Council Regulation (EC) No 2263/2000 of 9 October 2000 imposing a definitive anti-dumping duty on imports of black colorformers originating in Japan
Date: 2000-10-09
Institutions: Council of the European Union
Subjects: Japan, anti-dumping duty, anti-dumping legislation, import, originating product, pulp and paper industry

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(Acts whose publication is obligatory)

COUNCIL REGULATION (EC) No 2263/2000

of 9 October 2000

imposing a definitive anti-dumping duty on imports of black colorformers 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 Community (1), and in particular Article 9 thereof,

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

Whereas:

1. Initiation

A. PROCEDURE

(1)

(2)

(3)

(4)

(5)

On 24 July 1999, the Commission announced by two notices (the ‘notices of initiation’) published in
the Official Journal of the European Communities (2) the initiation of two anti-dumping proceedings with
regard to imports into the Community of, respectively, One Dye Black 1 (‘ODB-1’) and One Dye
Black 2 (‘ODB-2’) originating in Japan.

The proceedings were initiated following two complaints lodged in June 1999 by CEFIC (European
Chemical Industry Council) on behalf of Ciba Specialty Chemicals plc, representing the totality of the
Community production of respectively ODB-1 and ODB-2, two black colorformers. The complaints
contained evidence of dumping of the said products and of material injury resulting therefrom,
which was considered sufficient to justify the initiation of the proceedings.

2. Investigation

The Commission officially advised the complainant Community producer and its representative
association in the Community, the exporters, the producers, the importers, and the users known to
be concerned and the representatives of the exporting country concerned of the initiation of the
proceedings. Interested parties were given the opportunity to make their views known in writing and
to request a hearing within the time limit set out in the notices of initiation.

One exporting producer in the country concerned, as well as the Community producer, made their
views known in writing. All parties who so requested within the set time limit and who indicated
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 other parties that
made themselves known within the time limits set out in the notices of initiation. Replies were
received from the sole Community producer, six users of ODB-1 and/or ODB-2, a group of
importers related to a Japanese exporter and two companies located in Japan.

(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 C 213, 24.7.1999, pp. 2 and 3.

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(6)

(7)

(8)

(9)

(10)

(11)

(12)

None of the exporting producers cooperated in the investigation. Therefore, and pursuant to Article
18(1) of Council Regulation (EC) No 384/96 (the ‘basic Regulation’), findings were made on the basis
of the facts available. In the absence of a proper reply and in accordance with Article 16(1) of the
basic Regulation, no verification visits were carried out at the premises of any exporting producers or
related importers.

The Commission sought and verified all the information it deemed necessary for the purpose of a
determination of injury and Community interest. Verification visits were carried out at the premises
of the following companies:

(a) Community producer

— Ciba Specialty Chemicals plc, Macclesfield (United Kingdom)

(b) Users in the Community

— Jujo Thermal Ltd, Eura (Finland)

— Torraspapel SA, Barcelona (Spain)

— Zanders Feinpapiere AG, Bergisch Gladbach (Germany).

The investigation of dumping and injury covered the period from 1 July 1998 to 30 June 1999
(‘investigation period’ or ‘IP’). The examination of trends relevant for the determination of injury
covered the period from 1 January 1996 to the end of the investigation period (‘period considered’).

3. Clarification/extension of the product scope

During the preliminary investigations it was found that there were black colorformers other than
ODB-1 and ODB-2 which appeared to share the same basic chemical and physical characteristics and
appeared to overlap in their use (namely coating paper for use as carbonless copy paper (‘carbonless
image applications (‘thermal paper’)).
paper’) or paper for thermal

Therefore, after consulting the Anti-Dumping Committee, the Commission deemed it necessary to
publish on 1 April 2000, a notice in the Official Journal of the European Communities (1) relating to the
product scope of the anti-dumping proceedings, to cover all black colorformers for use in paper
coating applications (‘black colorformers’),

in order to investigate this matter further.

The complainant Community producer and its representative association, the exporters, the produ-
cers, the importers, the users known to be concerned as well as the representatives of the exporting
country were officially informed of the clarification/extension of the product scope of the proceed-
ings. Interested parties were given the opportunity to make their views known in writing and to
request a hearing within the time limit set out in this notice.

The Commission sent further questionnaires to all parties known to be concerned and to all other
parties who made themselves known within the time limit set out in the notice. Replies to these
questionnaires were received from the sole Community producer, one importer related to an
exporter, three Japanese companies and six users of black colorformers.

(13) At this stage again, none of the Japanese exporting producers cooperated in the investigation.
Consequently, pursuant to Article 18(1) of the basic Regulation, findings were made on the basis of
the facts available for Japan as a whole and no verification visits were carried out at the premises of
the exporting producers or related importers in accordance with Article 16(1) of the basic Regula-
tion.

(14)

The Commission further sought and verified all the information it deemed necessary for the purpose
of a determination of injury and Community interest, including carrying out a verification visit at the
premises of the following user in the Community:

— Papierfabrik August Koehler AG, Oberkirch (Germany).

(15) One interested party argued that the proceedings could not be extended to cover all black colorfor-
mers originating in Japan because complaints were filed only in respect of ODB-1 and ODB-2
without mentioning other colorformers although the Community industry could not have been
ignorant of their existence.

(1) OJ C 94, 1.4.2000, p. 5.

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(16)

The definition of the product scope of an anti-dumping proceeding is not the prerogative of the
complainant. Rather, the product has to be defined in accordance with the applicable law, as
embodied in the practice of the Commission and the Council and confirmed by the case-law of the
European Court of Justice. In the present case, complaints were lodged respectively for ODB-1 and
ODB-2 originating in Japan, providing prima facie evidence of dumping and resulting injury to the
Community industry. However, the information gathered in the course of the investigations, which
were initiated on the basis of these complaints, showed that both proceedings should be merged and
the product scope of the resulting single proceeding extended to cover all black colorformers for use
in paper-coating applications. This was due to the fact that all these black colorformers appeared to
share the same basic physical and chemical characteristics and overlap in their use. Furthermore, the
prima facie evidence on dumping and resulting injury contained in the original complaints and
relating to only two types of black colorformers was considered sufficiently representative for all
black colorformers, in view of the significant share of the Community market held by these two
types. In terms of due process, the rights of the parties concerned were respected since they were
informed by means of a notice published in the Official Journal of the European Communities and had
all the opportunities to make themselves known and to provide comments or request hearings.

B. PRODUCT

1. General

(17)

Black colorformers constitute a specific group of fluoran colorformers which, when used to coat
paper for the production of carbonless paper or thermal paper generate by their own properties a
black image on the paper without having to be mixed with other colorformers.

(18) On the basis of the information submitted by all parties, different types of black colorformers exist,
such as Black 15, Black 100, Black 303, Black 305, Black 500, CF 51, ETAC, Fuji Black, ODB-1,
ODB-2, ODB-7, PSD 150, PSD 184, PSD 300A, S-205 and TH 107. This list of product types is not
exhaustive since new product types appear on the market regularly. However, it should be noted that
the main types representing over 90 % of total Community consumption in the IP are ODB-1,
ODB-2, Black 15 and S-205.

(19)

is then washed,

The investigation has shown that all black colorformers share the same basic chemical characteris-
tics, i.e. the same basic molecule (C26H16N2O3). The basic molecule is the result of condensing a
benzophenone keto type acid in sulphuric acid with a substituted diphenylamine. The resulting
phtalide product
to the basic molecule, different
isolated and purified. Next
substituents are attached on the ring system (R1-R5). The colorforming reaction is conferred on the
paper by the basic chemical molecule, in a reaction where, the application of heat or pressure opens
up the ring in the basic molecule. This leaves a residual positive charge which is delocalised around
the ring system. The energy required to allow this delocalisation is absorbed from incident visible
radiation giving the compound its black colour. In this respect, the nature of the colorforming
reaction is unaffected by the substituents on the ring system. These substituents only lead to a variety
of minor differences and specific properties of the final paper product (background whiteness,
resistance to temperature changes,

image stability).

(20)

Furthermore, all black colorformers share the same basic physical characteristics, in that they are a
white or lightly coloured, free-flowing powder.

(21)

Finally, all black colorformers have the same basic use. Black colorformers are used to coat paper in
order to produce carbonless paper and/or thermal paper. In order to coat paper the black colorfor-
mers are mixed with other chemicals into a ‘recipe’ which is particular to each paper producer and
varies according to each type of colorformer used. The information provided by cooperating users
shows that there is a large interchangeability between the different types of black colorformers to
produce either carbonless paper and/or thermal paper. Furthermore, users have also switched black
colorformers within a short period of time to produce the same end paper product.

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2. Product under consideration

(22)

The product under consideration is black colorformers originating in Japan. As described above, all
types of the product concerned share the same basic physical and chemical characteristics and
overlap in their use to coat paper to produce carbonless paper and/or thermal paper. Consequently,
they are to be considered as one single product for the purpose of this investigation, i.e. the product
under consideration.

(23) One interested party argued that ODB-1/ODB-2 and S-205 do not share the same basic chemical
characteristics. It was argued that the substituents R1 and R2 are different between ODB-1/ODB-2
and S-205 and that this alters significantly the characteristics of S-205 as compared to ODB-1/ODB-
2. It should be noted that this party did not specify which characteristics were meant.

(24)

The investigation has shown that S-205 and ODB-1/ODB-2 share the same basic chemical character-
istics, i.e. the same basic molecule (see recital 19) and generate without having to be mixed with
other colorformers a black image on the coated paper. As to specific characteristics conferred by
different substituents R1 and R2, it should be noted that users have been found to produce the same
paper product by using indifferently ODB-1/ODB-2 or S-205, suggesting therefore that the different
characteristics conferred on the paper by the use of different types of black colorformers, if any, are
generally minor. In addition, another interested party while stating that each type of black color-
former contains different additional features did not however dispute the fact that the basic chemical
characteristics are the same.

(25) As to the interchangeability, the same interested party stated that ODB-1 is in general not used for

the production of thermal paper.

(26)

(27)

The investigation, however, revealed that at least two users in the Community use ODB-1 for the
production of thermal paper. The same user also stated that in the production of carbonless paper,
ODB-1, ODB-2 and S-205 are interchangeable. Furthermore, one user switched from ODB-1 to
ODB-2 in 1998 and then to Black 15 in the IP for the production of carbonless paper.

The same interested party also argued that thermal paper could be produced on the basis of either
ODB-2 or S-205. However, the characteristics and quality of the finished product varied. It was
further stated that for end customers, paper products manufactured using S-205 were not inter-
changeable with paper manufactured with other types of black colorformers, which, it was claimed
were of lesser quality,

less resistant to ageing and providing for less stable printing.

(28) Given the fact that at least six users are producing thermal paper using types of black colorformers
other than S-205 and that within thermal paper production there are standard products such as fax
paper, this argument cannot be accepted. Furthermore, one exporting producer and its related
importer stated that if the price of ODB-2 were to increase, a change from ODB-2 to S-205 would
take place and that S-205 was interchangeable with ODB-2.

(29)

(30)

Two interested parties argued that a change in black colorformer would require users to make a
change in the technology employed, in particular a change in the recipe or formulation. Therefore, it
was argued that it was not possible to immediately switch types of black colorformer without
significant technical and economic costs. It was therefore argued that each type of black colorformer
was one single product.

It should be noted that the notion of the same or a similar end use of the product covered by the
proceeding does not necessarily entail that every user should be able to switch from the use of one
type of the product in question to another without carrying out certain adaptations. In this case it is
clear that the change of type of black colorformer entails a change in the recipe. It should be noted,
however, that the need to change the recipe does not constitute an economic or technical deterrent
to the substitution, as evidenced by past switches from one type to another by users. In any event,
users themselves have indicated that the production line, production procedure and know-how do
not have to be changed substantially when switching types of black colorformers.

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(31)

In view of the above, it is concluded that all types of black colorformers originating in Japan should
be considered as one product,

i.e. the product under consideration.

3. Like product

(32)

(33)

(34)

(35)

(36)

(37)

It was found that the product under consideration and the black colorformers manufactured and
sold in the Community by the Community industry (as defined at recital 61) shared the same basic
chemical and physical characteristics and the same uses as those originating in Japan and exported to
the Community. The same was found to be the case for the black colorformers produced and sold
on the domestic market of Japan, which were alike to the product under consideration.

It was argued that since the Community industry only produces two types of black colorformers, i.e.
ODB-1 and ODB-2, the product under consideration should be limited only to those types produced
by the Community industry.

It should firstly be noted that, in anti-dumping proceedings, the product under consideration and the
like product are defined by reference to its basic physical, chemical and/or technical characteristics
and its basic use. Once the product under consideration is defined, i.e. the product exported from
Japan, it has to be examined whether the product produced and sold domestically, and the product
produced and sold by the Community industry in the Community are like products to the product
under consideration. In this respect, the fact that a certain product type is not produced in the
Community is irrelevant.

Furthermore, a limitation of the product coverage and eventually of anti-dumping measures to only
the types produced by the Community industry in the present case, would ignore the fact that the
behaviour of exporters of non-Community produced types have an influence on the Community
industry because their respective products are alike. Indeed, such a limitation could ultimately lead
users to switch to such types of colorformers not covered by the investigation, and would thus
render any anti-dumping measure inefficient. Users have quoted price differences between 5 % and
15 % as sufficient to motivate a switch of type of black colorformer.

It is therefore concluded that the black colorformers produced and sold by the Community industry
on the Community market and those sold on the domestic market of Japan are like products to the
product under consideration within the meaning of Article 1(4) of the basic Regulation.

In view of the conclusion that all black colorformers are one single product, the original proceedings
concerning respectively ODB-1 and ODB-2 are merged and it is confirmed that the product scope of
the resulting proceeding covers all black colorformers. A single analysis of dumping and resulting
injury as well as Community interest has therefore been undertaken.

C. DUMPING

1. Cooperation

(38)

The complaints identified three Japanese producers of ODB-1 and ODB-2. A fourth company was
identified in the preliminary investigations as exporting S-205. None of the four companies cooper-
ated in the investigation.

(39) Nippon Soda Co. Ltd declared, upon initiation and after extension/clarification of the product scope,

that it would not reply to the questionnaires.

(40) Hodogaya Chemical Co. Ltd (‘Hodogaya’) completed both questionnaires for producers/exporters of
ODB-1 and ODB-2 and the questionnaire for producers/exporters of black colorformers. The
information submitted did however not allow individual determinations in respect of this company.
Hodogaya was given disclosure of this issue and did not raise any comment.

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(41)

(42)

(‘Yamamoto’) did not reply to the main part of the questionnaires
Yamamoto Chemicals Inc.
intended for producers/exporters of ODB-1 and ODB-2. Replies were only received for the part of
the questionnaires labelled ‘questionnaire intended for related companies involved in sales of the
product concerned’ from a group of trading companies (the ‘Mitsui group’) (1). Indeed, Yamamoto
declared that all its sales on the Community market were handled by the Mitsui group and only
claimed for an individual determination in respect of export prices and injury margin. In response to
the questionnaire regarding black colorformers, Yamamoto only presented a supplementary submis-
sion on injury and Community interest. In view of the above, no individual determination of
dumping could be reached for this company.

Yamada Chemical Co. Ltd (‘Yamada’) and its related company Fukui Yamada Chemical Co. Ltd
(‘Fukui Yamada’) submitted materially incomplete replies to the questionnaire for producers/exporters
of black colorformers. The companies were duly informed and given an opportunity to provide
further explanations in accordance with Article 18(4) of the basic Regulation. The companies were
informed that, in the absence of a satisfactory response, the information submitted was insufficient
to make any individual determination. Notably, the corporate structure of these companies could not
be ascertained as the companies accepted disclosure of the identity of one of their shareholders only;
no information was submitted on the production process and cost of production; access to the
audited accounts or other financial statements was refused to the Commission on the grounds of
company business secrets. On 13 and 17 July 2000, more than two months after the deadline for
replying to the questionnaire, Yamada/Fukui Yamada submitted information on the costs of produc-
tion of S-205 and their financial statements for three financial years. These submissions, which were
made well beyond any prescribed time limit, could not change the legal assessment that these
companies were not cooperating in the investigation. The submissions were equally not capable of
being used as information available within the meaning of Article 18 of the basic Regulation as they
were received at an advanced stage of the investigation and could not reasonably be given due
consideration.

(43) No other producer exporting the product concerned to the Community made itself known within

the relevant time limits.

(44) On 17 and 18 July 2000, a Japanese exporter, Nagase & Co. Ltd, made for the first time two
submissions. These submissions, made well beyond any prescribed time limit, could, however, not
compensate for the initial non-cooperation of the company. Neither could the cooperation of its
related company in Germany, which made itself known and cooperated in the investigation as an
independent importer. The submissions of Nagase & Co. Ltd could equally not be used as informa-
tion available within the meaning of Article 18 of the basic Regulation as they were received at an
advanced stage of the investigation and could not reasonably be given due consideration.

(45)

In the absence of cooperation from the exporting producers, findings in respect of dumping were
made on the basis of the facts available for Japan as a whole pursuant to Article 18(1) of the basic
Regulation. According to the information available, the vast majority of imports of black colorfor-
mers originating in Japan consist of ODB-1, ODB-2 and S-205. It was therefore concluded that any
finding of dumping based on these three product types would be reasonably representative for the
imports of the product concerned.

2. Normal value

(46)

In respect of ODB-1 and ODB-2, given the absence of any cooperation, the complaints were the only
source of information available. The complaints estimated the normal values on the basis of
domestic prices. The incomplete questionnaire responses did not contain any information either on
domestic sales or on costs of production.

(1) These answers were submitted by Mitsui & Co. Ltd in Japan and its related importers (Mitsui & Co. Deutschland
GmbH, Mitsui & Co. UK plc, Mitsui & Co. España SA, Mitsui & Co. Scandinavia AB (Sweden) and Mitsui & Co.
France SA (the ‘Mitsui group’). It was declared that Mitsui & Co. Ltd purchased from Yamamoto.

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(47)

In respect of S-205, the only information available was the questionnaire reply submitted by
Yamada/Fukui Yamada. These domestic sales were considered representative because they accounted
for more than 5 % of the sales volume to the Community. In the absence of information on the cost
of production of S-205, this latter was estimated on the basis of the information submitted in the
complaints in respect of ODB-1 and ODB-2. On this basis, the transactions reported by Yamada
appeared profitable. Accordingly, normal value for S-205 was established as the weighted average
price of all domestic sales to independent customers declared by Yamada for the IP.

3. Export price

(48)

The export prices for the three product types were determined as follows:

3.1. ODB-1

(49)

The export price was determined on the basis of the information provided by the Mitsui group and
Eurostat.

(50) As far as information from the Mitsui group is concerned, it should be noted that all companies
belonging to the group were found to be related. Pursuant to Article 2(9) of the basic Regulation,
prices of sales between them were disregarded for not being reliable and use was made of the prices
at which the imported ODB-1 was first resold to an independent buyer. These prices were adjusted
to take into account all costs incurred between importation and resale, including taxes, customs
duties, the selling, general and administrative expenses of each related company, which intervened
between the importation and the resale to the independent customer and a 5 % profit on turnover.
In the absence of any cooperation from an independent importer in the Community, the 5 % profit
corresponds to the profit margin considered as reasonable in a previous case dealing with a chemical
product (1).

(51) As ODB-1 fell under a specific TARIC code during the IP, the value and quantity of the remaining
sales on the Community market were established by deducting the quantity and cif values of the
exports declared by Mitsui & Co. Ltd (Japan) for the IP from the respective totals as established by
Eurostat statistics.

3.2. ODB-2

(52)

The export price was determined on the basis of the information provided by the Mitsui group and
in the complaint.

(53) As regards prices of the ODB-2 exports declared by the Mitsui group, the methodology set out in

recital 50 was followed.

(54)

For the remaining sales, Eurostat data were not a reliable source of information as the TARIC code
under which imports of ODB-2 are declared also includes other chemicals and ODB-2 represents
only a fraction of the import volume declared under this heading. This is confirmed by the fact that
the average unit cif value was considerably lower compared to the average cif export price estimated
in the complaint and to the data submitted by the companies of the Mitsui group. Therefore the
quantity and value of the remaining imports of ODB-2 were established by deducting the quantity
and cif value of the exports declared by Mitsui & Co. Ltd (Japan) for the IP from the respective totals
as estimated in the complaint since there was no other information available.

3.3. S-205

(55)

Fukui Yamada declared that it supplied all products to Yamada, which in turn used a Japanese
independent trader to export S-205 to the Community. The export prices submitted corresponded to
the cif prices invoiced by this trader to a related company in the Community. These prices were
consequently disregarded for not being reliable and use was made of the purchase prices submitted
by the first independent buyers in the Community. These prices were adjusted to take into account
all costs incurred between importation and resale and the 5 % profit margin on turnover.

(1) See Commission Regulation (EEC) No 2172/93 of 30 July 1993 imposing provisional anti-dumping duties on imports
of ethanolamine originating in the United States of America (OJ L 195, 4.8.1993, p. 5) and Council Regulation (EC)
No 229/94 (OJ L 28, 2.2.1994, p. 40).

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4. Comparison

(56)

For the purpose of a fair comparison between the normal values and the export prices at an
ex-works level, due allowances in the form of adjustments were made for differences that affected
price comparability. These adjustments were made by reference to Article 2(10) of the basic
Regulation in respect of commissions, transport, insurance, handling, loading and ancillary costs
using information submitted in the complaints (for ODB-1 and ODB-2) and by Yamada (for S-205).

5. Dumping margin

(57) According to Article 2(11) of the basic Regulation the weighted average normal values were

compared to the weighted average export prices for each of the three product types.

(58)

Pursuant to Article 2(12) of the basic Regulation, a weighted average of the dumping margins per
type was established and considered representative of the level of dumping on all black colorformers
originating in Japan.

(59)

Expressed as a percentage of the cif Community frontier value of the imports, the dumping margin
so established is 49,8 %.

D. COMMUNITY INDUSTRY

(60)

Ciba Specialty Chemicals plc was the sole Community producer of black colorformers in the
Community during the IP.

(61)

Therefore, this company constitutes the ‘Community industry’ pursuant to Article 4(1) of the basic
Regulation.

E. INJURY

1. Preliminary remarks

(62) As indicated above, the examination of trends relevant for the determination of injury covered the

period from 1 January 1996 to the end of the investigation period.

(63) One interested party argued that the time period chosen was unrepresentative and disproportionate
and that the analysis should start in 1992, the year when the complainant started its production of
black colorformers in the Community.

(64)

Firstly, it should be noted that it is normal practice in anti-dumping proceedings to use a time period
of between three and five years to examine the evolution of the situation of the Community industry.

(65)

Secondly, it should be noted that injury as well as dumping has to be ascertained for the IP. The time
period prior to the IP merely serves as an indicator of the evolution of the situation of the
Community industry to determine whether the situation during the IP can be classified as injurious.
In this respect, the finding of injury suffered by the Community industry during the IP would have
been reached regardless of the starting point taken.

(66)

In view of the above, it is not considered justified to extend the period used for the analysis of trends
in the context of injury.

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2. Community consumption

(67)

In the absence of any cooperation from exporting producers and in view of the imprecise nature of
Eurostat information on imports, Community consumption was determined on the basis of the
volume of sales reported by the Community industry on the Community market, imports originating
in Japan and in the USA as provided by cooperating users and information provided by the
Community industry in the complaints.

(68)

Between 1996 and 1998 consumption increased by 18 % as a result of the increase in the
production of thermal paper. Between 1998 and the IP consumption decreased slightly by 1 %. This
decrease is explained by the withdrawal of two Community users from paper production.

3. Imports originating in Japan

3.1. Volume and market shares of the imports concerned

(69) Given the lack of cooperation from exporting producers and the imprecise nature of Eurostat
information on imports, these have been based on the information available, i.e. the information
provided by cooperating users and information given by the Community industry in the complaints.

(70) On this basis, the volume of imports of the product under consideration has risen continuously from
(index) 100 in 1996 to 123 in 1997, 131 in 1998 and 141 in the IP, i.e. an increase of over 40 %.
This increase is also reflected in the market share of the product under consideration which went
from 36,0 % in 1996, to 41,7 % in 1997, to 40,0 % in 1998 and to 43,4 % in the IP.

3.2. Prices of the imports concerned

(a) E v o l u t i o n o f

t h e p r i c e s o f

t h e i m p o r t s c o n c e r n e d

(71)

The average unit prices of all black colorformers imported from Japan, based on the information
provided by co-operating users and one importer, expressed in ECU/EURO per kg decreased by 19 %
over the period considered. Prices decreased from ECU 24,9 per kg in 1996 to ECU 22,1 per kg in
1997 and then to ECU 21,6 per kg in 1998 and further decreased to ECU/EUR 20,2 per kg in the
IP (1). Prices of various types of black colorformers have continuously decreased over the period
considered albeit to a different extent: average ODB-1 prices decreased by 13 % over the period
concerned whereas average ODB-2 prices decreased by 19 % and average S-205 prices by 15 % over
the same period (2).

(b) P r i c e u n d e r c u t t i n g

(72)

The Community market for black colorformers is characterised by a reduced number of suppliers
and a limited number of users. In this market, the price setting takes place via a system of price
quotations whereby the users ask for prices from all suppliers and further negotiations are based on
the prices offered by the suppliers.

(1) Prices between 1996 and 1998 do not include Black 15, since no user has reported imports of that type. In any
event, even if prices of Black 15 are excluded for the IP, the average price for the IP amounts to 20,28 EUR/kg.
(2) No user has provided information on imports of Black 15 originating in Japan between 1996 and 1998, but only for

the IP. Therefore no price evolution could be established for this type.

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(73) Given the above, price undercutting has been examined on the basis of the price negotiations
between the suppliers and the Community users. In the absence of cooperation from the Japanese
exporting producers, the analyses of the price undercutting has been based on the information
provided by the Community industry with reference to price negotiations representing around 50 %
of the total sales of the Community industry. Where possible, this information has been verified by
reference to cooperating users.

(74) As regards ODB-1, price negotiations have been examined for transactions representing around 45 %
of the Community sales of ODB-1 in the IP. On that basis, it was found that the price initially offered
by the Community industry was subsequently undercut by a Japanese offers in a range of 5 % to 8 %
when comparing the initial offer with the final price agreed.

(75)

(76)

Regarding ODB-2, price negotiations have been examined for transactions representing around 70 %
of the Community sales of ODB-2 in the IP. The same pattern was observed as regards this type of
black colorformer, with undercutting margins ranging between 1 % to 5 %.

This situation clearly reflects not only the extent to which Community industry's sales prices have
been undercut by the prices of the product under consideration within the process of price
quotations, but also the depressive effect of the dumped imports on the sales prices of the
Community industry, as it has been established that the low prices of the quotations necessarily
influence all prices negotiated in follow-up transactions for the same customer.

(77)

In conclusion, the price pressure exerted by the Japanese offers and transactions on the Community
market has forced the Community industry to align its prices thereto. This caused a price depression
of around 3 % to the Community industry between 1998 and the IP.

(78) One interested party argued that the methodology used to examine price undercutting was erro-
neous. It alleged that the initial bid in a commercial negotiation rarely represents a commercial price
level, rather such bid is often set too high since the party making the bid knows that it will be
reduced in the negotiation process.

(79) According to the information provided by the Community industry, the initial bids quoted by the
Community industry corresponded to the price level agreed with the respective customers in the
previous price negotiations. It should furthermore be noted that this price was already one which
yielded an insufficient return for the Community industry. It is therefore concluded that the initial
bid used to examine price undercutting is not erroneous.

4. Situation of the Community industry

4.1. General considerations

(80)

In accordance with Article 3(5) of the basic Regulation, the examination of the impact of the
dumped imports on the Community industry included an evaluation of all relevant economic factors
and indices having a bearing on the state of the industry including a decline of sales, profits,
production, market share, productivity, return on investments, capacity utilisation, factors affecting
Community prices, cash flow, inventories, employment, wages, growth, ability to raise capital or
investments. It should be noted that not any one or more of these factors necessarily gives decisive
guidance.

4.2. Production, capacity, capacity utilisation and inventories

(81)

Production increased by 19 % between 1996 and 1997, coinciding with an increase in consumption.
It decreased by 2 % between 1997 and 1998 and further decreased by 18 % between 1998 and the
IP. This decrease coincided with a small decrease in consumption and a severe drop in sales in the
same period.

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(82)

Production capacity should be seen in the light of the fact that the same production facilities are used
to produce both black colorformers and colour colorformers. Therefore, production capacity for
black colorformers has been estimated by deducting from the demonstrated capacity of
that
production line the production of colour colorformers.

(83) Accordingly, the capacity utilisation rate evolved from 72 % in 1996 to a peak of 79 % in 1997

before dropping to a level of 69 % in 1998 which was maintained during the IP.

(84) When analysing inventories, it should be noted that black colorformers are produced to order and
that therefore inventories are goods awaiting despatch to customers. In this context, therefore, the
evaluation of inventories does not appear to be relevant for the examination of the economic
situation of the Community industry. However, for the sake of completeness the evolution of
inventories is analysed below.

(85)

(86)

(87)

(88)

The Community industry's closing inventories decreased by 58 % between 1996 and the IP, reaching
a peak in 1997 and returning to the 1996 level in 1998. In relation to the total production volume
of the Community industry, closing inventories have decreased by 58 % over the period considered
as well, namely inventories represented 20,7 % of total production volume in 1996 and 8,7 % in the
IP.

The decrease in inventories in the IP was due to the introduction of an inventory reduction project.
Furthermore, three factors contributed to the decrease in the inventory of finished goods: actual
orders were better in line with sales forecasts; milling of products created a bottleneck in 1999
which led to a build up of inventories of semi-finished products (unpacked black colorformers) and
therefore lower inventories of finished goods and finally in June 1999 the American sales organ-
isation of the Community industry started to build up inventories in the United States of America
and therefore the dispatches to the United States of America led to a reduction in Community
inventories.

4.3. Sales volume, market share and growth

Sales of the Community industry to unrelated parties in the Community decreased by 5 % over the
period considered. Sales volume decreased by 2 % between 1996 and 1997. Between 1997 and
1998 sales increased by 15 %, in line with the evolution of consumption. Sales decreased sharply
between 1998 and the IP, whereas consumption dropped only slightly (decrease of 1 %).

The resulting market share of the Community industry decreased from 45,0 % in 1996, to 41,6 % in
1997 then slightly increased to 43,1 % in 1998 and decreased again to 36,5 % in the IP. Therefore,
despite a significant growth in the consumption of black colorformers in the Community, the
Community industry has not been able to benefit from it. This overall decrease in market share for
the Community industry is matched by a similar increase of market share by the product under
consideration. It is important to note that despite a growth in the overall consumption of black
colorformers of 17 % over the period considered, the Community industry did not benefit from
increased sales. To the contrary, the Community industry lost sales volume (5 % decline) and market
share over the same period.

4.4. Sales prices and factors affecting sales prices

(89) Unit prices of the product concerned sold by the Community industry on the Community market
decreased by 16 % in total over the period considered. After a decrease of 6 % between 1996 and
1997 prices decreased by a further 7 % between 1997 and 1998, followed by a further decrease of
3 % between 1998 and the IP.

(90)

Regarding factors affecting sales prices, cost of production has been examined. The cost of manufac-
turing decreased by 8 % between 1996 and the IP, mostly due to the decrease in the price of raw
materials which account for [between 60 % and 75 %] (1) of the total cost of production. The total
cost of production decreased by 7 %.

(1) Actual figures indexed for reasons of confidentiality.

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(91)

Regarding more specifically wages, according to the data available for Ciba Specialty Chemicals plc,
wages rose by 26 % over the period concerned. Taking into account the 15 % rise in the estimated
employment in black colorformers, the raise in wages amounted to 10 % over the period concerned,
i.e. a 2,8 % yearly average increase in wages and salaries. It should be noted, however, that the cost
of labour accounts for a small percentage of the total cost of production. The moderate increase in
wages, however, coincided with increased efficiencies of the Community industry in terms of a
reduction in the time necessary to complete a production cycle (‘batch time’) and increased yields per
batch.

(92)

It is therefore concluded that over the period considered, the prices of the Community industry
decreased well over the decrease in the cost (– 7 %). This severe price depression (– 16 %) led to
important losses to the Community industry as described below.

4.5. Profitability, cash flow and return on investments

(93)

(94)

Profitability of the Community industry in terms of return on net sales in the Community market
before any extraordinary items and taxes went from around break even in 1996, to [between – 5 %
to – 7 %] in 1997, to [between – 7 % to – 9 %] in 1998 and to [between – 8 % to 10 %] in the IP (*).

Between 1996 and 1997 the profitability of the Community industry deteriorated going from
around break even to a negative result. This coincided with a decrease in the sales volume of the
Community industry (– 2 %) and a sharp decrease in the sales prices (– 7 %), whereas the costs of the
Community industry remained stable. Between 1997 and 1998 the Community industry tried to
regain volume of sales and market share by lowering its prices (– 7 %) but, since its costs only
decreased by 6 %, this decrease in the prices resulted in higher losses. Between 1998 and the IP the
losses increased since the sales prices decreased by 3 %, whereas the costs only decreased by 1 %.

(95) One interested party argued that the Community industry has not suffered material injury since the

total colorformer sector was profitable throughout the period and even after the IP.

(96)

It should be noted that the product scope in the present proceeding is black colorformers and not
colorformers in general. The investigation has showed that the Community industry has suffered
significant losses on the sales of black colorformer in the Community in the IP. Therefore, the fact
that the Community industry is profitable on other products, i.e. colour colorformers is not an
indication that it is not suffering injury in the context of the present proceeding.

(97) As regards cash flow, this indicator could only be established for Ciba Specialty Chemicals Inc., the
Swiss parent company of Ciba Specialty Chemicals plc, and that only as from 1997 onwards, the
year in which the parent company was founded. However, it should be noted that black colorfor-
mers only represent around 0,4 % of the total turnover of the parent company. In view of the above,
it is considered that this factor would not provide guidance as to the specific situation of the
Community industry of black colorformers.

(98) As regards return on investments, this indicator was only available at the level of Ciba Specialty
Chemicals plc, whereas black colorformers constitute only around 3,5 % of total turnover of Ciba
Specialty Chemicals plc. In view of the above, it is considered that this factor would therefore not
provide guidance as to the specific situation of the Community industry of black colorformers.

4.6. Investments and ability to raise capital

(99)

Investments made throughout the period considered dropped from 100 in 1996 to 71 in the IP.
They represented around 9 % of the Community industry's turnover throughout the period consid-
ered.

(*) Actual data is given in a range for reasons of confidentiality.

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(100) As regards the ability to raise capital, this indicator was only available for Ciba Specialty Chemicals
plc. However, as stated above, since black colorformers only constitute around 3,5 % of the total
turnover of Ciba Specialty Chemicals plc, it is considered that this factor would therefore not provide
guidance as to the specific situation of the Community industry of black colorformers.

4.7. Employment and Productivity

(101) The Community industry's employment related to the production of black colorformers rose by
15 %, from 48 persons employed in 1996 to 55 employed in the IP. It should be noted that since
employees work both in the production of black colorformer and colour colorformers, employment
has been allocated on the basis of the proportion that the production volume of black colorformers
represents on the total production volume of all colorformers.

(102) Productivity of the Community industry, measured as output per person employed, decreased by
14 % over the period considered. The figures on productivity largely reflect the allocations made to
determine the employment.

5. Conclusion on injury

(103) Between 1996 and the IP, the volume of imports of black colorformers originating in Japan
increased substantially (41 %) at prices which continuously decreased over the same period (– 19 %)
and which significantly depressed the Community industry's prices by undercutting the prices quoted
by the Community industry in price negotiations.

(104) Over the same period the situation of the Community industry deteriorated in terms of production
(– 1 %), sales (– 5 %) and market share (–8,5 % percentage points). Despite an important decrease in
its overall costs (– 7 %), the sharp price depression (– 16 %) led to severe losses. During the period
considered, despite an increase in Community consumption, i.e. by 17 %, the Community industry's
market share decreased sharply, from 45,0 % to 36,5 %.

(105)

In particular, between 1996 and 1997 the Community industry's market share decreased from
45,0 % to 41,6 %. It tried to remedy this situation by reducing its sales prices in 1998 in order to
maintain market share, i.e. the Community industry decreased its prices by 6 % and it increased its
market share (from 41,6 % in 1997 to 43,1 % in 1998) but at the expense of profitability, which
decreased from [between – 5 % and – 7 %] to [between – 7 % and – 9 %] (*). Between 1998 and the
IP the Community industry could only decrease its prices by (– 3 %) with the result that the
Community industry lost sales volume (– 18 %) and market share which dropped to 36,5 %. Since
the prices of the Community industry decreased more than its costs, the Community industry
suffered increased losses.

(106)

In view of the above, it is concluded that in the IP the Community industry suffered material injury
within the meaning of Article 3(1) of the basic Regulation in the form of decreased production and
sales,

loss of market share and decreasing prices leading to severe losses.

F. CAUSATION

1. Preliminary remarks

(107)

In accordance with Article 3 of the basic Regulation, it was examined whether the volume and prices
of the dumped imports concerned were responsible for an impact on the Community industry to a
degree which enables it to be classified as material within the meaning of Article 3(6) of the basic
Regulation. In carrying out this investigation, care was taken to ensure that known factors other than
the dumped imports which at the same time are injuring the Community industry were not
attributed to the dumped imports concerned.

(*) Actual data is given in a range for reasons of confidentiality.

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2. Effects of the dumped imports

(108) During the period considered, dumped imports of the product under consideration increased
significantly in terms of volume and market share. This coincided with the deterioration of the
situation of the Community industry which lost sales volume and market share. In this respect, the
market share lost by the Community industry has been basically gained by the imports of the
product under consideration.

(109)

(110)

It should be noted that in the market for black colorformers, competition is in the form of prices.
This is due to the fact that there are few market players and that the different product types are
highly interchangeable.

In this respect the investigation showed that, the Community industry was forced to decrease its
sales prices in order to maintain its market share. This is evidenced by the findings that the prices of
the product under consideration were undercutting the Community industry's prices. Between 1996
and 1997 the Community industry's prices decreased by 7 % while prices of the product under
consideration decreased by 10 %. This coincided with a loss of market share by the Community
industry and an increase in market share of 5,7 percentage points by the product under considera-
tion. In an effort to regain market share, the Community industry decreased its prices by a further
6 % between 1997 and 1998 with the resulting increase in market share and a slight loss of market
share by the product under consideration. However, in view of the losses incurred, between 1998
and the IP the Community industry reduced its prices only by a further 3 % whereas Japanese
exporters decreased their prices by 5 %. Thus, the Community industry lost market share while the
product under consideration gained significant market share. The combined effect of depressed prices
and a decrease in sales volumes and thus a decrease in the production volume negatively affected the
profitability of the Community industry.

3. Impact of other factors

3.1. Other imports

(111)

Imports from other third countries amounted to slightly over 20 % of Community consumption in
the IP.

(112) Besides Japan, exports of black colorformers to the Community basically take place from the United
States of America. There is one indigenous American producer of black colorformers and two other
producers which are related to Japanese exporting producers.

(113)

Imports of black colorformers originating in the United States of America, based on the information
provided by cooperating users and estimates by the Community industry, went from an index 100 in
1996 to 93 in 1997. In 1998 imports from the United States of America increased to 105 and
further increased to 124 in the IP. The market share of these imports went from 19,0 % in 1996, to
16,7 % in 1997, to 16,9 % in 1998 and to 20,1 % in the IP.

(114) As far as prices are concerned, it should be noted that there is no information available on the 1996
price level, but from 1997 onwards the price level has decreased substantially from 100 in 1997 to
82 in 1998 and to 76 in the IP.

(115)

It should be noted that the price level of import of black colorformers originating in the United
States of America are, with the exception of 1997, below those of the imports originating in Japan.

(116)

In view of the low price level of the imports originating in the United States of America, it has been
found that the imports of black colorformers originating in the United States of America may have
contributed to the injury suffered by the Community industry in the IP. However, despite the low
level of the prices of American imports, the market share of the imports originating in the United
States of America has remained stable and can therefore not be the cause of the loss of market share
by the Community industry.

3.2. Evolution of the cost of production of the Community industry

(117)

It has been examined whether the deterioration of the situation of the Community industry, namely
in terms of profitability, was materially caused by an increase in its cost of production.

(118) As already explained above, the cost of production of the Community industry decreased (– 7 %)

over the period considered, mostly due to a decrease in the cost of raw materials.

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(119)

It is therefore concluded that the deterioration of the situation of the Community industry over the
period considered cannot be due to any increase in its cost of production.

4. Conclusion on causation

injury found. This is proven,

(120) The above findings clearly indicate the existence of a causal link between the dumped imports and
the material
the
Community industry, which was almost entirely gained by Japanese imports, combined with the
deterioration of the prices and the profitability of the Community industry. This coincided with the
increase in the volume of imports originating in Japan at prices which undercut and significantly
depressed the Community industry's prices.

in particular, by the loss of market share of

(121) Any other factors,

in particular imports originating in the United States of America, may have
contributed to the injurious situation of the Community industry, but they are not such as to break
the link between the dumped imports from Japan and the injury suffered by the Community
industry,

in particular in view of the market share gained by Japanese low-priced imports.

(122)

It is therefore concluded that the dumped imports originating in Japan have caused material injury to
the Community industry within the meaning of Article 3(6) of the basic Regulation.

G. COMMUNITY INTEREST

1. Preliminary remarks

(123) According to Article 21 of the basic Regulation and on the basis of all the evidence submitted, it was
examined whether, despite the injurious effect of the dumped imports, compelling reasons existed
against the imposition of anti-dumping measures in this case. This determination was based on an
appreciation of all the various interests taken as a whole.

(124)

In order to determine whether or not the imposition of measures was against the Community
including the domestic industry,
interest,
importers/traders and users.

information was requested from all

interested parties,

2. Interest of the Community industry

2.1. Viability of the Community industry

(125) The investigation has shown that the Community industry's global profitability for all colorformers
produced in the same production facilities where black colorformers are produced was positive
during the period considered. The negative situation of the Community industry's black colorformer
business is therefore attributable to the unfair trading practices by Japanese exporting producers
which have had an injurious effect on the Community industry.

(126)

In line with the development observed during the period considered, the Community market for
black colorformers is expected to continue to grow in the next years. Although the production of
carbonless paper will probably decline, this decline will be largely compensated by the increase in
thermal paper production.
In this respect, the investments made by the Community industry
throughout the period and its constant efforts in R & D (increase of 44 % over the period considered)
shows that the Community industry is not ready to abandon this market and that if fair market
conditions are restored, the Community industry could benefit from the expected growth in this
market.

(127) Finally,

it should be noted that the Community industry has considerably increased efficiency.
Significant efforts have been made by the Community industry in the form of reductions in batch
time and increased yields per batch, which have contributed to a reduction of costs.

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2.2. Likely effects of the imposition of measures

(128) As to the likely effects of the imposition of an anti-dumping measure on the Community industry,
these can generally result in an increase in the volumes sold on the Community market by the
Community industry and/or they can result in an increase in the level of the prices this industry can
obtain.

(129) As far as an increase in the prices in the Community market is concerned, it is likely that the
imposition of an anti-dumping measures on the product under consideration will have the effect of
increasing its prices and consequently the price level

in the Community.

(130) Since the most severe injurious factor has been the price depression resulting in financial losses, it is
expected that the Community industry will be likely to benefit from the measures in the form of an
increase in its prices.

(131) The imposition of measures is also likely to result in a moderate increase in the sales volume. In this
respect, the increase in its volume of sales in the Community and thus its production, will allow the
Community industry to decrease its unit costs, thus improving profitability.

(132)

It is therefore concluded that the imposition of anti-dumping measures will allow the Community
industry to increase both its prices and its volume of sales, thus improving its financial situation.

2.3. Likely effects of the non-imposition of measures on the Community industry

(133) Should measures not be imposed, it is likely that the negative trends as regards prices, profitability
if not aggravated further.

and market share will continue,

(134)

In the absence of an improvement in the price level in the Community, it is not expected that the
Community industry would regain profitability through rationalisation, given the efforts already
undertaken in increasing efficiency. Furthermore the current level of financial losses does not allow
this industry to remain operational. It is therefore expected that, should the price level remain stable
or continue to decrease, the Community industry could ultimately be forced to withdraw from this
market, with the consequent loss of investments, know-how and employment and with the result
that the number of suppliers in the Community market would be substantially reduced, with
negative effects for competition in the Community. Should the Community industry withdraw from
this market, it is unlikely that it will reenter it. Firstly, the Community industry would have lost
credibility with its customers, with whom it closely cooperates in R & D. Secondly, between two to
three years are required before a production plant is commissioned and an additional year is required
before the required stability per batch is attained. Finally, skilled labour as well as R & D acquired
through the years would be lost.

2.4. Conclusion

(135)

In view of the above, it is concluded that the imposition of an anti-dumping measure would benefit
the Community industry in terms of an increase in its prices and a certain increase in the sales and
production volume and therefore an improved financial situation. In turn, the non-imposition of
measures could result in the medium term in the Community industry's withdrawal from this
market.

3. Interest of importers/traders

(136) Three out of the four importers/traders concerned, representing around 60 % of the total import
volume of the product under consideration, did not respond to the Commission's questionnaire but
submitted general

information.

(137) One of them argued that the imposition of an anti-dumping duty would result in the possible
elimination of the product under consideration from the Community market without, however,
substantiating this claim nor any effects on this company's operations.

(138)

It should be noted that, although the Community industry has significant spare capacity, this
capacity is not sufficient to supply the entirety of the demand in the Community market. Therefore
imports are necessary to fulfil the demand. In view of the above,
it is not expected that the
imposition of measures will result in the total exclusion of the product under consideration from the
Community market, but rather that those imports will be made at fair prices.

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(139) On the basis of the information provided by the sole cooperating importer/trader, it has been found
that importers/traders generally trade also in products other than black colorformer, the latter being
of a proportion [between 8 % and 12 %] (*). Since the main effect of the anti-dumping measures is
expected to be principally a price increase and only a certain increase in the sales volume by the
Community industry, it is unlikely that importers/traders will be negatively affected in the form of a
significant reduction in the volume of sales.

(140)

In conclusion, the imposition of an anti-dumping measure on imports of black colorformers
originating in Japan is unlikely to significantly affect the economic situation of importers/traders.

4. Interest of users

4.1. Preliminary remarks on the structure of the user industry

(141) Black colorformers are used as coating in the production of carbonless paper and thermal paper. The
black colorformers are mixed with other chemicals in a ‘recipe’ and this is then applied on the base
paper.

(142) According to the information available there are 15 users in the Community which are producers of
either carbonless paper and/or thermal paper, out of which eight cooperated in the proceeding. Two
of these users produce both types of paper, three are active only in carbonless paper and three are
active only in thermal paper. In terms of company size, the coating paper industry is not homoge-
neous and is composed of large companies and medium-size companies. Furthermore, there are
companies that are active only in the coated paper business as well as companies that produce other
types of paper (non-coated). Finally, it should be noted that most companies produce the base paper
themselves, while one cooperating user purchases the base paper which it then coats.

(143) Around 40 % of total Community consumption of black colorformers is used as coating for the
production of carbonless paper. Community production of this type of paper amounted to around
1 000 000 tonnes in 1998.

(144) Five cooperating users are active in this sector. The most important producer represents over 30 % of
Community production. The second and third biggest company together have a share of about 25 %
of Community production and there are two more companies which represent around 10 % of
Community production each.

(145)

Import penetration of carbonless paper is very low (between 1 % and 2 %). This sector is reported to
be declining due to the introduction of new technologies such as electronic mail and ink-jet and laser
printers, which minimise the use of multi-copy forms, which is the most important application of
carbonless paper.

(146) Around 60 % of total Community consumption of black colorformers is used as coating for the
production of thermal paper. Community production of this type of paper amounted to around
200 000 in the IP.

(147) There are five cooperating users who are active in this sector. The most important holds [between
35 % and 45 %] (*). The second and third biggest companies are about one third of the size of the
biggest and the rest of the market is divided between about five companies.

(148)

Import penetration is very low, less than 7 %. This sector has been reported to be growing by 4 % to
5 % per annum due to the use of thermal paper in ticketing and labelling applications.

4.2. Data gathered from cooperating parties

(149) The cooperating companies represent a turnover of around EUR 2 000 million out of which coated
papers accounted for half. Total employment of the cooperating users was around 10 000 in the IP.

(*) Actual data is given in a range for reasons of confidentiality.

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(150) As regards profitability, the weighted average profitability for thermal paper producers in the IP
amounted to [between 5 % and 7 %] (*), whereas the weighted average profitability for carbonless
paper producers in the IP amounted to [between 0,5 % and 2 %] in the IP.

(151)

In the IP, cooperating users reported purchases from importers/traders representing 77 % of the total
volume of imports of the product under consideration. They have also purchased around 72 % of
black colorformers produced by the Community industry.

(152) The investigation has shown that black colorformers represent on average 1,1 % of the total cost of
production of carbonless paper producers. For thermal paper producers, black colorformers repre-
sent on average 7,9 % of the total cost of production. For the total user industry the weighted
average amounts to 4,2 %.

4.3. Impact in terms of costs of the anti-dumping measures

(153) Given the above, the imposition of an anti-dumping duty at the level considered would result in a
hypothetical maximum increase in the cost of production of carbonless paper producers of 0,21 %.
For thermal paper producers the maximum hypothetical increase in the cost of production would
amount to 1,49 %.

(154) However, this is a hypothetical maximum impact of the measure if the whole impact were to be
passed on to the user. It does not take into account that users have a substantial buying power, that
alternative sources of supply exist (United States of America) which are not subject to the measures
and that although a certain price increase is expected, it is unlikely that this will be of the same
amount as the duty proposed, since the Community industry will also benefit from a moderate
increase in its volume of sales.

4.4. User arguments on the imposition of anti-dumping measures

a) I m p o s s i b i l i t y o f

t o l e r a t i n g i n c r e a s e s i n t h e c o s t o f b l a c k c o l o r f o r m e r s

(155) Given the fierce competition amongst paper producers and the actual low level of prices for their
final product, some users claimed that the prices of black colorformers could not be increased.

(156) The investigation showed that black colorformers are but a small part of the total cost of production
of paper producers, the most important factor affecting cost of paper producers being paper pulp
prices which represents 50 % or more of the production costs for coated paper and whose prices are
very volatile. The monthly evolution of paper pulp prices between 1996 and the end of the IP shows
that paper pulp prices can fluctuate up to 28 % on a monthly basis.

(157) Given the fact that pulp can represent 50 % or more of the production costs for coated paper, any
fluctuation in the price of pulp has a profound impact on the overall cost of production for both
carbonless paper and thermal paper.

(158)

In this respect, information provided by cooperating users shows that the fluctuation in the prices of
the main raw material are reflected on the prices of the coated paper. The information available
showed that price fluctuations of even 12 % could be passed on to customers to a large extent.

(159)

It is therefore concluded that moderate price increases which could result from the imposition of the
likely to endanger the economic activities of users
anti-dumping measures proposed are not
concerned.

b) L i m i t a t i o n o f

t h e s o u r c e s o f s u p p l y

(160) One user has claimed that the imposition of anti-dumping duties would limit sources of supply

available to Community users thus eliminating or reducing competition in the Community.

(*) Actual data is given in a range for reasons of confidentiality.

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(161) The investigation has shown that the most likely effect of the imposition of anti-dumping measures
would be a moderate rise in the price level of black colorformers in the Community, rather than the
total exclusion of the Japanese imports from the Community market, notably in view of the fact that
the Community industry would not be able to supply the entirety of the Community market.
Furthermore, the USA is an alternative source of supply to the Community industry and to Japan.

(162)

It is therefore concluded that the imposition of anti-dumping measures is not likely to result in the
reduction of the sources of supply available to Community users. On the contrary, the non-imposi-
tion of anti-dumping measures could lead in the medium term to the disappearance of the sole
Community producer of black colorformers, namely in view of the significant losses incurred as a
result of the dumping of the product under consideration, which would reduce sources of supply in
the Community.

c) L o s s o f c o m p e t i t i v e n e s s f o r e x p o r t s o u t s i d e t h e C o m m u n i t y

(163) One user has claimed that imposition of anti-dumping duties would jeopardise its exports outside
the Community given the increase in its costs compared to its competitors located outside the
Community.

(164) Firstly, it has been found that due to the fierce competition on the Community market of black
colorformers, the price in the Community is substantially lower than that of the other main
paper-producing markets, i.e. the United States of America and Japan. As a result carbonless and
thermal paper producers outside the Community source black colorformers at prices which can be
even 20 % higher than those paid by Community users. Secondly, it should be noted that anti-
dumping duties are either not due when the product under consideration is imported under the
inward-processing regime or are reimbursed when it is re-exported as such or incorporated into
another product.

(165)

In view of the above, it is not expected that the imposition of an anti-dumping duty will result in a
loss of competitiveness of Community users on export markets.

5. Consequences for competition in the Community market

(166) According to Article 21(1) of the basic Regulation, the need to eliminate the trade-distorting effects
of injurious dumping and restore effective competition in the Community has been given special
consideration.

(167) As regards the structure of the world market for black colorformers, it has been found that there are
the three main producing countries worldwide: the European Community, where Ciba is the sole
producer; Japan, where four known producers manufacture black colorformers; and the United
States of America, where three known producers manufacture the product concerned (two of them
are subsidiaries of the main two Japanese exporting producers and one is an independent producer).

(168)

In the Community, Ciba produces both black and colour colorformers. Its market share amounted to
36,5 % in the IP, whereas that of the imports of the product under consideration amounted to
43,4 % and that of imports originating in the United States of America amounted to 20,1 %. It
should be noted that an estimated 15 % of the imports originating in the United States of America
are produced by the American subsidiaries of the main two Japanese exporting producers. The
Community, which is the world's largest market for black colorformers (38 % of the total estimated
world consumption of black colorformers) is largely open to import penetration (around 64 % of
total consumption).

(169)

In Japan, two producers, who are the main exporters to the Community market, hold over 70 % of
production capacity. In Japan, the market for black colorformers is largely closed to Community
exports since carbonless copy paper is not produced with black colorformers but with colour
colorformers and ODB-2 cannot be exported by the Community industry due to patent restrictions.
As a result there are no imports of black colorformers in Japan.

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13.10.2000

(170)

In the United States of America, the subsidiaries of the two main Japanese producers have the largest
production capacity (over 50 %). The American market is characterised by its high level of customs
duty applicable to imports of black colorformers (11,6 %). Furthermore, in the United States of
America through the acquisition of a local producer, the subsidiary of a Japanese exporter is bound
by a long-term supply contract with the biggest American user which represents between 40 % and
50 % of the market for black colorformers in the United States of America. As a result import
penetration in the United States of America amounts to only 17 %.

(171)

In conclusion, the Community is the market with the highest import penetration and where prices
are the lowest in the world. According to the information supplied by interested parties prices in the
United States of America and Japan were reported to be over 20 % higher than in the Community in
the IP.

(172) Regarding the competition situation in the Community market, the investigation has shown that
during the period considered the Community industry lost significant market share and suffered
increasing losses as a result of the dumped imports of the product under consideration. This loss of
market share was basically gained by the product under consideration through unfair trade practices.
This is all the more serious in view of the share of the Community market held by Japanese
exporting producers whether through their exports originating in Japan or those originating in the
United States of America.

(173) The adoption of anti-dumping measures is likely to ensure that the Community industry remains in
this market, thus contributing to fostering competition. On the other hand, it is not expected that
the imposition of anti-dumping measures forecloses the Community market to imports of the
product under consideration, in view of the limited capacity of the Community industry and the
purchasing power of users.

(174)

It is not unlikely that, without anti-dumping measures, the Community industry would withdraw
from this market thus reducing competition in the Community. As mentioned above at recital 134,
should this withdrawal take place, it is unlikely that the Community industry would re-enter this
market,

in view of the high entry costs in this market.

(175)

It is therefore concluded that the imposition of anti-dumping measures is likely to restore effective
competition by establishing a level playing flied and ensuring equal competitive opportunities for all
economic operators.

6. Conclusion on Community interest

(176) As regards the Community industry, it was found that the imposition of an anti-dumping duty
would have a beneficial effect on its situation in the form of an expected increase in its prices and
restored profitability. The non-imposition of measures is likely to lead to the closure of the
Community industry's activities in the medium term considering its negative profitability.

(177) As regards importers/traders, the imposition of duties is unlikely to have a significant negative effect
on them given the limited impact of black colorformers on their overall trading activities.

(178) As regards users, the imposition of an anti-dumping duty on the product under consideration would
only marginally affect their situation in view of the low impact of black colorformers on their overall
costs, the possibility of passing on fluctuations in the raw materials to the prices of the paper
products and the existence of an alternative source of supply, i.e. the United States of America. The
imposition of anti-dumping measures is also considered to foster enhanced competition in the
Community market for black colorformers by restoring fair trade.

(179)

In view of the above, the Commission has concluded that, in these circumstances no compelling
reasons exist on grounds of Community interest not to adopt anti-dumping measures in the present
case.

H. ANTI-DUMPING MEASURES

(180) For the purpose of establishing the level of the definitive duty, account was taken of the level of
dumping found and the amount of duty necessary to eliminate the injury suffered by the Community
industry.

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L 259/21

1. Injury elimination level

(181)

It was considered that the amount of duty necessary to remove the effects of injurious dumping
should allow the Community industry to cover its cost of production and obtain a reasonable profit
on sales. In this respect it was found that a profit margin of 7 % on turnover could be considered to
be an appropriate basis, due regard being given to a rate of return which the Community industry
could reasonably expect in the absence of injurious dumping. This rate was established by reference
to the profit margin publicly available for a number of European companies in the specialty chemical
sector, as defined in a report by an independent party.

(182) Yamamoto argued that the information submitted by the Mitsui group was sufficient to allow an
individual determination with respect to the injury margin. The information provided by the Mitsui
group included general information on their companies, their purchase prices and resales on the
Community market. Yamamoto argued that this was sufficient to establish an individual export price
and an individual injury margin in its respect as all its sales to the Community were handled by the
Mitsui group. Pursuant to Article 18(4) of the basic Regulation, Yamamoto and the abovementioned
companies were duly informed that the information submitted was insufficient and given an
opportunity to provide further explanations. Yamamoto and the Mitsui group provided corrections
to deficiencies noted in the replies of the Mitsui group and declarations stating the relation between
Yamamoto and Mitsui & Co. Ltd (‘Mitsui (Japan)’), as well as the role of Mitsui (Japan) as sole
exporter of Yamamoto's products. However, Yamamoto refused to reply to the main body of the
its
questionnaires requesting information on the corporate structure of the exporting producer,
its domestic sales and costs of production.
production,

its export sales to the Community,

(183)

It is considered that the non-cooperation of the producer made it impossible to carry out any
individual determination in its respect. Thus, if it was possible to verify that the companies of the
Mitsui group had reported completely and accurately their sales of black colorformers on the
Community market, the absence of information notably on production, corporate structure and sales
made it impossible to determine whether the sales reported by the Mitsui group represented all the
sales of Yamamoto to the Community. Black colorformers produced by Yamamoto in Japan could
be exported to the Community via other channels whether directly through related parties. Other
producers and/or traders could be related to Yamamoto and exporting Japanese black colorformers
to the Community, which would require the determination of a single export price and individual
injury margin for the group. The lack of data relevant to make an individual determination applies
therefore not only to the dumping margin but equally to the injury margin.

(184)

In view of the above, Yamamoto is considered as a non-cooperating exporting producer for the
purpose of the present anti-dumping proceeding and therefore, no individual injury-margin deter-
mination has been carried out for this company.

(185) Accordingly, injury elimination levels were determined on the basis of ODB-1 and ODB-2 respec-
tively by comparing the cost of production plus a reasonable profit margin for each of these types of
black colorformer produced by the Community industry with the selling price of the same types of
the product under consideration at user level. The injury margin, i.e. this difference expressed as a
percentage of the cif value of the imports concerned, was 18,9 % on average.

2. Form and level of the definitive anti-dumping measures

(186) Since the injury margin was found to be lower than the dumping margin, the definitive duty to be
imposed should correspond to the injury margin established, in conformity with Article 9(4) of the
basic Regulation.

(187) Based on the determination of dumping and the injury resulting therefrom, a definitive ad valorem
duty of 18,9 % should be imposed on imports of black colorformers originating in Japan,

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Official Journal of the European Communities

13.10.2000

HAS ADOPTED THIS REGULATION:

Article 1

A definitive anti-dumping duty is hereby imposed on imports of black colorformers falling within CN

1.
code ex 2932 29 80 (TARIC code: see Annex) and originating in Japan.

2.
For the purpose of the present proceeding, a black colorformer is a chemical colorformer which,
when used to coat paper for the production of carbonless copy paper or thermal paper generates by its
own properties a black image on the paper without having to be mixed with other colorformers and has
the following fluoran structure:

R1 and R2 may be identical or different and must be chosen from substituted or unsubstituted alkyl or aryl
groups. They may also form part of a ring system. R3 must be chosen from hydrogen, substituted or
unsubstituted alkyl, aryl, alkoxy groups or halogens. R3 is typically a methyl or chloro group. R4 must be
chosen from substituted or unsubstituted monoarylamino groups. If R3 is hydrogen then R4 must be a
substituted monoarylamino group. R1, R2 and R4 may not be hydrogen. R5 is hydrogen or halogen,
typically hydrogen. A list of identified black colorformers is provided in the Annex.

For the product referred to in paragraph 1, the rate of anti-dumping duty applicable to the net

3.
free-at-Community-frontier price, before duty,

is 18,9 %.

4.

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

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

Article 2

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

Done at Luxembourg, 9 October 2000.

For the Council

The President

H. VÉDRINE

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Official Journal of the European Communities

L 259/23

ANNEX

Commercial
description

Chemical abstract
registry number
(CAS No)

Chemical description

TARIC codes

Black 15

Black 100

Black 303

Black 305

Black 500

CF-51

ETAC

36431-22-8

3-(Diethylamino)-6-methyl-7-(2,4-dimethylphenylamino) fluoran

2932 29 80 35

68134-61-2

3-(Diethylamino)-7-(3-trifluoromethylphenylamino) fluoran

2932 29 80 60

92814-52-3

3-(N-ethyl-N-isopentylamino)-7-(2-chlorophenylamino) fluoran

2932 29 80 60

129437-78-5

3-(Dipentylamino)-6-methyl-7-anilinofluoran

2932 29 80 60

93071-94-4

3-[N-ethyl N-(3-ethoxypropyl)amino]-6-methyl-7-anilinofluoran

2932 29 80 60

102232-11-1

3-(N-tetrahydrofurfuryl-N-ethylamino)-6-methyl-7-anilinofluoran

2932 29 80 60

59129-79-2

3-(N-ethyl-N-p-tolylamino)-6-methyl-7-anilinofluoran

2932 29 80 40

Fuji Black

85443-45-4

3-(Diethylamino)-6-chloro-7-anilinofluoran

29512-49-0

3-(Diethylamino)-6-methyl-7-anilinofluoran

89331-94-2

3-(Dibutylamino)-6-methyl-7-anilinofluoran

2932 29 80 60

2932 29 80 60

2932 29 80 60

151019-95-3

3-(Diethylamino)-6-methyl-7-(3-methylphenylamino) fluoran

2932 29 80 60

PSD 150

55250-84-5

3-(N-methyl-N-cyclohexylamino)-6-methyl-7-anilinofluoran

2932 29 80 50

PSD 300A

92409-09-1

3-(N-methyl-N-propylamino)-6-methyl-7-anilinofluoran

2932 29 80 30

PSD 184

S 205

TH 107

95235-29-3

3-(N-ethyl-N-isobutylamino)-6-methyl-7-anilinofluoran

2932 29 80 45

70516-41-5

3-(N-ethyl-N-isopentylamino)-6-methyl-7-anilinofluoran

2932 29 80 10

82137-81-3

3-(Dibutylamino)-7-(2-chlorophenylamino) fluoran

2932 29 80 25

Other black colorformers

2932 29 80 60

ODB

ODB-2

ODB-7