Commission Regulation (EC) No 575/2002 of 3 March 2002 imposing a provisional anti-dumping duty on imports of sulphanilic acid originating in the People's Republic of China and in India
Date: 2002-03-03
Institutions: European Commission
Subjects: China, India, anti-dumping duty, chemical product, import, originating product

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COMMISSION REGULATION (EC) No 575/2002

of 3 March 2002

imposing a provisional anti-dumping duty on imports of sulphanilic acid originating in the People's
Republic of China and in India

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European
Community,

Having regard to Council Regulation (EC) No 384/96 of 22
December 1995 on protection against dumped imports from
countries not members of the European Community (1), as last
amended by Regulation (EC) No 2238/2000 (2) and in partic-
ular Article 7 thereof,

After consulting the Advisory Committee,

Whereas:

(1)

(2)

(3)

(4)

A. PROCEDURE

the Commission announced, by a
On 6 July 2001,
notice (‘notice of
initiation’) published in the Official
Journal of the European Communities (3), the initiation of an
anti-dumping proceeding with regard to imports into
the Community of sulphanilic acid originating in the
People's Republic of China (‘PRC’) and India. A parallel
anti-subsidy investigation concerning imports of
the
same product originating in India was initiated on the
same date (4).

The anti-dumping proceeding was initiated as a result of
a complaint lodged in May 2001 by Sorochimie Chimie
Fine, representing a major proportion,
in the current
case more than 65 %, of the Community production of
sulphanilic acid. The complaint contained evidence of
dumping of the said product and of material
injury
resulting therefrom, which was considered sufficient to
justify the initiation of an anti-dumping proceeding.

their

The Commission officially advised the exporting produ-
cers and importers/traders known to be concerned as
well
the
the
associations,
suppliers and
exporting countries concerned, users,
Community producers. Interested parties were given an
opportunity to make their views known in writing and
to request a hearing within the time limit set in the
notice of initiation.

representatives of

as well

A number of exporting producers in the countries
concerned,
producers,
as
Community users and a trader made their views known
in writing. All parties who so requested within the above
time limit and showed that there were particular reasons

Community

(1) OJ L 56, 6.3.1996, p. 1.
(2) OJ L 257, 11.10.2000, p. 2.
(3) OJ C 190, 6.7.2001, p. 2.
(4) OJ C 190, 6.7.2001, p. 5.

(5)

(6)

(7)

(8)

(9)

why they should be heard were granted the opportunity
to be heard.

the apparent

In view of
large number of exporting
producers of the product concerned in the countries
subject to the investigation, known from the complaint,
the application of sampling for the investigation of
dumping was envisaged in the notice of initiation.

However, only a limited number of exporting producers
from the PRC and India made themselves known and
provided the information requested in the notice of
initiation. Therefore, sampling was not considered neces-
sary for either of the countries concerned.

The Commission sent questionnaires
to all parties
known to be concerned and to all other companies who
made themselves known within the deadlines set in the
notice of
initiation. Replies were received from two
Community producers, one Indian exporting producer
and its related importer in the Community, one Chinese
exporting producer, one Chinese trading company and
one producer in a market economy third country. The
Commission also received replies from seven users, one
supplier and one trader providing information which
was sufficiently complete and representative to use in
the assessment of Community interest. Several compa-
nies chose to submit only comments in preference to
completing the Commission's questionnaires. These
comments have been taken into account where appro-
priate.

In order to allow exporting producers in the PRC to
submit a claim for market economy treatment (‘MET’) or
individual treatment, if they so wished, the Commission
sent to the Chinese companies known to be concerned a
market economy status and an individual
treatment
claim form. One company requested MET pursuant to
Article 2(7)(b) of Regulation (EC) No 384/96 (‘the basic
Regulation’) or individual treatment should the invest-
igation establish that it did not meet the conditions for
MET.

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

(a) Community producers

— Sorochimie Chimie Fine, Givet, France,

— Quimigal SA, Estarreja, Portugal;

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(b) Exporting producer in India

— Kokan Synthetics and Chemical Private Ltd,

Dapoli, Ratnagiri, Maharashtra;

(c) Market economy third country producer

— Nation Ford Chemical Company, South Carolina,

USA;

(d) Users

— Bayer AG, Leverkusen, Germany.

(10)

The investigation of dumping and injury covered the
period from 1 July 2000 to 30 June 2001 (‘IP’). The
examination of trends relevant for the assessment of
injury covered the period from January 1997 to the end
of the IP (‘analysis period’).

B. PRODUCT UNDER CONSIDERATION AND LIKE

PRODUCT

(11)

1. Product under consideration

The product under consideration is sulphanilic acid.
There are basically two grades of sulphanilic acid which
are determined according to their purity: a technical
grade and a purified grade.
In addition, the purified
grade is sometimes commercialised as a salt of sulpha-
nilic acid. Technical and purified acid share the same
basic chemical characteristics
in terms of chemical
formula (C6H7NO3S) and molecular structure although
they differ slightly in terms of purity (the range of purity
may start from 96 % for the technical grade and from
99 % for the purified grade and for the acid content of
its salt; the major impurities being residual aniline and
alkali insoluble materials ranging from 2 % to less than
0,1 %). Technical and purified grades of sulphanilic acid
are available as dry free flowing powders. The salt of
purified sulphanilic acid is sold in powder or solution
form according to customer requirements. Sulphanilic
acid is used as raw material in the production of optical
food colorants and
brighteners, concrete additives,
speciality dyes. Although there are different uses of
sulphanilic acid, all grades and forms are perceived by
users to be reasonably substitutable, are used inter-
changeably in most applications and should be, there-
fore, treated for the purpose of the present proceeding
as one single product.

(13)

(14)

(15)

(16)

(17)

2. Like product

(18)

(12)

The product exported to the Community from the PRC
and India, the product sold domestically in India as well
as the one manufactured and sold in the Community by
the Community producers were found to have basically
the same chemical characteristics as well as the same
uses and are therefore considered as like products within
the meaning of Article 1(4) of the basic Regulation.

C. DUMPING

1. India

1.1. Normal value

In accordance with Article 2(2) of the basic Regulation,
the Commission first examined whether the domestic
sales of sulphanilic acid were representative, i.e. whether
the total volume of such sales was at least 5 % of the
total export sales volume to the Community. The invest-
igation showed that
the domestic sales were repres-
entative.

The Commission subsequently identified those product
types of sulphanilic acid sold domestically as being iden-
tical or directly comparable with the types sold for
export to the Community when they were of the same
grade and form.

For each product type sold by the exporting producer
on its domestic market which was found to be directly
comparable with the type sold for export
to the
Community it was established whether domestic sales
the purposes of
were sufficiently representative for
Article 2(2) of the basic Regulation. Domestic sales of a
particular product
type were considered sufficiently
representative when the total domestic sales volume of
that type during the IP represented 5 % or more of the
type
total sales volume of
exported to the Community. The investigation showed
that out of
two were sold in
three exported types,
representative quantities on the domestic market.

the comparable product

The Commission subsequently examined whether the
domestic sales of the company could be considered as
being made in the ordinary course of trade pursuant to
Article 2(4) of the basic Regulation.

This was done by establishing the proportion of
domestic sales to independent customers, of each of the
two representative types, not sold at a loss on the
domestic market during the IP. For these product types,
since more than 80 % by volume was not sold at a loss
on the domestic market, and the weighted average sales
price was equal to or higher than the weighted average
production cost, normal value, by product type, was
calculated as the weighted average of all domestic sales
prices, paid or payable by independent customers, of the
type in question, as set out in Article 2(1) of the basic
Regulation.

In order

For the product type which was not sold in repres-
entative quantities on the domestic market, normal value
had to be constructed.
to determine the
constructed normal value,
the cooperating exporting
producer's own sales, general and administrative (SG&A)
costs incurred and weighted average profit realised on
domestic sales of the like product, in the ordinary course
of trade, during the IP, were added to the average cost of
manufacturing during the IP, pursuant to Article 2(6) of
the basic Regulation.

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(19)

(20)

(21)

1.2. Export price

The investigation showed that the exports of the Indian
exporting producer were made both to unrelated and to
related customers in the Community.

Therefore, for those sales made to unrelated customers
in the Community, the export price was established in
accordance with Article 2(8) of the basic Regulation, on
the basis of export prices actually paid or payable.

(26)

For sales made via its related importer, the export price
was constructed on the basis of the resale prices to
independent customers. Adjustments were made for all
costs incurred between importation and resale by that
including SG&A expenses, and a reasonable
importer,
profit margin,
in accordance with Article 2(9) of the
basic Regulation.

1.3. Comparison

(22)

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

(23) Accordingly, allowances for differences in transport
costs, ocean freight and insurance costs, handling,
loading and ancillary costs, packing costs, credit costs,
commissions and discounts have been granted where
applicable and justified.

(24)

(25)

The company claimed a duty drawback adjustment for
notional duties that would have been paid for imports of
(aniline) had the company
the principle raw material
its entire production of
used imported aniline for
sulphanilic acid sold on the domestic market. This claim
was rejected because it was based on notional assump-
tions and, as such, no amounts of duty were borne by
the material (aniline) incorporated in the like product,
when intended for consumption in India.

The company also claimed notional quantity discounts
that, had its domestic customers
with the argument
purchased the same quantities as the customers in the
export market,
then its domestic customers would
qualify for a discount in-built in the price which is given
to Community customers. This claim could not be
accepted under the provisions of Article 2(10)(c) of the
basic Regulation since quantity discounts can only be
considered for an adjustment when they are actually
given for differences in quantities and not on the basis
of notional assumptions.
It was, therefore, examined
under the provisions of Article 2(10)(k) of the same

Regulation (‘Other factors’), where it was found that the
pattern claimed by the company regarding the in-built
discounts was not consistently applied to its sales on the
domestic market. Indeed, it was established that smaller
quantities and/or orders were sold occasionally at lower
prices than larger quantity/orders. On this basis, since it
was not demonstrated that domestic customers pay
consistently different prices because of different quant-
ities purchased, this adjustment could not be accepted.

transactions

In this respect,

The company claimed credit costs for a number of its
domestic sales transactions that were based on verbal
agreements. However, these credit costs could not be
accepted since the company was not able to provide
proof of any agreements concerning the payment terms
of these sales. Moreover, for the remaining domestic
sales
for which written sales orders/
contracts defined their payment terms, the credit costs
that were accepted were adjusted downwards. This was
because the company had calculated the credit costs on
the total invoice value (including indirect taxes such as
sales tax and excise duty) and not on the basis of the net
invoice value.
it was found that the
payment of the sales tax which the company collected
from its customers was deferred,
for a
period of 12 years and, thus, the claim of credit costs
associated with the sales tax was unfounded. Secondly,
the amount of excise duties, which was a modified VAT
system (‘CENVAT’), paid to the tax authorities was calcu-
lated on the balance between the CENVAT on goods
purchased and the same tax on sales to customers. Of
this amount, the CENVAT paid for sales of the product
under consideration could not be identified separately. It
was therefore concluded that credit (finance) costs for
CENVAT, if any, should be considered as normal opera-
tional overheads and that no adjustment should be made
concerning such costs.

interest free,

1.4. Dumping margin

(27) According to Article 2(11) of the basic Regulation, the
adjusted weighted average normal value by product type
was compared with the adjusted weighted average
export price, as determined above.

(28) On this basis, the provisional weighted average dumping
margin expressed as a percentage to the cif Community
frontier price duty unpaid is 24,6 %.

(29)

Since the level of cooperation was high, the residual
provisional margin was set at the same level as the one
i.e. 24,6 %.
established for the cooperating company,

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2. China

2.1.3. D e t e r m i n a t i o n o f n o r m a l v a l u e i n t h e

a n a l o g u e c o u n t r y

2.1. Normal value

2.1.1. M a r k e t e c o n o m y t r e a t m e n t

( ‘ M E T ’ )

Pursuant to Article 2(7)(b) of the basic Regulation, in
anti-dumping investigations concerning imports origin-
ating in the PRC, normal value should be determined in
accordance with paragraphs 1 to 6 of the said Article for
those producers which were found to meet the criteria
laid down in Article 2(7)(c), i.e. where it is shown that
in respect of the
market economy conditions prevail
manufacture and sale of the product concerned.

The sole Chinese cooperating producer requested MET
pursuant to Article 2(7)(b) of the basic Regulation and
replied to the MET claim for exporting producers.

The claim was rejected because it was not submitted by
the whole group involved in the production and sale of
the product but only by one company within the group.
Therefore,
it was not possible to verify whether the
group as a whole merited market economy status. More-
over, the claimant company was subject to restrictions
in its buying and selling activities. In fact, the company
was not licensed to import nor to export which meant
that decisions regarding prices, costs and inputs were
not taken in response to market signals reflecting supply
and demand or without significant State interference (see
also recital 37 below).

Consequently, after a specific
the
company was
Advisory Committee,
informed that its MET application could not be granted.

consultation of

applicant

the

(30)

(31)

(32)

(33)

2.1.2. A n a l o g u e c o u n t r y

(34) According to Article 2(7) of the basic Regulation, for
companies to which MET could not be granted, normal
value has to be established on the basis of the price or
constructed value in an analogue country. In the notice
of initiation, the Commission indicated the use of the
United States of America (‘USA’), which was also the
proposal made in the complaint, as an appropriate
analogue country for the purpose of establishing normal
value for the PRC. However, after investigating this poss-
ibility the Commission decided that it was more appro-
priate to use India as an analogue country, due to the
similarities in the market conditions of this country and
those of the PRC. It also noted that this choice was
suggested by the cooperating Chinese exporter who
objected to the initial proposal indicated in the notice of
initiation.

(35)

to Article 2(7)(a) of

Pursuant
the basic Regulation,
normal value for the cooperating exporting producer in
China was established on the basis of verified informa-
tion received from the producer in the analogue country,
i.e. on the basis of the prices paid or payable on the
domestic market of India for products comparable to
those sold by the Chinese exporting producer to the
Community.

2.2. Export price

2.2.1. I n d i v i d u a l

t r e a t m e n t

(36)

(37)

The company that was not granted MET applied for
individual treatment, i.e. the determination of an indi-
vidual dumping margin on the basis of its individual
export prices. The Commission verified whether this
company enjoyed, both in fact and in law, the necessary
degree of independence from the State.

In this respect, it was established that the company was
not licensed to export and that all its exports were made
via a trading company controlled by state authorities. It
was, therefore, concluded that the applicant company
did not meet the necessary requirements for individual
treatment.

2.2.2. D e t e r m i n a t i o n o f e x p o r t p r i c e

(38) All export sales of the cooperating Chinese producer to
the Community, which were made via the trading
company, were made directly to independent customers
in the Community and the export price was established
in accordance with Article 2(8) of the basic Regulation
on the basis of the prices paid or payable.

(39)

The comparison of the data concerning exports to the
Community provided by the
cooperating Chinese
exporter and the import volume as determined in recital
47 below, indicated that these exports represented less
than 20 % of total Chinese imports into the Community
during the IP. Thus, the export price for non-cooper-
ating exporting producers had to be based on facts
available in accordance with Article 18 of the basic
Regulation. In this respect, in order not to reward non-
it was considered appropriate to use the
cooperation,
lowest export prices established for certain repres-
entative transactions of the cooperating exporter.

2.3. Comparison

(40)

For the purposes of a fair comparison by product type
between the normal value at fob Indian frontier level
and the export price at fob Chinese frontier level, due
allowance was made for differences which were claimed
and demonstrated to affect price comparability. These
adjustments were made in respect of
transport and
insurance costs in accordance with Article 2(10) of the
basic Regulation.

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2.4. Dumping margin

(41)

In the absence of individual treatment being granted to
the sole cooperating exporter, an overall dumping
margin was calculated for the whole of the PRC. The
comparison of normal value and export price revealed
the existence of dumping with regard to imports of the
product concerned originating in the PRC, the dumping
margin being equal to the amount by which the normal
value exceeded the export price to the Community.

(42)

The provisional dumping margin for imports originating
in the PRC expressed as a percentage of the cif price at
Community frontier level, duty unpaid,

is 21,0 %.

— the total verified sales of the Community industry on

the Community market,

— the verified responses of former Community produ-
cers of the product concerned which cooperated in
the investigation and

— evidence contained in the complaint for other former

producers which did not cooperate.

(46)

Community consumption of sulphanilic acid in the IP
was approximately 11 000 tonnes. This figure is some
13 % higher than at the start of the analysis period. After
two years of relative stability in 1997 and 1998, there
was a slight decline in consumption in 1999 before a
clear upturn in 2000 and the IP.

D. COMMUNITY INDUSTRY

(43)

(‘Quimigal’).

Sulphanilic acid is manufactured in the Community by
two companies: the complainant, Sorochimie Chimie
It
Fine (‘Sorochimie’) and Quimigal S.A.
should be noted that Sorochimie manufactured sulpha-
nilic acid throughout
the analysis period. Quimigal,
however, only began to produce and sell sulphanilic acid
in 1999. There were several other Community produ-
cers of sulphanilic acid active on the market at the start
of the analysis period. However, all these other produ-
cers ceased production during the period either to focus
on their other activities or to source sulphanilic acid
from external sources. They have therefore not been
taken into account when determining ‘Community
production’.
these
important developments on the Community market
allowed both Sorochimie and Quimigal to increase their
production and sales.

It should be borne in mind that

(44) Although Quimigal is not a party to the complaint, it
has expressed its support for the proceeding and fully
cooperated in the investigation. It is therefore considered
that Quimigal and Sorochimie fulfil the requirements of
Article 5(4) of the basic Regulation, since they accounted
for 100 % of the Community production of sulphanilic
acid on the date the proceeding was initiated. They are
the
therefore provisionally
‘Community industry’ within the meaning of Article 4(1)
of the same Regulation and will hereinafter be referred
to as such.

to constitute

deemed

2. Imports into the Community from the countries

concerned

2.1. Import data

(47)

the reply of

The CN heading, under which the product under invest-
igation is currently classified covers a variety of other
products. The Commission therefore made use of the
best facts available and established figures for both the
volumes and prices of imports of sulphanilic acid on the
following basis. Data for imports from India were estab-
lished on the basis of
the cooperating
exporting producer to the Commission's questionnaire.
The volumes of imports from the PRC and the USA
were taken from information contained in the complaint
given the low level of cooperation from producers in the
PRC and the fact that the sole exporting producer in the
USA gave an estimate in confidence of its exports to the
Community for the analysis period. The prices of these
imports were predominantly derived from Eurostat data
with the response of the cooperating Chinese producer
to the Commission's questionnaire also being taken into
account for the IP only.
Information concerning the
volume and prices of imports originating in Hungary
and Japan was derived by comparing Eurostat data to
responses of users to the Commission's questionnaires.
With the exception of the countries noted above, the
investigation established that
there were no imports
from other third countries during the analysis period.

E. INJURY

1. Community consumption

2.2. Cumulative assessment of

the effects of

the imports

concerned

(45) Apparent

consumption of

sulphanilic acid in the

Community was established on the basis of:

— imports of

the product

into the
Community as established according to recital 47
below,

concerned

(48)

In accordance with Article 3(4) of the basic Regulation,
it was examined whether imports from the countries
concerned should be assessed cumulatively for
the
purposes of the determination of injury.

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(49)

It was established (see recitals 29 and 42) that the margin of dumping for imports from each country
subject to the current investigation was more than de minimis as defined in Article 9(3) of the basic
Regulation. It was also established that the volume of such imports from each country was not
negligible. Imports from India and China had a combined market share of more than 40 % in the IP
with imports from China accounting for approximately two-thirds of this figure. The volume of
imports from each of the countries concerned increased during the analysis period and their price
levels on the Community market during the IP were fairly similar. In addition, the imports concerned
competed on the same market as the like product produced by the Community industry and many
users in the Community purchased from all three sources in the analysis period.

(50)

For the reasons noted above, it was provisionally concluded that imports originating in India and
China should be assessed cumulatively.

3. Volume and prices of the dumped imports

(51)

The volume of the imports concerned increased by more than 150 % during the analysis period from
a figure of approximately 1 800 tonnes in 1997 to 4 600 in the IP. They more than doubled their
market share during the analysis period from a level of approximately 18 % to more than 40 %.

(52)

The average price of the imports concerned increased by 9 % during the analysis period. They
reached their lowest level

in 1999.

Import
(tonnes)

(indexed)

Market share
(indexed)

1997

1998

1999

2000

IP

1 821

2 856

3 262

3 556

4 662

100

157

179

195

256

100

151

187

186

227

cif price ECU/EUR per

100

91

86

90

109

Average
tonne
(indexed)

3.1. Price undercutting

(53)

For the purposes of analysing price undercutting, the weighted average sales prices per grade of the
Community industry to unrelated customers on the Community market were compared to the
corresponding weighted average export prices of the imports concerned. The comparison was made
after the deduction of rebates and discounts. The prices of the Community industry were adjusted to
an ex-works basis. The prices of the imports concerned were on a cif basis with an appropriate
adjustment for customs duties and post importation costs.

(54) On this basis, the level of price undercutting for imports from the PRC was approximately 7 %. In
view of the high level of cooperation received from the exporting producer in India, as noted above
in recital 29, the level of price undercutting for India as a whole was established on the basis of this
company's data at a figure of 13 %. It should be noted the imports concerned exerted a price
depressive and suppressive effect on the prices of the Community industry which suffered losses
throughout the analysis period.

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4. Situation of the Community industry

4.1. Preliminary remarks

(55)

In order to respect confidential business information, it has been necessary to present information
concerning the two companies forming the Community industry in an indexed form. In addition, as
the second member of the Community industry began production only in 1999, i.e. midway through
the analysis period, it has been decided to present its data separately from that of Sorochimie so as to
allow a more meaningful analysis of trends. As a result, two indices, both starting at 100, are
presented for each indicator with 1997 as the base year for Sorochimie and 1999 as the base year
for Quimigal (except in the case of investments which started to be made earlier).

(56)

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 economic factors and
indices having a bearing on the state of the industry.

4.2. Production, production capacity and capacity utilisation

(57)

The Community industry's level of production in the IP was more than double the level recorded at
the start of the analysis period. This reflected an increase of 51 % in Sorochimie's production over
the analysis period and the entry of Quimigal onto the market in 1999. The Community industry's
production capacity also increased over the analysis period but to a lesser degree than its actual
production. The combination of these two factors led to an overall increase in the capacity utilisation
rate of the Community industry during the period. Quimigal's capacity utilisation rate increased
sharply as it came out of its start-up phase. Both companies achieved a satisfactory level of utilisation
of their capacity in the IP.

Indexed

Production
(tonnes)

Capacity
(tonnes)

Sorochimie

1997

100

Quimigal

0

Sorochimie

100

Quimigal

0

Increase in capacity
utilisation
(%)

Sorochimie

100

Quimigal

0

1998

126

0

115

0

110

0

1999

125

100

115

100

109

100

2000

142

288

115

133

124

216

IP

151

348

115

133

132

261

4.3. Stocks

(58)

Sorochimie's year-end stock levels were higher in absolute terms at the end of the IP than in 1997.
However, when expressed as a percentage of production they decreased over the period (from 15 %
to 11 %). Quimigal's stock levels decreased after its entry onto the market so that its stocks
represented approximately 5 % of production in the IP. The Community industry's year-end stock
levels are not considered to be abnormal for such an industry.

Indexed

Stocks
(tonnes)

Sorochimie

1997

100

Quimigal

0

1998

94

0

1999

76

100

2000

69

73

IP

108

59

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4.4. Sales volume, market share and growth

(59)

(60)

The sales of the Community industry in the IP were more than 75 % higher than recorded in 1997.
It should be borne in mind that part of the increase is due to the appearance of Quimigal on the
market in 1999. Considered in isolation, Sorochimie increased its sales on the Community market
by nearly 40 % during the analysis period.

The Community industry increased its share of the Community market by nearly 50 % during the
analysis period. The highest market share was recorded in 2000. However, some market share was
lost to the dumped imports in the IP as their volume grew at a faster rate than the overall market.
Most of the Community industry's increase in market share resulted from the effect of Quimigal's
production coming on stream. However, Sorochimie was also able to increase its market share
during the analysis period because a number of other producers in the Community withdrew from
the market. Both companies, therefore, were able to experience a more rapid growth than consump-
tion. This, however, was done by pushing capacity utilisation to high levels and developing sales of
salts as the presence of dumped imports prevented them from fully benefiting from the restructuring
of the Community production of sulphanilic acid and implementing their planned capacity expan-
sion (see recital 65).

Indexed

Sales
(tonnes)

Market share
(%)

Sorochimie

1997

100

Quimigal

0

Sorochimie

100

Quimigal

0

1998

93

0

92

0

1999

96

100

103

100

2000

135

243

132

222

IP

138

238

126

202

4.5. Sales prices and costs

(61)

Sorochimie's average selling price decreased by 9 % over the analysis period. There was a sharp
decline between 1997 and 1998 before prices began to rise again, albeit very slowly. The develop-
ment between 1997 and 1998 reflects both a slight fall in the price of aniline (the most important
raw material in price terms) as well as the price pressure exerted on the Community market by the
dumped imports which increased by over 50 % in volume at this time. Sorochimie's average selling
price increased marginally from 1999 onwards as the company was able to take advantage of both
an increase in Community consumption and the exit of certain producers from the market. However,
this increase was at a lower rate than the increase in the price of aniline, which is the most
significant raw material for the production of sulphanilic acid in cost terms. In this way, the level of
undercutting established for the imports concerned in the IP demonstrates the price depressing effect
they had on the level of Sorochimie's own prices as it was unable to recover the full amount of the
increase in its main raw material. Quimigal's average selling price increased at a faster rate than
Sorochimie's but it should be borne in mind that the company had to start from a relatively low
selling price in 1999 with relatively low sales volume as it attempted to establish itself in the market.
In spite of its rising sales price, it was nonetheless unable to cover its full costs of production and
remained loss making in the IP.

Indexed

Average sales price
(ECU/EUR per tonne)

Sorochimie

1997

100

Quimigal

0

1998

85

0

1999

86

100

2000

87

103

IP

91

119

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4.6. Profitability

(62)

The Community industry was loss making throughout the analysis period, with the most important
losses recorded in 2000. It is to be recalled that the imports concerned have been present on the
Community market in significant volumes and at low prices since the beginning of the analysis
period as demonstrated by their market share of approximately 18 % in 1997 and their prices being
between 7 % and 13 % below the prices of the Community industry's prices in the IP. Sorochimie's
losses on net sales to unrelated customers in the Community during the IP, when expressed as a
percentage of the same sales, were in single digits whilst Quimigal's losses were in double digits.
Quimigal's net return on sales include a recalculation of their depreciation on a straight line over a
period of 10 years in order not to take into account exceptional start-up costs in the form of
accelerated amortisation. Furthermore, as capacity utilisation was fairly high in the IP, no impact of
low start-up volumes on unit costs is included in the data examined.

(63)

It is clear that the viability of the Community industry depends on it being able to achieve higher
selling prices for its production and thereby put an end to its prolonged loss making period.

4.7. Investments and ability to raise capital

(64)

(65)

The table below indicates that the Community industry continued to make investments in its
sulphanilic acid activities throughout the analysis period. In the case of Sorochimie, these invest-
ments were primarily related to the maintenance of existing capital assets. It should be noted that
Quimigal made substantial investments in advance of its start-up in 1999. This company made the
decision to enter the sulphanilic acid market several years earlier when prices on the Community
market were higher.

Sorochimie's ability to raise capital has been affected by the dumped imports as investment plans to
increase capacity have been deferred since the necessary expenditure could not be justified in the
current environment of insufficient returns on sulphanilic acid activities. Quimigal also had to delay
its expansion plans because of the current market situation.

Indexed

Investments
(ECU/EUR)

Sorochimie

Quimigal

1997

100

100

1998

39

826

1999

92

291

2000

91

100

IP

81

99

4.8. Return on investments and cash flow

(66) As the Community industry has been loss making throughout the analysis period, the figure for the
return on investments, which expresses the after tax result as a percentage of the average opening
and closing net book value of assets employed in the production of sulphanilic acid, has also
remained negative.

(67)

Sorochimie was cash generative throughout the analysis period, although only marginally so in
1998, 1999 and 2000. Quimigal was cash generative in the year it commenced sales (1999) but
then cash flow became negative in 2000 and the IP.

4.9. Employment, productivity and wages

(68)

(69)

The following table shows the development in the number of workers employed in the sulphanilic
activities of both companies forming the Community industry and the average total employment
cost per employee. The figure for productivity is calculated on the basis of tonnes produced per
employee.

For the Community industry as a whole, employee numbers were the same in the IP as at the
beginning of the analysis period. However, it should be noted that the two companies experienced
divergent trends in that Sorochimie lost a number of jobs incidentally equal to that created by
Quimigal when it came onto the market.

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(70)

The Community industry considerably improved its productivity during the analysis period. This
occurred as Quimigal reached its planned level of production in the IP and efforts were made overall
to improve competitiveness.

Indexed

1997

1998

1999

2000

Employees
(number)

Average employment
cost per employee
(ECU/EUR
person)

per

Productivity
(tonnnes per person)

Sorochimie

100

Quimigal

0

Sorochimie

100

Quimigal

0

Sorochimie

100

Quimigal

0

96

100

121

100

131

0

89

100

133

278

140

100

86

133

134

208

166

216

IP

86

133

132

208

177

261

4.10. Magnitude of dumping

(71) Given the volume and the price of the dumped imports,
the impact of the actual margins of dumping, which are
significant, cannot be considered negligible.

4.11. Conclusion on injury

(72)

The imports from the countries concerned had a signifi-
cant presence on the market even at the beginning of
the analysis period. During the IP itself, the volume of
such imports was over 150 % the level recorded in
1997. They have doubled their market share during the
analysis period to reach a level of more than 40 % in the
IP. The imports concerned undercut the prices of the
Community industry significantly. The most
rapid
growth in market share occurred between 1997 and
1998. It was also at this time that Sorochimie suffered
the sharpest drop in its average sales prices as it was
the dumped
forced to compete aggressively against
imports in an effort to maintain its position on the
market.

(73) Although Sorochimie was later able to raise its selling
prices and also increase its sales volumes as other opera-
tors were forced out of the market,
it remained loss
making due to the low price levels prevailing on the
market. This was in spite of its improved efficiency as
demonstrated by the increase in productivity.

(74) Quimigal was never able to cover its costs although the
extent of its losses reduced somewhat due to an increase,
albeit an insufficient one,

in its selling price.

(75)

The dumping margins found were of a significant
It is also recalled that as a direct conse-
magnitude.
quence of the prolonged loss making situation that the
Community industry had difficulties in raising capital
and had to defer investment plans. The losses were also
reflected in the development of Community industry's
return on investment.

(76) On the basis of

it

is provisionally
the foregoing,
concluded that the Community industry has suffered
injury, characterised by price depression and
material
suppression, a prolonged period of losses,
insufficient
returns on investment and the deferment of expansion
plans, within the meaning of Article 3 of the basic
Regulation.

F. CAUSATION OF INJURY

1. Introduction

(77)

(78)

the Commission examined whether

In accordance with Article 3(6) and (7) of the basic
Regulation,
the
dumped imports originating in the countries concerned
have 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.

2. Effect of the dumped imports

the low price level of

The volume of the dumped imports increased by more
than 150 % during the analysis period. In addition to a
the
price depression effect,
dumped imports and their increasing presence on the
Community market had a price suppressing effect on the
prices of both companies constituting the Community
industry in that they were unable to reflect the full
increase in their cost of production in their selling price.
Finally the Community industry could not increase its
production capacity as should have been the case given
the withdrawal of other Community producers from the
market and the increase in demand observed over the
analysis period as a whole.

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3. Effects of other factors

3.3. The export performance of the Community industry

3.1. Imports originating in other third countries

(79) With the

level

to its lowest

exception of 1999 when Community
consumption fell
in the analysis
period, the volume of imports originating in other third
countries remained relatively stable at approximately
2 000 tonnes. Overall, they therefore lost market share
from approximately 21 % in 1997 to 18 % in the IP.
Only imports from the USA and Hungary were at levels
above 1 % of Community consumption in the IP.
It
should be noted that the sole producer of sulphanilic
acid in Japan ceased manufacturing the product during
the analysis period. Imports from this country in the IP
were not significant (less than 100 tonnes).
Imports
from Japan have therefore not been further considered
in this investigation.

(80)

(81)

Imports originating in the USA appeared on the
time in 1999 and
for the first
Community market
increased significantly thereafter to reach a market share
of around 10 % in the IP. This came about following the
relocation of some production activities that had previ-
ously taken place in the Community. The prices of
imports originating in the USA were significantly higher
than those of the Community industry.

Imports originating in Hungary decreased by nearly half
during the analysis period. Their average selling price
was
the dumped
imports and broadly similar to those of the Community
industry.

significantly higher

than that of

(82) On the basis of the above, it is provisionally concluded
that imports originating in other third countries and in
particular the USA and Hungary did not contribute to
the material injury suffered by the Community industry.

(84)

(85)

Sorochimie's exports as percentage of total sales in the
IP was similar to that recorded at the start of the analysis
period at approximately one third. There was an increase
in 1998 and 1999 due to certain one-off contracts. The
level of Quimigal's exports expressed by the same
measure was higher in the IP at approximately one half
of total sales. The Community industry's price level for
exports during the IP was similar to that experienced for
sales on the Community market. It has therefore been
provisionally concluded that the export performance of
the Community industry did not contribute to the injury
it suffered.

3.4. The entry of Quimigal onto the Community market

is

recalled that Quimigal,

It
the second company
the Community industry, began
forming part of
producing and selling sulphanilic acid in 1999 as a
result of an earlier decision taken at a time when prices
on the Community market for sulphanilic acid were
higher. It has been alleged that at least part of the injury
suffered by the Community industry should be attrib-
uted to Quimigal and not to the imports concerned in
that Quimigal had relatively low sales prices and high
unit costs in its first years of operation. This claim had
to be rejected since it is the presence of the very low
priced dumped imports, that forced the company to
offer its production at fairly similar prices in order to
gain market share in a reasonable length of time. Prices
of Quimigal were afterwards able to slightly increase.

(86)

Furthermore, in order to ensure that the injury suffered
by the Community industry was not incorrectly attrib-
uted to the dumped imports, the impact of any excep-
tional start-up costs from Quimigal's operating results
were removed as explained at section 4.6 on profit-
ability.

(87)

In view of the above, it is provisionally concluded that
the entry of Quimigal onto the market did not contri-
bute to the material injury suffered by the Community
industry.

3.2. Changes in the pattern of consumption

4. Conclusion on causation

(83)

The apparent consumption of sulphanilic acid in the
Community increased during the analysis period from
in 1997 to around
approximately 10 000 tonnes
11 000 tonnes in the IP. The Community industry was
able to increase its market share over the same period as
other Community producers left the market. The devel-
opment of consumption did not, therefore, contribute to
the injury suffered by the Community industry.

(88)

The investigation has shown that the dumped imports in
large quantities on the Community market caused severe
price depression of the Community industry's average
selling prices. The Community industry was forced to
considerably lower its prices in order to maintain its
share of the market and ensure a satisfactory capacity
there was price suppression as
utilisation. Moreover,

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price increases did not occur which would have taken
place in the absence of the dumped imports. The fact
that it was able to increase its market share can be
attributed to the exit of a number of other Community
producers from the sulphanilic acid market. Although
the Community industry was able to raise its prices from
1998 onwards, these increases were not sufficient to
return it
the
volume of imports from the countries concerned and
their market share continued to increase.

to profitability. Over the same period,

(89)

In view of the above and in the absence of any other
factors which could have injured the Community
industry, it was provisionally concluded that the material
injury suffered by the Community industry, as evidenced
by its prolonged loss making situation, negative returns
on sales and investments and difficulties in raising
capital and carrying out expansion plans, was caused by
the dumped imports.

G. COMMUNITY INTEREST

1. General remarks

The Commission examined whether, despite the conclu-
sion on injurious dumping, compelling reasons existed
that could lead to the conclusion that it is not in the
Community interest to adopt measures in this particular
case. For this purpose and in accordance with Article
21(1) of the basic Regulation, the impact of possible
measures on all parties involved in this proceeding and
also the consequences of not
taking measures were
considered on the basis of all evidence submitted.

2. The investigation

raw materials,

to importers,
The Commission sent questionnaires
suppliers of
the
product concerned as well as other interested parties
who made themselves known within the time limit set
in the notice of initiation.

industrial users of

In total, 27 questionnaires were sent out, but only 9
replies were received within the time limits set. As noted
above in recital 7, several companies chose to submit
only comments
to completing the
Commission's questionnaires. These comments have
been taken into account where appropriate.

in preference

(90)

(91)

(92)

(93) Questionnaire responses were received within the time

limits from seven users of the product concerned:

— Bayer AG, Leverkusen, Germany,

— Ciba Spezialitätenchemie Grenzach GmbH, Grenzach

Wyhlen, Germany,

— Manuel Vilaseca SA, Barcelona, Spain,

— SA Robama, Barcelona, Spain,

— Sika Limited, Welwyn Garden City, United Kingdom,

— SIPO srl, Milan, Italy,

— SKW Polymers GmbH, Trostberg, Germany;

one trader:

— Twinstar Chemicals Ltd., Harrow, United Kingdom;

one supplier of raw materials to the sulphanilic acid industry:

— Quimigal SA, Estarreja, Portugal.

(94)

(95)

(96)

3. Likely

effect

of

the

imposition

on

the

Community industry

It is recalled that the Community industry comprises
two companies with production facilities in France and
Portugal.

the material

injury suffered by the
In spite of
Community industry during the IP, there is no reason to
doubt its long-term viability and competitiveness in a
market where normal conditions of fair trade exist. The
Community industry has plans to increase its production
capacity in the Community to be able to meet growing
domestic demand. However, these plans have had to be
the low level of prices in the
deferred because of
Community brought about by the presence of
the
dumped imports.

It should be noted that the Community industry's loss
making situation has resulted from its difficulty to
compete with the low-priced dumped imports, which
already held a significant market share at the beginning
of the analysis period and which have increased their
market share considerably during the analysis period.
The pressure of the dumped imports has also forced a
number of Community producers to cease production of
sulphanilic acid.

(97)

It is considered that the imposition of measures will
restore fair competition on the market. The Community
industry should then be able to increase the volume and
prices of its sales, thereby generating the necessary level
of return to justify continued investment in its produc-
tion facilities.

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(98)

Should measures not be imposed, it is almost certain
that the losses of the Community industry observed over
the analysis period will continue. It will not be able to
invest in new production capacity and compete effec-
tively with imports from third countries.
It is to be
noted that Sorochimie has filed for protection from its
creditors because of difficulties in its business and that
its current trading activities are being overseen by an
administrator
of
Commerce. It may be impossible for the company to
continue if measures are not imposed.

local Court

appointed

the

by

(99)

In this context, it is noted that exports from the coun-
tries concerned have been subject to anti-dumping meas-
ures in the USA since August 1992 (PRC) and March
1993 (India). With the exception of the Community
market, there are considered to be limited additional
third country markets for these exports.

(100)

It is therefore provisionally concluded that the imposi-
tion of anti-dumping measures is in the interest of the
Community industry.

4. Likely effect of the imposition of measures on

traders

(101) The Commission received one reply from a company
which imported the product concerned until recently
and also traded sulphanilic acid produced by the
the
Community industry. The company noted that
imposition of measures in the Community could lead
some users to relocate their production facilities outside
the Community or move away from certain end-product
markets. It therefore feared that it would lose business in
the Community. As concluded below with regard to
users of the product concerned, such developments are
unlikely to occur and therefore it was provisionally
concluded that the imposition of measures would not
have a serious impact on Community traders of sulpha-
nilic acid.

5. Likely effect of the imposition of measures on
suppliers of raw materials to the sulphanilic acid
industry

(102) The Commission received only one questionnaire reply
from a supplier of raw material (aniline) to the sulpha-
nilic acid industry. This reply was from Quimigal, which
is also one of the two Community producers of sulpha-
nilic acid. In the IP, its aniline sales to sulphanilic acid
producers represented a very small percentage of
its
total aniline sales in the Community. In spite of this, the
company stressed the importance of
its sales (both
internal and external) to the sulphanilic acid industry.

dumping measures would not have either major benefi-
cial or prejudicial consequences for suppliers.

6. Likely effect of the imposition of measures on

users

exporting

(104) Sulphanilic acid has a wide range of applications. It is
used in the manufacture of optical brighteners, additives
for concrete and speciality dyes and colorants. An
analysis of data provided by the Community industry,
former
cooperating
Community producer of sulphanilic acid, showed the
optical brightener sector to be the most important user
sector with
estimated
Community consumption. Concrete additives accounted
for approximately 15 % of Community consumption
and speciality dyes and colorants for 10 %. The intended
application of the remainder, which also included sales
to traders, was unknown.

approximately

65 % of

producers

and

a

(105) The Commission sought to quantify the possible finan-
cial impact of measures on the operations of the cooper-
ating users by taking into account both the origins of
their sulphanilic acid purchases and its share in their
overall manufacturing costs in the IP. As the proposed
measures are based on the dumping margins found, it
was considered for the purposes of this exercise that the
prices of imports from the countries concerned would
increase by the proposed duties.

(106) As a number of users have made the same point
opposing the imposition of measures on the grounds
that production capacity in the Community is insuffi-
cient to meet domestic demand, it has been decided to
address this concern for all user sectors in section 7.

6.1. Optical brighteners

(107) Three

received

questionnaire

replies were

from
Community companies producing optical brighteners
and written comments from a fourth. Optical bright-
eners are general fluorescent whitening agents used by
external customers primarily in the paper and detergent
industries. Although one of the questionnaire respon-
dents did not provide comprehensive information on its
the trends
profitability during the analysis period,
observed for the other two companies are considered to
be meaningful in that the two accounted for half of the
sulphanilic acid used by all three companies in the IP.

(103)

In view of the low level of cooperation from suppliers of
raw materials to the sulphanilic acid industry and the
particular situation of the one cooperating supplier, it is
the imposition of anti-
provisionally concluded that

(108) The cooperating producers of optical brighteners use
either pure grade sulphanilic acid or pure grade in a salt
solution. In the IP, approximately half of their purchases
were sourced from the Community industry and half
from other sources including the countries concerned.

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(109) Sulphanilic acid is only used in certain types of optical
brighteners and in varying quantities. When the infor-
mation provided by the three cooperating users was
combined, it was found that sulphanilic acid accounted
for in the region of 10 % of their manufacturing costs of
those optical brighteners in which sulphanilic acid is a
constituent. It was consequently established using the
methodology detailed above in recital 105 that measures
would increase the manufacturing costs for optical
brighteners containing sulphanilic acid by just over 1 %
and that the increase in their full costs (i.e. after taking
SG&A costs into account) would be somewhat less than
1 %.

(110) The producers of optical brighteners argued that there is
little differentiation between the types available on the
market. As a result, optical brighteners are treated like a
is
commodity and competition between producers
intense. This appeared to be supported by the profit-
ability data provided by two of the respondents which
showed that the returns on sales of optical brighteners
containing sulphanilic acid had declined significantly
over the analysis period in spite of the availability of
sulphanilic acid at dumped prices and a more general
decline in total manufacturing costs observed over the
same period.

(111)

It was argued that if measures were imposed, producers
of optical brighteners in third countries where there
were no measures would gain a significant price advan-
tage. One producer claimed that if the already low level
of return from its optical brighteners' business were
further reduced by measures, it would have to reconsider
its presence in the market.

(112)

advantage

against Community

It is not evident that producers of optical brighteners in
countries outside the Community will derive a distinct
competitive
based
competitors if measures are imposed. This is particularly
true if one considers that the market for sulphanilic acid
in one of the largest optical brightener producing coun-
tries, the USA, is already subject to a number of anti-
dumping duties on imports of sulphanilic acid. It should
also be noted that, taking into account the fact that the
possible increase in the overall costs of Community
based optical brightener producers would be somewhat
less than 1 %, and that optical brighteners only account
for a small part of the cost of paper production, it has
not been demonstrated that continued production in the
Community of these products would be endangered. In
view of the substantial investments they have made in
their Community production facilities in recent years,
the size of the market and their customer base,
it is
evident that these producers will maintain a substantial
presence in the Community.

(113)

It is therefore provisionally considered that the imposi-
tion of measures would not have a major adverse impact
on this user group.

6.2. Concrete additives

(114) The Commission received replies to its questionnaire
from two companies producing concrete additives and
written comments from a third. Concrete additives or
admixtures are used to improve certain characteristics of
concrete and thereby the way in which it performs
under a variety of conditions.

(115) The data of the cooperating users showed that sulpha-
nilic acid was used in the production of all types of
concrete additives. When the data of the two companies
were combined and account was taken of their respec-
tive product mix and size, it was found that sulphanilic
acid represented roughly 15 % of their manufacturing
costs. It was consequently established using the meth-
odology detailed above in recital 105 that measures
would increase the manufacturing costs for concrete
additives by just over 2 % and that the increase in their
full costs (i.e. after taking SG&A into account) would be
less than this figure.

(116) Only one of the respondents provided data concerning
the profitability of products sold containing sulphanilic
acid. The Commission has therefore not been able to
make a precise assessment of the financial
impact of
measures on this user group. Nevertheless, it is to be
noted that the turnover of products containing sulpha-
nilic acid represents a very small part (i.e. less than 5 %)
of the total turnover of the two companies that replied
to the Commission's questionnaire. Therefore, although
it
is acknowledged that measures would have some
impact on their concrete admixture business, the compa-
nies' overall activities would not be endangered. This is
supported by the fact that neither company submitted
that it would be unable either to absorb the increase in
its costs or to pass such an increase onto customers.

(117) The same two cooperating users were very much against
the imposition of measures. Apart from raising concerns
about the adequate availability of sulphanilic acid in the
Community which are addressed below in section 7,
they alleged that they would lose competitiveness on
world markets to producers of concrete admixtures in
third countries where there was access to supplies of
sulphanilic acid from India and China without anti-
dumping duties.

first

instance, neither

(118) This claim had to be rejected for a number of reasons. In
the
company provided any
evidence, such as information relating to the degree of
competitive threat posed by producers of concrete addi-
tives in other third countries, with which to substantiate
their claim. In addition, having taken account the antici-
pated increase in these companies' overall costs as noted
above in recital 115, it was not considered that measures
would have such a prejudicial effect on their competi-
tiveness.

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(119) The third producer was more equivocal

in its stance.
Whilst underlining that its competitiveness depended to
a certain extent on the price at which it was able to
purchase its raw materials, it recognised the importance
of maintaining a competitive production base for
sulphanilic acid in the Community which would guar-
antee the security of supply for this raw material.

(120)

In the light of the above, it is provisionally concluded
that the imposition of measures would not have serious
prejudicial effects on the activities of this user sector.

producers
the
Community industry.

of

sulphanilic

acid

forming

the

(124) Due to the lack of information provided on profitability
and the relatively low importance of the cost of sulpha-
nilic acid in the overall manufacturing costs of all dyes,
it is provisionally concluded that the imposition of anti-
dumping duties would not have serious prejudicial
consequences for this user sector.

6.4. Conclusion

6.3. Dyes and colorant producers

(121) The Commission received questionnaire replies from
three producers of dyes, one of which had also replied
to the Commission in its capacity as a producer of
optical brighteners. Written comments were
also
received from a fourth producer. They purchased rela-
tively small quantities of sulphanilic acid in the IP.
Approximately half of the purchases were of sulphanilic
acid originating in the Community with the remainder
coming from the countries concerned. When the data of
the three companies were combined and account was
taken of their respective product mix and size, it was
found that sulphanilic acid represented between 5 and
10 % of their manufacturing cost for dyes containing
sulphanilic acid. The turnover of these products in turn
accounted for approximately one third of the combined
turnover of these companies.

(122)

It was consequently established using the methodology
detailed above in recital 105 that measures would
increase the manufacturing costs for dyes and colours
containing sulphanilic acid by just over 1 % and that the
increase in full costs
taking SG&A into
less than this figure.
account) would be somewhat
However, as none of
these companies provided the
Commission with specific details on the profitability of
their dye businesses, it was not possible to determine
with any precision the possible effect of measures on
their overall financial situation.

(i.e. after

It was stated that

(123) One respondent did however make written comments
on the very competitive nature of the dye business and
the low margin environment in which it had to do
business.
there was strong price
competition from dye products originating in India and
China, possibly due to dumping, and that any increase
in the price of sulphanilic acid could have serious
for continued dye production in the
consequences
Community. However,
existence of
dumping on a downstream market (no evidence to this
effect having been provided) should not prevent the
application of proper
trade defence instruments to
remedy the injurious effects of the dumped imports on

the possible

(125) Recalling the conclusions reached above in respect of
the various users of sulphanilic acid in the present
investigation,
the
imposition of measures would slightly affect their finan-
cial situation but would not endanger their continued
activities or lead them to relocate their production
outside the Community.

is provisionally concluded that

it

7. Competition and trade distorting effects

(126) The Commission considered the possible competition
and trade distorting effects of measures in the light of
the findings of the investigation and comments made by
interested parties. These comments primarily focused on
the product
the
concerned into the Community because of the inability
of the Community industry to satisfy demand. One user
also raised the fear that a reduction in supply from India
and China would allow Sorochimie to fix prices on the
Community market with its American competitor.

continued need for

imports of

is accepted that

(127) Measures are not intended to prevent imports into the
Community but to ensure that they are not made at
injurious dumped prices.
imports
It
from various origins will continue to satisfy a significant
part of Community demand. It should also be noted that
to increase its
the Community industry has plans
capacity if the return on its sulphanilic acid sales reaches
an acceptable level. It is therefore most likely, provided
that the injurious effects of the dumped imports are
removed by the imposition of measures,
the
Community industry will be able to carry out these
investment plans. It is important to note that sulphanilic
acid production is already concentrated in relatively few
countries around the world. According to the findings of
the present
the
Community is now restricted to India, China, the USA
and Hungary. It is therefore in the interests of all users
in the Community that
the Community industry is
allowed to operate under conditions of fair competition
so that domestic supplies of the product continue to be
available.

investigation, production outside

that

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Official Journal of the European Communities

L 87/43

(128) The second claim concerning price collusion had to be
rejected as mere conjecture. No evidence was supplied to
support the allegation. Moreover, were measures not to
be imposed, the Community industry could be forced
out of production. If this were to happen, the number of
suppliers on the Community market would be further
reduced and remaining suppliers could raise their prices
to take advantage of this fact.

(129)

In view of the above, it is provisionally concluded that
the imposition of provisional anti-dumping duties would
help to protect the choice of user industries and main-
tain competition on the Community market.

8. Conclusion on Community interest

(130) On the basis of the above, it is provisionally concluded
that there are no compelling reasons on the grounds of
Community interest why anti-dumping measures should
not be imposed in the present case.

H. PROVISIONAL ANTI-DUMPING MEASURES

1. Injury elimination level

(131)

In order to prevent further injury being caused by the
dumped imports, it was considered appropriate to adopt
anti-dumping measures
in the form of provisional
duties.

(132) For the purpose of determining the level of these duties,
the Commission took account of the dumping margins
found and the amount of duty necessary to eliminate the
injury sustained by the Community industry.

(133) To this end, the Commission determined a non-injurious
price based on production costs of
the Community
industry (without taking into account any exceptional
costs linked to the Sorochimie's difficulties in its glue
business or to the start-up costs of Quimigal), together
with a profit margin of 6 %. This profit margin was
considered reasonable and achievable for an industry of
this type in the chemical sector. The non-injurious price
was compared with the prices of the dumped imports
used to establish price undercutting, as outlined above.
Differences resulting from this comparison were then
expressed as a percentage of the total cif import value to
establish the injury margin.

2. Provisional measures

(134) Since for both India and the PRC the dumping margin
has been found to be lower than the injury elimination
level, the provisional duties to be imposed should corre-
spond to the dumping margins established, in accord-
ance with Article 7(2) of the basic Regulation.

India,

(135) However, with regard to the parallel anti-subsidy
proceeding in respect of
in accordance with
Article 24(1) of Council Regulation (EC) No 2026/97 (1)
(‘the basic anti-subsidy Regulation’) and Article 14(1) of
the basic Regulation, no product shall be subject to both
anti-dumping and countervailing duties for the purpose
of dealing with one and the same situation arising from
dumping or export subsidisation. It is therefore neces-
sary to determine whether, and to what extent,
the
subsidy amounts and the dumping margins arise from
the same situation.

(136) With regard to India, a provisional countervailing duty
corresponding to the amount of subsidy, which was
found to be lower than the injury margin, was proposed
the basic anti-
in accordance with Article 12(1) of
the subsidy schemes
subsidy Regulation. Certain of
investigated which were found to be countervailable in
India constituted export subsidies within the meaning of
Article 3(4)(a) of the basic anti-subsidy Regulation. As
such, these subsidies could only affect the export price
of the Indian exporting producer, thus leading to an
increased margin of dumping. In other words, the provi-
sional dumping margin established for the sole cooper-
ating Indian producer is partly due to the existence of
export subsidies. In these circumstances, it is not consid-
ered appropriate to impose both countervailing and anti-
dumping duties to the full extent of the relevant export
subsidy amount and dumping margin provisionally
established. Therefore,
the provisional anti-dumping
duty should be adjusted to reflect the actual dumping
margin remaining after the imposition of the provisional
countervailing duty offsetting the effect of the export
subsidies. Consequently, the anti-dumping duty rate for
India has been set at the level of the dumping margin
(24,6 %) minus the rate of countervailing duty of the
export subsidies (6,6 %).

(137) For the PRC, the anti-dumping duty rate has been set at

the level of the dumping margin.

I. FINAL PROVISIONS

(138)

In the interest of sound administration, a period should
be fixed within which the interested parties which made
themselves known within the time limit specified in the
notice of initiation may make their views known in
writing and request a hearing. Furthermore, it should be
stated that the findings concerning the imposition of
duties made for the purposes of this Regulation are
provisional and may have to be reconsidered for the
purposes of any definitive duty,

(1) OJ L 288, 21.10.1997, p. 1.

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Official Journal of the European Communities

4.4.2002

HAS ADOPTED THIS REGULATION:

Article 1

A provisional anti-dumping duty is hereby imposed on
1.
falling within CN code
acid
imports
ex 2921 42 10 (TARIC code 2921 42 10 60) originating in
the People's Republic of China and India.

sulphanilic

of

2.
The rate of the provisional anti-dumping duty applicable
to the net-free-at-Community-frontier-price, before duty, shall
be as follows:

Country

Provisional duties
(%)

People's Republic of China

India

21,0

20,1

3.
Unless otherwise specified,
concerning custom duties shall apply.

the provisions

in force

provision of a security equivalent to the amount of provisional
duty.

Article 2

Without prejudice to Article 20 of Regulation (EC) No 384/96
interested parties may request disclosure of the essential facts
and considerations on the basis of which this Regulation was
adopted, make their views known in writing and apply to be
heard orally by the Commission within 20 days of the date of
entry into force of this Regulation.

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

Article 3

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

4.
The release for free circulation in the Community of the
product referred to in paragraph 1 shall be subject to the

Article 1 of this Regulation shall apply for a period of six
months.

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

Done at Brussels, 3 March 2002.

For the Commission

Pascal LAMY

Member of the Commission