Proposal for a Council Regulation terminating the anti-dumping proceedings concerning imports of certain large aluminium electrolytic capacitors originating in Japan, the Republic of Korea and Taiwan
Date: 1999-12-13
Institutions: European Commission
Subjects: Japan, aluminium, anti-dumping duty, electric machinery, import

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 13.12.1999
COM(1999) 668 final

Proposal for a

COUNCIL REGULATION

terminating the anti-dumping proceedings concerning imports of certain Large
Aluminium Electrolytic Capacitors originating in Japan, the Republic of Korea
and Taiwan.

(presented by the Commission)

1.

2.

3.

4.

5.

6.

7.

EXPLANATORY MEMORANDUM

the Council

By Regulation (EEC) No 3482/921, as amended by Regulation (EC)
No 2593/972,
imposed definitive anti-dumping measures on
imports of certain large electrolytic aluminium capacitors (hereinafter
“LAECs”) originating in Japan. These measures took the form of ad-valorem
duties, ranging between 4.2% and 75%.

By Regulation (EC) No 1384/943, the Council
imposed definitive anti-
dumping measures on imports of LAECs originating in the Republic of
Korea and Taiwan. These measures took the form of ad-valorem duties,
ranging between 10.7% and 75.8%.

On 3 December 1997, the Commission announced by a notice published in
the Official Journal of the European Communities4 the initiation of a review
of the anti-dumping measures applicable to imports of LAECs originating in
Japan, pursuant to Articles 11.2 and 11.3 of Council Regulation (EC) No
384/96 of 22 December 1995 on protection against dumped imports from
countries not members of the European Community5 (hereinafter “the Basic
Regulation”).

On 7 April 1998, the Commission announced by a notice published in the
Official Journal of the European Communities6 the initiation of a review of
the anti-dumping measures applicable to imports of LAECs originating in the
Republic of Korea and Taiwan, pursuant
to Article 11.3 of the Basic
Regulation.

The review investigations revealed the existence of significant dumping from
all the three countries concerned.

it was demonstrated that

the cumulated dumped imports
Furthermore,
the Republic of Korea and Taiwan had caused a
originating in Japan,
material
injury to the Community industry. This injury was notably
evidenced by a loss of sales volume and market share, as well by a decline in
profitability between 1995 and the end of the investigation period.

Concerning Community interest, no compelling reasons were found against
the imposition of new measures. This conclusion was reached notably in
view of the fact that the likely effects on users of the imposition of definitive
measures could be considered as negligible, in view of the low share of costs
represented by LAECs in the total cost of the end product.

1 OJ L 353, 3.12.1992, p.1
2 OJ L 351, 23.12.1997, p.6
3 OJ L 152, 18.6.1994, p.1
4 OJ C 365, 3.12.1997, p.5.
5 OJ L 56, 6. 3. 1996, p. 1. Regulation as last amended by Regulation (EC) No 905/98 (OJ L 128,

30.4.1998, p.18).

6 OJ C 107, 7.4.1998, p.4.

2

8.

9.

10.

11.

12.

13.

14.

Finally, a strong likelihood of continuation or recurrence of dumping and
injury was ascertained.

A new proceeding, concerning LAECs originating in the USA and Thailand
was initiated in November 1997. Basically the same definitive conclusions
were reached in that new proceeding, as in the present reviews. Given that
these conclusions call in principle for the imposition of definitive anti-
the Commission proposed the imposition of such
dumping measures,
measures on the imports of LAECs originating in the USA and Thailand. .
However, no definitive conclusions were adopted by the Council within the
time limits laid down in the Basic Regulation. As a result, definitive
measures were not imposed on imports from the USA and Thailand and the
provisional measures, which entered into force in August 1998, lapsed.

Article 9(5) of the Basic Regulation provides that anti-dumping duties shall
be imposed on a non-discriminatory basis on imports of a product from all
sources found to be dumped and causing injury.

The new investigation concerning the USA and Thailand and the two present
reviews were conducted, to a large extent, simultaneously. They also covered
the same product. Basically, the same conclusions concerning dumping,
injury, causation and Community interest were reached in respect of all five
countries concerned (i.e. Japan, the Republic of Korea, Taiwan, Thailand and
the USA). These conclusions call, in principle, for the imposition of new
definitive measures. However,
in the absence of
measures on the USA and Thailand, the imposition of any measures on
imports originating in Japan, the Republic of Korea and Taiwan would be
discriminatory towards these latter three countries.

is considered that,

it

In light of the above, in order to ensure a coherent approach and to respect
the fundamental principle of non-discrimination, it is necessary to terminate
the proceedings concerning imports of LAECs originating in, respectively,
Japan, the Republic of Korea and Taiwan, without the imposition of anti-
dumping measures.

The application of the principle of non-discrimination implies that the two
above-mentioned proceedings be terminated with a retroactive effect as of 28
February 1999. This is the date when the provisional measures imposed on
the USA and Thailand lapsed and hence, when the discrimination against
Japan, Taiwan and the Republic of Korea started.

All parties concerned were informed of the essential facts and considerations
on the basis of which it was intended to recommend the termination of the
present proceedings. All parties were granted a period within which to make
representations. These representations were taken into consideration and,
where appropriate, the findings have been changed accordingly.

15.

The Anti-dumping Advisory Committee was consulted on 23 June 1999. A
majority of Member States supported the proposed termination.

3

16.

It is therefore proposed that the Council adopts the draft Regulation annexed,
terminating the anti-dumping proceedings concerning imports of certain
Large Aluminium Electrolytic Capacitors originating in Japan, the Republic
of Korea and Taiwan with a retroactive effect as of 28 February 1999.

4

Proposal for a

COUNCIL REGULATION

terminating the anti-dumping proceedings concerning imports of certain Large
Aluminium Electrolytic Capacitors originating in Japan, the Republic of Korea
and Taiwan.

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 Article 9(5) thereof,

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

Whereas:

1. Existing measures

A.

PROCEDURE

(1)

(2)

the Council

By Regulation (EEC) No 3482/922, as amended by Regulation (EC)
No 2593/973,
imposed definitive anti-dumping measures on
imports of certain large electrolytic aluminium capacitors (hereinafter
“LAECs”) originating in Japan. These measures took the form of ad-valorem
duties, ranging between 4.2% and 75%.

By Regulation (EC) No 1384/944, the Council
imposed definitive anti-
dumping measures on imports of LAECs originating in the Republic of
Korea and Taiwan. These measures took the form of ad-valorem duties,
ranging between 10.7% and 75.8%.

1 OJ L 56, 6.3.1996, p. 1. Regulation as last amended by Regulation (EC) No 905/98 (OJ L 128,

30.4.1998, p.18).

2 OJ L 353, 3.12.1992, p.1
3 OJ L 351, 23.12.1997, p.6
4 OJ L 152, 18.6.1994, p.1

5

2. Grounds for the reviews

Japan

(3)

(4)

(5)

Following the publication of a notice of impending expiry5 of the anti-
dumping measures applicable on imports originating in Japan, the Federation
for Appropriate Remedial Anti-Dumping (FARAD) lodged a request for a
review, on behalf of Nederlandse Philipsbedrijven BV (The Netherlands),
now BC Components International BV, and BHC Aerovox Ltd. (United
Kingdom), pursuant to Article 11(2) of Council Regulation (EC) No 384/96
(hereinafter referred to as the “Basic Regulation”).

Furthermore, the Commission decided, on its own initiative, to initiate an
interim review of the same anti-dumping measures pursuant to Article 11(3)
of the Basic Regulation in order to consider
the impact of changed
circumstances in relation to technical developments for the product as well as
market conditions on dumping and injury.

Consequently, on 3 December 1997, the Commission announced by a notice
published in the Official Journal of the European Communities6 the initiation
of a review of the anti-dumping measures applicable to imports of LAECs
originating in Japan (hereinafter the “review on Japan”).

Republic of Korea and Taiwan

(6)

(7)

Further to the initiation of the review on Japan and further to the initiation of
a new investigation concerning imports of LAECs originating in the United
States of America and Thailand7, the Commission also decided, on its own
initiative, to initiate a review of the anti-dumping measures applicable to
imports originating in the Republic of Korea and in Taiwan, pursuant to
Article 11(3) of the Basic Regulation.

This review was initiated on the grounds that available information indicated
an increased market penetration in the Community market of the product
concerned originating in the Republic of Korea and in Taiwan, despite the
anti-dumping measures imposed. Moreover, in view of the internationally
interdependent
and the
the market
interrelationship of the companies involved in this field, it was considered
that this review together with the above mentioned review on Japan and the
new proceeding concerning Thailand and USA, would allow the Commission
to form a better overall view of the impact on the Community industry of the
imports originating from the main exporting countries.

character of

this product

for

5 OJ C 168, 3.6.1997, p.4
6 OJ No C 365, 3.12.1997, p.5.
7 OJ No C 363, 29.11.1997, p.2

6

(8)

The review investigation (hereinafter the “review on Korea and Taiwan”)
was initiated in April 1998 by the publication of an opening notice in the
Official Journal of the European Communities 8.

3. Investigations

(9)

(10)

(11)

The Commission officially advised the producers/exporters and importers
known to be concerned as well as their associations, the representatives of
the exporting countries concerned,
the Community producers which
requested the review on Japan, as well as known users, about the initiation of
the reviews. Interested parties were given the opportunity to submit their
views in writing and to request a hearing within the time limits set out in the
notices mentioned above.

A number of producers/exporters in the countries concerned, as well as one
Community producer, along with a number of users and importers in the
Community, made their views known in writing. All parties, who so
requested within the above time limits and showed that there were particular
reasons why they should be heard, were granted the opportunity to be heard.

The Commission sent questionnaires to parties known to be concerned and to
all the other companies which made themselves known within the deadlines
set out in the above notices. Replies were received from one Community
producer, 3 producers/exporters in Taiwan, 4 producers/exporters in Japan,
as well as from their related importers in the Community. The Commission
also received a reply from one unrelated importer in the Community which
was considered meaningful and complete.

(12)

Verification visits with respect to the review investigations were carried out
at the premises of the following companies:

Community producer

–

Nederlandse Philipsbedrijven BV (Zwolle, The Netherlands) and its
related company, Österreichische Philips Industrie, GmbH (Klagenfurt,
Austria).

On 1 January 1999, these two companies were sold to a consortium of equity
investors and formed,
together with a number of other Philips entities, a new
company, called BC components BV. This company took over from the Philips Group
all activities in the manufacturing and sales of LAECs. Consequently, these two
companies will hereinafter jointly be referred to as “BC components”.

Producers/exporters in the countries concerned

-

-

Nippon Chemi-con ( Tokyo, Japan)

Nichicon Corporation (Kyoto, Japan)

8 OJ No C 107, 7.4.1998, p.4.

7

-

-

-

-

-

Rubycon Corporation (Ina, Japan)

Hitachi AIC Inc (Tokyo, Japan)

Teapo Electronic Corp. (Taipei, Taiwan)

Lelon Electronics Corp. (Taichung, Taiwan)

Kaimei Electronic Corp. (Taipei, Taiwan)

Unrelated importer in the Community

-

Beck Elektronik Bauelemente GmbH (Nürnberg, Germany).

Related importers in the Community

-

-

-

-

(13)

(14)

(15)

(16)

Nichicon UK (Europe) Ltd. (Camberley, UK)

Rubycon Corporation UK branch (South Ruislip, UK)

HPC Distribution (Krefeld, Germany)

Europe Chemi-con (Nürnberg, Germany)

The Commission sought and verified all information deemed necessary for
the purposes of its conclusions in both review investigations.

the parties concerned were informed of

facts and
All
considerations on the basis of which the conclusions of these reviews were
made. All parties were granted a period within which to make
representations. The representations received were taken into consideration
and, where appropriate, the findings have been changed accordingly.

the essential

The review on Japan could not be completed within the normal period of
twelve months provided for in Article 11(5) of the Basic Regulation, owing
to the fact
that, as a result of the updated product definition, a full
investigation on dumping, injury and causation was necessary. The timing of
the review on Korea and Taiwan was aligned on that of the review on Japan.

The investigation of dumping in the review on Japan covered the period from
1 October 1996 to 30 September 1997 (hereinafter
the “Investigation
Period”, or “IP”). The investigation of dumping in the review on Korea and
Taiwan covered the period from 1 January 1997 to 31 December 1997.

The examination of injury for both investigations covered the period from 1
January 1993 to 31 December 1997, to take account of the existence of two
differing investigation periods for dumping.

8

B. PRODUCT UNDER CONSIDERATION AND LIKE PRODUCT

1. Product under consideration

(17)

(18)

(19)

The product under consideration is certain electrical capacitors, non-solid,
aluminium electrolytic, with a CV product (capacitance multiplied by rated
voltage) between 8.000 and 550.000 micro-coulombs (µC), at a voltage of
160V or more, currently classifiable under CN code ex 8532 22 00. As
explained below, the term “large” should no longer be used to describe these
products. However, for practical reasons, they are referred to as “LAECs”, as
was done in the original investigations concerning Japan, the Republic of
Korea and Taiwan.

all

Capacitors are electronic components which can store and subsequently
release electric energy. These components are used in the electric circuits of
computer,
in
types
virtually
telecommunications,
industrial, military, automotive and
other consumer industries. Capacitors covered by these reviews (i.e. LAECs)
are particularly used in power supply circuits in durable consumer electronics
such as television sets, video cassette recorders and personal computers.

electronic
instrumentation,

equipment,

the

of

LAECs are produced in many different types depending, inter alia, on their
capacitance, the rated voltage, the maximum operating temperature, the type
of terminal and their dimensions. Despite these differences, all these types
share the same basic physical and technical characteristics and uses. They
were, therefore, considered as a single product.

2. Update of the product coverage in the review on Japan

(20)

The product definition in the original investigation concerning Japan, as set
out in Council Regulation (EEC) No 3482/92, was restricted to certain large
electrical capacitors, non solid, aluminium electrolytic, with a CV product
between 18.000 and 310.000 µC at a voltage of 160 V or more, with a
diameter of 19 mm or more and a length of 20 mm or more.

However, in the opening notice concerning the review on Japan, it was
outlined that this original definition should be adapted to cover all LAECs,
i.e. the same range of products as in the proceeding concerning the Republic
of Korea and Taiwan. This was necessary in view of changed circumstances
related to new technical and market developments of the product under
consideration.

(21)

The review confirmed these changed circumstances. Firstly, it was found that
technological evolution has lead to the development of LAECs with
in increasingly
increasingly higher capacitance, and hence CV product,
smaller can sizes. Secondly,
reported improvements in the electricity
consumption of certain power supplies have created a new demand for
LAECs with lower CV product (i.e. lower capacitance for a given voltage).
Thirdly, it was found that, for a given CV product, LAECs of different sizes
were offered on the Community market.

9

As a result of these developments, it was found that a whole range of
imported LAECs originating in Japan fell outside the original product
definition concerning this country. They were therefore exempt from anti-
dumping measures, even though they were alike in all basic physical and
technical characteristics and uses to those covered by this definition (and
hence by the anti-dumping measures). In addition, since several can sizes
could be offered for the same CV product, and since the CV product chiefly
it was
determines the types of applications in which LAECs are used,
considered that there were no longer grounds for differentiating between
LAECs according to their size. The term “large” should no longer be used to
identify these products.

(22)

For all these reasons, it was confirmed that the product definition in the
review on Japan should be adapted to cover all LAECs as defined above, i.e.
certain electrical capacitors, non-solid, aluminium electrolytic, with a CV
product (capacitance multiplied by rated voltage) between 8.000 and 550.000
micro-coulombs (µC), at a voltage of 160V or more.

3. Like product

(23)

(24)

A number of Japanese producers/exporters claimed that, because of
differences in size, lifetime or terminal configuration, the exported products
and those produced in the Community were not “like products”.

However, it was established that, despite these differences, which are minor,
the LAECs sold on the domestic market of the countries concerned, those
exported from these countries into the Community and those produced and
sold in the Community by the Community industry used the same basic
technology and were all produced according to world-wide applicable
industry standards. Therefore, all these products had the same basic physical
and technical characteristics. They also had the same types of applications
and were all used to perform the same types of functions. Therefore, all these
products were interchangeable and in direct competition with each other, on
a type-by-type basis.

(25)

Consequently, the claim was rejected and it was concluded that the LAECs
sold on the domestic market of the countries concerned, those exported from
these countries into the Community and those produced and sold in the
Community by the Community industry were to be considered to be like
products within the meaning of Article 1(4) of the Basic Regulation.

1. Japan

C. DUMPING

(26)

Since the circumstances regarding dumping had significantly changed in
view of the updating of the product definition, the Commission conducted a
full investigation, which led to the calculation of a new dumping margin for
the IP.

(27)

Four companies replied to the questionnaire for producers/exporters.

10

Normal value

(28)

(29)

(30)

As far as the determination of normal value is concerned, the Commission
first established, for each producer/exporter, whether its total domestic sales
of LAECs were representative in comparison with its total export sales to the
Community. In accordance with Article 2(2) of the Basic Regulation,
domestic sales were considered representative when the total domestic sales
volume of each producing company was at least equal to 5% of its total
export sales volume to the Community.

Subsequently,
those types of LAECs were identified which were sold
domestically by those companies having representative domestic sales and
which were identical or directly comparable to the types sold for export to
the Community.

For each of the types sold by the producers/exporters on their domestic
markets and found to be directly comparable to types sold for export to the
Community,
it was established whether domestic sales were sufficiently
representative for the purposes of Article 2(2) of the Basic Regulation.
Domestic
considered sufficiently
representative when the total domestic sales volume of LAECs of that type
during the IP represented 5% or more of the total sales volume of LAECs of
the comparable type exported to the Community.

a particular

type were

sales of

An examination was also made as whether the domestic sales of each type
could be regarded as having been made in the ordinary course of trade, by
establishing the proportion of profitable sales to independent customers of
the type in question. In cases where the sales volume of LAECs sold at a net
sales price equal to or above the calculated cost of production represented
80% or more of the total sales volume, normal value was based on the actual
domestic price, calculated as a weighted average of the prices of all domestic
sales made during the IP, irrespective of whether these sales were profitable
or not. In cases where the volume of profitable sales of LAECs represented
less than 80% but 10% or more of the total sales volume, normal value was
based on the actual domestic price, calculated as a weighted average of
profitable sales only.

(31) When the requirements set out above were met, normal value was based for
each type on the basis of the prices paid or payable, in the ordinary course of
trade, by independent customers in the domestic market of the exporting
country, as set out in Article 2(1) of the Basic Regulation.

(32)

(33)

In cases where the volume of profitable sales of any type of LAECs
represented less than 10% of the total sales volume, it was considered that
this particular type was sold in insufficient quantities for the domestic price
to provide an appropriate basis for the establishment of the normal value.

for
On the basis of the method referred to above,
to
approximately 60% of the types sold for export
establish normal value on the basis of the domestic price of comparable types
in accordance with Article 2(2) of the Basic Regulation. Wherever domestic

it was possible,
to the Community,

11

prices of a particular type sold by a producer/exporter could not be used,
constructed normal value had to be used in preference to domestic prices of
other similar types or to domestic prices of other producers/exporters, due to
the number of different types and the variety of factors affecting them. Using
in this case making
domestic prices of other types would have meant
numerous adjustments, most of which would have had to be based on
estimates. It was therefore considered that constructed value formed a more
appropriate basis to establish normal value.

(34)

Consequently,
in accordance with Article 2(3) of the Basic Regulation,
normal value was constructed by adding to the manufacturing costs of the
exported types, adjusted where necessary, a reasonable percentage for
selling, general and administrative expenses (“SG&A”) and a reasonable
margin of profit. To this end, the Commission examined whether the SG&A
incurred and the profit realised by each of the producers/exporters concerned
on the domestic market constituted reliable data. Actual domestic SG&A
expenses were considered reliable when the domestic sales volume of the
company concerned could be regarded as representative.

(35)

The domestic profit margin was determined on the basis of domestic sales
made in the ordinary course of trade.

the information
For two of the Japanese companies it was found that
provided regarding the cost of production of LAECs sold in the domestic
market did not accurately reflect costs incurred during the IP. Consequently,
it was necessary to use, in part, the facts available in order to correct the
in accordance with Article 18(1) of the Basic
inaccurate information,
Regulation. For this purpose, in one case the Commission collected and
verified on spot the information used by the company in its actual cost
to take account of the consistent
system and established an adjustment
underestimation of the costs reported in the questionnaire reply. For the other
company, some of the information provided in the questionnaire reply,
concerning production costs in one factory, was found not to relate to the
investigation period. It was therefore decided to exclude sales of products
made in this factory from both the profitability and dumping determinations,
in accordance with Article 18(1) of the basic Regulation.

For another company, it was found that the information contained in the
reply to the questionnaire regarding domestic sales was unreliable, since it
did not include sales of certain types and it included numerous sales to
domestic traders destined for subsequent export and sales to related
companies for their own consumption. It was therefore decided to use, in
accordance with Article 18(1) of the Basic Regulation, such facts as were
available in order to rectify the partial non co-operation. Hence,
the
transactions destined for re-export and the sales to related companies were
excluded. For the unreported types sold domestically a profit margin was
established by using the domestic types with a higher profitability.

12

Export price

(36)

In all cases where LAECs were exported to independent customers in the
Community, the export price was established in accordance with Article 2(8)
of the Basic Regulation, namely on the basis of export prices actually paid
or payable.

(37) Where the export sale was made to a related importer, the export price was
constructed pursuant to Article 2(9) of the Basic Regulation, namely on the
basis of the price at which the imported products were first resold to an
independent buyer.

(38)

(39)

In such cases, adjustments were made for all costs incurred between
importation and resale and for profits accruing, in order to establish a reliable
export price at the Community frontier level. On the basis of the information
available from a co-operating unrelated importer, this profit was set at around
5%. This was considered to be a conservative estimate for the sector
concerned.

Pursuant to Article 11(10) of the Basic Regulation, in those cases where the
export price had to be constructed, it was examined whether the applicable
anti-dumping duty was duly reflected in the resale prices and the subsequent
selling prices in the Community, in order to decide if the amount of duties
paid should be deducted from the price. For this purpose, the companies were
requested to provide conclusive evidence thereof.

Two of the Japanese producers/exporters provided conclusive evidence that
the applicable anti-dumping duty was duly reflected in their resale prices and
in subsequent selling prices in the Community. Consequently, it was decided
not to deduct the amount of duties paid from the relevant export prices,
pursuant to Article 11(10) of the Basic Regulation. The remaining companies
failed to provide conclusive evidence that the duty was reflected in resale
prices and subsequent selling prices and the Commission consequently
deducted the anti-dumping duty from the resale prices.

Comparison

(40)

For the purposes of ensuring a fair comparison between the normal value and
the export price, due allowance in the form of adjustments was made for
differences affecting price comparability in accordance with Article 2(10) of
the Basic Regulation.

Accordingly, allowances for differences in import charges,
transport,
insurance, handling charges, packing costs, credit, commissions and
discounts have been granted where applicable and justified, and when the
party concerned could demonstrate the effect of any alleged difference on
prices and price comparability.

13

(41)

(42)

for a level of
to take

the
trade adjustment made by one of
The request
producers/exporters
in
an alleged difference
into account
advertisement costs was rejected in the absence of any difference between
domestic and export levels of trade.

for

Requests
two
producers/exporters were also rejected since the companies failed to
demonstrate any effect on price comparability.

adjustments made

salesmen

salaries’

by

Dumping margins

(43)

(44)

According to Article 2(11) of the Basic Regulation, the weighted average
normal value by type was compared with the corresponding weighted
average export price.

The comparison, as described above, shows the existence of dumping in
respect of all producers/exporters that co-operated with the Commission. The
dumping margins expressed as a percentage of the CIF import price at the
Community border are the following:

- Hitachi AIC Inc: 25.5 %

- Rubycon Corporation: 5.4 %

- Nichicon Corporation: 20.5 %

- Nippon-Chemicon: 23.1 %

(45)

For non co-operating companies, a residual dumping margin was determined
in accordance with Article 18 of the Basic Regulation, on the basis of the
facts available.

Due to the high level of co-operation from Japanese producers/exporters it
was decided to establish the residual dumping margin at the level of the
highest dumping margin established for a co-operating company.

Expressed as a percentage of the CIF import price at the Community border,
the residual margin is 25.5 %.

2. Taiwan

(46)

Since the circumstances regarding dumping have changed significantly, the
Commission conducted a complete investigation, which led to the calculation
of new dumping margins.

Level of co-operation

(47)

Three companies replied to the questionnaire for producers/exporters.

One of the three companies was found to have only traded the product
this company had not
concerned to the Community. Considering that

14

produced the product sold to the Community, no individual assessment of its
situation with respect to dumping could be made.

Normal value

(48)

(49)

The procedures and methodologies followed by the Commission to assess the
normal value of products originating in Taiwan were the same as those used
for Japan and set out above, except where, in accordance with Article 18 of
the Basic Regulation, the facts available were used.

For both producers/exporters in Taiwan, it was found that the information
provided in the questionnaire response regarding domestic sales was
unreliable, since they failed to report a considerable number of sales of
LAECs subject
to the investigation. It was therefore decided for both
companies to base normal value on facts available in accordance with Article
18 of the Basic Regulation. For this purpose, it was decided to take account
of the amount of profit attributed to the non reported domestic sales by
applying the method described above for Japan.

(50)

On the basis of the method referred to above, it was possible for a certain
number of LAEC types sold for export to the Community, to establish
normal value on the basis of the domestic price of comparable types in
accordance with Article 2(2) of the Basic Regulation.

For all other LAEC types sold for export to the Community, normal value
had to be constructed.

Export price

(51)

(52)

The procedures and methodologies followed in assessing the export price of
products originating in Taiwan were the same as those used in the review on
Japan and set out above.

All sales of LAECs made by the Taiwanese companies on the Community
market were to independent importers in the Community. Consequently, the
export price was established by reference to the prices actually paid or
payable.

Comparison

(53)

(54)

For the purpose of ensuring a fair comparison between the normal value and
the export price, due allowance in the form of adjustments was made for
differences affecting price comparability in accordance with Article 2(10) of
the Basic Regulation.

Accordingly, allowances for differences in transport, handling, ancillary and
credit costs, have been granted where applicable and justified, namely when
the party concerned could demonstrate the effect of any alleged difference on
prices and price comparability.

15

Dumping margins

(55)

(56)

According to Article 2(11) of the Basic Regulation, the weighted average
normal value by type was compared with the corresponding weighted
average export price.

The comparison, as described above, shows the existence of dumping in
respect of all producers/exporters that co-operated with the Commission. The
dumping margins expressed as a percentage of the CIF import price at the
Community border are the following:

- Teapo Electronic Corporation: 8.1%

- Kaimei Electronic Corp.: 13.8%

(57)

In view of the high level of non co-operation, the residual dumping margin
was based on the highest dumped product for the company with the highest
dumping margin, expressed as a percentage of the CIF import price at the
Community border. It was considered that this was the most appropriate
method to avoid giving a bonus for non co-operation.

Expressed as a percentage of the CIF import price at the Community border,
the residual margin is 39.7%.

3. Republic of Korea

(58)

No company replied to the questionnaire for producers/exporters. In view of
this lack of co-operation, the dumping margin had to be established in
accordance with Article 18 of the Basic Regulation on the basis of the facts
available. In this respect it should be noted that the information available was
limited. As far as the export prices from the Republic of Korea were
concerned, statistical information was only available for a wider product
range. Moreover, since this product
is commonly sold by the domestic
producers/exporters directly to industrial users and not via traders it was not
possible to obtain reliable price information on the Korean domestic market.
It was therefore decided to take the highest dumping margin found for a
model sold in representative quantities in one of the other countries
concerned, i.e. Japan.

(59)

As a result,
the residual dumping margin for the Republic of Korea,
expressed as a percentage of the CIF import price at the Community border,
was set at 76.2%.

D. COMMUNITY INDUSTRY

1. Composition of the Community industry

(60)

The two reviews cover the same product and are based on data largely
pertaining to the same time periods. Therefore, it is considered appropriate to
investigate them simultaneously. Consequently, the same producers in the
Community constitute the Community production and the Community
industry in both reviews.

16

(61)

Four large producers of LAECs, i.e. BC components, BHC Aerovox Ltd.
(United Kingdom), Vishay Roederstein GmbH (Germany) and Siemens-
Matsushita Components GmbH & Co. KG (Germany), as well as some small
to medium-sized producers, were established in the Community.

Three producers supported the request for review on Japan: BC components,
BHC Aerovox Ltd. and Vishay Roederstein GmbH. However, the two latter
producers did not co-operate with the Commission and were, therefore, not
considered part of the Community industry.

(62)

(63)

(64)

As indicated above, BC components is a new company, incorporated after
taken over the activities of Philips
the end of the IP. It has, notably,
components BV in the manufacturing and sales of LAECs. This take-over
was made on a going concern basis,
the
manufacturing and sales of LAECs in the Community. Moreover, BC
components BV, expressed its support for both reviews.

in particular as

regards

Siemens-Matsushita Components GmbH & Co. KG (hereinafter “Siemens-
Matsushita”) and the other small and medium sized producers were not
among the producers which requested the review on Japan. Moreover, these
companies did not make themselves known after the publication of the
notices announcing the initiation of the reviews. Therefore, in accordance
with Article 5(4) of the Basic Regulation, these producers could not be
considered part of the Community industry.

One Japanese producer/exporter contested the fact that Siemens-Matsushita
was not contacted by the Commission and the fact that this company was
excluded from the Community industry. These claims could not be accepted
because, as stated above, further to the publication of the above notices,
Siemens-Matsushita did not make itself known as an interested party and did
not express any interest in co-operating. Also, it did not oppose its exclusion
from the Community industry.

In addition, available information indicated that Siemens-Matsushita is a
joint venture owned in equal parts by Siemens AG (Germany) and the
Matsushita Electric Industrial Ltd Group (Japan), a non co-operating
Japanese producer/exporter. Siemens AG holds control of the corporate
management and holds the casting vote in the event of a tied vote. Siemens-
Matsushita was reported not to have imported any LAECs originating in the
its own production of LAECs on the
countries concerned and to sell
through its 50%
Community market under
shareholding, the Matsushita Electric Industrial Ltd Group is clearly in a
position to exert control or restraint on Siemens-Matsushita. Available
information also indicated that Siemens-Matsushita benefited from the
shared know-how of its two shareholders.These two companies are therefore
related within the meaning of Article 4(2) of the Basic Regulation.

its own brand. However,

(65)

The important shareholding of Matsushita Electric Industrial Ltd in Siemens-
Matsushita and the above-mentioned shared know-how lead to the
conclusion that Siemens-Matsushita is in a fundamentally different position
in accordance with
as compared to that of BC components. Therefore,

17

(66)

(67)

(68)

Article 4 (1) (a) of the Basic Regulation, it was considered appropriate to
exclude Siemens-Matsushita from the definition of the Community industry.

It should finally be underlined that Siemens-Matsushita was already
excluded from the definition of the Community industry in the original
investigations concerning imports from Japan and imports from the Republic
of Korea and Taiwan. This approach has not been disputed in any of these
two investigations.

A number of Japanese producers/exporters claimed that BC components
should be excluded from the Community industry because, until the end of
the IP, companies which were related to it at that time, in particular Philips
Consumer Electronics BV, imported significant quantities of LAECs from
Japan.

that Philips Consumer
The Commission examined whether
Electronics BV imported LAECs from Japan was a sufficient reason to
exclude BC components, at that time the only LAECs manufacturer within
the Philips Group, from the Community industry.

the fact

It was found that almost all imports made by the Philips Group were not
destined for further resale, but were incorporated by Philips Consumer
Electronics BV in its own production of electronic products. Moreover, the
investigation revealed that the majority of these imports (more than 85%)
were of “radial” products either not yet produced by BC components or still
in a start-up phase of production. In these circumstances, Philips Consumer
by
Electronics BV had
producers/exporters in the countries concerned.

supplied

choice

other

but

no

be

to

It was also found that the remaining imports made by Philips Consumer
Electronics BV were products directly competing with BC components’
production and represented an insignificant share of the total imports into the
Community. It was also noted that Philips Consumer Electronics BV, despite
the above imports, was the biggest traditional customer of BC components,
since it represented approximately 40% of its total sales in the IP. The choice
of Philips Consumer Electronics BV to
by
producers/exporters in the countries concerned was made possible by the
structuring of the Philips Group into different profit centres which are all
independent and free to choose their suppliers, notably when it is necessary
to complete or supplement the range of products offered within the Philips
Group (as in the case of the “radial” LAECs).

supplied

partly

be

(69)

(70)

(71)

For the above reasons, the imports made by Philips Consumer Electronics
BV were considered as normal commercial behaviour until such time as fair
conditions of competition would be restored on the Community market.

BC components, represented a major proportion (41%) of the total estimated
Community production.

Based on Article 4(1)(a) of the Basic Regulation, the estimated production of
Siemens Matsushita was not taken into account in the determination of the

18

total Community production, for the purposes of the assessment of the
representativity of the Community industry. One co-operating Japanese
producer/exporter claimed that, had the estimated production of Siemens-
Matsushita been taken into account, BC components would not have had
sufficient standing to be representative of the total Community production.

However, it was found that even if the production of Siemens-Matsushita, as
established on the basis of the information submitted by the co-operating
parties had been included in the determination of the total Community
production, the Community industry would still have represented a major
proportion of
the Basic
Regulation.

this production, pursuant

to Article 5(4) of

(72)

It was therefore confirmed that BC components constituted the Community
industry in both reviews, within the meaning of Article 4(1) of the Basic
Regulation.

1. Community consumption

E. INJURY

(73)

(74)

Consumption was computed as the sum of the verified sales made by the
Community industry, an estimate of the sales made by the other producers
located in the Community and an estimate of the volume of imports into the
Community.

imports of LAECs could be obtained from Eurostat

In estimating the volume of imports, account was taken of the fact that the
CN code within which LAECs fall embraces other types of capacitors not
covered by the present reviews. Therefore, no precise figures concerning
total
statistics.
Consequently, the volume of imports into the Community was based on an
estimate provided by the Community industry. This estimate was adjusted,
for the countries concerned, to take account of the verified information
submitted by the co-operating producers/exporters concerned. This approach
was consistent with the one used in the original investigations.

(75)

On the above basis, consumption increased between 1993 and 1995, from
78.8 million units to 91 million units, then slightly declined to 87.9 million
units in the IP, but increased again to 90.8 million units in 1997. Overall
consumption increased by 12% over the period considered.

2. Imports on the Community market from the countries concerned

Cumulation of the dumped imports

(76)

In view of the updating of the product definition in the review on Japan, it
was considered appropriate to perform a full injury and causation analysis
with respect to the imports originating in that country. In addition, since the
review on Korea and Taiwan is being considered simultaneously with that on
Japan, it was examined whether the effects of the imports originating in all
the three countries concerned should be assessed cumulatively.

19

(77)

(78)

As stated above, the dumping margins found in respect of all these three
countries were above the de minimis level and the volume of imports
originating in these countries was significant during the IP.

As regards the conditions of competition, it was noted that the products
imported from all the countries concerned and the Community produced
products were alike in their basic physical and technical characteristics and
in their end uses and that they were sold through comparable sales channels.
The imported products and the Community produced products were therefore
competing with each other. It was also found that the average prices of such
imported products were all undercutting the Community industry’s prices
and were therefore exerting on the Community produced products similar
conditions of competition. Moreover, the average prices of the imports
subject to anti-dumping measures originating in all these countries also
showed a similar increasing trend over the period considered, as did the
average sales prices of the Community industry.

(79)

It was therefore concluded that, in accordance with Article 3(4) of the Basic
Regulation, the dumped imports from all the countries concerned should be
examined on a cumulated basis.

Volume and market share of the cumulated dumped imports

(80)

The volume of the cumulated dumped imports into the Community of LAEC
originating in Japan, the Republic of Korea and Taiwan increased by 11%
over the period considered, i.e. from 33.3 million units in 1993 to 37.1
million units in the IP. At the end of 1997, the cumulated imports peaked at
38.9 million units. The cumulated market share of these imports decreased
from 42.5% in 1993 to 36.6% in 1995 and then increased again to 42.2% in
the IP. At the end of 1997, this market share was 42.8%. Overall, the market
share of the cumulated imports remained stable.

Prices of the dumped imports

(81)

(82)

The investigation has shown that the average sales prices of the dumped
imports from the countries concerned were significantly below the sales
prices of the Community industry.

For the purposes of the determination of price undercutting, a comparison
was made, on a type-by-type basis, between the prices charged by the
producers/exporters concerned to unrelated importers in the Community or,
where applicable, the prices of the producers/exporters’ related importers to
the first independent customers in the Community, on the one hand, and the
prices of the Community industry to independent buyers, on the other. In the
absence of any co-operation from interested parties from the Republic of
Korea,
the undercutting levels were established by applying the same
methodology as for the dumping margin determination in respect to that
country, i.e. the highest undercutting level found for co-operating Japanese
producers/exporters. In the absence of reliable information from Eurostat
(see below), this was considered to be the best information available.

20

(83)

(84)

Imported and Community produced LAECs were compared on a type-by-
type basis. Types were identified on the basis of the following criteria which
basically influenced the sales prices and the customer’s purchasing decision:
the capacitance, the rated voltage, the operating temperature, the type of
terminal and the size. Where, on the basis of all these criteria, no identical
exported and Community produced types were found, closely resembling
ones were used. In this way, 40% to 70% of exports by producers/exporters
were covered.

The price comparison was made on the basis of a selection of transactions
representing approximately 95% of all transactions made by the Community
industry. The sales prices of the Community industry were adjusted, where
necessary, to ex-works level. For the comparison of sales prices of export
transactions made directly to unrelated customers, adjustments were also
made to the producers/exporters’ selling prices (CIF Community frontier) to
take account of customs duty paid (including anti-dumping duties, if any)
and an allowance in respect of post importation costs and profit. All prices
were compared on an average-to-average basis, after excluding all discounts
and rebates and at a comparable level of trade.

(85)

As a result of this comparison, the following significant weighted average
price undercutting margins, expressed as a percentage of the Community
industry’s prices, were found:

- Japan:

between 0% and 68.6%, on average 32.2%

- Taiwan:

between 0% and 60.0%, on average 30.6%

- Republic of Korea: 68.6%

3. Situation of the Community industry

Sales volume and market share of the Community industry

(86)

(87)

The volume of sales of the Community industry on the Community market
increased between 1993 and 1995 from an indexed 100 to an indexed 121,
and then decreased to an indexed 95 in the IP, i.e. an overall decrease of 5%
over the period considered. At the end of 1997, these sales increased to an
indexed 97, showing a decline of 3% compared to 1993.

The market share held by the Community industry decreased from an
indexed 100 in 1993 to an indexed 85 in the IP, i.e. a decline of 15%. This
market share remained stagnant at an indexed 84 at the end of 1997.

Production, capacity and capacity utilisation

(88)

Production by the Community industry increased between 1993 and 1995
from an indexed 100 to an indexed 123, then decreased to an indexed 98 in
the IP, and went up to an indexed 100 at the end of 1997. Although the
output decreased only slightly over the period considered, it decreased by
nearly 20% towards the end of it, i.e. between 1995 and the IP.

21

(89)

(90)

Stocks

(91)

Capacity increased by 25% between 1993 and 1995, remained stable through
1996 but then increased by a further 16% in the IP and remained stable at the
end of 1997. The increase in capacity between 1993 and 1995 was in line
with the development of consumption on the Community market over that
period of time. The increase in capacity in the IP was partly due to the
development of a new range of so-called “radial” LAECs.

Assessed in the light of the development of production and capacity, capacity
utilisation increased between 1993 and 1994, from an indexed 100 to an
indexed 109, but declined steadily thereafter to an indexed 70 in the IP and
an indexed 71 at the end of 1997.

The evolution of the stocks held by the Community industry showed an
irregular trend. These stocks increased between 1993 and 1995 from an
indexed 100 to an indexed 168, then declined in 1996 to an indexed 93 and
increased again in the IP, to an indexed 252. The number of days of sales
represented by the stocks held by the Community industry nearly tripled over
the period considered, from 13 days in 1993 to 37 days in the IP. However,
stocks decreased again at the end of 1997, to an indexed 113.

Evolution of sales prices of the Community industry

(92)

(93)

The average sales prices of the Community industry to unrelated parties
increased between 1993 and the IP by 16%. However, these prices declined
between 1995 and the IP by nearly 8%. During the same period, the average
prices of the dumped imports originating in Taiwan and the Republic of
Korea increased as well, by respectively 28% and 23%. The average prices
of the dumped imports originating in Japan remained overall stable between
1993 and the IP. However, while the prices of the products subject to anti-
dumping measures increased significantly, those of the products not subject
to such measures declined sharply, by approximately 40%.

The above evolution of the average selling prices of the Community industry
and that of the dumped imports has to be seen in the light of the substantial
increase in consumption during the period considered, the changes in product
mix between years, the wide diversity of different types of LAECs and the
corresponding diversity of sales prices, the introduction of new products on
the Community market, which tend to have a higher sales price than older
ones, as well as the effect of the imposition of previous anti-dumping
measures on Japan (1992) and on Taiwan and South Korea (1994).

Profitability

(94)

The financial results of the Community industry, expressed as a percentage
of net sales, showed a loss of close to – 6% in 1993. These results then
improved and in 1995 the Community industry recorded a profit of close to
6%. However, after 1995 the situation significantly deteriorated and it was
found that in the IP and at the end of 1997 the Community industry was
approximately at break-even point.

22

(95)

It should be noted that the increase in profitability between 1993 and 1995
coincided with the period of time immediately following the imposition of
anti-dumping measures on Japan and on the Republic of Korea and Taiwan.
It also coincided with a period of growing consumption. All this had positive
effects on the Community industry’s sales, both in volume and in value, and
on its production levels. On the other hand, the decline in profitability after
1995 should be mainly seen in the light of the Community industry’s decline
in sales and relative decline in average sales prices. The decline in sales
triggered a significant drop in production and a decline in the usage of
capacity installed, with a consequent
increase of unit costs, due to the
increased share of fixed costs in the unit cost of production.

Investments, employment and productivity

(96)

(97)

(98)

Yearly investments made by the Community industry increased between
1993 and 1996 from an indexed 100 to an indexed 576. Investments were
stopped in the IP. It should be noted that the investments made between 1993
and 1995 enabled the Community industry to increase capacity for the
production of new LAEC types and to improve overall performance.

Employment declined during the period considered by 22%, as a result of
higher efficiency and of a general restructuring, which was made necessary
by declining financial results after 1995. At the end of 1997, employment
levels were approximately at the same level as at the end of the IP.

Productivity of the Community industry, measured as output per person
employed, increased between 1993 and 1995 from an indexed 100 to an
indexed 128, essentially as a result of the decline in employment and the
increase in production levels. Productivity declined after 1995, due to the
strong decrease in production, but went up again in the IP, in view of the
continuous decline in employment. Overall, productivity increased by 26%
during the period considered.

Conclusion

(99)

Between 1993 and the end of the IP, at a time of growing demand on the
Community market (+ 12%), the Community industry has endured a drop in
sales volume (-5%), market share (-15%), production (-2%), capacity usage
(-30%) and employment (-22%).

the end of the IP,

Furthermore, at
the Community industry’s financial
situation, despite a brief improvement between 1993 and 1995, was still
unsatisfactory and largely insufficient to maintain investments and research
and development (a break-even situation was found for the IP).

(100)

The negative developments suffered by the Community industry occurred
primarily in the period between 1995 and the IP, when, in addition to a
significant
loss in sales volume, market share and output, profitability
declined from a profit of approximately 6% on turnover in 1995 to a break-
even situation in the investigation period.

23

(101)

(102)

The analysis of injury until the end of 1997, which was made to take account
of the end date of the investigation period for dumping in the review on
Korea and Taiwan, confirmed the above findings.

In the light of the foregoing analysis, the Commission concluded that the
Community industry suffered material injury within the meaning of Article
3(1) of the Basic Regulation.

F. CAUSATION OF INJURY

1. Effects of the cumulated dumped imports originating in Japan, the Republic
of Korea and Taiwan.

(103)

(104)

The decline in sales volume and market share suffered by the Community
industry during the period considered coincided with a very significant
increase in the cumulated dumped imports. Indeed, while the Community
industry saw its sales and market share declining by 5% and 15%
respectively,
increased by 11% and
maintained their market share.

the cumulated dumped imports

This evolution is even more striking when looking at the period during which
the Community industry suffered most strongly, i.e. between 1995 and the
investigation period. During that period, the Community industry’s sales
declined by 22%, while the volume of the dumped imports increased by
11%. The market share held by the Community industry decreased by 19%,
while the market share of the imports increased from 36.6% to 42.2%, i.e. by
15%. In a context of slightly declining consumption, the dumped imports not
only did not decrease, as could have been anticipated, but actually rose,
thereby taking sales volume and market share from the Community industry.

In addition, significant dumping and price undercutting was found in respect
of all countries considered. In view of the price sensitivity of the market and
its relative transparency, this undercutting caused the Community industry’s
sales to decrease. This decline, coupled with a decrease in sales prices,
caused a drop in profitability. Finally, as a result of the unsatisfactory
financial results, the Community industry had to suspend any investment
projects during the investigation period.

(105)

The evolution of the dumped imports also prevented the Community industry
from fully recovering from the past injury suffered at the time preceding the
imposition of anti-dumping measures on imports originating in Japan, the
Republic of Korea and Taiwan.

2. Other factors

(106)

injury suffered by the
The Commission examined whether the material
Community industry should not be attributed to factors other than the
dumped imports originating in the countries concerned.

24

Other imports

(107)

The market share of imports from third countries not concerned by these
reviews increased by 5.7% during the period considered. In particular, the
imports originating in the USA and Thailand increased significantly over the
period considered. Moreover, the prices of these imports were found to be,
on average, lower than the prices of the Community industry. Therefore, it
cannot be excluded that the imports originating in the USA and Thailand
contributed to the injury sustained by the Community industry.

(108) One of the Japanese producers/exporters claimed that imports originating in
Brazil were the main source for the injury suffered by the Community
industry. In support of this claim, statistics based on CN code 8532 22 00
were provided, which indicated a strong increase of imports from Brazil into
the Community over the period considered.

(109) However, as stated above, the CN code includes not only LAECs but many
other types of capacitors. No evidence was given that the statistics provided
related to LAECs only, nor was any evidence presented that such imports
were made at dumped and injurious prices. Finally, the available information
concerning total imports of LAECs into the Community appears to indicate
that imports from Brazil, if any, would be likely to be below de minimis
levels. The claim was therefore rejected.

Evolution of Community consumption

(110) One of the Japanese producers/exporters claimed that any injury suffered by
the Community industry was due to a general downturn in the economic
cycle of the LAEC market after 1995.

(111) Over the period considered, the Community consumption increased by 12%.
Despite this increase, the sales of the Community industry declined by 5%
and this industry lost market share (-15%). Between 1995 and the IP, the
Community consumption declined by 4%, while the sales of the Community
industry decreased by a much greater proportion (-25%). At the same time,
the cumulated dumped imports increased by 11%, despite the decline in
consumption, and, consequently, these imports gained market share (+ 15%)
Therefore, the injury suffered by the Community industry could not be solely
attributed to the decline in consumption between 1995 and the IP.

Performance of the Community industry

(112) One Japanese producer/exporter argued that

the injury suffered by the
Community industry was not due to the dumped imports, but resulted from
the
the relative inefficiency of the Community industry. In particular,
following comments were raised:

(113)

It was argued that the producers/exporters were more cost-efficient and more
productive than the Community industry and that this advantage in terms of
costs of production enabled these producers/exporters to sell LAEC at lower
prices.

25

However, without examining the issue as to whether the producers/exporters
concerned actually enjoyed any kind of cost advantage, the following must
be stressed. The increased imports made from the countries concerned by the
present reviews at dumped prices, even with anti-dumping measures in force,
prevented the Community industry from making full use of its production
capacity and thereby caused it severe injury. In these circumstances, it is
considered that, irrespective of any cost advantages, even if these were
accepted, this dumping of the exporters caused injury to the Community
industry.

(114)

It was further claimed that the Community industry was less advanced in
product innovation and miniaturisation than the producers/exporters in the
countries concerned and that, as a result of this, the Community industry's
product range was less attractive to customers.

The Commission compared the product ranges offered by the co-operating
parties. This comparison showed that, during the investigation period, the
Community industry’s product range was largely comparable in extension
the exporting producers. This included any
and features to that of
miniaturised types. The comparisons on a type by type basis which were
made for the purposes of the price undercutting calculations clearly indicated
a very large degree of overlap between the Community produced and the
imported products. Finally, it was also found that, as is the usual practice in
this industry, the Community industry was able to produce ‘special’ or
‘custom’ designs, according to specific needs of specific customers.
Therefore, the investigation did not identify any major differences in product
range between the Community industry and the producers/exporters
concerned, such as to justify any difference in attractiveness to the final
customers.

(115)

Finally, it was claimed that the Community industry sold over-specified
LAECs in terms of lifespan. This over-specification resulted in substantially
higher selling prices than the exporting producers concerned.

The results of the investigation have shown that the Community industry
manufactured LAEC in accordance with the specifications requested by their
customers. Moreover, it was found that the catalogue lifespan specifications
of the Community industry were not always based on the same criteria as
those of the producers/exporters, since different ways existed to express the
lifetime of LAECs (e.g. ‘total
life’, ‘endurance’, etc),
depending on the measurement criteria used. In this respect, no evidence was
provided that the alleged overspecification of the Community industry’s
products could not have resulted only from different criteria used to measure
the lifespan. Therefore,
the argument cannot be considered as being
substantiated and the allegations of these exporters cannot be accepted.

load life’, ‘test

Injury caused by the Community industry’s increased capacity and investments

(116)

It was noted that the Community industry increased capacity and invested at
a time, after 1995, when the market entered a downturn. However, it was
also established that the investments made after 1995, and the subsequent

26

capacity increase, were essentially related to the development of new state-
of-the-art “radial” capacitors. These investments did not represent more than
impact (i.e. additional depreciation and
1% of turnover. Their financial
additional interest charges) was almost
insignificant, compared to other
costs. In addition, a small profit was recorded on the sales of such new
“radial” products, which was, however, insufficient to compensate for the
losses incurred on other LAECs. Also, the sales of these new “radial”
products between 1996 and the IP avoided a further, even stronger decline in
the total sales of the Community industry.

Therefore, the investments made after 1995 and the subsequent increase in
capacity cannot be held responsible for the strong decline in profitability
which took place after
that date, especially when considering the
simultaneous decline in sales prices (- 8 %), due to the strong downwards
pressure exerted by the dumped imports.

3. Conclusion

(117) Although it cannot be excluded that the imports from other third countries, in
particular the USA and Thailand, and a slight reduction in Community
the cumulated dumped imports
consumption may have had an impact,
originating in Japan,
taken in
isolation, caused a material injury to the Community industry.

the Republic of Korea and Taiwan had,

(118)

This conclusion is drawn in particular in view of the decline in sales and the
loss in market share suffered by the Community industry, in a period of
increasing demand on the Community market, which coincided with an
increase in volume of the above-mentioned dumped imports, at prices which
significantly undercut
the Community industry’s prices. The unfair
competition from LAECs originating in the above countries also caused a
decline in the Community industry’s output and, between 1995 and the IP, a
relative decline in prices. The combination of these two factors resulted in a
significant drop in profitability during this latter period.

G. LIKELY EFFECTS OF THE REMOVAL OF THE ANTI-DUMPING
MEASURES

(119)

The possible effects of the removal of the anti-dumping measures currently
applicable to Japan, the Republic of Korea and Taiwan were examined.
Pursuant to Articles 11 (2) and (3) of the Basic Regulation, the following
elements were given particular attention: the effectiveness of the existing
measures and the likelihood of continuation or recurrence of dumping and
injury.

1. Effectiveness of the existing measures

(120) As explained above, the measures currently applicable on Japan cover a
narrower range of products than the review investigation. Consequently, the
analysis of the impact of the existing anti-dumping measures applicable on
the Japanese imports can only be performed for this narrower range of
products.

27

On the basis of the available information, it was noted that the volume of
imports originating in Japan subject
to anti-dumping measures declined
during the period considered by approximately 40% and that import prices
showed a steady increase over the period considered. As a result of these
trends, the market share of these imports declined from approximately 18%
in 1993 to approximately 9% in the investigation period.

the examination of the evolution of the volume of imports
Similarly,
originating in the Republic of Korea and Taiwan indicates a relative decline
over the period considered, which resulted in a consequent reduction in their
market share. Average import prices increased as well, although remaining at
injurious levels.

(121)

It can therefore be concluded that the measures in place where at least
partially effective in restoring fair conditions of competition on the
Community market.

(122) However, despite the anti-dumping measures in place,

the Community
industry continued to suffer material injury. This should be attributed to the
increasing amount of dumped imports originating in Japan, not subject to
anti-dumping measures and to changed circumstances as regards dumping
for the Republic of Korea and Taiwan. Indeed, the dumping margin for the
Republic of Korea increased since the original investigation, from 70.6% to
76.2%. The dumping margin for the sole Taiwanese producer/exporter which
co-operated in both the original and the review investigation concerning
Taiwan (Kaimei electronic Corp.) increased as well, from 10.7% to 13.8%.

2. Likelihood of continuation or recurrence of injury

(123) Actual material injury, caused by the cumulated dumped imports originating
in Japan, Taiwan and the Republic of Korea was established, despite the
existing anti-dumping measures. This provided sufficient evidence of a
strong likelihood of the continuation of injury should the anti-dumping
measures applicable to Japan, the Republic of Korea and Taiwan lapse.

(124)

In addition, as regards Japan, available information indicated that the co-
operating Japanese producers/exporters had still significant spare capacity to
increase their production and their exports into the Community, should the
existing measures lapse.

The review investigation also pointed to the existence of strong ties between
certain Japanese producers/exporters and certain producers/exporters located
in countries not subject to anti-dumping measures, including the USA and
Thailand. It was considered that, as a result of these relationships,
the
Japanese producers/exporters in question could pursue a global strategy,
especially since they sometimes sold in the Community through the same
sales channels as the US and Thai producers/exporters. The strong increase
in imports originating in these two latter countries during the period
renewed increased imports
considered,
originating in Japan, should measures lapse and hence the likelihood of the
continuation of injurious dumping.

reinforced the likelihood of

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H. COMMUNITY INTEREST

1. Preliminary remarks

(125)

In both the original investigations concerning Japan, the Republic of Korea
and Taiwan the Council concluded that no compelling reasons existed not to
impose measures. This conclusion was drawn, essentially, in view of the
negligible share of LAECs in the total costs of the end users (less than 1%).

The Commission examined whether there were any changed circumstances
since the original investigation which could lead to a different conclusion
concerning the Community interest. To this end, information was requested
from all
including parties in the upstream
industries, the Community producers, importers/distributors and the users. It
should be noted that no replies were received from the upstream industries.

interested parties known,

2. Likely effects of the anti-dumping measures on users

(126)

Two categories of users were identified

- The manufacturers of power supply devices. These power supplies are then
incorporated in finished consumer electronics goods,

- The manufacturers of finished electronics goods.

(127) As regards the manufacturers of power supplies, according to the information
available, this industry employs some 12.000 people and represents a total
turnover of approximately EUR 1.5 billion. Submissions were received from
a number of companies accounting for approximately 9% of total industry’s
turnover and employment and whose consumption of LAEC in the IP
accounted for approximately 5% of the total Community consumption,
according to available information. These companies argued that the existing
anti-dumping duties resulted in a significant increase in purchase costs. In the
longer run,
this increase in costs could force a significant number of
companies to de-localise production outside the Community, with a
consequent significant loss of employment.

However, the examination of the facts has shown that the cost of a LAEC
represents approximately 4% of the total cost of a power supply device. The
measures proposed would result in a negligible increase in costs (less than
1%). It was also found that
the weighted average profitability of the
companies which submitted information, expressed as a percentage of net
sales, was more than 18% in the IP. This profitability was attained despite
the anti-dumping measures in force and even increased between 1993 and the
IP.

(128) As regards the manufacturers of finished consumer electronics goods, the
costs of LAECs represent even less than 4% of total costs of production
(generally around 1%). The same conclusion can be drawn should the
LAECs presently not covered by anti-dumping measures also become subject
to such measures.

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(129)

Finally, no information was submitted to the Commission which would
indicate that users (power supply manufacturers or finished electronic goods
producers) had delocalised production outside the Community as a result of
the measures imposed on Japan, in the Republic of Korea and Taiwan. Any
the
risks of delocalisation resulting from the continuation and / or
amendment of the anti-dumping measures should be considered as being
unlikely.

3. Likely effects on importers and distributors

(130) On the basis of the available information,

the
continuation and / or the amendments of the anti-dumping measures would
only have a minimal impact on the importers and distributors of LAECs in
the Community, given that LAECs represented, on a weighted average basis,
a relatively small proportion of their total activities, in terms of turnover and
profit contribution.

it was concluded that

4. Conclusion on Community interest

(131) On the basis of the above elements, no changed circumstances as regards
Community interest were found which could lead to a different conclusion
than the one reached in the original investigations on Japan, the Republic of
Korea and Taiwan. It is therefore confirmed that no compelling reasons exist
which would indicate that it is not in the Community interest to renew anti-
dumping measures on imports of LAECs originating in Japan, the Republic
of Korea and Taiwan.

I. TERMINATION OF THE PROCEEDINGS

to Article 5 of

(132) As mentioned above in recital 0, a further proceeding, concerning LAECs
originating in the USA and Thailand was initiated in November 1997,
pursuant
the Basic Regulation. The Commission’s
investigationdefinitively established the existence of significant dumping and
injury on the Community industry resulting therefrom. No
material
compelling reasons where found indicating that new definitive measures
would be against the Community interest. Consequently, the Commission
proposed to the Council the imposition of definitive anti-dumping measures
on the imports of LAECs originating in the USA and Thailand. However, the
Council did not adopt the proposal within the time limits laid down in the
Basic Regulation. As a result, definitive measures were not imposed on
imports from the USA and Thailand and the provisional measures, which
entered into force in August 1998, lapsed on 28 February 1999.

(133)

The new investigation concerning the USA and Thailand and the two present
reviews were conducted, to a large extent, simultaneously. As indicated
above, basically the same conclusions in the present reviews have been
reached as in the new proceeding concerning the USA and Thailand, for the
same product concerned. These conclusions call in principle for amending
the definitive measures on imports from Japan, the Republic of Korea and
Taiwan.

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(134)

(135)

However, Article 9(5) of the Basic Regulation provides that anti-dumping
duties shall be imposed on a non-discriminatory basis on imports of a
product from all sources found to be dumped and causing injury.

Therefore, it is concluded that, in the absence of measures on the USA and
Thailand, the imposition of any measures on imports originating in Japan, the
Republic of Korea and Taiwan as a result of the present investigation would
be discriminatory towards these latter three countries.

In consideration of the above, in order to ensure a coherent approach and to
respect the principle of non-discrimination as set out in Article 9(5) of the
Basic Regulation, it is necessary to terminate the proceedings concerning
imports of LAECs originating in Japan, the Republic of Korea and Taiwan,
without the imposition of anti-dumping measures.

(136) One Japanese exporting producer claimed that the proceeding concerning
Japan should be retroactively terminated as from the date of initiation of the
present review, i.e. 3 December 1997, on the grounds that, while the review
on Japan was pending, imports originating in that country were still subject
to measures and were therefore discriminated against compared to the
imports originating in the USA and Thailand, for which no duties were
collected.

(137) However, as noted above in recital (132) above, between December 1997
and 28 February 1999 imports originating in the USA and Thailand were
subject to investigation, as were the imports originating in Japan.. The fact
that measures were in force against Japan but not against the USA and
Thailand over that period of time is merely a reflection of the fact that the
proceeding concerning the USA and Thailand was at a different stage, the
investigation being the initial investigation, whereas as regards Japan, the
measures in force were those imposed by Regulation 3482/92. In these
circumstances, no discrimination occurred because the situation of each
proceeding was different.

(138) Nevertheless, it is accepted that, from 28 February 1999 onwards, given the
considerations set out in recitals (132) to (135) above, imports originating in
Japan should be treated in the same way as those originating in the USA and
Thailand. The same is true for the Republic of Korea and Taiwan. The
investigation concerning the USA and Thailand had to be concluded by 28
February 1999, either by the imposition of measures or the termination of the
proceeding. The present investigation has reached similar conclusions to the
investigation concerning the USA and Thailand, and thus the same treatment
must be applied to the present proceeding.

(139)

Consequently, the proceedings concerning imports of LAECs originating
inJapan, the Republic of Korea and Taiwan, should be terminated without the
re-imposition of anti-dumping measures, with a retroactive effect as of 28
February 1999.

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HAS ADOPTED THIS REGULATION:

Article 1

The anti-dumping proceeding concerning imports of certain Large Aluminium
Electrolytic Capacitors originating in Japan is hereby terminated.

Article 2

The anti-dumping proceeding concerning imports of certain Large Aluminium
Electrolytic Capacitors originating in the Republic of Korea and Taiwan is hereby
terminated.

Article 3

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

It shall apply from 28 February 1999.

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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