Proposal for a COUNCIL REGULATION (EC) imposing a definitive anti-dumping duty on imports of plain paper photocopiers originating in Japan
Date: 1995-08-01
Institutions: European Commission
Subjects: Japan, anti-dumping duty, dumping, electronics industry, import, office equipment

COMMISSION OF THE EUROPEAN  COMMUNITIES 

Brussels,  01.08.1995 

COM(95)  386  final 

Proposal  for a 
COUNCIL  REGULATION  (EC) 
imposing  a definitive  anti-dumping  duty  on  imports  of  plain  paper 
photocopiers  originating  in Japan 

(presented  by  the  Commission) 

EXPLANATORY  MEMORANDUM 

1. 

2. 

3. 

In  August  1992,  the  Commission  initiated  a  review  under  Articles  14  and  15  of 
Counci  Regulation  (EEC)  No  2423/88(,),  as  last  amended  by  Regulation  (EC) 
No  522/94*  \  of the definitive  anti-dumping  measures  introduced  in  February  1987 on 
imports  of  plain  paper  photocopiers  (PPCs)  originating  in  Japan. 

that  the  existing  anti-dumping  duty  has  been  effective 

The  review  found 
in 
significantly  reducing  the  volume  of  PPC  imports  from  Japan.  On  the other  hand,  the 
remaining  import  volume  still  represented  26%  of  the  Community  market  in  the 
investigation  period.  Those  imports  were,  on  average,  highly  dumped  and  sold  at 
prices  in  the  Community  that  significantly  undercut  the  prices  of  the  Community 
industry  for  comparable  models.  Furthermore,  the  dumped  imports  have  become 
particularly  injurious  in  that  they  now  consist,  to  a  much  larger  degree  than  before, 
of  large  PPCs,  which  used  to  be  sold  mainly,  and  profitably,  by  the  Community 
industry.  The  degree  of  undercutting  on  large PPCs was twice that  of  small  PPCs.  As 
a  result,  the  Community  industry  lost  a  large  part  of  its  market  share  of  large  PPCs 
to  the  dumped  imports  from  Japan,  and  profitability  declined  considerably.  On  the 
whole,  the Community  industry  could  not be  said to be in  a better position  than  at the 
time  of  the  original  investigation,  when  the  Council  determined  that  material 
injury 
existed. 

The  Commission  proposes  that the  Council  maintains  the  existing  anti-dumping  duty, 
at  its  current  rates  (which  vary  between  7.2%  and  20%),  for  a  new  period  of  three 
years,  until  August  1998, and  that  it  enlarges the  product  scope  of the  duty  to  include 
PPCs  capable  of  operating  at  a  speed  of  more  than  75  copies  per  minute  of  A4  size 
paper.  The maintenance  of measures at their existing level  and their extension  to PPCs 
over  75  copies  per  minute  is  deemed  necessary,  but  also  sufficient,  to  counteract  the 
injurious  effects  of  dumping,  especially  on  large  PPCs.  The  limitation  of  the  new 
measures  to  three  years  instead  of  the  usual  five  years  is  considered  justified  by  the 
exceptional  length  of  the  investigation,  during  which  period  the  existing  duty  has 
remained  in  force. 

(1) 
(2) 

OJ  N oL  209,  2.8.1988,  p.  1. 
O J N oL  66,  10.3.1994,  p.  10. 

Proposal  for  a 
COUNCIL  REGULATION  (EC) 
imposing  a definitive  anti-dumping  duty  on imports of plain  paper 
photocopiers  originating  in Japan 

THE COUNCIL  OF THE EUROPEAN UNION, 

Having regard  to the Treaty  establishing  the European  Community, 

Having regard  to Council  Regulation  (EC) No 3283/94  of 22 December  1994 on protection 
against  dumped  imports from  countries not members of the European  Community(1), as last 
amended  by Regulation  (EC) No  1251/95(2),  and in particular  Article 23 thereof, 

Having  regard  to  Council  Regulation  (EEC)  No  2423/88,  of  11 July  1988  on  protection 
against dumped or subsidised imports from  countries not members of the European Economic 
Community^, as last amended by Regulation (EC) No 522/94(4), and in particular Articles 12, 
14 and  15 thereof, 

Having  regard  to  the  proposal  submitted  by  the  Commission  after  consulting  the 
Advisory  Committee, 

Whereas : 

A.  PROCEDURE 

(1) 

On  2  August  1985,  the  Commission  announced  the  initiation  of  an  anti-dumping 
proceeding  concerning  imports of photo-copying  apparatus  originating  in Japan( \  A 
provisional  anti-dumping  duty  was  imposed  on  26  August  1986  by  Commission 
Regulation  (EEC)  No  2640/86(6).  On  24  February  1987,  by  Regulation  (EEC) 
No  535/87(7), the Council imposed a definitive  anti-dumping duty on imports of plain 
paper  photocopiers  (hereinafter  referred  to  as  MPPCs") originating  in  Japan  . At  the 
same  time,  an  undertaking  was  accepted(8)  from  one  exporter,  Kyocera,  which  had 
discontinued the production of PPCs, to give advance notice to the Commission should 
it  decide to recommence  exports to the  Community. 

(i) 

(2) 

(3) 

(4) 

(5) 

(6) 

(7) 

(8) 

OJNoL349,  31.12.1994, p.  1. 
O J N oL  122, 2.6.1995, p. 1. 
OJNoL209,  2.8.1988, p. 1. 
O J N 0 L 6 6,  10.3.1994, p.  10. 
OJNoC  194, 2.8.1985, p. 5. 
OJNoL239,  26.8.1986,  p. 5. 
O J N oL  54, 24.2.1987,  p. 12. 
Commission  Decision  87/135/EEC, OJ No L  54, 24.2.1987, p. 36. 

(2) 

(3) 

(4) 

(5) 

(6) 

Following the introduction of these measures, a number of investigations were initiated 
under Article  13(10) of Regulation  (EEC) No 2423/88 in respect of the production or 
assembly  of  PPCs  in  the  Community  by  Japanese  exporters.  These  investigations 
resulted in undertakings being accepted by the Commission from  exporters whose PPC 
models, produced or assembled  in the Community, had originally been found  to have 
a weighted  average value  of parts or materials of Japanese  origin  of more than 60% 
of the total  value of all  parts or materials(9). 

Following  the  publication  in  August  1991 of  a notice(10)  of the impending  expiry  of 
the  measures  in  force  in  respect  of  imports  from  Japan,  the  Commission  received  a 
request  for  a  review  lodged  by  the  Committee  of  European  Copier  Manufacturers 
(CECOM)  allegedly  on  behalf  of  producers  representing  a  major  proportion  of  the 
total  Community  production  of PPCs.  This review  request  was limited  to PPCs with 
a  capacity  to  operate  at  a speed  of up  to  75  copies per  minute  of  A4  size paper.  In 
accordance with Article  15(3) of Regulation (EEC) No 2423/88, it contained evidence 
purporting to show that the expiry of the anti-dumping measures in force would again 
lead  to  injury  or  threat  thereof.  The  review  request  also  covered  the  undertakings 
given under  Article  13(10) of Regulation  (EEC)  No 2423/88. 

On  16 July  1992,  CECOM  submitted  a supplement  to its review  request,  asking  for 
the  inclusion  in  the  review  of  PPCs  capable  of  operating  at  a  speed  of  more  than 
75 copies per minute of A4 size paper. This supplementary request contained evidence 
purporting to show that such PPCs originating in Japan were being dumped and were, 
through  the effect  of dumping,  causing injury  to the Community  industry. 

On  14  August  1992,  in  a  notice  published  in  the  Official  Journal  of  the 
European  Communities(ll),  the  Commission  announced  the  initiation  of  a  review 
investigation in accordance with Articles  14 and  15 of Regulation (EEC) No 2423/88. 

The  Commission  notified  the  exporters  and  importers  known  to  be  concerned,  the 
representatives of the exporting country and known producers in the Community, and 
gave  the  parties  directly  concerned  the  opportunity  to  make  their  views  known  in 
writing  and to request  a hearing. 

All  complainant  producers  in the Community  replied  to the questionnaire  and  made 
their  views  known  in  writing.  In  addition,  some  information  was  received  from 
Kodak Ltd, Hemel Hempstead,  United Kingdom.  Almost  all  exporters together with 
their  related  importers  and  production  facilities  in  the  Community  replied  to  the 
questionnaire  and  made  their  views  known  in  writing.  The  only  known  exporter  in 
Japan that did not reply to the questionnaire was Sanyo Electric Co., Osaka. Two other 
Japanese companies, Kyocera Corp., Kyoto, and Fuji Xerox Co., Tokyo, declared they 
had  not  exported  PPCs  to  the  Community  during  the  investigation  period  of  the 
review. Kyocera Corp. indicated that it had not produced PPCs since  1986 and asked 
to  be  relieved  of  its  undertaking  to  give  the  Commission  sufficient  notice  should 
it recommence  exports  to  the  Community(,2).  One  Japanese  trading  company, 

(9) 

(10) 

(11) 

(12) 

See  Council  Regulation  (EEC)  No  3205/88,  OJ  No  L  284,  19.10.1988,  p.  36; 
Commission  Decision  88/519/EEC,  OJ No L 284 of  19.10.1988, p. 60; Commission 
Decision  88/638/EEC,  OJ  No  L  355,  23.12.88,  p.  66;  Council  Regulation  (EEC) 
No 4017/88,  OJ  No  L  355,  23.12.1988,  p.  1;  Commission  Decision  89/116/EEC, 
OJ No L 43,  15.2.1989,  p.  54; Council  Regulation  (EEC) No  359/89,  OJ No  L 43, 
15.2.1989,  p.  1; Commission  Decision  89/309/EEC,  OJ No  L  126, 9.5.1989,  p. 38; 
Commission  Decision  90/47/EEC, OJ No L 34, 6.2.1990,  p. 28. 
OJNoC  222, 27.8.1991, p. 2. 
OJNoC  207,  14.8.1992, p. 16. 
See footnote  8. 

Mitsui  Co  Ltd.,  Tokyo,  also  replied  to  the  questionnaire.  Three  unrelated  importers, 
Agfa  Gevaert  N.V.,  Mortsel,  Belgium,  Infotech  Europe  B.V.,  's-Hertogenbosch,  the 
Netherlands,  and  Lanier  Europe  B.V.,  Sassenheim,  the  Netherlands,  replied  to  the 
questionnaire  and  made  their  views  known  in  writing.  All  parties  who  so  requested 
were  granted  a hearing. 

(7) 

The  Commission  sought  and  verified  all  information  it  deemed  necessary  for  the 
purpose  of  a determination  and visited  the  premises  of  the  following  companies: 

- 

complainant  producers  in the  Community: 

Océ  Nederland  B.V.,  with  headquarters  and 
the  Netherlands, 

factory 

in  Venlo, 

Olivetti-Canon  Industriale  S.p.A.,  with  headquarters  and  factory  in  Ivrea, 
Italy, 

Rank  Xerox  Ltd.  with  headquarters  in  Marlow,  United  Kingdom,  and 
factories  in  Mitcheldean,  United  Kingdom,  Venray,  the  Netherlands,  and 
Lille,  France; 

producers/exporters  in Japan: 

Canon  Inc.,  Tokyo, 

Copyer  Co.  Ltd,  Tokyo, 

Konica  Corp.,  Tokyo, 

Matsushita  Electric  Industrial  Corp.,  Osaka, 

Minolta  Camera  Co.  Ltd.  (since  re-named  Minolta  Co.  Ltd.),  Osaka, 

Mita  Industrial  Co.,  Osaka, 

Ricoh  Co.  Ltd.,  Tokyo, 

Sharp  Corp.,  Osaka, 

Toshiba  Corp.,  Tokyo; 

- 

related  importers  in the  Community: 

Canon Deutschland  GmbH,  Neuss,  Germany, 

Canon  France  S.A.,  Le  Blanc  Mesnil,  France, 

Canon  (UK)  Ltd.,  Wallington,  United  Kingdom, 

Develop  Dr.  Eisbein  GmbH &  Co.,  Gerlingen,  Germany, 

Gestetner  Holdings  PLC, London,  United  Kingdom, 

Konica Bureautique  S.A.,  Nanterre,  France, 

Konica  Business  Machines  International  GmbH,  Hamburg,  Germany, 

Matsushita  Business  Machines  (Europe)  GmbH,  Neumtinster,  Germany, 

Minolta France  S.A.,  Carrières-sur-Seine,  France, 

Minolta  GmbH Business  Equipment  Operation,  Langenhagen,  Germany, 

Minolta  Italia  s.r.l.,  Buccinasco,  Italy, 

Minolta  UK  Ltd.,  Milton  Keynes,  United  Kingdom, 

Mita Deutschland  GmbH,  Steinbach,  Germany, 

Mita Europe B.V.,  Hoofddorp,  the Netherlands, 

Mita  Italia  S.p.A.,  Agrate,  Italy, 

NRG  Italia  S.p.A,  Milano,  Italy, 

NRG-Nashua  France  S.A.,  Créteil,  France, 

Panasonic  Deutschland  GmbH,  Germany, 

Panasonic  Europe  Ltd.,  Uxbridge,  United  Kingdom, 

Panasonic  Italia  S.p.A.,  Milano,  Italy, 

Panasonic  U.K.  Ltd.,  Bracknell,  United  Kingdom, 

Ricoh  Deutschland  GmbH,  Eschborn,  Germany, 

Ricoh  Europe  B.V.,  Amstelveen,  the Netherlands, 

Ricoh  France  S.A.,  Neuilly-sur-Seine,  France, 

Ricoh  Italia,  S.p.A.,  Verona,  Italy, 

Selex  Europe  B.V.,  Amstelveen,  the Netherlands, 

Selex  Italia  S.p.A.,  Milano,  Italy, 

Selex  (UK)  Ltd.,  Croydon,  United  Kingdom, 

Sharp Electronics  (Europe)  GmbH,  Hamburg,  Germany, 

Sharp Electronics  (UK)  Ltd.,  Manchester,  United  Kingdom, 

Toshiba  Europa GmbH,  Neuss,  Germany, 

Toshiba  Informationssysteme  (Deutschland)  GmbH,  Neuss,  Germany, 

Toshiba  Information  Systems  (UK)  Ltd.,  Weybridge,  United  Kingdom, 

Toshiba  Systèmes  (France)  S.A.,  Puteaux,  France; 

unrelated  importers  in the  Community: 

Agfa  Gevaert N.V.,  Mortsel,  Belgium. 

(8) 

The  investigation  of  dumping  covered  the  period  from  1 July  1991  to  30  June  1992 
(investigation  period). 

(9) 

Owing  to the  unusual  complexity  of  a number  of  legal,  technical  and  policy  issues 
dealt with  by  the  investigation,  and the very  large volume  of  data  and  submissions 
received  from  parties  concerned,  often  requiring  time  limits  to  be  extended,  the 
investigation  significantly  exceeded  the  period  of  one  year  recommended  for 
investigations in Article 7(9) (a) of Regulation (EEC) No 2423/88. For similar reasons, 
it had also already taken the Commission close to six months following the end of the 
five-year period  of  operation  of the original  measures,  24 February  1992, to  initiate 
this  review  investigation.  In  accordance  with  Article  15(3)  of  Regulation  (EEC) 
No 2423/88, the original  measures have remained  in force  during this entire period. 

(10)  All parties  concerned  were informed  of the essential  facts  and considerations  on the 
basis of which  it was intended  to recommend  the imposition  of definitive  measures. 
They were also granted a period within which to make representations  subsequent  to 
these disclosures. 

B. PRODUCT UNDER CONSIDERATION  AND LIKE PRODUCT 

1. Product  concerned 

(11) 

In accordance with Article 7(9)(b) of Regulation (EEC) No 2423/88, the anti-dumping 
proceeding which was initiated on 2 August  1985 concerning imports of photocopying 
apparatus originating in Japan, continues as long as the measures have not expired or 
been repealed  or  terminated.  There is therefore  no change  in the product  concerned 
by the proceeding. The product was defined as "photo-copying apparatus incorporating 
an  optical  system",  "formed  by  four  basic  elements,  i.e.  image  processing,  photo 
conducting or developing, transfer or fixing and paper transport system"(13), or in short 
as "plain paper photocopiers (PPCs)"(14). 

(12)  As the name indicates,  such copiers use plain  paper  instead  of coated paper to make 
copies.  PPCs  have  now  almost  entirely  replaced  coated  paper  copiers  for  normal 
applications. Whereas coated paper copiers use a direct  process to transfer  the image 
of an original  document onto a chemically  treated  sheet of paper, PPCs are based on 
an indirect process, whereby  the optical  system  (comprising  mainly  a light  source, a 
condenser, lenses, mirrors, prisms or an array of optical fibres) projects the image  of 
the  original  document  onto  a  light-sensitive  surface  (usually  a  drum  or  plate).  The 
image  is  then  developed  (often  by  means  of  a  powdered  dye),  transferred  onto 
ordinary  paper (normally  by  an electrostatic field) and fixed thereon  (by  heat  and/or 
pressure). Coated paper or direct process copiers, falling within CN code 9009  11 00, 
are  therefore  a  product  different  from  the  PPCs  which  are  the  subject  of  this 
proceeding. 

PPCs  often  consist  of  several  separate  modules,  which  are  assembled  only  at  the 
customer's  premises.  In  such  cases,  all  those  modules  are part  of the  PPC,  whether 
imported  together  or  separately,  unless they  qualify  as truly  optional  equipment  not 
included  in the standard  configuration  of the PPC. 

(13)  The above product description of PPCs entails that digital copiers (black and white or 
full  colour)  do  not  fall  within  the  scope  of  the  product  which  is the  subject  of  the 
proceeding. Even if the scanner used by a digital copier to read the original  document 
could be considered  an "optical  system", a digital  copier does not  "project"  an image 
onto a light-sensitive' surface,  but  rather re-composes  the original  image,  after  it has 
been transformed  by the image processor into digital  signals, into a new image, with 
or without changes to the original  image. It is this new image which is transmitted by 

(13) 
(,4) 

See notice of initiation  of the proceeding  (footnote  5). 
Recital  1 of Regulation  (EEC) No 2640/86,  see footote  6.. 

a laser onto a light-sensitive surface. When digital copiers are connected to computers, 
they  are not  even  dependent  on an original  document  for  their  input. 

2.  Product  investigated 

(14) 

In  terms  of  its  product  scope,  a  review  investigation  may  cover  the  entire  product 
concerned  by  the  proceeding.  For  the  purpose  of  this  review  it  was,  however,  not 
considered necessary to investigate a number of product types which had already been 
exempted  from  the  original  measures  and  which  the  Community  industry  did  not 
request  to be included  in  the review.  These comprised  analogue  full-colour  copiers, 
aperture  card  reader  printers  and  microfilm  printers,  whiteboard  copiers  and 
large-format  copiers  capable of  making  copies  of  A2  size and  larger  from  originals 
larger than  A2 size(15).  This means that highlight  PPCs, which  reproduce  only  a few 
colours to draw attention  to certain  segments  of a document,  and  A2 PPCs,  capable 
of  making  A2  size  copies  (but  not  larger)  from  A2  size  originals  or  larger,  were 
included  in the review  investigation. 

(15)  PPCs capable of operating  at a speed  of more than  75 copies per minute  of A4 size 
paper  were  included  in  the  review  investigation,  as  requested  by  the  Community 
industry. These products are clearly PPCs as defined  in the product description  of the 
proceeding*16). The only reason for their exclusion from the original measures was that 
at the time of the original  investigation  segments(17) 5 and  6 were not imported  from 
Japan  and  segment  6  was  not  produced  by  the  Community  industry.  In  its 
supplementary  request  for  a  review,  CECOM  submitted  sufficient  evidence  that 
segment  5 PPCs  had  since  been  imported  from  Japan  at  dumped  prices  and  were 
causing  injury  to  the  complainant  Community  industry,  producing  in  the  adjacent 
segments 4 and 6, warranting the inclusion of PPCs with a capacity of over 75 copies 
per minute of  A4 size paper within the scope of the review  investigation. 

This inclusion was commented on by several exporters and importers. They contested 
the view that the product scope of an Article  15 review can be as large as the product 
definition of the proceeding and considered that such a review should be limited to the 
product  types  covered  by  the  measures.  However,  the  design,  production  and 
marketing  of  particular  product  types  often  evolves  over  time,  with  new  types  still 
being essentially the same product. For PPCs, for instance, the market trend  has been 
towards more productive, larger and faster types of PPCs, the essential  characteristics 
of  which  are,  however,  still  the  same.  If  the  Commission  were  prevented  from 
investigating new types of the same product in an Article  15 review,  simply  because 
those  types  were  not  yet  produced  at  the  time  of  the  original  investigation,  a  new 
proceeding would  have to be opened. 

(,5) 
(,6) 

(17) 

See the product  descriptions in  Article  1(4) of Regulation  (EEC) No 535/87 
See for instance the first indent of Article  1 (4) of Regulation (EEC) No  535/87, which 
refers  to them  as being part  of  "those products defined  in paragraph  1", paragraph 1 
covering  "plain  paper  photocopiers incorporating  an optical  element". 
The  segmentations  used  for  this  review  are  the  generally  accepted  Dataquest 
segmentations  in force  in July  1992, as follows: 
personal  copier 
segment  1 

segment  2 
segment  3 
segment 4 
segment  5 
segment  6 

up to  12 copies per minute, minimally  featured 
up to 20 copies per minute, with features  such as 
reduction/enlargement, zoom 
from  21 to 30 copies per  minute 
from  31 to 44 copies per minute 
from  45 to 59 copies per minute 
from  70 to 90 copies per minute 
91 and  more copies per minute. 

8 

Conducting two separate proceedings on the same product  originating from  the same 
country  would  be  illogical,  contrary  to  the  system  envisaged  by  Regulation  (EEC) 
No 2423/88, and  conducive to  incongruous  results.  In  the case of  PPCs  from  Japan, 
the  review  of  the  existing  measures  under  Article  15 was opened  and  conducted  in 
accordance with  Article  14 as well, based on the view that Article  15 should,  indeed 
can only, be read in conjunction  with Article  14. Reviews of existing measures under 
these provisions may lead to the amendment of those measures. If,  following a review, 
existing measures could not be amended to include within the scope of those measures 
new types of the same product, the effectiveness  of those measures would be impaired. 

Several  exporters  also  commented  that  the  Commission  had  not  re-consulted  the 
Advisory  Committee  during  the  time  between  CECOMs  supplement  to  its  review 
request and the initiation of the review. However, the proceeding on imports of PPCs 
from  Japan  covers  all  types  of  PPCs,  irrespective  of  their  copy  speed,  and  the 
Advisory Committee was duly consulted on the basic Commission proposal  to initiate 
an  Article  15  review  in  respect  of  this  proceeding.  The  precise  parameters  of  the 
investigation were not, at that time, a matter of discussion, but were clearly  indicated 
in the  notice of  initiation,  and the inclusion  of PPCs over  75 copies per minute was 
subsequently  discussed  in  the  Advisory  Committee  on  several  occasions  before  any 
conclusions on the scope of possible measures were drawn. Private parties have their 
own extensive procedural  rights, and all comments made by them in the course of the 
investigation  on  the  types  of  product  covered  by  the  investigation  and  by  possible 
measures were carefully  considered  before  any  conclusions were drawn. 

3.  Like product 

(16)  With  respect  to the  question  whether  the PPCs  sold  by  the  Japanese  producers  and 
exporters concerned  on the Japanese market  and  in the Community  constitute  a like 
product  with  the  PPCs  sold  in  the  Community  by  the  Community  industry,  it  was 
established  in  the  course  of  the  review  investigation  that  the  basic  technical 
characteristics  (as  described  in  recitals  11  and  12)  of  all  PPCs  investigated  were 
identical  or  closely  resembled  one  another  within  the  meaning  of  Article  2(12)  of 
Regulation (EEC) No 2423/88. Furthermore, in terms of their application, at least - but 
not  necessarily  only  - PPCs  in  adjoining  segments  compete  with  each  other  for  the 
same users and  should be considered  like products. 

(17) 

Japanese  segment  5  PPCs,  which  were  not  produced  by  the  Community  industry 
during  the  investigation  period,  were,  on  the  above  analysis,  considered  to  be  like 
products to the segment 4 and  segment 6 models which the Community  industry  did 
produce.  One  exporter  in  particular  argued  that  there  was  no  competition  between 
Japanese  segment  5 PPCs  and  the  segment  4  and  segment  6 PPCs  produced  by  the 
Community industry, based notably on alleged differences in copy speed, copy volume 
and  usage.  However,  it  was  found  in  the  course  of  the  investigation  that  the  actual 
monthly copy volumes of segment 4 PPCs of the Community industry were frequently 
similar to those of Japanese  segment  5 PPCs. Also, the copy  speed  of the latter was 
often not much higher in complex applications such as duplex copying than that of the 
segment 4 PPCs of the Community industry. As for usage, no fundamental  difference 
was  observed  between  segment  4  models  of  the  Community  industry  and  Japanese 
segment 5 models. With respect to the Community industry's segment 6 PPCs,  it may 
be true  that  those  PPCs  are  more  economical  than  Japanese  segment  5 PPCs when 
used in central reproduction departments with high copy volumes. But no convincing 
evidence was supplied that Japanese segment 5 PPCs cannot also be used, even though 
perhaps less efficiently,  for  processing of high copy volumes, whether centralized  in 
a reproduction department or decentralized in office  corridors. Certainly for customers 
with a copy volume in between high and very high, there is thus a real choice between 
a segment  5 and a segment  6 PPC. Furthermore,  evidence was submitted  by  another 
Japanese exporter that  in fact  fierce  competition  existed,  especially  in the context of 
large bids and tenders, between a "centralized" hardware package, including segment 6 
PPCs,  offered  by  the  Community  industry  to  fulfil  the client's  copying  needs  and a 

"de-centralized" hardware package, including segment  5 and segment 4 PPCs,  offered 
by  Japanese  companies  to  fulfil  exactly  the  same  copying  needs.  In  this  sense, 
competition  between  PPCs  even  extends beyond  adjoining  segments.  On  the whole, 
therefore,  the strong growth in sales of segment 5 PPCs has been at least partly at the 
expense  of  sales of  segment  4 and  segment 6 PPCs, in the  sense that  in the absence 
of  segment  5  models,  customers  with  the  need  for  such  a  significant  copy  volume 
could not normally  have foregone  buying a PPC and would have had to buy  either a 
segment 4 or a segment  6 model. 

As for Japanese segment 6 PPCs, one Japanese company had already started exporting 
a  segment  6 model  from  Japan to the Community  and  had commenced  marketing it 
here  during  the  investigation  period  of  the  review.  These  imports  competed,  on  the 
above analysis, with the Community  industry's PPCs in  segments 6 and 4. 

(18) 

Japanese personal copiers, the smallest PPCs on the market, which were not produced 
by  the  Community  industry  in  the investigation  period,  should  be  considered  a like 
product  to  the  segment  1 PPCs  produced  by  the  Community  industry.  These  two 
segments  overlap  in  terms  of  copy  speed,  the  remaining  difference  between  them 
merely  being  that  segment  1  PPCs  tend  to  have  more  features,  for  example  the 
possibility  for  reduction  and  enlargement,  and  sometimes  a  larger  copy  volume 
capacity.  When  technical  differences  are so  small,  customer  choice  depends  heavily 
on pricing. 

C. COMMUNITY  INDUSTRY 

1. Introduction 

(19)  The question whether a Community industry existed and, if so, which producers were 
part  thereof,  was  important  in  this  review  for  two  reasons:  Procedurally,  interested 
parties requesting a review under  Article  15 of Regulation  (EEC) No  2423/88  must, 
under  paragraph  3 of that  Article,  show that  the  expiry  of  the measures  would  lead 
again  to  injury  or  threat  of  injury 
to  a  Community  industry.  Substantively,  the 
likelihood  of recurrence  of injury  or threat thereof  must, in the review investigation, 
be  assessed  in  relation  to  the  Community  industry,  as  defined  in  Article  4(5)  of 
Regulation (EEC) No 2423/88. Some exporters and importers questioned whether the 
complainant requesting the review represented Community producers whose collective 
output  of PPCs constituted  a major  proportion  of the total  Community  production  of 
PPCs, within the meaning of Article 4(5), and whether therefore the injury  assessment 
should be limited  to those producers. 

2. The Community  industry  in the original  investigation 

(20)  When the proceeding on PPCs was launched in August  1985, the Community industry 
consisted of 5 producers: Develop Dr. Eisbein GmbH, Germany, Océ Nederland B V, 
the Netherlands, Ing. C. Olivetti & C. S.p.A, Italy, Rank Xerox Ltd, United Kingdom 
and  the  Netherlands,  and  Tétras  S.A.,  France.  Together  they  constituted  CECOM 
In May  1986,  a  majority  of  the  shares  in  Develop  was  acquired  by  one  of  the 
Japanese exporters, and Develop was excluded  from  the Community  industry  for  the 
purpose of the injury  determination  of the original  investigation.  Japanese  subsidiary 
companies  producing  photocopiers  in  the  Community  were  also  excluded118) 
In November  1986, another Japanese exporter took a minority  share in Tétras, which 
did not prevent Tétras from  remaining part of the Community  industry09*.  Since then, 
however,  Tétras has stopped  producing  or  selling PPCs. 

(18) 

(19) 

Recital  62 of Regulation  (EEC) No 2640/86,  see footnote  6. 
Recital  68 of Regulation  (EEC)  No 535/87, see footnote  7. 

10 

The decision  in the original  investigation  to accept Rank  Xerox,  Océ and Olivetti  as 
part of the Community  industry was reached notwithstanding the fact that all three of 
them imported part of their range of PPC models from Japan. In addition, Rank Xerox 
had a  50% share holding  in  one of the Japanese  exporters,  and  had  a relatively  low 
percentage  of  EC  added  value  for  its  production  of  small  PPCs  in  the  UK.  The 
Council's  conclusions  on  Community  industry  in  the  original  investigation,  both  in 
respect of retaining the complaining companies as part of the Community industry and 
of excluding Japanese subsidiaries producing in the Community from  the Community 
industry,  were  upheld  by  the  European  Court  of  Justice(20).  In  doing  so,  the  Court 
emphasized  that the Community  authorities exercise a margin  of appreciation  in this 
respect,  on a case-by-case basis, by reference  to all the relevant  facts. 

3.  The Community  industry  in the review  investigation 

(21)  The request for  the review was submitted  on behalf  of the three remaining  members 

of CECOM, Rank Xerox,  Océ  and Olivetti. 

(22)  Rank Xerox's claim to be part of the Community  industry  has strengthened  since the 
original investigation. It neither imported nor sold PPCs from Japan in the Community 
during the investigation period of the review. It significantly  increased the percentage 
of Community  added value for  its production  of small PPCs in the United Kingdom. 
Its company-wide Community added value, including production  of high-speed PPCs 
in  France,  was  also  substantially  higher  than  in  the  original  investigation,  at  such a 
level that its Community  origin is beyond any doubt. Rank Xerox is therefore  still to 
be regarded  as part of the Community  industry. 

(23)  Following  the  original  investigation,  Océ  has  maintained  a  significant  level  of 
production  in the higher  speed  segments, with  a very  high  Community  added value, 
guaranteeing  Community  origin.  But  it  did  not  succeed  in  extending  its  own-
manufactured  product  range into the lower  speed  segments, where it continues to be 
supplied on the basis of an OEM (original equipment manufacturing) arrangement with 
a Japanese company. These OEM PPCs represent a minor, although  not  insignificant, 
part of Océ's PPC turnover in the Community.  However,  it was observed  during the 
review investigation  that it is now quite common  for  producers, including  producers 
in Japan, to buy part of the extensive model range required by consumers from  other 
producers. In addition, during the investigation period of the review the large majority 
of Océ's OEM PPCs were no longer supplied from  Japan, but from  a third country not 
subject  to the review (the correct origin  of which  was confirmed).  Thus, the number 
of  PPCs  which  Océ  imports  from  Japan  has  sharply  decreased  since  the  original 
investigation. Océ could, therefore,  as in the original investigation, be regarded as part 
of the Community  industry. 

(24) 

In  1987, Olivetti  shifted  its  entire  PPC  production  to  a  newly-created  joint  venture 
with Canon, Olivetti-Canon Industriale (OCI), established at the old Olivetti  premises 
in Ivrea, Italy. In this joint venture Olivetti holds half of the shares plus one. Olivetti's 
position  as a member  of CECOM was clarified  by  a letter  from  OCI  of  15 October 
1992, in which it was confirmed  that OCI, by a decision of its Board  of Directors of 
22 June  1992, delegated to Olivetti the right to represent OCI for the purpose of this 
anti-dumping  proceeding.  OCI produces PPCs in  segment  1, which  are sold  through 
the Olivetti  and Canon sales channels. The Community  added value of these PPCs is 
sufficient  to ensure Community  origin. 

(20) 

See for instance Case C-156/87, Gestetner Holdings PLC v Council and Commission. 
[1990]  ECR 1-781, paras. 41-61. 

11 

The review investigation  showed that OCI, rather than Olivetti,  should be considered 
as  a  "producer"  of  PPCs  within  the  meaning  of  Article  4(5)  of  Regulation  EEC 
No 2423/88. OCI is an independent legal entity in charge of the actual  manufacturing 
of PPCs. Olivetti is a major,  but not dominant,  shareholder in this company. It is one 
of OCI's two sales outlets, and is its legal representative for the purpose of the review. 
But Olivetti  does not itself  "produce" PPCs. 

It  was  considered  that  there  was  no  need  to  exclude  OCI  from  the  Community 
industry. It is true that 50% of the shares minus one in OCI are owned by Canon, one 
of the companies exporting the PPCs from  Japan that were investigated  in the review 
But there was no reason to believe that OCI, which is jointly  controlled by Canon and 
Olivetti,  which  claimed  the  protection  offered  by  Regulation  (EEC)  No  2423/88 
against imports of PPCs from  Japan, which did not import any PPCs from  Japan, and 
which granted full  cooperation to the review investigation, behaved in a way that was 
different  from  that  of  Rank  Xerox  or  Océ,  or  in  any  way  that  would  be  liable  to 
render the findings of the investigation  incorrect  or unreliable. 

It was, however, necessary to limit the injury  determination for OCI to the production 
for and sales made through the Olivetti sales channel. This was because Canon did not 
provide the information  necessary to permit the Commission to investigate OCFs sales 
through  the Canon  sales channel,  and because sales information  from  Canon,  one of 
the exporters of PPCs from  Japan, could in any case not be taken into account in this 
review  for  the  purpose  of  determining  injury  to  the  Community  industry.  As  for 
Olivetti,  although  the  majority  of  the  PPCs  it  sold  in  the  Community  in  the 
investigation  period  were  sourced  from  Canon,  in  accordance  with  the  normal 
commercial  strategy  of  offering  a  complete  range  of  models,  these  PPCs  did  not 
originate  in  Japan.  In  any  case,  sales  transactions  between  OCI  and  Olivetti  were 
ignored  as being transfers  between related  parties and data on cost of production  and 
sales  of  OCl-produced  PPCs  by  Olivetti  to  unrelated  customers  were  established 
through  verifications. 

(25)  Following the introduction of definitive  anti-dumping duties on imports of PPCs from 
Japan  in  1987,  almost  all  Japanese  exporters  established  or  expanded  production 
facilities  in  the  Community  (in  France,  the  United  Kingdom  and  Germany) 
As opposed to OCI, all  of these production  facilities  in the Community  are  100% or 
majority  owned by exporters of PPCs from  Japan, and none of them joined the review 
request.  It  was  considered  that,  as the  review  concerned  imports  from  Japan,  these 
production facilities, the commercial behaviour of which was determined by the parent 
companies in Japan under investigation and which did not support the review request, 
had to be excluded from  the Community industry, as their behaviour was shown to be 
different  from  that  of producers in the Community  that were not related  to Japanese 
exporters. 

4. Conclusion  on the Community  industry 

(26) 

In  conclusion,  for  the  purpose  of  this  review,  the  Community  industry  consisted  of 
Océ, OCI and Rank Xerox. The output of these Community producers, limited for OCI 
to the portion  produced  for and.sold through Olivetti, represented  the near totality  of 
Community  production  of  the  like  product,  given  that  the  production  facilities 
majority-owned  by  Japanese  exporters  had,  for  the  purpose  of  this  review,  to  be 
excluded from  Community industry. This exclusion entailed that their PPC production 
in the Community, whether or not having sufficient  Community  added value to be of 
Community  origin, did not qualify  as Community  production, nor did they qualify  as 
Community  producers,  within  the  meaning  of  Article  4(5)  of  Regulation  (EEC) 
No 2423/88, for the purpose of this review. Community production was the production 
of the  Community  industry  and  of  other  producers  in the  Community  that  were  not 
excluded,  but  that  chose  not  to  support  the  review.  The  only  other  possible 
Community producer in this review was Kodak, with a factory  in Germany. AJthough 
Kodak  supplied information  in response to the Commission's questionnaire, it did not 

12 

participate in the investigation  as part of the Community  industry,  and it is uncertain 
whether  its  limited  PPC  operations  in  the Community  would  qualify  as  production. 
The volume of PPCs involved was, in  any  case, quite small. 

(27) 

(28) 

D. THE PRESENT SITUATION  IN THE COMMUNITY  MARKET 

1. Introduction 

In order to establish whether the expiry of the measures in force would  lead again to 
dumping  and injury  or threat  of injury,  it was first necessary  to examine the present 
economic  situation  of the Community  industry.  This analysis consists of three parts. 
The first part briefly  recollects the economic  situation  of the Community  industry  at 
the time of the original  investigation. In a second part, developments in that situation 
between  1988 and the end of the investigation  period  are analysed  in detail. Finally, 
those recent developments are compared  with the situation  at the time of the original 
investigation  and a conclusion is drawn on the state of the present economic  situation 
of the Community  industry. 

2.  Situation  of the Community  industry  at the time of the 
original  investigation 

In the original investigation  period (1 January  1985 to 31 July  1985), the Community 
market share of the Community industry for its own-manufactured  PPCs had dropped 
from  21% in  1981  to  11.2%.  Price  undercutting  in  the  form  of  the  sale  of  more 
highly-featured  models imported  from  Japan  at  prices comparable to or below those 
of lesser-featured  Community industry models was found. Price depression was taking 
place. The PPC hardware profitability  of the Community industry had decreased  from 
8% net  profit  before  tax  in  1983 to 4% in the investigation  period,  while the target 
profit for the Community industry had been determined at 12%. Taking these elements 
into account,  the Council  considered  that material  injury  to the Community  industry 
existed. 

3.  Current situation  of the Community  industry 

Introduction 

(29)  The indicators for  the Community  industry  analysed  below  relate to the period  from 
1988 to  the  end  of  the  investigation  period  of  the  review  (1  July  1991 to  30  June 
1992).  They  pertain  to  the  own-manufactured  PPCs  of  the  Community  industry. 
Refurbishing  (the re-working of existing models taken back from the field with a view 
to  placing  them  again  in  the  market)  was  included  in  the  data.  Data  for  OCI  were 
limited  to production  for  and  sales via Olivetti. 

Production, production  capacity, utilization  of capacity,  stocks 

(30)  Production of the Community industry decreased by  16% from  226 480 units in 1988 
to  190 375 units  in the  investigation  period.  Over the  same period,  the  Community 
industry decreased production capacity by 29%. As a result of this, capacity utilization 
improved  13% to a level of 81% in the investigation period, based on one work  shift 
of 8 hours.  Stocks increased  by 7%. 

13 

Employment, investments.  R&D expenses 

(31)  The  number  of  manufacturing  personnel  employed  by  the  Community  industry 
increased by  13%, reflecting  a gradual  shift  to the manufacturing  of larger  and more 
complex PPCs and environmental  concerns resulting in an increasing level  of activity 
in refurbishing  existing models, a procedure which  is relatively  labour-intensive  The 
overall  level  of  employment  increased  by  4%,  to  a  total  of  16 549  people  in  the 
investigation  period  (excluding  suppliers  to  the  Community  industry).  The  level  of 
investment  of  the  Community  industry  decreased  from  3% of  turnover  in  1988  to 
2.7% of  turnover  in  the investigation  period.  Over the  same  period,  R&D  expenses 
increased  from  5.3% of turnover to 5.4%  of turnover. 

Sales volume and market  share 

(32)  The  number  of  placements  made  by  the  Community  industry  decreased  1%,  from 
141 477 units to 140 186 units, in a Community market which expanded by 24%  The 
market  share  of  the  Community  industry  consequently  decreased  by  a  fifth,  from 
15.4%  to  12.4%,  measured  in  units.  Weighting  the  number  of  units  placed  on  the 
market by their  copy  volume, which takes account  of differences  between  small  and 
large  PPCs,  the  market  share  of  the  Community  industry  was  still  29%  in  the 
investigation  period,  but  down  by  a  sixth  from  34.4% in  1988. Particularly  notable 
was  the  decrease  in  the  Community  market  share  of  the  Community  industry  for 
medium-large  PPCs,  in  which  it  used  to  have  a  strong  market  position  and  which 
formed  a major  source of profits.  In segment  4, for  instance, the market  share of the 
Community  industry  decreased  from  64.4%  in  1988  to  42.1% in  the  investigation 
period,  a dramatic drop of a third. 

Price  development 

(33)  The measurement of PPC price developments in the Community over time is to some 
extent  necessarily  speculative,  due  to  the  lack  of  information  on  actual  sales  prices 
(as opposed  to  list  prices)  for  the  years  prior  to  the  investigation  period,  the  rapid 
succession  of PPC models, with changes in features,  and the need to take account of 
developments in production costs, inflation and exchange rates. What can be observed, 
however,  is that between  1988 and  the investigation  period,  there were  a number of 
instances  where  Japanese  companies  introduced  new  models  with  more  features,  or 
more advanced  features,  at list  prices below those of the old  models  In other cases, 
list prices were kept stable for  several years, despite inflation  and appreciation  of the 
yen.  As  for  the  Community  industry,  one  company  registered  decreases  in  its  list 
prices  of  between  21  and  29%  for  the  period  between  1988  and  the  investigation 
period,  and  another  decreases  in  revenues  for  cost  per  copy  contracts  of  24%,  as 
adjusted  for  inflation.  The third  Community  producer  showed  a mixture  of  list price 
decreases  and  increases,  with the decreases centred  more on  lower  segment  models 
All  in  all,  therefore,  there  appears  to  have been  a  downward  price  spiral,  in  which 
most if not all  companies participated,  leading to price depression 

Profitability 

(34)  This  price  depression  is  reflected  in  the  development  of  the  profitability  of  the 
Community  industry.  While  Community  industry's  turnover  on  own-manufactured 
PPCs increased by 3% from  1988 to the investigation period,  its return on those sales 
decreased  by  76%, from  a weighted  average  level  of  11.1%  in  1988 to  2.7% in the 
investigation  period.  The  profitability  of  the  entire  photocopier  business  of  the 
Community  industry,  including  service,  consumables,  spare  parts,  and  financing, 
decreased by 42% from  a weighted average level of  11.1% in  1988 to a level of 6.4% 
in  the  investigation  period.  These  figures  demonstrate  that,  starting  from  the  same 
level of profitability  in  1988, sales of own-manufactured  PPC hardware have become 
much less profitable than the accompanying sales of maintenance contracts,  financing 

14 

contracts,  paper,  toner,  etc.  This  suggests  that  price  competition  on  sales  of  PPC 
hardware has become especially fierce. 

Some  exporters  argued  that  the  profitability  of  the  Community  industry  should  be 
evaluated  on the basis of their  overall  photocopier business,  and  not just  on  sales of 
PPCs.  Several  observations  should  be  made in  this respect  First, the other  elements 
involved in the overall  photocopier business, such as the servicing, consumables, spare 
parts and financing elements mentioned above, are not the subject of this investigation. 
Secondly,  the profit  figures  used  for  normal  value  are based  on  sales of PPCs only, 
and  might  have been  higher,  leading  to  a finding  of  more  dumping,  had  they  been 
based on the overall photocopier business. Indeed, in the original investigation, several 
exporters insisted  that the Commission  should base profitability  for  normal  value on 
sales  of  PPC  hardware  only.  The  Commission  then  adopted  this  approach  at  their 
request, and, with a view to consistency,  applied  it also for  the injury  determination. 
The  same  approach  was  duly  maintained  in  the review  investigation.  Finally,  if  the 
Community industry were not allowed to expect a reasonable return on the investment 
it has made to produce PPCs, it would have no incentive to continue  manufacturing. 
Instead, the Community producers would probably become OEM distributors, merely 
selling  and  servicing  PPCs  produced  by  Japanese  companies.  It  was  therefore 
considered  that  a reasonable  return  should  be available  on the manufacture  and  sale 
of PPCs as such. 

Some  exporters  and  importers  also  argued  that  the  profitability  of  the  Community 
industry had improved after  the end of the investigation  period to such an extent that 
the Community  industry was no longer in a precarious  situation. Events after  the end 
of  the investigation  period  are  not normally  taken  into  account,  as the  investigation 
would  otherwise  never  end. However,  given  the unusual  length  of the  investigation, 
this particular claim  was, exceptionally,  checked.  It was found  that while the overall 
profitability  of  the  Community  industry  had  improved  somewhat,  in  line  with  the 
general improvement in the economy in the Community, profitability on sales of PPCs 
continued  to  lag  far  behind.  The findings  for  the  investigation  period  therefore  still 
provided  a reliable basis for  the conclusion  drawn  below. 

4. Conclusion  on the current  situation  of the Community  industry 

(35)  Several  key  indicators  of  the  economic  performance  of  the  Community  industry 
deteriorated  significantly  from  1988 to  the  end  of  the  investigation  period,  such  as 
production  (down  16%),  market  share  (down  from  15.4%  to  12.4%),  and  PPC 
hardware profitability  (down  from  11.1% to 2.7%). 

Comparing the injury  data of the original investigation period with those of the review 
investigation  period,  it  was  observed,  first,  that  the  size  of  the  Community  market 
expanded  over  this  period  by  75%  from  53  913  units  placed  per  month  (in  ten 
Member  States)  to  94  286  units  placed  per  month  (in  twelve  Member  States)  In 
comparison  with  this  market  expansion,  the  sales  in  the  Community  of  Community 
industry's own-manufactured  PPCs increased by 94%, from  6 016 units per month to 
11  682  units  per month.  The  market  share  in  the  Community  of  the  Community 
industry for its own-manufactured  PPCs consequently increased from  11.2% to 12 4%, 
measured  in units. However,  this gain  in market  share was won  at the expense of a 
reduction  in  profits,  down  from  4%  net  profit  before  tax  on  PPC  hardware  in  the 
original  investigation  period  to 2.7% in the review investigation  period. 

15 

In this capital-intensive  industry  which  is currently  developing  major  new  successor 
products  to  PPCs  such  as  digital  copiers  and  multi-purpose  office  machines,  both 
reasonable  profits  and  significant  market  shares  are  important  to  ensure  that  the 
necessary  investments  in  R&D  and  production  facilities  can  be  made  in  order  to 
remain viable in the medium term. Comparing the original investigation period, when 
the Council  determined  that  material  injury  existed,  with the investigation  period  of 
the review, it could not, on the whole, be said that the Community industry had come 
to be in a better  position. 

E. THE BEHAVIOUR  OF THE EXPORTERS  CONCERNED 

1. Introduction 

(36) 

It  was  also  necessary  to  examine  the  behaviour  of  the  exporters  concerned  In  this 
respect,  one exporter  argued  that  for  the purpose  of  determining  whether  the expiry 
of the measures in force  would  lead  again to dumping  and injury  or threat  of  injury, 
its allegedly  small and not well-known exports should not be cumulated with those of 
the  other  exporters.  It  must  be  observed,  however,  that,  in  principle,  anti-dumping 
proceedings apply to imports from  countries and not to individual exporters. Also, the 
impact  of  the  dumped  imports  from  the  exporters  concerned  on  the  Community 
industry  should  be  assessed  globally,  as  every  sale  lost  by  Community  industry  to 
dumped  imports  hurts  Community  industry  equally,  whether  it  was  lost  to  a  small 
exporter or a large one. This particular exporter, whose sales to Community customers 
in any case represent  as much as around  10% of total  Community  sales of Japanese-
origin  PPCs, would  thus be  unfairly  favoured  if  it were  treated  differently  from  the 
other Japanese exporters. 

2.  Volume of imports from  Japan 

(37)  The situation  was found  to be as follows: 

In absolute terms 

Between  1988  and  the  investigation  period,  the  volume  of  imports  from  Japan 
decreased  16%, from  351 970 units to 294  195 units per year. 

Relative to consumption 

During the same period,  the total  number  of placements  of PPCs in the Community 
per year is estimated to have increased by 24% from  919 580 units to 1 137 910 units 
The market share of imports from  Japan thus decreased from  38.3% in  1988 to 25 9% 
in the investigation  period. 

Relative to total  production  in the Community 

Between  1988  and  the  investigation  period,  total  production  in  the  Community 
increased  30%  from  640  263  units  to  834  094  units  per  year,  including  Japanese 
production  facilities  in the Community.  Imports from  Japan thus represented  55% of 
total  production  in the Community  in  1988, and  35.3% in the investigation  period. 

Relative to the production  of the Community  industry 

The production  of the Community  industry  decreased by  16% from  226 480 units in 
1988 to  190 375 units in the investigation period. Imports from  Japan thus represented 
155.4%  of  production  of  the  Community  industry  in  1988,  and  154.5%  in  the 
investigation  period. 

16 

Conclusion  on volume of imports 

(38)  The introduction  of the definitive  anti-dumping  duty  in February  1987 was  followed 
by a substantial decrease in the volume of imports from  Japan. This trend has become 
even  stronger  recently,  in  line  with  the  appreciation  of  the  yen.  At  the  same  time, 
Japanese exporters have significantly  increased  production  in the Community,  up by 
56% from  413 783 units in  1988 to 643 719 units per year in the investigation period 
They  have  also increased  imports  into the Community  from  factories  established  in 
third countries, up by 37.7% from  106 012 units in  1988 to  145 978 units per year in 
the investigation  period. 

Nevertheless, the volume of imports from  Japan  during the investigation  period  still 
amounted  to  almost  300  000  units  per  year,  representing  26%  of  the  Community 
market, measured in units, and more than one and a half times the production volume 
in units of the Community industry. It also appeared that over time a larger part of the 
imports from  Japan has come to consist of medium-large to large PPCs, putting extra 
pressure  on  the  traditionally  strong  market  position  of  the  Community  industry  for 
such PPCs.  On the whole,  therefore,  imports  from  Japan  in  the investigation  period 
were  still  capable  of  having  a  very  significant  effect  on  Community  industry, 
depending in particular on the price level  at which they  were sold. 

3.  Prices of  imports from  Japan 

Methodology  to examine price undercutting 

(39)  The extent to which the weighted  average  sales prices  of imports from  Japan  in the 
investigation  period  in  the  Community  market  undercut  the  weighted  average  sales 
prices  of the Community  industry  during the investigation  period  was examined  for 
the  German,  French,  Italian  and UK  markets,  which  were  considered  representative 
for the Community  market as a whole, as they represented the large majority  of sales 
on the Community market, both by the Community industry and imported from Japan. 

As opposed to Japanese subsidiaries in the Community, who placed PPCs mainly with 
dealers for outright sale, the Community industry placed PPCs mainly with end-users, 
on leases, cost-per-copy  contracts and rentals. To permit  a fair  price comparison, the 
Commission  used  only  the outright  sales  and  leases  of the  Community  industry.  To 
"unbundle" the latter type of contracts into a hardware element to be used for the price 
comparison, setting aside the financial  element, companies' normal internal accounting 
rules,  based  on  generally  accepted  accounting  practices,  were  used.  The  weighted 
average PPC hardware price thus calculated  for  each model was then compared  with 
the  corresponding  weighted  average  Japanese  outright  sales  prices.  Pure  rentals, 
i.e contracts that do not qualify  as sales under normal  accounting rules, were excluded 
from  the comparison.  So were  cost-per-copy  contracts, whether  or  not  qualifying  as 
sales-type contracts, because of the difficulty  of objectively  "unbundling" them. As for 
the calculation of sales prices, these were net of directly linked discounts and rebates 
In this respect, trade-in  discounts were not regarded  as a discount  on the  sale of the 
new machine, in the  same way  as for  the dumping  calculation. 

Only  newly-manufactured  models were  compared,  as the use  of  re-furbished  or re-
manufactured  models  on  one  side  of  the  equation  might  have  distorted  the  price 
comparisons.  Given  the  technical  complexity  of  comparing  the  models  of  the 
Community  industry  with  those  of  Japanese  exporters,  price  undercutting  was 
examined  on the basis of a representative  sample of  7 own-manufactured  models of 
the Community industry, out of a total of 30. These models were selected to represent 
a broad range of PPC models, covering those product segments where the Community 
industry  sold  almost  all  of  its  own-manufactured  models,  i.e.  segments  1  to  4. 
Together  these  models  amounted  to  around  30% of the  Community  industry's  PPC 
turnover  in  the  Community  in  the investigation  period,  with  each  of them  having a 
significant  volume  of  sales.  The  total  number  of  units  sold  of  the  7  Community 

17 

industry  models  in  the  four  Member  States  concerned  was  around  15,000,  and  the 
distribution  between  outright  sales  and  leases  roughly  50/50.  For  each  of  these 
representative  Community  industry  models  a  comparable  imported  model  of  each 
Japanese exporter  was selected  whenever  available.  Almost  all  of these models were 
also sold in substantial  quantities. As for the few imported models that were sold only 
in small quantities, their prices were not observed  to be significantly  out of line with 
other,  more  frequently  sold  models.  In  any  case,  when  calculating  the  weighted 
average undercutting  margin for  each exporter,  small  quantities carried  little weight 

Two product segments not covered in the undercutting exercise were personal copiers, 
the smallest PPCs, and  segment 6, the latest  PPCs. Personal  copiers competed  with 
the  segment  1 PPCs  of  the  Community  industry,  just  as  Japanese  segment  5 PPCs 
competed with the Community industry segment 6 models. However, in order to arrive 
at the most reliable  price comparisons, with  the smallest  adjustments  for  differences 
in  technical  characteristics,  Japanese  segment  1  models  were  compared  with  the 
Community  industry  segment  1  models,  and  Japanese  segment  5  models  were 
compared  with the Community  industry  segment 4 models.  This does not  mean that 
Japanese personal  copiers were not undercutting  the Community  industry's  segment 
1 models or  that Japanese  segment  5 models were not  undercutting  the  Community 
industry's  segment  6  models,  as  properly  adjusted  for  differences  in  technical 
characteristics.  It  merely  means that it was not considered  necessary  to include such 
comparisons in the undercutting exercise, as price comparisons based on more similar 
product  segments,  covering  by  far  the  largest  part  of  Community  production,  were 
available. 

(40)  Where necessary, appropriate adjustments were made both for differences  in technical 

characteristics  and for  differences  in trade levels. 

Regarding  adjustments  for  technical  differences,  the  number  of  criteria  used  was 
substantial  and  differed  according  to  product  segment  The  adjustments  were 
determined  by  the  Commission  on  the  basis  of  input  from  both  the  Community 
industry and exporters. In general, adjustments were made for the presence or absence 
of  features,  not  for  any  alleged  differences  in  quality  for  the  same  features.  Such 
differences  were considered  too subjective and difficult  to estimate to permit reliable 
quantification.  The value of features was, in principle, calculated  as the ratio between 
the list price of the feature concerned and the list price of the basic model without that 
feature, as determined for a number of other models in the same product segment  The 
value of minor features was sometimes estimated as a percentage of the value of more 
important comparable features.  The value of options, which often  had to be added to 
Japanese models to make them comparable to the models of the Community  industry, 
was calculated  as the ratio of their list price to that of the basic Japanese model. The 
resulting percentage was then added to the actual sales price of the basic model, based 
on  the  assumption  that  the  percentage  discount  on  the  list  price  of  the  option  was 
similar to the percentage discount  on the basic model. 

Following  claims  by  exporters,  the  Commission  examined  whether  an  adjustment 
should be made for the generally higher weight of the Community  industry models in 
comparison  with Japanese models, especially  in the higher  copy  speed range  In this 
respect,  it was considered  that greater weight  in itself does not have any value in the 
eyes  of  consumers.  If  anything,  the  opposite  was  more  likely  to  be  true.  More 
importantly,  as a measure  for  greater  productivity  or durability,  the weight  criterion 
was  found  to  be  inaccurate,  as  the  actual  and  target  monthly  copy  volumes  of  the 
Japanese models used in the sample, and their actual  and target operational  life, were 
in fact not significantly  different  from  those of the Community  industry models in the 
sample, both in absolute terms and relative to copy speed.  With respect to durability, 
it  was  also  found  that  lease  periods  with  customers  were  generally  comparable  in 
length, meaning that customers write off  PPCs after  the same length of time, whether 
it concerns a Japanese model or an Community industry model. Leasing has overtaken 
renting as the normal mode of placement of the Community industry. As for a claimed 

18 

second  or third  operational  life  of the  Community  industry  models,  Japanese  models 
were also frequently  sold second hand. Furthermore, the capacity  of a model  to be re-
manufactured  or re-furbished  and then sold again does not affect  its operational  value 
in the  eyes  of  the first-time user.  No  adjustment  for  weight  or alleged  differences  in 
productivity/durability  was therefore  granted. 

Some exporters also argued that an adjustment should be made for the allegedly higher 
quality  and greater  length  of  the  warranty  provided  by  Rank  Xerox  and  Océ.  It  was 
found,  however,  that those warranties are provided  only  to customers that conclude a 
maintenance  contract,  and  are  financed  from  the  proceeds  thereof.  The  Community 
industry's warranties without  maintenance  contracts  were  comparable  to those  of  the 
Japanese  exporters. 

(41)  Regarding  levels  of  trade,  sales were  compared  at the  same  level  of  trade  whenever 
such sales were made in sufficient  quantities. In this respect, Olivetti  sales to end-users 
and  Océ  sales  to  dealers  had  been  made  in  insufficient  quantities  and  were 
disregarded.  Sales  of  certain  models  by  Rank  Xerox  to  dealers  in  certain 
Member  States  were  also  disregarded  as  being  too  small  in  volume.  Almost  all 
Japanese companies  sold in  sufficient  quantities at dealer level  but only  some  at end-
user  level.  Where  the  Community  industry  end-user  sales  nad  to  be  compared  with 
Japanese dealer sales, the former were brought to the dealer level. This adjustment was 
calculated  based  on  the  actual  difference  in  price  between  the  two  levels  of 
Rank  Xerox (for models sold in sufficient  quantities), the sales structure of which was 
considered comparable to Océ for this purpose. Japanese sales at distributor level  were 
also  adjusted  to  bring  them  to  dealer  level,  based  on  price  differences  of 
Japanese  companies between these two levels.  All  brand sales were thus compared at 
dealer level,  or at end-user  level  if  sufficient  volumes  had been  sold  by  both  sides. 

As  for  Japanese  sales  to  OEM  importers,  these  were  compared  as  adjusted  to  CIF 
Community  frontier  level,  customs  and  anti-dumping  duties  and  customs  clearance 
charges  added,  with  prices  of  the  Community  industry  adjusted  from  end-user  or 
dealer level to ex-factory  level. For this latter purpose, the percentage reduction in cost 
for  selling  ex-factory,  based  on  the  Community  industry's  own  cost  structure,  was 
deducted  from  their  actual  sales prices. 

Results 

(42)  On  this  basis,  the  weighted  average  undercutting  margin  per  exporter,  for  all  of  its 
imported  models  in  the  sample  together,  ranged  from  7%  to  36%.  The  weighted 
average  degree  of  undercutting  of  all  exporters  together  was  26%.  The  weighted 
average  degree  of  undercutting  for  segments  4  and  5  was  twice  that  for  segments 1 
to 3 (38% compared to  19%). The weighted average degree of undercutting was higher 
in  Germany  and the  UK  than  in  France  and  Italy,  but  it  was  high  in  the  latter  two 
Member  States  as  well.  These  figures  show  that,  despite  the  existence  of  the 
antidumping measures in force,  Japanese exporters were still  selling their PPCs on the 
Community  market  at prices  significantly  below  those  of  the  Community  industry. 

Underselling 

(43)  The  same methodology  as described  above for undercutting was used to examine  the 
price  increase  necessary  at the  CIF  free-at-Community  frontier  duty  unpaid  level  to 
raise the actual  sales prices  of the imported  models  in the  sample to a level  at which 
the Community  industry would be able to sell at a profit permitting a reasonable return 
on investment.  The weighted  average actual  sales prices of each exporter as calculated 
in the examination  of undercutting were set against the target prices of the models  of 
the Community industry.  The absolute amounts by which they fell  short of those target 
prices were then transformed,  on a weighted  average basis for each exporter,  into the 
underselling  margin  at the level  of  CIF  free-at-Community  frontier  duty  unpaid  For 
this  purpose,  in  order to bring  sales by  related  importers  to first independent  buyers 

19 

(44) 

in  the  Community  back  to  the  Community  frontier,  duty  unpaid  level,  the  existing 
anti-dumping and customs duties were deducted. For PPCs over 75 copies per minute, 
no anti-dumping  duty  was in force  and  no  such  deduction  was made.  On  this basis, 
the  weighted  average  underselling  margin  for  each  exporter  ranged  from  44%  to 
141%.  The weighted  average  degree  of underselling  of  all  exporters together  at this 
level was  113%. 

The  target  profit  margin  for  the  Community  industry  used  in  this  examination  was 
calculated  before  tax  as  a  percentage  of  actual  turnover  in  the  investigation  period 
sufficient  to  deliver  a  return  on  equity  before  tax  of  18%,  which  was  considered 
reasonable  for  publicly-quoted  companies with  a respectable  financial  status  in  this 
business  sector.  This  18%  consisted  of  a  market  interest  rate  of  8%  during  the 
investigation  period  of  the  review,  a  premium  of  4%  required  to  compensate 
shareholders for  the risks incurred in investing,  and an average tax rate applicable to 
the  Community  industry  of  35%. The  turnover  and  assets  used  for  this  calculation 
covered  the entire copier business of the Community  industry,  as it was not possible 
to  reliably  identify  separately  the  assets  used  for  PPC  hardware  sales.  It  was 
considered,  in  any  case, that  the  return  on  equity  for  the  PPC  hardware  part  of  the 
copier  business  should  not  be  lower  than  for  the  other  parts.  The  Community 
industry's  sales  outside  the  Community,  but  produced  in  the  Community,  were 
included  in  the  turnover  used.  The  resulting  target  return  on  sales  was  9.4%  on  a 
weighted  average basis for  the Community  industry  as a whole. 

(45)  Given  that the weighted  average  actual  profit  before  tax  of the Community  industry 
on PPC hardware was 2.7% in the investigation  period, sales prices of the Community 
industry  models  in  the  sample were  increased  by  an  extra  6 7%  profit  on  turnover 
This method,  which  is based on the weighted  average actual  profit  of all Community 
industry  own-manufactured  models  together  rather  than  the  actual  profit  or  loss 
achieved  on just  the  models  in  the  sample,  takes  account  of  the  higher  profit  rates 
achieved by the Community  industry  on segment  6 models, which were not included 
in  the  comparison  table.  For  this  reason,  this  method  was  preferred  over  the  more 
common method of adding a 9.4% profit  margin on turnover to the cost of production 
of each  model  in the comparison  table 

4.  Conclusion 

(46)  Following the introduction  of the original  anti-dumping measures, PPC imports  from 
Japan  showed  a  significant  fall  in  volume.  The  remaining  volume  of  these  imports 
was,  however,  still  quite  significant.  The  imports  from  Japan  also  showed  a  shift 
toward larger  PPCs. The degree of undercutting found  in the Community  market  for 
Japanese imports was high all around, and especially  high for the larger PPCs. Given 
this  strong price  pressure  exerted  by  substantial  import  volumes  from  Japan,  it was 
considered  necessary  to examine whether  dumping was  occurring  which  contributed 
to the situation of the Community  industry described above and whether the expiry of 
the anti-dumping measures in force would lead to a recurrence of dumping and injury 

F. RECURRENCE  OF DUMPING 

1. General 

(47)  Dumping calculations, both for normal value and export price, were based on verified 
outright sales of PPCs only. Leases, rentals and cost-per-copy contracts were excluded 
in order to facilitate  the calculations and render them more reliable.  Since these types 
of contracts represented  only a small percentage of total transactions for  the Japanese 
companies, both  in the Community  and Japan,  it was assumed  that the results would 
not be significantly  affected. 

20 

(48)  Dumping margins were initially  established  separately  for brand sales and OEM  sales 
and  combined  to  a  single  weighted  average  dumping  margin  for  each  exporter  only 
in the last stage of the calculation.  OEM sales, whether in the domestic  market or for 
export to the Community, could generally be distinguished from brand sales by several 
factors: significantly  lower sales, advertising,  service and other costs were incurred for 
OEM sales than for brand sales; the OEM PPCs were re-sold to final customers under 
a brand  name  not  owned  by  the  exporter;  and the  relationship  between  the  producer 
and the  OEM  purchaser  was  at arm's length. 

(49)  The OEM importer Agfa Gevaert requested to have its own dumping margin and duty, 
arguing  that  there  was  less  dumping  on  its  imports  from  Japan,  that  it  had  not 
contributed  to  the  dumping,  and  that  it  deserved  special  treatment  because  of  the 
allegedly  large  contribution  it  made  to  the  design  and  development  of  the  PPCs  it 
purchased  in  Japan.  It  was  established  in  the  investigation  that  the  imports  of 
Agfa  Gevaert  were  dumped,  albeit  less  so  than  the  brand  sales  of  its  Japanese 
suppliers.  As  for  the  contribution  of  Agfa  Gevaert  to  the  PPCs  it  purchased  from 
Japan, the value added was limited  and focused  on the outside appearance of the PPC 
and the lay-out and software  of its control  panel, rather than on the functioning  of the 
PPC  inside.  It  was  clear,  therefore,  that  Agfa  Gevaert  could  not  be  considered  the 
producer  of  its  Japanese-sourced  PPCs,  but  that  it  was  an  OEM  importer.  It  is  not 
possible  under the  legal  framework  established  by  Regulation  (EEC)  No  2423/88  to 
impose  separate  duties  on  individual  importers,  whether  OEM  or  brand-sale,  as 
opposed  to  exporters.  Separate  duties  for  importers  could  easily  lead  to  selective 
dumping  by  the  exporters  concerned.  Article  2  of  Regulation  (EEC)  No  2423/88 
stipulates that an anti-dumping  duty  may  be  applied to  any  dumped  "product" whose 
release for free  circulation in the  Community  causes injury,  where  a product  shall  be 
considered  to  have  been  dumped  if  its  "export  price" to  the  Community  is  less  than 
the  normal  value  of  the  like  product.  For  the  calculation  of  this  export  price,  the 
exports  to  all  Community  importers  of  all  different  types  of  the  product  concerned 
should  be  cumulated, 
in  accordance  with  Article  2(8)  of  Regulation  (EEC) 
No  2423/88.  Article  13(2) of that Regulation  confirms  that regulations imposing anti 
dumping duties shall indicate the product covered, the country of origin or export and, 
if practicable,  the name of the supplier. No  provision is made for indicating the name 
of  the  importer. 

(50) 

So-called trade-in discounts were considered as representing the value of the traded-in 
PPC  or,  when  such  PPCs  were  destroyed,  the  value  of  preventing  a  second-hand 
market  from  overtaking  sales  of  newly  produced  PPCs.  Not  being  considered  true 
discounts, they  were not deducted from  the sales price of the new machine,  either for 
normal  value  or for  export  price.  Such expenses  were  considered  part of  SGA  costs. 
The  fact  that  these  expenses  could  be  linked  by  some  exporters  to  the  sale  of  new 
PPCs  is  not  surprising,  since  the  old  PPC  is  only  traded  in  when  a  new  one  is 
purchased.  This does  not, however,  mean that the money  paid by  the supplier  for the 
traded-in  PPC  is  a  discount  on  the  sale  of  the  new  PPC.  Also,  the  fact  that  some 
exporters treated these expenses as deductions from gross turnover in their accounting 
records  is  not  determinative  for  the  legal  interpretation  of  the  concept  of  a  discount 
in Article 2 (3) (a) of Regulation (EEC) No 2423/88. The same approach was followed 
in respect of the practice of paying  off the remaining lease term of  a PPC in the field 
in  order  to  sell  a  new  one,  which  is  a  scheme  similar  to  a  trade-in  discount.  The 
methodology  was  the  same  as that used in the  original  investigation,  which  has been 
accepted  by  the European  Court  of  Justice(21). 

(21) 

See for instance Case C-174/87,  Ricoh  Company  Ltd v  Council.  [1992]  ECR 1-1335, 
paras.  19,  20  and  21. 

21 

(51)  Ordinary  financial  expenses were taken  into account  as a cost both  for  normal  value 
and for export prices. Offsetting financial  revenues resulting from the normal operation 
of  the  business  were  accepted,  up  to  the  level  where  they  completely  annulled  the 
financial  expenses. The argument of some exporters that financial revenues should be 
allowed to further  offset  other SGA costs was not accepted,  as an excess of  financial 
income should not be allowed to eliminate SGA expenses that were actually incurred 
Credit granted by suppliers was, in accordance with normal Commission  practice, not 
regarded  as  an  offsetting  financial  revenue,  but  as  a potential  cost  not  incurred,  for 
which  no  allowance  can  be  made.  Extraordinary  income  and  expenses  were 
disregarded  in all cases. 

(52)  Also,  in  respect  of  both  normal  value  and  export  price,  the  expenses  and  revenues 
involved  in  PPC  service  centres were  included  in  certain  cases  in the  calculation  of 
SGA percentages applicable  to sales of PPCs, namely  when it was established  in the 
course  of  verification  that  these  centres  provided  certain  benefits  without  charge  to 
buyers of PPCs, for  instance by giving technical  training to dealers or providing  free 
spare parts, the costs of which could not be identified  separately.  Since these centres 
were  also  involved  in  the  conclusion  and  operation  of  maintenance  contracts,  the 
turnover  produced  thereby  was, in those cases, included  as well. 

Links between  legally  separate  companies 

2. Normal  value 

(53)  Such  links were  the  subject  of  discussion  in  two  respects.  First,  the  question  arose 
whether  two of the exporters did not,  in reality,  form  a single  economic  entity.  One 
of these two companies (company A) is majority-owned by the other (company B) and 
is included in the latter's consolidated  accounts, even though it is a legal  entity  in its 
own right, listed separately on the stock exchange. Company A assembles, on the basis 
of  a  sub-contracting  agreement,  a  large  quantity  of  PPCs  for  company  B.  For  this 
purpose,  the  latter  supplies  the  results  of  its  R&D,  the  technical  designs,  and  a 
majority  of the parts. Company  B, which  should be considered  the producer  of these 
PPCs,  sells  these  and  other  PPCs  both  in  Japan  and  for  export  to  the  Community 
A joint  selling company  of companies A and B sells, in Japan,  PPCs of company B's 
brand.  However,  company  A  also  produces  -  partially  different  -  PPCs  for  its  own 
account, with some R&D of its own and with royalty payments to company  B for  the 
remainder.  Company  A  sells  these  PPCs  for  export  to  the  Community  (but  not  in 
Japan), partly  to OEM purchasers and partly  under  its own brand  name, for  which  it 
has  set  up  a distribution  network  of  its  own.  In  this  respect,  company  A  exerts  the 
complete  functions  of  producer/exporter,  and  it  is  in  this  respect,  therefore,  that  it 
should  be  considered  a  separate  economic  entity  from  company  B,  although  it  is 
clearly related.  In the absence of domestic sales of own-manufactured  PPCs, whether 
brand sales or OEM sales, normal value for company A was constructed, based partly 
on  costs  verified  at  the  premises  of  company  A,  company  B  and  their joint  selling 
company,  and  partly  on the weighted  average cost  and  profit  of other producers. 

(54)  The  above  situation  where two  companies  operate  at  the  same  horizontal  level  and 
exert the same functions,  even though one is majority-owned  by and partly  dependent 
on the other, should be distinguished from  the situation where a division of production 
and sales activities is made within a group made up of legally distinct companies, with 
one company producing and the other company selling. Two companies operating such 
a  vertical  distribution  of  tasks,  each  incomplete  in  itself,  do  constitute  a  single 
economic entity,  as confirmed  by the European  Court  of Justice on many  occasions. 
Thus, the Commission  could  not accept the claim  made by certain  exporters that the 
export  prices  and  normal  value  used  were  not  comparable  within  the  meaning  of 
Article 2 (3) of Regulation (EEC) No 2423/88. Both domestic and export prices were 
in  fact  compared  ex-warehouse  of  the  producer,  with  domestic  sales  subsidiaries 
forming  part  of  the  economic  entity  "producer",  as  they  fulfilled  tasks  which  are 
normally  the responsibility  of  an internal  sales department  of the producer.  Sales by 

22 

such domestic  subsidiaries  have thus been  properly  compared  with the sales made by 
the producer's export department for export to the Community  Appropriate allowances 
for  differences  affecting  price  comparability  were  subsequently  made  in  accordance 
with  Article  2(9)  and  1(10)  of  Regulation  (EEC)  No  2423/88. 

Selective  normal  value 

(55)  Two  exporters  claimed  that  they  operated  a  separate  sales  channel  for  sales  to 
unrelated distributors, that these sales were at a different  level  of trade than their sales 
to other types of clients, and that this level  of trade should be used to establish normal 
value for comparison with export prices, to the exclusion of their sales to other clients. 
The Commission  investigated these claims. For both exporters it was found,  based on 
a representative  sample of models, that the prices of their individual  transactions with 
the  claimed  distributors  overlapped  to  a  considerable  degree  with  the  prices  of 
individual  transactions with other types of clients,  whether dealers or end-users. With 
respect  to  quantities  sold  to  the  claimed  distributors,  whether  model-by-model  or  in 
total, there was  also  significant  overlap with quantities  sold to other types  of  clients, 
whether  dealers  or  end-users.  The  claimed  distributors  of  one  exporter  were, 
furthermore,  found  to  sell  partly  to  end-users,  meaning  that in this respect  they  were 
exercising the same functions as dealers. As for the other exporter, it reported its sales 
to the claimed  distributors as taking  place  through the  same  sales channel  as its  sales 
to large end-users,  implying  a similar  cost  structure for both types of  clients.  Finally, 
for  both  exporters the  total  of  sales  to  claimed  unrelated  distributors by  volume  was 
very  small  in relation to the volume  of  their domestic  sales  and less  than  5% of their 
export  sales.  Under  these  conditions,  it  was  considered  that  the  exporters  had  not 
demonstrated that the claimed sales channels of unrelated distributors were consistently 
distinguishable from  sales to other types of clients in terms of costs, quantities, prices, 
and  functions  of  buyer,  and  that  the  exporters  had  thus  failed  to  prove  why  the 
claimed distributor channel  should be used to the exclusion of other sales channels for 
the  comparison  with  export  prices. 

There was, furthermore,  no reason to exclude  sales to end-users,  as requested  by  one 
of  the  above  exporters,  as  the  prices  of  individual  transactions  with  end-users, 
especially  large  ones,  overlapped  to  a  great  extent  with  the  prices  of  individual 
transactions  with  dealers. 

Normal  value  for  brand  sales based  on  actual  prices 

(56) 

In  the  investigation  period,  all  but  one  of  the  exporters  visited  had  a  volume  of 
domestic  PPC  sales  which  exceeded  5%  of  their  export  sales  to  the  Community. 
Normal  value  for  this  one  exporter  was  constructed.  For  the  other  exporters,  it  was 
considered  that  their  domestic  PPC  sales,  taken  as  a  whole,  were  sufficiently 
representative  to  serve  as the  basis  for  the  determination  of  normal  value.  For  those 
exporters,  transactions  covering  at  least  70%  of  domestic  PPC  turnover  were  the 
subject  of  verification.  Some  transactions  that  were,  at the  request  of  exporters,  not 
used  for the  calculations  pertained  to  sales channels  with  a very  small  turnover  or to 
sales  made by  very  small  related  sales  subsidiaries. 

For these exporters, domestic PPC models that were comparable with models exported 
to  the  Community  were  identified,  adjustments  being  made  where  necessary  and 
feasible  for  differences  in  technical  characteristics  to  the  domestic  models.  For  a 
number of export models, closely resembling domestic models were not found. Normal 
value  for  those  models  was  constructed. 

For  each  comparable  domestic  model,  the  volume  of  domestic  sales  was  compared 
with  the  volume  of  export  sales  to  the  Community  of  the  export  model.  Where 
domestic sales did not exceed  5% of export sales in volume, those domestic  sales were 
not  considered  representative  for  the  model  in  question,  and  normal  value  for  that 
model  was  constructed. 

23 

(57)  For  each  remaining  comparable  model,  the  number  of  units  sold  domestically  at a 
profit  was  calculated,  by  comparing  the  net  invoice  value  -  after  directly  related 
rebates and discounts  - of each  transaction  with  the cost  of production,  calculated  in 
the manner indicated  further  below. Where profitable  sales exceeded  80% in volume 
of  total  domestic  sales  of  the  model  concerned,  normal  value  was calculated  as  the 
weighted  average  sales  price  of  all  transactions,  including  those  at  a  loss  Where 
profitable  sales represented between 20 and 80% in volume of total domestic  sales of 
the model concerned, normal value was calculated as the weighted average sales price 
of  profitable  transactions  only.  Where  profitable  sales  represented  less  than  20% in 
volume of total  domestic  sales of the model  concerned,  normal value for  that  model 
was  constructed,  as  it  was  then  considered  not  to  have  been  sold  in  the  ordinary 
course of trade, within the meaning of Article 2 (4) of Regulation (EEC) No 2423/88. 

Constructed  normal  value for  brand  sales 

(58)  Where,  in  accordance  with  the  above  methodology,  normal  value  had  to  be 
constructed,  the cost of manufacturing  of the export models was calculated.  Amounts 
for depreciation of molds were based on normal Japanese accounting and tax practices, 
resulting  in  full  depreciation  over  two  years.  In  some  cases  where  statements  of 
manufacturing  costs submitted by exporters were found  to be significantly  out of line 
with  audited figures for  cost of goods  sold  and  stocks, corrections were made 

(59)  The reasonable  amount  for  selling,  general  and  administrative expenses to be added 
to arrive at the full  cost of production  was, for  all producers, based on their own cost 
structure,  including  sales subsidiaries,  in accordance  with  the single economic  entity 
concept.  This  includes  the  one  producer  which  did  not  sell  PPCs  of  its  own  brand 
domestically,  as in that  case the  SGA costs were taken  which  it  incurred  in  selling, 
through  its joint  domestic  sales  subsidiary  with  another producer,  PPCs of that other 
producer's brand. The same approach  had been followed  in the original investigation 
This  producer  argued  that  if  it  had  sold  its  own  brand  PPCs  domestically,  it  would 
have sold them in small quantities only and in a more direct manner with fewer costs 
However,  this producer  did  have a domestic  sales structure  and  there was no reason 
to  assume,  without  any  evidence,  that  it  would  not  have  sold  its  own  brand  PPCs 
through that structure. Furthermore,  since the SGA was calculated  as a percentage of 
turnover,  the  argument  that  a  smaller  quantity  of  sales,  even  through  a  different, 
simpler type of  sales channel, would  necessarily  have led to a lower  cost  allocation, 
is flawed.  Finally, that this producer's own brand would be less well known is already 
taken  into account  by  the fact  that  its domestic  sales  structure,  on which  SGA costs 
were  based,  incurred  few  advertising  expenses  for  the  PPCs  of the  other  producer's 
brand. 

SGA  expenses  were  calculated  specifically  for  PPCs,  and  separately  for  each  sales 
channel,  whenever the available  accounting  information  permitted  this. 

R&D  expenses  were  normally  based  on  those  allocated,  under  internal  company 
accounting  rules, to the copier  division  as a whole  (including  digital  and  full  colour 
copiers). Where  a separate  identification  of the  copier  division  was not  possible,  or 
where  the  company's  allocation  of  R&D  costs  to  the  copier  division  did  not  take 
account of basic R&D that is not product-specific,  the R&D costs for the company as 
a  whole  were  taken,  calculated  as  a  percentage  of  the  company's  total  cost  of 
manufacturing  for  all  products.  The  argument  that  R&D  costs  should  be  limited  to 
those  strictly  incurred  for  PPCs  was  rejected:  R&D  expenses  are  general  expenses, 
which have to be borne by the company on a current accounting basis and which must 
therefore  be entered  in the accounts for  the financial year  in which they  are incurred 
on the turnover of similar products or, in the case of R&D that is not  product-specific, 
on all products.  Royalty  income was allowed  to offset  R&D expenses. 

24 

(60) 

In  cases where  exporters  had  a  sufficient  volume  of  profitable  sales,  the  reasonable 
profit  margin was the weighted  average profit  of their own sales, i.e. all sales if more 
than  80% in volume was sold  at a profit  and profitable  sales only  if between  20 and 
80% in volume was sold at a profit.  In other cases, the weighted average profit  margin 
of  all  other  producers  with  a  sufficient  volume  of  profitable  sales  was  applied. 
Although  some exporters  criticized  this  approach  as leading  to  high  profit  margins, 
this approach results directly from  the ordinary course of trade test described in recital 
57. Its correctness is confirmed by Article 2(3)(b)(ii) of Regulation (EEC) No 2423/88, 
which  states clearly that the profit  used  in constructed  normal  value should be based 
on profitable  sales. 

Normal  value for  OEM sales 

(61)  The  general  methodology  applied  to  establish  normal  value  for  OEM  sales  was 
identical to that outlined above for brand  sales. In contrast to the situation at the time 
of the original investigation,  several producers now made OEM sales in the domestic 
market. Where such sales represented more than  5% in volume of OEM export  sales 
to  the  Community,  both  overall  and  for  each  comparable  model,  normal  value  for 
OEM sales was established  on the basis of prices actually  paid, whenever  such  sales 
were  made  at  a profit  in  sufficient  volumes.  In  other  cases,  the  OEM normal  value 
was constructed, based on the producer's own cost and profit  structure when possible, 
and on those of the OEM sales of other producers when necessary.  In this latter case, 
given  the availability  of usable cost  and  profit  data  of  other  producers for  domestic 
OEM sales of PPCs, the request of one exporter to use costs and profit  incurred in its 
OEM sales of other products in the same business sector could not be granted, taking 
account of the order laid down in Article 2(3)(b)(ii) of Regulation (EEC) No 2423/88. 

(62)  When normal values had to be constructed  on the basis of the SGA expenses of other 
companies, R&D expenses were considered  as part  of the cost of manufacturing,  so 
that each company's own R&D figures were used, together with the weighted average 
SGA expenses (excluding  R&D)  of other  companies.  This approach  was  considered 
to be more reliable than using other companies' R&D  figures. 

General 

3.  Export  price 

(63)  Export prices were verified  for around 70% of each exporter's total export sales to the 
Community.  All  sales to OEM importers were verified,  either  at the premises of the 
exporters or of their subsidiaries in the Community concerned with OEM sales. As for 
brand  sales, which  were  sold  almost  exclusively  via  subsidiaries  established  in most 
of  the  Member  States of  the  Community,  it  was deemed  necessary  to verify  only  a 
representative  portion,  based  on  the  largest  Member  States.  A  correcting  weighting 
factor  was  accordingly  used  in  the  final  dumping  calculation  to  re-establish  the 
original  ratio between brand  sales and OEM sales. 

(64)  Where models were  sold  in  several  different  configurations,  standard  configurations 
were agreed with exporters, which were normally the most basic version of the model 
concerned. This standard configuration was then compared with domestic models, and, 
where necessary and feasible,  appropriate adjustments were made to the normal value 
of tiie comparable domestic model. 

25 

Status of  importers 

(65)  Three importers which  had claimed  to be unrelated to an exporter were found  in  fact 

to be related. 

The  first  case  concerned  an  importer,  in  which  one  of  the  Japanese  exporters  had 
acquired  a  significant  minority  share  in  September  1991.  This  shareholding  was 
substantial  and appeared to allow the exporter to exert considerable influence over the 
importer,  the exporter's  acquisition  being accompanied  by  a structural  programme to 
increase  cooperation  between  the  two  companies.  During  the  remainder  of  the 
investigation  period  of the review, this cooperation,  as verified  at the premises of the 
importer,  appeared  to  be  inconsistent  with  a  normal  arm's  length  commercial 
relationship. A particularly  notable aspect of this cooperation related to the pricing of 
PPCs from  the exporter to the importer,  which, at least in one case, appeared to vary 
according to whether or not the PPCs were subject to anti-dumping duty, thus raising 
the  suspicion  of  absorption  of  the  anti-dumping  duty.  Under  these  circumstances,  it 
was considered  that  the  criteria  of  Article  2(8)(b)  of  Regulation  (EEC)  No  2423/88 
had been met,  in the  sense that both  an association  and a compensatory  arrangement 
appeared to exist which rendered the prices paid or payable between the exporter and 
the importer concerned unreliable. This importer and its subsidiaries in the Community 
were consequently  treated  as related importers within the meaning of Article 2(8)(b). 

(66)  The same factual circumstances, and the consequent qualification  as a related importer, 
also  prevented  this  importer  from  being  treated  as  an  OEM  importer.  An  essential 
characteristic  of  sales  to  OEM  importers  is  that  exporters  incur  significantly  lower 
costs in respect of such  sales, as marketing, distribution,  and maintenance  is all  done 
by the OEM importer under the latter's own brand name and for its own account  The 
exporter  can therefore  charge lower  prices, resulting  in the claim  that genuine OEM 
export  prices  are  at  a  different  level  of  trade  from  brand  sales  and  should,  for  the 
purpose  of  a  fair  comparison,  be  compared  with  a  similar  level  of  trade  on  the 
domestic  market.  In  this  respect,  this  importer  did  sell  the PPCs  imported  from  the 
exporter  concerned  under  its  own brand  names  in  the  Community  However,  this  is 
not  in  itself  sufficient  to  qualify  as  an  OEM  importer.  If  it  were,  it  would  be very 
simple  indeed  for  exporters to  have their  subsidiaries  in the  Community  qualify  for 
the status of OEM importer, simply by having them sell under a different  brand name, 
as some exporters were  found  to have done in this review.  In order  for  export  sales 
to  qualify  as  having  been  made  at  the  level  of  trade  of  an  OEM  importer,  the 
information  regarding sales prices between exporter and importer and the costs borne 
by  each  must  be  reliable.  This  criterion  is,  by  definition,  not  met  between  related 
parties within  the meaning  of Article 2(8)(b). 

These  conclusions  were  contested  by  the  importer  and  exporter  concerned.  They 
argued  that  at  least  purchases  ordered  before  the  exporter's  acquisition  of  its  share 
holding  should  still  be  treated  as unrelated.  However,  as described  above,  from  the 
moment  of  that  acquisition,  the  entire  relationship  between  exporter  and  importer 
changed to a degree where the prices actually paid for all subsequent imports, whether 
ordered  before  or after  the shareholding, became  unreliable. The same applies to the 
costs.  The  fact  that  the  Commission  verified  these  costs  and  used  them,  with  some 
corrections,  to construct  the  export price,  does not  necessarily  mean  that  these  costs 
were accepted  as entirely  reliable. 

(67)  The same considerations applied even more strongly to a second importer. During the 
investigation  period  of  the  review,  a  majority  of  the  capital  of  this  importer  was 
owned  by  one  of the  Japanese  exporters.  Given  the exporter's  majority  share  in  the 
company,  prices between  exporter  and importer  and the costs incurred  by each  were 
considered  unreliable.  Although  the importer  sold  the PPCs which  it  imported  from 
the exporter concerned under the importer's brand name in the Community, that brand 
name is in fact  owned and controlled  by the exporter concerned. This importer could, 
therefore,  not be treated  as an OEM importer. 

26 

(68) 

In  September  1991, the European  headquarters of one of the Japanese exporters took 
a  significant  minority  shareholding  in  a  third  importer,  the  name  of  which  was 
changed in line with the brand name of the exporter concerned.  As in the case of the 
first importer, this shareholding was so large as to make it likely, in the Commission's 
view,  that  the  exporter  was  in  a  position  to  exercise  restraint  or  direction  over  the 
importer.  During  the  verification  visit  to  this  importer  it  was  also  found  that 
advertising  support was received  from  the exporter.  It was therefore  considered  that 
also in this case an  association  or compensatory  arrangement  within  the meaning of 
Article 2(8) b) of Regulation (EEC) No 2423/88 appeared to exist, which rendered the 
sales prices and distribution of costs between this importer and the exporter concerned 
unreliable. 

Facts available 

(69)  A planned  visit  to a European  subsidiary  of one of the Japanese  exporters could  not 
take  place,  as the  company  did  not  supply  necessary  information  regarding  its  cost 
structure  in time.  As a consequence,  the Commission  was  not  able to  determine  the 
costs  incurred  by this company  in  respect  of  sales made to first independent  buyers 
by the other subsidiaries of the same group that had been visited.  Based on the scarce 
information  available  to  the  Commission,  it  appeared,  however,  that  the  company 
clearly  did perform  functions  that were of benefit  to those other subsidiaries,  such as 
collecting  and  disseminating  marketing  information,  providing  marketing  assistance, 
standardising accounting practices, giving legal assistance, undertaking pan-European 
advertising, providing services in the financial  area, assisting in product  development 
and  product  adaptation  to  the  market,  etc.  In  the  absence  of  better,  verified 
information,  facts  available  had  to  be  used,  in  accordance  with  Article  7(7)(b)  of 
Regulation  (EEC) No 2423/88, in casu the  SGA costs in the audited  accounts of this 
company, to establish the costs incurred in providing the above - and possibly  other -
services. 

Export  price for  related  importers 

(70)  For related importers, export prices were constructed  from  the sales prices to the first 
independent  buyers  in  the  Community,  minus  discounts  and  rebates  directly  linked 
(including items free  of charge), by deducting all  costs incurred between  importation 
and resale and a reasonable profit  margin of 5%. The profit  levels found  for unrelated 
importers could not be used to establish an appropriate profit  margin, for two reasons. 
First, few unrelated importers replied to the questionnaire. Of these, the profit  margin 
of one unrelated  importer  was verified,  representing  only  a small  percentage  of total 
imports  from  Japan.  Secondly,  it  was  found  that  the  profit  margins  of  unrelated 
importers were artificially depressed, in line with the general price depression analysed 
further  below  for  PPCs  in  the  Community,  as  a  result  of  having  to  compete  with 
dumped  Japanese  brand  sale  imports  sold  through  related  subsidiaries  in  the 
Community.  In  the  absence  of  reliable  profit  figures  of  unrelated  importers,  the 
Commission  considered  a  5% profit  margin  a  reasonable  minimum  in  the  ordinary 
course of trade, taking account of Commission practice in other cases, including in the 
original investigation. As requested by exporters, a single profit margin, always of 5%, 
was  used  irrespective  of  the  number  of  subsidiaries  actually  involved  in  the  sales 
chain. 

(71)  PPCs sold to dealers at a lower price for demonstration  purposes were included in the 
transactions used to calculate dumping, as the cost of demonstration  should normally 
be  borne  by  the  dealer  himself.  Depreciation  of  stock,  covering  missing  or  stolen 
products or damaged  or obsolete products  destined  for  disposal, was considered  as a 
cost  incurred  between  importation  and  resale.  Where  old  stocks  of  PPCs  were  not 
depreciated  but  sold, these transactions were included  in the dumping  calculation. 

27 

Export  price for  unrelated  importers 

(72)  Export prices to unrelated importers, normally OEM purchasers, were calculated based 
on the actual prices for these transactions, minus discounts and rebates directly linked 
(including  items  free  of  charge).  Compensations  paid  to  OEM  purchasers  for 
disadvantageous exchange rate fluctuations  in connection  with the sale of PPCs were 
considered  as  discounts.  Where  exporters'  subsidiaries  in  the  Community  incurred 
costs in respect  of these  sales, by carrying  out certain  activities that would  normally 
have  been  undertaken  by  the  importer  (for  instance  the  provision  of  advertising 
support)  or  by  performing  a  role  similar  to  that  of  a  re-invoicing  agent,  the  costs 
involved  and  a  reasonable  profit  margin  were  deducted,  in  accordance  with 
Article 2(8)(b) of Regulation  (EEC) No 2423/88. In this respect, the  same 5% profit 
margin was applied  as for all sales through related importers, based on the method of 
using  the  same  profit  margin  irrespective  of  the  number  of  subsidiaries  involved. 
While one exporter commented that this percentage was relatively  high in the case of 
sales  to  OEM  importers,  it  was  precisely  this  exporter  which  had  insisted,  in  the 
original  investigation,  that  one  and  the  same  profit  percentage  should  be  used 
irrespective  of  the  number  of  subsidiaries  involved  in  the  sales  channel.  It  was 
considered  that the  5% deduction  by the Commission  for  reasonable  profit  was low 
in  respect  of  sales  in  Member  Sates  in  which  two  or  sometimes  even  three  related 
subsidiaries were involved,  as well  as in respect of sales to end-users, which implied 
an  integrated  chain  of  distribution,  and  that,  therefore,  the  approach  followed  was 
reasonable. 

4.  Comparison 

(73)  Export  prices  and  normal  value  were  compared  at  the  same  level  of  trade.  OEM 
export sales were compared with the weighted average normal value of OEM domestic 
sales.  As for  the  own-brand  export  sales, which  had  to be  constructed  in  almost  all 
cases, these were compared  with the weighted  average  normal  value of  all  domestic 
own-brand sales channels, given that these were not consistently  distinguishable  from 
each  other,  and  that  therefore  insufficient  evidence  existed  that  one  type  of  sales 
channel  would be better comparable to the export  sales than  another. 

(74)  Where  sufficient  evidence  was  submitted,  appropriate  adjustments  were  made  in 
respect of differences  in physical characteristics and selling expenses. No adjustments 
were claimed for any difference  in import charges and indirect taxes. With respect to 
salesmen's salaries, only  the salaries paid to personnel  wholly  engaged  in  direct PPC 
selling  activities  were  deducted,  to  the  exclusion  of  staff  that  partly  or  entirely 
exercised  management  functions,  and  to  the  exclusion  of  service  and  sales  support 
personnel.  This  approach  was  based  on  Article  2(10)(c)(v)  of  Regulation  (EEC) 
No 2423/88, which states that an allowance can be granted only for personnel  wholly 
engaged  in  direct  selling  activities.  Where  PPC  salesmen  were  found  to  be  selling 
other  products  or  services  as  well,  the  turnover  concerned  was  included  for  the 
purpose of calculating  the percentage  deduction  for  PPCs. 

The  total  allowances  for  normal  value  were  calculated  as  an  absolute  amount  per 
model  per  unit  sold.  This  absolute  amount,  representing  the  allowable  cost  per  unit 
actually  incurred,  was then deducted  from  the normal  value calculated  for  the model 
in question. 

28 

5. Dumping  margins 

(75)  Dumping margins were calculated as the total absolute amount of dumping on verified 
import  sales  divided  by  the  total  CIF  value  as  declared  to  customs  of  all  verified 
imports, whether  or not  dumped.  The dumping  margins for  brand  sales  (only  partly 
verified)  and  OEM  sales  (all  verified)  were  weighted  to take  account  of  the  actual 
ratio in terms  of  CIF value between  these two types  of export  sales.  In  this  respect, 
dumping found  for the verified  part of the brand  sales was considered  representative 
of all brand sales. 

(76) 

In the case of related importers, the existing anti-dumping duty was deducted as a cost 
between  importation  and  resale,  in  accordance  with  Article  2(8)(b)  of  Regulation 
(EEC) No 2423/88. For PPCs over  75 copies per minute, no anti-dumping  duty  was 
in  force  and  thus  no  anti-dumping  duty  was  deducted.  On  this  basis,  the  dumping 
margins found  varied between  21.5% and  83.9%. They were significantly  higher  for 
each exporter concerned than the rate of the original  anti-dumping duty pertaining to 
that exporter.  The weighted  average dumping margin  was 41.0%. 

(77)  The  effect  of this  high  degree  of  dumping  on the Community  market  place was  far 
from  being  completely  offset  by  the  existing  anti-dumping  duty.  When,  in  order  to 
evaluate  tiie  effectiveness  of  the  original  anti-dumping  duty,  this  duty  was  not 
deducted  as a cost  in the  case of related  importers,  and  added  to the export  price in 
the  case  of unrelated  importers,  the weighted  average  effect  of the  dumping  on  the 
Community  market was still as high as 28.8%, with individual  rates varying between 
13.5% and 74.4%. 

(78) 

In  conclusion,  the  review  showed  that  the  existing  anti-dumping  duty  has  not  led 
exporters to revise their pricing to an extent that  dumping was eliminated,  nor  has it 
offset  the effect  of the dumping on the Community  market.  Given the high  dumping 
margins  found  in  the  review  investigation,  it  is considered  that  if  the  existing  duty 
were  allowed  to  lapse,  dumping  would  be  likely  to  continue  at  the  same  or  even 
higher margins. The abolition  of the anti-dumping  duty can, if anything, only  further 
increase the level  of dumping to the extent that  the lower  costs for  exporters  selling 
in the Community  through  related  importers could  result  in further  price decreases 

G.  RECURRENCE  OF INJURY 

1. Effect  of dumped  imports from  Japan 

(79)  Despite  the  existing  anti-dumping  duty,  Japanese  exporters,  selling  mostly  through 
related  importers,  were,  in  the  investigation  period  of  the  review,  undercutting  the 
prices  of the  Community  industry  in  the  Community  market  place  with  their  PPCs 
imported  from  Japan  by  a  weighted  average  of  26%,  with  a  sales  volume  that, 
although  significantly  declining,  still  represented  26%  of  units  placed  in  the 
Community.  As  PPCs  are  a  mature  product,  with  relatively  limited  technical 
differences  among  producers  and  with  price  thus  playing  an  important  role  in  the 
customer's  choice, it  is clear  that  such  a large volume of  imports  at such  low  prices 
could  not fail  to have a significant  negative impact  on the economic performance  of 
the  Community  industry,  showing  itself  in  insufficient  profitability  and  declining 
market  shares and production  volumes for  that  industry. 

(80)  Any  reduction  in  injury  that  might  be  derived  from  the  decrease  over  time  in  the 
Community  market  share of Japanese PPCs, has been offset  by the fact  that in terms 
of  models,  those  imports  have  become  especially  injurious.  In  the  original 
investigation,  the  large  bulk  of  imports from  Japan  consisted  of  small  PPCs.  These 
gave the Japanese exporters a large markiet share measured in units, but their  injurious 
effect  was limited  by the fact  that Océ afod Rank Xerox had traditionally  focused  on 
the more important  large PPCs and continued  to have a strong technical  and  market 

i 
29  \ 

V 

position and adequate profitability  on those large models. Since then, however, almost 
all  of  the  Japanese  exporters  have  shifted  a  large  part  of  their  production  of  small 
PPCs (in particular mature models of relative simplicity) to the Community or to other 
third  countries  and  have  concentrated  on  exporting  to  the  Community  the  more 
sophisticated  segment 4, 5 and 6 models they have come to produce in Japan. In view 
of  the  fact  that  a  weighted  average  degree  of  undercutting  was  determined  for 
segments  4  and  5  which  was  twice  the  level  of  undercutting  for  segments  1 to  3 
(38% compared  to  19%),  the  imports  from  Japan  exerted  very  strong  downward 
pressure  on the  prices, profitability  and  market  share  of  the Community  industry  in 
these segments. For instance, in segment 4 (PPCs capable of making 45 to 59 copies 
per  minute),  Community  industry's  market  share  in  the  Community  decreased  from 
64.4% in  1988 to 42.1%  in the investigation  period of the review, a dramatic fall  of 
22.3%.  Most  of  the  segment  4  PPCs  and  all  segment  5  PPCs  competing  with  the 
segment 4 PPCs of the Community industry  in the investigation period  of the review 
were produced  in Japan. 

(81)  Given  the  pricing  aggressiveness  of  the  Japanese  exporters  already  found  with  the 
existing  anti-dumping  duty  in  force,  it  is  considered  that  undercutting  and  price 
depression  caused  by  dumped  imports  from  Japan  could  only  deteriorate  if  the duty 
were allowed to lapse, as Japanese exporters would be likely to use at least part of the 
cost reduction resulting for their related importers from  an expiry of the anti-dumping 
duty to decrease further  resale prices in the Community.  This likelihood  is considered 
all the greater as the introduction  of lower prices by just  one major  player in the PPC 
market  would,  for  such  a  price-sensitive  product,  put  great  pressure  on  the  other 
players to follow  suit, leading to an even more ruinous price war than already  exists 
The consequences of any further price decrease for the Community industry  would be 
serious,  as PPCs  are for  each  producer  the  mainstay  of their business,  which  should 
provide the profits necessary to make the investments required to remain viable in the 
medium term. Any of these firms could decide to stop production and become a mere 
OEM  purchaser,  deriving  revenues  from  service  and  supplies  only,  as  other 
Community  producers have already  been forced  to do in past years. They  could  also 
replace  part  of  their  range  of  own-manufactured  models  with  OEM  purchases.  The 
experience  of  recent  years  has  shown  that  parts  of  the  Community  industry's  own 
production, especially in the lower segments, had to be sacrificed  when losses became 
too  great.  The  aggressiveness  of  Japanese  exporters'  pricing  in  the  higher  segments 
means that  danger  could  now arise even  for  the higher  segments. 

(82)  With respect to volumes of imports, during the investigation  period of the review, the 
economic  situation  in Japan deteriorated,  demand  stagnated,  and  stocks increased by 
65%  to  a  level  of  300  000  units,  more  than  the  annual  volume  of  exports  to  the 
Community  during the investigation  period. Capacity utilization  was also decreasing 
If  duties  were  allowed  to  lapse,  the  incentive  to  increase  exports  from  Japan  to  the 
Community,  at prices covering variable costs of production  at most,  would be great, 
quite possibly even to the extent of closing Japanese PPC factories  in the Community 
in  order  to  improve  capacity  utilization  in  Japan.  The  existing  trend  towards 
decreasing volumes of imports from  Japan  could thus be stopped  or even  reversed  if 
duties  were  allowed  to  lapse.  This  would  be  even  more  likely  if  the  yen  were  to 
depreciate  in the coming years  against  the European  currencies.  With  the  behaviour 
of currencies being as volatile  as it is, this development  cannot be excluded. 

2.  Other  allegedly  injurious  factors 

(83)  The  Commission  examined  whether  a  fall  in  demand  for  PPCs  in  the  Community 
market  could  have  caused  the  precarious  situation  of  the Community  industry  This 
was  not  the  case.  Between  1988  and  the  investigation  period  of  the  review  the 
Community  market for PPCs expanded by 24%. However, the Community  industry's 
sales  in the Community  declined  by  1% over the  same period,  leading to  a decrease 
in their market  share in the Community  from  15.4% to  12.4%. 

30 

(84)  The  argument  by  some  exporters  that  a  period  of  economic  recession  in  the 
Community  was the  cause  of the precarious  situation  of the Community  industry  in 
the investigation  period  of the  review,  is  also  considered  unfounded  The  economic 
recession in the Community began, except in the United Kingdom, only in the second 
half  of  1992,  after  the  end  of  the  investigation  period.  Thus,  while  total  PPC 
consumption  has  decreased  by  around  10% following  the  end  of  the  investigation 
period, it had still been climbing  strongly  between  1988 and the investigation  period 
and remained  stable during the investigation  period itself.  To the extent  that demand 
may have shifted  somewhat towards second-hand  PPCs, the Community  industry  did 
not  suffer  from  this, as it is strongly represented  in this market (as are the dealers of 
the  Japanese  producers).  Furthermore,  while  the  profitability  of  the  Community 
industry in the Community for its products and services other than PPCs declined  from 
an index of  100 in  1988 to 76 in the investigation  period of the review,  Community 
industry's profitability  on PPC hardware sales in the Community  dropped  much more 
steeply from  an index of  100 in  1988 to 24 in the investigation  period  of the review. 
This  suggests  that  sales  of  PPCs  by  the  Community  industry  were  under  severe 
additional  pressure  from  sources  other  than  the general  economic  conditions  Some 
exporters  commented  that  the  relatively  better  performance  of  overall  profitability 
could be due to customers postponing the replacement of their PPC and spending more 
on maintaining their existing PPC. However,  as mentioned  above, between  1988 and 
the  investigation  period,  sales of  PPCs in  the Community  increased  by  24%, which 
contradicts the argument that  customers had postponed  purchases of  new machines. 

(85) 

the  Commission 

to  obtain  relevant 

It was  suggested  by  certain  exporters that  PPCs produced  by Japanese companies in 
the Community and in third countries had also been causing injury  to the Community 
industry,  and that the Commission  should  quantify  what part  of the injury  should be 
attributed  to each. It may be observed, in this respect, that neither of these two other 
sources of  sales in  the Community  was the object  of the present  review,  so that  the 
possibility  for 
information  was  limited. 
Furthermore,  none  of  the  Japanese  exporters  volunteered  any  information  on  the 
degree  to which  their  PPCs produced  in third  countries  other  than  Japan  and  in  the 
Community were alleged to cause injury  to the Community  industry.  Nevertheless, it 
was  considered  reasonable  to  assume  that  the  prices  of  PPCs  which  Japanese 
companies  produce  in  the  Community  and  which  they  produce  in  and  import  from 
third  countries other than Japan  are not likely to be significantly  out  of line with the 
prices  of  PPCs  imported  from  Japan,  as  major  price  differences  in  the  Community 
between similar PPCs produced by the same company probably could not be sustained 
In  this  sense,  it  was  considered  likely  that  PPCs  sold  by  Japanese  companies  from 
these  other  sources  than  Japan  likewise  contributed  to  the  injury  suffered  by  the 
Community industry.  It was also noted that the relative importance in the Community 
market  of  PPCs  from  these  other  sources  had  increased  continuously,  to  a  market 
share of 61.8% in the investigation  period of the review (consisting of  12.8% imports 
from  third countries other than Japan and 49% estimated  EC sales of PPCs produced 
by Japanese companies in the Community). 

Nevertheless, the market share of 26% held by the imports from  Japan, combined with 
the undercutting level  of 26% found  for  those imports, is considered  to be in itself a 
significant  cause of the poor economic situation of the Community  industry.  In order 
to defend  its market share against such a large volume of unfairly  low-priced imports, 
the Community industry was forced to lower its own sales prices to levels that resulted 
in an important shortfall  of profitability  on their sales of PPCs. That PPCs of Japanese 
companies  from  other  sources  were  probably  sold  at  similarly  low  prices,  does not 
change the  fact  that  even  in  their  absence the  Community  industry  would  still  have 
had  no  choice  but  to  follow  the  price  lead  of  the  imports  from  Japan,  sold  as they 
were  in  such  important  volumes.  Those  imports  were,  therefore,  taken  in  isolation, 
sufficient  to  cause price  depression  and  a significant  shortfall  in  profitability  for  the 
Community  industry.  As  mentioned  before,  they  were  also  the  main  cause  of  the 
dramatic loss of market share of the Community  industry  in segment 4 PPCs and the 
only cause of sales lost by the Community  industry in segment 6, since all  segment 5 

31 

and segment 6 PPCs and the large majority  of segment 4 PPCs introduced by Japanese 
companies  on  the  Community  market  in  the  investigation  period  of  the  review 
originated  in  Japan.  For the  other  segments,  imports from  Japan  probably  combined 
with  PPCs from  other  sources to cause loss of market  share and  lack of  profitability 
to the Community  industry. 

(EEC)  No  2423/88 

the 
Although  Article  4(1)  of  Regulation 
Community  authorities  not  to  attribute  to  dumped  imports  injuries  caused  by  other 
factors,  this  requirement  is  satisfied  where  it  is  shown,  as  described  above,  that 
dumped  imports,  taken  in  isolation,  have  been  an  independent  cause  of  the  poor 
economic  situation  of the  Community  industry,  even  if  other  factors  may  also have 
contributed  to that  situation.  Thus,  even  if  it were  assumed  that  imports  from  other 
third  countries  and  sales from  Japanese production  facilities  in the Community  have 
contributed to the precarious situation of the Community industry, this would not alter 
the fact that dumped imports from  Japan, taken in isolation, caused the poor economic 
situation  of the Community  industry. 

requires 

(86) 

As  for  the  argument  that  the  Community  industry  inflicted  injury  upon  itself  by 
importing  and  selling  in  the  EC  PPCs  originating  in  Japan,  it  has  already  been 
mentioned that the number of PPCs imported from  Japan by the Community  industry 
and  sold  in  the  Community  in  the  investigation  period  of  the  review  declined 
dramatically  in  comparison  with  the  original  investigation.  The  percentage  of  PPCs 
imported  by  the Community  industry  from  Japan  and  sold  in  the Community  in the 
investigation period of the review represented  less than  1% of its production  of PPCs. 
Any negative impact of such imports on the situation  of the Community  industry  can 
therefore  be ignored. 

Not only was the quantity  of PPCs imported from  Japan by the Community  industry 
very small, the fact of buying part of one's product range from  other producers is now 
a  common  and  normal  business  strategy  even  among  Japanese  producers.  Selling 
dumped PPCs from  Japan in the Community, as practised by Océ, but not by the other 
two Community producers, may be seen as a legitimate act of self-defence  in view of 
the  need  to  sell  in  the  Community  market  in  competition  with  other  dumped  PPCs 
from  Japan.  Indeed,  had  Océ  failed  to  do this,  the  injury  on  its  own-manufactured 
PPCs  would  in  all  likelihood  have  been  larger  still,  as  it  would  then  have  lost  a 
number  of customers needing  an assortment  of PPCs ranging from  small  to large. 

3.  Conclusion 

(87)  The  above  considerations,  and  in  particular  the  finding  that  notwithstanding  the 
existing anti-dumping duty, significant volumes of highly dumped imports from  Japan 
were sold on the Community  market at very  low prices, causing serious detriment to 
the Community  industry, lead to the conclusion that if the anti-dumping duty in  force 
were allowed to lapse, material  injury  caused by dumped  imports from  Japan  would 
recur. 

H. COMMUNITY  INTEREST 

1. General 

(88)  The general  purpose of anti-dumping measures is to eliminate trade-distorting  effects 
of  dumping  practices  and  thus  to  restore  effective  competition  on  the  Community 
market.  Effective  competition  is fundamentally  in the Community  interest,  both  as a 
general  policy  objective  and  in  terms  of  the  interests  of  Community  producers  and 
consumers. 

32 

2. Original  findings 

(89)  With respect to the specific  case of dumped PPC imports from  Japan, the interests of 
producers, consumers and unrelated  (mainly  OEM) importers,  such as Agfa  Gevaert, 
in the Community had already been examined extensively in the original investigation 
At that time, it was concluded  that  the Community's  interest  in  maintaining  a viable 
Community  PPC  manufacturing  industry  capable  of  competing  with  imports  from 
Japan on fair terms outweighed the short-term interest of consumers in profiting  from 
unfairly  low  prices,  for  as  long  as  they  would  last,  as  well  as  the  interests  of 
OEM importers,  who  profited  from  distributing,  under  their  own  brand,  dumped 
imports from  Japan at the expense of sales of PPCs produced by Community industry 
Regarding OEM importers it was considered, in particular, that the Community interest 
in  a Community  industry  which  both  produces  and  distributes PPCs is, other  things 
being  equal,  greater  than  in  European  companies  which  essentially  distribute  under 
their own brand  PPCs produced  in Japan 

3.  Findings  in the review 

Community  interest  in PPC  production 

(90)  With respect to the Community's interest in maintaining  a viable PPC industry  in the 
Community, this has, if anything, increased from the time of the original investigation 
It is estimated that  close to 23 000 people are employed  full-time  in the Community 
to  manufacture,  distribute,  service  and  sell  the  PPCs  produced  by  the  Community 
industry,  of  which  12 000  are  employed  in  manufacturing  (including  those  working 
full-time at Community companies supplying parts and sub-assemblies for Community 
PPC  producers).  While  PPC  technology  has  become  mature,  it  is  still  a  highly 
complex and sophisticated process, combining chemical, optical, electronic, mechanical 
and  software  know-how.  The  PPC  of  today  also  forms  an  important  technological 
starting point not only for the production of digital copiers, printers and faxes, but also 
for  a  whole  new  generation  of  multi-purpose,  networked  office  products  to  be 
introduced  in the years to come. 

(91)  Furthermore,  after  anti-dumping  measures  were  introduced  in  1986,  almost  all 
Japanese  producers  established  or  expanded  PPC  production  facilities  in  the 
Community. As a result, Japanese PPC production in the Community, which had been 
less than  50 000 units in  1984, increased to 643 719 units in the investigation  period 
of the review.  Although  the  anti-dumping  duties may  not  have been the only  reason 
for  this  strongly  increased  Japanese  production  in  the  Community,  it  can  hardly  be 
doubted  that  they  did  significantly  influence  this  development.  In the  wake  of  these 
factories,  a  strong  supplier  industry  also  developed  within  the  Community, 
representing,  in  all  likelihood,  more  employment  than  the  Japanese  factories  in  the 
Community  themselves or than the 6 000 workers involved  full-time  in supplying the 
Community  industry. 

As  already  mentioned,  if  duties  were  to  lapse,  there  would  be  an  incentive  for  the 
Japanese exporters to cut production in the Community to reduce the significant  stocks 
existing in Japan and to improve capacity utilization there. This rationale would apply 
especially  to  the  larger  PPCs,  which  could  be  supplied  world-wide  from  a  single 
source, Japan. In addition, the lapsing of the duties in the face of high dumping would 
probably  be  interpreted  by  the  Japanese  producers  as meaning  that  the  Community 
authorities no longer attached importance to maintaining a photocopier industry in the 
Community.  As a result,  the economic  advantages  of producing  small  and  relatively 
simple PPCs in third  countries with  low labour  costs, rather  than  in the  Community 
where  most  Japanese  companies  produce  them  now,  would  become  more  alluring 
There will  be  a point  where  cost^enefit  considerations  will  outweigh  even  strategic 
considerations  relating  to  maintaining  a manufacturing  presence  in  the  main  global 
markets,  especially  since  at  least  one  other  Japanese  producer  has  no  production 
facilities  at  all  in  the Community  and  competes  strongly  on the Community  market 

33 

with PPCs made with low labour costs in a third country. If this trend were  followed, 
the final result  could  be a  severely  limited  Japanese PPC  manufacturing  presence in 
the  Community.  If  the  production  of  several  if  not  all  of  the  Japanese  production 
facilities  were  to  be  closed  or  switched  to  other  products,  this  would  be  serious  in 
itself.  However,  probably  the biggest  disadvantage  would  be that  a myriad  of  small 
and  medium-sized  Community  suppliers  now  providing  the  Japanese  assembly 
facilities with parts, would be without clients. It is precisely this strong reliance by the 
Japanese assembly facilities  on outside suppliers, entailing minimal capital investment 
in  assembly  plants,  that  would  limit  their  shutdown  costs  if  they  decided  to  cease 
assembly  in the  Community. 

Interest  of  importers 

(92)  Certain  importers claimed that they  suffered  from  the anti-dumping  duty  in that they 
were unable, whether  partially  or entirely, to pass this cost  on to consumers,  leading 
to reduced  profitability  and loss of employment  in their companies. It is evident that 
the  imposition  of  an  anti-dumping  duty  is not to  the  advantage  of  importers,  which 
have to pay  the  anti-dumping  duty  and  which  are  therefore  less  able  than before  to 
undercut  the prices of the Community  industry  with  dumped  imports. However,  it is 
precisely  the  intention  of  the  introduction  of  an  anti-dumping  duty  that  the  sales 
prospects  for  the Community  industry  be improved  in  relation  to those  of importers 
selling  dumped  products.  In  addition,  it  was  noted  that  this  claim  was  made  by 
importers,  such  as Agfa  Gevaert,  which  sell  the PPCs which  they  purchase  in Japan 
under their own brand in the Community. The profitability  of such companies is likely 
to have been affected  at least as much by the tendency of their Japanese PPC suppliers 
gradually  to expand their own brand  sales network  in the Community  at the expense 
of  sales  under  the  importer's  brand.  While  some  employment  in  sales  and  service 
activities  may  have  shifted  from  these  importers  to  the  Community  industry  or  to 
Japanese  sales  subsidiaries  in  the  Community,  this  employment  remained  in  the 
Community. This situation should be distinguished from  the net loss of  manufacturing 
employment which,  as described  above, is at stake for the Community  if duties were 
allowed  to lapse. 

The importer  Agfa  Gevaert  also made the argument  that  the  anti-dumping  measures 
on  PPCs  from  Japan  endangered  its  direct  investments  in  PPCs  in  Japan.  Upon 
verification,  however,  it was found  that  such no direct  investments  existed. 

Interest  of Community  consumers 

(93) 

(94) 

It  was  estimated  that  an  amount  of  around  ECU  500  million  was  collected  in  anti 
dumping  duties  on PPC  imports  from  Japan  from  their  introduction  in  August  1986 
to the end of the investigation period. However, given the continued effect  of dumping 
on the Community  market  and the high undercutting margins found,  it would  appear 
that a large part  of this  amount was not  charged  to Community  consumers. 

If  duties  were  allowed  to  expire,  consumers  would  benefit  to  the  extent  that  the 
Japanese  exporters  and  unrelated  importers  decided  to  use  their  reduced  costs  to 
further  decrease  resale  prices  in  the  Community  of  PPCs  imported  from  Japan.  If 
maintaining  the  duty  led  to  no  price  movement,  the  situation  would  continue  as 
mentioned  in recital  93. If maintaining the duty  led to a price increase to consumers 
with the full  amount of the anti-dumping duty, if imports continued  at the same level 
as  presently,  and  if  PPCs  not  imported  from  Japan  did  not  increase  in  price,  the 
estimated  cost to Community  consumers of a continuation  of the measures would be 
ECU 42.5 million per year.  This figure  is based  on a weighted  average anti-dumping 
duty  of  16.3% for  the exporters investigated,  multiplied  by  a total  customs  value of 
PPCs imported  from  Japan  in  1994 of ECU 260.8 million.  Such a price increase on 
PPCs  imported  from  Japan  would,  however,  be  quite  unlikely,  given  that  the  duty 
would remain at the same level as before. Even if a price increase of PPCs from  Japan 
did take place, it would  be likely  to lead to their partial  or complete replacement by 

34 

PPCs from  other  sources, whether  sales by the Community  industry  or sales of PPCs 
produced  by  the Japanese  companies  in  the  Community  or  in  other  third  countries. 
The  Community  industry  would  probably  want  to  use  part  of  the  breathing  space 
created  to  increase  sales  volumes  rather  than  increase  prices  up  to  the  full  margin 
possible. As for the Japanese producers, there is no reason why they would change the 
pricing  strategy  of  their  PPCs  not  imported  from  Japan,  especially  because  they 
compete  among  themselves  and  are  still  subject  to  competition  from  low-priced 
imports from  third  countries  other  than  Japan.  A general  price  increase  of  all  PPCs 
sold  in  the  Community  is therefore  extremely  unlikely.  In  general,  in  a  competitive 
market  for  a mature  product  such  as  photocopiers,  it  takes  only  one  or  a  few  large 
sellers to force the general price level down, but it takes a general cost increase or the 
participation  of  all  or  most  large  sellers  to  get  the  general  price  level  up.  If  one 
company  increases  its  prices  in  isolation,  it would  be  forced  to  rethink  this  strategy 
very  quickly. 

(95) 

It is in the long-term  interest of consumers to maintain  a variety  of sources of supply 
and competition.  Two of the smaller Japanese exporters observed that their continued 
operation  might be endangered  if the anti-dumping  duty  on PPC  imports from  Japan 
were maintained, which would reduce competition. However, of these two companies 
one was already  majority-owned  by one of the largest  Japanese companies, while the 
other  exported  the  bulk  of  its  PPCs  to  the  Community  from  a  third  country.  The 
Community authorities were, therefore, more concerned about the reduction in sources 
and variety of supply which could result from  the disappearance of one or more of the 
remaining  Community  producers.  Around  85% of the  Community  market  measured 
in units  (and  around  70% measured  in units weighted  by  copy volume)  was already 
in  the  hands  of  the  nine  Japanese  exporters  investigated,  whether  exporting  from 
Japan,  from  third  countries,  or  producing  in  the  Community,  even  though,  as 
mentioned above, these Japanese companies did compete among themselves during the 
investigation  period  of the review. 

(96)  Some  exporters  and  one  importer  pointed  to the  strong  position  in  terms  of  market 
share of the Community  industry  in  segment  6 to argue that this  segment,  or part of 
it,  should  be  excluded  from  the  duties.  However,  given  that  Rank  Xerox,  Océ  and 
Kodak  sell  in  segment  6  and  compete  between  themselves,  and  that  anti-dumping 
duties  will  not  prevent  Japanese  exporters  from  exporting  segment  5 or  segment  6 
PPCs  to  the  Community  (or  from  producing  them  in  the  Community  or  third 
countries), but merely  from  selling them  at unfairly  low prices, it was considered that 
this  alleged  risk  to  competition  in  segment  6  was  outweighed  by  the  Community 
industry's  interest  in  receiving  protection  from  dumped  imports.  This is the  more so 
as  segment  6  should  not  be  considered  as  a product  in  itself,  but  merely  as a  small 
part  of  a  product,  PPCs,  in  which  Japanese  companies  have  a  very  strong  market 
position  in  the Community. 

4.  Conclusion 

(97) 

It was  considered  that,  on balance,  it  is in the  overall  Community  interest  that  anti 
dumping measures on PPC imports from  Japan should not be allowed to expire at this 
time. 

I. MEASURES 

1. General 

(98)  The  question  governing  this  review  was,  in  accordance  with  Article  15(3)  of 
Regulation (EEC) No 2423/88, whether the expiry of the measures in force would lead 
again to injury  or threat of injury.  Based on the above analysis, this question must be 
answered  in the affirmative.  Taking  account  of the Community  interest,  the Council 
concluded  that  anti-dumping  measures  should be maintained. 

35 

2.  Product  scope 

(99)  When the anti-dumping  measures  on PPCs from  Japan were first introduced,  PPCs 
capable of  operating  at a speed  of more than  75 copies per minute  of  A4 size paper 
were excluded from  the scope of the measures, as there were, at that time, no imports 
from  Japan  of  those  copiers.  Since  then,  however,  such  imports,  at  dumped  prices, 
have increased  strongly  and were shown to be especially  injurious  to the Community 
industry.  It was therefore  deemed  necessary  now to include  such  PPCs  in  the  scope 
of the measures. 

The new measures will  thus  cover the  entire product  investigated,  i.e.  PPCs ranging 
from  personal  copiers to  segment  6. Personal  copiers,  although  not  produced  by  the 
Community  industry,  compete  with  segment  1  PPCs  that  were  produced  by  the 
Community  industry  during the investigation  period,  and their continued  inclusion  is 
therefore  justified.  For  segment  6  PPCs,  already  one  Japanese  exporter  had  started 
importing  such  PPCs  into  the  Community,  while  there  is  also  competition  with 
segment  5, which  is dominated  by  the Japanese  exporters.  If  either  personal  copiers 
or  segment  6  copiers  were  excluded  from  the  measures,  not  only  would  dumped 
imports in these segments continue to injure  the Community  industry, but the risk of 
circumvention  of  the  anti-dumping  measures  on  segments  1  and  5  would  be 
considerable,  as  it  would  be  possible  for  exporters  to  change  the  copy  speed  or 
features  of the PPC in such a manner as to fall  within the adjoining  segment, without 
essentially  changing the model. 

These considerations are not invalidated by the fact that on a weighted  average basis, 
the  Community  industry  obtained  an  adequate  return  on  sales  of  segment  6  PPCs 
during the investigation  period.  First, the operating results for individual  Community 
producers on segment 6 PPCs differed  substantially, with one of the two Community 
producers  suffering  losses  in  that  segment.  Secondly,  injury  was  determined  for  the 
like  product  as  a  whole,  in  accordance  with  Article  4(4)  of  Regulation  (EEC) 
No 2423/88.  The  profitability  of  the  Community  industry,  one  of  the  key  injury 
criteria, would have been worse if segment 6 had been excluded.  Thirdly,  in  contrast 
to the situation  prevailing in the original  investigation  period,  segment  6 is now both 
produced  in  the Community  and  imported  from  Japan.  It  would  be  inappropriate  to 
identify  injury  for each product segment or each model separately and to exclude from 
the measures  segments or models that  happened to be commercially  more  successful 
during the investigation  period. 

3.  Rates of the duty 

(100)  It  was  considered  that  the  existing  anti-dumping  duty  has  been  effective  in 
significantly  reducing the volume of PPC imports from  Japan, and that other factors, 
notably  the  prices  and  volumes  of  PPCs  sold  in  the  Community  and  produced  by 
Japanese companies  in the Community  and in third  countries  other than  Japan, were 
likely  to  be  contributing  to  the  precarious  situation  of  the  Community  industry 
On balance, therefore,  the Council  considered that confirming  the existing duty at its 
current  levels should  give adequate protection  to the Community  industry,  given  the 
continuous downward trend in PPC imports from  Japan and the fact that the measures 
will  now  cover  PPCs  capable  of  operating  at  a  speed  of  more  than  75  copies 
per minute of  A4 size paper. 

(101)  Some  exporters  and  the  Community  industry  argued  that  the  rate  of  the  new  anti 
dumping duty should be amended for each exporter based on the lower of its dumping 
and underselling margins. They noted that the review investigation  had been  initiated 
not  only  on  the  basis  of  Article  15  of  Regulation  (EEC)  No  2423/88,  but  also  of 
Article  14  of  that  Regulation,  and  that  Article  14(3)  provided  for  the  amendment, 
where warranted, of the measures in force.  They claimed that discrimination  occurred 
between  exporters,  as lower  duty  rates were applied  to some than  others whilst they 

36 

had  similar  dumping  or underselling  margins, and the same duty  rate was applied  to 
other  exporters  even  though  they  had  different  dumping  or  underselling  margins 
In this  respect,  the  following  observations  should  be  made: First,  Articles  14  and 
15 appear  together  under  the  heading  "review"  in  Regulation  (EEC)  No  2423/88 
Article  15  should,  therefore,  be  read  in  conjunction  with  Article  14, especially  the 
procedural provisions thereof. Secondly, the word "confirmed"  in Article  15(1) would 
serve  no  purpose  if  the  new  measures  always  had  to  be  based  on  the  lower  of  the 
dumping  and  underselling  margins,  since  it  is  highly  unlikely  that  the  duty  rates 
derived  from  such  a calculation  would, for  each exporter,  be identical  to the existing 
rates,  resulting  in the existing  duties being  "confirmed"  by  the review investigation 
The Community  authorities nevertheless clearly  have the right under Article  15(1) to 
"confirm"  the  existing  measures.  Thirdly,  the  confirmation  of  existing  measures  is 
especially  appropriate  where  they  have  had  some  beneficial  effect,  as  in  this  case 
through  the  significant  reduction  of  the  volume  of  imports,  but  not  yet  enough  to 
permit their expiry. In the present case, it is considered that maintaining the duty rates 
at  their  current  level  will  in  fact  provide  adequate  protection  to  the  Community 
industry,  and  that  it  is  therefore  simply  not  necessary  to  increase  the  duty  rates 
Finally,  with  respect  to the  claim  of  discrimination  between  exporters,  it  should  be 
noted  that  the  existing  rates  now  confirmed  by  the  Council  are,  for  each  exporter, 
significantly  lower  than  its  dumping  and  underselling  margins  found  in  the  review, 
calculated in the manner indicated above. While the difference  in benefit  is larger for 
some exporters than for others, the same result is inherent in the "lesser duty" rule laid 
down  in Article  13(3) of Regulation  (EEC) No 2423/88, under which  the  same duty 
rate based  on  injury  may  be applied  to all  exporters,  even though  some have  higher 
dumping margins than others. In the original  investigation,  for instance, the duty rate 
based  on  a  global  injury  assessment  was  20%  for  all  exporters  (except  those  with 
lower dumping margins), even though the dumping  margin  of those exporters varied 
between  22 and 60%. The degree to which  the three exporters  with  lower duty  rates 
now benefit,  compared to the lower of their dumping and underselling margins, is not 
necessarily  larger than the degree of benefit  of exporters to which  a 20% duty  rate is 
applied,  as compared  to the lower  of their dumping  and underselling  margins. 

(102)  The exporter Ricoh claimed that it was the only exporter whose dumping margin had 
decreased and that it should be rewarded  for this is in the sense that the existing anti 
dumping  duty  should  not be  deducted  to calculate its new  dumping  margin  On that 
basis,  it  claimed  a  lower  duty  than  20%.  It  was  found  that  Ricoh  was  correct  in 
claiming that it was the only exporter whose dumping had decreased since the original 
investigation.  This  circumstance  cannot,  however,  lead  to  the  non-deduction  of  the 
existing  anti-dumping  duty  for  the  determination  of  the  duty  to  be  applied,  since 
Article  2(8)(b) of Regulation  (EEC) No  2423/88  clearly  provides  that  anti-dumping 
duties  should  be  deducted  as  a  cost  for  related  importers  in  the  calculation  of  the 
export price. In terms of injury,  the reduction in this exporter's dumping margin could 
just as well have been due to a decrease in its normal  value. The undercutting margin 
for  this  exporter,  which  was  just  below  the  weighted  average  for  all  exporters, 
supports  this  hypothesis  and  indicates  that  its  export  prices  contributed  to  the  poor 
economic  situation  of  the  Community  industry.  Its  claim  for  a  reduced  duty  was 
therefore  not considered justified  or possible under Regulation  (EEC) No 2423/88 

4.  Period  of operation 

(103)  With respect to the period  of operation  of the measures, the Council  noted  that,  due 
to the unusual  complexity  of a number of aspects of this case, significant  delays were 
incurred  in  its treatment.  First,  nearly  six  months  elapsed  between  the  notice  of the 
Commission's intention  to carry out a review of the measures and the actual  initiation 
of that review. Then, the review investigation itself, which was initiated on  14 August 
1992,  took  more  than  two  and  a  half  years  to  complete.  In  accordance  with 
Article  15(3) of Regulation (EEC) No 2423/88, the original anti-dumping duty on PPC 
imports from  Japan remained in force during this entire period. The Council  therefore 
considers it reasonable that, in these exceptional circumstances, the period of operation 

37 

of the new measures  should  be limited,  to expire  on  14 August  1998, subject  to the 
applicable provisions  on reviews. 

(104)  Some exporters  and  importers  commented  that  the  Community  industry  had  already 
had  eight  years  of  protection  through  anti-dumping  measures,  that  this  was  long 
enough, and that the measures should  now be allowed  to lapse  However,  there is no 
statutory time limit to the period of operation of anti-dumping measures other than the 
five-year  period mentioned in Article  15(1) of Regulation (EEC) No 2423/88. As that 
Article  itself  makes  clear,  a  review  held  at  the  end  of  this  time  limit  can,  where 
warranted, lead to the confirmation,  as in this case, of the existing measures for a new 
period.  Also, while the existing  anti-dumping  measures have been  in  force  for  eight 
years,  this  review  has  shown  that  their  effectiveness  in  protecting  the  Community 
industry  has  been  limited  by  the  fact  that  due  to  the  behaviour  of  the  Japanese 
exporters  the  effect  of  dumping  on  the  Community  market,  manifested  by  price 
depression  and undercutting,  remains  substantial. 

5. Residual  duty 

(105)  The  verification  visits  to  cooperating  exporters  covered  the  near  totality  of  PPC 
exports  from  Japan  to  the  Community  during  the  investigation  period.  It  was 
considered  appropriate  that  for  those  companies  which  did  not  cooperate  in  this 
review,  the  residual  duty  be  set  at  the  highest  of  the  individual  duty  rates  for  the 
exporters  investigated,  i.e.  at  20%,  in  the  absence  of  any  information  justifying  a 
higher or lower level. The same rate should apply for those companies which  did not 
export  to  the  Community  during  the  investigation  period.  However,  for  the  latter 
companies,  this  is  subject  to  the  possibility  of  a  newcomer  review  pursuant  to 
Article  11(4) of  Regulation  (EC)  No 3283/94. 

6.  Undertakings 

(106)  It was considered  that the undertaking  of Kyocera Corporation,  Tokyo, under which 
it  was  committed  to  giving  the  Commission  sufficient  advance  notice  if  it  were  to 
recommence exports to the Community,  should  be allowed  to lapse. 

(107)  As  regards  the  undertakings  given  under  Article  13(10)  of  Regulation  (EEC) 
No 2423/88, the Commission has received regular information  enabling it to verify  the 
undertakings  given.  The  weighted  average  value  of  parts  and  materials  of  Japanese 
origin  used  in  the assembly  or  production  of  PPCs in  the  Community  has  remained 
at less than  60% of the total  value  of  all  parts and  materials.  The undertakings  will 
lapse at the end  of the  investigation, 

HAS ADOPTED THIS  REGULATION: 

Article 1 

A  definitive  anti-dumping  duty  is  hereby  imposed  on  imports  of  plain  paper 
photocopiers  falling  within  CN codes (ex)  9009  12 00 (Taric code:  9009  12 00*19) 
and  (ex) 9009 21 00 (Taric code: 9009 21 00*19), originating  in Japan. 

For  the  purpose  of  this Regulation,  plain  paper  photocopiers  shall  be  understood  to 
mean analogue, indirect-process  copiers incorporating  an optical  system,  irrespective 
of their copy  speed and whether imported as a whole or in modules. Such copiers are 
formed  by four basic elements, i.e. imaging, photo-conducting or developing,  transfer 
or  fixing  and  paper  transport  system.  Digital  copiers,  which  use  a  scanner  and  an 
image  processor  to  transform  an  original  image  into  a  digital  signal  and  then 
recompose  that  signal,  with  or  without  changes,  into  a  copy,  are  not  part  of  this 
proceeding  and  are  thus not  subject  to the  duty.  In  addition,  the  following  products 
shall  not be subject  to the duty: 

38 

analogue  full-colour  copiers  (machines  which  have  the  capacity  to  make  full 
colour copies automatically from corresponding coloured originals in one copying 
cycle by means of a polychromatic process), 

aperture  card  reader  printers  and  microfilm  printers  (machines  which  have  the 
capacity  to  read  images  from  and  make  enlarged  copies  of  microfilms, 
microfiches  and  aperture cards), 

whiteboard  copiers  (machines  which  have  the  capacity  to  make  copies  from 
information  displayed  on  screens), and 

large format  copiers (machines capable  of making  copies of  A2 size and  larger 
from  originals larger than  A2 size) 

For the avoidance of doubt, highlight PPCs (PPCs which reproduce only a few colours 
to draw attention to certain segments of a document) and A2 size PPCs (PPCs capable 
of  making  A2  size  paper  copies  - but  not  larger  -  from  A2  size  paper  originals  or 
larger)  are subject  to the duty. 

3. 

The rate of the duty  shall be 20% of the net free-at-Community  frontier  price  before 
duty  (Taric  additional  code:  8841),  with  the  exception  of  imports  which  are 
manufactured  by  the  following  companies,  which  shall  be  subject  to  the  following 
rates of duty: 

Copyer Company  Limited,  Tokyo  7.2% (Taric  additional  code: 8838), 

Mita Industrial  Company,  Osaka 

12.6% (Taric  additional  code: 8839), 

- 

Toshiba  Corporation,  Tokyo 

10% (Taric  additional  code: 8840) 

Regulation  (EEC)  No 535/87 is repealed. 

Article 2 

Article 3 

This  Regulation  shall  enter  into  force  on  the  day  following  that  of  its  publication  in  the 
Official  Journal  of the European  Communities. 

It shall  expire on  14 August  1998, save that  should  any  review  of the measures adopted by 
this Regulation be pending on that date, it shall remain in force until that review is concluded. 

This Regulation  shall be binding in its entirety  and directly applicable in all Member States. 

Done at Brussels, 

For the Council 
The President 

39 

ISSN 0254-1475 

COM(95) 386 final 

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