CELEX: 62005CJ0398
Language: en
Date: 2008-02-28 00:00:00
Title: Judgment of the Court (Fourth Chamber) of 28 February 2008.#AGST Draht- und Biegetechnik GmbH v Hauptzollamt Aachen.#Reference for a preliminary ruling: Finanzgericht Düsseldorf - Germany.#Common commercial policy - Countervailing duties - Protection against subsidies - Regulation (EC) No 1599/1999 - Stainless steel wires - Injury to the Community industry - Causal link.#Case C-398/05.

Case C-398/05
      AGST Draht- und Biegetechnik GmbH
      v
      Hauptzollamt Aachen
      (Reference for a preliminary ruling from the Finanzgericht Düsseldorf)
      (Common commercial policy – Countervailing duties – Protection against subsidies – Regulation (EC) No 1599/1999 – Stainless steel wires – Injury to the Community industry – Causal link)
      Summary of the Judgment
      Common commercial policy – Protection against subsidisation practices of non-Member States – Injury – Establishing a causal
            link – Obligations of the institutions – Taking into account of matters extraneous to the subsidy 
      (Council Regulation No 2026/97, Art. 8(7))
      In determining, in an anti-subsidy proceeding, injury to the Community industry, the Council and the Commission are under
         an obligation to consider whether the injury on which they intend to base their conclusions actually derives from the subsidised
         imports and must disregard any injury deriving from other factors, particularly from the conduct of Community producers.
      
      Where the institutions have complied with that obligation and concluded that a factor arising from anti-competitive conduct
         of the Community producers constituted but a small percentage of the final price of the product in question, so that such
         price could be regarded as a reliable indicator for the purposes of establishing what injury was suffered by the Community
         industry, it is for the parties pleading the invalidity of the regulation imposing the countervailing duty to adduce evidence
         to show that that factor could have had an effect of such magnitude that the final prices of the product could no longer be
         used to establish the existence of that injury and that there was a causal link between it and the subsidised imports.
      
      (see paras 35, 51, 54)
JUDGMENT OF THE COURT (Fourth Chamber)
      28 February 2008 (*)
      
      (Common commercial policy – Countervailing duties – Protection against subsidies – Regulation (EC) No 1599/1999 – Stainless steel wires – Injury to the Community industry – Causal link)
      In Case C‑398/05,
      REFERENCE for a preliminary ruling under Article 234 EC from the Finanzgericht Düsseldorf (Germany), made by decision of 2
         November 2005, received at the Court on 15 November 2005, in the proceedings
      
      AGST Draht- und Biegetechnik GmbH
      v
      Hauptzollamt Aachen,
      THE COURT (Fourth Chamber),
      composed of K. Lenaerts, President of the Chamber, G. Arestis (Rapporteur), R. Silva de Lapuerta, J. Malenovský and T. von
         Danwitz, Judges,
      
      Advocate General: E. Sharpston,
      Registrar: B. Fülöp, Administrator,
      having regard to the written procedure and further to the hearing on 21 June 2007,
      after considering the observations submitted on behalf of:
      –        AGST Draht- und Biegetechnik GmbH, by P. Henseler and T. Lieber, Rechtsanwälte,
      –        the Council of the European Union, by J.-P. Hix, acting as Agent, assisted by G. Berrisch, Rechtsanwalt,
      –        the Commission of the European Communities, by T. Scharf and K. Gross, acting as Agents,
      having decided, after hearing the Advocate General, to proceed to judgment without an Opinion,
      gives the following
      Judgment
      1        This reference for a preliminary ruling concerns the validity of Council Regulation (EC) No 1599/1999 of 12 July 1999 imposing
         a definitive countervailing duty and collecting definitively the provisional duty imposed on stainless steel wires with a
         diameter of 1 mm or more originating in India and terminating the proceeding concerning imports of stainless steel wires with
         a diameter of 1 mm or more originating in the Republic of Korea (OJ 1999 L 189, p. 1).
      
      2        The reference was made in proceedings between AGST Draht- und Biegetechnik GmbH (‘AGST’) and Hauptzollamt Aachen (‘the Hauptzollamt’),
         by which the latter imposed on AGST a countervailing duty on imports of stainless steel wires with a diameter of 1 mm or more
         under subheading 7223 00 19 in the Combined Nomenclature (‘the CN’) originating in India.
      
       Legal context
      3        The provisions which govern the imposition of countervailing duties by the European Community are set out in Council Regulation
         (EC) No 2026/97 of 6 October 1997 on protection against subsidised imports from countries not members of the European Community
         (OJ 1997 L 288, p. 1), as amended by Council Regulation (EC) No 461/2004 of 8 March 2004 (‘the basic regulation’).
      
      4        Article 1(1) of the basic regulation provides as follows:
      
      ‘A countervailing duty may be imposed for the purpose of offsetting any subsidy granted, directly or indirectly, for the manufacture,
         production, export or transport of any product whose release for free circulation in the Community causes injury.’
      
      5        Article 8(7) of the basic regulation provides:
      
      ‘Known factors other than the subsidised imports which are injuring the Community industry at the same time shall also be
         examined to ensure that injury caused by these other factors is not attributed to the subsidised imports pursuant to paragraph
         6. Factors which may be considered in this respect include the volume and prices of non-subsidised imports, contraction in
         demand or changes in the patterns of consumption, restrictive trade practices of, and competition between, third country and
         Community producers, developments in technology and the export performance and productivity of the Community industry.’
      
       Regulation No 1599/1999
      6        On 23 March 1999, the Commission of the European Communities adopted Regulation (EC) No 618/1999 imposing a provisional countervailing
         duty on imports of stainless steel wire having a diameter of 1 mm or more originating in India and the Republic of Korea (OJ 1999
         L 79, p. 25; ‘the provisional regulation’).
      
      7        Subsequently, on 12 July 1999, the Council adopted Regulation No 1599/1999 imposing a definitive countervailing duty on imports
         originating in India and terminating the proceeding concerning imports originating in the Republic of Korea.
      
      8        In another proceeding, concerning stainless steel bars, the Council had adopted, on 13 November 1998, Regulation (EC) No 2450/98
         imposing a definitive countervailing duty on imports of stainless steel bars originating in India and collecting definitively
         the provisional duty imposed (OJ 1998 L 304, p. 1). That regulation was annulled by the judgment of the Court of First Instance
         of the European Communities in Case T‑58/99 Mukand and Others v Council [2001] ECR II‑2521.
      
       The main proceedings and the question referred for a preliminary ruling
      9        AGST is one of the principal German producers of flexible stainless steel wires. On 7 August and 17 November 2000, it declared
         to the Hauptzollamt stainless steel wires with a diameter of 1 mm or more, corresponding to subheading 7223 00 19 in the CN,
         for their release for free circulation.
      
      10      AGST declared the United Arab Emirates as the goods’ place of origin and, in addition, produced invoices addressed to it by
         Link Middle East Ltd and certificates of origin in Form A, according to which the goods had been manufactured in the United
         Arab Emirates.
      
      11      An investigation by the European Anti-Fraud Office (OLAF) revealed, however, that the country of origin of the imported products
         was in fact India. In OLAF’s view, the stainless steel wires imported into the Community by Link Middle East Ltd, between
         June 1999 and December 2000 had been manufactured by Venus Wire Industries Ltd, established in Mumbai (India).
      
      12      By decision of 30 July 2003, the Hauptzollamt, on the basis of Regulation No 1599/1999, imposed post-clearance customs and
         countervailing duties on those customs declarations of sums, respectively, of DEM 4 034.79 and DEM 59 513.21.
      
      13      By decision of 29 June 2004, the Hauptzollamt rejected an objection by AGST to the imposition of those duties. On 21 July
         2004, AGST brought an action against that decision before the Finanzgericht Düsseldorf in which it alleges, in particular,
         that the post-clearance imposition of the countervailing duty is unlawful, on the ground that Regulation No 1599/1999 is invalid.
      
      14      It is in those circumstances that the Finanzgericht Düsseldorf decided to stay the proceedings and to refer the following
         question to the Court for a preliminary ruling:
      
      ‘Is … Regulation … No 1599/1999 … invalid in so far as it provides that countervailing duty under subheading 7223 00 19 of
         the [CN] is to be imposed on wire manufactured by Venus Wire Industries Ltd [in] Mumbai, India?’
      
       The question referred for a preliminary ruling
      15      It is clear from the contents of the Court file that the referring court is asking, in essence, whether Regulation No 1599/1999
         is invalid, since the determination by the Council of the European Union concerning the existence of injury to the Community
         industry and of the causal link between that injury and the subsidised imports of stainless steel wires is vitiated by manifest
         error. In that regard, that court is uncertain whether the judgment of the Court of First Instance in Mukand and Others v Council, which annulled Regulation No 2450/98 concerning stainless steel bars originating in India within subheadings 7222 20 11,
         7222 20 21, 7222 20 31 and 7222 20 81 in the CN, is applicable to the main proceedings for the purpose of determining the
         validity of Regulation No 1599/99. 
      
       Arguments of the parties
      16      AGST submits that Regulation No 1599/1999 is void, as a matter of law, on the ground that the Council’s determination concerning
         the existence of injury to the Community industry and the causal link between that injury and the subsidised imports of stainless
         steel wires is vitiated by manifest error. The Community institutions did not take sufficient account of the Indian exporting
         producers’ objection that the Community producers of flat stainless steel products had caused injury to the Community industry
         by forming an ‘alloy surcharge cartel’.
      
      17      At the hearing, AGST argued that, for flat products, the alloy surcharge, which is a coefficient incorporated in the calculation
         of the price of steel products, was artificially increased by a yield factor of 1.35. The alloy surcharge applied to steel
         wires was fixed by multiplying the alloy surcharge applied to flat products also by a factor of 1.35, which inevitably increased
         that alloy surcharge for steel wires.
      
      18      AGST observes, in addition, that Mukand and Others v Council should be applied, by analogy, and Regulation No 1599/1999 declared invalid.
      
      19      In that regard, AGST argues that, so far as concerns the existence of the alloy surcharge cartel for flat products, it makes
         no difference that the steel wire is not produced from flat products or that the respective producers are not always the same.
         The Commission has already established the existence of that cartel, which, as the Court of First Instance held in Mukand and Others v Council, has influenced the prices of stainless steel bars.
      
      20      AGST submits that the cartel has also influenced the prices of stainless steel wire. There is no distinction between stainless
         steel bars and stainless steel wire, given that both are long products. Indeed, due to the significance of flat products,
         price developments in the stainless steel markets are very often driven by pricing decisions by producers of those products.
      
      21      AGST argues that Regulation No 1599/1999 reproduces, in the recitals in its preamble, the same statement of reasons as Regulation
         No 2450/98, which was annulled by the judgment in Mukand and Others v Council.
      
      22      In AGST’s submission, since there is no distinction between stainless steel bars and stainless steel wire, the alloy surcharge
         cartel has influenced stainless steel wire prices to the same extent as those of stainless steel bars. Thus, Regulation No 1599/1999
         is just as much vitiated by a manifest error of assessment as Regulation No 2450/98, which covered subsidised imports of stainless
         steel bars.
      
      23      The Commission submits, on the other hand, that the Community institutions examined, both in the provisional regulation and
         in Regulation No 1599/1999, the Indian producers’ objections concerning the existence of an alloy surcharge cartel between
         the Community producers of flat products.
      
      24      In that regard, the Commission states that it found, among other matters, in the 212th to 216th recitals in the preamble to
         the provisional regulation, that stainless steel wires were not manufactured from flat products and that comparison of the
         Community industry producers’ sale prices revealed that they varied for identical references.
      
      25      Moreover, those recitals stated that the alloy surcharge cartel constituted only a small percentage of the total price of
         stainless steel wire products. The Council confirmed those findings, subsequently, in the 93rd recital in the preamble to
         the definitive Regulation No 1599/1999.
      
      26      Furthermore, the Council and the Commission submit that the conclusions of the Court of First Instance in Mukand and Others v Council are not applicable to the main proceedings for the purpose of determining the validity of Regulation No 1599/1999. In that
         regard, the Community institutions correctly concluded, in that regulation, that the application of the alloy surcharge, which
         constituted only a small percentage of the total price of the products in question, had cast no doubt on the reliability of
         the final weighted average prices for the purposes of the determination of the injury to the Community industry.
      
      27      In any event, those institutions state that the observations based on the final weighted average prices in Regulation No 1599/1999
         concerning the injury and the causal link between it and the subsidised imports of the products in question in the main proceedings
         are not vitiated by a manifest error of assessment.
      
      28      In the context of the determination of that injury, the two essential factors were, first, a considerable undercutting of
         the imports from India and, second, a significant depression in the Community industry’s sale prices. Consequently, even assuming
         that the application of the alloy surcharge raised all the net prices in the Community and that, in addition, that increase
         was entirely attributable to anti-competitive conduct, the undercutting would be of around 17% of those imports.
      
       The Court’s reply
      29      It must be examined whether the Community institutions fell into manifest error in the determination of the existence of injury
         to the Community industry and of the causal link between that injury and the subsidised imports of stainless steel wires.
      
      30      The referring court points out that Regulation No 1599/1999 repeats the same reasons as those set forth in Regulation No 2450/98
         for rejecting the Indian exporting producers’ objection relating to the Community producers’ restrictive practices, namely
         the uniform application of the alloy surcharge.
      
      31      It must be noted, on the one hand, that, under Article 8(7) of the basic regulation, known factors, other than the subsidised
         imports, which are injuring the Community industry at the same time are also to be examined to ensure that injury caused by
         those other factors is not attributed to the subsidised imports pursuant to Article 8(6).
      
      32      As an indication, that article provides, among other things, that the factors which may be considered relevant in this respect
         include restrictive trade practices of, and competition between, third country and Community producers.
      
      33      It must, on the other hand, be observed that in the sphere of the common commercial policy and, most particularly, in the
         realm of measures to protect trade, the Community institutions enjoy a broad discretion by reason of the complexity of the
         economic, political and legal situations which they have to examine (see Case C‑351/04 Ikea Wholesale [2007] ECR I‑0000, paragraph 40, and the case-law cited).
      
      34      Furthermore, it is settled case-law that the determination of the existence of harm to the Community industry requires an
         appraisal of complex economic situations and the judicial review of such an appraisal must therefore be limited to verifying
         whether relevant procedural rules have been complied with, whether the facts have been accurately stated, and whether there
         has been a manifest error in the appraisal of those facts or a misuse of powers (see Ikea Wholesale, paragraph 41, and the case-law cited). That is, particularly, the case as regards the determination of the factors injuring
         the Community industry in an anti-subsidy proceeding.
      
      35      In determining injury, the Council and the Commission are under an obligation to consider whether the injury on which they
         intend to base their conclusions actually derives from the subsidised imports and must disregard any injury deriving from
         other factors, particularly from the conduct of Community producers themselves (see Case C‑358/89 Extramet Industrie v Council [1992] ECR I‑3813, paragraph 16).
      
      36      In that regard, it should be noted that, in order to refute AGST’s argument that the Indian producers’ objections concerning
         the alloy surcharge cartel for flat products was not examined by the Community institutions, those institutions referred,
         in the proceedings before the Court, to the 93rd recital in the preamble to Regulation No 1599/1999, which confirmed the conclusions
         set forth in the 209th to 216th recitals in the preamble to the provisional regulation, since none of the parties concerned
         put forward additional arguments concerning the Indian exporting producers’ objections that all data submitted by the Community
         industry within the framework of the anti-subsidy proceeding would be artificially inflated as a result of the uniform application
         of the ‘alloy surcharge’ system.
      
      37      In the 210th and 211th recitals in the preamble to the provisional regulation, it was noted that the decision which held that
         the alloy surcharge was an anti-competitive practice covered flat products as opposed to long products, which include the
         stainless steel wires in question in the main proceedings. However, the exporting producers argued that the existing illegal
         practice for flat products would have a synergy or downstream effect on long products.
      
      38      In that regard, in the 212th recital in the preamble to the provisional regulation, the Commission, in order to refute that
         argument of the exporting producers, maintained that stainless steel wires were not produced, for technical reasons, from
         flat products and that therefore any downstream effect of the concerted practice found for flat products on stainless steel
         wires was doubtful. The Commission added that the producers of flat products and the producers of long products were not the
         same and that the number of the latter was significantly higher than that of the former.
      
      39      It follows from those recitals that, contrary to AGST’s submission, the Community institutions, in accordance with the requirement
         of the basic regulation to disregard any injury arising from factors other than the subsidised imports, examined whether the
         data submitted by the Community industry within the framework of the anti-subsidy proceeding could have been influenced by
         the concerted application of the ‘alloy surcharge’ system by the flat product producers.
      
      40      In support of its arguments, AGST declares that the 209th to 216th recitals in the preamble to the provisional regulation,
         in which the Commission had rejected the Indian producers’ objection relating to the existence of an alloy surcharge cartel,
         correspond, on the whole, to the 43rd, 46th and 47th recitals in the preamble to Regulation No 2450/98, on the basis of which
         the Court of First Instance, in Mukand and Others v Council, declared that they contained manifest errors of assessment.
      
      41      In that regard, it is clear from the contents of the Court file that Regulations No 1599/1999 and No 2450/98 cover stainless
         steel products which belong in the category of long products. In addition, it is not disputed that the alloy surcharge applied
         to stainless steel wires had been fixed in the same way by the steel bar producers, by multiplying the alloy surcharge applied
         to flat steel products by a factor of 1.35.
      
      42      Thus, the question which arises is whether the anti-competitive conduct of the flat steel producers, linked to the uniform
         application of the alloy surcharge cartel, constituted, for the stainless steel wires sector, a known factor within the meaning
         of Article 8(7) of the basic regulation. 
      
      43      In that context, Mukand and Others v Council, upon which AGST relies, concerns the anti-competitive fixing of the amount of the alloy surcharge, applied by the Community
         producers to flat stainless steel products, which had significantly affected the prices of stainless steel bars and artificially
         caused their increase, and which would render those prices unreliable for the purposes of the determination of the injury
         suffered by the Community industry.
      
      44      In that judgment, the Court of First Instance held that, although it was not proved that the final sale prices of stainless
         steel bars had been fixed by Community producers acting in concert, the Community institutions, by failing to take account
         of the uniform, consistent industrial practice of Community stainless steel bar producers, the objective effect of which was
         automatically to mirror, in the markets for those products, the artificial price increases achieved through concerted action
         between the flat product producers, disregarded a known factor, other than the subsidised imports, which could have caused
         injury to the Community industry at the same time.
      
      45      It is therefore necessary to examine whether the concerted application of the alloy surcharge by the flat product producers
         which, as was held in Mukand and Others v Council, could have had a significant influence on the prices of stainless steel bars, could also have had such an influence on the
         prices of stainless steel wire for the purposes of Article 8(7) of the basic regulation.
      
      46      In that regard, it is necessary to note that the Community institutions stated that the alloy surcharge for stainless steel
         wires had already been imposed as an element in the final price.
      
      47      Those institutions submit that the alloy surcharge for stainless steel wires was, during the period under investigation, a
         percentage lower on average than 5% of the net average weighted price of those products. Even assuming that the amount of
         the alloy surcharge was influenced by the flat product producers’ anti‑competitive conduct, the effect of the artificial increase
         of the alloy surcharge on the net average weighted prices of stainless steel wires was so small that it could not cast doubt
         on the reliability of those prices.
      
      48      AGST claims that if the alloy surcharge for stainless steel bars artificially increased their prices, since it was multiplied
         by a yield factor of 1.35, it also inevitably artificially increased the price of stainless steel wires. In that regard, AGST
         maintained, at the hearing, that the alloy surcharge for stainless steel wires, during the period under investigation, was,
         in any event, higher than the 4 or 5% suggested by the Commission.
      
      49      The exporting producers stated, during the administrative procedure, that the Community producers which had applied an alloy
         surcharge to steel wires had fixed its amount in the same way as the steel bar producers, by multiplying the alloy surcharge
         applied to flat steel products by a factor of 1.35, the objective effect of which was automatically to mirror, in the markets
         for those products, the artificial price increases achieved through the concerted action between the flat product producers.
      
      50      However, AGST provided no evidence concerning the parallelism between the evolution of the prices of flat products and that
         of the prices of stainless steel wires because of the uniform application of the yield coefficient of 1.35 by the wire producers
         to the alloy surcharge applied to flat products which could show that the flat product producers’ anti‑competitive conduct
         could have significant repercussions on the level of stainless steel wire prices which would render them artificially higher.
      
      51      In the main proceedings, the Community institutions did not fail to take account of a known factor like the system of applying
         the alloy surcharge. They examined the factor of the application of the alloy surcharge and concluded that it constituted
         a small percentage of the final price. In those circumstances, it is for the parties pleading the invalidity of the regulation
         to adduce evidence to show that the concerted application of the alloy surcharge by the flat product producers could have
         had an effect of such magnitude that the final prices of stainless steel wires could no longer be used to establish the existence
         of injury to the Community industry and of the causal link between that injury and the subsidised imports.
      
      52      However, the Court file contains no material which could lead to the conclusion that the Community institutions made a manifest
         error of assessment by relying, in the determination of the injury and of the causal link between that injury and the subsidised
         imports, on the absence of factors, other than those imports, which, according to AGST, caused injury to the Community industry
         at the same time.
      
      53      AGST relied solely on Mukand and Others v Council to claim that the conclusions therein apply to Regulation No 1599/1999, since stainless steel wires belong, just like stainless
         steel bars, in the category of so‑called ‘long’ products, and on the similarity between the two products in respect of the
         calculation of the alloy surcharge.
      
      54      No indication has been given that the concerted application of the alloy surcharge to flat products led to an increase in
         the overall level of stainless steel wire prices such that the final prices of those products could not be regarded as a reliable
         indicator for the purpose of establishing what injury was suffered by the Community industry because of the subsidised imports.
      
      55      It follows from all the foregoing that consideration of the question referred has disclosed nothing capable of affecting the
         validity of Regulation No 1599/1999.
      
       Costs
      56      Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court,
         the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs
         of those parties, are not recoverable.
      
      On those grounds, the Court (Fourth Chamber) hereby rules:
      Consideration of the question referred has disclosed nothing capable of affecting the validity of Council Regulation (EC)
            No 1599/1999 of 12 July 1999 imposing a definitive countervailing duty and collecting definitively the provisional duty imposed
            on stainless steel wires with a diameter of 1 mm or more originating in India and terminating the proceeding concerning imports
            of stainless steel wires with a diameter of 1 mm or more originating in the Republic of Korea.
      [Signatures]
      * Language of the case: German.