2006/753/EC: Commission Decision of 3 November 2006 terminating the anti-dumping proceeding concerning imports of recordable compact discs (CD+/-R) originating in the People’s Republic of China, Hong Kong and Malaysia
Date: 2006-11-03
Institutions: European Commission
Subjects: China, Hong Kong, Malaysia, anti-dumping legislation, import (EU), originating product, record

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COMMISSION DECISION

of 3 November 2006

terminating the anti-dumping proceeding concerning imports of recordable compact discs (CD+/-R)
originating in the People’s Republic of China, Hong Kong and Malaysia

(2006/753/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European Community,

Having regard to Council Regulation (EC) No 384/96 of 22 December 1995 on protection against dumped
imports from countries not members of the European Communities (1) (‘the basic Regulation’), and in
particular Article 9 thereof,

After consulting the Advisory Committee,

Whereas:

1. PROCEDURE

1.1. Initiation

The initiation of an anti-dumping proceeding concerning imports of recordable compact discs
(‘CD-R’) originating in the People’s Republic of China (‘PRC’), Hong Kong and Malaysia was
announced on 6 August 2005 in the Official Journal of the European Union (2) (‘notice of initiation’).

The initiation was made following a complaint lodged on 24 June 2005 by the Committee of
(‘the complainant’) on behalf of
European CD-Rs and DVD+/-R manufacturers — ‘CECMA’
producers representing a major proportion, in this case more than 60 %, of the total Community
production of CD-R. The complaint contained evidence of dumping of CD-Rs and of material injury
resulting there from, which was considered sufficient to justify the initiation of the proceeding.

1.2. Parties concerned by the proceeding

The Commission officially advised the complainant, other Community producers, the exporting
producers, importers, suppliers and users as well as user associations known to be concerned, and
representatives of the PRC of the opening of the proceeding.
Interested parties were given an
opportunity to make their views known in writing and to request a hearing within the time limit
set in the notice of initiation.

complainant producers, other

exporting producers,
The
importers, suppliers, users and user associations made their views known. All
interested parties,
who so requested and showed that there were particular reasons why they should be heard, were
granted a hearing.

cooperating Community producers,

In order to allow exporting producers in the PRC to submit a claim for market economy treatment
(‘MET’) or individual treatment (‘IT’), if they so wished, the Commission sent MET and IT claim forms
to the Chinese companies known to be concerned.

(1)

(2)

(3)

(4)

(5)

(1) OJ L 56, 6.3.1996, p. 1. Regulation as last amended by Regulation (EC) No 2117/2005 (OJ L 340, 23.12.2005,

p. 17).

(2) OJ C 192, 6.8.2005, p. 3.

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(6)

(7)

(8)

(9)

Thirteen groups of exporting producers (‘exporting producers’) requested MET pursuant to Article
2(7) of the basic Regulation or IT pursuant to Article 9(5) of the basic Regulation should the
investigation establish that they did not meet the conditions for MET.

In view of the apparent high number of exporting producers in the PRC and Hong Kong, sampling
was envisaged in the notice of initiation for the determination of dumping, in accordance with Article
17 of the basic Regulation. In order to enable the Commission to decide whether sampling would be
necessary and,
if so, to select a sample, all exporting producers were asked to make themselves
known to the Commission and to provide, as specified in the notice of initiation, basic information
on their activities related to the product concerned during the investigation period (1 July 2004 to 30
June 2005).

After examination of the information submitted and given the high number of exporting producers
in the PRC and Hong Kong which indicated their willingness to cooperate,
it was decided that
sampling was required.

The Commission sent questionnaires to all parties known to be concerned and to all other companies
that made themselves known within the deadlines set out in the notice of initiation. Replies were
received from all complainant producers, one other Community producer, eight unrelated importers,
one distributor and seven retailers (one of whom is a combined wholesaler/retailer), six exporting
producers in the PRC, six exporting producers in Hong Kong, four exporting producers in Malaysia,
two traders related to Chinese exporting producers and one trader related to a Malaysian exporting
producer located in Taiwan, one trader related to Hong Kong exporting producers, 12 importers
related to Chinese or Malaysian exporting producers and located in the Community.

(10)

The Commission sought and verified all the information deemed necessary for a definitive determi-
nation of dumping, injury and Community interest and carried out verifications at the premises of
the following companies:

(a) Community producers:

— Computer Support Italcard s.r.l. (Milan, Italy)

— Global Digital Disk GmbH & Co KG (Dresden, Germany)

— Manufacturing Advanced Media S.A. (Mulhouse, France)

— Sony DADC AG (Salzburg, Austria)

— TDK Recording Media Europe SA (Luxembourg)

(b) exporting producers in the PRC:

— Fortune (Jiangsu) Multimedia Co., Ltd, Nantong

— Prodisc Technology. Inc. (‘Prodisc China’), Ningbo

(c) exporting producers in Hong Kong:

— Audio Distributor’s/Artsome Ltd.

— Lead Data Inc.

— Mediastar Technology Ltd.

— MDA Technology Ltd.

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(d) exporting producers in Malaysia:

— Daxon Technologies Sdn Bhd, Kuala Lumpur

— Digital Data Technologies Sdn Bhd., Kuala Lumpur

— Dragon Optical Media Technologies Sdn Bhd. Kuala Lumpur

— Memory Tech Sdn Bhd., Kuala Lumpur

(e) related traders:

— Daxon BenQ Inc. (Taiwan)

— Prodisc Technology Inc. (Taipei, Taiwan)

— Artsome Investment Ltd. (Hong Kong)

(f) unrelated importers and distributors:

— Emtec International S.p.a. (Paris, France)

— Ingram Micro Distribution GmbH (München, Germany)

— Intenso GmbH (Vechta, Germany)

— Maxell Europe Ltd (London, United Kingdom)

— Philips Recordable Media (Wiesbaden, Germany)

— Sony France S.A. (Paris, France)

— Verbatim Ltd (London, United Kingdom)

(g) related distributor:

— SK Kassetten GmbH & Co KG (Neuenrade, Germany)

(h) wholesaler/Retailer:

— Metro Group Buying GmbH (Düsseldorf, Germany)

(i)

retailers:

— Carrefour Marchandises Internationales (Paris, France)

— El Corte Inglés S.A.(Madrid, Spain)

— FNAC S.A. (Paris, France)

(j) other stakeholders:

— Philips Intellectual Property & Standards, Eindhoven, Netherlands

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(11)

In light of the need to establish a normal value for exporting producers in the PRC to which MET
might not be granted, a verification to establish normal value on the basis of data from an analogue
country took place at the premises of the following producer in Japan:

— Taiyo Yuden, Inc. (Takasaki, Japan)

1.3. Sampling

(12) With regard to exporting producers in the PRC and Hong Kong, the Commission selected,

in
accordance with Article 17 of the basic Regulation, a sample based on the largest representative
volume of exports to the Community which could reasonably be investigated within the time
available.

(13)

(14)

The sample selected for the Chinese exporting producers consisted of
four Chinese exporting
producers, representing around 85 % of the export volume of the cooperating parties from the
PRC to the Community. Additionally, two exporters were included on the reserve list.

The sample selected for the Hong Kong exporting producers also consisted of four companies,
representing over 90 % of
the volume of exports to the Community from the cooperating
exporting producers from Hong Kong. Additionally, two companies were included on the reserve list.

(15)

The Commission received replies from the sampled exporters in China and Hong Kong as well as
from the companies on the reserve list.

(16)

In accordance with Article 17(2) of the basic Regulation the Chinese and Hong Kong authorities were
consulted on the samples and raised no objections.

(17)

The investigation of dumping and injury covered the period from 1 July 2004 to 30 June 2005
(‘investigation period’ or ‘IP’). The examination of trends relevant for the assessment of injury covered
the period from 1 January 2002 to the end of the investigation period (‘period considered’).

1.4. Investigation period

1.5. Provisional measures

(18)

injury, causation and
It
is recalled that given the need to further examine certain aspects of
Community interest, no provisional measures were imposed in the current
investigation. All
parties were informed of the preliminary findings and of the facts and considerations on which
the decision not to impose provisional measures was based. All parties were granted a period within
which they could make comments.

(19)

Some interested parties submitted comments in writing. Those parties who requested were also
granted an opportunity to be heard orally. The Commission continued to seek and verify all infor-
mation it deemed necessary for its definitive findings.

1.6. Measures in force on imports of CD-Rs from other countries

(20) Definitive anti-dumping duties on imports of CD-Rs from Taiwan were imposed on 19 June 2002 (1).

They ranged from 17,7 % to 38,5 %.

(21) Moreover, a definitive countervailing duty on imports of CD-Rs from India was imposed on 6 June

2003 (2). It amounts to 7,3 %.

(1) OJ L 160, 18.6.2002, p. 2.
(2) OJ L 138, 5.6.2003, p. 1.

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(22)

(23)

(24)

1.7.1. Product concerned

1.7. Product concerned and like product

The product concerned is recordable compact disks (CD-Rs) originating in the PRC, Hong Kong and
Malaysia, which was classifiable in 2005 within CN code ex 8523 90 00. Due to changes in the
Combined Nomenclature and as no CD/Rs exists with a recording capacity exceeding 900 megabytes,
from 2006 on, the product concerned falls within CN code ex 8523 90 10.

The product concerned is a polycarbonate disc, which is coated with a layer of dye, a layer of
reflective material and a protective layer. Although recording on such discs can be done in several
steps, the recorded information can not be erased. The disc is an optical storage medium for digital
data or sound.

CD-Rs can be distinguished according to the type of data stored (data CD-Rs versus music CD-R), the
storage capacity, the reflective metal
layer and whether or not the CD-Rs are printed upon. The
investigation has shown that all types of CD-Rs share the same basic physical and technical char-
acteristics and are used for the same purposes. Therefore, they are considered to constitute one single
product.

1.7.2. Like product

(25) No differences were found between the product concerned and the CD-Rs produced and sold on the
domestic market in the PRC, Hong Kong, Malaysia and Japan, which served as an analogue country,
as well as the CD-Rs produced and sold in the Community by the Community industry. They were
all found to have the same basic physical and chemical characteristics and uses.

(26)

It is therefore concluded that all types of CD-Rs form one product and are considered to be alike
within the meaning of Article 1(4) of the basic Regulation.

(27)

The investigation established a level of dumping of more than de minimis for each of co-operating
exporting producers from the countries concerned. However, given the conclusions as set out below,
it is not necessary to detail these findings.

2. DUMPING

3. INJURY

3.1. Community Production

(28)

In the light of the definition of Community industry as set out in Article 4(1) of the basic Regulation,
the output of the following Community manufacturers was considered for inclusion in the definition
of the Community production at the initiation of the investigation:

— Five complainant Community manufacturers:

— CDA Datenträger Albrechts GmbH (‘CDA’)

— Computer Support Italcard s.r.l. (‘CSI’)

— Global Digital Disc GmbH & Co KG (‘GDD’)

— Manufacturing Advanced Media S.A. (‘MAM-E’)

— TDK Recording Media Europe S.A. (‘TDK’)

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— Two other Community producers who fully cooperated in the investigation, and who supported

the proceeding:

— BOC SA

— Sony DADC Austria AG (‘Sony DADC’)

— Thirteen other manufacturers, as listed in the complaint, to whom questionnaires were sent but

none of whom replied to the questionnaire.

3.1.1. Exclusion of Community manufacturers from the definition of Community production for reasons of

significant imports during or after the end of the IP

3.1.1.1. C o m p a n y A

(29)

In the questionnaire response by company A, it appeared that company A, in addition to its own
Community manufacturing, also had imported the product concerned from the countries concerned.
The proportion of the imported product sold on the Community market significantly exceeded the
volumes of the like product manufactured and sold within the Community.

(30)

It was thereafter considered whether, despite the significant import volumes, the centre of interest for
company A still was within the Community and/or whether the imported volumes could be of a
temporary nature.

(31)

It appeared that the imports of company A were not of a temporary nature but rather based on a
strategic decision to source its production from Original Design Manufacturers (‘ODM’) which are
companies that design and manufacture products that are then sold under other brand names. It
could therefore not be concluded that company A’s centre of interest for the manufacturing of CD-Rs
was still within the Community as it appeared likely that company A would continue to import
significant volumes of its sales on the Community market from the countries concerned. It was also
found that, during the IP, company A’s sales on the Community market consisted to a large majority
of imported CD-Rs. This casts company A more as an importer than a producer. It was also noted
that company A’s head office and main R&D centre for CD-Rs are located outside the Community.

(32)

Thus, it was concluded that company A should not be included in the definition of Community
industry and that its production should therefore be excluded from the definition of Community
production.

(33)

Furthermore, company A has meanwhile withdrawn its support for the complaint and decided to
oppose the imposition of anti-dumping measures on imports from the countries concerned which
confirms the above evaluation of company A’s shift of interest.

3.1.1.2. C o m p a n y B

(34)

In the questionnaire response by company B, it appeared that company B, in addition to its own
Community manufacturing, had also imported the product concerned during the period considered.
However, during the IP, these imports have decreased to less than 1 % of its total sales and were
therefore deemed insignificant.

(35)

The Commission also received a questionnaire reply from another company (‘B-Rel’) that turned out
to have the same mother company (‘company B-corporation’) as company B. Company B-Rel and
company B are thus considered related within the meaning of Article 4(2) of the basic Regulation.

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(36)

Being company B-corporation’s distributor of CD-Rs for the retail market
in the Community,
company B-Rel has purchased all the CD-Rs that are destined for the retail market from company
B. In addition, company B-Rel has also imported significant volumes from third countries including
the countries concerned.

(37) When comparing company B-Rel sales of CD-Rs originating in the countries concerned with those
manufactured by company B (which subsequently were either sold directly by company B to business
customers or sold via company B-Rel to retailers), it appeared that for company B-corporation the
proportion of the imported product sold on the Community market significantly exceeded the
volumes of the like product manufactured and sold within the Community.

(38)

It was thereafter considered whether, despite the significant import volumes, the centre of interest for
company B-corporation was still within the Community and/or whether the imported volumes could
be of a temporary nature.

(39)

The findings of the investigation indicate that the imports could not be considered as being done
only on a temporary basis (as the volume of own manufactured CD-R would not increase consi-
derably in the foreseeable future even taking into account possible extension of the production
capacity of company B). Thus, it appeared likely that company B-corporation would also continue
to source major parts of its sales on the Community market from the countries concerned. It was
also noted that company B-corporation’s head office and main R&D centre for CD-Rs are located
outside the Community. It could therefore not be concluded that company B-corporation’s centre of
interest for the manufacturing of CD-Rs is within the Community.

(40)

Thus, it was concluded that company B should not be included in the definition of Community
industry and that its production should therefore be excluded from the definition of Community
production.

3.1.1.3. C o m p a n y C

(41)

The Commission received a questionnaire from the Community producer company C as well as from
company C-Rel, a distributor of CD-Rs located in Germany.
It appeared that company C and
company C-Rel are related within the meaning of Article 4(2) of the basic Regulation, as they
have the same owner.

(42) During the investigation period, company C-Rel was distributing CD-Rs manufactured by company C.
However, after the end of the investigation period, i.e. as from July 2005 onwards, on the basis of
supplementary information requested from all Community producers for the period July 2005 to
February 2006, company C-Rel has been found to have started to import significant (at a level
equivalent to the production of company C in the IP) quantities of CD-Rs from third countries
including significant volumes from the countries concerned.

(43)

In order to verify whether these imports were of a temporary nature, the Commission sent an
additional request for supplementary information, this time for the period March 2006 to May
2006. On this basis, as significant volumes of imports continued,
it had to be concluded that
these imports were not of a temporary nature, but rather a strategic decision to source significant
parts of its future sales from imports.

(44)

In accordance with the principles presented above and applied vis-à-vis companies A and B and given
that company C-Rel/company C will be shielded from the effects of any dumped imports in the
future, it was concluded that company C should not be included in the definition of the Community
production.

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3.1.2. Exclusion of Community manufacturers from the definition of Community production for reasons of

cessation of production during or after the end of the IP

3.1.2.1. C o m p a n y D

(45) After the end of the IP, the complainant Community producer company D filed for liquidation.
Several parties argued that, pursuant to Community practice, company D should be excluded from
the definition of Community production.

(46)

In January 2006, the liquidator announced its intention to sell all the assets of company D, including
all of its production lines. The complainant subsequently informed the Commission that a subsidiary
of company D, the complainant Community producer company E, would acquire the production
lines of its parent company and would re-install them and utilize them for continuous CD-Rs
production at the premises of company E. For this purpose, company E would be re-capitalized
and be sold to an external party.

(47)

it could not be concluded that company D should be
Thus, at the time of the Interim Report,
excluded from the definition of Community production as the production lines allegedly were to be
reinstalled and re-utilized at the premises of its Community subsidiary, company E.

(48) However, on the basis of supplementary information requested from Community producers for the
period July 2005 to May 2006 (i.e. after the IP), this supplementary information showed that
production lines indeed had not been reinstalled as production and capacity were in line with
those before the acquisition of production lines. Furthermore, no valid business plan had been
presented to the Commission’s services that demonstrated that company D’s production lines were
being installed at the premises of company E.

(49)

It is Community practice that manufacturers that definitively cease their production during or after
the end of the IP should not be included in the definition of Community industry within the meaning
of Article 4 of the basic Regulation. Consequently, company D’s production should be excluded from
the definition of the Community production as company D’s production lines closed definitely after
the end of IP and it has not been demonstrated that these production lines are again being utilized.

3.1.2.2. C D A & B O C S A

(50)

Subsequent to the publication of the notice of initiation, two further companies, CDA and BOC SA,
informed the Commission that they had ceased their production within the Community for the
foreseeable future.

(51)

Consequently, CDA and BOC SA were excluded from the definition of the Community industry and
their production was excluded from the definition of Community production.

3.1.3. Other Community producers

(52)

The complainant had provided a list of 13 other producers in the Community. With the exception of
BOC SA, none of these producers have co-operated during the investigation. Nevertheless, they
should be accounted for when defining Community production.

(53) On the basis of information in the complaint, the production of these companies has been estimated

to be around 264 Mio Units (for calendar year 2004).

(54)

Recent information by the complainant suggests that at least four of those other Community
producers ceased their production during or after the end of the IP.

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(55) As stated above, manufacturers that definitively cease their production during or after the end of the
IP should not be included in the definition of the Community industry. Consequently, also the
production of
these four companies should be excluded from the definition of Community
production.

(56)

To conclude, Community production of CD-Rs within the meaning of Article 4(1) of the basic
Regulation has been defined as:

— CD-Rs produced by the original 20 companies listed in recital (28), minus

— the CD-Rs produced by the three companies which, as described in recitals (29) to (44) , have

been excluded for reasons of imports, and

— the output of the three cooperating companies which, as described in recitals (45) to (51)

have been excluded as their production within the Community ceased,

— the output of the four non-cooperating companies which, as described in recitals (52) to (55)

have been excluded as their production within the Community ceased.

(57)

The total production of those remaining 10 producers, which constitute Community production
within the meaning of Article 4(1) of the basic Regulation, has been estimated to be 168 Mio units
during the IP.

3.2. Definition of Community Industry

(58)

It follows from recital (57) above that Community production within the meaning of Article 4(1) of
the basic Regulation was constituted by the 10 producers whose collective output was estimated to
168 Mio Units.

(59) Moreover, it follows from recital (28) and the recitals thereafter that the sole Community producer
which has cooperated with the Commission in the investigation was Manufacturing Advanced Media
(‘MAM-E’).

(60)

The collective output of this company amounted to more than 50 % of the Community production.
This company can therefore be considered to constitute the Community industry within the meaning
of Articles 4(1) and 5(4) of the basic Regulation.

3.3. Community consumption

3.3.1. Preliminary remarks

3.3.1.1. I m p o r t d a t a

(61)

Statistics on imports of CD-Rs are included in Eurostat under CN Code 8523 90 00. However,
included in the same CN Code are also other recordable media products such as DVD-R, CD-Rom
etc. Moreover,
imports under CN Code 8523 90 00 are recorded in kilos, whereas CD-Rs are
recorded by all interested parties as being produced and sold in units. Thus, information statistics
from Eurostat, without a further breakdown of the figures obtained, are not a reliable source of data.

(62)

Consequently, statistics were further broken down using a method suggested by the complainant and
i.e. exporters’ data and other
further corroborated by figures obtained during the investigation,
sources in order to ensure that the figures are as complete and accurate as possible.

3.3.1.2. D a t a o n C o m m u n i t y p r o d u c t i o n

(63)

Community industry data were obtained from the verified questionnaires of the sole cooperating
Community producer that constitutes the Community industry. Further information on Community
production was derived from the questionnaire responses from the companies which have been
excluded from the definition of Community production, and also from data contained in the
complaint.

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3.3.2. Consumption

(64)

Thus, the consumption in the Community was established on the basis of:

— the total imports of the product concerned into the Community as reported by Eurostat and

converted into units,

— the total verified sales on the Community market by the Community industry,

— the total sales on the Community market by other cooperating manufacturers in the Community,

— the total estimated sales on the Community market by the other manufacturers in the

Community in operation.

(65) On this basis, Community consumption developed as follows:

Consumption

Mio Units

Index: (2002 = 100)

2002

2003

3 580

3 738

100

104

2004

3 527

99

IP

3 488

97

(66) Over the period considered consumption in the Community decreased by 3 %. Consumption peaked

in 2003. Since then, Community consumption has decreased by 7 percentage points.

3.4.1. Cumulative assessment of the effects of the dumped imports from the countries concerned

3.4. Imports from the countries concerned

(67)

(68)

The Commission considered whether the effects of
the dumped imports from the countries
concerned should be assessed cumulatively, on the basis of the criteria set out in Article 3(4) of
the basic Regulation. This Article provides that the effects of imports from two or more countries
simultaneously subject
is
determined that:

shall be assessed cumulatively if

to anti-dumping investigations

it

— the margin of dumping established in relation to the imports from each country is more than de

minimis as defined in Article 9(3) of the basic Regulation,

— the volume of imports from each of the countries concerned is not negligible,

— a cumulative assessment of the effects of the imports is appropriate in the light of the conditions
of competition between imported products and the conditions of competition between the
imported product and the like Community product.

It was first found that the dumping margins established for each of the countries concerned was
more than de minimis. Second, the investigation showed that the conditions of competition between
the product concerned and the Community like product sold were similar as demonstrated by the
fact that the CD-Rs imported from the countries concerned were alike in all respects, they are
interchangeable and are marketed in the Community through comparable sales channels and
thus competing with each other and with the CD-Rs
under similar commercial conditions,
imports from each country concerned was also
produced in the Community. The volume of
found to be above the threshold of 1 % market share set by Article 5(7) of the basic Regulation.
The import prices of the product concerned from all of the countries concerned had followed a
similar decreasing trend throughout the period considered. Moreover, the users (distributors and
retailers) were the same. Consequently,
the
effects of the imports was appropriate and in accordance with Article 3(4) of the basic Regulation.

it was concluded that a cumulative assessment of

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3.4.2. Import volumes and market shares from the countries concerned

(69) On the basis of Eurostat statistics, the import volumes have developed as follows during the period

considered:

Hong Kong

Index: (2002 = 100)

Market share

PRC

Index: (2002 = 100)

Market share

Malaysia

Index: (2002 = 100)

Market share

Countries concerned

Index: (2002 = 100)

Market share

Mio Units

2002

2003

2004

IP

274

188

8 %

262

179

7 %

1 077

1 128

224

30 %

312

210

9 %

235

32 %

277

188

8 %

1 504

1 651

1 679

194

40 %

213

46 %

217

48 %

146

100

4 %

480

100

250

171

7 %

930

194

13 %

25 %

324

219

8 %

148

100

4 %

774

100

21 %

(70)

The imports from the countries concerned as well as their market shares have steadily increased
during the period considered. From a market share of 21 % during the first year in the period
considered, the market share has more than doubled to 48 % during the IP.

(71)

3.4.3. Average prices and level of undercutting of imports from the countries concerned
The average price level and level of undercutting of the Community industry’s sales prices for the IP
has thus been calculated on the basis of information gathered from co-operating exporters.

Hong Kong

PRC

Malaysia

Average level of undercutting

69,7 %

43,9 %

0 %

(72)

It follows from above that imports from Hong Kong and the PRC were found to undercut the
Community industry’s sales prices by 69,7 % and 43,9 %, whereas for Malaysia no undercutting was
found.

3.5. Situation of the Community Industry

(73)

The investigation established the existence of material
injury for the sole Community producer
constituting the definition of the Community industry. However, given the conclusions as set out
below, it is not necessary to detail these findings.

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4. CAUSATION

4.1. Preliminary remarks

(74)

In accordance with Article 3(6) of the basic Regulation, it was examined whether the material injury
suffered by the Community industry had been caused by the dumped imports from the countries
concerned. In accordance with Article 3(7) of the basic Regulation, the Commission also examined
other factors which might have injured the Community industry in order to ensure that any injury
caused by those factors was not attributed to the dumped imports.

4.2. Effects of the dumped imports from the countries concerned

(75)

It follows from recital (69) that the volume of imports from the PRC, Malaysia and Hong Kong has
increased by 117 % during the period considered, representing an increase in market share from 21 %
in 2002 to 48 % during the IP.

(76)

In recital (72), it was established that that the imports originating in the PRC and Hong Kong, have
undercut the Community industry’s prices by 43,9 % and 69,7 % respectively, whereas for Malaysia
no undercutting was found.

(77)

It was further concluded in recital (73) that the Community industry has suffered material injury and
it appears that the injurious situation coincides in time with the increase in volumes of dumped
imports from the countries concerned.

(78) Given this coincidence in time between the increased imports at dumped prices and the deterioration
of the situation of the Community industry, it can be concluded that the dumped imports have had a
direct effect on this situation.

4.3.1. Imports from other third countries

4.3. Effect of other factors

(79)

It has been alleged that some of the injury suffered by the Community industry has been caused by
imports from other third countries. Based on this allegation, the overall volume of imports from
other third countries below has been obtained from Eurostat using the breakdown method referred to
in recital (62) above:

Mio Units

Third country: India

Index: (2002 = 100)

Market share

Third country: Taiwan

Index: (2002 = 100)

Market share

Other third countries

Index: (2002 = 100)

Market share

Total third countries

Index: (2002 = 100)

Market share

2002

712

100

20 %

1 206

100

33 %

514

100

14 %

2 432

100

67 %

2003

1 143

160

31 %

163

13

4 %

423

82

11 %

1 729

71

46 %

2004

1 207

169

34 %

89

7

2 %

39

7

1 %

IP

1 124

158

32 %

53

4

1 %

129

25

4 %

1 335

1 306

55

37 %

54

37 %

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L 305/27

(80)

It follows from the above that the overall volumes of imports from other third countries have
decreased from 67 % of Community consumption to 37 % of Community consumption, or by 30
percentage points. However, among the different exporting third countries, divergent developments
were found. These warranted a closer individual analysis of the largest amongst these, namely Taiwan
and India.

(81)

In this respect, the import statistics for Taiwan and India also have been cross-checked with infor-
mation obtained from co-operating importers.

4.3.1.1. T a i w a n

(82)

Following the introduction of anti-dumping measures, imports from Taiwan have almost disappeared
from the Community market. Information in the complaint suggests that, following the introduction
of these measures in December 2001, the Taiwanese exporting producers relocated some of their
production lines to other countries, including the PRC.

(83)

This can be an explanation of the drop in import volumes from Taiwan and the corresponding
increase of import volumes from the PRC.

4.3.1.2. I n d i a

(84)

It is recalled that an anti-dumping investigation on imports of CD-Rs from India was terminated
in May 2003 due to the absence of dumping. It is also recalled that following an anti-subsidy
investigation, a countervailing duty of 7,3 % was imposed on imports of CD-Rs originating in India.

(85) Nevertheless, imports from India increased considerably between 2002 and 2004, increasing their
market share from 20 % to 34 %. During the IP, the market share decreased slightly. Still, imports
originating from India play a major role in the Community market of CD-Rs.

(86) Moreover, based on information from cooperating importers, the average import price from India is
around 12,7 EUR-cents/unit (DDP). Comparing this price of Indian imports with the price at which
the same co-operating importers purchased the product concerned from the PRC, this comparison
shows that imports from India were at the same price level as imports from the PRC. Consequently,
imports from India have undercut the Community industry with a percentage level equivalent to that
of
it cannot be excluded that imports from India have
contributed to the difficult financial situation of the Community industry.

imports from the PRC (43,9 %) Thus,

4.3.2. Decrease in overall consumption

(87)

It follows from recital (66) that consumption of CD-Rs has decreased by 7 % since 2003. It has been
examined whether this decrease may have been a reason for the injury suffered by the Community
industry. To this end, a comparison between the development of sales on the EC market by the
Community industry and the overall development of Community consumption was made.

(88)

It was found that the negative development of EC sales by the Community industry ties in with the
overall decrease in consumption.
the overall decrease of
consumption has contributed to the injury suffered by the Community Industry.

It can therefore be concluded that

4.3.3. Special levies

(89)

In many Member States, the sales of CD-Rs (as well as other recordable media) are taxed by way of a
special levy included in the price when purchased at the retail level. It has been claimed that this
special levy has contributed to the injury suffered by the Community industry. This special levy is
however collected on an equal basis on sales of imported CD-Rs as well as CD-Rs manufactured in
the Community,
thus being neutral between imported products and Community-manufactured
products.

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(90) However, the level of this special levy differs significantly between Member States, varying from no
levy at all in countries such as the United Kingdom and Luxembourg to EUR 0,52/unit in France and
EUR 0,29/unit in Italy. This should be set against the average import price (at DDP) of EUR 0,12/unit
when imported from India as well as from the PRC during the period considered. Given the free
movement of goods between Member States, this has allegedly led to a significant trade diversion to
Indeed, sales of CD-Rs,
the detriment of the retailers located Member States with a high levy.
according to sales statistics from Community manufacturers, confirm the fact
that sales to
retailers/e-shops located in low-levy Member States are significant and appear to include significant
border-trade.

(91) Given that the Community industry is located in Member States with the highest levy, it has been
alleged by some interested parties that the injury suffered by the Community industry has been
the
caused by the negative effect on consumption that
Community industry has not been able to compensate for this loss by gains in sales in other
Member States.

this levy has brought, assuming that

(92)

(93)

(94)

(95)

It is noted that one of the complaining Community producers which was subsequently excluded from
the definition thereof, in March 2005, has questioned the legality of these levies itself and indeed
claimed that the levy has caused the sales price to ‘collapse’. Thus, this confirms that the levies had an
effect on the Community producers’ sales.

It follows from recital (65) that the consumption of CD-Rs in the Community has decreased by 3 %
it was stated that the
during the period considered. Meanwhile,
negative sales development of the Community industry coincides with the overall negative devel-
opment of Community consumption. Thus, whereas it cannot be stated that the special levy has had
a specific and measurable impact on the overall Community sales (i.e. in addition to its effect on the
overall development of Community consumption), it cannot be excluded that the special levy has had
a negative impact on consumption, particularly in those Member States where this levy makes up a
significant part of the retail price.

it is recalled that in recital (88),

4.3.4. Royalties

It has been alleged that the injury suffered by the Community industry is due to the royalties payable
to the licence holder, Royal Philips Electronics Corporation, per unit produced, since this leads to a
cost increase with which the imported products are allegedly not burdened and which could not been
passed on to the customers.

The technique to produce CD-Rs is patented. The patent-holders are Sony Corporation, Taiyo Yuden
and Royal Philips Electronics Corporations. The latter is authorized by the former two companies to
grant licenses (‘CD-R Disc Patent License Agreement (Joint)’) and to collect royalties due from any
licensing agreement. The cost of royalties would typically be around 5 EUR-cents per unit produced
(USD 0,06).

(96)

It should be noted that the cost of royalty payable indeed appears significant as compared to an
average sales price during the investigation period, i.e. 30 %.

(97) However, the investigation revealed, that although the Community industry had signed a licensing
agreement with Philips, it had apparently refused to pay royalties to Philips at the level set in the
the Federation of
licensing agreement. To this end,
(‘FIPCOM’) which has in
Interested Parties in fair Competition in the Optical Media sector
February 2006 reached an agreement with Royal Philips Electronics Corporations to pay a new
lower rate of royalties. Still, it is noted that the Community industry has not yet paid (as of May
2006) the royalties due.

the Community industry was member of

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L 305/29

(98)

it appeared that, should the Community industry had paid the royalties payable in
To conclude,
accordance with the licensing agreement signed by it, this may well had contributed to the negative
financial performance, assuming that it would not have been able to pass on these costs to its
customers. However, since the Community industry was found not to pay, consequently royalties
could not have played a part in the injury suffered by the Community industry.

4.4. Conclusion on Causation

(99)

It was established above that there is a link between dumped imports and the injury suffered by the
Community industry. It has also been concluded above that the injury suffered by the Community
industry may, to a significant extent, be attributed to imports from other third countries (especially
imports from India) and to the overall decrease of EC consumption.

(100) These reasons appear not to be able to break the causal link between dumped imports and the injury
suffered by the Community industry, but have significantly contributed to the injury suffered by the
Community industry, thus severely weakening the causal link established above between the dumped
imports and the injurious situation of the Community industry.

5. COMMUNITY INTEREST

(101)

It has further been examined whether compelling reasons exist that could lead to the conclusion that
it would not be in the Community interest to impose anti-dumping measures on the imports from
the countries concerned. For this purpose and in accordance with Article 21(1) of the basic Regu-
lation, the determination of Community interest was based on an appreciation of all the various
interests involved, i.e. those of the Community industry, the importers/traders, the distributors, the
retailers and the end-users (associations as well as end-consumers).

(102) The Commission contacted a significant number of interested parties to obtain their views.

In
addition to the Community industry, representatives of all the major sales brands on the market
such as Verbatim, Maxell, Philips, TDK and Sony as well as some representative retailers such as
Carrefour, Tesco, Metro-Group, including Media-Saturn, Fnac and El Corte Inglés have been heard. All
importers, distributors, whole-sellers or retailers have expressed opposition to any imposition of
measures.

(103) Following the imposition of anti-dumping measures on imports of CD-Rs originating in Taiwan (and
the
the imposition of countervailing measures on imports of CD-Rs originating in India),
of
Community industry, as constituted in this proceeding, had a market share of 2 %. Given this
remote market share,
the Community
industry would in all likelihood not be in a position to raise its prices to a sufficient level.

is considered that even if measures were imposed,

it

(104) The complainant has argued that the negative prospects for the Community industry in the preceding
recital would be inconsistent with the reasoning in the Council Regulation (EC) No 1050/2002
imposing definitive anti-dumping measures on imports of CD-Rs originating in Taiwan.

(105)

In comparison to the situation in 2000 (which was the investigation period for the anti-dumping
investigation leading to the adoption of Council Regulation (EC) No 1050/2002), two important
differences have emerged:

— whereas the market share of the Community industry in the previous investigation was 12,6 %
the Community industry in the present
(consisting of 9 companies),
investigation was limited to 2 % (consisting of one sole company). In view of the fact that the
market share of the Community industry is only one sixth of the market share it held in 2000,
consisting only of one sole company (following the exclusion of a number of Community
manufacturers which have been found to have imported themselves),
the more negative
assessment of the prospects for the Community industry in this investigation is fully reasonable,

the market share of

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— by the IP, the product concerned is considered to have reached a mature stage in its life cycle and
is treated as a commodity at the retail level. This has been confirmed by the distributors and
retailers that co-operated in the investigation. As seen in recital (65) above, consumption of
CD-Rs have decreased by 7 percentage points since 2003 as alternative storage facilities (hard
discs, USB-sticks, Mp3-players, etc.) have become more accessible and more attractive for end-
consumers. The technological development in the market of media storage devices has been
found to be fast and new media storage products have the advantage (in comparison to CD-
Rs) of bigger storage capacity which, in the case of flash memory sticks, is combined with small
sizes.

(106)

In view of the changed circumstances laid down in the preceding recital,
it is considered fully
consistent with the basic Regulation that the prospects for the Community industry in this investi-
gation are assessed differently in comparison to the reasoning set out in Council Regulation (EC)
No 1050/2002.

(107) The complainant has further argued that some of the non-cooperating producers that have ceased
their production during or after the end of the IP could resume their production should measures be
introduced. However, in the absence of information directly from these non-cooperating producers
that would confirm these alleged intentions, or other evidence substantiating the allegation, this
argument has to be rejected. It is also noted that even if these companies were to resume production,
their production would in all likelihood not be very substantial as compared to the volumes imported
from the countries concerned.

(108) A number of parties have further argued that, should measures be introduced, the resulting cost
increase would have to be borne by one or several levels in the distribution chain (thereby signifi-
cantly decreasing their respective margins), or passed on to the consumers (thereby perhaps affecting
the overall consumption of CD-Rs negatively), or shared between both.

(109) The likely reaction of importers, distributors or retailers to the cost increase following the imposition
of measures would depend on the situation in each Member State. In some Member States, the
demand for CD-Rs is indeed already under pressure from the mentioned ‘special levies’ on recordable
In this case, the
media (a tax which increases the retail price significantly for the consumer).
consumers of CD-Rs would possibly not be ready to pay more as a result of anti-dumping duties
as the retail price is already perceived as high. The full cost of measures would in all likelihood
therefore have to be borne by the distribution chain in order to avoid that consumers turn even more
increasingly to other means of media storages such as hard discs and flash memory sticks. As the
mark-up of the importers/wholesalers in these countries can be estimated at around 4 %, the impo-
sition of anti-dumping duties would significantly decrease the already small margin.

(110) Conversely, in Member States with the lowest (or absence of) special levies, it is more likely that a
substantial part of the cost increase will be passed on to consumers. Therefore, the relative effect of
anti-dumping measures would be the greatest there, since the price increase would be relatively
higher. As a result, consumption might further decrease, as consumers would have an incentive to
turn to substitution products.

(111)

It follows from the above that the price strategy of the importers, distributors and retailers will vary
depending on the situation in each Member State. Nonetheless, it is apparent that all of them will
suffer from the introduction of anti-dumping measures, either by way of decreased margins or by
way of decreased sales volumes. Similarly, to the extent that the cost increase of anti-dumping
measures is passed on the consumers, the latter will also be negatively affected.

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(112)

It has also been argued that the situation of the Community industry is the result of abusive price
behaviour by certain dominant exporting producers, consisting in pursuing a strategy of below-cost
prices which has prevented the Community industry from building up any significant market
presence.

(113) Firstly, it has to be noted that a corresponding decision or investigation concerning an abuse of
dominance under the EC competition rules does not exist, nor has the complainant pointed to any
respective decision under national competition rules. Secondly, the investigation has revealed a large
number of operators in Europe and the world on the relevant product market. Within the context of
this investigation, it has not been demonstrated that any of the operators, solely or jointly, holds a
market share significant enough that this could likely be considered to constitute a dominant
position.
In addition, neither has it been demonstrated that any of the companies enjoys such
economic strength as to impede effective competition.

(114) Thirdly, there is no indication of any significant loss-making with the exporters concerned which
would suggest that the exporters did pursue a strategy of selling below-cost prices. The argument was
therefore rejected.

(115) Moreover, while Article 21 of the basic Regulation indeed refers to the need to give special consi-
deration to the need to remedy the trade distorting effects of injurious dumping and to restore
effective competition, this particular provision has to be seen in the overall framework of the
Community interest test as laid down in the aforementioned Article. Thus the effects of imposing
measures or not imposing measures on all parties concerned have to be examined and balanced. In
this respect, it is recalled that there are a number of other exporters and producers in competition on
the world market and to a certain extent also on the Community market. Even in a medium term
perspective the Community industry would be unlikely to take full benefit of possible measures given
that it is to be expected that other third countries would considerably increase their part on the
Community market.

5.1. Conclusion on Community interest

(116) On the basis of the above, it can be concluded that the imposition of measures would, on the one
hand, have substantial negative effects on importers, distributors, retailers and consumers of the
product concerned, while on the other hand, the Community industry is unlikely to obtain any
significant benefits. It is therefore considered that the imposition of measures would be dispropor-
tionate and against the Community interest.

(117)

In view of the conclusions on Community interest, the proceeding with regard to imports of CD-Rs
from the countries concerned should be terminated.

6. TERMINATION OF THE PROCEEDING

(118) The complainant and all other interested parties were informed of the essential facts and consid-
erations on the basis of which the Commission intends to terminate this proceeding. Subsequently,
the complainant made known its views which, however, were not of a nature to change the above
conclusion,

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HAS DECIDED AS FOLLOWS:

Article 1
The anti-dumping proceeding concerning imports of recordable compact discs (‘CD-R’) originating in the
People’s Republic of China, Hong Kong and Malaysia, falling within CN code ex 8523 90 10 (CN code since
1 January 2006) is hereby terminated.

The Decision shall enter into force on the day following that of its publication in the Official Journal of the
European Union.

Article 2

Done at Brussels, 3 November 2006.

For the Commission

Peter MANDELSON
Member of the Commission