Council Regulation (EC) No 930/2003 of 26 May 2003 terminating the anti-dumping and anti-subsidy proceedings concerning imports of farmed Atlantic salmon originating in Norway and the anti-dumping proceeding concerning imports of farmed Atlantic salmon originating in Chile and the Faeroe Islands
Date: 2003-05-26
Institutions: Council of the European Union
Subjects: Chile, Faroes, Norway, anti-dumping legislation, anti-subsidy proceeding, import, originating product, sea fish

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I

(Acts whose publication is obligatory)

COUNCIL REGULATION (EC) No 930/2003

of 26 May 2003

terminating the anti-dumping and anti-subsidy proceedings concerning imports of farmed Atlantic
salmon originating in Norway and the anti-dumping proceeding concerning imports of farmed
Atlantic salmon originating in Chile and the Faeroe Islands

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 (‘the basic
anti-dumping Regulation’) (1), and in particular Articles 5, 9
and Article 11(3) and (7) thereof,

Having regard to Council Regulation (EC) No 2026/97 of 6
October 1997 on protection against subsidised imports from
countries not members of the European Community (‘the basic
anti-subsidy Regulation’) (2), and in particular Articles 14, 19
and Article 22(3) thereof,

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

Whereas:

A. PROCEDURE

(1)

1. PREVIOUS INVESTIGATIONS AND EXISTING MEASURES

CONCERNING NORWAY

In September 1997 the Council, by Regulations (EC) No
1890/97 (3) and No 1891/97 (4), imposed definitive anti-
dumping and countervailing duties on imports of farmed
Atlantic salmon originating in Norway. By Decision 97/
634/EC (5), the Commission accepted undertakings from
a large number of exporters/producers from Norway to
In
respect,
December 1998, the Commission announced by way of
a notice published in the Official Journal of the European
Communities (6) the initiation of an ex officio investiga-
tion pursuant to Article 11(3) of Regulation (EC) No
384/96 and Article 19(1) of Regulation (EC) No 2026/
97 in order to review the possibility of a change in the
form of the duties so that imports of salmon at injurious

inter alia, certain minimum import prices.

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

(EC) No 1972/2002 (OJ L 305, 7.11.2002, p. 1).

(2) OJ L 288, 21.10.1997, p. 1. Regulation as amended by Regulation

(EC) No 1973/2002 (OJ L 305, 7.11.2002, p. 4).

(3) OJ L 267, 30.9.1997, p. 1.
(4) OJ L 267, 30.9.1997, p. 19.
(5) OJ L 267, 30.9.1997, p. 81. Decision as last amended by Decision

2003/119/EC (OJ L 47, 21.2.2003, p. 46).

(6) OJ C 400, 22.12.1998, p. 4.

(2)

(3)

prices would be prevented. Subsequently, the Council
repealed and replaced Regulations (EC) No 1890/97 and
No 1891/97 by a single Council Regulation (EC) No
772/1999 (7).

to the abovementioned anti-dumping and
In parallel
countervailing duties and undertakings, an agreement
known as the ‘Agreement on a solution to the salmon
case’
signed between the
Commission and the Norwegian government providing
for supporting measures to be managed within the
framework of regular contacts between the signatories.

(Salmon Agreement) was

2. INTERIM AND EXPIRY
CONCERNING NORWAY

REVIEW INVESTIGATIONS

On the basis of
the information received by the
Commission within the framework of the Salmon Agree-
ment and information obtained from various other
sources in 2001, the Commission considered there to be
sufficient grounds to warrant the initiation of a further
interim review of the existing measures. In particular, it
appeared that the form of the measures (including the
undertakings) was no longer appropriate to remove the
injurious effects of dumping and subsidisation given the
disturbances present in the Community market. It also
appeared, given the evidence provided by the Norwegian
authorities concerning normal value and the available
information on export prices to the Community, that
the dumping margins established may have changed
in the light of information
significantly. Furthermore,
received from the Norwegian authorities concerning
changes
tax and certain information
received from Community producers of farmed Atlantic
salmon,
it was considered appropriate to review in
parallel the effectiveness of the form and level of the
countervailing measures. Finally, given other information
concerning developments in the ownership structure of
salmon producing companies in the Community and
production costs and the resale prices of Norwegian
imports, whose volume was substantial, it was consid-
ered necessary to review the findings relating to injury
in respect of
the anti-dumping and countervailing
measures.

to the export

(7) OJ L 101, 16.4.1999, p. 1. Regulation as last amended by Council

Regulation (EC) No 321/2003 (OJ L 47, 21.2.2003, p. 3).

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(4)

(5)

(6)

(7)

(8)

Therefore, having determined, after consultation of the
Advisory Committee, that sufficient evidence existed to
justify the initiation of an interim review, the Commis-
sion announced by way of a notice (notice of initiation)
published in the Official Journal of the European Commu-
nities (1), the initiation of an investigation pursuant to
Article 11(3) of the basic anti-dumping Regulation and
Article 19(1) of the basic anti-subsidy Regulation with
regard to imports
farmed
Atlantic salmon originating in Norway, covering both
the form and the level of the anti-dumping and counter-
vailing measures.

into the Community of

According to Article 11(7) of the basic anti-dumping
Regulation and Article 22(3) of the basic anti-subsidy
Regulation, when an interim review of measures is in
progress at the time when measures are due to expire,
the interim review must also cover those aspects, which
under other circumstances, would be dealt with within
the scope of an expiry review opened under Article
11(2) of the basic anti-dumping Regulation and Article
18(1) of the basic anti-subsidy Regulation. The Commis-
sion therefore had to investigate whether the expiry of
the measures would be likely to result in a continuation
or recurrence of dumping, subsidisation and injury. In
this context,
interested
parties of the extension in the scope of the review and
sought opinions as
the
to whether
measures would be likely or unlikely to lead to the conti-
nuation or recurrence of dumping and injury, and/or the
continuation or recurrence of subsidisation and injury.

the Commission informed all

the expiry of

3. INITIATION OF AN ANTI-DUMPING PROCEEDING

CONCERNING CHILE AND THE FAEROE ISLANDS

On 18 July 2002, the Commission announced by a
notice published in the Official Journal of the European
Communities (2),
an anti-dumping
initiation of
the
proceeding concerning imports of
farmed Atlantic
salmon originating in Chile and the Faeroe Islands.

The proceeding was initiated as a result of a complaint
lodged on 3 June 2002 by the EU Salmon Producers'
Group (the complainant) on behalf of producers repre-
senting a major proportion of the Community produc-
tion of farmed Atlantic salmon within the meaning of
Article 4 of
the basic anti-dumping Regulation. The
complaint contained sufficient prima facie evidence of
dumping and material
injury resulting therefrom to
justify the initiation of an anti-dumping proceeding.

(9)

(10)

(11)

an opportunity to make their views known in writing
and to request a hearing within the time limit set in the
notices of initiation.

in
A number of exporting producers and traders
Norway, Chile and the Faeroe Islands, producers and
suppliers located in the Community as well as represen-
tative associations of
fish importers, processors and
consumers made their views known in writing. All
parties who so requested within the above time limit
and showed that there were particular reasons why they
should be heard were granted the opportunity to be
heard.

the apparent

large number of exporting
In view of
producers of the product concerned in Norway, Chile
and the Faeroe Islands and the large number of produ-
cers of the product in the Community, the application of
sampling techniques for the investigation of injurious
dumping and subsidisation in the review and injurious
dumping in the investigation concerning Chile and the
Faeroe Islands was envisaged in the notices of initiation.

The Commission sought and verified all information it
deemed necessary for the purposes of the investigations.
With regard to the investigation concerning imports
originating in Chile and the Faeroe Islands, this included
all information deemed relevant for the determination of
dumping, injury and Community interest. With regard
to the investigation concerning imports originating in
Norway, this included all information deemed relevant
for the determination of dumping, subsidisation and
injury and also the determination as to whether there
was a likelihood of a continuation and/or recurrence of
injurious dumping and subsidisation and the assessment
of Community interest. Verification visits were carried
out at the following:

(a) The Government of Norway and other entities

in Norway

— Ministry of Fisheries, Oslo,

— Ministry of Local Government and Regional Develop-

ment, Oslo,

— Ministry of Trade and Industry, Oslo,

— Norwegian Industrial and Regional Development

Fund (SND), Oslo,

— The Research Council of Norway, Oslo.

(b) Community producers

— Orkney Sea Farms Ltd. Glasgow, United Kingdom,

4. PARTIES CONCERNED BY THE INVESTIGATIONS

— Muirachmhainní Teo, Co. Galway, Ireland,

The Commission officially advised the exporting produ-
cers and importers/traders known to be concerned as
well as their associations, the authorities of Norway and
Chile, and the Home Government of the Faeroe Islands,
users, suppliers and Community producers of the initia-
tion of the investigations. Interested parties were given

(1) OJ C 53, 28.2.2002, p. 10.
(2) OJ C 172, 18.7.2002, p. 11.

— Ardvar

Salmon

Ltd,

Saffron Walden, United

Kingdom,

— Hoganess Salmon Ltd, Wester Sound Salmon Ltd,

Shetland, United Kingdom,

— Cro Lax Ltd, Shetland, United Kingdom,

— Bressay Salmon Ltd, Shetland, United Kingdom,

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— West Minch Salmon Ltd, Atlantic West Salmon Ltd,
Sidinish Salmon Ltd, South Uist, United Kingdom,

— Loch Duart Ltd, Edinburgh, United Kingdom,

— Hoove Salmon Ltd, Shetland, United Kingdom,

(12)

— North Atlantic

Salmon Ltd,

Shetland, United

Kingdom,

— Ayre Salmon Ltd, Shetland, United Kingdom.

(c) Exporters/producers and related sales companies

Norway

— Midt-Norsk Havbruk AS, Rørvik,

— Lofoten Sjøprodukter AS, Leknes,

— Follalaks AS, Nordfold,

— Terra Seafood AS, Trondheim,

— Marine Harvest Norway AS, Bergen,

— Aqua Farms AS, Bergen,

— Naco Trading AS, Bergen,

— Aalesundfisk AS, Aalesund,

— Alsaker Fjordbruk AS, Onarheim,

— Labeyrie Norge AS, Oslo.

Chile

— Marine Harvest Chile S.A., Puerto Montt,

— Salmones Multiexport Ltda, Puerto Montt,

— Pesca Chile S.A., Santiago,

— Invertec Pesquera Mar de Chiloé S.A., Santiago,

— Cultivos Yadran S.A., and Yadran Quellón S.A.,

Quellón, Chiloé Island,

The Faeroe Islands

— P/F Vestlax, and P/F Vestsalmon, Kollafjørður,

— P/F East Salmon, Klaksvík,

— P/F Faeroe Seafood, Tórshavn,

— P/F Bakkafrost, Glyvrar.

(d) Related importers in the Community

— Armoric S.A., Quimper, France,

— Vensy España S.A., Málaga, Spain,

— Narvik S.A., Landivisiau, France,

(13)

(14)

(15)

(16)

(f) Suppliers

— Landcatch Ltd, Argyll, United Kingdom.

The investigation of dumping and subsidisation in the
review investigation concerning Norway covered the
period 1 January to 31 December 2001 (‘IP’). This same
period was exceptionally taken for the investigation of
dumping in the anti-dumping proceeding concerning
Chile and the Faeroe Islands in order to allow for a
combined analysis of injury and causation for all the
proceedings. The examination of trends in the context of
the analysis of injury for both investigations covered the
period from January 1998 to the end of the IP (analysis
period).

In accordance with Article 20 of the basic anti-dumping
Regulation and Article 30 of the basic anti-subsidy Regu-
lation, all parties concerned were informed of the essen-
tial facts and considerations on the basis of which it was
intended to propose the termination of the investiga-
tions. They were also granted a period within which to
make representations subsequent to this disclosure.

The Commission continued to seek and verify all infor-
mation it deemed necessary for its investigations. The
written comments submitted by the parties were consid-
ered, and where appropriate,
the findings have been
modified accordingly.

B. PRODUCT CONCERNED AND LIKE PRODUCT

1. PRODUCT CONCERNED

The product under consideration is farmed Atlantic
salmon, whether or not filleted, fresh, chilled or frozen.
The definition excludes other
farmed fish
similar
trout, other salmon
products such as large (salmon)
species such as Pacific salmon as well as wild salmon
and further processed types such as smoked salmon.

The product is currently classifiable within CN codes
0302 12 00, 0303 22 00, 0304 10 13 and 0304 20 13,
corresponding to different presentations of the product
(fresh or chilled whole fish, fresh or chilled fillets, frozen
whole fish and frozen fillets). All these presentations
were found to be sufficiently similar for them to consti-
tute a single product for the purpose of the proceeding.

— Benfumat S.A., St. Feliu de Llobregat, Spain,

2. LIKE PRODUCT

— H. Van Wijnen, Krimpen a/d Ijssel, Netherlands,

— A-fish Skagen AS, Skagen, Denmark,

— Labeyrie S.A., Saint Geours de Maremne, France.

(e) Unrelated importers in the Community

— Moulin de la Marche, Brittany, France.

(17)

It was considered whether the product produced in
Norway, Chile and the Faeroe Islands and sold for export
to the Community was identical, that is to say alike in
all respects to the farmed Atlantic salmon produced in
the Community and sold on the Community market
within the meaning of Article 1(4) and (5) of the basic
anti-dumping and anti-subsidy Regulations respectively.

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(18) One party contended that

fresh and frozen salmon
should be distinguished for the purpose of the investiga-
tion on the basis that
frozen salmon, which is not
produced in large quantities in the Community, had
distinct customers and markets from fresh salmon. It
was noted that in a previous Commission investigation
of farmed Atlantic salmon initiated in 1990, which was
subsequently terminated without
the imposition of
measures, frozen salmon had been excluded from the
the investigation. Similarly, attention was
scope of
drawn to the fact that authorities in the United States of
America (USA) have consistently made the distinction
between fresh and frozen salmon in the context of anti-
dumping and countervailing investigations relating to
salmon. This party suggested that the freezing of salmon
added significant value-added to the final product which
was appreciated by certain users in the processing
industry. Frozen salmon, it was argued, was a further
processed product that used fresh salmon as its raw
material. It was claimed that consumers in the Commu-
nity showed a clear preference for fresh salmon and that
this was reflected in the price premium that they were
prepared to pay. In view of these considerations, it was
argued that frozen Atlantic salmon could not be consid-
to that produced in the
ered to be a like product
Community and should therefore be excluded from the
investigation.

(19)

(20)

In assessing whether the product concerned should be
deemed to be alike to farmed Atlantic salmon produced
in the Community, it was initially considered whether
the various types and presentations of farmed Atlantic
salmon, i.e. fillets or whole fish, fresh or frozen, shared
the same basic physical, technical and/or chemical char-
acteristics. Arguments concerning practice in the USA
and in the prior investigation, which was terminated
without measures, were not considered relevant in this
context. Indeed,
it is recalled that in the most recent
investigations which led to the imposition of measures
against imports into the Community of farmed Atlantic
salmon originating in Norway,
it was determined that
the product concerned included whole fish, gutted fish
and various types of portion and fillets, whether fresh,
chilled or frozen and that such presentations of salmon
constituted a single product which itself was deemed to
be alike in all respects to that produced in the Commu-
nity and sold on the Community market. It was not
considered that the freezing of salmon was sufficient to
alter the basic characteristics of the product. Rather than
adding value to the product that was appreciated by
certain users,
it was considered that one of the main
reasons for freezing the product was to facilitate its
transport to the Community. Consequently, references to
frozen salmon as a further processed product derived
from fresh salmon in the same way that wine is
produced from grapes were not found to be reasonable
in the context of the present investigations.

increased

The present investigations established fresh and frozen
salmon to be interchangeable to a certain degree. Indeed,
given the
consumption
accounted for by frozen salmon in the IP, it has to be
assumed that there are certain users not having coop-
erated in the proceeding that are able to replace fresh
salmon in their production processes with frozen

share of

total

salmon. At the same time, it is noted that the Commu-
nity market shows a clear preference for farmed Atlantic
salmon over other types of salmon such as Pacific
salmon and wild salmon. This is evidenced by the
volume of
farmed Atlantic salmon consumed in the
Community as described in recital 164. Species of
salmon other than the product concerned are therefore
not considered to have a significant influence on the
market for farmed Atlantic salmon.

C. SAMPLING FOR DUMPING ASSESSMENT PURPOSES

to Article 17(2) of

In order to enable the Commission to select a sample,
pursuant
the basic anti-dumping
Regulation, exporters, producers and exporting produ-
cers were requested to make themselves known within
three weeks of the initiation of the review investigation
and of the anti-dumping proceeding and to provide basic
information on their export and domestic sales, their
precise activities with regard to the production of the
product concerned and the names and activities of all
their related companies in the production and/or selling
of
salmon. The Commission also
contacted known associations of exporters/producers,
the authorities of Norway and Chile, and the Home
Government of the Faeroe Islands. No objections to the
use of sampling were raised by these parties.

farmed Atlantic

1. PRE-SELECTION OF COOPERATING COMPANIES

Chile

related companies

59 entities in Chile, composing 42 individual companies
or groups of
(companies), came
forward and provided the requested information within
the time limit set for this purpose. They represented
almost 100 % of total exports of the product concerned
from Chile to the Community. However, only 28 were
producers reporting exports to the Community during
the IP which could be taken into account in the selection
of the sample. As to the remaining fourteen companies,
eight were traders that could not be taken into account
in the selection of the sample, three were producers with
no exports to the Community during the IP and the
remaining three companies were transformers with no
production of the product concerned.

(21)

(22)

The Faeroe Islands

(23)

26 companies in the Faeroe Islands, grouped in thirteen
groups of related companies, came forward and provided
the requested information within the time limit set for
this purpose. All of these companies expressed a wish to
cooperate in the investigation. They represented 100 %

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total exports of

the product concerned from the
of
Faeroe Islands to the Community. Out of the thirteen
groups, seven indicated both production and exports to
the Community during the IP. These seven groups were
taken into account in the selection of the sample.

(29)

The companies which finally constituted the sample and
which fully cooperated with the investigation as well as
the sole company that claimed individual examination
were attributed their own dumping margin.

Norway

(30) Questionnaires were sent

four
sampled companies and to those companies that initially
expressed their intention to claim an individual margin.

for completion to all

(24)

228 companies in Norway replied to the sampling mini-
questionnaire within the time limit set for this purpose.
They represented close to 100 % of total Norwegian
exports of the product concerned to the Community.

The Faeroe Islands

2. SELECTION OF THE SAMPLE

Chile

(25)

In Chile, as a general rule, the production and sales of
the product concerned is made by integrated companies
which carry out both functions. Thus,
in the case of
Chile only one sample of integrated exporting producers
was selected. According to Article 17(1) of the basic
anti-dumping Regulation, the selection of the sample
was based on the largest
representative volume of
exports which could reasonably be investigated within
the time available. Criteria that were also found to be
important in the selection of the Chilean sample were
representative domestic sales and significant production.

(26) On this basis four exporting producers were chosen to
constitute the sample in consultation with the Chilean
Salmon and Trout Producers Association (‘CSTPA’) and
the Chilean authorities, both of which raised no objec-
tion to the proposal of
the Commission. The four
companies selected in the sample represented, according
to the replies to the mini-questionnaire, around 45 % of
Chilean export sales to the Community, 53 % of Chilean
domestic sales and 36 % of Chilean production of the
product concerned.

(27)

The cooperating exporting producers, who were not
finally retained in the sample, were informed that any
anti-dumping duty on their exports would be calculated
in accordance with Article 9(6) of
the basic anti-
dumping Regulation. Some of these companies initially
indicated their intention to claim an individual treatment
in accordance with Article 17(3) of
the basic anti-
dumping Regulation in case they were not selected in
the sample. However, only two substantiated claims
were received within the deadline specified in the notice
of initiation.

treatment,

subsequently

(28) One of the two companies that submitted a claim for
individual
the
Commission that it wished to withdraw its request for
individual treatment because its submission (question-
naire response) had serious errors and it did not have
the human resources either to correct these errors or to
continue with the investigation.

informed

exporting

integrated

producers was

(31) As was the case with Chile, the production and sales of
the product concerned in the Faeroe Islands is carried
out by integrated companies. Therefore, only one sample
selected.
of
According to Article 17(1) of the basic anti-dumping
Regulation, the selection of the sample was based on the
largest representative volume of exports, which could
reasonably be investigated within the time available.
Three exporting producers were chosen to constitute the
sample in consultation with and with the consent of the
Faeroe Fish Farmers Association and the Home Govern-
ment of the Faeroe Islands. The three companies selected
in the sample represented, according to the replies to the
around 54 % of both Faeroese
mini-questionnaire,
production and exports
the
to the Community of
product concerned.

(32) None of the remaining exporting producers requested an
individual treatment in accordance with Article 17(3) of
the basic anti-dumping Regulation. The cooperating
exporting producers, who were not finally retained in
the sample, were therefore informed that any anti-
dumping duty on their exports would be calculated in
accordance with Article 9(6) of the basic anti-dumping
Regulation.

(33)

The companies which finally constituted the sample and
which fully cooperated with the investigation were
attributed their own dumping margin. Questionnaires
were sent for completion to all sampled companies.

Norway

(34)

The samples for Norway were selected in consultation
with and with the consent of the Norwegian authorities
and the Norwegian Federation of Fish and Aquaculture
Industries.

(35) As was the case at the time of the investigation which
led to the imposition of the original measures (original
investigation),
it was found that a strict distinction in
functions is maintained between the farmers who grow
the salmon and the traders (exporters) who sell it domes-
tically and for export. It was therefore decided to have
two samples, one for farmers and one for exporters.

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(36) As it was found impossible to impose a company
specific duty which could be enforced by customs autho-
rities, since the identity of the grower could never be
checked, it was decided that the purpose of the samples
would be to establish a country-wide duty. Moreover, as
Regulation (EC) No 772/1999 established only one duty
rate for Norway as a whole, the present investigation
envisaged the review of that single duty.

(37) As a consequence, one company which had specifically
requested to be part of the sample with a view to having
an individual margin, withdrew its request.

independent customers by each exporting producer were
representative, i.e. whether the total volume of such sales
was equal to or greater than 5 % of the total volume of
the corresponding export sales to the Community.

(42)

This assessment revealed that all investigated exporting
producers had representative sales of farmed salmon on
the domestic market during the IP.

(38)

The companies were selected on the basis of
following criteria:

the

(43)

For the farmers:

(i) the significance of their production volumes; and

(ii) their location, so as to ensure a good geographical

spread.

For the exporters (traders):

(i) the significance of volume of exports; and

(ii) their involvement in activities which are representa-
tive of the various roles played by Norwegian expor-
ters.

The samples that were established along these lines
comprised ten companies. Altogether the sampling ques-
tionnaire replies of these companies indicated that they
represented 17 % of Norwegian export sales to the
Community, 20 % of Norwegian domestic sales and
15 % of Norwegian production of
the product
concerned. Questionnaires were sent for completion to
all sampled companies.

Subsequent to the disclosure, one party claimed that the
Norwegian sample of exporters was unrepresentative
and had led to unreliable results mainly because it
included a company which was part of a multinational
group with worldwide interests. It should be noted that
the selection of the sample was made at the early stages
of the review investigation and that interested parties
had the opportunity to comment on its appropriateness
at that time and chose not to do so. More importantly,
no reason was advanced as to why the fact that the
Norwegian exporter belonged to a multinational group
made the data of that company unusable for dumping
purposes. The claim of this party was therefore rejected.

(39)

(40)

D. DUMPING

1. CHILE

(a) Normal value

(41)

the basic anti-
In accordance with Article 2(2) of
the Commission first examined
dumping Regulation,
whether the domestic sales of farmed Atlantic salmon to

considered whether
The Commission subsequently
domestically sold and exported product types had similar
quality, form (fresh/chilled or frozen) and presentation
(gutted fish head-on, gutted fish head-off, whole fillets,
portions, etc.) and concluded that they were identical or
directly comparable.

(44) Additionally and for each product

type sold by the
exporting producer on the domestic market, which was
found to be directly comparable with the type sold for
export to the Community,
it was established whether
domestic sales were sufficiently representative for the
purposes of Article 2(2) of the basic anti-dumping Regu-
lation. Domestic sales of a particular product type were
considered as sufficiently representative when the total
domestic sales volume of that type during the IP repre-
sented 5 % or more of the total sales volume of the
comparable product type exported to the Community.

(45)

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

This was done by establishing the proportion of
to independent customers, of each
domestic sales
exported product type, sold at a loss on the domestic
market during the IP:

— For those product types where more than 80 % by
volume of sales on the domestic market were not
below unit costs, and where 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 of the type in question.

— For those product types where at least 10 %, but no
more than 80 %, by volume of sales on the domestic
market were not below unit costs, normal value, by
product type, was calculated as the weighted average
of domestic sales prices which were found equal to
or above unit costs only, of the type in question.

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— For those product types where less than 10 %, by
volume of sales, on the domestic market, were not
below unit costs, it was considered that the product
type concerned was not sold in the ordinary course
of
value was
constructed.

therefore,

normal

trade

and

For certain types sold for export to the Community,
domestic sales were found to have been made in the
ordinary course of trade in the case of three investigated
companies. Normal value was based for
the corre-
sponding product
type on the actual prices paid or
payable, by independent customers in the domestic
market of Chile, during the IP, as set out in Article 2(1)
of the basic anti-dumping Regulation.

(52)

(46)

(47)

(48)

(49)

(50)

For sales of product types not made in the ordinary
course of trade, as well as for product types which were
not sold in representative quantities on the domestic
market, normal value had to be constructed. All five
investigated companies had sales to the Community of
such product types.

To construct normal value pursuant to Article 2(6) of
the basic anti-dumping Regulation, the selling, general
incurred and the
and administrative (SG&A) costs
weighted average profit
realised by the cooperating
exporting producers concerned on domestic sales of the
like product, in the ordinary course of trade, during the
IP, was added to their own average cost of manufac-
the manufac-
turing during the IP. Where necessary,
turing costs and SG&A costs reported were corrected,
before being used in the ordinary course of trade test
and in constructing normal values.

(b) Export price

The investigation showed that the exports of certain
Chilean exporting producers were made both to unre-
lated and to related customers in the Community. Two
companies exported via unrelated traders in Uruguay
and in the USA. In these cases it could however be
established that the product under consideration was
shipped to the Community.

Therefore, for exports of the product under considera-
tion by the exporting producers which were made
directly to independent customers in the Community,
the export price was established in accordance with
Article 2(8) of the basic anti-dumping Regulation, on the
basis of export prices actually paid or payable by the
independent customers in the Community or by the
independent traders located in the third countries.

(51)

For sales made via their related importers, 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 those

including SG&A costs, and assuming a
importers,
reasonable profit margin, in accordance with Article 2(9)
of the basic anti-dumping Regulation.

(c) Comparison

The comparison between normal value and export price
was made on an ex-factory basis. 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
investigated
basic anti-dumping Regulation. For all
exporting producers allowances for differences in trans-
port costs, ocean freight and insurance costs, handling,
loading and ancillary costs, import charges, credit costs,
after-sales
rebates,
commissions,
currency conversions have been claimed and granted
where applicable and justified.

discounts,

costs,

(d) Dumping margins

(53) Dumping margins, for the companies investigated, were
established on the basis of a comparison of a weighted
average normal value by product type with a weighted
average export price by product type.

(54)

Since zero dumping margins were established for three
out of the four sampled exporting producers in Chile,
the dumping margin for exporting producers, which
made themselves known in accordance with Article 17
of
the basic anti-dumping Regulation but were not
examined individually, has been established, pursuant to
Article 9(6) of the basic anti-dumping Regulation, on the
basis of the dumping margin of the company in the
sample for which the existence of dumping was estab-
lished. Moreover, due to the high overall cooperation
level established, it was considered appropriate to set the
residual dumping margin for non-cooperating compa-
nies at the same level.

(55)

The dumping margins, expressed as a percentage of the
cif import price at the Community border, duty unpaid,
are the following:

Companies in the sample

— Marine Harvest Chile SA

29,4 %

— Salmones Multiexport Ltda

— Invertec Pesquara Mar de Chiloé SA

— Pesca Chile SA

0 %

0 %

0 %

Company for which individual treatment is granted

— Cultivos Yadran S.A.

and its

related

10,3 %

exporter Yadran Quellón S.A

All other companies

29,4 %

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2. THE FAEROE ISLANDS

(a) Normal value

(56)

the basic anti-
In accordance with Article 2(2) of
dumping Regulation,
the Commission first examined
whether the domestic sales of the product concerned to
independent customers by each exporting producer were
representative, i.e. whether the total volume of such sales
was equal to or greater than 5 % of the total volume of
the corresponding export sales to the Community.

(63)

(57)

This examination revealed that none of the investigated
exporting producers had representative sales of farmed
Atlantic salmon to the domestic market during the IP.

(58) As stipulated in Article 2(3) of the basic anti-dumping
Regulation, normal value was therefore to be based
either on the cost of manufacturing of the companies in
the sample, plus a reasonable amount for SG&A and for
profits or on the basis of export prices, in the ordinary
course of
third country,
provided that such sales were representative.

to an appropriate

trade,

(59)

In this respect, it was found that none of the exporting
producers had representative exports sales to an indivi-
dual third country. Therefore, the Commission had no
other option than to base normal value on the cost of
manufacturing of the companies in the sample, plus a
reasonable amount for SG&A and for profits.

(60) Given the overall absence of representative domestic
sales of the product concerned but also the absence of
domestic sales of other products falling within the same
general category as the product, a reasonable method
was sought for calculating the amounts for SG&A costs
and profits to be added to the cost of manufacturing of
the sampled exporting producers.

(61)

Therefore, it was decided, pursuant to Article 2(6)(c), to
determine normal values for the exporting producers in
the sample by adding to their own cost of manufac-
turing the weighted average SG&A costs and profits
incurred by the sampled Chilean exporting producers on
their domestic sales. This method was considered to be
the most reasonable in this situation since Chile is party
to the same proceeding as the Faeroe Islands and the
production and sales structure of the salmon industry in
this country is similar to that of the Faeroe Islands, in
the sense that both in Chile and the Faeroes the salmon
industry is run by large integrated companies.

(62)

Subsequent to the disclosure, one party contested this
methodology and claimed that the Commission should
not have used the SG&A costs and profits from Chile in

constructing the normal value for the Faeroes as the
Chilean market
is not comparable to the Faeroese
market, neither in terms of size nor in development. It
further claimed that a profit margin of 15 % should have
been used as the Commission had considered this to be
the Community
a proper
industry
investigation concerning
Norway.

level of profitability for
in the original

In addressing this argument,
it should be noted that
since there is no domestic market in the Faeroes Islands
for the product concerned, the issue of comparability of
a non-existing domestic market with another domestic
market is irrelevant. Therefore, the Commission main-
tains that, due to the absence of a domestic market in
the Faeroe Islands for the product concerned or for other
similar products, the most appropriate method for deter-
mining normal values for this territory was to use the
weighted average SG&A costs and profits incurred by
the sampled Chilean exporting producers. As explained
in recital 61, this was considered the most reasonable
the salmon
method due to the similar structure of
industry in both territories. Regarding the claim for the
level of profit used, it should be noted that the profit
margin used in the original Norwegian investigation for
calculating the injury margin (15 %)
to be
confused with the profit margin that should be used in
constructing normal values for the dumping calculations
in the current investigations. On the basis of the above
the claims made by the party cannot justify an amend-
ment to the methodology used by the Commission.

is not

(b) Export price

(64)

It was established that the exports of Faeroese exporting
producers were made directly to independent customers
in the Community. As a consequence, and in accordance
with Article 2(8) of the basic anti-dumping Regulation,
the export price was established on the basis of export
prices actually paid or payable.

(c) Comparison

(65)

The comparison between normal value and export price
was made on an ex-factory basis. 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 anti-dumping Regulation.

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L 133/9

(66)

For all investigated exporting producers allowances for
differences in transport costs, ocean freight and insur-
ance costs, credit costs, discounts and rebates have been
granted where applicable and justified.

weighted average export price for Norway as a whole
was calculated, on the basis of the information submitted
by the companies included in the samples.

(d) Dumping margins

(b) Normal value

(67) Dumping margins were established on the basis of a
comparison of a weighted average normal value by
product type with a weighted average export price by
product type. On the basis of this comparison, zero
dumping margins were found in respect of all three
companies
forming the sample. Moreover, due the
overall high cooperation level achieved from exporting
producers in the Faeroe Islands it was considered appro-
priate to attribute a zero dumping margin to all other
Faeroese exporting producers.

3. NORWAY

(a) General

(68)

(69)

In the original investigation the assessment of dumping
was made at exporters' level because the farmers, at that
time, sold all their output to Norwegian exporters and
were generally unaware of the final destination of the
product. As there has been no fundamental change in
this situation since the original investigation, the same
approach has been followed in the present investigation.

It should also be noted that, at the time of the original
investigation,
it was considered reasonable to select a
representative sample of Norwegian farmers and to base
the ‘cost of acquisition’, used in determining whether,
for each exporter, domestic sales were profitable or not
and for constructing normal value, on a weighted
average of the domestic selling prices charged by the
sampled farmers. The same approach has been followed
in this investigation, for the reasons explained in recital
68.

(70) Moreover, in the original investigation, the investigation
of dumping was limited to two specific product types
(namely fresh/chilled salmon gutted head-on of superior
quality and fresh/chilled salmon gutted head-on of
ordinary quality), which accounted for more than 72 %
of the total exports to the Community by each of the six
same
exporters which composed the
approach was followed in the present investigation, as
these two product types were found to represent not less
than 85 % of the total exports to the Community by
the five exporters comprising the present
each of
sample.

sample. The

(71)

In view of the fact that the present investigation envi-
saged the establishment of one single country-wide duty
for Norway, a weighted average normal value and a

(72)

It was first examined whether the domestic sales of each
exporter — in total and for each of the two product
types considered — had been made in representative
quantities or not. In this respect, it should be recalled
that, in the original investigation, the quantities sold to
other exporters, the final destination of which could not
be determined by the seller, were disregarded. Moreover,
the Norwegian
given the specific characteristics of
domestic market, a percentage of at least 4 % of the
volume of exports of
the product concerned to the
Community (instead of the usual 5 %) was held as suffi-
cient to consider domestic sales to be representative. As
fundamentally changed in this
the situation has not
respect, both approaches have also been applied in the
present investigation.

(73) One party claimed that the Commission should not have
used domestic sales representing less than 5 % of the
exports to the Community, and hinted that sales to
domestic customers could have been further redirected
to the Community. In relation to the first claim,
it is
noted that
the basic anti-dumping Regulation clearly
provides for the possibility to use domestic sales when
they represent a percentage lower than 5 %, if the prices
the market
charged are considered representative of
concerned, in accordance with Article 2(2). Thus, as the
circumstances between the original and the current
investigation regarding the domestic consumption in
Norway had not fundamentally changed this claim had
to be rejected. As regards the second claim, the Commis-
sion checked the domestic nature of the sales taken into
consideration and only used those which were made to
final domestic customers.

(74)

(75)

It was found that,
in the case of one exporter only,
domestic sales — in total, and for each of the two
product types considered — represented at least 4 % of
the export sales to the Community. The other sampled
exporters had either no domestic sales or domestic sales
accounting for significantly less than the abovemen-
tioned percentage.

it was

For the sole exporter for which domestic sales were
found to be representative,
then examined
whether they could be considered as being made in the
ordinary course of trade pursuant to Article 2(4) of the
basic anti-dumping Regulation. In this respect,
it was
found that for both product types the proportion of
domestic sales, by volume, sold above unit costs on the
domestic market, during the IP was less than 80 % but
more than 10 %.

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(76)

In view of the above, normal value, by product type,
was calculated as the weighted average of domestic sales
prices which were equal to or above unit costs only, of
the product type in question.

(c) Export price

(77)

The unit cost used in determining whether the domestic
sales were made in the ordinary course of trade was
calculated by adding to the unit ‘cost of acquisition’ the
unit SG&A costs incurred by the exporter in question
for the domestic sales of the like product. The unit ‘cost
of acquisition’, by product type, was obtained as the
weighted average of the prices made by the companies
included in the sample of farmers, when selling to inde-
pendent domestic customers, and in the ordinary course
of trade.

(78) As the remaining four exporters in the sample had no
representative sales, normal value in their case was
constructed on the basis of the ‘cost of acquisition’ as
defined above plus a reasonable amount for SG&A costs
and for profits, in accordance with Article 2(3) and (6)(c)
of the basic anti-dumping Regulation. The amount for
SG&A costs and the profit margin used were based on
the respective amounts calculated for the sole exporter
whose normal value was based on its domestic sales.

incorrect,

exporter was

(79) One party claimed that to use the SG&A costs and
profits of only one
and
complained that such amounts had not been disclosed.
In its opinion, the amounts used were lower in percen-
investigation.
tage than those applied in the original
With regard to these claims, it is firstly noted that the
party in question had not suggested any possible alterna-
tive, and that the use of the amounts observed during
the investigation concerning Chile would have not given
any more favourable result to that party. Moreover, there
was no reason why the percentages observed during the
original investigation should be applied as Article 11(9)
refers to the application of the same methodology of the
original
investigation (when circumstances have not
changed) and not to the application of the same factual
data for the dumping calculations. This claim was there-
fore rejected. As for the disclosure of the amounts of
SG&A costs and profits relating to only one exporter,
these could not be disclosed for reasons of confidenti-
ality.

(81)

In those cases, where export sales had been made to
independent customers in the Community, the export
price was established, in accordance with Article 2(8) of
the basic anti-dumping Regulation, on the basis of
export prices actually paid or payable.

(82)

In certain cases,
the product was imported into the
Community by a related company (transformer) in order
to further process it, and sell it as smoked or marinated
In these cases, reliable export prices would
salmon.
normally be obtained by deducting all costs incurred
between importation and resale from the prices charged
to the first independent customer,
in accordance with
Article 2(9) of
the basic anti-dumping Regulation.
However, it was found that the sales of all but one of
these exporters to their related transformers were made
at prices which were fully in line with the prices made
by the sampled exporters to independent customers in
the Community. In these cases, it was established that
both the exporters and the related transformers were
operating with reasonable profits and that the transfor-
mers did not appear to benefit from financial support of
their
therefore,
considered that the prices paid by these related transfor-
mers were reliable and could be used to establish the
export price on the basis of prices actually paid or
payable.

related Norwegian exporters.

It was,

(83)

For the sole exporter which was found to sell to its
related transformers at prices which were not in line
with the average prices made by the sampled exporters
to independent customers in the Community, the export
price was constructed in accordance with Article 2(9) of
the basic anti-dumping Regulation.

(84) One party claimed that export prices should have been
constructed for all the exporters. This claim was rejected
because Article 2(9) of the basic anti-dumping Regula-
tion is to be applied only when export prices are deemed
to be unreliable, which was the case for one exporter
only.

(80)

Finally, the normal values established as indicated above
for each exporter in the sample, were weighted on the
basis of the quantities sold to their respective customers
in the Community, so as to arrive at an average normal
value for Norway.

(85)

Finally, the export prices established, as indicated above,
for each exporter of the sample, were weighted on the
basis of the quantities sold to the respective customers
in the Community, so as to arrive at an average export
price for Norway.

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L 133/11

(d) Comparison

(86)

The average normal value and average export price
obtained as indicated above were compared on an ex-
works basis. For the purpose of ensuring a fair compar-
ison 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 anti-dumping Regulation.
Accordingly, in relation to the export price, allowances
for differences in discounts, rebates, transport, insurance,
handling,
loading and ancillary costs, credit and after-
sales costs as well as for the export tax applicable to
exports of Norwegian salmon to the Community were
granted, where applicable and supported by verified
evidence. Similarly,
in relation to the normal value,
allowances for differences in transport, insurance, hand-
ling,
loading and ancillary costs and credit costs were
granted.

(87) One party queried that the actual

level of allowances
granted had not been disclosed. However,
the actual
amounts could not be disclosed for reasons of confiden-
tiality.

(e) Dumping margin

(88)

The dumping margin was established on the basis of a
comparison of a weighted average normal value with a
weighted average export price,
in accordance with
Article 2(11) and (12) of the basic anti-dumping Regula-
tion.

(89)

This comparison showed a zero country-wide dumping
margin.

(90) One party claimed that if the weighted average normal
value had been compared with individual export transac-
tions, as should have been done in its opinion, this
would have shown the existence of dumping. For the
sake of certainty, the Commission had also assessed the
dumping margin of Norway by comparing the weighted
individual
average normal value with the prices of
export
this exercise only
transactions. The results of
showed a de minimis dumping margin for Norway, which
meant
the weighted average normal value to
weighted export price method reflected the full degree of
dumping being practised. The claim was
therefore
rejected.

that

(91) One party alleged that

the calculations should have
arrived at a positive determination of dumping by high-
lighting the fact that certain important Norwegian opera-
tors had reported losses during the IP. This party also
claimed that the system of price undertakings was being
circumvented by a large number of Norwegian exporters
and that this was indicative of dumping. However, first
of all it should be noted that the selective highlighting of
the economic performance of individual companies does

reflect

the general

situation of

the Norwegian
not
salmon industry seen as a whole. In fact the situation of
the Norwegian salmon industry during the IP showed a
mixed picture, which is commonly the case with most
other industries, where certain companies report losses
whilst others report profits. Moreover, as the reasons for
companies reporting losses may vary (e.g. extraordinary
restructuring costs,
losses from investments in other
products or countries), the fact alone that they were loss
making during the IP does not necessarily imply that
they were dumping the product concerned. With regard
to the issue of the price undertakings, it is to be noted
that this party did not bring any substantive evidence in
support of its claim. Moreover, whilst it is acknowledged
that certain undertakings were withdrawn following
violations,
such undertakings
remained in place and no evidence was found in the
investigation to suggest
the companies involved
that
were not respecting them. Therefore, these claims were
rejected.

the vast majority of

(f) Likelihood of recurrence of dumping

(i) Production capacity

(92) All but one of the sampled Norwegian farmers were

working at full capacity during the IP.

(93)

The production capacity of Norway depends on the
granting of additional licences by the Norwegian govern-
ment, and also on the feeding quota policies established
by the authorities. The Norwegian parties have stated
that any increase in the number of licenses granted and
any expansion of the feed quota policy will be made
according to sustainable market growth.

(94) One party claimed that Norway would shortly increase
its production capacity by over 10 %, following the issue
of 90 additional production licenses by the Norwegian
government in November 2002 and that this fact alone
is sufficient to indicate the likelihood of further injurious
dumping by Norwegian exports to the Community.

(95)

It was, however, considered that an increase in the
number of production licenses alone would not necessa-
rily lead to an increase in actual production, since the
latter also depends on the level of feed quota. It was also
considered that, because the length of the production
cycle of the product concerned is of at least two years,
any potential
increase would only be felt on the
Community market from the end of 2004 onwards. In
increase of
the short term, therefore, such a potential
production capacity would not have any effect on the
level of sales volumes including exports to the Commu-
nity. In any event, an increase in production capacity
does not imply of itself that any additional Norwegian
exports would be directed to the Community at injurious
prices. The claim was therefore rejected.

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(ii) Export sales to other countries (prices, volumes, dumping)

(96)

(97)

The analysis of trends in prices and volumes to other
countries was carried out both on the basis of statistical
data and on the basis of data collected from the sampled
companies.

The analysis on the basis of statistical data was made
difficult by the fact that exports of salmon were recorded
under statistical codes which do not distinguish between
product types and by the fact
that prices may vary
significantly depending on the product type. The exami-
nation of exported quantities has shown that (between
the period before the imposition of measures and the IP)
exports of the product concerned from Norway to ‘emer-
ging markets’, such as Russia and Poland increased very
significantly. Exports to other more ‘traditional markets’,
such as Japan, Hong Kong and Taiwan, increased in a
way more comparable to exports to the Community,
which is also considered a traditional market. It should
therefore be expected that most of the additional exports
deriving from any increased capacity would be directed
towards
‘emerging markets’, which are in constant
expansion, rather than to ‘traditional’ markets such as
the Community, which have already reached a certain
degree of stability.

(98) Over the same period, prices have remained substantially
stable in respect of the ‘traditional markets’, and prices
of exports to non-EU countries overall were, on average,
higher than those to the Community market. Prices to
‘emerging markets’ have somewhat decreased, as it could
be expected from markets in strong expansion.

(99)

The examination of data received from the sampled
companies has confirmed that exports of salmon from
Norway to non-EU countries were made at prices higher,
on average, than those to the Community.

(100)

In consideration of the fact that the Community has long
been the major export market of salmon from Norway,
it can be assumed that, should measures be repealed, the
evolution in quantities exported and price behaviour
would be similar to that in the case of other ‘traditional
markets’ rather than in the case of markets such as
Poland and Russia. Accordingly, should measures be
repealed, prices are likely to remain stable and quantities
to increase only to the same degree as they have been
doing during the period following the imposition of the
measures. It should also be noted that exports to the
other traditional markets Japan, Hong Kong and Taiwan
appear to have been made at non-dumped prices during
the IP.

(104)

(105)

(101) Subsequent

to the disclosure, a number of parties
claimed that the analysis carried out on the likelihood of
recurrence of dumping was based on optimistic assump-

tions which could well not take place. Notably it was
claimed that Poland and Russia were not genuine
markets of final destination, but only markets of ‘conve-
nience’ from which the salmon would be transhipped to
the Community. However,
trade
the
statistics showed only insignificant shipments of
product concerned from these countries to the Commu-
nity. Moreover,
in question have never
submitted any evidence to support their allegations in
this respect. Accordingly, this claim had to be rejected.

the examination of

the parties

(iii) Conclusions

(102)

In the light of the market situation as explained above, it
is considered unlikely, at least in the short run, that
important quantities would flow into the Community
should measures be repealed. Although it cannot be
excluded that the situation could start changing from
late 2004, due to the newly granted production licenses,
it is considered that most of any increase in Norwegian
exports would be directed towards expanding ‘emerging
markets’ rather than to the Community. As the investiga-
tion has shown that exports of the product concerned to
traditional markets, among which the Community, were
made at a non-dumped level during the IP, prices can
reasonably be expected to remain stable and at a non-
dumped level, even in the case of increased Norwegian
production, as indicated in recital 100.

(103)

It is therefore concluded that, should measures in respect
of Norway be repealed, it would be unlikely that exports
of the product concerned to the Community at dumped
prices would recur.

E. SUBSIDIES

1. PRELIMINARY REMARKS

It was established in the original investigation that the
Government of Norway granted a number of subsidies
which were found countervailable in accordance with
the basic anti-subsidy Regulation. The
Article 3 of
programmes found to be countervailable in the original
investigation were investigated in the framework of this
review.
it was investigated whether any
other subsidy schemes conferred a benefit to producers/
exporters of the product concerned.

In addition,

In this respect,
the Commission investigated whether
Government institutions, including any public or private
entity under the control of the Government of Norway,
provided any financial contribution, as defined in Article
2(1) of
to salmon
growers in Norway. It was further investigated whether
the financial contributions found to exist conferred a
benefit to their recipients.

the basic anti-subsidy Regulation,

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(106) As in the original

investigation, although a limited
number of representative companies was investigated in
agreement with the Norwegian authorities,
it was
considered appropriate to establish a single country-wide
subsidy amount.

(107) The investigation also examined whether the expiry of
the measures would be likely, or unlikely, to lead to the
continuation or recurrence of subsidisation.

3. PROGRAMMES FOUND TO BE COUNTERVAILABLE IN

THE ORIGINAL INVESTIGATION

(a) Differentiated social security contributions

(111)

In Norway, employers' social security contributions vary
according to the zone of residence of the employee. As
in the original
the prevailing system
consists of five geographical zones with differentiated
rates. The rates vary from 14,1 % in zone 1 to 0 % of
the employee's gross wage for employees resident in
zone 5:

investigation,

2. AGREEMENT ON THE EUROPEAN ECONOMIC AREA (EEA

AGREEMENT)

(108) The Norwegian Government

repeated its argument,
made in the original investigation, that the application
of countervailing measures in the field of fisheries should
only be considered and assessed in relation to the obliga-
tions under Protocol 9 to the EEA Agreement and in
relation to the Joint Declarations on the Agreed Interpre-
tation of Article 4(1) and (2) of the Protocol.

(109) The Norwegian Government made reference to Article
4(1) of Protocol 9 which stipulates that aid granted
through State resources to the fisheries sector which
distorts competition shall be abolished. In addition, refer-
ence was made to the Joint Declaration which states the
following: ‘While the EFTA States will not take over the
“acquis communautaire” concerning the fishery policy, it
is understood that, where reference is made to aid
granted through State resources, any distortion on
competition is to be assessed by the Contracting Parties
in the context of Articles 92 and 93 of the EEC Treaty
and in relation to relevant provisions of the “acquis
communautaire” concerning the fishery policy and the
content of
Joint Declaration regarding Article
61(3)(c) of the Agreement’. In other words, the Norwe-
the assessment of a
gian Government argues
possible distortion of competition should be based on a
comparison between the aid granted by the EFTA/EEA
States concerned and the aid granted by the Community,
and in case where any distortion of competition is estab-
lished the state aid shall be abolished.

that

the

(110) As in the original investigation, it should be recalled that
Article 26 of the EEA Agreement prohibits the use of
countervailing measures, unless specified in the Agree-
ment. In this respect, Article 20 of the EEA Agreement
explicitly states that provisions and arrangements that
apply to fish are set out in Protocol 9. Article 4(3) of
Protocol 9 expressly permits the use of countervailing
measures in order to remedy the injurious effects of
subsidies in the fisheries sector. Protocol 13 to this
Agreement limits the use of countervailing measures to
areas where the Community acquis is not fully inte-
grated. This is the case as regards the fisheries sector.

Zone 1

Zone 2

Zone 3

Zone 4

Zone 5

14,1 %

10,6 %

6,4 %

5,1 %

0 %

(112) According to the Government of Norway the zones were
revised in 1999, but only minor adjustments took place.
Some sectors have been taken out of the system of
differentiated social security contributions, for example
mining and telecommunications. These sectors have to
pay 14,1 % irrespective of
their
employees. The different rates have not changed since
the original investigation.

location of

the

(113) The differentiated employers' social security contribution
constitutes a subsidy as defined in Article 2 of the basic
anti-subsidy Regulation. The conclusions on this scheme
are the same as in the original investigation.

(114) The reduction in or exemption from employers' social
security contributions constitutes a financial contribution
by the Government of Norway. The system constitutes
Government revenue that is foregone or not collected. In
exempting or reducing the employers' social security
contributions, in all zones except zone 1, the Govern-
ment revenue is reduced. Therefore, the scheme falls
within the definition of a financial contribution in accor-
dance with Article 2(1)(a)(ii) of the basic anti-subsidy
Regulation.

(115) The scheme clearly confers a benefit to the employers in
accordance with Article 2(2) of the basic anti-subsidy
Regulation. In employing employees who are resident in
zones 2 to 5, employers obtain a benefit compared to
the situation that would exist if all employees were resi-
dent in zone 1 and were subject to the basic rate of
to
14,1 %. The scheme confers a de facto benefit
employers on the basis of their location, since most
employees live in the same zone as the employer. The
benefit to employers employing employees in zones 2 to
5 is the difference between the actual amount of social
security contributions paid and the amount of such
contributions that would have been paid if the basic rate
of 14,1 % had been applied. The amount of subsidy
should therefore, as in the original
investigation, be
measured by reference to the above basic rate of contri-
bution.

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(116) Employers located in zones 2 to 5 pay less than the
basic rate in zone 1, and therefore the benefit conferred
is limited to firms located in those zones only. Hence,
this subsidy is specific within the meaning of Article
3(2)(a) of the basic anti-subsidy Regulation.

(117) As in the original

the Government of
investigation,
Norway was not able to provide global figures for social
security contributions by the salmon farming industry.
Therefore the basis for the calculation of the benefit was
the social security contributions of
the investigated
growers located in various zones. The subsidy was calcu-
lated by comparing the actual payment of social security
contributions with the amount, which would have been
paid if the basic rate of 14,1 % had been applied.

(118) The difference thus obtained was considered to be the
benefit to the salmon growers. The total subsidy, when
expressed as a percentage of the turnover of the investi-
gated growers (including zone 1), amounts to 0,84 %.

(b) The Norwegian Industrial and Regional Develop-

ment Fund (SND)

(119) The SND was established by Act No 97 of 3 July 1992
and started to operate on 1 January 1993. The SND is
owned by the Ministry of Trade and Industry and is
responsible for carrying out public policy. The objective
of
the SND is to promote profitable business and
economic development all over Norway, by contributing
towards development, modernisation and re-structuring
of — and product development and new establishments
in — Norwegian trade and industry, and promote activ-
ities that will provide stable and profitable employment
and opportunities in areas with particular employment
problems or traditionally weak economic basis.

(120) SND provides incentives to firms in the form of grants,

loans and loan guarantees.

(i) Grants

(121) The grants programmes available to salmon growers, are
funded over the budgets of the Ministry of Trade and
Industry and the Ministry of Local Government and
Regional Developments. The programmes funded by
these Ministries have been in function since 1996. Two
new programmes funded by the Ministry of Fishery,
NUMARIO and Grant for Developing the Marine Sector,
were
introduced respectively in 1997 and 2001.
However, they have not been used by the salmon fish
farming sector and,
therefore, were not considered
further.

(122) The following programmes have been available to

salmon growers:

1. Development grants.

2. Regional development grants.

(123) Programme 2 is limited to assist certain areas while
programme 1 has no geographical
limitations, but is
mainly operative in areas outside the assisted areas. Both
programmes have been in operation since the original
IP, and only some minor changes have taken place.

(124) The SND operates several other grant programmes.
However, these have not been used by the salmon fish
farming sector.

(125)

the total amount of grants
It was established that
provided to salmon growers have decreased since the
original IP.

E x i ste nce of a su bsi dy

(126) The grant scheme provides a financial contribution since
there is a direct transfer of funds from the Government
to the beneficiaries within the meaning of Article
2(1)(a)(i) of
the basic anti-subsidy Regulation. The
scheme confers a benefit to salmon producers, since
investment costs are reduced by the amount of the grant.
The SND grants therefore constitute subsidies.

Sp e c i f i c i ty

(127) As

regards SND grants,

specificity was established

twofold in the original investigation:

— regional specificity and,

— lack of objective criteria and of automatic eligibility

for non-regional schemes.

(128) With regard to the grants which are available nationwide
(programme 1), no grants have been given to the salmon
farming sector during the IP. Therefore the question of
specificity does not arise.

(129) With regard to programme 2, access to the subsidy is
limited to enterprises, albeit not exclusively salmon
in certain regions and specificity therefore
producers,
exists in accordance with Article 3(2)(a) and (3) of the
basic anti-subsidy Regulation.

Calc ulati on of th e be nefi t

fixed assets,

(130) Although SND grants were in general used for the acqui-
sition of
they are recurring subsidies
obtained by the beneficiaries on a regular basis. In addi-
tion,
they were not granted in large, concentrated
amounts, as was the case in the original IP, and the
amounts of grants were relatively small. Therefore, the
value of the grants can be expensed in the IP.

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(131) The benefit of the grants in the IP, expressed as a percen-
the total sales value of Norwegian salmon
tage of
is 0,26 %. However, as further discussed in
growers,
recital 153,
it could not be established with certainty
whether the whole amount of this subsidy was actually
conferring a benefit on salmon production.

(140)

In the present review, it was found that only 4 out of 19
counties operated a transport aid scheme, and that the
total grants to companies transporting, among other fish
products, salmon, was around NOK 600 000 compared
to NOK 1 420 000 in the previous investigation.

(ii) Loans

(132)

(133)

In the original investigation the SND loan programme
was found countervailable. There was a financial contri-
bution from the Government
and a benefit was
conferred by providing loans at an interest rate lower
than the interest rates available for similar loans in the
commercial market. In addition, the SND incurred heavy
losses on loans to the fish farming sector.

In order to establish whether a benefit still exists for the
investigated growers, the interest rate of the SND loans
which was actually paid during the IP was compared
with the normal commercial interest rate. The compar-
able commercial loan is a loan of a similar amount with
a similar repayment period obtainable by the recipient
from a representative private bank operating in the
domestic market. The analysis revealed that the SND
loan programme, including its rates, was comparable to
that of the private market. Consequently, there is no
benefit for the investigated growers.

(134) As to the losses incurred by the SND on loans due to
non-repayments, it was found that the amount of losses
was small. Moreover, the interest rate charged included a
risk element for loans other than low risk loans.

(143)

(135) Consequently, no subsidy was found to be conferred

under the loan programme.

(iii) Loan guarantees

(136)

investigation the SND loan guarantee
In the original
programme constituted a subsidy. It should be recalled
that there was a financial contribution from the SND
and a benefit for the salmon growers whose loan was
guaranteed to the extent that the guarantee was not
made on a commercial basis.

(144)

(137) The overall

losses

incurred by the SND on this
programme were very small since the original IP, and
even nil for the entire fish farming sector (including
salmon) during the IP. Moreover, it could not be estab-
lished that the fees were set at a level which would not
cover the amount of defaulted loans.

(138)

In these circumstances, no subsidy is now conferred
under this programme.

(c) Transport subsidies

(139)

found specific

In the original investigation, the transport aid scheme
was
countervailable.
However, the subsidy found for this scheme was only
0,01 %.

and therefore

(141) The benefit of the grant was calculated as a percentage
of the total sales value of salmon in the IP and the
amount of subsidy was found to be negligible. Therefore,
this scheme was not considered further in the context of
this review.

(d) Regional Commission for northern Norway and

North Trondelag

(142) The investigation revealed that no new grants have been
allocated to the salmon sector after 1998. Therefore, this
scheme was not considered further in the context of this
review.

(e) FOS/Rødfisk

In November 1991, Rødfisk, a consortium of banks set
up to conduct the liquidation of FOS, the former export
monopoly organisation for salmon in Norway, received
a NOK 400 million loan from the Government; this was
subsequently written off and therefore became a grant.
The original investigation established that the benefit of
the written-off loan was passed on to salmon growers in
order to settle their claims against FOS. The grant was
found to be countervailable, and the benefit was allo-
cated over a period of time reflecting the normal depre-
ciation period for fixed assets in the industry concerned.
This period ended in 1998 and therefore no subsidy is
now conferred.

In addition, it was established that no aid programmes
salmon
as FOS/Rødfisk involving benefits
growers have been granted after the original investiga-
tion. Therefore, this scheme was not considered further
in the context of this review.

the

for

4. OTHER PROGRAMMES

(145) Programmes under the Research Council of Norway
(RCN) were investigated. The objective of the RCN is to
support Research and Development (R&D)
in various
sectors in Norway. The purpose of the support scheme
is to develop new knowledge through R&D. Eligible
receivers of support are universities, research institutes
and companies. The grants are open for proposals from
all participants and are not limited to certain regions in
Norway. It was established that some salmon growers
received R&D support under this programme.

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(146) The Government of Norway made a claim for green-
light treatment for aid to companies, i.e. R&D support
to user-controlled projects to producers of the product
concerned, on the basis that it is granted in accordance
with the criteria set out in Article 4(2) of the basic anti-
subsidy Regulation. However, the support for R&D was
considered not to be specific, since the programme is
generally available to all sectors of the economy.

(147) Consequently, it has been concluded that R&D aid from
the RCN cannot be subject to countervailing measures,
since it is not specific; hence it is not considered neces-
sary to assess the claim for green-light treatment.

(148) No other programmes were found to be countervailable.
Finally,
it was established that no other institutions
granted financial supports which constitute a subsidy
within the meaning of the basic anti-subsidy Regulation.

5. CONCLUSION ON SUBSIDIES

(149) The following schemes were found to be countervailable
in accordance with the provisions of the basic anti-
subsidy Regulation, with amount of subsidy, expressed
ad valorem, as follows:

— Differentiated social security contribu-

tions

— Regional Development Fund (SND) —

Grants

0,84 %

0,26 %

The total ad valorem amount of subsidy is 1,1 %, thus a
mere 0,1 % above de minimis. In this context, it has also
to be borne in mind that this 1,1 % ad valorem is only
arrived at assuming that all the subsidies established for
the SND grants are to the exclusive benefit of salmon
production, which is, as further explained in recital 153,
almost certainly not an accurate reflection of the real
situation.

6. CONTINUATION OR RECURRENCE OF SUBSIDISATION

(150)

(151)

In accordance with the provisions of Article 18 of the
basic anti-subsidy Regulation, the Commission investi-
gated whether the expiry of the measures would be
likely to lead to a continuation or recurrence of subsidi-
sation. This provision requires a prospective assessment
of
in the
reasonably foreseeable future, taking account of the find-
ings for IP.

the rate of subsidisation likely to prevail

investigation.

It was established that the total amount of governmental
support to salmon growers in Norway has decreased
significantly since the original
In the
investigation the total ad valorem amount of
original
subsidy was 3,8 %. Several programmes found to be
countervailable in the original investigation are either no
longer applicable (grants under FOS/Rødfisk referred to
above) or no benefit to salmon growers could be estab-
lished (transport subsidies and loans/loan guarantees
under the SND). Furthermore, it was established that the

Government of Norway did not
programmes which conferred a benefit
growers.

introduce any new
to salmon

(152) Only two programmes found to be countervailable in
the original investigation and in the course of this review
continued to confer benefits. In this context, however,
the following two observations have to be borne in
mind:

the SND,

investigation.

In respect of

(153) Firstly, as far as the level of subsidisation found for
differentiated social security contributions (0,84 % of
benefit established to salmon growers), which is a
general regional programme not particularly destined for
salmon growers, has slightly decreased since the original
investigation. Secondly, as regards the grants provided to
salmon growers from the SND, it was confirmed that
the level has also decreased from 0,48 % to 0,26 % since
it
the original
should be pointed out that the level of grants found is
almost certainly inflated,
since the Government of
Norway was only able to provide total amounts of
support to companies involved in, amongst other activ-
ities, the production or sales of salmon. In the absence
of more precise figures, these amounts were taken as the
basis for the present investigation irrespective of whether
the grants de facto benefited salmon production in parti-
cular. However, the verification visits at the premises of
the investigated growers confirmed that most of the
grants were in fact used for capital
investments not
related to salmon; e.g. warehousing for other species and
packing stations not solely used for salmon. It was not
possible to quantify the level of investments for products
other than salmon. In any event, it is clear that a number
of the grants reported do in all likelihood not directly
relate to the product concerned. Therefore, even if it
were assumed that all grants were related to the product
concerned, the resulting subsidy found for this scheme,
i.e. 0,26 % is
the absolute maximum conceivable.
However, bearing in mind that in reality the actual figure
benefiting salmon is lower, the overall actual
level of
subsidisation will be below de minimis level.

(154) The amount of subsidy for the SND scheme is based on
the amounts actually paid out to the salmon farming
sector during the IP. However, the sum of the grants
committed by the Government of Norway to salmon
growers during the IP was significantly lower than the
amount paid which led to the 0,26 % figure referred to
above. Using the total amounts of grants committed to
(as opposed to paid to) salmon growers during the IP,
will bring the overall
level of subsidisation below de
minimis. For this reason and given that there is no indi-
cation to believe that the subsidy amount will increase,
it is unlikely that there will be a continuation or recur-
rence of subsidisation at a level above de minimis. More-
over, official
figures on amounts committed to and
amounts paid to salmon growers in 2002 confirm that
the level of subsidisation is de minimis.

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(155)

In conclusion, it is unlikely that there will be a continua-
tion or recurrence of subsidisation, since the current
level of subsidy is very close to de minimis, and the rate
of subsidisation likely to prevail in the reasonably fore-
seeable future will be below de minimis. The anti-subsidy
proceeding should therefore be terminated.

F. COMMUNITY INDUSTRY

(156) According to Article 11(9) of the basic anti-dumping
Regulation and Article 22(4) of the basic anti-subsidy
Regulation, review investigations should normally follow
the same methodology as that used in the investigation
which led to the duty. However,
in view of certain
changes in the ownership structure of the Community
salmon farming industry in recent years and other
it is noted that the companies considered to
factors,
constitute the Community industry for the purposes of
the present investigations within the meaning of Article
4 of the basic anti-dumping Regulation and Article 9 of
the basic anti-subsidy Regulation are not necessarily the
same as those considered in the previous investigation
concerning Norway which led to the imposition of the
measures currently under review.

(157)

It is also noted that it was decided to exclude from the
determination of the Community industry any producer
related to exporters in Norway, Chile and the Faeroe
Islands in accordance with Article 4(2) and Article 9(2)
of the basic anti-dumping and anti-subsidy Regulations
respectively. Two producers located in the Community
expressed their disappointment at
this interpretation.
They noted that although they formed part of a multina-
tional group which had salmon farming activities in
Norway, Chile and other third countries, the ultimate
parent company of
the group was a Dutch based
publicly quoted company. Consequently, they considered
that they should be taken into account as part of the
Community industry. However, for the reasons noted in
the aforementioned Articles,
this claim could not be
accepted.

(158)

it was determined that the
In the light of the above,
companies which were not related to exporters in the
countries under
investigation represented a major
proportion (over 80 %) of the Community production of
farmed Atlantic salmon and therefore constituted the
‘Community industry’ within the meaning of Article 4(1)
and Article 5(4) of the basic anti-dumping Regulation
and Article 9(1) and Article 10(8) of the basic anti-
subsidy Regulation.

G. INJURY

1. PRELIMINARY REMARKS

(159)

In view of the large number of producers of farmed
Atlantic salmon in the Community, the application of
sampling techniques was foreseen in the notice of initia-

tion for the assessment of injury in the review investiga-
tion. The selection of the sample of Community produ-
cers was based on the largest representative volume of
production and sales that could be reasonably investi-
gated within the time available,
in accordance with
Article 17 of the basic anti-dumping Regulation and
Article 27 of
the basic anti-subsidy Regulation. All
Community producers of farmed Atlantic salmon were
therefore requested in the notice of initiation to provide
certain information concerning their activities during the
period 1 July to 31 December 2001.

(160) On the basis of

the information provided to the
Commission, the 17 companies listed below were initi-
ally selected for the sample:

— Gaelic Seafoods (Ireland) Ltd, Co. Galway, Ireland,

— Johnson Seawell Ltd, Johnson Seafarms Ltd, Shetland,

United Kingdom,

— Orkney Sea Farms Ltd. Glasgow, United Kingdom,

— Muirachmhainní Teo, Co. Galway, Ireland,

— Ardvar

Salmon

Ltd,

Saffron Walden, United

Kingdom,

— Hoganess Salmon Ltd, Wester Sound Salmon Ltd,

Shetland, United Kingdom,

— Cro Lax Ltd, Shetland, United Kingdom,

— Bressay Salmon Ltd, Shetland, United Kingdom,

— West Minch Salmon Ltd, Atlantic West Salmon Ltd,
Sidinish Salmon Ltd, South Uist, United Kingdom,

— Loch Duart Ltd, Edinburgh, United Kingdom,

— Hoove Salmon Ltd, Shetland, United Kingdom,

— North Atlantic

Salmon Ltd,

Shetland, United

Kingdom,

— Ayre Salmon Ltd, Shetland, United Kingdom.

(161) All interested parties to the review concerning imports
from Norway were informed of the sample chosen and
given an opportunity to make
comments. Gaelic
Seafoods (Ireland) Ltd ceased trading on 21 March 2002
because of financial difficulties and took no further part
in the review Johnson Seawell Ltd and Johnson Seafarms
Ltd subsequently withdrew their cooperation and also
took no further part in the proceeding. It was subse-
quently established that Muirachmhainní Teoranta had
entered into a joint venture arrangement with a
company related to exporters in Norway and therefore
could not be considered to be part of the Community
industry. Consequently, the injury indicators discussed
below have been established on the basis of the verified
information provided by the remaining companies listed
above in recital 160.

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(162)

In view of the fact that the period considered for the assessment of injury in the investigation
concerning Chile and the Faeroe Islands is the same as that used in the review investigation, inter-
ested parties to the new investigation were informed of the intention to make use of the same
sample of independent Community producers, subject to the developments noted in the preceding
recital. Interested parties were given the opportunity to comment on this proposed course of action.
It is recalled that in accordance with Article 19(6) and Article 29(6) of the basic anti-dumping and
anti-subsidy Regulations respectively, information received pursuant to either Regulation may only
be used for the purposes for which it was requested. As a result, the Commission approached those
sampled producers which had cooperated in the review for their written permission to use informa-
tion submitted in the framework of the review to be taken into account for the purposes of the new
investigation. All parties concerned gave their consent with the result that the sample established for
the investigation concerning Chile and the Faeroe Islands is the same as that in the review.

2. COMMUNITY CONSUMPTION

(163) Large scale farming of Atlantic salmon in the Community is confined to the United Kingdom (Scot-
land) and Ireland. Therefore, apparent consumption in the Community of farmed Atlantic salmon
was established on the basis of the production figures for producers located in those two countries
obtained from the Fisheries Research Services of the Scottish Executive and the Irish Sea Fisheries
Board and, as far as imports and exports are concerned, on data derived from Eurostat. As was the
case in the original investigations concerning Norway, certain adjustments were made to convert net
weights as reported by Eurostat to round weights or ‘whole fish equivalents’ as it is common for
comparisons in the industry to be made on this basis. Therefore the import figures for fresh, chilled
and frozen salmon excluding fillets and for fresh, chilled and frozen salmon fillets were divided
respectively by the conversion factors of 0,90 and 0,65.
It should be noted that CN codes
0302 12 00, 0304 10 13 and 0304 20 13 may also cover other types of fish not included in the
scope of this review, such as Pacific salmon and Danube salmon. However, given the origins
reported, such quantities can be considered to be negligible.

(164) On the above basis, Community consumption of farmed Atlantic salmon in the IP reached a level of
almost 500 000 tonnes. This figure was almost 25 % higher than that recorded at the start of the
analysis period.

Consumption

1998

1999

2000

2001 (IP)

Tonnes

Index

396 829

457 569

470 705

487 307

100

115

119

123

3. CUMULATIVE ASSESSMENT OF THE EFFECTS OF THE IMPORTS CONCERNED

(165) The question of cumulation did not arise in this case since imports from the Faeroe Islands and
Norway were not dumped and, in the case of Norway, there was no likelihood of a recurrence of
dumping or subsidisation. Therefore, the term ‘imports concerned’ is taken to refer to imports origi-
nating in Chile only.

4. VOLUME OF THE IMPORTS CONCERNED AND MARKET SHARE

(166) The volume of imports originating in Chile derived from Eurostat data using the methodology
described in recital 163 increased from approximately 9 000 tonnes in 1998 to over 26 000 tonnes
in the IP. Over the same period, the imports concerned increased their share of the Community
market from 2,4 % in 1998 to 5,4 % in the IP.

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Tonnes

Index

1998

1999

2000

2001 (IP)

9 336

8 173

12 323

26 360

100

88

132

282

Market share

2,4 %

1,8 %

2,6 %

5,4 %

5. PRICES OF THE IMPORTS CONCERNED

(a) Evolution of prices

(167) Price information for the imports concerned was derived from Eurostat data based on the import
volumes established using the methodology detailed above in recital 163. This information showed
that the average price of the imports concerned increased from EUR 3 per kilogram in 1998 to
EUR 3,75 per kilogram in 2000 before declining in the IP to EUR 2,93 per kilogram.

1998

3,00

1999

3,14

2000

3,75

2001 (IP)

2,93

100

105

125

98

Price per kg

Index

(b) Price undercutting

(168) For the purposes of calculating the level of price undercutting in the IP, the prices of the sampled
Community industry producers were compared to the prices of the imports from Chile. The prices
of the sampled Community industry producers were taken at an ex-works (post processing) level
and at levels of trade considered to be comparable to those of the imports concerned. For those
sampled Community industry producers selling their fish ‘in the bin’ (i.e. at the farm gate without
any processing) an upward adjustment of 29 pence (47 cent) per kilogram was made to reflect
processing and packing costs. This adjustment was made on the basis of the costs incurred by other
producers in the sample for these activities.

(169) The investigation demonstrated that imports from Chile in the IP consisted almost entirely of frozen
fillets. As this presentation of salmon was not produced and sold by the sampled Community
industry producers, an adjustment was made to reflect differences between this presentation and the
fresh fillets produced and sold by the sampled Community industry producers. It should be noted
that all presentations of fillet accounted for only 1 % of the sales of the sampled Community
industry producers by volume in the IP.

(170) According to the complainant, fresh salmon should command a premium of some 10 % over frozen
salmon. However, information collected in the investigations from both Norwegian and Faeroese
cooperating exporters selling both fresh and frozen salmon of the same presentation,
indicated
frozen salmon to be systematically more expensive than its equivalent fresh salmon presentation.
Therefore, a weighted average premium for frozen salmon was calculated on the basis of the figures
collected from the Norwegian and Faeroese cooperating exporters and applied to the prices of the
Chilean imports on a Community frontier customs duty paid basis. The result of the comparison
showed the level of price undercutting to range between 20 % and 30 %.

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6. ECONOMIC SITUATION OF THE COMMUNITY INDUSTRY

(a) Preliminary remarks

The application of sampling techniques

(171)

In view of the time limits established by Article 5(9) and Article 11(5) of the basic anti-dumping
Regulation with regard to the conduct of investigations and the large number of producers of
farmed Atlantic salmon in the Community, sampling techniques were applied for the assessment of
the economic situation of the Community industry. Consequently, the injury indicators presented
below have been established on the basis of information obtained from a representative sample of
Community industry producers as described in recital 160. At
information
concerning the sales on the Community market of cooperating Community industry producers not
included in the sample was obtained in order to calculate the overall sales and market share of the
Community industry.

the same time,

(172)

It should noted that one of the sampled companies, namely Loch Duart Ltd, began operations in
1999 when it purchased certain salmon farming operations from another company. Although the
latter is not included in the sample, it is not considered that this has a material effect on the trends
observed during the analysis period.

(b) Production, production capacity and capacity utilisation

it is recalled that in the original

(173) The sampled Community industry producers increased their production during the analysis period
from approximately 7 000 tonnes in 1998 to more than 15 000 tonnes in the IP. With regard to
investigations which led to the current
production capacity,
measures, figures for capacity were based on environmental consents issued by the Scottish Environ-
ment Protection Agency (SEPA). SEPA is a public body responsible for environmental protection in
Scotland. It regulates salmon farming in Scotland by the granting of consents or licences for the
discharge of waste to tidal waters. These consents normally set limits for cage sizes and biomass
levels (the weight of live fish) per site at any one time. As fish from a particular cage can be
harvested over an extended period of time, it could be argued that the total production of that cage
may be greater than the biomass limit without the latter ever being exceeded. However, as no other
reasonable basis for capacity could be found which could be applied across the sample and as there
were no changes in circumstances in this regard, SEPA consents were again taken in accordance
with Article 11(9) of the basic anti-dumping Regulation as the basis for calculating capacity in the
present investigations. However, it is to be noted that in correspondence, SEPA confirmed that it
was unable to provide information in precise tonnage terms for certain sites as this was either not
available centrally or the consent was expressed in terms of cage numbers rather than fish biomass.
These limitations should be borne in mind when considering the information presented below
regarding capacity and capacity utilisation.

Production (tonnes)

7 067

8 962

11 645

15 251

1998

1999

2000

2001 (IP)

Index

100

127

165

216

Production capacity (tonnes)

7 231

8 199

13 025

29 632

Index

100

113

180

410

Capacity utilisation

98 %

109 %

89 %

51 %

(c) Stocks

(174)

It is noted that farmed Atlantic salmon is a perishable product, which unless frozen, has a shelf life
of less than two weeks. As the sampled Community industry producers do not keep stocks of fresh
salmon after harvest and do not freeze their production, stock levels are not considered to be a
meaningful indicator of injury in these investigations.

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(d) Sales volume, market share and growth

(175) The volume of the Community industry's sales on the Community market increased during the
analysis period from approximately 10 500 tonnes in 1998 to more than 21 000 tonnes in the IP.
Over the same period it progressively increased its share of the Community market from 2,7 % in
1998 to 4,3 % in the IP. This rate of increase was in excess of the growth in apparent Community
consumption recorded over the same period. The volume of the sampled Community industry
producers' sales on the Community market increased during the analysis period from approximately
6 000 tonnes in 1998 to more than 15 000 tonnes in the IP. The sampled Community industry
producers' share of the Community market grew from 1,6 % in 1998 to 3,1 % in the IP.

Community industry sales (tonnes)

10 686

13 543

16 263

21 129

1998

1999

2000

2001 (IP)

Of which sampled Community industry producers

6 245

8 372

10 911

15 143

Index

100

134

175

242

Community industry market share

2,7 %

3,0 %

3,5 %

4,3 %

Sampled Community industry producers

1,6 %

1,8 %

2,3 %

3,1 %

(e) Sales prices and costs

(176) The sampled Community industry producers' average sales price increased from a figure of
EUR 3,31 per kilogram in 1998 to reach a peak of EUR 3,93 in 2000. A dramatic fall in price was
then observed in the IP as the average price fell back to EUR 3,13 per kilogram. Over the same
period, the sampled Community industry producers were able to reduce their average cost of
production by some 10 % to a figure of EUR 3,11 per kilogram.

1998

3,31

100

3,47

100

1999

3,27

99

3,14

90

2000

3,93

119

3,53

102

2001 (IP)

3,13

95

3,11

90

Sales price (EUR per kilogram)

Index

Cost of production (EUR per kilogram)

Index

(f) Profitability

(177) Following the imposition of measures in 1997, the sampled Community industry producers' return
on net sales in the Community market, before taxes, improved to reach a level of over 10 % in
2000. However, in spite of their continued efforts to improve efficiency, the sampled Community
industry producers taken as a whole suffered a marked deterioration in profitability in the IP due to
the low prices prevailing on the market. It is to be noted that the sampled Community industry
producers never achieved the minimum profit level of 15 % during the analysis period that was
considered necessary at the time of the original investigations. It is recalled that the profit margin in
the original investigations was established at this level in order to take into account the high risk
nature of the industry, subject as it is to uncertain factors such as the weather, disease and escapes.
It cannot be excluded that the combination of factors such as these and the restructuring and conso-
lidation seen in the industry during recent years may in part explain the sharp movements in profit-
ability shown below. However, in the absence of conclusive evidence to suggest that circumstances
in the intervening period had changed and considering the submissions of producer associations in
the Community in support of this level, the profit margin of 15 % was again used in accordance
with Article 11(9) of the basic-anti dumping Regulation.

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Profitability

– 5,1 %

3,9 %

10,2 %

0,6 %

1998

1999

2000

2001 (IP)

(g) Investments and return on investments

(178) The level of investments made by sampled Community industry producers increased during the
analysis period from approximately EUR 2,5 million in 1998 to more than EUR 4,5 million in the
IP. Apart from the replacement of existing assets and the acquisition of additional equipment to
handle increased levels of production, the most significant items of expenditure related to the
purchase of automated feed barges. These vessels are designed to supply feed on a controlled basis
to salmon in cages at sea and require fewer people to oversee the feeding of the fish.

(179) The sampled Community industry producers' return on investment, which expresses their pre-tax
result as a percentage of the average opening and closing net book value of assets employed in
salmon farming, was negative in 1998 reflecting their loss making situation. The return on invest-
ment was positive in the other years considered as the sampled Community industry producers were
profitable.

1998

1999

2000

2001 (IP)

Investments (EUR '000)

2 448

2 207

3 312

4 659

Index

100

282

423

595

Return on investment

– 18,3 %

16,1 %

51,4 %

2,1 %

(h) Cash flow and ability to raise capital

(180) The sampled Community industry producers recorded a net cash inflow from operating activities
during the analysis period. However, when expressed as a percentage of turnover, the net cash
inflow showed a marked decline in percentage terms.

(181) The sampled producers have experienced difficulties in raising capital from external sources such as
banks and in certain cases have had to have recourse to shareholders for additional funds. Given the
risks involved in the industry, traditional lenders have been reluctant to extend finance without
substantial security being provided. Pressure from finance providers, coupled with short-term cash
flow difficulties have meant that producers have not always been able to adhere to their optimum
harvest schedules. Extended credit terms from feed producers are playing an increasingly important
role in the operational financing of the industry. In some cases, feed companies are also providing
funding for the purchase of feed barges. In all cases however, there are additional costs associated
with such arrangements.

Cash flow (EUR '000)

Index

1998

783

100

1999

2000

2001 (IP)

1 233

2 022

158

258

403

52

Cash flow expressed as percentage of turnover

3,8 %

4,5 %

4,7 %

0,9 %

(i) Employment, productivity and wages

(182) The number of people employed by the sampled producers increased throughout the analysis period
to reach a figure of 175 in the IP. This should be viewed in the context of the substantial increase in
production that occurred over the same period as noted in recital 173. It is estimated that in the
region of 250 people are employed by the Community industry as a whole.

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(183) As the rate at which employment grew was less than that at which production increased, the
productivity of the sampled Community industry producers as measured by tonnes produced
annually per employee increased from approximately 70 tonnes in 1998 to more than 85 tonnes in
the IP.

(184) The total wage bill of the sampled Community industry producers increased in absolute terms
throughout the analysis period. The average wage level per employee also increased over the analysis
period.

Number of employees

Index

1998

98

1999

126

100

129

Wages per employee (EUR '000)

27

27

2000

2001 (IP)

161

164

31

175

179

32

Index

100

100

113

118

(j) Magnitude of dumping and recovery from past dumping and subsidisation

(185)

In view of the volume and the prices of the imports from Chile, the impact on the Community
industry of the magnitude of the actual dumping margin cannot be considered to be negligible.

(186) The economic situation of the sampled Community industry producers improved after the imposi-
tion of anti-dumping and countervailing measures against imports originating in Norway. They
increased their production, sales and market share and returned to profitability in 1999. However,
significant disturbances on the Community market in the IP reduced the returns of many producers
and the economic situation of the sampled Community industry producers deteriorated. It is there-
fore considered that the sampled producers did not fully recover from past dumping and subsidisa-
tion and their economic situation continues to be weak.

7. CONCLUSION ON INJURY

(187)

In spite of the Community industry's continued efforts to improve its efficiency, as evidenced by its
investment in new feeding technologies and improved productivity, it was not able to make the level
of return deemed necessary for an industry of this nature in the analysis period. Although it was
able to return to profits from 1999 onwards, it could not in that time build up sufficient reserves to
allow it to withstand an extended period of adverse price developments such as that which occurred
in the IP when imports from Chile were present on the Community market at dumped prices in
large volumes. As a result of the disturbances on the Community market in the second half of the
IP, a number of producers have been forced out of the market. In particular, it is noted that one of
the companies initially selected for sampling, Gaelic Seafoods (Ireland) Ltd. went into administration,
and two companies remaining in the sample, Hoganess Salmon Ltd and Wester Sound Salmon Ltd,
were taken over by Norwegian interests after the IP. In view of their financial position, other compa-
nies have had to reconsider their production plans for future years with the result that fewer smolts
were put to sea in the autumn of 2001.

(188)

It is noted that the Community industry was able to take advantage of the increase in consumption
observed during the analysis period to increase its production, capacity and sales. This growth was
accompanied by an increase in the level of employment and investments. However, in spite of the
Community industry's efforts to improve its productivity, it was not able to counter the severe price
depression in the IP. Its level of profitability declined dramatically as did its return on investment. It
is therefore concluded that the Community industry has suffered material injury, characterised by
price depression, falling profitability and insufficient returns on investments, within the meaning of
Article 3 of the basic anti-dumping Regulation.

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H. CAUSATION OF INJURY

1. INTRODUCTION

(189)

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

2. EFFECT OF THE DUMPED IMPORTS

(190) The volume of the dumped imports originating in Chile increased almost threefold in the analysis
period. In absolute terms, they increased their share of the Community market during the same
period from 2,4 % in 1998 to 5,4 % during the IP. Their rate of growth was most marked between
2000 and the IP when they more than doubled in volume. The dumped imports undercut the prices
of the sampled Community industry producers by more than 20 %.

(191) During the same period, the Community industry had to lower their prices on average by 5 %.
Although profitability developed positively until 2000, it went then down to merely break even
during the IP while the rate of return on investment was 2,1 %. However, there were also a signifi-
cant number of positive developments: the Community industry was able to double its sales and
expand its market share, invest in increased capacity and also reduce its cost of production by 10 %.

(192) A more focused analysis of the developments in 2000 and the IP shows an even more complex and
more ambiguous picture. The market share held by imports from Chile went from 2,6 % to 5,4 %
and Chilean prices dropped from a fairly high level by 27 percentage points to slightly below their
1998 level. At the same time however, the Community industry's market share increased from
3,5 % to 4,3 %, its prices dropped by 24 percentage points, its profitability went from 10,2 % to
0,6 % and the rate of return on investment went from 51,4 % to 2,1 %.

(193)

It is recalled that imports from three Chilean companies were found not to have been dumped. If
the analysis of a direct causal link were to be limited to the imports which had been found to be
dumping the volume, market share and the prices of these imports on the basis of data from Euro-
stat and the sampling exercise would be as shown below. It should be noted that net weights have
been converted to whole fish equivalents using a conversion factor of 0,65 and average prices per
kg are also based on the whole fish basis and that the situation of the IP has been extrapolated for
earlier years of the analysis period.

Volume (tonnes)

7 965

7 038

10 675

22 784

1998

1999

2000

2001 (IP)

Market share

Unit price

2,0 %

1,5 %

2,3 %

4,7 %

2,98

3,09

3,66

2,62

(194)

It can be seen that the volume of these imports doubled between 2000 and the IP and that their
market share also increased by the same factor. The prices of the imports were below those of the
Community industry throughout the period. The level of undercutting in the IP for those sampled
companies found to have been dumping exceeded 30 %. The increase in the volume of dumped
imports during the IP and their significant level of price undercutting coincided with a deterioration
in the situation of the Community industry in terms of its average sales price and profitability.
However, in the light of certain positive developments in the situation of the Community industry
as noted in recital 191 and other factors, including the limited competition between fresh and
frozen salmon on the Community market, it could not be concluded with absolute certainty that the
dumped imports, considered in isolation, were responsible for the material injury suffered by the
Community industry.

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(195) Subsequent to the disclosure, one party argued that the Commission's understanding of the interac-
tion between fresh and frozen salmon in the market was wrong. Although the investigation
confirmed that imports of the product concerned originating in Chile were almost exclusively of
frozen salmon whereas the Community industry only sold fresh salmon, this party claimed that
many processors saw no difference between the two and would prefer to buy frozen salmon where
its price was much lower than fresh salmon. It claimed that this was evidenced by the fact that
Chilean imports had taken market share from both Norwegian and Scottish producers and would
continue to do so.

(196)

In addressing these arguments, it should be recalled that it was established that there was limited
competition between fresh and frozen salmon in the market during the IP. This competition was
restricted to certain users which were able to use both types of salmon in their production.
However, the market continued to demonstrate a marked preference for fresh salmon rather than
frozen salmon. As regards the claim that Chilean imports have taken market share from both
Norwegian and Scottish suppliers, it is acknowledged that Norwegian imports did lose some market
share in the IP. However, the production of salmon by producers in Scotland reached record levels
in the IP. During the same period, the market share of all producers in the Community and of the
Community industry considered separately also increased. It was therefore evident that the party
was mistaken in its claim regarding a decline in the market share of Scottish producers. In consid-
ering future developments in Chilean import volumes and market share, it should be recalled that it
is normally not within the scope of an investigation according to Article 6(1) of the basic anti-
dumping Regulation to consider events occurring after the IP. Therefore, the arguments of this party
could not be accepted.

3. EFFECTS OF OTHER FACTORS

(a) Imports originating in other third countries

(197) Norway is the most important player on the Community salmon market. Imports originating in
Norway increased in volume terms from 1998 to 2000 before declining in the IP. As the imports
grew at a slower rate between 1998 and 2000 than apparent Community consumption, their
market share declined from approximately 64 % in 1998 to 60 % in 2000. In the IP, as Community
consumption continued to increase whilst the volume of imports from Norway declined, their share
of the Community market fell to approximately 53 %. On the basis of information obtained from
Eurostat,
imports from Norway remained stable in 1998 and 1999 at
EUR 3,18 per kilogram before increasing in 2000 to reach EUR 3,71 per kilogram. In the IP, their
average price declined to EUR 3,16 per kilogram and was close to the price level of the Community
industry. Imports from Norway were found not to have undercut the prices of the Community
industry.

the average price of

(198)

Imports originating in the Faeroe Islands increased in volume between 1998 and 1999 before falling
back in 2000. They then recorded a sharp increase in volume in the IP to reach a level of over
40 000 tonnes. It was also at this time that they gained their highest market share during the
analysis period of just over 8 %. On the basis of information obtained from Eurostat, the average
price of imports from the Faeroe Islands increased from EUR 3,21 per kilogram in 1998 to
EUR 3,84 per kilogram in 2000. In the IP, their average price fell to below EUR 3 per kilogram. It
should be recalled that imports originating in the Faeroe Islands were found not to have been
dumped. However, they undercut the prices of the Community industry by some 10 %. It should
finally be noted that the market share of imports from the Faeroe Islands (8,3 %) is well above that
held by the Community industry and Chile (4,3 % and 5,4 % respectively).

(199) Subsequent to the disclosure, one party questioned the way in which the Commission had consid-
ered the role played by imports from Norway and the Faeroe Islands in the assessment of injury to
the Community industry. In particular, the party argued that the calculation on which the level of
price undercutting for imports from Norway was based was incorrect in that the Community indus-
try's prices did not include delivery costs to the first customer. The party also claimed that the
Commission had not ascribed to imports from the Faeroe Islands the importance they deserved in
assessing injury in view of their market share and level of price undercutting.

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(200) The argument concerning the calculation of price undercutting for imports from Norway had to be
rejected for two reasons. Firstly, the comparison was made at similar levels of trade and for similar
presentations of salmon. This was after an upward adjustment of EUR 0,47 per kg had been made
to the prices of those Community industry producers selling ‘in the bin’ (i.e. ex-farm) to reflect ancil-
lary transport, processing and packing costs to the first customer. Secondly, this methodology was
consistent with that used in the original investigation.

(201) The level of price undercutting for imports from the Faeroe Islands was calculated in the same
manner as that for imports from Norway as described above. It is recalled that imports from the
Faeroe Islands were found not to have been made at dumped prices. Their level of price undercut-
ting therefore does not derive from dumping. The Commission has acknowledged the impact that
these imports may have had on the situation of the Community industry. Ascribing even more
importance in the injury assessment to imports from the Faeroe Islands would further weaken causal
link between imports from Chile and the injury suffered by the Community industry.

(202)

Imports originating in remaining third countries (i.e. excluding Norway, Chile and the Faeroe
Islands) increased in volume over the analysis period from approximately 9 000 tonnes in 1998 to
15 000 tonnes in the IP. Over the same period their market share increased from 2,3 % in 1998 to
3,1 % in the IP. Over 85 % of these imports by weight (on a whole fish equivalent basis) were of
frozen fillets (CN code ex 0304 20 13) with the most significant origins being the People's Republic
of China (‘China’) and the USA. The average price of all types of the product concerned from these
remaining third countries increased from EUR 2,36 per kilogram in 1998 to EUR 2,57 in the IP.
The prices of such imports were therefore always below the prices of the sampled Community
industry producers and imports from Norway, Chile and the Faeroe Islands during the analysis
period but this may be because of the nature and quality of such imports. The current investigations
found no evidence of farmed Atlantic salmon being produced in China. It may therefore be the case
that the salmon declared under the CN codes subject to investigation is of another species of salmon
(Pacific or Danube) or processed Atlantic salmon originally farmed in another third country.

Norway (tonnes)

— Index

— Market share

1998

1999

2000

2001 (IP)

252 267

273 375

281 376

258 389

100

108

112

102

63,6 %

59,7 %

59,8 %

53,0 %

— Average price (EUR per kg)

3,18

3,18

3,71

3,16

Faeroe Islands (tonnes)

15 187

28 236

23 962

40 414

— Index

— Market share

100

186

158

266

3,8 %

6,2 %

5,1 %

8,3 %

— Average price (EUR per kg)

3,21

3,24

3,84

2,94

Other third countries (tonnes)

9 057

11 009

14 763

15 126

— Index

— Market share

100

122

163

167

2,3 %

2,4 %

3,1 %

3,1 %

— Average price (EUR per kg)

2,36

2,24

2,50

2,57

(203) The above shows that both the Community industry and the imports from Chile are peripheral
players on the Community market. It cannot be excluded that imports from the countries indicated
in recital 202 may have at least been partly responsible for the decrease in price and the injury
suffered by the Community industry.

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(b) Changes in the pattern of consumption

(204) The consumption of farmed Atlantic salmon in the Community increased by 25 % during the
analysis period to reach a level of almost 500 000 tonnes in the IP. The Community industry bene-
fited from this growth in consumption to increase its production and sales. The Community
industry was also able to increase its market share especially in the IP as imports from Norway
declined in volume. The development of consumption is therefore not considered to have contrib-
uted to the injury suffered by the Community industry.

(c) The nature of the salmon market

(205)

It was also considered whether other factors having a bearing on the salmon market in the Commu-
nity could have contributed to the injury suffered by the Community industry.

(206) The Faeroe Fish Farming Association argued that the existence of a number of factors demonstrated
that there was no causal link between imports of farmed Atlantic salmon from the Faeroe Islands
and the alleged injury suffered by the Community industry. It was suggested that short-term prices
were governed by factors such as weather, disease and smolt supply while long-term price trends
depended upon production costs. It was argued that in view of the length of the production cycle
for farmed Atlantic salmon (2 to 3 years), prices should be examined over a similar period rather
than 6 months to one year. It was also argued that other types of salmon such as wild salmon and
farmed Pacific salmon should be taken into account in the investigations as their supply could have
an impact on the price of farmed Atlantic salmon in the Community.

(207) Short-term factors such as disease can have an impact on supply in the salmon market. Outbreaks
of diseases such as Infectious Salmon Anaemia (ISA) in the Community require the removal of fish
from affected areas and an enforced fallow period of six months thereafter. ISA was detected at a
number of farms in Scotland in 1998 and has also been recorded in Norway, Canada and more
recently in the Faeroe Islands. The removal of fish from infected sites means that they may be
harvested ahead of expectations and at weights which do not meet the requirements of certain
customers. In addition, this enforced harvest reduces the total biomass of fish to be harvested in later
periods. A small number of companies forming part of the Community industry were affected by
suspected ISA outbreaks in 1998. This may have reduced the number of fish available to harvest in
subsequent years. However, it is not considered that this situation explains the deterioration in the
overall situation of the Community industry observed in the IP.

(208) With regard to this party's second point, it is not accepted that it is incorrect to examine prices in a
restricted period such as the IP. Whilst acknowledging that the life cycle of the farmed Atlantic
salmon is between 2 and 3 years, product cycles cannot be seen as an excuse to engage in dumping.

(209) With regard to the final argument raised by this interested party concerning the influence of other
types of salmon on the Community market for farmed Atlantic salmon, it is to be noted that no
evidence was provided in support of this argument. This argument would appear to suggest that
farmed Pacific salmon and wild salmon are homogeneous in nature to farmed Atlantic salmon and
substitutes for one another, a claim for which no evidence was found in the investigations. In any
event, taking into account the volume of farmed salmon sold in the Community, it is believed that
the quantities of the other types of salmon sold on the Community market could not have been
such as to have significantly affected the Community market price for farmed Atlantic salmon.

(d) The structure of the salmon farming industry in the Community

(210) The Faeroe Fish Farming Association drew attention to the possible effects on the Community
industry of the increase in production recorded during the analysis period by other producers in the
Community not forming part of the Community industry. It was suggested that the process of
consolidation amongst producers in the Community meant that the Community industry, much
reduced in size, now faced increased competition from larger and more numerous producers in the
Community which are not part of the Community industry as defined pursuant to Article 4 of the
basic anti-dumping Regulation.

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(211) The investigations confirmed that the category of producer referred to by the Faeroe Fish Farming
Association accounted for the majority of farmed Atlantic salmon produced in the Community
during the analysis period. These companies are generally larger in size than those companies
deemed to constitute the Community industry in the present investigations and show a greater
degree of vertical integration with interests in smolt rearing (the freshwater stage of the salmon life
cycle), feed production and control of their own processing facilities. Taken together, they have a
market share in the region of 25 %. As part of large multinational groups, often quoted on stock
exchanges, they also benefit from better access to capital markets and financial support. They are
better suited to plan their production to meet the specific requirements of major customers such as
supermarket chains with seven day harvesting programs. They often negotiate short to medium term
contracts with their major customers which normally provide some degree of protection against
extreme price fluctuations on the uncontracted or spot market to which other operators are
exposed.

(212)

Information gathered from transformers/smokers of the product concerned in the framework of the
review investigation concerning imports from Norway further demonstrated that certain producers
in the Community were influenced by the way in which the processing industry operated. The prices
at which processing companies purchased the product concerned in the IP and the prices at which
they sold salmon after transformation were examined. It was established that these companies
purchased Community produced salmon in the IP at prices similar to or even below salmon origi-
nating in Norway. However, after transformation/smoking when the salmon was sold on, products
derived from salmon produced in the Community were sold at much higher prices than products
derived from salmon originating in Norway. The premium for these products derived from salmon
produced in the Community was found to be in the region of 10 % over similar products derived
from Norwegian produced salmon. It would therefore appear that certain transformers/smokers are
able to obtain a premium for their products which is not always passed onto their suppliers. It is
therefore considered that some of the injury suffered by the Community industry may be due to its
lack of leverage vis-à-vis certain larger customers.

(e) Conclusion on causation

(213)

In the light of the above, it is concluded that a causal link between the imports originating in Chile
and the material injury of the Community industry could not be established with the necessary
degree of certainty.

(214) The concurrence of the increase in imports from Chile and the price undercutting on the one hand,
and the negative developments of the Community industry in terms of its sales prices and financial
performance on the other, are not sufficient to establish a causal link in this case. Indeed, there are a
number of other factors which had an impact on the Community industry and which are, when
compared to the impact of the imports from Chile, of greater importance. Imports from all countries
not concerned have been made at prices which were in the case of Norway at the level of those of
the Community industry or, with regard to other third countries, below that level. The prices of
other producers in the Community were also at this level. Thus, not only the imports from Chile,
but also sales representing a further 30 % of the Community market (i.e. sales of other producers in
the Community and imports from the Faeroe Islands) were made at a price level, which was clearly
unsatisfactory for the Community industry. In these circumstances, it is difficult to see how the
imports from Chile when taken in isolation could have had a material impact on the Community
industry.

(215) Subsequent to the disclosure, one party criticised the manner in which the issue of causation had
been examined. The party argued that the Commission should have made a cumulative assessment
of the effects of imports from Chile, Norway and the Faeroe Islands in accordance with Article 3(4)
of the basic anti-dumping Regulation. Article 3(4) specifies a number of criteria, all of which must
be satisfied, before the effects of imports from different origins can be assessed cumulatively. In the
present investigations, as no dumping was found for imports from Norway and the Faeroe Islands,
there was no legal basis for assessing the combined effects of imports from these origins with the
dumped imports from Chile. Accordingly, this claim had to be rejected on the grounds that it is an
incorrect interpretation of the provisions of the Article concerned.

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(216) However, in view of the fact that a causal link could not be excluded with absolute certainty, it was
considered prudent to nevertheless examine the question whether or not the imposition of measures
against imports from Chile would be in the Community interest, should one decide that such a
causal link existed despite of the above evidence to the contrary.

1. PRELIMINARY REMARKS

I. COMMUNITY INTEREST

(217)

It was examined whether, despite the findings on injurious dumping, compelling reasons existed
which would lead to the conclusion that it was not in the Community interest to impose measures
against imports originating in Chile. For this purpose and in accordance with Article 21(1) of the
basic anti-dumping Regulation, the impact of possible measures for all parties involved in the inves-
tigations and also the consequences for those same parties of not taking measures were considered
on the basis of all evidence submitted.

(218)

In order to consider the Community interest, information was requested from all interested parties,
which were either known to be concerned or which made themselves known within the time limit
set in the notice of initiation.

(219)

In addition to the replies received from the sampled Community industry producers, questionnaire
replies were also received from the following companies:

— two other producers of farmed Atlantic salmon in the Community — Marine Harvest (Scotland)

Ltd and Marine Harvest Ireland,

— five suppliers of inputs to the Community salmon farming industry including four feed compa-
nies — Trouw (UK) Ltd, Trouw Aquaculture Ltd, Ewos Ltd and Biomar Ltd and one supplier of
smolts — Landcatch Ltd in the framework of the review concerning Norway,

— two importers/users in the framework of the review concerning Norway which are unrelated to
exporters in Norway — Moulin de la Marche S.A. and Le Borvo SA and two unrelated impor-
ters/users in the framework of the investigation concerning Chile and the Faeroe Islands —
Cogesal Miko and Royal Greenland Seafood A/S.

(220) Comments were also received from the following organisations and bodies:

— The Scottish Salmon Producers' Organisation,

— The Shetland Salmon Farmers' Association,

— The Irish Salmon Growers' Association,

— BEUC — The European Consumers' Organisation,

— AIPCE/CEP — The Federation of National Organisations of Importers and Exporters of Fish,

— The Danish Association of Fish Processing Industries and Exporters,

— The French Syndicat National de l'Industrie du Saumon Fumé,

— Nutreco Aquaculture,

— SA Direct Ocean.

(221)

Information was also received from a feed supplier located outside the Community, namely Havs-
brun pf of the Faeroe Islands. It was therefore considered that this information should not be taken
into account for the assessment of the Community interest in the current investigation.

(222) The complainant in the investigation concerning Chile and the Faeroe Islands submitted that the
views of the Nutreco group and the Syndicat National de l'Industrie du Saumon Fumé should be
discounted. It was argued that the interests of the Nutreco group were predominantly outside the
EU and that the membership of the Syndicat National de l'Industrie du Saumon Fumé included a
number of companies related to Norwegian concerns. It is recalled that the assessment of the
Community interest, in accordance with the provisions of Article 21 of the basic anti-dumping
Regulation, shall be based on an appreciation of the various interests of all parties including, inter
alia, the domestic industry and users. Therefore, the submissions of these interested parties should
be taken into account.

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2. INTEREST OF THE COMMUNITY INDUSTRY

(223) The main areas for the production of salmon in the Community are located in Scotland and Ireland
where suitable conditions exist. There have been significant changes in the structure of the salmon
farming industry in the Community since the original investigations with a trend towards fewer,
larger companies. A number of smaller producers have either gone out of business or sold out to
other operators, often large multinational groups with salmon farming interests around the world.
Many of the companies constituting the Community industry have taken steps to improve their effi-
ciency and reduce costs in the face of increased competition by entering into collaborative arrange-
ments for feed buying. This has enabled the companies to increase their buying power vis-à-vis
suppliers. At the same time, a number of the companies constituting the Community industry have
also entered into arrangements for the joint marketing and sale of their production through which it
is hoped their products will be differentiated on the market.

(224)

It is recalled that information gathered in the course of the review investigation concerning Norway
(see recital 212) showed that Community salmon producers did not derive the full benefit of the
premium that consumers paid for the finished product. It is also recalled that Chilean exports of
frozen salmon only compete with Community industry fresh salmon to a limited extent. The
Community industry's market share in the IP was less than 5 % whereas imports originating in coun-
tries other than Chile (Norway, the Faeroe Islands, etc.) accounted for over 60 % of Community
consumption. If the imposition of measures against imports originating in Chile were to lead to a
positive effect on the situation of the Community industry, this would necessitate that prices of
imports of the product concerned from other sources would have to increase as well as those of
producers in the Community not part of the Community industry. As a consequence, considering
the relatively small market share of the Community industry vis-à-vis other suppliers on the
Community market, the imposition of measures against Chile would lead to a substantial net
transfer of wealth out of the Community as the market adjusts to higher prices. Whether higher
prices would be borne by the consumer or shared by other intermediaries in the sales chain, the
transfer of wealth to third country suppliers would greatly exceed any benefit from measures that
the Community industry would derive. However, it is already highly doubtful whether any anti-
dumping measures on imports from Chile would lead to such a price increase for salmon from all
sources and that the Community industry would benefit at all considering the small market share of
Chilean salmon.

3. INTEREST OF OTHER COMMUNITY PRODUCERS

(225) The two other producers in the Community which cooperated in the proceedings employed nearly
800 people in salmon related activities in the IP and had a combined turnover in excess of
EUR 120 million. These companies suffered a marked deterioration in their economic situation in
the IP as a result of the marked disturbances on the Community market. They highlighted the
important role played by salmon farming in many outlying and relatively disadvantaged areas of the
Community. They noted that many problems in the market had arisen because of the imbalance
between supply and demand. It was suggested that 2000 had been a good year for prices because of
the combined effect of a number of factors,
including disease problems in Scotland, that had
restricted supply. Thereafter, over supply by many producing countries, including Scotland, had led
to a sharp fall in prices. It was claimed that Community producers of salmon and their suppliers
would be best served when a proper balance was established between supply and demand. This, it
was argued, could be achieved by further stimulating demand and managing supply in line with that
demand and by investing funds in Community producers to address competitive and regulatory
differences vis-à-vis other producer countries.

(226) Nutreco Aquaculture (the division of the Nutreco group to which both Marine Harvest companies
belong) did not consider measures to be the optimal solution for the salmon industry as a whole,
both for producers in the Community and for those in third countries exporting to the Community.
It was noted that measures, inter alia, would not address the oversupply of salmon or promote the
efficiency or competitiveness of EU producers.

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4. INTEREST OF IMPORTERS, USERS AND CONSUMERS

(227) The two importers cooperating in the framework of the investigation concerning Chile and the
Faeroes had no opinions regarding the Community interest aspects of the investigation as sales of
farmed Atlantic salmon represented an insignificant part of their overall turnover.

(228) Representations were also received on behalf of SA Direct Ocean. This company noted that it used
imported frozen salmon from Chile in its production of ready meals which were aimed at low and
middle income consumers. It was suggested that these products were not in competition with fresh
salmon from Scotland. Moreover, it was claimed that measures against Chile would not benefit the
Community as Scottish salmon farmers could not supply frozen salmon. It was further claimed that
several thousand jobs in the food processing industry would be put at risk if measures against
imports from Chile were imposed.

(229) The Federation of National Organisations of Importers and Exporters of Fish (AIPCE/CEP) expressed
its opposition to any system that impacted supply and demand if it resulted in increased prices and
made the obtaining of supplies more difficult. It considered that if prices were to rise above the
natural level of the market, this would be negative in terms of competition for both EU industry and
the consumer. The Federation provided data which showed that its members processed in excess of
60 000 tonnes of salmon per year and produced nearly 50 000 tonnes of smoked salmon. It esti-
mated the number of people to be directly employed in the sector to exceed 10 000.

(230) The Danish Association of Fish Processing Industries and Exporters made clear its opposition to any
regulation of the market which disturbed prices and the normal rules of competition.
It was
suggested that the existing measures had distorted the market for salmon in the Community and led
to excess profits being made in Norway. These high profits, it was claimed, had in turn encouraged
over investment in the salmon farming industry and created an imbalance between supply and
demand world-wide. The association highlighted the importance of the processing industry in the
Community both in terms of employment and the added value it created.

(231) The Syndicat National de l'Industrie du Saumon Fumé represents 15 companies in France involved
in the production of smoked salmon. These companies employ 2 800 people and processed
approximately 36 000 tonnes of fresh salmon in the IP. The association considered that the anti-
the appropriate mechanism for regulating trade in agricultural
dumping Regulation was not
products which were subject to significant price movements and that the salmon farming industry
had to manage its growth on a global basis.

(232) The European Consumers' Organisation (BEUC) noted that the market for salmon in the Community
had increased markedly, largely in its opinion as a result of increased competition from producers in
Norway and more recently Chile and the Faeroe Islands. It was suggested that this competition had
led to a decline in prices which had allowed European consumers to increase their intake of salmon.
This fact was to be welcomed because of the perceived nutritional benefits of salmon. At the same
time, it was argued that the economic interests of importers, processors and retailers of salmon in
the Community far outweighed any potential short-term benefits that measures would bring to the
relatively small number of independent producers remaining in the Community. As a result, BEUC
expressed its opposition to measures of any kind against imports into the Community of farmed
Atlantic salmon.

(233)

In the light of the comments received from the three representative associations, it was also consid-
ered whether the imposition of measures could lead certain users to relocate their production facil-
ities to countries outside the Community. In this context it is noted that the conventional tariff
applicable to imports of fresh and frozen Atlantic salmon into the Community in the IP and 2002 is
2 % whereas that for imports of smoked salmon is normally 13 %. Eurostat data for the analysis
period shown in the table below indicates that almost half of all imports declared in the IP under

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heading CN 0305 41 00 (Pacific, Atlantic, Danube salmon, smoked including fillets) originated in
Poland with the next most important origins being Norway and the Faeroe Islands. Imports from
other origins were not significant. The data would at first appear to suggest that the measures
currently in place against Norway have not had an appreciable impact on the trade flows of smoked
salmon. However, it should be recalled that the measures against Norway were imposed in 1997.
Imports of smoked salmon in this year and 1996 should therefore also be considered in order to
have a more meaningful picture. These figures show a much lower level of imports originating in
Poland with 302 tonnes recorded in 1996 and 229 tonnes in 1997. The figures for imports origi-
nating in Norway for the same years were 771 and 900 tonnes respectively and for the Faeroe
Islands, 566 and 493 tonnes. It is therefore apparent that the imposition of measures led to a signifi-
cant increase in the volume of imports of smoked salmon from Poland which may have replaced
certain production originating in Denmark as volumes from this country to the rest of the Commu-
nity declined from approximately 15 500 tonnes in 1997 to 13 500 tonnes in 1998.

Poland (tonnes)

1 931

1 664

1 677

1 637

1998

1999

2000

2001 (IP)

Index

100

86

87

85

Norway (tonnes)

1 084

975

951

920

Index

100

90

88

85

Faeroe Islands (tonnes)

594

370

453

686

Index

100

62

76

116

Total from three origins (tonnes)

3 608

3 009

3 080

3 243

Index

100

83

85

90

(234)

It is also noted that the European Community and its Member States have recently concluded a Free
Trade Agreement with Chile. According to the Agreement, the conventional duty of 2 % on imports
of the product concerned will be eliminated from the date on which the Agreement enters into
force. As regards trade in salmon related products such as smoked salmon, it is noted that the
Agreement foresees a gradual elimination of the existing tariff over a 10 year period in tandem with
a system of aggregated quotas of 40 tonnes for products classified under headings 0305 41 00
(smoked) and 0305 30 30 (salted or in brine). In view of the quantities involved in this quota
system, the future accession of Poland to the European Union and the proposal to discontinue
measures against Norway, it is not considered that the imposition of measures against Chile will lead
to a delocalisation of the salmon processing industry to third countries.

(235)

In considering the possible impact of measures on the final consumer, information submitted by the
Norwegian Seafood Federation concerning retail prices in 150 supermarkets in France for Atlantic
salmon fillets was taken into account. This demonstrated that, on average, prices fluctuated within a
narrow band as shown in the table below. It was therefore argued that the EU consumer had not
benefited from the reduction in production costs achieved by producers. This fact was echoed by
the EU Salmon Producers' Group which also made the point that the Salmon Agreement and the

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existing measures had had no recognisable effect on consumer prices and that the primary benefici-
aries of falling producer prices appeared to be retailers and wholesalers. It would appear from these
submissions that consumers of farmed Atlantic salmon are to a certain extent insulated from the
extremes of price volatility on the market. It is therefore unclear as to precisely what extent consu-
mers would be impacted by the imposition of measures against Chile as this depends partly on the
pricing policy of retailers which did not cooperate in the proceedings.

EUR per kilogram

11,03

10,81

11,64

11,30

1998

1999

2000

2001 (IP)

Index

100

98

106

102

(236)

In conclusion, whilst recognising the importance of the salmon processing sector in terms of
employment and value creation, it is not considered on the basis of evidence available that the
impact of measures would be such as to lead to a delocalisation of processing activities to locations
outside the Community. Nevertheless, it is considered that importers/users will be disadvantaged by
measures in that they will have to pay additional duties on their imports of salmon from Chile.

5. INTERESTS OF SUPPLIERS

(237) The five cooperating suppliers made themselves known in the review concerning Norway and there-
fore did not comment in detail on the impact of potential measures on Chilean imports on their
activities. However, two suppliers did express the opinion that measures were not the most appro-
priate means of addressing the situation of Community salmon producers.

6. CONCLUSION ON COMMUNITY INTEREST

(238)

It is acknowledged that the existing measures against imports from Norway initially enabled the
Community industry to improve its economic situation with regard to its level of production, sales,
profitability and market share. However, in the absence of a likelihood of a continuation or recur-
rence of dumping and subsidisation for imports from this country, measures against imports from
Norway cannot be continued. Any measures limited to Chilean exports, even assuming that these
were considered to cause injury, would in all probability be inefficient due to the limited price
competition between fresh and frozen salmon and considering recital 212 above, the difficulties the
Community industry is likely to experience in reaping the benefits of any price increase. Even if
measures on Chilean exports alone were to trigger a price increase in the price of fresh salmon on
the Community market to the supposed benefit of the Community industry, the resulting transfer of
wealth to those producers/exporters in countries not subject to measures would outweigh the
benefit accruing to the Community industry and certain other interested parties. At the same time, it
is recalled that any such increase in prices would be to the detriment of importers, users and consu-
mers.

(239) Subsequent to the disclosure, one party criticised the manner in which the Commission had made
its assessment of the Community interest. According to this party, the interests of the Community
industry had not been properly taken into account. It argued that although the Community industry
was small, this should not be used as an argument against its need for protective measures and that
this approach contradicted the stance that had been adopted in similar situations in the past, most
notably at the time when measures were originally imposed on imports from Norway.

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(240) The same party argued that the appreciation of the views of other parties to the investigations was
mistaken. In particular, it suggested that the opinions expressed by those other producers in the
Community which had cooperated in the investigations but which were not part of the complainant,
could not be considered to be representative of the views of all other producers in the Community,
many of which had not made themselves known. It claimed that Norwegian-owned salmon produ-
cers located in the Community had been instructed not to cooperate with the Commission. It
claimed that 8 000 jobs were at imminent risk of disappearing if such measures were not imposed
as a matter of urgency. It also expressed the view that the situation on the Community market could
be expected to deteriorate further as trade defence measures in the USA could be expected to lead to
an increased trade diversion of Chilean exports from that market to the Community.

(241)

It is to be noted that the assessment of the Community interest was made on the basis of all infor-
mation submitted. The views of all interested parties were addressed including those which drew on
the experiences of the existing measures applicable to Norwegian imports. It is not accepted that the
situation in the present case is similar to that prevailing at the time of the previous investigation
concerning Norway. At that time, the market share of the Community industry was determined to
be over 25 % and that of Norwegian imports over 65 %. Consequently, the imposition of measures
at that time covered the majority of imports of the product concerned into the Community and
afforded protection to a Community industry with a significant share of the market. In the present
case, the assessment of the Community interest is limited to a consideration of measures against
dumped imports from Chile only. These imports accounted for market share of around 5 % in the
IP and under 7 % of total imports. In addition, the market share of the Community industry has
been significantly reduced to less than 5 % as the process of restructuring and consolidation in the
market has continued.

(242) Regarding the other issues raised by this party on the question of the Community interest, it has
been clearly acknowledged that the Nutreco group companies were the only producers other than
those in the Community industry to have cooperated in the investigations. Whilst it was not the
intention to portray the views of Nutreco as representing all other salmon producers in the Commu-
nity, it is to be noted that the group is one of the largest producers of salmon in the Community.
As the assessment of the Community interest calls for an appreciation of all the various interests
taken as a whole, it would have been inappropriate not to have given due consideration to the views
expressed by Nutreco.

(243)

It is recognised that the salmon farming industry provides employment in remote areas of the
Community where other employment opportunities are often limited. However, it would appear that
the figure of 8 000 jobs, for which no supporting evidence has been provided, could be overstated.
Figures published by the Scottish Executive show 1 257 people to have been directly employed
(either full-time or part-time) in salmon production in Scotland in 2001. In view of the significantly
lower production volume of farmed Atlantic salmon in Ireland, the figure for direct employment in
that country is expected to be far lower. It should be underlined that the primary purpose of the
anti-dumping instrument is to counter unfair trade practices. More specifically, the purpose of the
Community interest test is to determine whether there are any overriding interests against the impo-
sition of measures despite the existence of injurious dumping. This calls for an appreciation of all
economic interests involved in the Community.

(244)

In considering the party's final point relating to the trade defence measures in place in the USA and
their possible repercussions for the Community salmon market, it is noted that such measures were
first imposed by the authorities in 1998 and not in 2001 as has been suggested. The measures were
only imposed on imports of fresh salmon into the USA meaning that frozen salmon, which
accounts for almost all exports from Chile to the Community, was unaffected. Moreover, the admin-
istrative review process undertaken by the authorities in the USA subsequent to the imposition of
the original measures has resulted in a lowering of the level of duties for most Chilean exporters.
Therefore, it is not considered that trade defence measures in the USA constitute sufficient justifica-
tion for the imposition of measures in the Community against imports from Chile. In light of the
foregoing, this claim and others made by the party as detailed in recitals 239 and 240 were rejected.

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(245) Therefore, on the basis of all the information submitted, it is concluded that it is not in the Commu-

nity interest to apply such measures.

J. TERMINATION OF THE PROCEEDINGS

(246)

In view of the above findings it is therefore concluded that the proceedings concerning imports
originating in Norway should be terminated and that the anti-dumping and countervailing measures
initially adopted by Regulations (EC) No 1890/97 and (EC) No 1891/97 should be allowed to
expire.

(247)

It is also concluded on the basis of the above findings that the anti-dumping proceeding concerning
imports originating in Chile and the Faeroe Islands should be terminated,

HAS ADOPTED THIS REGULATION:

Article 1

The anti-dumping and anti-subsidy proceedings concerning imports of farmed Atlantic salmon falling
within CN codes ex 0302 12 00, ex 0303 22 00, ex 0304 10 13 and ex 0304 20 13 originating in
Norway are hereby terminated.

Article 2

The anti-dumping proceeding concerning imports of farmed Atlantic salmon falling within CN codes
ex 0302 12 00, ex 0303 22 00, ex 0304 10 13 and ex 0304 20 13 originating in Chile and the Faeroe
Islands is hereby terminated.

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

Article 3

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

Done at Brussels, 26 May 2003.

For the Council

The President

G. DRYS