Proposal for a COUNCIL REGULATION terminating the partial interim review of Council Regulation (EC) No 661/2008 imposing a definitive anti-dumping duty on imports of ammonium nitrate originating in Russia
Date: 2010-08-27
Institutions: European Commission
Subjects: Russia, anti-dumping legislation, anti-dumping measure, chemical compound, chemical fertiliser, import, originating product

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EUROPEAN COMMISSION 

Brussels, 27.8.2010 
COM(2010) 445 final 

2010/0236 (NLE) 

Proposal for a 

COUNCIL REGULATION 

terminating the partial interim review of Council Regulation (EC) No 661/2008 imposing 
a definitive anti-dumping duty on imports of ammonium nitrate originating in Russia 

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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  1225/2009  of 
30 November 2009 on protection against dumped imports from countries not members 
of  the  European  Community  ('the  basic  Regulation')  in  the  partial  interim  review 
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  were  imposed  by  Council  Regulation  (EC)  No 
661/2008  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 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 4 July 2009, the Commission initiated a partial interim review of the measures in 
force in respect of imports of ammonium nitrate ('AN') originating in Russia further to 
a  request  made  by  an  exporting  producer  in  Russia,  Joint  Stock  Company  "Acron" 
(‘the applicant') .  

The  attached  proposal  for  a  Council  Regulation  is  based  on  the  findings  of  the 
investigation carried out which is limited in scope to the form of the measures and in 

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particular to the inclusion of a related trader into the price undertaking of the applicant. 

The  investigation  concluded  that  the  inclusion  of  the  related  trader  in  the  price 
undertaking  of  the  applicant  would  seriously  increase  the  risk  of  cross-compensation 
and affect the workability and the effective monitoring of the undertaking. 

It was also found that the changed circumstances were not of a lasting nature.  

It is therefore proposed to terminate the review. 

Legal basis 

Council  Regulation  (EC)  No  1225/2009  of  30  November  2009  on  protection  against 
dumped imports from countries not members of the European Community. 

Subsidiarity principle 

The  proposal  falls  under  the  exclusive  competence  of  the  Union.  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 Union, 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 
basic Regulation does not foresee alternative options. 

Budgetary implication 

The proposal has no implication for the Union budget. 

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2010/0236 (NLE) 

Proposal for a 

COUNCIL REGULATION 

terminating the partial interim review of Council Regulation (EC) No 661/2008 imposing 
a definitive anti-dumping duty on imports of ammonium nitrate originating in Russia 

THE COUNCIL OF THE EUROPEAN UNION, 

Having regard to the Treaty on the Functioning of the European Union,  

Having regard to Council Regulation (EC) No 1225/2009 of 30 November 2009 on protection 
against dumped imports from countries not members of the European Community1 (the ‘basic 
Regulation’), and in particular Articles 8 and 9 and 11(3) thereof, 

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

Whereas: 

(1) 

A. PREVIOUS PROCEDURE 

By  Regulation  (EC)  No  2022/19952,  the  Council  imposed  a  definitive  anti-dumping 
duty  on imports of  ammonium nitrate ('AN') originating in Russia  falling  within CN 
codes  3102  30  90  and  3102  40  90.  Pursuant  to  a  further  investigation  in  accordance 
with  Article  12  of  the  basic  Regulation,  which  established  that  the  duty  was  being 
absorbed, the measures were amended by Regulation (EC) No 663/19983. Following a 
request for an expiry and an interim review pursuant to Articles 11(2) and 11(3) of the 
basic Regulation, the Council, by Regulation (EC) No 658/20024, imposed a definitive 
anti-dumping  duty  of  EUR  47,07  per  tonne  on  imports  of  ammonium  nitrate  falling 
within  CN  codes  3102  30  90  and  3102  40  90  and  originating  in  Russia.  Finally,  a 
product  scope  interim  review  pursuant  to  Article  11(3)  of  the  basic  Regulation  was 
carried out and, by Council Regulation (EC) No 945/20055, a definitive anti-dumping 
duty ranging between EUR 41,42 per tonne and EUR 47,07 per tonne was imposed on 
imports  of  solid  fertilisers  originating  in  Russia  with  an  ammonium  nitrate  content 
exceeding 80 % by weight (‘AN’), falling 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) 

Following  a  request  for  an  expiry  and  an  interim  review  ('the  last  expiry  review') 
pursuant  to  Articles  11(2)  and  11(3)  of  the  basic  Regulation,  the  Council,  by 
Regulation  (EC)  No  661/20086,  imposed  a  definitive  anti-dumping  duty  ranging 
between EUR 28,88 per tonne and EUR 47,07 per tonne for a further five years. 

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OJ L 343, 22.12.2009, p. 51. 
OJ L 198, 23.8.1995, p. 1. 
OJ L 93, 26.3.1998, p.1. 
OJ L 102, 18.4.2002, p.1. 
OJ L 160, 23.6.2005, p.1. 
OJ L 185, 12.7.2008, p.1. 

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(3) 

(4) 

Following the decision of the Court of First Instance of the European Communities to 
partially  annul  Council  Regulation  (EC)  No  945/2005,  the  Council,  by  Regulation 
(EC) No 989/20097 amended the definitive anti-dumping duty in so far as it concerned 
JSC Kirovo-Chepetsky Khimichesky Kombinat.  
By  Commission  Decision  2008/577/EC  of  4  July  20088,  the  Commission  accepted 
undertaking  offers  submitted  by  several  exporting  producers,  including  the  related 
Russian  exporting  producers  Joint  Stock  Company  Acron  and  Joint  Stock  Company 
Dorogobuzh  (‘Acron’  Holding  Company),  in  connection  with  the  anti-dumping 
proceeding  concerning  imports  of  ammonium  nitrate  originating  in  Russia  and 
Ukraine.  

B. PRESENT PROCEDURE 

1. REQUEST FOR A REVIEW  

(5) 

(6) 

A request for a partial interim review ('the present review') pursuant to Article 11(3) of 
the  basic  Regulation  was  lodged  by  JSC  Acron,  JSC  Dorogobuzh  and  their  related 
trading company Agronova International Inc., members of ‘Acron’ Holding Company 
(‘the applicant’). The request was limited in scope to the examination of the form of 
the measure and in particular to the inclusion of Agronova International Inc. into the 
price undertaking of the JSC Acron and JSC Dorogobuzh.  

The  applicant  alleged  that  the  circumstances  under  which  the  price  undertaking  was 
granted  changed,  in  particular  that  Agronova  International  Inc.,  a  newly  established 
trader in the USA was incorporated into the 'Acron' Holding Company. The applicant 
further alleged that these changes were of a lasting nature. 

2. INITIATION OF A REVIEW 

(7) 

The  Commission  examined  the  prima  facie  evidence  submitted  by  the  applicant  and 
considered it sufficient to justify the initiation of a partial interim review pursuant to 
Article  11(3)  of  the  basic  Regulation.  After  consulting  the  Advisory  Committee,  the 
Commission initiated9 a review of the anti-dumping measures imposed by Regulation 
(EC)  No  661/2008  ('measures  in  force')  limited  in  scope  to  the  examination  of  the 
form  of  the  measure,  in  particular  the  potential  effect  of  the  inclusion  of  Agronova 
International Inc. into the price undertaking of JSC Acron and JSC Dorogobuzh. 

3. PRODUCT CONCERNED  

(8) 

The product concerned by the present review is the same as in the last expiry review, 
i.e.  solid  fertilisers  with  an  ammonium  nitrate  content  exceeding  80%  by  weight, 
originating in Russia ('the product concerned'), currently falling 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.  

4. PARTIES CONCERNED 

(9) 

The Commission officially informed the applicant, the representatives of the exporting 
country  and  the  association  of  Union  producers  about  the  initiation  of  the  review. 
Interested  parties  were  given  the  opportunity  to  make  their  views  known  in  writing 

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OJ L 278, 23.10.2009, p.1. 
OJ L 185, 12.7.2008, p.43. 
OJ C 152, 4.7.2009, p. 40. 

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and  to  request  a  hearing  within  the  time  limit  set  in  the  notice  of  initiation.  All 
interested parties, who so requested and showed that there were particular reasons why 
they should be heard, were granted a hearing. 

(10)  The  Commission  sent  questionnaires  to  the  applicant  and  received  replies  within  the 
deadlines  set  for  that  purpose.  The  Commission  sought  and  verified  all  information 
deemed necessary. The Commission carried out a verification visit at the premises of 
Agronova International Inc., Hallandale, USA ('Agronova'). 

5. REVIEW INVESTIGATION PERIOD 

(11)  The review investigation period covered the period from 1 July 2008 to 30 June 2009 

('RIP'). 

C. RESULTS OF THE INVESTIGATION  

(12)  The investigation confirmed that Agronova was a newly established trading company 

belonging to 'Acron' Holding company.  

1. 

Workability of the undertaking 

(13)  The  main  considerations  as  to  the  inclusion  of  a  trading  company  in  the  current 
undertaking  were  the  practicability  of  the  undertaking,  i.e.  the  effectiveness  of  its 
the  risks  of  cross-compensation  and 
monitoring  and 
circumvention through different sales channels and/or through the pricing of different 
products sold to potentially the same customers. 

in  particular  assessing 

1.1. 

High risk of cross-compensation through an undisclosed trading company 

(14)  The  investigation  revealed  that  Agronova  had  strong  interpersonal  and  operational 
links to at least one other undisclosed company active in the trading and marketing of 
fertilizer  products.  It  was  found  that  the  same  and  only  persons  operating  Agronova 
were in fact also involved in the activities of the said trading company. In particular, 
the evidence available showed that both companies shared a common manager and a 
common  officer  during  most  of  the  RIP,  while  a  third  person  (who  was  at  the  same 
time  found  to  be  the  President  of  the  trading  company  in  question),  although  not 
formally  employed  by  Agronova,  was  in  fact  carrying  out  its  daily  trading  business 
including  the  conduct  during  the  verification  visit  on  behalf  of  Agronova  where  he 
was presented as an advisor of Agronova. In addition to the strong interpersonal links, 
it was found that both companies were operating from the same office, employing the 
same secretary and using the same computers and office equipment during almost the 
entirety of the RIP. Agronova did not reveal the existence and operations of this other 
trading  company  neither  in  its  response  to  the  questionnaire  nor  at  the  time  of  the 
verification  visit.  The  Commission's  request  for  additional  information  in  order  to 
clarify  the  situation  was  only  partly  satisfied  by  the  applicant  since  it  did  not,  inter 
alia, disclose the precise ownership of said trading company nor its detailed activities. 
The information provided was therefore considered insufficient.  

(15)  On  the  basis  of  the  above,  the  Commission  considered  that  the  above  mentioned 
trading  company  was  related  to  Agronova  within  the  meaning  of  Article  143  of  the 
IPCCC10 and should have been reported in the applicant's reply to the questionnaire. 
The Commission notified the applicant in accordance with Article 18(1) of the basic 

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Regulation  (EEC)  No  2454/93  laying  down  provisions  for  the  implementation  of  the  Community 
Customs Code (“IPCCC”), OJ L 253, 11.10.1993, p. 1–766. 

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Regulation  of  its  intention  to  base  these  findings  on  facts  available  and  invited  the 
applicant  to  comment  thereon  in  accordance  with  Article  18(4)  of  the  basic 
Regulation.  

(16)  The applicant contested that Agronova is related to the above trading company or any 
other company. Furthermore, on the Commission's further enquiry request, it did not 
provide any detailed and verifiable information on the ownership and activities of the 
trading company in question within the deadline set.  

(17)  Upon  disclosure  of  the  Commission's  proposal  to  base  findings  on  Article  18  of  the 
basic Regulation, the applicant further denied any relationship between Agronova and 
the trading company in the sense of Article 143 of the IPCCC. As far as the precise 
roles  of  the  persons  involved  in  both  companies,  the  applicant  contested  that  both 
companies shared directors or officers. The applicant even withdrew information given 
before,  claiming  that  it  was  wrong  or  imprecise.  The  new  information  given  was, 
however,  not  sufficiently  supported  by  evidence.  Overall,  the  information  and 
evidence provided in this regard was unclear and in some instances contradictory and 
therefore in general cast doubts on the reliability of the information provided.  

(18)  By  way  of  example,  while  the  applicant  originally  stated  that  the  president  of 
Agronova  was  also  the  manager  of  the  trading  company  in  question,  this  statement 
was later qualified by explaining that the tasks carried out in the trading company by 
the president of Agronova did not include any control and decision making function. 
Likewise, while the evidence provided (annual accounts) showed that another person 
was an "officer" in both companies, it was later claimed that the real functions of this 
person were those of a legal secretary. 

(19) 

In  conclusion,  the  applicant  did  not  submit  any  sufficiently  reliable  information  or 
evidence  which  could  show  that  the  roles  and  responsibilities  of  each  actor  were 
defined  and  exercised  in  a  way  which  would  have  excluded  the  existence  of  a 
relationship.  

(20)  The  applicant  also  contested  that  the  trading  company  in  question  should  be 
considered as a trading company since it was mainly involved in marketing rather than 
sales  of  fertiliser  products.  However,  besides  the  fact  that  this  statement  was  not 
supported by any evidence, the company also stated at several instances to be indeed 
involved  in  fertiliser  sales  as  a  trader,  but  only  for  small  quantities  destined  to  other 
markets than Europe. The company had therefore to be considered as a trader and this 
argument had to be rejected. 

(21)  The Commission considered that the applicant impeded the investigation in the sense 
of  Article  18(1)  of  the  Regulation  by  having  provided  relevant  information  only 
gradually  upon  request,  and  the  information  provided  in  most  cases  was  afterwards 
corrected,  modified  or  contradicted.  In  this  regard,  given  Agronova's  unsatisfactory 
cooperation, a relationship of trust between the Commission and the company, which, 
as a general policy, is a necessary precondition for the acceptance of an undertaking, 
could not be established. 

(22) 

It is reminded that in the analysis of the risk of cross-compensation, the knowledge of 
different  sales  channels  and  the  flow  of  products  through  these  channels  are 
indispensable  information.  Given  the  very  close  interpersonal  and  operational  links 
between  Agronova  and  the  other  trading  company,  it  was  concluded  that  the  risk  of 
cross-compensation and circumvention through different sales channels was too high 
and that therefore Agronova should not be included in the current undertaking. 

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(23)  Subsequent  to  disclosure,  the  applicant  claimed  that  there  would  be  a  risk  of  cross 
compensation  only  in  case  companies  are  related  by  shares.  First  it  should  be  noted 
that  the  risk  of  cross  compensation  is  not  limited  to  situations  where  companies  are 
related by shares since there are various different ways of cross compensation. Thus, 
in this particular case and for reasons explained in the above recital, it was considered 
that there is a high risk of cross compensation even if the applicant and Agronova are 
not related by shares. Also, the applicant did not outline any legal or factual basis or 
present evidence to support its claim. This argument had therefore to be rejected.  

1.2. 

Considerable risk of cross-compensation through the pricing of different products 

(24)  The current undertaking not only covers ammonium nitrate but it also imposes a price 
regime  for  other  products  traded  by  the  group  in  order  to  avoid  the  risk  of  cross-
compensation.  The  applicant  stated  in  its  questionnaire  reply  that  it  intended  to  sell 
through Agronova, inter alia, products that are not included in this price regime and 
even  fertiliser  products  produced  by  other  producers,  located  in  Russia  as  well  as  in 
other  countries.  Therefore  a  risk  of  cross-compensation  through  exports  of  different 
products to the same customers was considered as high.  

(25)  Some of the products that Agronova intended to sell do not have a quoted market price 
that  could  serve  as  a  benchmark  for  monitoring  purposes.  For  this  reason  the 
monitoring of the undertaking would also be impracticable. 

(26)  Following  disclosure,  the  applicant  claimed  that  the  Commission  disregarded  the 
applicant's  offer  to  drop  its  business  plans  related  to  blending  and  other  products  in 
case  the  Commission  found  it  necessary.  In  this  respect  it  is  noted  that  the 
Commission  received  those  amended  offers  only  later  during  the  proceeding.  The 
Commission considered that the applicant's continuous changing of its business plan to 
fit  whatever  it  considered  as  the  Commission's  expectations  casts  doubts  on  the 
credibility of the applicant's offer. In this regard, the Commission also considered the 
insufficient level of cooperation by Agronova in this investigation as an impediment to 
establishing a relationship of trust between the Commission and Agronova. Therefore, 
the Commission was not satisfied that such commitment would indeed be respected.  

(27) 

It  was  therefore  concluded  that  the  inclusion  of  Agronova  in  the  sales  channels  of 
Acron  would  seriously  increase  the  risks  of  cross-compensation  and  circumvention 
and affect the workability and the effective monitoring of the undertaking.  

2. 

Lasting nature of the changed circumstances 

(28)  During  the  investigation,  the  'Acron'  Holding  Company  established  another  trading 
company, namely Agronova Europe AG ('Agronova Europe') which it claimed would 
take  over  most  of  the  trading  with  European  clients  and  thereby  gradually  replace 
Agronova. At a certain stage of the proceeding, the applicant requested that this new 
trader  also  be  included  in  the  current  review  with  a  view  to  having  the  two  traders 
included  in  the  existing  price  undertaking  or  alternatively  that  a  new  review  be 
initiated to include this new trader also in  the  sales channel of the  undertaking. This 
shows  that  the  changed  circumstances  on  the  basis  of  which  the  present  review  was 
requested are not of a lasting nature. 

(29)  Following  disclosure,  the  applicant  claimed  that  an  analysis  whether  the  changed 
circumstances on the basis of which the present review was initiated were of a lasting 
nature,  would  not  be  relevant  in  the  context  of  the  present  interim  review  limited  in 
scope to the form of measures. The applicant claimed that such analysis would only be 
required in case dumping and/or injury would be assessed.  

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(30)  The  applicant  also  claimed  that  it  would  not  intend  anymore  to  channel  sales  of 

ammonium nitrate through Agronova Europe.  

(31)  With regard to the argument that an analysis as to whether the changed circumstances 
would  be  irrelevant  in  the  present  review,  the  applicant  did  not  provide  any  legal 
reasoning that would have supported this view. In the present review it was considered 
that the stability of the sales channel(s) was an important factor in deciding to accept 
the inclusion of a newly established trader in an undertaking given that with every new 
trader 
the  risk  of  cross-compensation  and 
circumvention increases. This also needs to be addressed through adequate monitoring 
activities.  Therefore,  it  was  concluded  that  the  lasting  nature  of  the  changed 
circumstances was indeed a relevant factor and the argument of the applicant had to be 
rejected.  

in  a  price  undertaking 

included 

(32)  As regards the applicant's claim that Agronova Europe would finally not be used for 
sales of ammonium nitrate to the European Union market, this was provided at a very 
late stage of the investigation (after final disclosure) and contradicted the information 
submitted before. The applicant could furthermore not give sufficient assurances as to 
the respect of this commitment. The Commission again considered that the continuous 
changing  in  business  plans  of  the  applicant  to  fit  whatever  it  considered  as  the 
Commission's expectations casts doubts on the credibility of the applicant's offer. As 
outlined above in recital (26), the Commission also considered Agronova's behaviour 
of having impeded the investigation as an impediment to establishing a relationship of 
trust between the parties to the undertaking. The applicant's argument had therefore to 
be rejected. 

D.TERMINATION OF THE REVIEW 

(33) 

In view of the conclusions reached with regards to the workability of the undertaking 
and  the  lasting  nature  of  the  changed  circumstances,  the  investigation  should  be 
terminated without changing the existing undertaking of the applicant. 

E. DISCLOSURE 

(34)  The  applicant  and  interested  parties  were  informed  of  the  essential  facts  and 
considerations  on  the  basis  of  which  it  was  intended  to  terminate  the  investigation.  All 
parties were given an opportunity to comment. 

(35)  The applicant stated that its rights of defense and to a fair hearing have been impaired in 
the  proceeding.  The  applicant  was  given  and  has  indeed  used  numerous  occasions  to 
introduce submissions and was given sufficient time to provide information and evidence 
during the proceeding. The applicant was also given the possibility to request hearing at 
several occasions. Therefore its claims in this respect are unwarranted. 

HAS ADOPTED THIS REGULATION: 

Article 1 

The partial interim review concerning imports of solid fertilisers with an ammonium nitrate 
content exceeding 80% by weight, currently falling 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 and originating in Russia produced by Joint Stock Company 
Acron and Joint Stock Company Dorogobuzh is hereby terminated without changing the form 
of the measure. 

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

Article 2 

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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