Commission Regulation (EC) No 617/98 of 18 March 1998 imposing a provisional anti-dumping duty on imports of polysulphide polymers originating in the United States of America
Date: 1998-03-18
Institutions: European Commission
Subjects: United States, anti-dumping duty, anti-dumping legislation, import, synthetic rubber

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COMMISSION REGULATION (EC) No 617/98

of 18 March 1998

imposing a provisional anti-dumping duty on imports of polysulphide polymers
originating in the United States of America

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European
Community,

Having regard to Council Regulation (EC) No 384/96 of
22 December 1995 on protection against dumped imports
from countries not members of
the European Com-
munity (1), as amended by Regulation (EC) No 2331/96 (2),
and in particular Article 7 thereof,

After consulting the Advisory Committee,

Whereas:

(5)

(6)

A. PROCEDURE

1. Initiation

(1)

(2)

(3)

In June 1997, the Commission announced by a
notice (hereinafter referred to as ‘notice of initia-
tion’) published in the Official Journal of the
European Communities (3)
the initiation of an
anti-dumping proceeding with regard to imports
into the Community of polysulphide polymers
originating in the United States of America and
commenced an investigation.

The proceeding was initiated as a result of a
complaint lodged in May 1997 by Akcros Chem-
icals GmbH & Co KG, Germany (hereinafter
referred to as
the sole Community
producer of polysulphide polymers. The complaint
contained evidence of dumping of the said product
and of material injury resulting therefrom, which
was considered sufficient to justify the initiation of
a proceeding.

‘Akcros’),

2. Investigation

The Commission officially advised the exporting
producer and importers known to be concerned,
the representatives of the exporting country and
the Community producer, of the initiation of the
proceeding. The parties directly concerned were
given the opportunity to make their views known
in writing and to request a hearing within the time
limit set in the notice of initiation.

(4)

The exporting producer in the country concerned,
as well as the Community producer, Community

(1) OJ L 56, 6. 3. 1996, p. 1.
(2) OJ L 317, 6. 12. 1996, p. 1.
(3) OJ C 187, 19. 6. 1997, p. 4.

users and importers made their views known in
requested a
exporting producer
writing. The
hearing, which was granted.

The Commission sent questionnaires to all parties
known to be concerned and received replies from
from the exporting
the Community producer,
producer in the USA and from its two related
importers in the Community. The Commission
also received replies from five users in the Com-
munity, three of which were considered sufficiently
complete so that they could be used for the assess-
ment of Community interest.

The Commission sought and verified all the in-
formation it deemed necessary for the purpose of a
preliminary determination of dumping, injury and
Community interest, and carried out verification
visits at the premises of the following companies:

(a) Community producer

— Akcros Chemicals GmbH & Co. KG,

Greiz-D(cid:148)lau, Germany.

(b) Producer/exporter in the exporting country

— Morton International Inc., Chigaco, United
States of America (hereinafter referred to as
‘Morton’).

(c) Related importers in the Community

— Morton International GmbH, Mannheim,

Germany,

— Morton International Limited, Hounslow,

United Kingdom.

(7)

The investigation of dumping covered the period
1 April 1996 to 31 March 1997 (hereinafter
referred to as ‘the investigation period’). The exam-
ination of injury and Community interest covered
the period 1 January 1994 up to the end of the
investigation period (hereinafter referred to as ‘the
period examined’).

B. PRODUCT UNDER CONSIDERATION AND
LIKE PRODUCT

1. Product under consideration

(8)

The product under consideration is polysulphide
polymers (hereinafter referred to as ‘PSP’). It falls
within CN code ex 4002 99 90.

PSP is a synthetic rubber also called ‘thioplast’ by
the Community industry or ‘thiokol’ by the ex-
porting producer. PSP is a saturated synthetic

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19. 3. 98

substance, obtained by the reaction of aliphatic
dihalides with a
is
generally vulcanized (i.e. further treated to improve
strength and elasticity) with the classical type of
vulcanizing agents.

sodium polysulphide.

It

There are several types of PSP which are produced
in the USA and in the Community. The mech-
anical properties of certain types are inferior to
those of other grades of synthetic rubber but have
the advantage of being resistant to solvents.

(9)

PSP is the basic polymer used in the manufacture
of sealing compounds. In the Community, PSP is
mainly used for the production of glass insulation
sealant which accounts for around 75 % of the
consumption. It is also used for construction appli-
cations (joint tape or expansion joint in walling,
between precast concrete cladding panels, or as a
sealing perimeter joint between window frames and
surroundings) and other special applications, such
as in the aerospace industry,
in environmental
protection for petrol stations or for floor coatings in
chemical plants.

In the insulating glass segment, 85 % of sealing
compounds used are made of PSP. In the USA, PSP
consumption is far lower than in the Community,
namely around 25 % of Community consumption,
although PSP is used for the same applications as
in the Community.

2. Like product

(10)

investigation has

The
also shown that PSP
produced and sold on the domestic market in the
USA and PSP exported to the Community from the
country concerned had essentially the same basic
physical and chemical characteristics and uses as
PSP produced and sold by the Community industry
on the Community market and that they therefore
are in direct competition in the Community
market. In this respect, it appeared, on the basis of
the available information, that all industrial users
located in the Community could process both PSP
produced in the Community and PSP imported
from the USA.

(11)

Some industrial users stated that certain types of
PSP imported from the USA were of higher quality
than those produced in the Community. In this
respect, it should be noted that quality does not
the product
change the basic characteristics of

concerned and that as far as such differences are
concerned, users could process both the imported
product and the Community-produced product
although some minor alterations in their produc-
tion process might be necessary. Community
produced and imported products are therefore
interchangeable. In any event any such differences
in physical characteristics cannot
lead to the
conclusion that the product produced and sold by
the Community
product
industry
concerned imported from the USA cannot be
considered as one like product.

and

the

(12) On the basis of

it was

therefore
the above,
concluded that the PSP produced and sold by the
Community industry and the PSP produced and
sold in the USA are alike, within the meaning of
Article 1(4) of Regulation (EC) No 384/96 (here-
inafter referred to as the ‘Basic Regulation’), to the
PSP imported into the Community and originating
in the USA.

C. DUMPING

1. Normal value

(13)

In order to establish normal value, the Commission
first analysed whether domestic sales in the ex-
porting country concerned were representative in
accordance with Article 2(2) of the Basic Regula-
tion. In this respect it was established that the total
domestic sales of the product concerned in the
United States market represented more than 5 % of
the volume exported to the Community.

(14)

It was then examined whether total domestic sales
of each product type constituted 5 % or more of
the sales volume of the same product type exported
to the Community.

For those product types meeting the 5 % test, the
Commission assessed whether sufficient sales had
been made in the ordinary course of trade in ac-
cordance with Article 2(4) of the Basic Regulation.
For all product types which were sold in represen-
tative quantities,
the weighted average domestic
selling price was found to be above the weighted
average unit cost. Furthermore, the volume of sales
below unit cost was less than 20 % of sales. There-
fore, for these product types normal value was esta-
blished on the basis of the weighted average prices
actually paid for all domestic sales.

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Where, per product type, the volume of domestic
sales was lower than 5 % of the volume destined
for export to the Community, domestic sales were
considered insufficient in the meaning of Article
2(2) of the Basic Regulation and were therefore
disregarded.
In these cases, normal value was
constructed in accordance with Article 2(3) and (6)
of the Basic Regulation. For each such product
type, normal value was calculated on the basis of all
costs of manufacturing plus all selling, general and
administrative expenses incurred by this company
and a reasonable amount for profit. The amount for
profit was established on the basis of the weighted
average profit made on domestic sales in the or-
dinary course of trade of the product concerned.

(15)

(16)

(17)

2. Export price

The exporting producer made all export sales of
the product concerned to the Community via two
related importers. For that reason, in accordance
with Article 2(9) of the Basic Regulation, the export
prices were constructed on the basis of the prices at
which the imported product was first resold to an
independent buyer, with adjustments being made
for all costs incurred between importation and
resale and for a profit margin. In view of the fact
that no unrelated importers cooperated in the
present investigation, the Commission used a profit
margin of 5 % for calculating the export price,
which appears to reflect appropriately the functions
carried out by these related importers.

3. Comparison

For the purpose of a fair comparison, due al-
lowance in the form of adjustments was made for
differences which were claimed, and demonstrated
to affect price comparability. In accordance with
Article 2(10) of the Basic Regulation, these adjust-
ments were made, in respect of packing, transport,
insurance, handling and ancillary costs, credit costs
and after-sales costs.

The exporting producer claimed an allowance for
the credit cost of sales on the domestic market and
requested that the actual payment date be used.
This claim was rejected on the grounds that, in
accordance with Article 2(10)(g) of the Basic Regu-
lation, an adjustment can only be given for the
number of days agreed at the time of the sale, as
only the expense of that number of days can be
considered to have influenced the decision on the
price level agreed.

(18)

The company also claimed an allowance for a
sustained movement in exchange rates during the

the provisional determination since,

investigation period with regard to one European
currency, the D mark, and requested that an adjust-
ment be made for the entire investigation period.
This claim could not be accepted for the purpose
in ac-
of
cordance with Article 2(10)(j) of the Basic Regula-
tion, this allowance can only be granted to reflect a
sustained movement and should thus be made only
for the specific period in which such a sustained
movement takes place. In the present case it was
found that the movement in exchange rates for
which an allowance was claimed was not
fully
sustained throughout the investigation period. In
the
addition,
movement of the D mark versus the US dollar,
whereas a movement
in the opposite direction
occurred regarding the British pound versus the US
dollar which partly offset
the effect on the
dumping margin caused by the revaluation of the
US dollar versus the D mark. This issue will be
reexmained when definitive findings are establi-
shed.

the adjustment was requested for

4. Dumping margin

(19)

Pursuant to Article 2(11) of the Basic Regulation,
the dumping margin was established on the basis
of a comparison between the weighted average
normal value and the weighted average export price
both at an ex-factory level and at the same level of
trade. Although the analysis has concluded that the
imports concerned target certain Member States, it
was not necessary to apply the provisions of the
second sentence of Article 2(11) of the Basic Regu-
transactions were made at
lation as almost all
dumped prices.

(20)

The dumping margin expressed as a percentage of
the cif price at Community frontier level was as
follows:

— Morton International Inc., Chicago:

49,6 %.

As this company is deemed to represent 100 % of
United States production of the product concerned,
the residual dumping margin provisionally es-
tablished is also 49,6 %.

D. COMMUNITY INDUSTRY

(21) Akcros is the only Community producer of PSP
and therefore constitutes the Community industry,
within the meaning of Articles 4(1) and 5(4) of the
Basic Regulation.

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19. 3. 98

(22)

(23)

(24)

E. INJURY

1. Collection and confidentiality of

injury

data

For the purpose of the examination of injury in the
present proceeding, data relating to the period
examined (1 January 1994 to the investigation
period ending 31 March 1997) was considered. The
geographical scope of
the investigation was the
Community of 15 Member States.

Since there is only one Community producer and
one producing exporter in the USA, in accordance
with Article 19 of the Basic Regulation the data
relating to injury has been indexed in order to
preserve the confidentiality of the data submitted.

2. Consumption in the Community

of

Total consumption in the Community was estab-
lished on the basis of Morton’s and Akcros’ sales, in
quantity and value, to independent customers in
the Community market. From 1994 up to the
investigation period the volume (expressed in
consumption in the Community
tonnes)
same period,
increased by 5 %. During the
consumption in value terms decreased by 1 %. The
year-to-year analysis of the evolution of consump-
tion indicates a negative trend in sales prices in the
market which
continued
throughout 1996 and became even more negative
during the investigation period.

started

1995,

in

by 5 % but sales value only increased by 2 %.
Then, from 1996 to the investigation period, the
sales volume decreased by 2 %, whereas the sales
value decreased by 5 %, again pointing to a con-
tinued price decrease.

2. Share of the Community market

(27) Market share in volume held by Morton was very
high and stable during the whole period under
analysis (over 75 % of the market). Morton kept its
market share in terms of volume and after the sales
prices decreased by 2 % in 1995, Morton managed
to increase significantly its market share in terms of
volume by 7 % in 1996.

3. Average sales price of dumped imports

(28)

(29)

From 1994 to the investigation period, sales prices
of PSP imported from the USA into the Com-
munity market decreased by 4 %. In Germany,
which is the main market for PSP,
it has been
found that during the same period of time Morton’s
average prices decreased by around 5 %. In other
Member States such as the United Kingdom, where
Akcros does not at present trade, prices were higher
and did not fluctuate during the same period of
time.

The fact that Morton sold around 80 % of its PSP
in Germany and that during the investigation
period Morton’s average sales price in the United
Kingdom was around 17 % higher than its average
that Morton
sales price in Germany,
targets the Member States where Akcros mainly
does business.

indicates

3. Sales of dumped imports in the Com-

munity

4. Price undercutting

1. Volume and value of sales made by Morton

sales

to unrelated customers

(25) Morton exported its PSP to the Community via two
related sales companies, one located in the United
Kingdom and, since 1995, one located in Germany.
From 1994 to the end of the investigation period,
Morton’s
in the
Community market
increased both in terms of
volume (+ 5 %) and value (+ 1 %). The fact that
sold in the Community market
the
increased more than the value and that there was
no significant change in the mix of the product
types sold,
indicates that Morton decreased its
average sales prices during the period examined.

volume

(26)

The investigation has shown that prices charged by
Morton in the Community market
started to
decrease in 1995 when the sales volume increased

(30) As it was found that most of Akcros’ sales, and all
sales made by Morton, were made directly to indus-
trial users in the Community, average sales prices
of PSP charged by Morton were compared on a
type-by-type basis to the relevant prices charged by
Akcros to users in order to evaluate possible price
undercutting.

(31)

(32)

Since no difference in sales conditions or levels of
trade which would have had an impact on price
comparison was found to exist, it was not necessary
to adjust the average prices.

For the investigation period the comparison made
on a type-by-type basis showed price undercutting
margins expressed as a percentage of the relevant
Community industry’s sales price which ranged
from 1 to 23 % depending on the type of PSP, or
1,8 % on total turnover.

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4. Situation of the Community industry

1. Volume and value of sales in the Community

market

(33)

(34)

The investigation has shown that Akcros’ sales
volume decreased by 13 % and its sales value by
20 % in 1996 when compared with 1994. The
decrease is even higher when compared with 1995.

Since prices were decreasing in the Community
market, customers took advantage of the situation
prevailing in the Community market and requested
additional price reductions from the Community
industry. Even though Akcros refused to do this
over a long period in 1996 they finally had to make
price concessions. This explains why the volume of
sales recovered (+ 22 %) and average sales prices
decreased by 4 % during the investigation period
as compared with 1996.

increased its capacity of production. As a result of
increased capacity and of a volume of production
lower than expected, the capacity utilisation rate
decreased by 18 % during the entire period
examined.

As far as capacity utilization is concerned,
the
investigation has shown that a rate of around 80 %
would be necessary to produce positive effects in
costs and profitability.

(39)

Between 1994 and the investigation period stocks
increased by 56 %.

6. Investments

(40)

Investments in the product concerned increased by
7 % during the period under examination. The
Community industry has also invested in ma-
chinery with the aim of increasing its production
capacity and improving its presence in the market.

2. Market share

7. Employment

(35) During the period examined the trend in market
share shows that the Community industry kept its
market share in terms of volume but lost 6 % in
terms of value.

(41)

The number of personnel
employed by the
Community decreased by 7 % during the period
examined.

3. Average sales price and price evolution

(36)

The average sales price of PSP sold by the Com-
munity industry between 1994 and the investiga-
tion period decreased by 11 %. Price evolution per
Member State indicated that the trend in prices in
Germany was more negative
than in other
Community Member States and price evolution on
a type-by-type basis had shown better trends in
sales prices for the types of PSP not sold by
Morton.

4. Profitability

(37)

the product
for
The average return on sales
concerned has
remained negative since 1994.
Although the Community producer has made
considerable efforts to control and reduce costs,
profitability has always been negative during the
period examined.

5. Production, capacity installed, capacity utilisa-

tion and stocks

(38)

Production of the Community industry over the
period examined increased by 5 % and production
capacity by 28 %.

In view of the positive forecasts in the PSP market
the Community industry
until

the year 2000,

5. Conclusion on injury

(42)

The injury investigation has shown that during the
period examined, despite the increase in consump-
tion and the generally positive market expectations
for the PSP market, the decrease in average sales
prices of PSP led to a deterioration of the financial
situation of the Community industry which was
only attenuated through substantial cost reduction
effected at the end of the period examined.

(43)

The seriousness of this deterioration first appeared
between 1995 and 1996 when Akcros’ sales volume
decreased by 18 %, production by 19 % and sales
prices by 8 %.

(44) Although the Community industry’s production
and sales volume developed positively during the
investigation period,
the continuous pressure on
sales prices which decreased yet again by 4 %,
prevented any improvement
in profitability and
financial losses added to those already made in the
past.

(45)

In view of the developments of the injury indic-
ators during the period under examination,
in
particular the negative evolution of sales prices and
incurred by the Community
significant
industry,
this industry has
it
suffered material
injury within the meaning of
Article 3 of the Basic Regulation.

losses
is considered that

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F. CAUSATION

1. Introduction

have in itself had a significant
impact on the
overall market and, consequently, on the situation
of the Community industry, the smaller producer.

(46)

The Commission examined whether
the injury
suffered by the Community industry was caused by
the volume and price level of dumped imports in
question. The Commission also examined whether
other known factors, such as the development of
consumption in the Community market, the export
activity and price policy of
the Community
industry and competition from substitute products,
were not such as to break the causal link between
the dumping practiced in the imports of PSP from
the USA and the injury suffered by the Community
industry.

2. Effect of dumped imports on the Com-

munity industry

(47) When assessing the effect of dumped imports on
the Community industry, it should be recalled that
Morton, whose production capacity is sufficiently
large to meet the demand of PSP throughout the
world, is by far the main supplier and therefore the
market
the largest
market world-wide. Its behaviour, as such, affects
the whole market.

in the Community,

leader

(48)

(49)

This leadership therefore influences the level of
prices in the Community. The injury investigation
has shown that despite an increase in consumption
of 5 % between 1994 and the end of the investiga-
tion period, prices in the Community market were
decreasing. Akcros, the minor player in the market,
had to follow this price decrease tendency which
had a considerable negative impact on its financial
situation during the period examined.

the

that

imports

concerned target

The detailed analysis of prices for imports has
shown for particular markets and particular product
types
the
Community industry’s sales in sensitive sectors. It
was found that
from 1994 to the investigation
period, Morton’s price decrease strategy aimed at
targeting the German market where Morton’s
prices were found to be lower
than in other
Member States, and the type of PSP mostly sold by
Akcros with the result that prices for these types
were reduced by 15 % in the German market
during the same period of time.

(50)

The injury investigation has also shown that the
market share held by Morton during the whole
period under examination was particularly high,
over 75 %. The presence of such large quantities of
dumped imports on the Community market must

3. Impact of other factors

1. Development of consumption

under

period

examination,

(51) When considering whether the development of
consumption affected the situation of the Com-
munity industry, it should be recalled that during
the
consumption
increased by 5 % and that the market expectations
for PSP, in particular in the Community market,
are good up to the year 2000 and probably also
beyond that date. Therefore the material
injury
suffered by the Community industry cannot be
attributed to the development of Community
consumption.

2. Export activity of the Community industry

(52)

Exports have always represented a minor activity
for Akcros as they accounted for around 13 % of
total sales during the period examined. It follows
that the slight decrease in the volume of export
sales (– 3,5 % of
total sales) during the period
under examination, cannot explain the material
injury suffered by Akcros, particularly in view of
the fact that the average sales price charged by
Akcros for exports was around 19 % higher than
the average Community price.

3. Competition from substitute products

(53) Considering the main sales

segment

for PSP,
namely the insulating glass segment, it was found
that there are also other products, such as poly-
urethane or silicone, used as glass sealant in the
Community. However these being rather expensive
and less resistant to solvent than PSP in the longer
term, their market share is estimated to be limited,
at around 15 % of the Community market. The
Commission, however, examined whether competi-
tion from these substitutes may have caused injury
to the Community industry during the period
examined.

(54) On the basis of

the information available,

it
appeared that these substitute products did not gain
market share during the period examined. On the
contrary,
the increase in consumption of PSP
indicates that industrial users continued to mainly
rely on PSP rather than on other substitutes to
be
produce
concluded therefore that competition from substi-
tute products had,
if any, only a very limited
impact on the Community industry.

glass-insulating

sealant.

can

It

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4. Self-inflicted injury

(55)

The Commission examined whether, on the basis
of the volume of sales made by Akcros during the
investigation period, the increase in the capacity of
production had caused injury to the Community
industry.

Recalling that the market forecasts were good for
PSP in the European market, it was found that the
amount of investment required for increasing the
capacity of production was rather limited. Indeed,
the cost of this investment included in the finan-
cial statements of Akcros during the investigation
period was found to be below 1 % of the total
turnover of the product concerned.

(56) According to Morton, the general price depression
in the Community market, which has been the
major cause of the injury suffered by the Com-
munity industry from 1994 up to the investigation
period, has been the result of a policy initiated by
the Community industry since entering the market
in 1991.

(57)

types of PSP Morton had undercut

In this respect it should be recalled that the price-
undercutting analysis revealed that for the Com-
munity industry’s main sales market and for its im-
portant
the
Community industry’s prices. Moreover, taking due
consideration of the fact that Morton is the market
leader, with a market share of over 75 %,
the
Commission concluded that it is not in the interest
of Akcros to pursue such a policy in the long term.
This
is also demonstrated by the Community
industry’s efforts to maintain prices at a reasonable
level as described in recital 34.
In addition,
depressed sales prices would never allow Akcros to
recover the considerable investments made in the
PSP business since 1991.

Community industry’s prices had a significant
impact on that market. Furthermore, the market
being transparent, the effect of price decreases well
known to all users in the Community market, had
a major impact on the level of prices in the market
as a whole.

(61) On the basis of the above and in the absence of
other factors it is provisionally concluded that the
dumped imports under examination caused the
material
the Community
suffered by
industry.

injury

G. COMMUNITY INTEREST

1. Preliminary remarks

(62)

(63)

The purpose of anti-dumping measures
to
remedy an unfair trading practice which has an
injurious effect on a Community industry. Such a
remedy should result in the re-establishment of a
situation of effective competition on the Com-
munity market.

is

The Commission provisionally examined, on the
basis of all
the evidence submitted, whether,
despite the conclusions on dumping, injury and the
cause of this injury, any compelling reasons existed
which would have led to the conclusion that it is
not in the Community interest to impose measures
in this particular case. For
this purpose, and
pursuant to Article 21(1) of the Basic Regulation,
the Commission considered the impact of possible
measures on all parties involved in the proceeding
and also the consequences of taking or not taking
measures.

(58) Contrary to Akcros, Morton, being the major
supplier and able to supply the entire market
demand, may have a certain interest in following a
policy of price decrease as this may strengthen and
reinforce in the long run its position as market
leader.

(64)

(59) On the basis of the above facts and considerations,
the Commission did not find any objective interest
in Akcros implementing a policy of price reduc-
tion.

4. Conclusion on causation

2. Interest of the Community industry

1. Viability of the Community industry

The investigation has shown that Akcros Chem-
global profitability, before
icals’
extraordinary
results,
for the whole production facility where,
among other products, PSP is produced, was pos-
itive at the end of the investigation period. The
negative situation in the Community industry’s PSP
business was only caused by the presence of a high
volume of dumped imports from the USA in the
Community market. The global performance there-
fore indicates that this industry is in general term
competitive and viable.

(60)

The investigation has shown that PSP is a homo-
geneous product, mainly offered directly to end-
users in the Community market. Therefore the
the high volume of dumped PSP
presence of
the
imported from the USA which undercut

(65)

The Community PSP market is the largest market
in the world and forecasts for the near future in-
dicate that it will increase even further. The invest-
igation has shown that Akcros has become an
important operator of PSP in the Community
market. The ongoing rationalisation efforts and

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it

investments which Akcros has made during the
period examined, show that
is not ready to
abandon the PSP market. With anti-dumping
measures in force, Akcros could make a recovery
and benefit from the positive volume effect fore-
seen in the PSP business in the Community up to
the year 2000.

(71)

Taking due consideration of the above findings and
the market share held by Morton in the Com-
munity, it was established that a possible duty of
9 % on PSP would have an estimated impact of
around 1,7 % on users’ costs of production of
PSP-based finished products.

(66)

The interest of the Community industry, the minor
player in the Community PSP market, is therefore
that
fair competitive conditions be restored and
that prices reflecting fair trading conditions be
quoted in the Community market.

2. Employment

(67) As the PSP business represents a significant share
of Akcros’ activities, leaving this business segment
without any protection against unfair trade prac-
tices, may also affect the activities of the whole
company which are mainly concentrated in a
region already suffering from a high rate of unem-
ployment.

(68)

(69)

It follows therefore that the examination of the
consequences of not taking measures on employ-
ment should not be limited to the number of
people directly employed in the production and
sale of PSP but should also take into consideration
the possible impact on all the personnel employed
by Akcros, and the uncertainty it would create in
the sector dependent on PSP which employs
around 1 000 additional people in the Community.

3. Interest of Community users

In order to evaluate the impact on users of taking
measures or not taking measures, the Commission
conducted a separate investigation on the basis of
the responses to the questionnaires sent
to the
in the Community. As
main industrial users
mentioned above it has been provisionally es-
tablished that three users covering over 65 % of the
total consumption of PSP in the Community
replied to the questionnaire in a meaningful
manner. The following findings are based on their
replies.

The above impact on users’ costs should be seen in
the light of
the positive effects anti-dumping
measures could produce on the sales volume and
sales price of Akcros as indicated in recital 38.

(72) Not taking measures may lead to the disappearance
of the sole Community producer and to a mono-
poly situation in the Community market. On the
basis of the experience gained since the end of the
monopoly in 1991, this would probably, among
other consequences, lead to a significant increase in
prices.

(73)

The investigation has shown that users benefited
from the presence of a second operator in the
market since 1991. Firstly because competition had
a positive effect on the level of prices and secondly
in the
because the existence of
market also ensures the security of supply; users
tend to be supplied by both companies rather than
relying on only one supplier. Accordingly it
is
concluded that it was in the users interests that
both Akcros and Morton are present in the market.

two suppliers

4. Consequences

for

competition in the

Community market

(74)

Special attention has been paid to the competition
aspects covered by the present case because of the
existence of a duopoly on the Community market.

(75) On the basis of

the available information,

the
opinion of the Commission is that without the
imposition of anti-dumping measures the Com-
munity producer risks being driven out of
the
market in the short term and consequently there
will be no competition at all in the market. Indus-
trial users would thus be deprived of the benefit of
the competition they have enjoyed in the Com-
munity market since 1991. Among other con-
sequences, prices will probably increase signi-
ficantly if left in the hands of a single operator.

(70)

It was found that PSP supplied by the two suppliers
in the market represents on average 25 % of the
full cost of production of
finished PSP-based
sealing compounds.

(76)

The potential for price increases should also be
seen in the light of competition from substitute
products, such as polyurethane and silicone which
are already available on the Community market,
although it should be borne in mind that these

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L 82/33

only cover a very limited share of the market, as
indicated in recital 53, and therefore users will not
necessarily be able to switch easily to these substi-
tutes.

(82)

(77)

In addition the investigation has also shown that
prices charged for PSP in Member States where
only one supplier is present are significantly higher
than in Member States where both suppliers are
present. It can therefore be expected that the price
increases resulting from the absence of competition
would be higher
than those if anti-dumping
measures were imposed.

1. Injury elimination level

It was considered that the amount of duty neces-
sary to remove the effects of injurious dumping
should allow the Community industry to cover its
costs of production and obtain a reasonable profit
on sales. In this respect it was found that a profit
margin before tax of 9 % on turnover could be
considered to be an appropriate basis, due regard
being given to the need for long-term investment
and, more particularly, a rate of return which the
Community industry could reasonably expect in
the absence of injurious dumping.

(78) As a matter of fact, with the measures proposed
below, price increases, if any, will be very limited as
indicated in recital 71.
from an
economic point of view the level of these measures
is not such as to foreclose the Community market
to the American producing exporter and will there-
fore
their
products in the market.

continued presence of

In addition,

ensure

the

(79) As already mentioned, imports from the USA are
necessary in order to cover the expanding demand
of Community users as well as to ensure competi-
tion in the market. The proposed measures are not
inconsistent with this aspect while at the same time
restoring fair competition conditions in the market.
Thus, the benefits of a market governed by two
competitive forces would be available to the users
of
the product concerned and ensure fair price
negotiations.

(80) On the basis of the above facts and considerations,
it can be concluded that not taking measures would
cause uncertainty for users and could lead to con-
siderable price increases in the medium term, and
that it is in the users’ interest that the market be
governed by two competitive and competing forces.

5. Conclusion on Community interest

In examining the various interests involved, the
Commission concluded that there were no compel-
ling reasons not to adopt anti-dumping measures.

(83) Accordingly, injury elimination levels were deter-
mined on a type-by-type basis and compared to the
selling price of PSP originating in the USA at
industrial user level. The injury margin, expressed
as a percentage of the cif value of the imports in
question, was 9,1 % on average.

2. Form and level of the provisional measures

(84)

Since the injury margin was found to be lower than
the dumping margin, the provisional duty to be
imposed should correspond to the injury margin
established, in conformity with Article 7(2) of the
Basic Regulation.

on the

Based
determination of
provisional
dumping and the injury resulting therefrom, a
provisional ad valorem duty of 9,1 % should be
imposed on imports of polysulphide polymers
originating in the USA.

I. RIGHTS OF INTERESTED PARTIES

(85)

In the interests of sound administration, a period
should be fixed within which the parties concerned
may make their views known in writing and
request a hearing. Furthermore, it should be stated
that the findings made for the purposes of this
Regulation are provisional and may have to be
reconsidered for the purposes of any definitive duty
which the Commission may propose,

H. PROPOSED MEASURES

HAS ADOPTED THIS REGULATION:

(81)

For the purposes of establishing the level of the
provisional duty, account was taken of the level of
dumping found and the amount of duty necessary
to eliminate the injury suffered by the Community
industry.

A provisional anti-dumping duty is hereby imposed
1.
on imports of polysulphide polymers falling within CN
code ex 4002 99 90 (TARIC code 4002 99 90 * 10) ori-
ginating in the United States of America.

Article 1

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19. 3. 98

2.
For the product concerned referred to in paragraph
1 the rate of anti-dumping duty applicable to the net free-
at-Community-frontier price, before duty, shall be as
follows:

— United States of America:

9,1 %.

Unless otherwise specified, the provisions in force

3.
concerning customs duties shall apply.

The release for free circulation in the Community of
4.
the products referred to in paragraph 1 shall be subject to
the provision of a security, equivalent to the amount of
the provisional duty.

views in writing and apply to be heard orally by the
Commission within one month of the date of entry into
force of this Regulation.

Pursuant to Article 21(4) of Regulation (EC) No 384/96,
the parties concerned may comment on the application of
this Regulation within one month of the date of its entry
into force.

Article 3

Article 2

Without prejudice to Article 20 of Regulation (EC) No
384/96, the parties concerned may make known their

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

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

Done at Brussels, 18 March 1998.

For the Commission

Leon BRITTAN

Vice-President