CELEX: 51995PC0695
Language: en
Date: 1995-12-08
Title: Proposal for a COUNCIL REGULATION (EC) imposing definitive anti-dumping duties on imports of microwave ovens originating in the People' s Republic of China, the Republic of Korea, Malaysia and Thailand and collecting definitively the provisional duty imposed

COMMISSION OF THE EUROPEAN COMMUNITIES
                                                   Brussels, 08.12.1995
                                                   COM(95)695 final
                                    Proposal for a
                          COUNCIL REGULATION (EC)
                 imposing definitive anti-dumping duties on
                  imports of microwave ovens originating in
the People's Republic of China, the Republic of Korea, Malaysia and Thailand
           and collecting definitively the provisional duty imposed
                           (presented by the Commission)
 ---pagebreak---  ---pagebreak---                                 EXPLANATORY MEMORANDUM
1. By Regulation (EC) No 1645/95 of 5 July 19951, the Commission imposed
provisional anti-dumping duties on imports into the Community of microwave ovens
originating in the People's Republic of China, the Republic of Korea, Thailand and
Malaysia, falling within CN code 8516 50 00.
2. By Council Regulation (EC) No 2580/95 of 30 October 19952, the Council extended
the validity of these duties for a period of two months.
3. Certain parties requested and were granted hearings and presented written
comments which were taken into account where appropriate. The Commission
continued to seek and verify all information it deemed necessary for its definitive
findings.
4. The definitive determination confirmed the existence of dumping. Changes in the
individual margins compared to the provisional findings are due to reassessments of
the cost of production and allowances determined with respect to individual
producers.
Both Chinese producers requested individual treatment. As not all the conditions the
Community Institutions have applied to grant such a treatment in the past were met, it
 is considered that neither of the two Chinese companies should be given individual
treatment.
 1
   OJ. No L 156,7.7.1995, p. 5
 2
   OJ. No L 263,4.11.1995, p. 1
 ---pagebreak--- 5. The conclusion that the complaining industry suffered material injury is also
confirmed. For the purpose of the determination of material injury, the imports from
these countries were analysed cumulatively because it was found that the imports
from each of these countries competed with each other and with the like product of
the Community industry, that import volumes from each of the countries concerned
were significant in the investigation period and that price trends were similar.
6. The Commission established the causal link between the dumped imports and the
injury suffered by the Community industry. It is the size of the dumped imports, their
low prices and the fact that such imports went to the same channels as sales of the
Community industry that led to this conclusion.
7. In light of the investigation findings, it is considered in the Community interest that
definitive duties should be imposed. The level at which the definitive duties should be
set was determined by the dumping margins found which were lower than the injury
level. These dumping margins ranged from 3.3% to 24.4% for the Republic of Korea,
from 14.3% to 27.3% for Thailand, was 29.0% for Malaysia and 12.1% for the
People's Republic of China.
8. One Chinese producer offered an undertaking. The Commission considered the
offer as not acceptable because it was considered not to remove injurious dumping.
9. It is therefore proposed that the Council adopts the draft Régulation annexed ;.
imposing a definitive anti-dumping duty on imports of microwave ovens originating in
the People's Republic of China, the Republic of Korea, Thailand and Malaysia.
 ---pagebreak---   Council Regulation (EC) No ...795 imposing definitive anti-dumping duties on
                       imports of microwave ovens originating in
  the People's Republic of China, the Republic of Korea, Malaysia and Thailand
               and collecting definitively the provisional duty imposed
THE COUNCIL OF THE EUROPEAN UNION,
Having regard to the Treaty establishing the European Community,
Having regard to Council Regulation (EC) No 3283/94 of 22 December 1994 on
protection against dumped imports from countries not members of the European
Community3, as last amended by Regulation (EC) No 1251/954, and in particular
Article 23 thereof,
Having regard to Council Regulation (EEC) No 2423/88 of 11 July 1988 on protection
against dumped or subsidized imports from countries not members of the European
Economic Community5, as last amended by Regulation (EC) No 522/946 and in
particular Article 12 thereof,
Having regard to the proposal submitted by the Commission after consulting the
Advisory Committee,
WHEREAS:
3
        OJ No L 349, 31.12.1994, p.1.
4
        OJ No L 122, 2.6.1995, p.1.
5
        OJ No L 209, 2.8:1988, p. 1.
6
        OJ No L 66,10.3.1994, p. 10.
 ---pagebreak--- I.   Provisional Measures:
(1.)   The Commission, by Regulation (EC) No 1645/957, hereinafter referred to as
       "the provisional duty Regulation", imposed a provisional anti-dumping duty on
       imports into the Community of microwave ovens (hereinafter referred to as
       "MWOs") originating in the People's Republic of China, the Republic of Korea,
       Malaysia and Thailand.
       By Regulation (EC) No 2580/958 the Council extended the validity of this duty
      for a period of two months expiring not later than 7 January 1996.
II.  Subsequent Procedure:
(2.)   Following the imposition of the provisional anti-dumping measures the following
       interested parties submitted comments in writing:
       1. Community industry:
      - GIFAM, the complainant and the following individual complaining Community
       producers:
       - AEG - Germany,
      - Groupe Moulinex S.A. - France,
      - Thomson Electroménager - France.
      2. A company with an MWO production located in a Member State newly part
      of the Community:                               .
      - Whirlpool Europe B.V. - Sweden ("Whirlpool").      '
7
      OJ No L 156 of 7.7.95, p. 5
8
      OJ No L 263 of 4.11.95, p.1
 ---pagebreak---      3. The following producers/exporters:
     - Beijing Sampo Electric Co. Ltd - China together with Vegary Ltd - Hong Kong,
     - Whirlpool SMC Microwave Products (China) Co. Ltd9,
     - Daewoo Electronics Co. Ltd. - Korea ("Deawoo") and its related importers in
     the Community,
     - LG Electronics Co. Ltd. - Korea ("LG Electronics") and its related importers in
     the Community,
     - Korea Nisshin Co. Ltd - Korea ("Korea Nisshin"),
     - Samsung Electronics Co. Ltd - Korea ("Samsung Korea"), and its related
     importers in the Community,
     - Samsung Electronics (M) SDN.BHD - Malaysia ("Samsung Malaysia")and its
     related importers in the Community,
     - Acme industry Co. Ltd - Thailand ("Acme").
     4. An organisation representing importers into the Community, the Foreign
     Trade Association (" FTA"), Kôln.
(3.) Those parties who so requested were granted an opportunity to be heard by
     the Commission.
(4.) The Commission continued to seek and verify all information it deemed
     necessary for its definitive findings.
     The ownership of one producer located in China, i.e. SMC Microwave Products (China) Co. Ltd,
     changed after the investigation period. As a consequence the name of the Chinese producer
     changed.
 ---pagebreak--- (5.)   Parties were informed of the essential facts and considerations on the basis of
       which it was intended to recommend the imposition of definitive anti-dumping
       duties and the definitive collection of amounts secured by way of a provisional
       duty. They were also granted a period within which to make representations
       subsequent to the disclosure.
(6.)   The parties' oral and written comments were considered, and the conclusions
       altered where deemed appropriate.
(7.)   Owing to the complexity of the case, in particular due to the number of
       exporting countries and parties involved, the investigation overran the normal
       duration of one year provided for in Article 7 (9) (a) of Regulation (EEC) No.
       2423/88 (hereafter referred to as the 'basic anti-dumping Regulation').
Hi. Product under consideration and like product:
(8.)   As no new evidence and comments have been presented regarding the
       product under consideration and the like product, the findings set out in recitals
       (7) to (10) of the provisional duty Regulation are confirmed.
iV. Dumping:
               • <                      • • ' . - " . . •
A. China:
1. volume of Chinese exports to ttte Community;
(9.)   The investigation carried out with respect to MWOs originating in China had
       revealed at the provisional stage that the export volume to customers located in
       the Community reported by the two cooperating producers located in China
       was higher than the import volume from China reported in the Community
       import statistics for the investigation period.
 ---pagebreak---       One Chinese producer claimed that import statistics should be used instead of
      the information provided by the cooperating Chinese producers. Although it
      was not possible to assess decisively the reason for the discrepancy, it was
      concluded that the determination of export/import volumes as well as
      export/import prices should be based on the specific information submitted by
      the Chinese producers which was verified at the premises of these producers'
       related exporters in Hong Kong and which covered these producers' exports of
       MWOs with the Community as final destination.
       It was considered that only in the absence of such information should generally
       available statistical information be used.
2. Normal vaiue:
(10.) One Chinese producer argued that the normal value established based on
       Korean prices appeared inappropriate given the higher degree of sophistication
       of MWOs sold on the analogue country market.
       In respect of the above submission, it should be noted that the normal values
       for by far the great majority of MWOs exported from China were constructed
       on the basis of the cost of manufacturing models exported by the Korean
       companies concerned to the Community, plus an amount for selling, general
       and administrative costs ("SG&A") and profit realised for the like product on the
       domestic market. The constructed normal values established were therefore
       fully comparable to those of the Chinese producers.
       The same Chinese producer also claimed that the SG&A costs incurred for
       sales of the like product on the domestic market in Korea were inflated, given
       this market's inefficient distribution system.
 ---pagebreak---       In fact, the amount of SG&A costs attributed was far below that which the
      Chinese producer concerned alleged had been used in constructing normal
      value.. The amount of SG&A costs used is in line with the Chinese producer's
      estimate.
(11.) In these circumstances, it is considered that none of the comments received
      after the imposition of provisional measures require the choice of an analogue
      country other than Korea, or a change in the methodology used for determining
      the normal values for the Chinese producers. Consequently, the approach
      followed at the provisional stage with regard to the determination of normal
      values concerning China is maintained.
3. Export price:
(12.) In establishing the export price all export transactions during the investigation
      period reported by Chinese producers were used.
      Account was taken of the fact that no price for the Chinese MWOs sold directly
      for export to the Community from the country of origin was found to exist as all
      export sales were made through related selling organisations located in
      Hong Kong. Therefore the export price had to be adjusted on the basis of the
      price at which the product concerned was resold by the Hong Kong based
      selling companies to independent customers located in the Community.
      Contrary to the approach taken at the provisional stage, at which a flat rate of
      5% was applied to reflect the costs incurred and profit realised by the exporters
      concerned for their export activity, at the definitive stage due allowance Was
      only made for the direct costs actually incurred by the Hong Kong sales '
      companies.
 ---pagebreak--- 4. Comparison:
(13.) As at the provisional stage, all adjustments relating to differences in normal
      value affecting price comparability claimed by the Korean producers
      concerned, which proved to be justified and significant in accordance with
      Article 2 (10) (c) of the basic anti-dumping Regulation, were also applied in
      comparing normal value and export price for Chinese producers. Such
      adjustments were made in particular in respect of physical differences,
      differences relating to import charges and indirect taxes, differences in the level
      of trade and to differences in direct selling expenses as discussed in recital
      (20) below.
      Normal value established in the analogue country on an ex-frontier level was
      compared with the export price at the Chinese ex-frontier level on a
      transaction-by-transaction basis.
5. Pumping margin:
(14.) The assessment of the information received from the Chinese producers
      concerned with respect to export prices and taking into account the normal
      value as established above shows the existence of dumping in respect of
      imports of MWOs originating in China taken as a whole.
      Unlike at the provisional stage, the two Chinese producers claimed individual
      treatment at the definitive stage.
      However, one company did not submit any new arguments after the imposition
      of provisional measures relating to the direct and indirect, contractual and
      factual involvement of Chinese public authorities in the operation of the
      company.
      The other company newly submitted information related to its operation in
      China which also indicates that the company does not operate in a way that
      would justify the granting of individual treatment.
 ---pagebreak---       Indeed, both producers in China are joint-venture companies whose joint
      venture partners are non-Chinese as well as Chinese companies. From the
      joint-venture contracts, it appears that the producing companies are still partly
      controlled in their operations by the Chinese partners and are not entirely free
      to determine the destination of their sales.
      These case specific grounds are in themselves sufficient to reject the claims for
      individual treatment without having to examine further whether there has been
      a change in the involvement of the State in, or the influence of the State on,
      economic activity in China as described, in particular, in recital (19) of Council
       Regulation (EEC) No 2474/9310 on the basis of which individual treatment could
      not, at that time, be granted.
(15.) In conclusion concerning Chinese imports, the weighted average dumping
      margin found, expressed as a percentage of the net free-at-Community-frontier
      price was determined at the definitive stage to be 12.1 %.
B. Korea:
1. Normal value:
   a) Ordinary course of trade of domestic sales:
      (1) Total sales:
(16.) Two companies requested that normal value be established on the basis of all
      their sales on the domestic market. These companies considered this
      approach to yield a more representative result as compared to the one taken at
      the provisional stage in which the analysis was limited to approximately 85% of
      domestic salés.
10    OJ L 228/1, 9.9.93
                                            10
 ---pagebreak---       On the basis of the above request, at the definitive stage the assessment of
      whether domestic sales were made in the ordinary course of trade took into
      account all sales of these companies.
      (2) Profitable sales:
(17.) Based on the total domestic sales transactions as determined above, and
      using the costs of production data submitted by the three Korean producers
      which had made representative sales, the profitability of these transactions was
      analysed.
      Where the companies concerned had reported incomplete information with
      respect to costs of production, where they had used allocation methods
      yielding unrepresentative results or where the allocation methods used were
      not supported by the internal accounts of the companies concerned, the costs
      of production were adjusted accordingly. Such adjustments concerned in
      particular the financing costs of three companies and the SG&A costs incurred
      for domestic sales of three companies.
      In accordance with Article 2 (11) of the basic anti-dumping Regulation,
      allocations of indirect costs after the above mentioned adjustments were made
      on the basis of turnover.
       It was concluded at the definitive stage after taking into account the above
      mentioned adjustments that all three Korean producers concerned had made
       profitable sales on the domestic market, i.e. that these companies had made
      sales in the ordinary course of trade.     '.
      The same methodology described in recital (21) of the provisional duty
       Regulation and used at the provisional stage to assess the profitability by
       MWO model was used at the definitive stage.
                                             H
 ---pagebreak---    b) Model comparison and normal value determination:
(18.) As far as model comparisons are concerned, the provisional conclusions
      reached in recital (23) to (25) of the provisional duty Regulation that the great
      majority of domestically sold models are not comparable to those exported
      were maintained. Consequently, normal values had to be constructed for the
      great majority of exported models using the companies' specific cost of
      production information and profit rates as determined for their sales in the
      ordinary course of trade.
      In the few cases where domestically sold models were comparable with
      exported models, normal value was established on domestic sales prices.
      For the fourth producer located in Korea, which had not made any domestic
      sales, normal value was constructed using the methodology described in recital
      (19) of the provisional duty Regulation.
2. Export price:
(19.) As for the domestic sales, also export sales prices were established on the
      total sales volume, where requested, at the definitive stage. Otherwise the
      same methodologies as the ones used at the provisional stage and described
      in recitals (26) to (29) of thé provisional duty Regulation were used at the
      definitive stage in order to establish export prices.
3. Comparison:
(20.) At the definitive stage, normal value by model, as determined above, was
      compared at an ex-factory level with the ex-factory export price on a
      transaction-by-transaction basis.
                                              12
 ---pagebreak--- For the purpose of a fair comparison, due allowance in the form of adjustments
was made for differences affecting price comparability. Those allowances
which were claimed and which proved to be significant were granted where
justified in accordance with Article 2 (9) and (10) of the basic anti-dumping
Regulation. Based on the analysis conducted after the imposition of provisional
measures, adjustments were made in respect of physical differences,
differences relating to import charges and indirect taxes, selling expenses and,
 in addition, with respect to differences in the level of trade, in particular as
 regards sales to original equipment manufacturers ("OEM").
 As far as differences in selling expenses in the form of credit costs for
 differences in payment terms are concerned, the general approach taken at the
 provisional stage is maintained. This approach allowed for the granting of an
 allowance for differences in payment terms if it was demonstrated by the
 parties concerned that these differences affect price comparability. In this
 context it was considered that payment terms can affect prices paid by a
 customer only where the payment terms are agreed at the date of sale, i.e. the
 date of the conclusion of the sales contract or the date of the invoice at the
 latest. It is only in such circumstances that the cost of credit associated with the
 payment terms can be considered to have influenced the buyer's decision.
 As far as export sales to OEM-customers are concerned, allowances were
  granted in cases in which these customers performed functions different from
 customers on the domestic market resulting in consistently different export
  price patterns for such customers.
  Furthermore, two Korean producers had submitted information on the
  organisation of their export sales that did not reflect the actual export
  organisation. These producers had incorrectly described the role of related
  companies in the Community involved in the export transactions and not
  submitted information on the related costs of these related companies
  reflecting their role.
                                        13
 ---pagebreak---       In these circumstances the directly related costs involved had to be determined
      on the basis of Article 7 (7) (b) of the basic anti-dumping Regulation. This
      determination was based on general experience related to costs incurred by
      economic operators assuming such functions.
4. Dumping margin:
(21.) The assessment of the information received from the producers concerned at
      the definitive stage with respect to export prices and taking into account the
      normal value as established above shows the existence of dumping in respect
      of imports of the product concerned originating in Korea also at the definitive
      stage.
      The weighted average dumping margins definitively established for each
      producer and expressed as a percentage of the total CIF Community- frontier
      value of imports are as follows:
              -Daewoo                                  9.4%
              - LG Electronics                        18.8%
              - Korea Nisshin                         24.4 %
              - Samsung Korea                          3.3%
      As at the provisional stage and for the reasons set out in recital (35) of the
      provisional duty Regulation the dumping margins of the cooperating company
      with the highest margin, i.e. 24.4 %, should apply to all non-cooperating
      producers.
                                             14
 ---pagebreak--- C. Malaysia:
1. Normal value:
(22.) No changes with regard to the overall methodology described in recitals (36)
       and (37) of the provisional, duty Regulation were deemed to be necessary at
       the definitive stage for the détermination of normal value in the light of the
       comments received.
       However, since certain changes were made with respect to the amounts of
       SG&A and profit realised by Korean producers and since these items were
       used in constructing normal value for the Malaysian producer, the constructed
       normal values applied to the Malaysian producer have also changed.
2. Export price:
(23.) No new arguments were raised in respect to the determination of the export
       price. The approach followed at the provisional stage is therefore maintained at
       the definitive stage.
3. Comparison:
 (24.) As for the determination of the normal values mentioned above, changes were
        also made with respect to certain allowances granted following changes in the
        amounts of these allowances for the Korean producers. Consequently, the total
        allowances granted in order to reflect differences affecting price comparability
        relating to selling expenses were changed accordingly.
 4. Dumping margin:
 (25.) Applying the same methodology as explained in the provisional duty
        Regulation, the weighted average dumping margin established at the definitive
        stage for the sole cooperating Malaysian producer and expressed as a
        percentage*of the total CIF Community- frontier value of imports is as follows:
                 Samsung Malaysia          29.0%
                                             15
 ---pagebreak---       As this producer was the only one which cooperated in the present
      investigation and as it appears from Community import statistics that no other
      producer made any MWO-exports during the investigation period, it is
      considered appropriate to apply the above dumping rate to all M WO imports
      originating in Malaysia.
D.Thailand:
1. Normal value and export price:
(26.) The cooperating Thai producer requested that the normal value for Thailand be
      established on the basis of sales made by this producer's related company on
      the Japanese market. The Thai producer in particular claimed that this was in
      line with the provisions of Article 2 (6) of the basic anti-dumping Regulation, as
      exports to the Community of MWOs produced in Thailand were actually
      shipped from Japan. In investigating this request, it was established that the
      producer's related company in Japan merely issued the invoices for export
      sales while the MWOs concerned were produced in Thailand and physically
      shipped directly from Thailand to export markets. Moreover, the information
      submitted by the Thai producer on its sales activity on the Japanese market
      turned out to be unreliable.
      In these circumstances, it is considered reasonable to maintain, as in the case
      of Malaysia, the general methodology for determining normal value for Thailand
      as outlined in recitals (46) and (47) of the provisional duty Regulation.
      As for Malaysia, certain changes in the profitability and SG&A costs of the
      Korean companies having profitable sales on the Korean market, led to a
      change in the average SG&A rate and the average profit rate used for
      constructing the normal values for the Thai producer.
                                             16
 ---pagebreak--- 2. Comparison:
(27.) As in the case of Malaysia, the changes in the total allowances granted to the
      Korean producers concerned and deducted from normal value were also taken
      into account in comparing normal value and export prices for the Thai
      producer. In particular, an allowance was also granted for sales made at a
      different level of trade.
3. Dumping margin:
(28.) Applying the same methodology as explained in the provisional duty
      Regulation, the weighted average dumping margin established at the definitive
      stage for the co-operating Thai producer and expressed as a percentage of the
      total CIF Community- frontier value of imports is as follows:
              Acme                  14.1%
      For the reasons set out at the provisional stage which were not contested by
      any party, the dumping margin for the non-cooperating Thai
      producer(s)/exporter(s) is based on the highest weighted average dumping
      margin determined with regard to an individual MWO-segment for which the co-
      operating Thai producer made significant export sales to the Community.
(29.) On this basis, the clumping margin established for all other exporters from
      Thailand expressed as a percentage of the total CIF Community-frontier value
      of imports is 27.3%;
                                          17
 ---pagebreak--- V. DEFINITION OF COMMUNITY INDUSTRY:
(30.) In its provisional determination, the Commission had established that a variety
      of producers operated on the Community market.
      In accordance with the provisions of Article 4 (5) of the basic anti-dumping
      Regulation, it was concluded that certain producers related to the exporters
      should be excluded from the definition of the Community production. On this
      basis, it was further concluded that the complaining companies represented a
      major proportion of the remaining Community production. The resulting injury
      assessment was consequently limited to the situation of the complaining
      producers.
(31.) One MWO producer located in the Community after its enlargement at 1
      January 1995 ("the enlarged Community") claimed that, for the purpose of the
      injury analysis, the term Community industry should be interpreted as including
      not only the complaining companies but all Community producers.
      Moreover, the company argued that producers from the new Member States
      should also be included in the definition of the Community industry for the
      purpose of this proceeding.
      In this regard, the complainant has submitted that the inclusion of producers
      located in new Member States should not be considered, given that these
      Member States were not part of the Community during the investigation period.
      Furthermore, it was argued that the producer concerned was directly related to
      one of the exporters subject to the investigation. The complainant has
      concluded that this company was shielded from the injurious effects of
      dumping and should on this ground alone be excluded from the definition of the
      Community industry.
                                            18
 ---pagebreak--- (32.) in respect of the above mentioned arguments the following is noted:
              -- in accordance with Article 4(5) of the basic anti-dumping Regulation
              the term "Community industry" is defined as including either the
              producers located in the Community as a whole or those producers
              whose collective output represents a major proportion of the total
              Community production,
              -- as outlined in recital (110) of the provisional duty Regulation, the
              Commission took the view that, with or without considering companies
              located in new Member States as part of the overall Community industry
              and taking into account a conservative approach as far as the status of
              the remaining non-cooperating producers are concerned, the
              complaining companies represent in either case a major proportion of
              the total Community production.
      In view of the above, the Council confirms that it is not necessary to address
      the question of whether or not producers located in new Member States should
      be included into the overall Community production as in the present
      investigation the complaining producers fulfil in any case the requirements of
      Article 4 (5) of the basic anti-dumping Regulation and form a major proportion
      of the total Community production.
(33.) This conclusion is reinforced by the fact that, after the end of the investigation
      period, another producer located in the Community, which did not initially
      cooperate in the investigation and which was not considered as part of the
      complaining producers at the provisional stage, approached the Commission
      indicating its support for the complaint.
(34.) Consequently, for the remainder of this document, the term "Community
      industry" refers only to that part represented by the complaining companies.
                                              19
 ---pagebreak--- VI. INJURY:
A. Cumulation of the imports originating in the countries concerned:
(35.) One Chinese producer argued that the imports from the exporting countries
       concerned by this anti-dumping proceeding should not be cumulated. This
       producer in particular stressed that imports originating in China were not of the
       same volume as those from Korea.
       As already determined at the provisional stage and as outlined in recitals (66)
       to (69) of the provisional duty Regulation, it is considered that all criteria on the
       basis of which the Community Institutions usually decide whether the imports
       from several exporting countries may be cumulated are met in the present
       proceeding . it has been established that imports from China followed trends
       comparable to those of the other exporting countries in that;
              - they were made at significant levels during the investigation period,
              - they were sold at low prices and
              - they were in competition on the Community market with the other
              imports concerned.
       Therefore, the Council confirms that it is justified and necessary to cumulate
       the imports from the countries concerned for the injury determination.
                                            20
 ---pagebreak--- B. Prices of the dumped imports:
(36.) The investigation conducted after the provisional determination has confirmed
       that prices of MWOs originating in the countries concerned were significantly
       below the prices charged by the Community industry during the investigation
       period. In order to establish the level at which prices of the exporters undercut
       those of the Community industry, the methodology used for the purposes of the
       preliminary determination has been adapted, in that it was considered
       reasonable to take into account the possibility of a difference of level of trade
       between some of the export sales made to independent customers and those
       made, on average, by the Community industry.
       The revised methodology consisted of comparing the sales prices of all sales
       of the Community industry to independent customers with sales prices of the
       producers/exporters concerned to independent customers in the Community;
       an additional amount representing 10% of the export prices being added to the
       latter prices, representing an estimate for distribution and marketing costs and
       for a profit for the independent distributors located in the Community.
(37.) The above approach is considered conservative, given that the adapted export
       prices have been compared to all sales transactions of the Community industry
       whereas some of these sales by Community industry were made at a level of
       trade comparable to that of the Community frontier stage. The results of this
       price comparison showed that for all producers located in the exporting
       countries concerned substantial price undercutting remained. The weighted
       average undercutting margin was about 20% for China, between around 12%
       to 30% for Korea depending on the producers and was around 33% for
       Malaysia and Thailand.
                                             21
 ---pagebreak--- C. Arguments raised concerning the injurious situation of the Community
industry:
(38.)  No new arguments were raised relating to the injurious situation of the
       Community industry after the imposition of provisional measures. Therefore,
       on the basis of the conclusion reached at the provisional stage in recitals (75)
       to (84) of the provisional duty Regulation, it was definitively concluded that the
       Community industry has been suffering material injury within the meaning of
       Article 4 of the basic anti-dumping Regulation.
VH. CAUSATION:
A. Effect of the dumped imports:
(39.) One Chinese producer, one producer located in the enlarged Community and
       tin importers' association alleged that at the provisional stage the Commission
       did not establish a causal link between dumped imports from the countries
       under investigation and the injury caused to the Community Industry. According
       to these parties, the Commission has merely relied on a coincidence between
       the imports and the deterioration of the situation of the Community industry.
(40.) The complainant has contested these claims and supported the provisional
       conclusions of the Commission set out in recitals (85) to (95) of the provisional
       duty Regulation and has contested the influence of any factor other than
       dumped imports on the injurious situation of the Community industry.
                                            22
 ---pagebreak--- (41.) With regard to the question of the causal link between dumped imports and the
      injury suffered by the Community industry, the Council notes the following:
      in the analysis undertaken, the Community Institutions have not merely relied
      on a coincidence in time of increased low-priced imports and the deterioration
      of the situation of the Community industry. The impact of the increase in
      volume and market share of the dumped imports and the amount by which they
      undercut the prices of the Community industry, with a particular emphasis on
      the pricing behaviour of the exporters and its consequent effect on the
      Community market has been examined in concreto.
      In this analysis it was established that sales made during the investigation
      period by the exporters concerned and by the Community industry actually
      went to the same sales channels and even customers. In the light of this and
      bearing in mind that customer loyalty is generally not very strongly developed
      for this type of product - this factor being reflected in a high price elasticity of
      demand - it was considered that the above claims are unfounded and that it
      was established that dumped imports have contributed significantly to the injury
      suffered by the Community industry.
B.    Other factors:
1.    Imports from other countries:
(42.) One Chinese producer and a producer located in Sweden stated that the loss
      in market share of one producer of the Community industry in particular was
      not due to dumped imports but to increased imports from Sweden.
                                              23
 ---pagebreak--- (43.) The Commission had provisionally concluded, as stated in recitals (89) to (90)
      of the provisional duty Regulation, that an examination of the trend in imports
      from other countries (i.e. Japan, Sweden, United States and other third
      countries) showed, overall, a declining tendency. The prices of these imports
      were found to be substantially higher than those from the countries subject to
      investigation.
      With regard to the above allegation, as stated in the provisional duty
      Regulation in recital (89) imports from Sweden taken individually increased up
      to the investigation period to reach a market share of around 8%. However, it
      was found that the average import prices of these imports were substantially
      higher than those of the exporting countries concerned by this proceeding and
      even higher than the average prices of MWOs of the Community industry.
   f
      Furthermore, the development of the market shares in individual Member
      States by the Community producer and the, Swedish producer has been
      specifically analysed, based on the information provided by the Chinese
      producer and the Swedish producer. This analysis shows that there is no
      consistent correlation between increases in market share in individual Member
      States for MWOs originating in Sweden and losses in market share for MWOs
      made by the Community producer and vice versa. Indeed, the two companies
      concerned have strongholds in entirely different Member States.
      In conclusion, it was deemed highly unlikely that the imports from Sweden have
      had a significant impact on the overall situation of the Community industry
      except that, if any, resulting from normal competition.-
                                            24
 ---pagebreak--- 2.    Behaviour of the Community industry:
(44.) One Chinese producer, one producer located in the enlarged Community and
      an importers' association alleged that the difficulties suffered by the Community
      industry can be reduced to problems encountered by one of the complaining
      companies. In particular the Chinese producer and the producer located in the
      enlarged Community have stated that this company has made wrong
      management decisions in its acquisition of a company located in the
      Community and in not renewing its model range.
(45.) In addressing the above allegations, which were not supported by any relevant
      evidence, it is considered of particular jrhportance to stress that the
      investigation carried out before and after the provisional determination has
      confirmed that indeed all four individual companies constituting the complaining
      industry have suffered material injury. The collected and verified information on
      the state of the Community industry does not contain any indication that the
      material injury suffered by this industry was due to particularly adverse results
      by one company only.
(46.) Furthermore, it is noted that the above parties have not submitted any
      information in support of their claims that would justify a change in the
      assessment outlined in recital (92) of the provisional duty Regulation,
      concerning the acquisition policy of one particular complaining producer.
                                            25
 ---pagebreak--- (47.) As far as the policy of model renewal of the complaining producer mentioned in
      the above claim is concerned, the investigation has shown that, in the three
      years between 1990 and 1992 leading to the investigation period, the
      Community producer in question launched new model ranges which during the
      investigation period were sold in substantial quantities. In any event, as has
      been stated in recital (82) of the provisional duty Regulation, the Community
      industry could not implement all its investment plans due to its deteriorating
      financial situation resulting from the depressed price situation.
(48.) One Chinese producer and one producer located in the enlarged Community
      also alleged that certain Community producers, by over-investment in an
      unrealistic level of capacity for MWO production, had suffered self-inflicted
      injury.
(49.) The evidence relating to the history of investment decisions submitted in the
      course of the present anti-dumping proceeding by the companies concerned
      was reviewed in detail. This revealed that the investment decisions concerned
      were based on independent and reliable forecasts of the size of the Community
      MWO market and on realistic targets as far as market shares in this market are
      concerned.
(50.) One Chinese producer, one producer located in the enlarged Community and
      an importers1 association submitted that during the period under consideration
      for assessing injury, other Community producers, which were not part of the
      complaining industry, had a positive performance.
                                            26
 ---pagebreak--- (51.) In response to this argument, it should be noted that, as explained in recitals
      (57) to (64) of the provisional duty Regulation, certain producers operating in
      the Community which were not excluded from the definition of Community
      production, and which did not support the complaint, were shielded from the
      injurious effect of dumped imports by having themselves imported dumped
      MWOs in substantial quantities. It is considered that any positive performance
      by such companies cannot constitute proof that dumped imports have not
      caused injury to the complaining companies.
(52.) For the reasons given in recital (32) above, it was not necessary to determine
      whether such producers' output constituted Community production for the
      purposes of determining Community industry, but it should be noted that these
      companies' positive performance tends to reinforce the conclusion that it is
      actually necessary to exclude them from the category of Community production
      for the purposes of an examination of injury. If their data were to be included in
      the evaluation of the state of the Community industry, this would distort the
      evaluation of the situation of those companies that did not benefit from
      dumping and have encountered economic difficulties.
3.    Development of the Community MWO market:
(53.) One Chinese producer and the producer located in the enlarged Community
      have further alleged that the price erosion noticed in the Community MWO
      market can be explained by factors relating to changes in the distribution of
      MWOs in general.
                                            27
 ---pagebreak---       Although the above parties have not supported their claim with evidence, it is
      considered that changes in the distribution system of MWOs might be one
      reason for a reduction in MWO sales prices. However, it should be emphasised
      that such developments do not explain the substantial level of price
      undercutting found between the export prices concerned and prices of the
      Community industry.
C.    Conclusion:
(54.) Based on the above analysis and taking into account the analysis summarised
      in recitals (85) to (95) of the provisional duty Regulation, the conclusions of
      which remain unchanged, it is considered that, on balance, it must be
      concluded that dumped imports have caused material injury to the Community
      industry.
      This conclusion is supported in particular by the findings concerning imports of
      MWOs made in increasing volumes and at prices substantially undercutting
      those of the Community industry and the findings that, to a great extent, the
      sales of the MWOs by both the exporters and the complaining producers were
      made through the same sales channels and in some cases the same
      customers.
(55.) This conclusion was reached at the definitive stage even though it cannot be
      excluded that certain other factors have also contributed to the economic • • •
      difficulties of the Community industry. It rémains the case that the injury caused
      by the dumped imports, taken in isolation, was material.
                                              28
 ---pagebreak--- V1H. COMMUNITY INTEREST:
(56.) The determination as to whether the Community interest calls for intervention in
      the present investigation was based on an appreciation of all various interests
      taken as a whole, including the interest of the domestic industry and users and
      consumers. In such an examination, the need to eliminate the trade distorting
      effects of injurious dumping and to restore effective competition was given
      special consideration.
(57.) After the imposition of provisional measures, one Chinese producer and one
      producer located in the enlarged Community stated that the imposition of
      definitive anti-dumping measures in this case would not be in the Community
      interest as such rrieasures would result in an increase of sales prices to the
      end customers. In response to this argument, it is considered that while it is
      the purpose of any anti-dumping measure that the prices for imports originating
      in the countries concerned are increased to a non-dumped or at least non-
      injurious level, it is also considered that, given the number of suppliers
      operating in this market, and given the purchasing power of the distribution
      channels in the Community, the overall price increase in the market will be
      limited as the market will continue to operate in a competitive environment.
      This conclusion is reached taking into account that, by the imposition of
      definitive anti-dumping measures, the Community industry will be allowed to
      operate under effective conditions of competition, ensuring this industry's
      presence on the Community market in the future.           .
                                             29
 ---pagebreak--- (58.) Furthermore, the producer located in the enlarged Community argued that the
      imposition of anti-dumping measures would deprive it of the opportunity to
      pursue a global production and marketing strategy as it would be forced to
      operate separately in each region of the world. This in turn would lead to
      inefficiencies and ultimately to a worsening of the situation of its Community
      based production.
      As far as the above argument is concerned, it should be pointed out that anti-
      dumping measures, perse, do not affect the globalisation strategies of
      companies, unless such strategies rely on sourcing products at dumped prices.
      In such cases, where dumping has caused injury to a Community industry, the
      companies in question would, to the detriment of other producing companies in
      the Community, in the absence of corrective measures eliminating injurious
      dumping, benefit from an unfair competitive advantage beyond any normal and
      fair advantage that globalisation might bring.
(59.) In conclusion, and taking into account the analysis outlined in recitals (96) to
      (102) of the provisional duty Regulation, it is considered that, on balance, it is in
      the general interest of the Community to impose anti-dumping measures
      concerning imports of MWOs originating in China, Korea, Thailand and
      Malaysia. Indeed, no compelling reason not to impose anti-dumping measures
      in this case has been identified.
                                           30
 ---pagebreak--- IX. UNDERTAKING:
(60.) The Commission has received an offer of an undertaking from one Chinese
      producer pursuant to Article 10 (2) of the basic anti-dumping Regulation. This
      offer has been examined carefully. In particular, attention- has been paid as to
      whether the minimum prices offered in the undertaking are such that the
      Commission can be satisfied that the injurious effect of the dumping
      determined would be eliminated, as specifically required by Article 10 (2) (b) of
      the basic anti-dumping Regulation.
      Furthermore, the Commission has assessed whether it would be feasible to
      monitor the undertaking proposed.
(61.) As far as the level of the prices offered is concerned and on the basis of the
      investigation conducted, it has been determined that the price levels proposed
      would lead to a dumping margin even higher than the one determined for the
      investigation period. In any event, it should be noted that the acceptance of
      undertakings for consumer products has historically been exceptional given,
      inter alia, the complexity of the models, the number of different types and the
      variety and the regularity with which they are upgraded or otherwise modified.
      All these considerations tend to lead to virtually insurmountable difficulties in
      monitoring. These general considerations also apply to the present case.
(62.) It was therefore considered by the Commission, after consultation, that the
      acceptance of an undertaking was not appropriate in this particular proceeding
      and the offer concerned has accordingly been rejected. The Commission has
      informed the exporter concerned accordingly.
                                            31
 ---pagebreak--- X. DUTY:
(63.) For the purpose of establishing the level of the definitive duty, the same
       methodology already applied at the provisional stage and outlined in recitals
        (103) to (108) was used taking account of the dumping margins definitively
        determined and of the amount of duty necessary to eliminate the injury
       sustained by the Community industry.
        Since it was confirmed at the definitive stage that the injury consists principally
        of price undercutting, price depression and, as a consequence, slightly
        decreasing market shares and substantial financial losses, the removal of such
        injury requires that the industry should be put in a position where prices can be
        increased to profitable levels without a continued loss of market share.
        For calculating the necessary price incxease^it was considered that the actual
        prices of these imports adjusted using the same methodology as mentioned in
        recitals (35) and (36) had to be compared to selling prices that reflect the costs
        of production of the complaining producers plus a reasonable amount of profit.
(64.) To this end, the costs of manufacturing of the complaining producers were
        increased by the SG&A costs and an amount of profit, i.e. a margin of 5% on
        turnover, which was considered to provide the minimum required to ensure the
        viability of the Community industry.
        The actual weighted average selling prices charged during the investigation
     . period by the Community industry were compared to the values constructed as
        explained above, and increased, if appropriate, in order to achieve the overall
        minimum amount of profit required. The resultant prices thus established were
      ' compared with the average prices of the dumped imports used to establish
        price undercutting.
                                             32
 ---pagebreak---       The differences between these two prices expressed on a weighted average
      basis and as a percentage of the free-at-Community-frontier price ranged from
      around 50% for China for which a single margin was established, between 35%
      and 60% for Korea depending on the exporters concerned and around 80% for
      Malaysia and Thailand.
(65.) Based on the above, definitive anti-dumping duties, expressed as a percentage
      of the free-at-Community-frontier price before CCT duty, should, in accordance
      with Article 13 (3) of the basic anti-dumping Regulation be imposed at the level
      of the dumping margins found, the dumping margins all being lower than the
      above levels of injury. Definitive duties should therefore be as follows :
                                             33
 ---pagebreak---                       China            - all imports                   12.1 %
                      Korea              Daewoo                          9.4%
                                         LG Electronics                18.8%
                                         Korea Nisshin                 24.4%
                                         Samsung Korea                   3.3 %
                                         any other imports             24.4 %
                      Malaysia :       - all imports                   29.0 %
                      Thailand :       - Acme                          14.1 %
                                       - any other imports             27.3 %
XL COLLECTION OF THE PROVISIONAL DUTIES:
(66.) In view of the magnitude of the dumping margins found for the majority of
      exporting producers and in light of the seriousness of the injury, in particular in
      light of the level of price undercutting and price underselling, it is considered
      necessary that amounts secured by way of provisional anti-dumping duties
      should be definitively collected for all companies at the level of the definitive
      duties,                                  •••••.';
HAS ADOPTED THIS REGULATION :
                                             34
 ---pagebreak---                                            Article 1
         Definitive anti-dumping duties are hereby imposed on imports of microwave
         ovens falling within CN code 85 16 50 00 and originating in the People's
         Republic of China, the Republic of Korea, Malaysia and Thailand.
         The rate of the anti-dumping duties applicable to the net, free-at-Community-
         frontier price, before CCT-duty, shall be as follows :
           Country                  Products manufactured by       Rate of      Taric
                                                                   duty %     additional
                                                                                code
People's Republic of China :                                          12.1%        -
Republic of Korea :              - Daewoo Electronics Co. Ltd.         9.4 %    8829
                                 - LG Electronics Inc.                18.8%     8830
                                 - Korea Nisshin Co. Ltd             24.4 %     8831
                                 - Samsung Electronics Co. Ltd         3.3 %    8832
      <       •
                                 - other companies                   24.4%      8833
Malaysia :                                                           29.0 %      . -
  •.
Thailand:                        - Acme Industry Co. Ltd          • 14.1 %      8836
                                 - other companies                    27.3%     8837
                                               35
 ---pagebreak--- 3.    Unless otherwise specified, the provisions in force concerning customs duties
      shall apply.
                                        Article 2
The amounts secured by way of provisional anti-dumping duty under Regulation
No. 1645/95 shall be definitively collected at the duty rate definitively imposed.
Amounts secured in excess of the definitive rate of anti-dumping duty shall be
released.
                                        Article 3
This Regulation shall enter into force on the day following its publication in the Official
Journal of the European Communities.
This Regulation shall be binding in its entirety and directly applicable in all Member
States.
Done at Brussels,
                                             36
 ---pagebreak---  ---pagebreak---                                                                    ISSN 0254-1475
                                                             COM(95) 695 final
                                              DOCUMENTS
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