawal of the undertaking by the [applicant] itself, has been given an opportunity to comment.’

11 Under the third indent of paragraph 1 of the undertaking, the terms and provisions of the undertaking apply not only to the applicant, but also to any related company worldwide.

12 By its Decision 1999/572/EC of 13 August 1999 accepting undertakings offered in connection with the anti-dumping proceedings concerning imports of steel wire ropes and cables originating in the People’s Republic of China, Hungary, India, the Republic of Korea, Mexico, Poland, South Africa and Ukraine (OJ 1999 L 217, p. 63), the Commission inter alia accepted the applicant’s undertaking.

13 In the context of an investigation to verify compliance with the undertaking, in accordance with paragraphs 5.1 and 5.4 of the undertaking, the Commission visited the applicant’s premises in both India and the United Arab Emirates in January and February 2005.

14 By letter of 12 May 2005, the Commission informed the applicant that, following the investigation, it considered that the applicant had infringed the undertaking on three occasions, and that it was therefore proposing to withdraw acceptance of the undertaking.

15 By letters of 20 May 2005, 29 August 2005 and 6 September 2005, the applicant submitted its comments on the finding of a breach of the undertaking and on the withdrawal envisaged by the Commission.

16 On 8 November 2005, the Council adopted Regulation (EC) No 1858/2005 imposing a definitive anti-dumping duty on imports of steel ropes and cables originating in the People’s Republic of China, India, South Africa and Ukraine following an expiry review pursuant to Article 11(2) of the Basic Regulation (OJ 2005 L 299, p. 1). By Regulation No 1858/2005, the Council decided that the anti‑dumping measures applicable to imports of the product concerned originating in, inter alia, India, established by Regulation No 1796/1999, should be extended for a further five years.

17 By Decision 2006/38/EC of 22 December 2005 amending Commission Decision 1999/572/EC accepting undertakings offered in connection with the anti‑dumping proceedings concerning imports of steel wire ropes and cables originating, inter alia, in India (OJ 2006 L 22, p. 54; ‘the contested decision’), the Commission decided to withdraw its acceptance of the undertaking relating to imports of steel ropes and cables offered by the applicant and, therefore, to amend Decision 1999/572 accepting the undertaking. At the same time, the Commission submitted to the Council a proposal for a regulation withdrawing acceptance of the undertaking and imposing definitive anti-dumping duties on the applicant (document COM(2005) 541 final).

18 In the contested decision, the Commission found three infringements. First, examination of the applicant’s accounting records showed that significant volumes of the product concerned not covered by the undertaking had not been included in the quarterly sales reports submitted by the applicant to the Commission, contrary to the provisions of paragraph 5.2 of and the first paragraph of Annex IV to the undertaking. Secondly, the Commission found that the goods in question had been sold by the applicant, in infringement of paragraphs 4.2 and 4.3, to its related importers in the United Kingdom and Denmark and included on Undertaking Invoices. Thirdly, the verification at the premises of Brunton Wolf Wire & Ropes in Dubai revealed that some steel ropes had been exported from the United Arab Emirates to the European Union and declared as having United Arab Emirates origin, although they were in fact of Indian origin.

19 On 23 January 2006, the Council therefore adopted Regulation (EC) No 121/2006 amending Regulation (EC) No 1858/2005 imposing a definitive anti-dumping duty on imports of steel ropes and cables originating, inter alia, in India (OJ 2006 L 22, p. 1; ‘the contested regulation’). Under Article 1 of the contested regulation, the applicant was withdrawn from the list of companies exempt from definitive anti-dumping duties. Consequently, the definitive rate of 23.8% imposed on the applicant under recital 86 and Article 1(2) of Regulation No 1796/1999 and extended by Article 1(2) of Regulation No 1858/2005 was applicable for the products concerned manufactured by the applicant and exported to the European Union.

Procedure and forms of order sought

20 By application lodged at the Court Registry on 19 April 2006, the applicant brought the present action.

21 The composition of the Chambers of the Court having been altered, the Judge‑Rapporteur was attached to the Fifth Chamber, to which this case has therefore been assigned.

22 On hearing the report of the Judge-Rapporteur, the Court (Fifth Chamber) decided to open the oral procedure. The parties presented oral argument and answered the questions put to them by the Court at the hearing on 25 March 2010.

23 The applicant claims that the Court should:

– annul the contested decision in so far as it relates to it and withdraws acceptance of a minimum price undertaking previously in force;

– annul the contested regulation in so far as it relates to it and gives effect to the contested decision;

– order the Council and the Commission to pay the costs.

24 The Council contends that the Court should:

– dismiss the application;

– order the applicant to pay the costs.

25 The Commission contends that the Court should:

– dismiss the application;

– order the applicant to pay the costs.

Law

26 In support of its action, the applicant puts forward two pleas alleging, first, infringement of the principle of proportionality and, secondly, an error of law, failure to state reasons and misuse of powers as regards the origin of the products concerned.

The first plea, alleging infringement of the principle of proportionality

Arguments of the parties

27 In the context of its first plea, the applicant maintains, in essence, that, in accordance with the principle of proportionality, the two irregularities observed by the Commission – failure to supply a report on sales not covered by the undertaking and the use of the Undertaking Invoices – are not material breaches of the undertaking permitting the Commission to impose on the applicant a sanction as drastic as withdrawing acceptance of the undertaking. The Commission could have used less serious sanctions for the applicant, such as an instruction not to commit the same error in the future.

28 According to Article 5 EC, any action by the Community must not go beyond what is necessary to achieve the objectives of the Treaty. Consequently, the principle of proportionality, laid down by the EC Treaty, requires that the means used by the institutions must be in proportion to their purpose. Moreover, the case-law provides that the principle of proportionality, as a general principle of Community law, requires that measures adopted by Community institutions do not exceed the limits of what is appropriate and necessary in order to attain the objectives legitimately pursued by the legislation in question; when there is a choice between several appropriate measures, recourse must be had to the least onerous, and the disadvantages caused must not be disproportionate to the aims pursued.

29 For the applicant, respect for the principle of proportionality is, in the present case, particularly important because the Commission, in deciding to withdraw acceptance of the undertaking pursuant to Article 8 of the Basic Regulation, enjoys considerable discretion, which must be exercised in accordance with the principle of proportionality.

30 In that regard, it is clear that withdrawal of acceptance of an undertaking is a serious measure having profound consequences for the business of the company concerned, and therefore a manifestly excessive action unless a material breach of the undertaking has been found to have occurred.

31 In the present case, first, it is not contested that the exports to which the failure to supply the quarterly report related were not covered by the scope of the undertaking. Consequently, no material harm to the Community industry’s interests was occasioned by such an omission. Since the purpose of an undertaking is to offer a potential benefit to an exporter while at the same time guaranteeing the minimum level of protection necessary for the Community industry, the infringement at issue cannot be described as a material infringement.

32 In that regard, the applicant points out inter alia that infringement of the obligation to draw up a report concerning sales not covered by the undertaking does not call into question compliance with the main objective of the undertaking, namely to maintain the minimum import prices. The applicant always fulfilled that main obligation. That is particularly so because the information drawn from quarterly reports of all sales, whether covered by the undertaking or not, indicates what a given company says it has exported, rather than what it has actually exported. Therefore, the information drawn from the quarterly reports is only an indicative guide. Furthermore, the human error consisting in failing to draw up a report, over a short period, concerning some sales not covered by the undertaking does not compromise ‘the effectiveness of the undertaking’.

33 The applicant stated at the hearing that the undertaking was applied for six months and that the Commission, during its investigation, took account of a period of 24 months. However, in regard to that period of 24 months, the Commission found only that transactions of a volume of about 150 tonnes had not been included in a quarterly report. Consequently, the first infringement was found to exist only during a single quarter in six years.

34 The applicant also regards the second infringement found by the Commission, namely the incorrect inclusion in Undertaking Invoices of sales of the product concerned which were not covered by the undertaking, as being of minor importance. The fact that there may have been confusion as to whether or not Undertaking Invoices were to be drawn up for products not covered by the undertaking cannot call into question the fact that the undertaking was respected.

35 The applicant argues, inter alia, that full anti-dumping duties were paid on the imports in question and that it did not seek to avoid payment of such duties. At the hearing, the applicant added on that subject that it provided the Commission with proof of payment of the anti-dumping duties concerned by means of two faxes sent to it, dated 14 and 30 March 2005. The fact that those anti‑dumping duties were paid was common ground between the parties during the administrative procedure and was challenged by the Commission and the Council for the first time in their rejoinders.

36 Consequently, the applicant takes the view that the fundamental points of the undertaking were respected, since the minimum prices were respected for the products covered by the undertaking and the anti-dumping duties were paid for the products outside the scope of the undertaking.

37 For the applicant, the infringements found by the Commission concerning the quarterly reports and the Undertaking Invoices, which the applicant has admitted, are only slight technical infringements. The applicant also states that it did not accept that those infringements were material infringements, and adds that the extent of the infringement must be taken into account for determining the sanction.

38 The applicant therefore takes the view that the drastic step of withdrawing acceptance of the undertaking, with all the consequences that it entails, in response to a human error of an administrative nature as insignificant as the one in the present case, is not proportionate, but is a manifestly excessive reaction which infringes the principle of proportionality. A less radical measure would have achieved all identifiable purposes and objectives.

39 Furthermore, according to the applicant, the excessive nature of the withdrawal of acceptance of the undertaking is also contrary to Article 15 of the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 (OJ 1994 L 336, p. 103; ‘the Anti-Dumping Agreement’), which imposes an obligation upon developed countries, such as those in the European Union, to give ‘special regard to the circumstances of developing country Members when considering the application of anti-dumping measures under this Agreement’. Article 15 of the Anti-Dumping Agreement means that special consideration must be given to the conclusion of undertakings with developing country members. However, that obligation under Article 15 of the Anti-Dumping Agreement ought to extend beyond the conclusion of undertakings to the monitoring of such undertakings.

40 In recitals 34 and 35 of the contested decision, the Commission wrongly rejected the applicability of Article 15 of the Anti-Dumping Agreement, on the ground that the applicant was a multinational group of companies. The company’s structure does nothing to alter the fact that India is a developing country within the meaning of that provision, and it is particularly because the applicant is established in India that Article 15 of the Anti-Dumping Agreement is applicable.

41 The applicant submits that, in circumstances such as those of this case, withdrawing an undertaking on the basis of a non-material administrative error completely devalues the spirit of Article 15 of the Anti-Dumping Agreement. It is self-evident from the text of the undertaking that compliance with every detail of the undertaking is complex and difficult. Although the applicant can understand that a material breach of the undertaking may lead to withdrawal of its acceptance, it cannot understand how a simple administrative error may have the same consequence. Given that no material breach of the undertaking occurred, and that the applicant had continuously shown good faith to the Commission over many years and was willing at all times to submit to inspections, the applicant cannot see a justification for withdrawing acceptance of the undertaking. In such a situation, in which exercise of the Commission’s discretion puts a developing country exporter at a great deal of risk, it is disproportionate to terminate an undertaking for what the applicant considers to be minor infringements.

42 In the reply, the applicant contests the view of the Commission and the Council that any non-adherence to the letter of the undertaking is sufficient basis for withdrawal of its acceptance and that no distinction is made according to the seriousness of the infringements. The case-law on which the institutions base this argument relates to circumstances which are totally different from those of the present case. For the applicant, on the other hand, the question which arises in the first plea is: how serious does an infringement have to be to justify withdrawal of acceptance of an undertaking?

43 The Council and the Commission contest the applicant’s arguments.

Findings of the Court

44 It must be borne in mind that by virtue of the principle of proportionality, as expressed in the third paragraph of Article 5 EC, the legality of Community rules is subject to the condition that the means employed must be appropriate to attainment of the legitimate objective pursued by those rules and must not go further than is necessary to attain it, and, where there is a choice of appropriate measures, it is necessary, in principle, to choose the least onerous (Case T‑162/94 NMB France and Others v Commission [1996] ECR II‑427, paragraph 69; Case T-87/98 International Potash Company v Council [2000] ECR II‑3179, paragraph 39; and Case T‑340/99 Arne Mathisen v Council [2002] ECR II‑2905, point 112).

45 However, in an area such as the common commercial policy in which the Community legislature has a broad discretion which accords with the political responsibilities given to it by the Treaty, only if a measure is manifestly inappropriate having regard to the objective which the competent institution is required to pursue can its lawfulness be affected (NMB France and Others v Commission, paragraph 44 above, paragraphs 70 and 71 and the case-law cited).

46 The broad discretion enjoyed by the Community legislature in this area corresponds to the broad discretion which, according to settled case-law, the Community institutions have when adopting specific anti-dumping measures pursuant to the basic regulations (NMB France and Others v Commission, paragraph 44 above, paragraph 72; see also, to that effect, Case 191/82 Fediol v Commission [1983] ECR 2913, paragraph 30, and Joined Cases T-163/94 and T‑165/94 NTN Corporation and Koyo Seiko v Council [1995] ECR II‑1381, paragraphs 70 and 113).

47 It follows that review by the Community judicature must be limited, in the sphere of anti-dumping action, to determining whether the measures adopted by the Community legislature are manifestly inappropriate having regard to the objective pursued (NMB France and Others v Commission, paragraph 44 above, paragraph 73, and Arne Mathisen v Council, paragraph 44 above, paragraph 115).

48 In the present case, it is common ground between the parties that the applicant did not comply with the undertaking at issue on two occasions, first, by infringing its obligation to provide quarterly reports of sales of the product concerned not covered by the undertaking (paragraph 5.2 of and the first paragraph of Annex IV to the undertaking) and, secondly, by infringing its obligation not to issue Undertaking Invoices for products not covered by the undertaking (paragraphs 4.1 and 4.2 of the undertaking).

49 In that regard, the applicant maintains in its first plea, in essence, that the two irregularities observed by the Commission are not material breaches of the undertaking permitting the Commission to impose on the applicant a sanction as drastic as withdrawal of acceptance of the undertaking. In accordance with the principle of proportionality, the Commission could have used less serious sanctions for the applicant, such as an instruction not to commit the same error in the future, something which the applicant would have been willing to give the Commission an undertaking to do.

50 That argument cannot be accepted.

51 It must be recalled, first, that, according to Article 8(7) and (9) of the Basic Regulation, any breach of an undertaking or obligation to cooperate in regard to the implementation and monitoring of that undertaking suffices to allow the Commission to withdraw its acceptance of the undertaking and impose a definitive anti-dumping duty on the basis of the facts established within the context of the investigation which led to the undertaking, provided that the investigation was concluded with a final determination that there was dumping and injury, and that the exporter concerned has been given an opportunity to comment (see, to that effect, Arne Mathisen v Council, paragraph 44 above, paragraph 118). It must be pointed out in that regard that the applicant does not dispute that those conditions are fulfilled in the present case.

52 Moreover, it must be emphasised that, according to case-law, breach of an undertaking is, in itself, sufficient to trigger its withdrawal (see, to that effect, Case T‑51/96 Miwon v Council [2000] ECR II‑1841, paragraph 52, and Arne Mathisen v Council, paragraph 44 above, paragraph 57).

53 Secondly, it must be recalled that, whilst the principle of proportionality applies to the question whether the amount of anti-dumping duty imposed is appropriate in the light of the injury suffered by the Community industry (see, to that effect, Case C‑136/91 Findling Wälzlager [1993] ECR I‑1793, paragraph 13), it does not, however, apply to the question of the imposition per se of those duties (Arne Mathisen v Council, paragraph 44 above, paragraph 121).

54 However, the consequence of withdrawal of acceptance of the undertaking is the imposition of definitive anti-dumping duties on the applicant’s imports in question. Thus, in the present case, the contested regulation, on the one hand, implemented – by amending Regulation No 1858/2005 – the withdrawal by the contested decision of the undertaking at issue and, on the other, removed the applicant from the list of companies exempted from definitive anti-dumping duties. Consequently, and in accordance with Article 8(9) of the Basic Regulation, the definitive anti‑dumping duty of 23.8% imposed on the basis of the facts established in the context of the investigation which led to the undertaking is applicable to the applicant’s imports in question and is therefore equivalent to the imposition per se of those duties.

55 It follows that the lawfulness of the withdrawal of acceptance of an undertaking cannot, as such, be called into question by reference to the principle of proportionality (see, to that effect, Arne Mathisen v Council, paragraph 44 above, paragraph 122).

56 Having regard to all those considerations, the first plea, alleging infringement of the principle of proportionality, must be rejected.

The second plea, alleging an error of law, failure to state reasons and misuse of powers as regards the origin of the products concerned

57 The second plea refers, according to the applicant, to the third breach of the present undertaking which the institutions had found to exist, concerning the origin of products manufactured in Dubai, and not the breaches alleged in the context of the first plea. However, it follows from consideration of the first plea that the Commission was entitled, without infringing the principle of proportionality, to withdraw its acceptance of the undertaking.

58 Consequently, since the second plea is ineffective, the action must be dismissed in its entirety.

Costs

59 Under Article 87(2) of the Rules of Procedure of the General Court, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. Since the applicant has been unsuccessful, it must be ordered to pay the costs incurred by the Council and the Commission, as sought by them.

On those grounds,

THE GENERAL COURT (Fifth Chamber)

hereby:

1. Dismisses the action;

2. Orders Usha Martin Ltd to pay the costs.





Vilaras Prek Ciucă

Delivered in open court in Luxembourg on 9 September 2010.

[Signatures]