Amended proposal for a Council (EC) regulation imposing a definitive anti-dumping duty on imports of gas- fuelled, non-refillable pocket flint lighters originating in Japan
Date: 1999-04-13
Institutions: European Commission
Subjects: Japan, anti-dumping duty, import, non-durable goods, tobacco industry

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 13.04.1999
COM(1999)161 final

Amended proposal for a

COUNCIL (EC) REGULATION

imposing a definitive anti-dumping duty on imports of gas-fuelled, non-refillable
pocket flint lighters originating in Japan

(presented by the Commission pursuant to Article 189 a (2)
of the EC-Treaty)

(1)

(2)

(3)

(4)

(5)

(6)

EXPLANATORY MEMORANDUM

Attached is an amended proposal for a Council Regulation maintaining the
1991 definitive anti-dumping duty on imports of gas-fuelled, non-refillable
pocket flint lighters originating in Japan.

The review investigation was
initiated on 30 November 1996 under
Article 11(2) and 11(3) of the Basic Anti-dumping Regulation. In accordance
with Article 11(2) the measure remains in force pending the outcome thereof.

The co-operating interested parties were informed of the essential facts and
considerations on the basis of which the Commission services intended to
recommend that the definitive anti-dumping duty be maintained at its current
level. Subsequent to this disclosure no comments were received which could
alter these facts and considerations.

The Anti-Dumping Advisory Committee was consulted in April 1998. The
proposal of the Commission services did not obtain a favourable opinion of an
the
absolute majority. Six Member States
Netherlands, Portugal and Spain) voted in favour and one did not express an
opinion.

(Belgium, France, Greece,

The consultation was followed by an exchange of views in writing on the
issues raised by certain of the Member States that had not voted in favour of
the proposal of the Commission services.

The proposal to maintain the definitive anti-dumping duty is essentially based
on the existence of actual dumping, of huge idle capacity at the exporter's
plant in Japan, and the likelihood that the Community industry would suffer
serious injury if that capacity were used for exports of the products at dumped
prices to the European Community, especially if the prices of increased
volumes of such exports undercut the Community industry's prices by the
43 % established for the investigation period. In this regard, the existence of a
plant in Mexico, developed by a subsidiary of the exporter almost immediately
after the imposition of the measure under
review, and the subsequent
imposition of an anti-dumping measure (in force until March 2002) on imports
originating in Mexico, were also taken into account.

In this context, the continued existence in force of that anti-dumping measure
is a highly significant factor in concluding that there is a strong likelihood of
recurrence of injurious dumping of Japanese lighters should the measure on
imports originating in Japan lapse.

(7)

Thus it is now proposed that any duty imposed on Japanese imports should
lapse at the same time as the measure concerning imports originating in
Mexico, i.e. in less than 3 years.

2

This approach is also compatible with the Judgment of the Court of First
Instance of 8 July 1998 (Case T-232/95, Committee of European Copier
Manufacturers (CECOM) v. Council of the European Union), which allows a
reduction of the duration of the maintained measure if, as in the present case,
the investigation exceeded the normal duration provided for in Article 11(5) of
the Basic Regulation.

3

Amended proposal for a

COUNCIL (EC) REGULATION

imposing a definitive anti-dumping duty on imports of gas-fuelled, non-refillable
pocket flint lighters 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 384/96 of 22 December 1995 on
protection against dumped imports from countries not members of the European
Community1, and in particular Articles 11 (2) and (3) thereof,

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

Whereas:

(1)

(2)

(3)

1

2

3

4

5

A.

PROCEDURE

1.

Measures in force

By Council Regulation (EEC) No 3433/912, hereinafter referred to as the
"definitive duty Regulation", the Council imposed a definitive anti-dumping
duty on imports of gas fuelled, non-refillable pocket flint lighters originating
in Japan,
the Republic of Korea and
the People’s Republic of China,
Thailand. As regards Japan, the duty rate was set at 35.7 %.

The definitive duty Regulation was amended with respect to China in 19953.
In as far as Thailand is concerned, it was replaced by Council Regulation
(EC) No 423/97 in March 19974.

2.

Initiation of a review

In May 1996 the Commission published a notice of the impending expiry of
the measures in force concerning Japan and the Republic of Korea5. After
this publication, the Commission received a request for a review pursuant to

OJ L 56, 6. 3. 1996, p. 1. Regulation as amended by Regulations (EC) No 2331/96 (OJ L 317,
6. 12. 1996, p. 1) and (EC) No 905/98 (OJ L 128, 30. 4. 1998, p. 18).
OJ L 326, 28. 11. 1991, p. 1.
Council Regulation (EC) No 1006/95, OJ L 101, 4. 5. 1995, p. 38
OJ L 65, 6. 3. 1997, p. 1.
OJ C 155, 30. 5. 1996, p. 6.

4

Article 11(2) of Council Regulation (EC) No 384/966, hereinafter referred to
as the "Basic Regulation", with regard to imports of gas-fuelled, non-
refillable pocket flint lighters originating in Japan, lodged by the European
Federation of Lighter Manufacturers on behalf of BIC S.A. and Flamagas
S.A.. Subsequently this request received the support of Swedish Match S.A..
BIC S.A., Flamagas S.A. and Swedish Match S.A. represent almost the
totality of Community production of the product concerned.

The request contained sufficient prima facie evidence that the expiry of
measures would be likely to result in a recurrence of dumped imports causing
injury. Evidence of the presence of under-utilised capacity in Japan as well
as evidence that imports from Japan would have an immediate depressing
effect on the prices of the Community producers supported this alleged
likelihood. It was further alleged that this situation would exacerbate the
continuing vulnerability of the Community industry.

Therefore, the Commission announced the review of the definitive duty
Regulation in respect of Japan7. This review was opened in accordance with
Articles 11(2) and 11(3) of the Basic Regulation, as an interim review also
seemed to be appropriate. As regards Korea, the measure was allowed to
expire8.

3.

Review investigation

The Commission officially advised the only producer in the exporting
country known to be concerned, Tokai Corporation, its related importer in
the Community, Tokai Seiki GmbH, the representatives of the exporting
country and the complainants.

The parties directly concerned were given the opportunity to make their
views known in writing and to request a hearing. One of the complainants
requested and was granted a hearing.

The Commission sent questionnaires to all parties known to be concerned
and received detailed information from the complainant Community
producers, their subsidiaries, the Japanese exporter and its related importer
located in the Community.

The Commission sought and verified all information it deemed necessary for
the purpose of the investigation and carried out verifications at the premises
of the following companies:

(4)

(5)

(6)

(7)

(8)

(9)

Community producers and their subsidiaries

– BIC S.A. (the BIC group), Clichy, France,

– BIC BJ 75, Redon, France,

6

7

8

OJ L 56, 6. 3. 1996, p.1.
OJ C 361, 30. 11. 1996, p.3.
OJ C 360 of 29. 11. 1996, p. 2.

5

– BIC Deutschland GmbH & Co., Ettlingen, Germany,

– BIRO BIC Ltd, London, UK,

– Laforest BIC S.A., Tarragona, Spain,

– Swedish Match Lighters B.V., Assen, Netherlands,

– Swedish Match Lighters (including Cricket SA), Rillieux-la-Pape, France,

– Arnold André GmbH & Co., KG, Bünde, Germany,

– Flamagas S.A., Barcelona and Llinas del Valle, Spain.

Producer in the country of origin

– Tokai Corporation Japan, Tokyo, Japan.

the purpose of

For
determinations,
Community of 15.

the dumping,
the geographical scope of

injury and Community interest
the
the investigation was

The investigation of dumping covered the period from 1 January 1996 to
30 September 1996 (hereinafter referred to as the ‘investigation period’). The
examination of injury covered the period from 1992 up to the end of the
investigation period.

time period provided for

in
The investigation exceeded the normal
Article 11(5) of the Basic Regulation. This was due to the fact that the
Commission considered that the data gathered and examined initially were
not sufficient to be used as a basis for a new anti-dumping duty and that, for
an accurate assessment of the likelihood of recurrence of injurious dumping,
a verification visit to the exporter had to be carried out at an advanced stage
of the investigation. In view thereof and taking into account that the anti-
dumping measure under review remained in force pending the investigation,
it appears opportune that any measure maintained or imposed as a result of
the investigation remain in force for a shorter period of time than foreseen by
the Basic Regulation with a view to balancing the rights and obligations
of all co-operating parties.

B. PRODUCT CONCERNED AND LIKE PRODUCT

1.

Product concerned

(10)

(11)

(12)

(13)

The products under consideration are gas-fuelled, non-refillable pocket flint
lighters (hereinafter referred to as "disposable flint lighters") falling within
CN code ex 9613 10 00.

- Request for inclusion of other lighters

(14)

It should be recalled in this respect that there are other disposable lighters on
the market (so called electronic or piezo lighters) which are not subject to

6

(15)

(16)

(17)

(18)

(19)

the opening of the review
anti-dumping measures. Two months after
investigation, Swedish Match S.A. made a request to extend the scope of this
review investigation to electronic (or piezo) lighters arguing that gas-fuelled,
non-refillable pocket flint lighters and gas-fuelled, non-refillable electronic
lighters (hereinafter "electronic lighters") were forming one single category
of product.

As regards this request, it should be recalled that the proceeding - opened in
April 1990 - concerns gas-fuelled, non-refillable pocket flint lighters and that
it has already been assessed9 that the (basic) technical characteristics of
electronic lighters were quite different from those of the disposable flint
lighters currently subject to anti-dumping duties. The request did not contain
any evidence showing that this conclusion was no longer appropriate. In
particular, it did not show any changes in the (basic) technical characteristics,
such as the ignition system, of either type of lighters, which could have
invalidated the findings of the definitive duty Regulation.

As the evidence that was presented was insufficient to justify the inclusion of
electronic lighters in the investigation, and the request was made belatedly by
a party that had supported the request for a review without reservation, the
request for an extension of the scope of the review investigation could not be
granted.

- Different sizes and models

it

should be noted that

Finally,
the product under consideration is
manufactured in different sizes and models. All these disposable flint lighters
have the same basic technical characteristics and the same basic application,
and perform the same function. As in previous investigations, the whole
range of models of disposable flint lighters was, therefore, considered as
forming one single category of product.

2.

Like product

As regards the disposable flint lighters produced and sold domestically in
Japan, the investigation showed that such products were in all respects
identical to, or closely resembling, those exported to the Community from
the country in question.

The investigation also established that the disposable flint lighters imported
from the country concerned, on the one hand, and those produced by the
Community industry and sold in the Community market, on the other hand,
possess similar basic technical characteristics and are intended for the same
use. The disposable flint
lighters produced and sold by the Community
industry should therefore be regarded as like products to those imported from
the country concerned.

9

See in particular Council Regulation (EEC) No 3433/91 which confirms the provisional findings
laid down in recital 11 to Council Regulation (EEC) 1386/91 (OJ L 133, 28. 5. 1991, p. 20).

7

(20)

Accordingly, it was concluded that the disposable flint lighters produced and
sold in the Community, as well as those produced and sold in Japan should
be regarded as like products, within the meaning of Article 1(4) of the Basic
Regulation, to those exported to the Community from Japan.

C. DUMPING

1.

Normal value

(21)

(22)

(23)

(24)

As in the original investigation, Tokai Corporation was the sole co-operating
exporting Japanese producer. During the investigation period it sold 20
different models of the product concerned on its domestic market. Only two
of those models were exported to the Community.

It was found that
this exporter’s overall domestic sales of the product
concerned during the investigation period were representative since the total
volume of such sales exceeded the threshold of 5 % of export sales provided
for in Article 2(2) of the Basic Regulation. Domestic sales of each of the two
product models exported to the Community were also representative because
they met the same 5 % criterion.

In accordance with Article 2(4) of the Basic Regulation the Commission also
had to determine whether domestic sales of each model were made in the
ordinary course of trade by looking at the proportion of profitable sales to
total sales. The investigation showed that all domestic sales made during the
investigation period were profitable. Consequently, normal value was based
on the average weighted sales price of all domestic transactions of the two
models in question.

2.

Export price

The totality of the export sales made by the exporter concerned during the
investigation period was made to a related company in the Community. The
export prices were therefore constructed, in accordance with Article 2(9) of
the Basic Regulation, on the basis of resale prices to the first independent
buyer adjusted to take account of all costs incurred between importation and
resale including customs and anti-dumping duties and a 5 % profit margin.
The latter was established on the basis of the profit margins considered
reasonable in this business sector for unrelated importers.

(25) Where cost allocations for importers’ general administration and selling
expenses were necessary in the construction of export prices, these were
made on the basis of turnover.

3.

Comparison and dumping margin

(26)

In accordance with Articles 2(10) and 2(11) of the Basic Regulation, the
weighted average normal value per model was compared with the weighted
average export price per model, at ex-factory level and at the same level of
trade. For the purpose of a fair comparison, adjustments were granted for
those differences affecting price comparability for which satisfactory

8

(27)

(28)

(29)

(30)

(31)

evidence was supplied. Thus, adjustments were made in respect of transport,
insurance, credit and packaging.

The comparison of normal value and export prices showed the existence of
dumping. The dumping margin expressed as a percentage of the CIF
Community frontier value of the imports was found to be 208.1 %.

D. COMMUNITY INDUSTRY

In the present
investigation, Tokai Seiki GmbH, a subsidiary of Tokai
Corporation, a producer of the product concerned in the Community and the
only co-operating importer in the Community of disposable flint lighters
originating in Japan, was not included in the definition of the Community
industry in accordance with Art. 4 (1) (a) of the Basic Regulation as it was
the sole importer of the product under consideration and a 100 % subsidiary
of Tokai Corporation Japan.

Disregarding Tokai Seiki GmbH's production,
the three Community
producers which co-operated with the present investigation (including their
subsidiaries) represented almost the totality of Community production of
disposable flint lighters. Consequently, these three co-operating Community
producers constitute the Community industry within the meaning of Article 4
of the Basic Regulation.

E. INJURY

1.

Preliminary remark

In the definitive duty Regulation it was concluded that “the cumulated
dumped imports from Japan, the People’s Republic of China, the Republic of
injury to the Community
Korea and Thailand had caused material
industry”10. As meanwhile the measure concerning the Republic of Korea
was allowed to lapse and the measures concerning the People’s Republic of
China and Thailand have been amended further to interim reviews11, the
actual impact of imports originating in Japan, as well as the possible impact
seen from the angle of recurrence, had to be examined in isolation.

2.

Consumption in the Community

In order to calculate total apparent consumption of disposable flint lighters in
the Community, Community producers’ sales in the Community were added
to the total imports originating in third countries, as declared under CN code
ex 9613 10 00. An adjustment was made as regards imports originating in
China for the years 1994 and 199512. On this basis annual apparent
consumption in the Community increased by 27 %, from 617.7 million units
in 1992 to 785.4 million units in 1996.

10

11

12

Recital 15 to Council Regulation (EEC) No 3433/91 referred to above.
See recital 2.
See recital 46 to Council Regulation (EC) No 423/97 referred to above.

9

(32)

(33)

(34)

(35)

(36)

(37)

3.

Factors relating to imports originating in Japan

Volume and market share

From 1992 to the investigation period, imports from Japan plummeted to
very low levels in absolute terms. The indexed import figures were 100 in
1992, 150 in 1993, 33 in 1994 and 83 in 1995, while sales of such imports
during the investigation period represent but 6.1. The market share of
imports from Japan decreased from around 0.5 % in 1992 and 1993 to
0.06 % during the investigation period. The anti-dumping measure under
review therefore effectively limited the impact of dumping of imports of
disposable flint lighters originating in Japan.

In this context it should, however, be noted that a considerable portion of
overall
the
Philippines and Thailand should be mentioned in this regard13.

imports was dumped. In particular,

imports from Mexico,

Price undercutting

The Commission calculated to what extent the prices charged by the exporter
in the Community market undercut the price charged by the Community
producers. As all sales made by the exporter were made to its related
the level of sales to the first
importer,
independent customer, and on the basis of the related importer’s and the
Community producers’ weighted average selling prices free of all rebates and
taxes. The price charged by the related importer was not adjusted for anti-
dumping duties paid.

this comparison was made at

The comparison was made at
the level of prices to wholesalers (thus
excluding sales to retailers and the advertising sector). Moreover, the price
comparison was made for naked lighters (including, however, the lighters the
exporter presented as 'wrapped') as the exporter had not exported any printed
or sleeved lighters during the investigation period.

As in the original investigation and in accordance with Article 11(9) of the
Basic Regulation, the price undercutting calculation was made for lighters
with a similar gas content14.

On this basis it was found that the average price of the imported products
undercut the weighted average price of the Community producers by 22.9 %
during the investigation period. This is to be compared with the average
undercutting of 11.5 % found in the original investigation. It should therefore
be concluded that the exporter’s undercutting level has increased, despite the
upward effect the anti-dumping duty of 35.7 % must have had on the price
charged by the related importer.

13

14

See Council Regulation (EC) No 423/97 referred to above.
See recital 13 to Council Regulation (EEC) No 3433/91 referred to above.

10

4.

Situation of the Community industry

Production

(38)

From 1992 to 1996 production by the Community industry increased by
28 %.

Capacity and Utilisation of capacity

(39)

The capacity utilisation rate increased from 66 % in 1992 to 73 % in 1994, to
drop to 71 % during the investigation period. This drop coincided, however,
with an increase in capacity. Although an increase in capacity of almost 25 %
was reported, the increases in capacity are quite recent as from 1992 to 1994
capacity did not increase at any material rate.

Sales volume

(40)

Sales in units in the Community market by the Community industry
increased by 33 % from 1992 to the investigation period.

Market share

(41)

(42)

(43)

In a growing market, the market share of the Community industry dropped
rather steadily from 66.1 % in 1992 to 46.8 % in 1995, after which it
increased somewhat to 53.6 % during the investigation period. This market
share is still somewhat lower than the 1990 market share of 57.3 %15 but
shows that the Community industry is beginning to recover from the effects
of dumped imports.

Price evolution and total sales value

It was established that weighted average sales prices of the Community
industry had dropped by almost 8 % from 1992 to the investigation period.
fully
The favourable development of sales volume was therefore not
reflected in terms of turnover: the value of sales in the Community market
increased by only 23 %.

The lighter market is known to be very price sensitive. This means that faced
with low priced dumped imports, the Community industry is either forced to
lower its prices in order to try to maintain market share, production level and
capacity utilisation, or set to lose market share if it tries to maintain its prices.

Profitability

(44)

After several years of losses, the Community industry’s return on sales
became slightly positive in 1991 and deteriorated somewhat in 199216.

15

16

See recital 48 to Council Regulation (EC) No 423/97 referred to above.
See recital 55 to Council Regulation (EC) No 423/97 referred to above.

11

(45)

(46)

(47)

(48)

(49)

(50)

(51)

For the present investigation 1992 was taken as the basis for comparison.
After a further deterioration in 1993, the Community industry's financial
results have steadily improved: compared to 1992, the profit rates more than
doubled in 1994 and more than tripled in the investigation period.

Nevertheless, the data supplied by the Community industry, which for this
purpose did not include one of the complainants given that it did not give an
admissible reply on profitability, show that since 1992 its overall financial
performance continued to be below the target set as a reasonable profit for
this industry in the definitive duty Regulation17. In fact, profits in 1992 and
1993 were very small and, although in the following years an improvement
was noticeable, profits were less than half the non-injurious level set.

Stocks

The Community industry did not build up any significant stocks. It is usual
practice in this sector to stop production if stocks become too big because of
the security risks of stocking lighters containing gas for a long period of
time. Moreover, as rationalisation efforts have been made the overall stocks
at the end of the investigation period were some thirty percent smaller than
those at the end of 1992.

Employment

From 1992 to the investigation period, employment
in the Community
industry was stable from 1992 to 1994 and increased by some 17 % since
1995. While this could be said to be a sign of recovery, it should be noted
that the employment figure for 1992 was at its lowest level and had fallen by
13 % since 198918. It was noted that a considerable portion of the expansion
pertains to the sales and administrative segment rather than to production.

Exports

The Community industry performed well in export markets. Its sales in units
steadily increased from 1992 to the investigation period. Over this period
export sales, which represent approximately 60 % of
the Community
industry's overall production, increased 69 %.

5.

Conclusion

The situation of the Community industry has improved in recent years due to
an increase of their sales in both the Community market and third countries.
This development coincided with the imposition of several anti-dumping
duties.

The increase in sales in the Community market is most probably due to both
the growth of consumption and, to a lesser extent, to the beneficial effects of
anti-dumping measures taken by the Community.

17

18

Recital 17 to Council Regulation (EEC) No 3433/91 referred to above.
See recital 49 to Council Regulation (EC) No 1006/95 referred to above.

12

(52)

(53)

(54)

(55)

(56)

The downward trend of the market share of the Community industry was
reversed since 1995, but its 53.6 % market share during the investigation
period is still smaller than the 1992 one.

that anti-dumping
The increase in apparent consumption and the fact
measures were imposed, should normally have had an upward effect on
prices in the Community market. Nevertheless, the prices of the Community
industry were found to have decreased by 8 %.

Sales by the Community industry in the Community market proved more
profitable during the investigation period than in e.g. 1992. However, the
prices charged by the exporter in the Community market still undercut the
Community industry’s prices after application of the anti-dumping duty and
the levels of profitability were still much lower than the non-injurious level
fixed in the definitive duty Regulation.

In the light of the above, it is considered that the Community industry
continues to suffer injury, notably in terms of profitability and the growth of
market share. As the market share of imports of disposable flint lighters
originating in Japan was very small, it was not possible to establish a causal
link between the dumped Japanese imports and this injury. The injury caused
by these imports is therefore considered negligible or, in any case, not
material.

F. LIKELIHOOD OF RECURRENCE OF INJURIOUS DUMPING

1.

Introduction

The Community industry requested that the definitive duty Regulation be
reviewed arguing that there was a likelihood of recurrence of injurious
dumping. In order to make a determination on this point, a number of factors
were considered, in particular the exporter's group behaviour, the availability
of unused capacity at the exporter's plant in Japan, the existence of a price
undertaking with respect to exports by a company belonging to the exporter's
group and the price the exporter might charge if the duty were allowed to
expire. In addition to the examination of the position of the Community
industry, the impact that resumed exports from Japan would be likely to have
on the Community industry, the existence of dumping practices and the
evolution of the share of overall imports in the Community market were
examined.

2.

Exporter's group behaviour

(57)

In recent years, only small quantities of disposable flint
lighters were
imported from Japan and sold on the Community market, especially when
compared to imports from several other third countries (primarily China,
Mexico, the Philippines and Thailand) whose prices were found to be at
dumped levels. However, the low level of imports originating in Japan has to
be considered in the light of the Tokai group’s behaviour.

13

(58)

(59)

(60)

(61)

(62)

inter alia,

imports
The sole exporter in the investigation concerning,
originating in Mexico - further to which definitive anti-dumping measures
were imposed in March 1997 - was a fully owned and controlled subsidiary
of the Tokai group developed after the imposition of anti-dumping measures
on disposable flint lighters originating in Japan19. The import figures show
that
imports from Mexico have simply replaced those produced (and
exported) by Tokai Corporation at its Japanese plant, after the imposition of
measures on the latter in 1991. Indeed, the imported quantities of lighters
originating in Mexico are similar to the quantities that Tokai Corporation
used to deliver to the Community market from Japan prior to the imposition
of the 1991 measure. Moreover, it should be recalled that Tokai Corporation
started a downward price trend by selling Japanese lighters at dumped prices
in the late 1980s. This trend was subsequently reinforced by dumping
practices of other Asian producers and its resumption of dumping through its
subsidiary set up in Mexico.

In the light of the above, the low level of Japanese imports during the
investigation period cannot lead to the conclusion that these developments,
which occurred after the imposition of measures in 1991, are the result of
normal economic behaviour of an exporting producer,
i.e. behaviour
independent of the measures subject to review. As they are, in fact, the result
of an apparent strategy of the Tokai group, there is clearly a risk that Tokai
would decide to resume exporting disposable flint lighters to the Community
market from Japan should measures be allowed to lapse.

It is therefore considered appropriate to take into account that, as of 7 March
1997, definitive anti-dumping duties were imposed on imports of disposable
flint lighters originating in Mexico, the Philippines and Thailand20 and that
the Mexican exporter, currently subject
is a
subsidiary of the Japanese exporter, when examining what is likely to happen
if the existing measure were allowed to lapse.

to anti-dumping measures,

3.

Japanese production capacity

From 1992 to the investigation period, the exporter’s production capacity
decreased by 54 %. However, in addition to the decrease of production
capacity, the utilisation rate (expressed in percent) of its remaining capacity
also decreased by 38 % from 1992 to the investigation period.

During the investigation period, unused capacity at the exporter's Japanese
plant accounted for a bigger quantity than the 56.6 million disposable flint
lighters Tokai Corporation exported from Japan in 1989 (i.e.
the
investigation period of the original investigation. It was also established that,
from 1992 to the investigation period, the unused capacity had been rather
stable in absolute terms, given the concomitant decreases of production
capacity and the capacity utilisation rate.

19

20

See recitals 9 and 36 to Regulation (EC) No. 423/97 referred to above.
Council Regulation (EC) No 423/97 referred to above.

14

(63)

(64)

(65)

(66)

(67)

(68)

4.

Price undertaking applicable to another group company

The point should be made that, after the imposition of the measure under
review,
lighters
the exporter shifted the production of disposable flint
destined for export to the Community market to Mexico and subsequently
offered a price undertaking in respect of imports originating in that country
when anti-dumping measures on these imports were unavoidable in March
1997.

in Japan, given that

The lapse of the existing measure could therefore bring about sourcing of
production for the Community market
the price
undertaking does not apply to imports from that country and that, even
without moving production lines from Mexico to Japan,
the exporter
disposed of sufficient freely disposable capacity at its Japanese plant to
supply the Community market with a quantity higher than its 1989 exports.
This may in particular occur if the exporter would wish to be able to charge
lower prices on the Community market than allowed for imported products
originating in Mexico.

5.

Continuation of dumping and price the exporter might charge

As stated above, during the investigation period, imports of disposable flint
lighters originating in Japan continued to be dumped. As the imported
products were sold at prices which were significantly more dumped than in
the original investigation it appears likely that dumping will continue.

Despite the application of the anti-dumping duty, undercutting of the average
unit price charged by the Community producers was still significant (22.9 %)
during the investigation period. If the anti-dumping duty had been deducted
from the price charged to the first independent customer, the average price of
the Community industry would have been undercut by as much as 43.1 %.

6.

Impact on the Community industry

The price depressing effect of continued dumping during the investigation
period was minimal, due to the application of the anti-dumping duty and the
small quantities imported. The exporter had, however, sufficient unused
capacity to resume exports of disposable flint lighters originating in Japan at
significant levels, e.g. similar to the quantity imported in 1989 (56.6 million).
If such a quantity would be sold in the Community market at the same prices
that the German subsidiary of the exporter charged during the investigation
period, this would result in substantial downward pressure on prices in the
Community market and corresponding losses of turnover and market share.

The level of actual losses will depend on the extent to which Tokai Seiki
GmbH would lower its customer delivered prices charged in the Community
market, as a result of the anti-dumping duty of 35.7 % being lifted. If these
prices would be lowered by the entire amount of the anti-dumping duty and
imports would be 56.6 million, the Community industry would suffer an
immediate loss of at least 4.88 % of its 1996 (whole year) turnover in the
Community market as a result of undercutting alone if they were to lower

15

(69)

(70)

(71)

(72)

(73)

(74)

their price accordingly in order not to lose their customers. However, such
loss does not include the losses on other sales due to the general, widespread
price depressive effect of such undercutting and does not take into account
the impact on the volume of sales, while the Community industry is set to
lose sales as a result of price undercutting.

The quantity imported from Japan in 1989 would presently represent a
market share of approximately 7.2 %. This market share is too significant to
be without any impact on the situation of the Community industry. It was,
however, not possible to establish with precision what the effect of the
removal of the measures would be on such factors as market shares,
profitability and employment of the Community industry as much would
depend on uncertain factors such as the growth of consumption in the
Community and the general price depression which may be caused by the
resumption of importation of significant quantities.

A global analysis of some specific aspects of the main regional markets in
the Community was made to assess the impact the importation of significant
quantities of disposable flint lighters originating in Japan at prices which
significantly undercut
the Community price is likely to have on the
Community industry.

It was established that competition on the German market was extremely
fierce as major distributors and, in particular, supermarket chains are usually
selecting one or two suppliers per product offered in their outlets and thus
exercise downward pressure on the prices of these suppliers. In this situation
even minimal price undercutting precludes the Community industry's access
to distribution networks representing a large number of consumers. The
effects of future price undercutting would therefore be out of proportion (be
it in terms of loss of market share or loss of profitability) and would most
likely last for an extended period of time as access to the distribution
network is normally granted for long contract periods.

It was also established that at producer level prices in the United Kingdom
were relatively low and the Community producers were not well established
in this market. In these circumstances, future price undercutting would
impair the penetration of Community producers' disposable flint lighters in
this already difficult market and further reduce the profitability of their sales.

Competition in the French market was found to be important due to the very
presence of the manufacturing plants of two major Community producers but
price depression appeared less important than in e.g. Germany and the UK.
imported products was relatively low and the
As the penetration of
Community industry is well established in this market,
future price
undercutting is likely to bring about not only some price depression but also
a loss of market shares.

It was also established that two Community producers have production plants
in Spain and are well established in that market. It was found that a very
substantial part of the Spanish market
is supplied by non-Community
producers, as Spain was the second largest importing Member State in 1995,

16

(75)

(76)

(77)

(78)

(79)

(80)

and prices were low compared to France and Germany. As one of the
producers established in Spain indicated that further rationalisation and cost
reduction in its production plant was not possible, a loss of a substantial
market share or a price war in the Spanish market is likely to result in closure
of its plant, especially if this loss were matched by a similar development in
the nearby, important French market.

Irrespective of the final destination in the Community of such future imports,
sales of significant quantities of disposable flint lighters originating in Japan,
would affect the Community industry’s position in such a way that their
beginning recovery would be severely impaired if not nullified as the
Community industry would lose sales and market share. As a result of the
additional price depression caused by price undercutting in respect of this
quantity, e.g. at the level of the investigation period (43.1 % in the absence of
anti-dumping duty), the recovery of the Community industry’s profitability
would, moreover, be impaired and the Community producers would probably
close one or more plants in the European Community.

7.

Volume and prices of overall imports

As stated above, the Japanese exporter decided to supply the Community
market with products manufactured in Mexico, on which anti-dumping
measures were imposed in March 1997. Therefore, the remedial effect of the
measure imposed in 1991 was much smaller than it would have been under
normal circumstances.

In addition, overall imports of disposable flint lighters increased by 74 %
from 1992 to the investigation period, an increase much higher than the
increase of consumption during that period. As a result, the market share of
these imports increased from 33.5 % in 1992 to 53 % in 1995 and 46.3 % in
1996.

As shown by the successive anti-dumping measures imposed from 1992 to
1998, there has been a continuous influx of low-priced and dumped imports
from third countries in the Community market. As a result prices on the
Community market have continuously dropped to reach low levels: in a
growing market the prices of the Community industry nevertheless decreased
by 8 % from 1992 to the investigation period.

8.

Conclusion

After the imposition of the anti-dumping duty, dumping of disposable flint
lighters originating in Japan continued during the investigation period. It is
therefore likely that dumping will also continue in the future.

lighters originating in Japan would cause material

It is considered likely that, should the measure subject to review be allowed
to lapse, a resumption of the importation of large quantities of disposable
flint
injury to the
Community industry. First of all, because, if one bases oneself on the prices
of Japanese lighters sold during the IP, the prices of such imports would
significantly undercut the Community producers’ price and thus affect their

17

(81)

(82)

(83)

(84)

financial results. Secondly, because prices on the Community market are
already very low as a result of downward pressure on prices, and further
downward pressure is therefore likely to force the Community industry to
sell with a minimal profit margin or even at a loss. Thirdly, because the
quantities are likely to be big enough to impair or nullify the recent recovery
of this industry, to endanger its economic viability and to cause a loss of
crucial markets for the Community industry.

In this regard, it should be noted that profit margins have been small for
several years, that overall imports have shown a disproportionate increase
and that, even if the exporter's sales of disposable flint lighters originating in
Japan decreased, the remedial effect of the measure was undermined by that
same exporter's decision to supply the Community market with dumped
products originating in Mexico.

Given this link between the Mexican and the Japanese exporters, and the
existence of sufficient, freely disposable capacity in Japan, the Japanese
exporter would not only have the means to supply the Community market,
but also the option to charge lower prices than permitted by its price
undertaking in respect of its Mexican production,
if the definitive duty
Regulation were to be allowed to expire. The small market share of imports
originating in Japan during in particular the investigation period could not
invalidate this conclusion on the exporter's potential for future exports.

there was sufficient unused capacity at

As it was established that
the
exporter's plant in Japan to supply the Community market with significant
quantities of disposable flint lighters, that the dumped imports during the
investigation period significantly undercut the Community industry's price,
that the Community industry is only beginning to recover and its prices
dropped some 8 % from 1992 to the investigation period, it is considered
likely that the expiry of the measure under review would entail a recurrence
of injurious dumping, if the exporter would decide to source its exports to the
Community at its plant in Japan. Given the price competitiveness of the
market and the exporter's strategy to avoid the anti-dumping duty under
review, such a decision does not appear to be unlikely.

G. COMMUNITY INTEREST

1.

Community industry

review,

The Community industry has for almost a decade been suffering from low-
priced and dumped imports of disposable flint lighters. The objective of the
definitive duty under
to re-establish fair competition in the
Community market between the Community producers and their exporting
counterparts in third countries, has not been fully met as is shown by
subsequent developments: Tokai itself set up a production plant in Mexico
and started exporting from there to the European Community at dumped
prices, while other third countries – more particularly China, the Philippines
and Thailand – also resorted to dumping. As a result the Community industry
has not been able to recover entirely, despite its efforts to reduce costs and to
benefit from economies of scale.

18

(85)

(86)

(87)

(88)

(89)

(90)

The Community industry consists of two multinational groups selling several
products other than disposable flint lighters and a relatively small producer,
which combines the production of disposable flint lighters with a trading
company.

The Community industry has been making considerable efforts to improve its
productivity in recent years in an attempt to obtain the lowest possible cost of
production and to enhance its competitiveness in this price sensitive market.
Rationalisation efforts were made:
the two producing groups have
rationalised their production process and adapted their structures, the third
producer’s efforts were primarily based on the realisation of economies of
scale. New investments were also made to improve productivity. However,
given that export sales increased much faster than sales in the Community
and export sales represent more than half of the Community producers' sales,
the investments in production capacity were primarily made for the purpose
of supplying markets other than the Community market.

Although no closure of production plants occurred, this appears due to a
strategic approach of the producers concerned, supported by the existence of
anti-dumping measures concerning disposable flint
lighters and the
development of their export sales. In this regard, it should be noted that all
three producers have profitable activities in other sectors, which provide
enough financial resources to maintain their production plants for disposable
flint lighters for some time. It cannot, however, be ruled out that the effects
of a discontinuation of an anti-dumping measure will provoke the mere
closure of any of the production plants.

In view of the above,
the effectiveness of the Community’s measures
designed to re-establish fair and open market conditions and to protect the
Community industry against an unfair trading practice is at stake. This major
consideration apart, there is a serious risk that Community producers put an
end to production at one or more plants, if the anti-dumping measure were
allowed to lapse and subsequently injurious dumping of large quantities of
disposable flint lighters originating in Japan would occur. The impact thereof
could be detrimental for some, if not all, of the regions in the Community
where the plants are established.

2.

Importers

As the exporter did not report any direct sales to unrelated parties in the
European Community and no reaction was received from any importer after
the publication of the notice of initiation, no unrelated importers of Tokai’s
lighters originating in Japan could be identified.

As regards Tokai’s subsidiary in Germany, which is the sole importer of
disposable flint
it
employed a very limited number of people as compared to the Community
industry. The impact on this importer of maintaining the measure under
review is therefore likely to be minimal.

lighters originating in Japan,

it should be noted that

19

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(92)

(93)

(94)

(95)

(96)

3.

Consumers

investigation,

the importers alleged that

In the original
the interests of
consumers would be adversely affected by anti-dumping measures on
disposable flint
investigation, no
representations of consumers associations were received and there is
otherwise no reason to assume that a change of circumstances has occurred
which could invalidate the arguments used in previous investigations to
reject this allegation.

lighters. However,

in the present

It was therefore concluded that usually importers benefit from low-priced
imports rather than the consumers and that it is the long-term consumers’
interest that a wide range of products is offered at fair (rather than extremely
low) market prices. Moreover, as disposable flint lighters are inexpensive
products even when sold without dumping and do not therefore constitute a
major part of any consumer’s overall expenditure, consumers are not likely
to refrain from buying this product if the absolute level of prices is increased
somewhat.

4.

Conclusion

In view of the above, no compelling reasons not
to take action were
identified. It was therefore concluded that it is in the Community interest to
maintain the anti-dumping measure on disposable flint lighters originating in
Japan to avoid a recurrence of material injury to the Community industry
caused by dumped Japanese imports.

H. DEFINITIVE MEASURES

1.

Level of measures

As during the investigation period only a very small quantity of lighters
originating in Japan was sold on the Community market, the market share of
these imports was very small and, accordingly, the injury caused by such
imports is considered negligible and, in any case, not material. In view
thereof, and despite a substantially increased dumping margin,
is
considered that
the data concerning dumping and injury during the
investigation period do not constitute a proper basis for an upward
amendment of the anti-dumping duty.

it

It was, however, established that dumping had continued after the imposition
of anti-dumping measures, that the exporter’s unused capacity during the
investigation period was considerable and that, given the existence of a price
undertaking applicable to the Mexican subsidiary of the exporter, a decision
in Japan is not
to source again production for the Community market
excluded, if the measures in force would expire.

It was also established that, after imposition of the duty, the prices charged
those of the Community
during the investigation period still undercut
industry. If significant quantities of disposable flint lighters originating in
is
Japan would be sold on the Community market at similar prices,

it

20

(97)

(98)

(99)

considered likely that the Community industry would suffer material injury
as a result of the price depressing effect on prices in the Community market
and a loss of sales which might well be disproportionate.

there is a likelihood of
it was established that
In these circumstances,
recurrence of injurious dumping and it is considered that the current measure
should be maintained to prevent dumping which would cause material injury
to the Community industry.

2.

Residual duty

As Tokai Corporation is the sole co-operating exporting Japanese producer,
whose exports to the Community represented during the investigation period
a high proportion of total exports of disposable flint lighters from Japan, it is
considered appropriate to set the duty for any non co-operating companies
which are not known at present, at the level of the duty set for that producer.

3.

Duration of measures

As the length of the review was unusual, the duration of the maintained
measure should, in this specific case, be fixed in such a way as to balance the
rights and obligations of all co-operating parties. To that end the duration of
five years that would otherwise have applied, should be reduced.
Furthermore, in view of the fact that the Japanese exporter has a fully
owned and controlled subsidiary in Mexico and used its production base
there to avoid delivering gas-fuelled, non-refillable pocket flint lighters
originating in Japan, on which an anti-dumping duty was imposed, to its
customers in the Community,
it appears appropriate to reduce the
duration by aligning it with that of the measure imposed on imports
originating in Mexico.

4.

Conclusion

(100)

is considered
In view of the considerations and facts stated above,
appropriate that
the anti-dumping measure concerning the imports of
disposable flint lighters originating in Japan be maintained at the current rate
of duty until 7 March 2002. The new duty should therefore be 35.7 %.

it

I. FINAL PROVISIONS

(101) All interested parties co-operating with the investigation, the complainants,
the exporter and the Japanese government, received disclosure in writing of
the essential facts and considerations on the basis of which the Commission
intended to recommend that the definitive measure be maintained.

(102)

The complainant producers did not submit any written comments and the
exporter submitted comments of a general nature that did not justify any
modification of the conclusions brought to its attention.

(103)

For the sake of clarity, provision should be made to amend the definitive
duty Regulation, given that the anti-dumping duty on imports originating in

21

the Republic of Korea has lapsed and the present Regulation imposes a
definitive anti-dumping duty on imports originating in Japan.

HAS ADOPTED THIS REGULATION:

Article 1

1.

2.

3.

A definitive anti-dumping duty is hereby imposed on imports of gas-fuelled,
non-refillable pocket flint lighters falling within CN code ex 9613 10 00 (Taric
code 9613 10 00*19) originating in Japan.

The rate of the duty, applicable to the net, free-at-Community-frontier price,
before duty, shall be 35.7 %.

Unless otherwise specified, the provisions in force concerning customs duties
shall apply.

Regulation (EEC) No 3433/91 is hereby amended as follows:

Article 2

(i)

At the end of Article 1(1) the words "originating in Japan, the People's
Republic of China and the Republic of Korea" shall be replaced by
"originating in the People's Republic of China".

(ii)

Article 1(2) shall be replaced by the following:

“2. The amount of duty shall be EUR 0.065 per lighter."

Article 3

1.

2.

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

This Regulation shall remain in force until 7 March 2002, provided that,
should any review of that measure 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

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