Council Regulation (EC) No 2080/2001 of 23 October 2001 imposing a definitive anti-dumping duty on imports of internal gear hubs for bicycles originating in Japan
Date: 2001-10-23
Institutions: Council of the European Union
Subjects: Japan, anti-dumping duty, import, mechanical equipment, spare part, two-wheeled vehicle

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I

(Acts whose publication is obligatory)

COUNCIL REGULATION (EC) No 2080/2001

of 23 October 2001

imposing a definitive anti-dumping duty on imports of internal gear hubs for bicycles 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:

A. PROCEDURE

1. Initiation

On 27 July 2000, the Commission announced by a
notice (‘Notice of Initiation’) published in the Official
Journal of the European Communities (2) the initiation of an
anti-dumping proceeding with regard to imports into
the Community of internal gear hubs (‘IGH’) originating
in Japan.

The proceeding was initiated as a result of a complaint
lodged on 6 July 2000 by SRAM Deutschland GmbH,
the Community
representing a major proportion of
production of IGH.

The complaint contained evidence of dumping of the
said product and of material injury resulting therefrom,
which was considered sufficient to justify the opening of
an anti-dumping proceeding.

(1)

(2)

(3)

(4)

(5)

(6)

(7)

(8)

writing and to request a hearing within the time limit set
out in the Notice of Initiation.

A number of parties made their views known in writing.
All parties who so requested within the above time limit
and who demonstrated that
there were particular
reasons why they should be heard were granted the
opportunity to be heard.

The Commission sent questionnaires
to all parties
known to be concerned and to all other companies
which made themselves known within the deadline set
out in the Notice of Initiation. Meaningful replies were
received from the complaining Community producer,
eight unrelated importers in the Community, 35 users
and the exporting producer in Japan.

Detailed information on product comparability for types
of IGH sold on the Community market was requested in
to 58 parties (the
an additional questionnaire sent
two
Community industry,
related importers, nine unrelated importers and 45
users). 49 meaningful replies were received. Reactions
were also received from 137 parties, mainly bicycle
producers, retailers, consumer and user associations.

the exporting producer,

The Commission sought and verified all the information
deemed necessary for the purposes of a determination of
dumping, injury and Community interest including the
carrying out of verification visits at the premises of the
following companies:

A. Community producer

— SRAM Deutschland

GmbH,

Schweinfurt,

Germany;

2. Investigation

B. Exporting producer in Japan

— Shimano Inc., Sakai, Japan;

The Commission officially advised the exporting produ-
cers, importers and users known to be concerned, the
representatives of the exporting country concerned, the
complainant and another Community producer about
the initiation of the proceeding. Interested parties were
given an opportunity to make their views known in

C. Related importers in the Community

— Shimano

Europa GmbH (Dutch

Branch),

Nunspeet, The Netherlands

— Shimano Benelux B.V., Nunspeet, The Nether-

lands;

(1) OJ L 56, 6.3.1996, p. 1. Regulation as last amended by Regulation

(EC) No 2238/2000 (OJ L 257, 11.10.2000, p. 2).

(2) OJ C 214, 27.7.2000, p. 4.

D. Unrelated importers in the Community

— Paul Lange & Co, Stuttgart, Germany.

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(9)

On-the-spot visits were also carried out at the premises
of the following Community users:

— Batavus B.V., Heerenveen, The Netherlands,

— Biria GmbH, Edingen-Neckarhausen, Germany,

— Epple Zweidrad GmbH, Memmingen, Germany,

— Helkama, Hanko, Finland,

— Koninklijke Gazelle B.V., Dieren, The Netherlands,

— Tunturi, Turku, Finland.

(10)

The investigation of dumping and injury covered the
period from 1 July 1999 to 30 June 2000 (‘the invest-
igation period’ or ‘IP’). With respect to the trends rele-
vant for the injury assessment, data covering the period
from 1 January 1996 to 30 June 2000 (‘the period
considered’) was analysed, whereas the period used for
the findings on undercutting and underselling is the
aforementioned IP.

3. Provisional measures

(11) Given the need to further examine certain aspects of
injury, causation and Community interest, no provi-
sional anti-dumping measures were imposed on IGH
originating in Japan.

4. Subsequent procedure

(12) At

that stage, additional

information was requested,
notably from the exporting producer, and all parties
were informed of the Commission's preliminary assess-
ment of the case. The Commission continued to seek
information it deemed necessary for its
and verify all
definitive findings.
further on-the-spot
In particular,
investigations were carried out at the premises of the
exporting producer in Japan, of an unrelated importer in
the Community and of users in the Community.

(13) All parties were informed of

the essential

facts and
considerations on the basis of which it was intended to
recommend the imposition of definitive anti-dumping
duties. They were also granted a period within which
they could make representations subsequent
to this
disclosure.

(14)

The oral and written comments submitted by the parties
were considered, and, where appropriate, the findings
have been modified accordingly.

B. PRODUCT UNDER CONSIDERATION AND LIKE

PRODUCT

1. Product under consideration

(15)

The product under consideration is an internal gear hub,
defined as a hub of a bicycle wheel with an integrated
gear system with three or more gears, regardless of
whether or not a braking system is integrated in the
hub, attached to the hub or mounted on another part of
the bicycle.

(16)

(17)

(18)

(19)

(20)

(21)

(22)

(23)

The investigation has shown that the product concerned
is exclusively used as an integrated gear hub of a bicycle
wheel to operate the bicycle.

The investigation has also shown that IGH consist of
three basic types, namely ‘coaster brake hubs’ (where the
gearing system, as well as the back-pedalling braking
system, are integrated in the hub),
‘drum brake hubs’
(where the gearing system, as well as the hand-operated
braking system, are integrated in the hub), and ‘free-
wheel hubs’ (where only the gearing system is integrated
in the hub), all having the same basic physical and
technical characteristics and uses.

In this respect, the exporting producer and some other
interested parties claimed that the above types of IGH
had different physical characteristics. In particular they
argued that users would regard coaster brake hubs (with
back-pedalling braking system), and drum brake and
freewheel hubs (with hand-operated braking systems) as
different products due to the differences in the braking
systems. On this basis, they claimed that the invest-
igation should be limited to coaster brake hubs only.

The investigation showed that the main physical and
technical characteristic of an IGH is the gear-shifting
mechanism itself, which is always integrated in the hub.
An IGH consists of a set of gears integrated in a hub,
and this in contrast to an external (dérailleur) gearing
system. Whether or which type of braking system,
if
any, is additionally integrated in or attached to the hub,
while relevant for calculations and price comparison
purposes, does not affect the basic characteristics and
use of an IGH and is thus irrelevant in respect of the
definition of the product concerned.

In addition, the investigation has shown that different
types of IGH are interchangeable and that they have the
same use and applications.

In view of the above, the claim to exclude certain types
of IGH from the scope of the present investigation had
to be rejected, and all IGH containing a gear-shifting
mechanism with three or more gears are considered as a
single product for the purpose of this proceeding.

2. Like product

The investigation has shown that the basic physical and
technical characteristics of IGH produced and sold by
the Community industry in the Community and IGH
produced and sold on the domestic Japanese market,
and of IGH imported into the Community from Japan
are the same. Furthermore, the end use of IGH is the
same.

the above it

In view of
these
products are alike within the meaning of Article 1(4) of
Council Regulation (EC) No 384/96 (‘the basic Regula-
tion’).

is concluded that all

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C. DUMPING

in representative quantities. The profit margin was based
on domestic sales of IGH in the ordinary course of trade.

(24)

(25)

(26)

(27)

(28)

(29)

1. Normal value

2. Export price

In order to establish normal value it was first determined
whether the total volume of the domestic sales of the
product concerned was representative in accordance
with Article 2(2) of the basic Regulation, i.e. whether
these domestic sales represented 5 % or more of the
sales volume of the product concerned exported to the
Community. It was established that this requirement was
met.

The exporting producer claimed that prices of some
models sold on the domestic market which are very
similar to exported models could be used to establish
normal value if they were adjusted by differences in the
costs of manufacturing. The Commission verified the
degree of similarity between the 19 exported models
concerned and two similar models sold on the domestic
market and concluded that they were very similar and
could be compared.

(30) Approximately 40 % of export sales to the Community
were made directly to independent customers and export
prices for these were established on the basis of the
prices actually paid or payable by these customers in
accordance with Article 2(8) of the basic Regulation.

(31)

The remaining sales were made to related companies
based in the Community. Therefore, export prices for
these sales were 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. In order to establish a reliable export
price, adjustments were made for all costs incurred
between importation and resale by those importers and
for profits accruing. The profit margin applied was the
weighted average profit margin of unrelated importers.

3. Comparison

It then was examined whether total domestic sales of
each model exported to the Community constituted 5 %
or more of the sales volume of the same model exported
to the Community. It was found that only four models
passed this test.

(32)

For these four models, it was examined whether suffi-
cient sales had been made in the ordinary course of
trade in accordance with Article 2(4) of the basic Regula-
tion.

It was established, for three of the four models, that the
volume of domestic sales above unit cost represented
more than 80 % of sales and that the weighted average
unit price in Japan was higher than the weighted average
unit cost. Consequently, normal value for those three
models was established on the basis of the weighted
average price actually paid for all domestic sales of those
models.

For the fourth model, the volume of domestic sales
above unit cost represented less than 10 % of sales. For
this model and for all other models which were not sold
in sufficient quantities in the Japanese market, normal
value was constructed on the basis of the costs of manu-
facturing incurred by the exporting producer for the
exported models in question plus a reasonable amount
for selling, general and administrative expenses (‘SG&A’)
and profit in accordance with Article 2(3), (5) and (6) of
the basic Regulation. The amount of SG&A expenses
was based on domestic sales of IGH, which were made

comparability. Accordingly,

For the purposes of a fair comparison, due allowance, in
the form of adjustments, was made for differences under
the basic Regulation which affected
Article 2(10) of
price
allowances were
applied concerning physical characteristics, discounts,
loading and ancillary
transport,
costs, packing, credit costs, after-sales costs, commis-
sions and currency conversions.

insurance, handling,

4. Dumping margin

(33)

(34)

In accordance with Article 2(10) and (11) of the basic
Regulation, the dumping margin was established on the
basis of a comparison between the weighted average
normal values and the weighted average export prices at
ex-factory level for the same model and at the same level
of trade.

This comparison showed the existence of dumping, the
to the amount by which the
dumping being equal
normal value exceeded the export price. Expressed as a
percentage of the cif Community frontier import price,
duty unpaid, the weighted average dumping margin is
36,6 %.

(35)

The exporting producer represents the entirety of the
Japanese exports of IGH to the Community. Accord-
ingly, the residual dumping margin definitively estab-
lished is set at the same level.

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D. COMMUNITY INDUSTRY

1. Definition of the Community production

(36) At the time of the lodging of the complaint and during
the IP there were two operators producing the product
concerned on the Community market:

— the complainant,

— another

(‘the

producer

Community

other
Community producer’) which accounted for less than
10 % of the total estimated Community production
of
IGH during the IP. The other Community
producer did not reply to the questionnaire and did
not take a position on the complaint.

the sales of the other Community producer, the estimate
was made on the basis of
figures presented by the
Community industry and the exporting producer. There
were no imports originating in other third countries.

(42) On this basis, it was found that consumption of IGH
decreased by 5 % during the period considered. While
only decreasing by 4 % from 1996 to 1998,
it went
down by a further 8 % between 1998 and 1999. During
the IP, consumption recovered to near 1998 levels.

3. Imports concerned

(a) Volume of the imports concerned

(37)

The exporting producer requested that the Commission
review the figures with respect to the other Community
producer. In this respect, it should be noted that given
the lack of cooperation of
the other Community
producer, best facts available had to be used, which were
in this case from both the complainant and the sole
cooperating exporting producer. It was also found that
this operator went into liquidation and ceased produc-
tion shortly after the IP.

(43)

(38)

Based on the above, the production of the complainant
and the other Community producer constitute the total
Community production within the meaning of Article
4(1) of the basic Regulation.

in the

country

imports
Between 1996 and the IP the volume of
concerned originating
concerned
increased by a significant 23 %. While these imports
decreased by 14 % from 1996 to 1998, they increased
by as much as 43 % in the period 1998-IP. On a year-to-
year basis, it emerged that despite the fall in consump-
tion in 1999 (– 8 % compared to 1998), the imports
concerned increased by 17 % in 1999 compared to
1998. The increase in the volume of these imports was
even more pronounced between 1999 and the IP
(+ 22 %).

2. Definition of the Community industry

(39)

the

found that

complaining

total Community production of

It was
cooperating
Community producer represented a major proportion of
the product
the
concerned, in this case more than 90 %. It was therefore
concluded that the complaining Community producer
constituted the Community industry within the meaning
of Article 5(4) and Article 4(1) of the basic Regulation. It
is hereafter referred to as ‘the Community industry’.

(b) Market share of the imports concerned

(44) Over the period considered, the market share of the
imports concerned increased by over 30 % in a declining
Community market. Between 1996 and 1998,
the
market share held by the exporting producer decreased
by 10 % but increased by 30 % between 1998 and 1999
and by a further 11 % between 1999 and the IP, in line
with the above development of its import volume.

E. INJURY

(45)

1. Preliminary remark

(40) Given that

there is only one cooperating exporting
producer and that the Community industry comprises
only one company,
specific data relating to these
companies have been indexed in order to preserve the
confidentiality of the data submitted in accordance with
Article 19 of the basic Regulation.

2. Community consumption

(46)

(41)

Community consumption was established on the basis
of the sales volumes of the Community industry, an
estimate of the sales made by the other Community
producer and the imports of the Japanese exporting
producer onto the Community market. With respect to

(c) Average prices of imports concerned

Based on the information provided by the exporting
producer,
it appeared that between 1996 and 1998
prices of Japanese IGH sold on the Community market
decreased by 5 %. They rose by 15 % in 1999 and by a
further 2 % during the IP. In this context it should be
noted that this price trend is exclusively based on the
data submitted by the exporting producer, which could
not be verified for all the period considered.

(d) Price undercutting

For the determination of price undercutting, the prices
of IGH sold by the Community industry were compared
to the prices of the Japanese exporting producer on the
Community market during the IP. This comparison was
made for comparable types of IGH and at the same level
of
independent
customer.

trade, namely for sales to the first

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(i) C o m p a r a b i l i t y

(53)

(47) As explained above in recital 7, detailed information on
product comparability for types of IGH sold on the
Community market was requested in an additional ques-
tionnaire. The directly comparable
IGH
produced by the Japanese exporting producer and sold
on the Community market, and those produced and sold
by the Community industry on that market were identi-
fied on the basis of these replies.

types of

(48)

For the purpose of a meaningful price comparison, it
was thus ensured that IGH could be compared on a
type-by-type basis
taking into account notably the
number of gears.

(ii) A d j u s t m e n t s

(49)

(50)

(51)

The Community industry claimed that certain IGH sold
by the exporting producer on the Community market
were equipped with hub shells made of aluminum,
whereas the comparable hubs sold by them were exclu-
sively equipped with hub shells made of steel. The
Community industry claimed that the exporting produ-
cer's prices should therefore be adjusted downwards to
reflect the market value of this material difference. The
Japanese exporting producer, while acknowledging that
an adjustment was appropriate, claimed that this should
be in the order of not more than 5 %, by reference to
differences in cost of production.

In this respect, the investigation showed that more than
55 % of the 7-speed coaster brake hubs and 100 % of
the 7-speed freewheel hubs
sold by the exporting
producer during the IP on the Community market were
equipped with aluminum hub shells, whereas
the
Community industry exclusively sold comparable IGH
with steel shells.

Based on evidence available, in particular a price list of
the exporting producer, it was found that IGH equipped
with aluminum hub shells were, during the IP, priced
about 22 % higher than the same IGH with steel hub
shells. According to the transaction listing for the IP
provided by the exporting producer, the prices effec-
tively invoiced for the aluminum hubs were, however,
only 11 % higher than the prices for the corresponding
steel hubs.

In addition, both the Community industry and the
exporting producer, respectively, claimed that further
adjustments should be made, on the basis of alleged
differences in the product types under consideration.
However, they were informed that none of the alleged
differences were found to be objective and measurable
notably in terms of market value. The additional claims
from both parties therefore had to be rejected.

(54)

(55)

(56)

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

Based on the above, and further to the additional verifi-
cations carried out, two types of IGH (coaster brake hub
and freewheel hub) representing around 78 % of the
sales made by the Community industry on the
Community market and around 85 % of the exports
made by the Japanese exporter, were considered to be
comparable and made at the same level of trade. The
following IGH sold on the Community market by the
Community industry and the exporting producer were
compared with each other on a type-by-type basis:

— 3-speed coaster brake hubs,

— 7-speed coaster brake hubs,

— 3-speed freewheel hubs,

— 7-speed freewheel hubs.

The sales prices considered for the exporting producer
concerned were those at cif Community border level,
the
including customs duties. The sales prices of
Community industry were adjusted where necessary to
an ex-works level,

i.e. excluding transport costs.

the comparison on a transaction to
The results of
weighted-average basis showed that the average price
undercutting margin, expressed as a percentage of the
Community industry's average selling prices, was 6,8 %
during the IP.

4. Situation of the Community industry

(a) Preliminary remark

(57)

In accordance with Article 3(5) of the basic Regulation,
the Commission examined all economic factors and
indices having a bearing on the state of the Community
industry on its domestic market.

(b) Production, capacity and utilisation of capacity

(58) During the period considered, the Community industry's

production increased by 3 %.

(52) On this basis, it was considered that there was an objec-
tive market value difference between an IGH equipped
with an aluminum shell and a hub equipped with a steel
one. This difference was established at 11 % of the price
of the aluminum hub.

(59) However, between 1998 and 1999 Community industry
production significantly decreased by 19 %, whilst
Community consumption in terms of volume decreased
by only 8 % during the same period. Production then

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recovered during the IP (+ 18 % by comparison with
1999) but was below the level of 1998. This increase in
production, in spite of the decrease in the Community
is
industry's sales volume on its domestic market,
explained by the increased export activities of
the
Community industry to other third countries during the
IP.

(60) Given that production capacity did not change during
the period considered, the trend in utilization of capacity
was similar
remaining
to the trend in production,
between 50 % and 65 %.

(c) Volume of sales, market share and growth

(61)

From 1996 to the IP the Community industry's sales to
unrelated customers in the Community decreased by 6 %
in volume. During the period 1996-1998,
in parallel
with its increased production, the Community industry
managed to increase its Community sales by 8 %. There
then followed a 17 % fall in sales volume between 1998
and 1999. This decrease was far more pronounced than
the decrease of the Community consumption during
that period which was limited to – 8 %. The slight
increase in sales volume between 1999 and the IP
(+ 4 %) did not allow the Community industry to
recover the volume previously lost.

(62) Although the Community industry's market

share
increased by 13 % between 1996 and 1998,
it went
back down to its 1996 level in the period 1998-IP. This
should be seen in the light of the decrease in consump-
tion. This situation coincided with a significant increase
of 43 % in the volume of the imports concerned on the
Community market in the same period.

(63)

It should be noted that the exporting producer claimed
that the Community industry had been able to increase
its market share at the expense of the other Community
producer during the period considered. However, the
investigation has shown that this claim was not founded.
In fact the increase in the Japanese exporting producer's
market share during the IP was made at the expense of
both the Community industry and the other Community
producer in particular in the period 1998 to the IP.
Actual sales figures show that the sales volume lost by
the Community industry and the other Community
producer during that period was completely taken over
by the Japanese exporting producer.

(d) Prices and factors affecting prices

(64) During the period considered, the Community industry's
average sales price of IGH on the Community market
dropped significantly by 21 %. It should be noted in this
context that neither the price differences between types
of IGH nor the product mix of the Community industry
on the Community market changed significantly during
that period. Therefore, the decrease in average price is

not due to any change in its product mix towards
cheaper types of IGH.

(65) Whilst price lists indicate that Japanese prices seem to
have increased over the period considered, it should be
noted that they were still undercutting the Community
industry's prices on the Community market by around
7 % on average during the IP. On this basis, it can also
be assumed that a higher price differential between the
Japanese
and the Community
industry indeed existed during considerable parts of the
period considered. This had the effect of depressing
domestic prices to the extent that they were not profit-
able during the period considered. This was notably the
case during the IP.

exporting producer

(e) Inventories (stocks)

(66) During the period considered, except between 1997 and
the levels of stocks kept by the Community
1998,
industry was rather low. This is notably due to the fact
that
for
the Community industry mainly produces
orders and does not produce to pile stocks. On this
basis, the impact,
if any, of stock movement on the
situation of the Community industry, particularly during
the IP was negligible. The evaluation of stocks does not
appear
in examining the
economic situation of the Community industry.

to be a relevant

factor

(f) Profitability and cash flow

(67) As

the

losses

incurred by

to profitability,

the
Community industry in 1996 were between 5 % and
10 % of turnover. In 1997, the situation improved and
profitability was close to break-even. Between 1997 and
the IP, after the take-over of the Community industry
(formerly Mannesmann Sachs) by SRAM Deutschland
GmbH, the Community industry restructured its activi-
ties, thus reducing its costs of production by almost
20 %. Over the period considered, the cost reduction
was indeed as high as 26 %. Notwithstanding this, the
Community industry's profitability remained negative
during the whole period considered.

(68)

From the break-even situation in 1997, it could reason-
ably have been expected that the efforts made by the
Community industry to restructure and reduce costs
would lead to a profitable situation. However, the price
depression experienced by the Community industry, in
particular in 1999 and during the IP, undermined these
efforts. This suggests that, without the restructuring of
its activities,
the Community industry's losses would
have been even higher or that Community IGH produc-
tion would have ceased completely. The losses incurred
by the Community industry during the IP were around
3 % of turnover. It should be noted that this result does
not
take account of restructuring and extraordinary
costs incurred by the Community industry during the
period considered.

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(69)

The reduction in cost of production and in losses gave
rise to an improvement of the cash flow generated by
the Community industry during the period considered.
In line with the evolution of the losses incurred by the
Community industry, cash flow significantly deteri-
orated, in particular between 1997 and 1999, but recov-
ered somewhat during the IP.

5. Conclusion on injury

(77) During the period considered the presence of imports
originating in Japan significantly increased on the
Community market and the main relevant injury indica-
tors pertaining to the Community industry showed a
negative development.

(70)

(71)

(g) Investments, return on investments and ability to raise

capital

Investments made in the period considered were particu-
larly high in 1999. This is explained by the new IGH
manufacturing facility set up in Germany which started
to operate at the beginning of 1999. This investment
shows that the company intends to remain an active
player on the market and has a long term strategy for
the product under consideration.

In this respect, the investigation showed that the restruc-
turing undertaken by the Community industry led to a
slight improvement in the operating return on invest-
ments during the IP. However, this improvement does
not detract from the fact that the Community industry's
financial result remained negative during the whole
period considered.

(72) Despite the financial

losses incurred, the Community
industry was not found to be experiencing serious diffi-
culties in its ability to raise capital.

(h) Employment, productivity and wages

(73)

Employment decreased by 17 % from 1997 to 1998 and
remained stable until
the IP despite the difficulties
encountered by the Community industry.

(74) Given the level of production and the reduction in
personnel employed, productivity was improved during
the period from 1997 to the IP.

(75)

The total amount of wages increased slightly during the
period considered. The average wage per employee
remained rather stable.

(i) Magnitude of dumping margin

(78)

(79)

increased

This development was particularly evident between
the imports
1998 and the IP when the volume of
concerned
by 43 % while Community
consumption decreased by 1 %. This allowed the Japa-
nese exporting producer to gain a significant additional
share of the Community market (12 percentage points),
mainly at the expense of the Community industry. In
this context,
the imports
concerned were undercutting the Community industry's
prices by around 7 % during the IP, and that
the
Community industry's sales prices were depressed, not
reaching any profitable level.

should be noted that

it

It was also found that the main negative development in
the economic situation of the Community industry took
place during the same period, namely from 1998-IP: its
sales volume decreased by 13 % and its sales prices by
7 %. Production decreased by 4 % and the loss in market
share incurred by the Community industry was as high
as 7 percentage points. Despite restructuring efforts and
cost reductions, profitability worsened and remained
negative, and this in parallel with the sales price pressure
faced by the Community industry on its domestic
market.

(80)

In the light of the foregoing, in particular the decrease in
sales price, profitability and market share experienced by
the Community industry, in the period from 1998 to
the IP in particular, it is concluded that the Community
industry has suffered material injury within the meaning
of Article 3(1) of the basic Regulation during the IP.

F. CAUSATION

1. Introduction

(81)

In accordance with Article 3(6) and (7) of the basic
Regulation,
the dumped
it was examined whether
imports of IGH originating in Japan caused injury to the
Community industry to a degree that enables it to be
classified as material. Known factors other than the
dumped imports, which could at
the same time be
injuring the Community industry, were also examined to
ensure that possible injury caused by these other factors
was not attributed to the dumped imports.

(76)

The impact on the Community industry of the magni-
tude of the actual margin of dumping cannot be consid-
ered to be negligible given the volume and the prices of
the imports concerned. Indeed, the investigation showed
that overall the imports originating in Japan were sold at
dumped prices on the Community market during the IP.
Price pressure on Community prices would obviously
have been lower or even non-existent without dumping.

2. Effect of the dumped imports

(82) During the period considered, the volume of dumped
imports originating in Japan into the Community
increased by 23 % and their market share rose by 39 %,
a significant gain at the expense of producers in the
Community.

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(83)

(84)

The link between the injury suffered by the Community
industry and the dumped imports is demonstrated in
particular by the developments observed from 1998
until the end of the IP. During this period, dumped
imports originating in Japan increased by 43 % in terms
the
of volume and the increase in the share of
Community market was as high as 44 %.

Japanese
the prices of

It has been found that the Community industry was
to price pressure, as evidenced by the price
subject
exporting
undercutting practised by
the
producer and the evolution of
the
Community industry, which were depressed to a consid-
erable extent. This price pressure was further aggravated
by the fact that the IGH market is price transparent with
only two operators. The above developments coincided
with the
the main
significant declining trend of
economic indicators pertaining to the Community
industry from 1998 to the IP: its sales volume decreased
by 13 %, and significant market share was lost. The
average sales price decreased by 7 %. As a result, the
Community industry continued to incur financial losses.

(85)

It is concluded, therefore, that the dumped imports of
IGH originating in Japan had a material impact on the
injury suffered by the Community industry, within the
meaning of Article 3(6) of the basic Regulation.

3. Effect of other factors

(86)

In accordance with Article 3(7) of the basic Regulation,
it was examined whether factors other than the dumped
imports originating in Japan might have contributed to
the material injury suffered by the Community industry
to ensure that injury caused by these other factors is not
attributed to the dumped imports. In this context, the
following factors were examined: the allegedly higher
prices of the Japanese exporting producer, the fall
in
consumption in 1999, the relocation of production of
certain bicycle manufacturers to Central and Eastern
European Countries (CEEC), the Community industry's
export
the other
the
and,
Community producer.

situation of

activities

(a) Allegedly higher prices of the exporting producer

(87) A number of users contested the results of the price
undercutting exercise and causal
link between the
dumped imports originating in Japan and the injury
suffered by the Community industry. They claimed that
prices of Japanese IGH were consistently higher than
those of the Community industry during the IP.

(88)

It should be noted that this claim was made mainly by
parties which are not buying IGH directly from the
exporting producer or its related companies on the
Community market.
these users
compared the prices directly charged by the Community
industry with prices charged by an intermediary sales
company selling Japanese IGH. On this basis, contrary to

In other words,

IGH are not
the contents of
compared at the same level of trade and show unreliable
results.

recital 46 prices of

(89)

The Commission established price undercutting by
comparing the Japanese exporting producer's prices with
the Community industry's prices at the same level of
trade. As explained in recital 56,
this comparison
showed that price undercutting existed for a large
number of IGH types and transactions during the IP. The
undercutting found during the IP was in the order of
7 % on average of the sales price of the Community
industry.

(90) As mentioned in recitals 64, 65 and 76, price undercut-
ting by the Japanese exporting producer was found to
exist during the IP and price depression was also found
for the Community industry's prices during the period
considered.

(91)

Consequently the above argument is considered to be
unsubstantiated and is therefore rejected.

(92)

(93)

(b) Fall

in consumption in 1999 and market development

It has been examined whether the fall in consumption in
1999 was a major factor contributing to the injury
suffered by the Community industry. Given the presence
of basically two major operators on the Community
market, it was considered that the possible impact of the
fall in consumption and the subsequent market develop-
ment should be examined in the light of the perfor-
mances of both operators.

In 1999, as compared with 1998,
the Community
industry's sales volume decreased by around 18 %,
whereas demand decreased by 8 %, i.e. to a much lesser
degree. The Community industry also lost around 9 % of
market share. During the same period, the exporting
producer was able to increase its sales volume by 17 %
and its market share by 30 %.

(94) During the IP, by comparison to 1999, the Community
industry increased its sales volume by 4 % but its market
share dropped by 4 %. In the meantime, the exporting
producer was able to further increase its sales volume
(22 %) and market share (11 %), namely to a much
larger extent than the recovery of the market (8 %).

(95)

recovered during

Based on the above facts, it is clear that the deterioration
of the Community industry's position in 1999 was more
dramatic than any reduction in consumption. Similarly,
when the market
the
performance of the Community industry was far below
the market development. In the meantime, the dumped
imports substantially improved their position on the
Community market. Consequently, unlike dumped
imports it is considered that the fall in consumption did
not play any significant role in the injurious situation of
the Community industry.

the

IP,

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L 282/9

(c) Relocation of production of certain bicycle manufacturers
to Central and Eastern European Countries (CEEC) and
export sales of the Community industry

share during the period considered, remaining with a
market share of around 6 % during the IP. It is therefore
concluded that the other Community producer did not
contribute to the injury suffered by the Community
industry.

(96)

(97)

(98)

Japanese

exporting producer argued that

The
the
decrease in the Community industry's sales volume
during the period considered was caused by the contrac-
tion of demand on the Community market. This
contraction was due to the shift of production of a
number of the Community industry's customers from
the Community to Central and Eastern European Coun-
tries (CEEC) in 1998. The exporting producer therefore
argued that any loss of sales volume (and further injur-
ious consequences) incurred by the Community industry
on its domestic market was offset when taking into
account the Community industry's export sales to CEEC.

In this respect, it has been found that the number of
bicycle manufacturers that relocated their production to
certain CEEC during the period considered is likely to be
rather small compared to Community consumption.
Furthermore, the investigation did not show that the
Community industry increased its export sales in 1998
or even in 1999 compared to previous years.

still

There are indications that relocation was also under-
taken by customers of the Japanese exporting producer.
It has also been found that a number of bicycle manu-
the
facturers
in
Community while setting up production plants
certain CEEC, during the IP. The effect, if any, of such
relocation on the situation of the Community industry
cannot therefore be considered substantial during the
period considered.

production

retained

their

in

(99) An analysis of

the Community
the export sales of
industry was also carried out. The analysis showed that
the Community industry's
from 1996 up to 1999,
export sales to third countries represented around 8 % of
its total sales, whereas they rose to 15 % during the IP.
Had the export sales not increased, the loss of econo-
mies of scale and the impact on the unit cost of the
Community industry's production would have been even
higher,

leading to even greater financial

losses.

4. Conclusion on causation

(102) The substantially dumped imports which increased
materially during the period considered, the price under-
cutting and the price depression found, all had signifi-
cant negative consequences on the economic situation of
the Community industry, notably in terms of sales prices
and sales volumes, which in turn had an effect on
market
the
dumped imports was such that it caused material injury
to the Community industry. Based on the above facts
and considerations, it is also concluded that any other
factors which may have contributed to the injury
suffered by the Community industry were not such as to
break the causal link between the injury established and
the impact of the dumped imports concerned.

share and profitability. The impact of

G. COMMUNITY INTEREST

1. Preliminary remarks

(103)

In order to determine whether the Community interest
called for intervention, an investigation was carried out
into the likely effects of the imposition/non-imposition
of anti-dumping measures on the economic operators
concerned. For this purpose, information was requested
including the Community
from all
industry, the unrelated importers/traders and the users of
the product under consideration.

interested parties,

2. Interest of the Community industry

(100) Therefore, the argument that the relocation of bicycle
production to Central and Eastern European Countries
explains the fall
in sales volume of the Community
industry in its domestic market is rejected.

(104)

(d) The other Community producer

(101)

It was further considered whether the other Community
producer could have contributed to the injury suffered
by the Community industry. However, on the basis of
the facts available, the other Community producer lost
around 60 % of sales and around 60 % of its market

It was found that the Community industry had been
making considerable efforts during the period consid-
ered to improve its productivity, in a successful attempt
to lower its costs of production and to enhance its
competitiveness in the Community and world-wide. In
this respect, the Community industry made a major
investment in 1999, opening a new production site in
order
improve efficiency and production
quality. This investment was decided upon at the time of
the take-over of Mannesmann Sachs, in 1997, based on
a
assessment of market developments.
During the period considered, the Community industry
managed to reduce its costs by 26 % and increase its
export sales. This indicates that the Community industry
to continue
is viable and competitive and intends

to further

reasonable

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Official Journal of the European Communities

26.10.2001

production of IGH in the Community unless it is driven
out of the market by dumped imports. The large invest-
ment made by the Community industry also indicates
that the company has a long term Community-based
strategy for the product concerned. However, its future
largely depends on the existence of fair conditions of
competition and therefore on the absence of dumped
and injurious imports on the Community market.

(105)

it

is considered that,

In view of the nature of the injury suffered by the
Community industry,
in the
absence of anti-dumping measures, a further deteriora-
tion in the situation of
the Community industry is
unavoidable. This will most likely entail further injury
and in the medium term even the disappearance of that
industry. The adoption of anti-dumping measures would
therefore be in the interest of the Community industry.

3. Interest of unrelated importers and traders

(106) Of

the

ten unrelated importers

eight
submitted meaningful replies to the questionnaire. They
represent about 21 % of Community imports and 8 % of
Community consumption. All of them were exclusive
distributors of the Japanese exporting producer.

contacted,

(107) As

eight

these

are
far
as
concerned,
the IGH segment represented on average
2,4 % (varying between 0 % and 8 %) of their total turn-
over during the IP.

cooperating importers

(108) The likely average impact of the proposed anti-dumping
duty on the importers' overall profitability was exam-
ined. Given the small share of the IGH segment in their
overall turnover, the maximum negative impact of the
proposed measures on the eight importers is likely to be
negligible.

(109) Consequently, given the average proportion of the IGH
segment in their total activities, and bearing in mind the
level of the measures proposed, it is considered that the
interests of importers will not be affected to any signifi-
cant overall extent.

the Community. Submissions were also received from
associations of users in the Community.

(111)

It was found that these users actually achieve an average
profit margin of around 3 % on their overall activities,
and of around 11 % with respect to bicycles equipped
with IGH.

(112) During the IP, the sale of bicycles equipped with IGH
(the latter being of either Japanese or Community origin)
represented about 25 % of the users' total turnover.

(113)

In view of the limited proportion of bicycles equipped
with IGH in their total activities, and bearing in mind
the level of the measures proposed and the profitability
situation of the cooperating users, it is concluded that
the possible negative effects of the measures proposed
on users cannot be considered such as to outweigh the
expected benefits for the Community industry.

5. Competition and trade distorting effects

(114)

components

It was found that the Community industry basically only
produces and sells the product under consideration,
whereas the exporting producer is a major player for all
bicycle
especially on the Community
market but also world-wide. In view of the price-under-
cutting found, the existing price pressure, the financial
losses and the loss of market share experienced,
it
cannot be excluded that the Community industry will
struggle to remain an effective player on the market. The
exporting producer's overall strong position on the
Community market, where it only faces competition for
IGH, and the level of the measures, make it unlikely,
from an economic point of view, that the Community
market will be foreclosed to its imports The continued
presence of its IGH will therefore be ensured in the
event of the imposition of anti-dumping measures.

4. Interest of users

(110) Users of the product under consideration are bicycle
manufacturers and assemblers, as well as certain retailers
in the Community. Of the users contacted, 35 submitted
a meaningful reply to the questionnaire. These 35 users
represented around 32 % of total IGH consumption in

(115) Some parties have further alleged that

the measures
would reduce users' and consumers' choice and prevent
them from benefiting from the innovations developed
by the Japanese exporting producer. However, as
outlined above, it is considered that IGH originating in
Japan will continue to be available on the Community
market in the future due to both the strong position of
the exporting producer on the Community market for a
large number of bicycle parts and the importance of the
Community market for the exporting producer.

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Official Journal of the European Communities

L 282/11

(116) Thus users and consumers will continue to have the
choice between the competing products, albeit at non-
injurious prices. Conversely, such freedom of choice
would be affected if
the Community industry was
allowed to disappear, which is not excluded if anti-
dumping measures were not imposed.

(120) When calculating the amount of duty necessary to
remove the effects of the injurious dumping,
it was
considered that
should allow the
Community industry to cover its costs of production
and to obtain a reasonable pre-tax profit that could be
achieved in the absence of dumped imports.

any measures

(117) Measures, therefore, are expected to re-establish fair and
effective competition on the Community market, merely
correcting the distorting effects of the injurious dumping
practised by the Japanese exporting producer. Not
imposing measures in the present case would maintain
and amplify the distortion of competition, resulting in a
further deterioration in the situation of the Community
industry. Were the Community industry to disappear,
reduced competition and less choice for users and
consumers on the Community market would be the
result.

(121) On this basis it was found that a profit margin of 8 %
on total turnover could be regarded as an appropriate
minimum which the Community industry could reason-
ably have expected to obtain in the absence of injurious
dumping, account being taken of its successful and cost-
reducing restructuring efforts and the need for long-term
investments by the Community industry. World-wide,
there
the
Community market and the Japanese market where
dumped imports are absent. Given the significantly
higher profit realised in Japan, it is considered that the
above margin of profit is very conservative.

are only two large markets

IGH:

for

6. Conclusion on Community interest

(118) On the basis of the above facts and considerations, it is
concluded that there are no compelling reasons on the
ground of Community interest against the imposition of
anti-dumping measures on imports of IGH originating in
Japan.

(122) Accordingly, injury elimination levels were determined
as the difference between the cost of production of the
Community industry, increased by the abovementioned
profit margin on the one hand, and the adjusted actual
net sales price of the imported IGH used for the price
undercutting calculations on the other. This difference
was then expressed as a percentage of the net, free-at-
Community-frontier price, before duty. The result of this
calculation was an injury margin of 11,3 %.

H. PROPOSED MEASURES

2. Definitive anti-dumping duty

1. Injury elimination level

(123)

In the light of the foregoing, and in accordance with the
lesser duty rule as set out in Article 9(4) of the basic
Regulation,
is considered that a definitive anti-
dumping duty should be set at the level of the injury
margin.

it

caused material

the dumped imports under
(119) Having established that
consideration have
injury to the
Community industry and that there are no compelling
reasons against the imposition of measures, an anti-
dumping duty should be imposed at a level sufficient to
eliminate the injury caused without exceeding the
dumping margin found.

(124) As

the

sole known Japanese

exporting producer
accounts for substantially all exports to the Community
originating in Japan, the residual duty is set at the same
level.

(125) On the basis of the above, the proposed definitive duty rate, expressed as a percentage of the net,

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

is as follows:

Company

Rate of anti-dumping duty

TARIC additional code

Shimano Inc.

All other companies

11,3 %

11,3 %

A252

A999

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HAS ADOPTED THIS REGULATION:

Article 1

1.
A definitive anti-dumping duty is hereby imposed on imports of internal gear hubs of a bicycle wheel
with an integrated gear system with three or more gears, regardless of whether or not a braking system is
integrated in the hub, attached to the hub or mounted on another part of the bicycle, currently classifiable
within CN code ex 8714 99 90, (TARIC code: 8714 99 90*91) and originating in Japan.

The duty also applies to coaster braking hubs and hub brakes falling under CN code ex 8714 94 10 and
hubs without free-wheel of braking device, other than coaster braking hubs and hub brakes falling under
CN code ex 8714 93 10, both combined with an integrated gear system with three or more gears (TARIC
codes: 8714 94 10*10, 8714 93 10*10) originating in the same country.

The rate of definitive anti-dumping duty applicable to the net free-at-Community-frontier price, before

2.
duty, for the product originating in Japan shall be as follows:

Company

Rate of anti-dumping duty

TARIC additional code

Shimano Inc.

All other companies

11,3 %

11,3 %

A252

A999

3.

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

This Regulation shall enter into force on the day of 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, 23 October 2001.

For the Council

The President

A. NEYTS-UYTTEBROECK