Proposal for a Council Regulation terminating the partial interim review pursuant to Article 11(3) of Regulation (EC) No 384/96 of the anti-dumping duty on imports of ammonium nitrate originating in Russia
Date: 2008-02-14
Institutions: European Commission
Subjects: Russia, anti-dumping duty, anti-dumping legislation, fertiliser, import, originating product

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COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 14.2.2008 
COM(2008) 76 final 

Proposal for a 

COUNCIL REGULATION 

terminating the partial interim review pursuant to Article 11(3) of Regulation (EC) No 
384/96 of the anti-dumping duty on imports of ammonium nitrate originating in Russia 

(presented by the Commission) 

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EXPLANATORY MEMORANDUM 

CONTEXT OF THE PROPOSAL 

Grounds for and objectives of the proposal 

This  proposal  concerns  the  application  of  Council  Regulation  (EC)  No  384/96  of 
22 December 1995 on protection against dumped imports from countries not members 
of  the  European  Community,  as  last  amended  by  Council  Regulation  (EC) 
No 2117/2005  of  21  December  2005  ('the  basic  Regulation')  in  the  proceeding 
concerning imports of ammonium nitrate originating in Russia. 

General context 

This proposal is made in the context of the implementation of the basic Regulation and 
is the result of an investigation which was carried out in line with the substantive and 
procedural requirements laid out in the basic Regulation. 

Existing provisions in the area of the proposal 

The measures currently in force are imposed by Council Regulation (EC) No 658/2002, 
as  last  amended  by  Council  Regulation  (EC)  No  945/2005  imposing  a  definitive  anti-
dumping duty on imports of ammonium nitrate originating in Russia. 

Consistency with the other policies and objectives of the Union 

Not applicable. 

CONSULTATION OF INTERESTED PARTIES AND IMPACT ASSESSMENT 

Consultation of interested parties 

Interested  parties  concerned  by  the  proceeding  have  already  had  the  possibility  to 
defend their interests during the investigation, in line with the provisions of the basic 
Regulation. 

Collection and use of expertise 

There was no need for external expertise. 

Impact assessment 

This proposal is the result of the implementation of the basic Regulation. 

The  basic  Regulation  does  not  foresee  a  general  impact  assessment  but  contains  an 
exhaustive list of conditions that have to be assessed. 

LEGAL ELEMENTS OF THE PROPOSAL 

Summary of the proposed action 

On 19 December 2006, the Commission initiated an interim review of the measures in 

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force  in  respect  of  imports  of  ammonium  nitrate  originating  in  Russia  further  to  a 
request  made  by  one  exporting  producer  in  Russia,  namely  OJSC  Acron  and  OJSC 
Dorogobuzh. The request was based on prima facie evidence that the circumstances on 
the basis of which measures were established have changed and therefore the continued 
imposition  of  measures  at  the  existing  levels  would  no  longer  be  necessary  to  offset 
dumping. 

The  attached  proposal  for  a  Council  Regulation  is  based  on  the  findings  of  the 
investigation carried out which is limited in scope to the examination of dumping as far 
as the applicant is concerned. 

The investigation showed that dumping took place during the investigation period. The 
level  of  the  dumping  found  was  higher  than  the  one  during  the  investigation  period 
which led to the imposition of the definitive duties. It was also higher than the injury 
elimination level which formed the basis of the current measures in force. Therefore no 
circumstances  have  changed  in  such  a  way  as  to  no  longer  render  necessary  the 
existing measures to  offset dumping.  It was also found that the circumstances during 
the current investigation period were of a lasting nature.  

It is therefore proposed that the Council adopt the attached proposal for a Regulation 
that  would  terminate  the  review  without  amending  the  anti-dumping  measures 
currently in force, which should be published in the  Official  Journal no later than 18 
March 2008. 

Legal basis 

Council  Regulation  (EC)  No  384/96  of  22  December  1995  on  protection  against 
dumped  imports  from  countries  not  members  of  the  European  Community,  as  last 
amended by Council Regulation (EC) No 2117/2005 of 21 December 2005.  

Subsidiarity principle 

The proposal falls under the exclusive competence of the Community. The subsidiarity 
principle therefore does not apply. 

Proportionality principle 

The proposal complies with the proportionality principle for the following reasons:  

The form of action is described in the above-mentioned basic Regulation and leaves no 
scope for national decision. 

Indication  of  how  financial  and  administrative  burden  falling  upon  the  Community, 
national governments, regional and local authorities, economic operators and citizens is 
minimized and proportionate to the objective of the proposal is not applicable. 

Choice of instruments 

Proposed instruments: regulation. 

Other  means  would  not  be  adequate  for  the  following  reason:  The  above-mentioned 

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basic Regulation does not foresee alternative options. 

BUDGETARY IMPLICATION 

The proposal has no implication for the Community budget. 

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. 

Proposal for a 

COUNCIL REGULATION 

terminating the partial interim review pursuant to Article 11(3) of Regulation (EC) No 
384/96 of the anti-dumping duty on imports of ammonium nitrate originating in Russia 

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  Community1  (‘the  basic 
Regulation’), and in particular Article 11(3) thereof, 

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

Whereas: 

1. Measures in force 

A. PROCEDURE 

(1) 

The measures currently in force are a definitive anti-dumping duty imposed by Council 
Regulation  (EC)  No  658/20022,  as  last  amended  by  Council  Regulation  (EC)  No 
945/20053on imports of ammonium nitrate originating in Russia.  

2. Request for review 

(2) 

(3) 

The  Commission  received  a  request  for  a  partial  interim  review  pursuant  to  Article 
11(3) of the basic Regulation. 

The request was lodged by two related exporting producers in Russia, belonging to the 
'Acron'  Holding  Company,  namely  OJSC  Acron  and  OJSC  Dorogobuzh.  These  two 
companies, due to their relationship are treated as one legal entity for the purpose of 
the  present  investigation  (‘the  applicant’).  The  request  is  limited  in  scope  to  the 
examination of dumping as far as the applicant is concerned. 

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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). 
OJ L 102, 18.4.2002, p. 1. 
OJ L 160, 23.6.2005, p. 1. 

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(4) 

The  applicant  alleged  and  provided  sufficient  prima  facie  evidence  that  the 
circumstances  on  the  basis  of  which  measures  were  established  have  changed  and  that 
these  changes  are  of  lasting  nature.  The  applicant  provided  prima  facie  evidence 
showing that a comparison between its own costs of ammonium nitrate and its export 
prices to the Community would lead to a reduction of dumping significantly below the 
level  of  the  current  measures.  Therefore,  the  continued  imposition  of  measures  at  the 
existing levels, which were based on the level of dumping previously established, would no 
longer be necessary to offset dumping. 

3. Initiation 

(5) 

Having determined, after consulting the Advisory Committee, that sufficient evidence 
existed for the initiation of a partial interim review, the Commission, on 19 December 
2006, by a notice published in the Official Journal of the European Union4, initiated a 
partial  interim  review  of  the  anti-dumping  measures  applicable  to  imports  of 
ammonium  nitrate  originating  in  Russia  pursuant  to  Article  11(3)  of  the  basic 
Regulation. 

(6) 

This review was limited in scope to dumping, with the objective of assessing the need 
for the continuation, removal or amendment of the existing measures in respect of the 
applicant. 

4. Investigation 

(7) 

(8) 

The  investigation  of  dumping  covered  the  period  from  1  October  2005  to  30 
September 2006 (‘review investigation period’ or ‘RIP’). 

The Commission officially advised the applicant, as well as the representatives of the 
exporting country and the Community industry of the initiation of the review. Interested 
parties were given the opportunity to make their views known in writing and to request 
a hearing. 

(9) 

All  interested  parties,  who  requested  and  showed  that  there  were  particular  reasons 
why they should be heard, were granted a hearing.  

(10)  A  questionnaire  was  sent  to  the  applicant  and  its  related  sales  companies  on  the 
Russian domestic market. The applicant as well as two of the related sales companies 
submitted full questionnaire replies.  

(11)  The  Commission  sought  and  verified  all  information  deemed  necessary  for  the 
determination of dumping. Verification visits were carried out at the premises of the 
following companies: 

(a) 

The exporting producers: 

– 

– 

OJSC Acron 

OJSC Dorogobuzh 

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OJ C 311, 19.12.2006, p. 55. 

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(b) 

The related sales companies 

– 

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JSC Rostragronova 

JSC Kubanagronova 

B. PRODUCT CONCERNED AND LIKE PRODUCT 

1. Product concerned 

(12)  The product under review is the same as in the investigations mentioned in recital (1), 
i.e.  solid  fertilizers  with  an  ammonium  nitrate  content  exceeding  80  %  by  weight 
originating in Russia (‘the product concerned’), currently classifiable within CN codes 
3102 30 90, 3102 40 90, ex 3102 29 00, ex 3102 60 00, ex 3102 90 00, ex 3105 10 00, 
ex 3105 20 10, ex 3105 51 00, ex 3105 59 00 and ex 3105 90 91. 

2. Like product 

(13)  As  established  in  the  previous  investigations  and  confirmed  in  this  investigation,  the 
product  concerned  and  the  products  manufactured  and  sold  by  the  applicant  on  the 
Russian  domestic  market  were  found  to  have  the  same  basic  physical  and  chemical 
characteristics  and  essentially  the  same  uses  and  are  therefore  considered  to  be  like 
products within the meaning of Article 1(4) of the basic Regulation. Since the present 
review  was  limited  to  the  determination  of  dumping  as  far  as  the  applicant  is 
concerned, no conclusions were reached with regard to the product produced and sold 
by the Community industry in the Community market. 

C. RESULTS OF THE INVESTIGATION 

(14) 

In accordance with Article 11(3) of the basic Regulation, it was examined whether the 
circumstances  on  the  basis  of  which  the  current  dumping  margin  was  based  have 
changed and whether such change was of a lasting nature. 

1. Normal value 

(15) 

In order to establish the normal value, it was first verified that the total domestic sales 
of  the  applicant  were  representative  in  accordance  with  Article  2(2)  of  the  basic 
Regulation.  Domestic  sales  of  the  applicant  were  found  to  be  representative  when 
compared to its export sales as they represented more than 5% of its total export sales 
volume to the Community. 

(16)  The  Commission  subsequently  examined  whether  the  domestic  sales  could  be 
considered as being made in the ordinary course of trade pursuant to Article 2(4) of the 
basic Regulation. To this end, the cost of production of the product produced and sold 
by the applicant on the domestic market was examined. 

(17)  Gas  is  a  main  raw  material  component  in  the  manufacturing  process  of  the  product 
concerned  and  represents  a  significant  proportion  of  the  total  cost  of  production.  In 
accordance  with  Article  2(5)  of  the  basic  Regulation,  it  was  examined  whether  the 
costs associated with the production and sales of the product under consideration were 
reasonably reflected in the records of the parties concerned. 

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(18) 

It was established on the basis of data published by internationally recognised sources 
specialised  in  energy  markets,  that  the  prices  paid  by  the  applicant  were  abnormally 
low. By way of illustration, they amounted to one fifth of the export price of natural 
gas  from  Russia  and  were  also  significantly  lower  than  the  gas  price  paid  by  the 
Community  producers.  In  this  regard,  all  available  data  indicate  that  domestic  gas 
prices  in  Russia  were  regulated  prices  which  are  far  below  market  prices  paid  in 
unregulated markets for natural gas.  

(19)  Since gas costs were not reasonably reflected in the applicant's records, they had to be 
adjusted  accordingly.  In  the  absence  of  any  undistorted  gas  prices  relating  to  the 
Russian domestic market, and in accordance with Article 2(5) of the basic Regulation, 
gas prices had to be established on 'any other reasonable basis, including information 
from other representative markets'. The adjusted price was based on the average price 
of Russian gas when sold for export at the German/Czech border (Waidhaus), net of 
transport  costs  and  adjusted  to  reflect  local  distribution  costs.  Waidhaus  being  the 
main hub for Russian gas sales to the EU, which is both the largest market for Russian 
gas  and  has  prices  reasonably  reflecting  costs,  can  be  considered  a  representative 
market. 

(20)  Following  disclosure,  the applicant claimed that any adjustment of its gas  price paid 
on the domestic market would be unwarranted because the accounting records of the 
company fully reflected the costs associated with the activity of production and sales 
of the like product in the country of origin.  

(21)  However, when examining cost of production of the like product under Article 2(5) of 
the  basic  Regulation,  it  must  be  determined  whether  the  costs  as  booked  in  the 
company's accounts are reasonably reflecting the costs associated with the production 
and  sale  of  the  product  under  investigation.  For  the  reasons  set  out  above  in  recital 
(18),  this  was  found  not  to  be  the  case.  The  applicant  did  not  address  the  apparent 
significant difference between the price for gas paid on the Russian domestic market 
and the export price of natural gas from Russia on the one hand and the one paid by 
the  Community  producers  on  the  other  hand.  It  did  also  not  address  the  fact  that 
domestic prices for natural gas were regulated in Russia and could not be considered 
to  reasonably  reflect  a  price  normally  payable  in  undistorted  markets.  Finally,  the 
applicant did not explain why despite the reasons set out in recital (18), the cost of gas 
used  for  the  production  of  the  like  product  sold  on  the  domestic  market  would  be 
reasonably reflected in its records. This claim therefore had to be rejected. 

(22)  The  applicant  further  claimed  that  by  making  a  gas  adjustment,  de  facto  a 
methodology to determine normal value was used which is not foreseen by the basic 
Regulation.  Thus,  by  replacing  domestic  gas  costs  by  costs  calculated  as  described 
above in recital (19), and due to the fact that these costs constitute major part of the 
total costs of the like product and therefore also of the constructed normal value, the 
normal  value  would  be  de  facto  determined  by  data  from  a  third  "representative" 
market.  In  this  regard,  the  applicant  argued  that  for  market  economy  countries,  the 
basic  Regulation  foresees,  however,  only  the  following  methodologies  to  determine 
the  normal  value:  (i)  on  the  basis  of  the  domestic  price  of  the  like  product  in  the 
ordinary  cause  of  trade,  or  alternatively,  in  case  sales  are  not  made  in  the  ordinary 
course of trade, (ii) on the basis of the cost of production in the country of origin (plus 
a  reasonable  amount  for  selling,  general  and  administrative  costs  ("SG&A")  and  for 
profits) or (iii) representative export prices of the like product to an appropriate third 

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country. The applicant concluded that on this basis normal value should not be based 
on data from a third representative market.  

(23) 

In this regard and as also outlined below in recitals (45) to (48), it should first be noted 
that  normal  value  was  established  in  accordance  with  the  methodologies  outlined  in 
Article  2(1)  to  (6)  of  the  basic  Regulation.  However,  in  order  to  establish  whether 
domestic  sales  were  made  in  the  ordinary  course  of  trade  by  reason  of  price,  i.e. 
whether  they  were  profitable,  it  must  first  be  established  whether  the  costs  of  the 
applicant  were  a  reliable  basis  within  the  meaning  of  Article  2(5)  of  the  basic 
Regulation. Only after costs have been reliably established, it can be determined which 
methodology to establish normal value should be used. It is therefore wrong to claim 
that  by  determining  reliable  costs  in  accordance  with  Article  2(5)  of  the  basic 
Regulation a new methodology to determine normal value was introduced.  

(24)  The  applicant  moreover  argued  that  when  adjusting  cost  in  accordance  with  Article 
2(5) of the basic Regulation, the level of the adjusted costs cannot exceed the level of 
the respective costs in the exporting country. Otherwise, the methodology used when 
adjusting  cost  would  be  in  breach  of  Article  2(3)  of  the  basic  Regulation  which 
stipulates that normal value of the like product shall be calculated on the basis of the 
costs of production in the country of origin. 

(25)  The cost adjustment was done in accordance with Article 2(5) of the basic Regulation. 
Article  2(5)  of  the  basic  Regulation  does  not  refer  to  the  "cost  of  production  in  the 
country of origin", but explicitly entitles the Institutions to use the cost of production 
coming  "from  other  representative  market"  in  other  countries  than  the  country  of 
origin. The applicant's argument therefore had to be rejected 

(26)  Finally, the findings set out above in recitals (18) and (19) are also not in contrast to 
Article 1 of the basic Regulation, as claimed by the applicant. Indeed, although Article 
1  of  the  basic  Regulation  indicates  that  normal  value  should  be  established  by 
reference to data from the country of export, the basic Regulation makes also clear that 
this rule is subject to exceptions.  

(27)  The applicant's arguments in this respect had therefore to be rejected. 

(28)  The  applicant  further  claimed  that  if  an  adjustment  were  to  be  made  to  its  cost  of 
natural gas on the domestic market, such adjustment should be based on either the (i) 
non-regulated gas prices available in Russia or, (ii) the average export price of Russian 
natural gas to the Baltic countries, or alternatively (iii) on the basis of the actual cost 
of production of natural gas in Russia plus a reasonable profit margin. 

(29)  Firstly,  the  fact  that  the  Commission  could  have  chosen  a  different  basis  does  not 
render the choice of Waidhaus unreasonable. The primary criterion for the choice of 
the  basis  on  which  to  establish  the  gas  prices  is  that  it  reasonably  reflects  a  price 
normally  payable  in  undistorted  markets..  It  is  undisputed  that  this  condition  is  met 
with respect to the prices at Waidhaus. Secondly, the fact that the volume of gas sold 
at non-regulated prices in the domestic market was only minor during the RIP and that 
such prices were significantly closer to the regulated domestic price than to the freely-
determined  export  price  strongly  suggests  that  these  non-regulated  prices  were 
distorted by the prevailing regulated prices. Therefore, the unregulated domestic prices 
could not be used. It was also considered that Russian export prices of gas to the Baltic 

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States were not sufficiently representative, due to the relatively low export volumes to 
these countries. Furthermore, necessary data concerning transportation and distribution 
cost were not available and therefore, reliable prices to the Baltic States could not be 
established.  Indeed,  by  far  the  greatest  volume  of  gas  is  exported  via  the  Waidhaus 
hub which represents therefore an appropriate basis for an adjustment. The Applicant 
did not provide any evidence regarding the existence of representative markets, other 
than  the  Waidhaus  hub,  where  prices  reasonably  reflect  a  price  normally  payable  in 
undistorted markets. Consequently, these arguments were rejected. 

(30) 

In this context, the applicant also claimed that it purchased approximately 50% of the 
natural  gas  consumed  in  its  production  of  fertilisers  on  the  non-regulated  market  in 
Russia.  The  applicant  claimed  it  would  therefore  be  discriminatory  to  adjust  its  gas 
costs while no such adjustments would be made  for  other exporters with higher cost 
levels similar to those of the applicant. It should be noted that according to the verified 
questionnaire reply, the applicant's purchases of natural gas on the un-regulated market 
in Russia were marginal during the RIP. This claim had therefore to be rejected.  

(31)  As far as the third alternative mentioned under (iii) in recital (28) above is concerned, 
i.e. to base the adjustment on the actual cost of production of natural gas in Russia, it 
should  first  be  noted  that  such  alternative  is  not,  as  claimed  by  the  applicant, 
expressively  foreseen  in  Article  2(5)  of  the  basic  Regulation.  Furthermore,  as 
mentioned in recital (29), the primary criterion for the choice of the basis on which to 
establish  the  gas  prices  is  that  it  reasonably  reflects  a  price  normally  payable  in 
undistorted  markets.  Thus,  whether  the  price  of  gas  charged  by  the  supplier  to  the 
customers is made at a profit as such is irrelevant in this context. This argument had 
therefore to be rejected. 

(32)  The  applicant  furthermore  argued  that  domestic  prices  for  natural  gas  in  Russia 
regulated by the State are increasing constantly and reaching levels covering the cost 
of production of gas. Therefore, the price on the domestic market cannot be considered 
as uncompetitive or unreasonably low.  

(33)  This argument has no grounds since the correct standard for choosing a representative 
market  is  not  whether  prices  are  profitable  as  such  but  whether  prices  reasonably 
reflect  a  price  normally  payable  in  undistorted  markets,  as  explained  in  recital  (29) 
above.  This  is  not  the  case  for  prices  regulated  by  the  State.  Furthermore,  this 
argument also contradicts public statements of the Russian gas supplier (as confirmed 
by its published audited accounts) that the Russian domestic gas prices do not cover 
production, transportation and sales cost. Therefore, this argument was rejected.  

(34)  As regards the calculation method of the gas price at Waidhaus as such, the applicant 
claimed  that  the  Russian  export  duty  payable  for  all  exports  should  have  been 
deducted  from  the  Waidhaus  price,  because  the  export  duty  is  not  incurred 
domestically.  

(35) 

Indeed the market price at Waidhaus, which was considered as representative market 
within  the  meaning  of  Article  2(5)  of  the  basic  Regulation,  is  the  price  after  export 
taxes and not the prices before these taxes. From the perspective of the buyer it is the 
price  it  has  to  pay  at  Waidhaus  which  is  relevant,  and  in  this  regard  it  is  irrelevant 
what percentage of that price constitutes an export tax and what percentage is paid to 
the gas supplier. The latter, on the other hand will always try to maximise its price and 

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therefore charge the highest price its customers are willing to pay. Given that this price 
is always well above its costs of production, allowing the gas supplier to make huge 
profits, its price setting is not primarily influenced by the amount of the export tax but 
by what price its customers are willing to pay. It was therefore concluded that the price 
including  the  export  tax,  and  not  the  price  before  that  tax,  is  the  undistorted  market 
driven price. Consequently, the arguments of the applicant in this regard were rejected. 

(36)  The applicant further claimed that the price at Waidhaus should have been adjusted for 
quality,  availability,  marketability,  transportation  and  other  conditions  of  sale  which 
would be different in the export and the domestic market of natural gas. It should first 
be  noted  that  the  price  of  Waidhaus  was  indeed  adjusted  by  different  transportation 
cost for the export and the domestic market and that the applicant's claim in this regard 
was not warranted and had to be rejected. As far as the other elements are concerned 
the  applicant  did  not  provide  any  further information  or  any  supporting  evidence.  In 
particular, the applicant did not show, nor was there any other information available, 
that there were differences in quality, availability, marketability and other conditions 
of sales which would have justified further adjustments, nor did the applicant attempt 
to quantify these alleged differences. 

(37) 

In  this  context,  the  applicant  further  argued  that  no  adjustments  for  natural 
comparative  advantages  have  been  made  to  the  price  at  Waidhaus.  In  this  regard,  it 
was  claimed  that  since  gas  is  largely  available  in  Russia  but  not  in  the  Community, 
prices  in  Russia  would  be  naturally  lower  than  the  price  of  the  exported  gas. 
Furthermore, it was alleged that the export capacity would be limited by the limits of 
the  existing  gas  transportation  system  which  would  increase  export  prices  of  Russia. 
The applicant also argued that the "abnormal high profits" of the Russian gas supplier 
on the export market should be deducted from the Waidhaus price used. 

(38)  As mentioned in recital (29) above, the primary criterion for the choice of Waidhaus 
prices  as  basis  on  which  to  establish  the  gas  prices  is  that  they  reasonably  reflect  a 
price normally payable in undistorted markets.  .  The  market  conditions  prevailing  in 
the domestic market are irrelevant in this context. Therefore these arguments had to be 
rejected. 

(39)  The applicant also objected that the mark-up of the local distributors has been added to 
the adjusted gas price, claiming that profits of distributors would already be included 
in the price at Waidhaus. In this regard, the applicant claimed that the local distributors 
in Russia were fully owned subsidiaries of the gas supplier and therefore addition of 
the profit of these distributors could constitute double counting. 

(40) 

It  is  first  noted  that  the  mark-up  of  local  distributors  do  not  only  include  the  profit 
margin  of  these  companies  but  also  their  costs  between  purchase  and  re-sale  of  the 
natural gas. 

(41)  Secondly, this argument could not be sufficiently verified anymore. This is due to the 
fact that the gas supplier in Russia and its affiliations were not subject to the present 
investigation and that therefore there was insufficient information of the organisation 
and  its  cost  structure  available.  It  is  also  noted  that  the  situation  in  Russia  in  this 
regard  due  to,  inter  alia,  the  close  links  between  the  gas  supplier  and  the  Russian 
government  is  not  sufficiently  transparent  to  allow  sufficient  access  to  the  necessary 
evidence. 

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(42)  Moreover,  the  applicant,  who  has  the  burden  of  proof,  was  not  able  to  submit  any 
further information or evidence which showed whether and in what extent distribution 
costs were indeed included in the Waidhaus price. However, since domestic customers 
were  purchasing  the  gas  from  local  suppliers,  it  had  to  be  assumed  that  they  would 
have to pay local distribution costs which are not as such included in the unadjusted 
Waidhaus price. Therefore, at this stage of the proceeding it had to be considered that 
this adjustment was warranted and consequently the argument was rejected.  

(43)  However,  the  Community  Institutions  also  considered  that  the  impact  on  the 
calculation  of  the  dumping  margin  of  this  specific  adjustment  may  be  significant. 
Therefore,  given  the  particular  situation  described  above  in  recital  (41),  it  was 
considered that if the applicant supplies sufficient verifiable evidence, the Commission 
may consider the re-opening of the investigation in this regard.. 

(44)  The applicant also made allegations about non-competitive domestic pricing on gas in 
Germany.  It  is  noted  that  ongoing  investigations  by  German  antitrust  authorities 
concern  prices  at  which  German  main  gas  distributors  sell  the  gas  on  the  domestic 
market, and therefore it is not linked at al to the price at which Russian exported gas is 
sold at Waidhaus. 

(45)  After adjusting the cost of manufacturing as described above, no domestic sales were 

made in the ordinary course of trade pursuant of Article 2(4) of the basic Regulation.  

(46) 

It was therefore considered that domestic prices did not provide an appropriate basis 
for  the  establishment  of  the  normal  value  and  another  method  had  to  be  applied.  In 
accordance  with  Article  2(3)  and  (6)  of  the  basic  Regulation,  normal  value  was 
constructed by adding to the exporter's manufacturing costs of the product concerned, 
adjusted where necessary as mentioned in recital (19) above, a reasonable amount for 
SG&A and a reasonable amount for profit. 

(47)  SG&A costs and profit could not be established on the basis of the chapeau of Article 
2(6)  of  the  basic  Regulation  because  the  applicant  did  not  have  representative 
domestic sales of the product concerned in the ordinary course of trade. Article 2(6)(a) 
of the basic Regulation could not be applied, since there is only one producer subject 
to the investigation. Article 2(6)(b) was not applicable either, since the manufacturing 
cost  of  the  applicant  for  products  belonging  to  the  same  general  category  of  goods 
would  also  need  to  be  adjusted  in  respect  of  gas  costs,  for  the  reasons  indicated  in 
recital  (18)  above.  Therefore,  SG&A  costs  and  profit  were  established  pursuant  to 
Article 2(6)(c) of the basic Regulation. 

(48) 

In  accordance  with  Article  2(6)(c)  of  the  basic  Regulation,  the  SG&A  costs  were 
based  on  a  reasonable  method.  The  North  American  market  showed  a  significant 
volume of domestic sales and a considerable level of competition from both domestic 
and foreign companies. In this respect, consideration was given to publicly available 
information relating to major companies operating in the fertilizers business sector. It 
was  found  that  the  corresponding  data  from  North  American  (USA  and  Canadian) 
producers would be the most appropriate for the purpose of the investigation, given the 
large  availability  of  reliable  and  complete  public  financial  information  from  listed 
companies  in  this  region  of  the  world.  Therefore,  SG&A  costs  and  profit  were 
established  on  the  basis  of  the  weighted  average  SG&A  costs  and  profit  from  three 
North American producers, which were found to be amongst the largest companies in 

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the nitrogen fertilizers' sector, with regard to their domestic sales of the same general 
category  of  products  (nitrogen  fertilizers).  These  three  producers  were  considered  to 
be representative of the nitrogen fertilizers' business and their SG&A costs and profit 
thereby representative of those normally incurred by companies operating successfully 
in  that  business  segment.  It  should  be  noted  that  there  were  no  indications  that  the 
amount  for  profit  so  established  would  exceed  the  profit  realized  by  other  Russian 
producers on sales of products of the same general category on their domestic market. 

(49)  The  Community  industry  objected  to  the  above  approach  with  regard  to  the 
determination of the SG&A and claimed the applicant's own SG&A should have been 
used.  However,  Article  2(6)  of  the  basic  Regulation  sets  out  that  the  amounts  for 
SG&A shall only be based on actual data pertaining to the production and sales of the 
exporting producer concerned, when these sales were made in the ordinary course of 
trade.  As  outlined  in  recitals  (45)  and  (46),  this  was  not  the  case  and  this  argument 
therefore had to be rejected.  

2. Export price 

(50) 

In  accordance  with  Article  2(8)  of  the  basic  Regulation,  the  export  price  was 
established on the basis of the price actually paid or payable for the product concerned 
when sold for export to the Community. 

3. Comparison 

(51)  The normal value and the export price were compared on an ex-works basis. For the 
purpose of ensuring a fair comparison between normal values and export prices, due 
allowance  in  the  form  of  adjustments  was  made  for  differences  affecting  price  and 
price  comparability  in  accordance  with  Article  2(10)  of  the  basic  Regulation. 
Appropriate adjustments concerning transport, credit, packing and bank charges were 
granted when reasonable, accurate and supported by verified evidence. 

4. Dumping margin 

(52)  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 Regulation. 

(53)  The  investigation  showed  that  dumping  took  place  during  the  RIP.  The  dumping 
margin expressed as a percentage of the CIF Community frontier price, duty unpaid, is 
42,06%. 

5. Lasting nature of the circumstances prevailing during the IP 

(54) 

(55) 

In accordance with Article 11(3) of the basic Regulation, an analysis was made as to 
whether the change in circumstances with regard to dumping could reasonably be said 
to be of a lasting nature. 

In  this  regard,  it  should  be  noted  that  normal  value  in  the  original  investigation  was 
established on the basis of profitable sales prices in the USA domestic market, since 
Russia  was  not  a  market  economy  country  at  that time.  In  the context of the  current 
review investigation, Russia is considered a market economy country, and the normal 
value  has  therefore  been  established  on  the  basis  of  the  applicant’s  own  cost  of 

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production, adjusted where necessary. No indications could be found that the normal 
value established during the present review could not be considered to be of a lasting 
nature. 

(56)  No evidence was found that export sales would not continue to be made at the current 

price level. 

(57)  On  this  basis,  it  is  concluded  that  the  changed  circumstances  with  respect  to  the 
original  investigation  regarding  dumping  (now  based  on  the  comparison  of  the  own 
normal value and export prices of the applicant) could reasonably be considered to be 
of a lasting nature. 

D. TERMINATION OF THE REVIEW 

(58)  Since,  in  the  original  investigation  the  duty  was  imposed  in  the  form  of  a  specific 
amount per tonne, it should have the same form in the current investigation. The duty 
calculated on the basis of the current margin of dumping would be EUR 48,09/ton. 

(59) 

It is recalled that, as outlined in recital (94) of Council Regulation (EC) No 658/2002, 
when  imposing  definitive  measures  in  2002,  the  injury  margin  was  used  when 
determining  the  amount  of  the  definitive  duty  to  be  imposed  in  accordance  with  the 
lesser  duty  rule.  As  defined  by  Article  1(2)  of  Regulation  (EC)  658/2002,  the  duty 
currently in force is depending on the specific product type and varies between EUR 
41,42/ton and EUR 47,07/ton. 

(60)  Since the duty established on the basis of the current margin of dumping is higher than 
the  current  duty,  the  review  should  be  terminated  without  amending  the  level  of  the 
duty  applicable  to  the  applicant,  which  should  be  maintained  at  the  level  of  the 
definitive anti-dumping duty rate established in the original investigation. 

E. UNDERTAKING 

(61)  The  applicant  expressed  an  interest  in  offering  an  undertaking  but  failed  to  submit  a 
sufficiently substantiated undertaking offers within the deadlines set in Article 8(2) of 
the  basic  Regulation.  Consequently  no  undertaking  offer  could  be  accepted  by  the 
Commission. However, it is considered that the complexity of several issues, namely 
(1) the volatility of the price of the product concerned which would require some form 
of  indexation  of  minimum  prices,  while  at  the  same  time  the  volatility  is  not 
sufficiently explained by the key cost driver; and (2) the particular market situation for 
the  product  concerned  (inter  alia,  that  there  are  limited  imports  from  the  exporter 
subject  to  this  review)  point  to  the  need  to  further  consider  whether  an  undertaking 
combining an indexed minimum price and a quantitative ceiling would be workable. 

(62)  As  mentioned  above,  due  to  this  complexity  the  applicant  could  not  formulate  an 
acceptable  undertaking  offer  within  the  statutory  deadline.  In  view  of  the  above,  the 
Council  considers  that  the  applicant  should  exceptionally  be  allowed  to  complete  its 
undertaking  offer  beyond  the  above-mentioned  deadline  but  within  10  calendar  days 
from entry into force of this regulation.  

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F. DISCLOSURE 

(63) 

Interested parties were informed of the essential facts and considerations on the basis of 
which it was intended to terminate the present review and to maintain the existing anti-
dumping  duty  on  imports  of  the  product  concerned  produced  by  the  applicant.  All 
parties were given an opportunity to comment. Their comments were taken into account 
where warranted and substantiated by evidence. 

HAS ADOPTED THIS REGULATION: 

Sole Article 

The  partial  interim  review  of  the  anti-dumping  measures  applicable  to  imports  of  solid 
fertilisers  with  an  ammonium  nitrate  content  exceeding  80%  by  weight  falling  within  CN 
codes 3102 30 90, 3102 40 90, ex 3102 29 00, ex 3102 60 00, ex 3102 90 00, ex 31 05 10 00, 
ex 3105 20 10, ex 3105 51 00, ex 3105 59 00 and ex 3105 90 91 and originating in Russia, 
initiated pursuant to Article 11(3) of Regulation (EC) No 384/96, is hereby terminated without 
amending the anti-dumping measures in force. 

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

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

Done at Brussels, […] 

For the Council 
The President 
[…] 

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