CELEX: 51995PC0386
Language: en
Date: 1995-08-01
Title: Proposal for a COUNCIL REGULATION (EC) imposing a definitive anti-dumping duty on imports of plain paper photocopiers originating in Japan

COMMISSION OF THE EUROPEAN COMMUNITIES
                                      Brussels, 01.08.1995
                                     COM(95) 386 final
                           Proposal for a
                COUNCIL REGULATION (EC)
imposing a definitive anti-dumping duty on imports of plain paper
                 photocopiers originating in Japan
                  (presented by the Commission)
 ---pagebreak---  ---pagebreak---                          EXPLANATORY MEMORANDUM
 1. In August 1992, the Commission initiated a review under Articles 14 and 15 of
    Counci Regulation (EEC) No 2423/88(,), as last amended by Regulation (EC)
    No 522/94* \ of the definitive anti-dumping measures introduced in February 1987 on
    imports of plain paper photocopiers (PPCs) originating in Japan.
2.  The review found that the existing anti-dumping duty has been effective in
    significantly reducing the volume of PPC imports from Japan. On the other hand, the
    remaining import volume still represented 26% of the Community market in the
    investigation period. Those imports were, on average, highly dumped and sold at
    prices in the Community that significantly undercut the prices of the Community
    industry for comparable models. Furthermore, the dumped imports have become
    particularly injurious in that they now consist, to a much larger degree than before,
    of large PPCs, which used to be sold mainly, and profitably, by the Community
    industry. The degree of undercutting on large PPCs was twice that of small PPCs. As
    a result, the Community industry lost a large part of its market share of large PPCs
    to the dumped imports from Japan, and profitability declined considerably. On the
    whole, the Community industry could not be said to be in a better position than at the
    time of the original investigation, when the Council determined that material injury
    existed.
3.  The Commission proposes that the Council maintains the existing anti-dumping duty,
    at its current rates (which vary between 7.2% and 20%), for a new period of three
    years, until August 1998, and that it enlarges the product scope of the duty to include
    PPCs capable of operating at a speed of more than 75 copies per minute of A4 size
    paper. The maintenance of measures at their existing level and their extension to PPCs
    over 75 copies per minute is deemed necessary, but also sufficient, to counteract the
    injurious effects of dumping, especially on large PPCs. The limitation of the new
    measures to three years instead of the usual five years is considered justified by the
    exceptional length of the investigation, during which period the existing duty has
    remained in force.
(1)
    OJ N o L 209, 2.8.1988, p. 1.
(2)
    O J N o L 66, 10.3.1994, p. 10.
 ---pagebreak---                                           Proposal for a
                                COUNCIL REGULATION (EC)
             imposing a definitive anti-dumping duty on imports of plain paper
                                photocopiers originating in Japan
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    (2)
                                                 members of the European Community(1), as last
amended by Regulation (EC) No 1251/95 , and in particular Article 23 thereof,
Having regard to Council Regulation (EEC) No 2423/88, of 11 July 1988 on protection
against dumped or subsidised imports from countries not members of the European Economic
Community^, as last amended by Regulation (EC) No 522/94(4), and in particular Articles 12,
 14 and 15 thereof,
Having regard to the proposal submitted by the Commission after consulting the
Advisory Committee,
Whereas :
                                       A. PROCEDURE
(1)     On 2 August 1985, the Commission announced the initiation of an anti-dumping
        proceeding concerning imports of photo-copying apparatus originating in Japan( \ A
        provisional anti-dumping duty was imposed on 26 August 1986 by Commission
       Regulation(7)(EEC) No 2640/86(6). On 24 February 1987, by Regulation (EEC)
       No 535/87 , the Council imposed a definitive M    anti-dumping duty on imports of plain
        paper photocopiers (hereinafter referred to   as  PPCs") originating in Japan . At the
        same time, an undertaking was accepted(8) from one exporter, Kyocera, which had
        discontinued the production of PPCs, to give advance notice to the Commission should
        it decide to recommence exports to the Community.
(i)    OJNoL349, 31.12.1994, p. 1.
(2)
       O J N o L 122, 2.6.1995, p. 1.
(3)
        OJNoL209, 2.8.1988, p. 1.
(4)
        O J N 0 L 6 6 , 10.3.1994, p. 10.
(5)
       OJNoC 194, 2.8.1985, p. 5.
(6)
        OJNoL239, 26.8.1986, p. 5.
(7)
        O J N o L 54, 24.2.1987, p. 12.
(8)
        Commission Decision 87/135/EEC, OJ No L 54, 24.2.1987, p. 36.
 ---pagebreak--- (2)  Following the introduction of these measures, a number of investigations were initiated
     under Article 13(10) of Regulation (EEC) No 2423/88 in respect of the production or
     assembly of PPCs in the Community by Japanese exporters. These investigations
     resulted in undertakings being accepted by the Commission from exporters whose PPC
     models, produced or assembled in the Community, had originally been found to have
     a weighted average value of parts or materials of Japanese origin of more than 60%
     of the total value of all parts or materials(9).
(3)  Following the publication in August 1991 of a notice(10) of the impending expiry of
     the measures in force in respect of imports from Japan, the Commission received a
     request for a review lodged by the Committee of European Copier Manufacturers
     (CECOM) allegedly on behalf of producers representing a major proportion of the
     total Community production of PPCs. This review request was limited to PPCs with
     a capacity to operate at a speed of up to 75 copies per minute of A4 size paper. In
     accordance with Article 15(3) of Regulation (EEC) No 2423/88, it contained evidence
     purporting to show that the expiry of the anti-dumping measures in force would again
     lead to injury or threat thereof. The review request also covered the undertakings
     given under Article 13(10) of Regulation (EEC) No 2423/88.
     On 16 July 1992, CECOM submitted a supplement to its review request, asking for
     the inclusion in the review of PPCs capable of operating at a speed of more than
     75 copies per minute of A4 size paper. This supplementary request contained evidence
     purporting to show that such PPCs originating in Japan were being dumped and were,
     through the effect of dumping, causing injury to the Community industry.
(4)  On 14 August 1992, in a notice published in the Official Journal of the
     European Communities(ll), the Commission announced the initiation of a review
     investigation in accordance with Articles 14 and 15 of Regulation (EEC) No 2423/88.
(5)  The Commission notified the exporters and importers known to be concerned, the
     representatives of the exporting country and known producers in the Community, and
     gave the parties directly concerned the opportunity to make their views known in
     writing and to request a hearing.
(6)  All complainant producers in the Community replied to the questionnaire and made
     their views known in writing. In addition, some information was received from
     Kodak Ltd, Hemel Hempstead, United Kingdom. Almost all exporters together with
     their related importers and production facilities in the Community replied to the
     questionnaire and made their views known in writing. The only known exporter in
     Japan that did not reply to the questionnaire was Sanyo Electric Co., Osaka. Two other
     Japanese companies, Kyocera Corp., Kyoto, and Fuji Xerox Co., Tokyo, declared they
     had not exported PPCs to the Community during the investigation period of the
     review. Kyocera Corp. indicated that it had not produced PPCs since 1986 and asked
     to be relieved of its undertaking to give the(,2)Commission sufficient notice should
     it recommence exports to the Community . One Japanese trading company,
(9)
      See Council Regulation (EEC) No 3205/88, OJ No L 284, 19.10.1988, p. 36;
      Commission Decision 88/519/EEC, OJ No L 284 of 19.10.1988, p. 60; Commission
     Decision 88/638/EEC, OJ No L 355, 23.12.88, p. 66; Council Regulation (EEC)
     No 4017/88, OJ No L 355, 23.12.1988, p. 1; Commission Decision 89/116/EEC,
      OJ No L 43, 15.2.1989, p. 54; Council Regulation (EEC) No 359/89, OJ No L 43,
      15.2.1989, p. 1; Commission Decision 89/309/EEC, OJ No L 126, 9.5.1989, p. 38;
      Commission Decision 90/47/EEC, OJ No L 34, 6.2.1990, p. 28.
(10)  OJNoC 222, 27.8.1991, p. 2.
(11)  OJNoC 207, 14.8.1992, p. 16.
(12)  See footnote 8.
 ---pagebreak---     Mitsui Co Ltd., Tokyo, also replied to the questionnaire. Three unrelated importers,
    Agfa Gevaert N.V., Mortsel, Belgium, Infotech Europe B.V., 's-Hertogenbosch, the
    Netherlands, and Lanier Europe B.V., Sassenheim, the Netherlands, replied to the
    questionnaire and made their views known in writing. All parties who so requested
    were granted a hearing.
(7) The Commission sought and verified all information it deemed necessary for the
    purpose of a determination and visited the premises of the following companies:
    -   complainant producers in the Community:
              Océ Nederland      B.V.,   with   headquarters  and   factory  in  Venlo,
              the Netherlands,
              Olivetti-Canon Industriale S.p.A., with headquarters and factory in Ivrea,
              Italy,
              Rank Xerox Ltd. with headquarters in Marlow, United Kingdom, and
              factories in Mitcheldean, United Kingdom, Venray, the Netherlands, and
              Lille, France;
        producers/exporters in Japan:
              Canon Inc., Tokyo,
              Copyer Co. Ltd, Tokyo,
              Konica Corp., Tokyo,
              Matsushita Electric Industrial Corp., Osaka,
              Minolta Camera Co. Ltd. (since re-named Minolta Co. Ltd.), Osaka,
              Mita Industrial Co., Osaka,
              Ricoh Co. Ltd., Tokyo,
              Sharp Corp., Osaka,
              Toshiba Corp., Tokyo;
    -   related importers in the Community:
              Canon Deutschland GmbH, Neuss, Germany,
              Canon France S.A., Le Blanc Mesnil, France,
              Canon (UK) Ltd., Wallington, United Kingdom,
              Develop Dr. Eisbein GmbH & Co., Gerlingen, Germany,
              Gestetner Holdings PLC, London, United Kingdom,
              Konica Bureautique S.A., Nanterre, France,
              Konica Business Machines International GmbH, Hamburg, Germany,
              Matsushita Business Machines (Europe) GmbH, Neumtinster, Germany,
 ---pagebreak---               Minolta France S.A., Carrières-sur-Seine, France,
              Minolta GmbH Business Equipment Operation, Langenhagen, Germany,
              Minolta Italia s.r.l., Buccinasco, Italy,
              Minolta UK Ltd., Milton Keynes, United Kingdom,
              Mita Deutschland GmbH, Steinbach, Germany,
              Mita Europe B.V., Hoofddorp, the Netherlands,
              Mita Italia S.p.A., Agrate, Italy,
              NRG Italia S.p.A, Milano, Italy,
              NRG-Nashua France S.A., Créteil, France,
              Panasonic Deutschland GmbH, Germany,
              Panasonic Europe Ltd., Uxbridge, United Kingdom,
              Panasonic Italia S.p.A., Milano, Italy,
              Panasonic U.K. Ltd., Bracknell, United Kingdom,
              Ricoh Deutschland GmbH, Eschborn, Germany,
              Ricoh Europe B.V., Amstelveen, the Netherlands,
              Ricoh France S.A., Neuilly-sur-Seine, France,
              Ricoh Italia, S.p.A., Verona, Italy,
              Selex Europe B.V., Amstelveen, the Netherlands,
              Selex Italia S.p.A., Milano, Italy,
              Selex (UK) Ltd., Croydon, United Kingdom,
              Sharp Electronics (Europe) GmbH, Hamburg, Germany,
              Sharp Electronics (UK) Ltd., Manchester, United Kingdom,
              Toshiba Europa GmbH, Neuss, Germany,
              Toshiba Informationssysteme (Deutschland) GmbH, Neuss, Germany,
              Toshiba Information Systems (UK) Ltd., Weybridge, United Kingdom,
              Toshiba Systèmes (France) S.A., Puteaux, France;
         unrelated importers in the Community:
              Agfa Gevaert N.V., Mortsel, Belgium.
(8) The investigation of dumping covered the period from 1 July 1991 to 30 June 1992
    (investigation period).
 ---pagebreak--- (9)  Owing to the unusual complexity of a number of legal, technical and policy issues
     dealt with by the investigation, and the very large volume of data and submissions
     received from parties concerned, often requiring time limits to be extended, the
     investigation significantly exceeded the period of one year recommended for
     investigations in Article 7(9) (a) of Regulation (EEC) No 2423/88. For similar reasons,
     it had also already taken the Commission close to six months following the end of the
     five-year period of operation of the original measures, 24 February 1992, to initiate
     this review investigation. In accordance with Article 15(3) of Regulation (EEC)
     No 2423/88, the original measures have remained in force during this entire period.
(10) All parties concerned were informed of the essential facts and considerations on the
     basis of which it was intended to recommend the imposition of definitive measures.
     They were also granted a period within which to make representations subsequent to
     these disclosures.
         B. PRODUCT UNDER CONSIDERATION AND LIKE PRODUCT
                                   1. Product concerned
(11) In accordance with Article 7(9)(b) of Regulation (EEC) No 2423/88, the anti-dumping
     proceeding which was initiated on 2 August 1985 concerning imports of photocopying
     apparatus originating in Japan, continues as long as the measures have not expired or
     been repealed or terminated. There is therefore no change in the product concerned
     by the proceeding. The product was defined as "photo-copying apparatus incorporating
     an optical system", "formed by four basic elements, i.e. image processing, photo-
     conducting or developing, transfer or fixing and paper transport system"(13), or in short
     as "plain paper photocopiers (PPCs)"(14).
(12) As the name indicates, such copiers use plain paper instead of coated paper to make
     copies. PPCs have now almost entirely replaced coated paper copiers for normal
     applications. Whereas coated paper copiers use a direct process to transfer the image
     of an original document onto a chemically treated sheet of paper, PPCs are based on
     an indirect process, whereby the optical system (comprising mainly a light source, a
     condenser, lenses, mirrors, prisms or an array of optical fibres) projects the image of
     the original document onto a light-sensitive surface (usually a drum or plate). The
     image is then developed (often by means of a powdered dye), transferred onto
     ordinary paper (normally by an electrostatic field) and fixed thereon (by heat and/or
     pressure). Coated paper or direct process copiers, falling within CN code 9009 11 00,
     are therefore a product different from the PPCs which are the subject of this
     proceeding.
     PPCs often consist of several separate modules, which are assembled only at the
     customer's premises. In such cases, all those modules are part of the PPC, whether
     imported together or separately, unless they qualify as truly optional equipment not
     included in the standard configuration of the PPC.
(13) The above product description of PPCs entails that digital copiers (black and white or
     full colour) do not fall within the scope of the product which is the subject of the
     proceeding. Even if the scanner used by a digital copier to read the original document
     could be considered an "optical system", a digital copier does not "project" an image
     onto a light-sensitive' surface, but rather re-composes the original image, after it has
     been transformed by the image processor into digital signals, into a new image, with
     or without changes to the original image. It is this new image which is transmitted by
(13)
     See notice of initiation of the proceeding (footnote 5).
(,4)
     Recital 1 of Regulation (EEC) No 2640/86, see footote 6..
 ---pagebreak---      a laser onto a light-sensitive surface. When digital copiers are connected to computers,
     they are not even dependent on an original document for their input.
                                   2. Product investigated
(14) In terms of its product scope, a review investigation may cover the entire product
     concerned by the proceeding. For the purpose of this review it was, however, not
     considered necessary to investigate a number of product types which had already been
     exempted from the original measures and which the Community industry did not
     request to be included in the review. These comprised analogue full-colour copiers,
     aperture card reader printers and microfilm printers, whiteboard copiers and
     large-format copiers capable of making copies of A2 size and larger from originals
     larger than A2 size(15). This means that highlight PPCs, which reproduce only a few
     colours to draw attention to certain segments of a document, and A2 PPCs, capable
     of making A2 size copies (but not larger) from A2 size originals or larger, were
     included in the review investigation.
(15) PPCs capable of operating at a speed of more than 75 copies per minute of A4 size
     paper were included in the review investigation, as requested by the Community
     industry. These products are clearly PPCs as defined in the product description of the
     proceeding*16). The only reason for their exclusion from the original measures was that
     at the time of the original investigation segments(17) 5 and 6 were not imported from
     Japan and segment 6 was not produced by the Community industry. In its
     supplementary request for a review, CECOM submitted sufficient evidence that
     segment 5 PPCs had since been imported from Japan at dumped prices and were
     causing injury to the complainant Community industry, producing in the adjacent
     segments 4 and 6, warranting the inclusion of PPCs with a capacity of over 75 copies
     per minute of A4 size paper within the scope of the review investigation.
     This inclusion was commented on by several exporters and importers. They contested
     the view that the product scope of an Article 15 review can be as large as the product
     definition of the proceeding and considered that such a review should be limited to the
     product types covered by the measures. However, the design, production and
     marketing of particular product types often evolves over time, with new types still
     being essentially the same product. For PPCs, for instance, the market trend has been
     towards more productive, larger and faster types of PPCs, the essential characteristics
     of which are, however, still the same. If the Commission were prevented from
     investigating new types of the same product in an Article 15 review, simply because
     those types were not yet produced at the time of the original investigation, a new
     proceeding would have to be opened.
(,5)
     See the product descriptions in Article 1(4) of Regulation (EEC) No 535/87
(,6)
     See for instance the first indent of Article 1 (4) of Regulation (EEC) No 535/87, which
     refers to them as being part of "those products defined in paragraph 1", paragraph 1
     covering "plain paper photocopiers incorporating an optical element".
(17)
     The segmentations used for this review are the generally accepted Dataquest
     segmentations in force in July 1992, as follows:
     personal copier            up to 12 copies per minute, minimally featured
     segment 1                  up to 20 copies per minute, with features such as
                                reduction/enlargement, zoom
     segment 2                  from 21 to 30 copies per minute
     segment 3                  from 31 to 44 copies per minute
     segment 4                  from 45 to 59 copies per minute
     segment 5                  from 70 to 90 copies per minute
     segment 6                  91 and more copies per minute.
                                              8
 ---pagebreak---      Conducting two separate proceedings on the same product originating from the same
     country would be illogical, contrary to the system envisaged by Regulation (EEC)
     No 2423/88, and conducive to incongruous results. In the case of PPCs from Japan,
     the review of the existing measures under Article 15 was opened and conducted in
     accordance with Article 14 as well, based on the view that Article 15 should, indeed
     can only, be read in conjunction with Article 14. Reviews of existing measures under
     these provisions may lead to the amendment of those measures. If, following a review,
     existing measures could not be amended to include within the scope of those measures
     new types of the same product, the effectiveness of those measures would be impaired.
     Several exporters also commented that the Commission had not re-consulted the
     Advisory Committee during the time between CECOMs supplement to its review
     request and the initiation of the review. However, the proceeding on imports of PPCs
     from Japan covers all types of PPCs, irrespective of their copy speed, and the
     Advisory Committee was duly consulted on the basic Commission proposal to initiate
     an Article 15 review in respect of this proceeding. The precise parameters of the
     investigation were not, at that time, a matter of discussion, but were clearly indicated
     in the notice of initiation, and the inclusion of PPCs over 75 copies per minute was
     subsequently discussed in the Advisory Committee on several occasions before any
     conclusions on the scope of possible measures were drawn. Private parties have their
     own extensive procedural rights, and all comments made by them in the course of the
     investigation on the types of product covered by the investigation and by possible
     measures were carefully considered before any conclusions were drawn.
                                     3. Like product
(16) With respect to the question whether the PPCs sold by the Japanese producers and
     exporters concerned on the Japanese market and in the Community constitute a like
     product with the PPCs sold in the Community by the Community industry, it was
     established in the course of the review investigation that the basic technical
     characteristics (as described in recitals 11 and 12) of all PPCs investigated were
     identical or closely resembled one another within the meaning of Article 2(12) of
     Regulation (EEC) No 2423/88. Furthermore, in terms of their application, at least - but
     not necessarily only - PPCs in adjoining segments compete with each other for the
     same users and should be considered like products.
(17) Japanese segment 5 PPCs, which were not produced by the Community industry
     during the investigation period, were, on the above analysis, considered to be like
     products to the segment 4 and segment 6 models which the Community industry did
     produce. One exporter in particular argued that there was no competition between
     Japanese segment 5 PPCs and the segment 4 and segment 6 PPCs produced by the
     Community industry, based notably on alleged differences in copy speed, copy volume
     and usage. However, it was found in the course of the investigation that the actual
     monthly copy volumes of segment 4 PPCs of the Community industry were frequently
     similar to those of Japanese segment 5 PPCs. Also, the copy speed of the latter was
     often not much higher in complex applications such as duplex copying than that of the
     segment 4 PPCs of the Community industry. As for usage, no fundamental difference
     was observed between segment 4 models of the Community industry and Japanese
     segment 5 models. With respect to the Community industry's segment 6 PPCs, it may
     be true that those PPCs are more economical than Japanese segment 5 PPCs when
     used in central reproduction departments with high copy volumes. But no convincing
     evidence was supplied that Japanese segment 5 PPCs cannot also be used, even though
     perhaps less efficiently, for processing of high copy volumes, whether centralized in
     a reproduction department or decentralized in office corridors. Certainly for customers
     with a copy volume in between high and very high, there is thus a real choice between
     a segment 5 and a segment 6 PPC. Furthermore, evidence was submitted by another
     Japanese exporter that in fact fierce competition existed, especially in the context of
     large bids and tenders, between a "centralized" hardware package, including segment 6
     PPCs, offered by the Community industry to fulfil the client's copying needs and a
 ---pagebreak---       "de-centralized" hardware package, including segment 5 and segment 4 PPCs, offered
      by Japanese companies to fulfil exactly the same copying needs. In this sense,
      competition between PPCs even extends beyond adjoining segments. On the whole,
      therefore, the strong growth in sales of segment 5 PPCs has been at least partly at the
      expense of sales of segment 4 and segment 6 PPCs, in the sense that in the absence
      of segment 5 models, customers with the need for such a significant copy volume
      could not normally have foregone buying a PPC and would have had to buy either a
      segment 4 or a segment 6 model.
      As for Japanese segment 6 PPCs, one Japanese company had already started exporting
      a segment 6 model from Japan to the Community and had commenced marketing it
      here during the investigation period of the review. These imports competed, on the
      above analysis, with the Community industry's PPCs in segments 6 and 4.
(18)  Japanese personal copiers, the smallest PPCs on the market, which were not produced
      by the Community industry in the investigation period, should be considered a like
      product to the segment 1 PPCs produced by the Community industry. These two
      segments overlap in terms of copy speed, the remaining difference between them
      merely being that segment 1 PPCs tend to have more features, for example the
      possibility for reduction and enlargement, and sometimes a larger copy volume
      capacity. When technical differences are so small, customer choice depends heavily
      on pricing.
                              C. COMMUNITY INDUSTRY
                                       1. Introduction
(19)   The question whether a Community industry existed and, if so, which producers were
      part thereof, was important in this review for two reasons: Procedurally, interested
       parties requesting a review under Article 15 of Regulation (EEC) No 2423/88 must,
      under paragraph 3 of that Article, show that the expiry of the measures would lead
       again to injury or threat of injury to a Community industry. Substantively, the
       likelihood of recurrence of injury or threat thereof must, in the review investigation,
       be assessed in relation to the Community industry, as defined in Article 4(5) of
       Regulation (EEC) No 2423/88. Some exporters and importers questioned whether the
       complainant requesting the review represented Community producers whose collective
       output of PPCs constituted a major proportion of the total Community production of
       PPCs, within the meaning of Article 4(5), and whether therefore the injury assessment
       should be limited to those producers.
                 2. The Community industry in the original investigation
(20)   When the proceeding on PPCs was launched in August 1985, the Community industry
       consisted of 5 producers: Develop Dr. Eisbein GmbH, Germany, Océ Nederland B V,
       the Netherlands, Ing. C. Olivetti & C. S.p.A, Italy, Rank Xerox Ltd, United Kingdom
       and the Netherlands, and Tétras S.A., France. Together they constituted CECOM
       In May 1986, a majority of the shares in Develop was acquired by one of the
       Japanese exporters, and Develop was excluded from the Community industry for the
       purpose of the injury determination of the original investigation. Japanese subsidiary
       companies producing photocopiers in the Community were also excluded118)
        In November 1986, another Japanese exporter took a minority share in Tétras, which
        did not prevent Tétras from remaining part of the Community industry09*. Since then,
        however, Tétras has stopped producing or selling PPCs.
 (18)   Recital 62 of Regulation (EEC) No 2640/86, see footnote 6.
 (19)   Recital 68 of Regulation (EEC) No 535/87, see footnote 7.
                                              10
 ---pagebreak---           The decision in the original investigation to accept Rank Xerox, Océ and Olivetti as
          part of the Community industry was reached notwithstanding the fact that all three of
          them imported part of their range of PPC models from Japan. In addition, Rank Xerox
          had a 50% share holding in one of the Japanese exporters, and had a relatively low
          percentage of EC added value for its production of small PPCs in the UK. The
          Council's conclusions on Community industry in the original investigation, both in
          respect of retaining the complaining companies as part of the Community industry and
          of excluding Japanese subsidiaries producing in the Community from the Community
          industry, were upheld by the European Court of Justice(20). In doing so, the Court
          emphasized that the Community authorities exercise a margin of appreciation in this
          respect, on a case-by-case basis, by reference to all the relevant facts.
                     3. The Community industry in the review investigation
     (21) The request for the review was submitted on behalf of the three remaining members
          of CECOM, Rank Xerox, Océ and Olivetti.
     (22) Rank Xerox's claim to be part of the Community industry has strengthened since the
          original investigation. It neither imported nor sold PPCs from Japan in the Community
          during the investigation period of the review. It significantly increased the percentage
          of Community added value for its production of small PPCs in the United Kingdom.
          Its company-wide Community added value, including production of high-speed PPCs
          in France, was also substantially higher than in the original investigation, at such a
          level that its Community origin is beyond any doubt. Rank Xerox is therefore still to
          be regarded as part of the Community industry.
     (23) Following the original investigation, Océ has maintained a significant level of
          production in the higher speed segments, with a very high Community added value,
          guaranteeing Community origin. But it did not succeed in extending its own-
          manufactured product range into the lower speed segments, where it continues to be
          supplied on the basis of an OEM (original equipment manufacturing) arrangement with
          a Japanese company. These OEM PPCs represent a minor, although not insignificant,
          part of Océ's PPC turnover in the Community. However, it was observed during the
          review investigation that it is now quite common for producers, including producers
          in Japan, to buy part of the extensive model range required by consumers from other
          producers. In addition, during the investigation period of the review the large majority
          of Océ's OEM PPCs were no longer supplied from Japan, but from a third country not
          subject to the review (the correct origin of which was confirmed). Thus, the number
          of PPCs which Océ imports from Japan has sharply decreased since the original
          investigation. Océ could, therefore, as in the original investigation, be regarded as part
          of the Community industry.
(24)      In 1987, Olivetti shifted its entire PPC production to a newly-created joint venture
          with Canon, Olivetti-Canon Industriale (OCI), established at the old Olivetti premises
          in Ivrea, Italy. In this joint venture Olivetti holds half of the shares plus one. Olivetti's
          position as a member of CECOM was clarified by a letter from OCI of 15 October
          1992, in which it was confirmed that OCI, by a decision of its Board of Directors of
          22 June 1992, delegated to Olivetti the right to represent OCI for the purpose of this
          anti-dumping proceeding. OCI produces PPCs in segment 1, which are sold through
          the Olivetti and Canon sales channels. The Community added value of these PPCs is
          sufficient to ensure Community origin.
     (20)
          See for instance Case C-156/87, Gestetner Holdings PLC v Council and Commission.
          [1990] ECR 1-781, paras. 41-61.
                                                   11
 ---pagebreak---      The review investigation showed that OCI, rather than Olivetti, should be considered
     as a "producer" of PPCs within the meaning of Article 4(5) of Regulation EEC
     No 2423/88. OCI is an independent legal entity in charge of the actual manufacturing
     of PPCs. Olivetti is a major, but not dominant, shareholder in this company. It is one
     of OCI's two sales outlets, and is its legal representative for the purpose of the review.
     But Olivetti does not itself "produce" PPCs.
     It was considered that there was no need to exclude OCI from the Community
     industry. It is true that 50% of the shares minus one in OCI are owned by Canon, one
     of the companies exporting the PPCs from Japan that were investigated in the review
     But there was no reason to believe that OCI, which is jointly controlled by Canon and
     Olivetti, which claimed the protection offered by Regulation (EEC) No 2423/88
     against imports of PPCs from Japan, which did not import any PPCs from Japan, and
     which granted full cooperation to the review investigation, behaved in a way that was
     different from that of Rank Xerox or Océ, or in any way that would be liable to
     render the findings of the investigation incorrect or unreliable.
     It was, however, necessary to limit the injury determination for OCI to the production
     for and sales made through the Olivetti sales channel. This was because Canon did not
     provide the information necessary to permit the Commission to investigate OCFs sales
     through the Canon sales channel, and because sales information from Canon, one of
     the exporters of PPCs from Japan, could in any case not be taken into account in this
     review for the purpose of determining injury to the Community industry. As for
     Olivetti, although the majority of the PPCs it sold in the Community in the
     investigation period were sourced from Canon, in accordance with the normal
     commercial strategy of offering a complete range of models, these PPCs did not
     originate in Japan. In any case, sales transactions between OCI and Olivetti were
     ignored as being transfers between related parties and data on cost of production and
     sales of OCl-produced PPCs by Olivetti to unrelated customers were established
     through verifications.
(25) Following the introduction of definitive anti-dumping duties on imports of PPCs from
     Japan in 1987, almost all Japanese exporters established or expanded production
     facilities in the Community (in France, the United Kingdom and Germany)
     As opposed to OCI, all of these production facilities in the Community are 100% or
     majority owned by exporters of PPCs from Japan, and none of them joined the review
     request. It was considered that, as the review concerned imports from Japan, these
     production facilities, the commercial behaviour of which was determined by the parent
     companies in Japan under investigation and which did not support the review request,
     had to be excluded from the Community industry, as their behaviour was shown to be
     different from that of producers in the Community that were not related to Japanese
     exporters.
                        4. Conclusion on the Community industry
(26) In conclusion, for the purpose of this review, the Community industry consisted of
     Océ, OCI and Rank Xerox. The output of these Community producers, limited for OCI
     to the portion produced for and.sold through Olivetti, represented the near totality of
     Community production of the like product, given that the production facilities
     majority-owned by Japanese exporters had, for the purpose of this review, to be
     excluded from Community industry. This exclusion entailed that their PPC production
     in the Community, whether or not having sufficient Community added value to be of
     Community origin, did not qualify as Community production, nor did they qualify as
     Community producers, within the meaning of Article 4(5) of Regulation (EEC)
     No 2423/88, for the purpose of this review. Community production was the production
     of the Community industry and of other producers in the Community that were not
     excluded, but that chose not to support the review. The only other possible
     Community producer in this review was Kodak, with a factory in Germany. AJthough
     Kodak supplied information in response to the Commission's questionnaire, it did not
                                              12
 ---pagebreak---       participate in the investigation as part of the Community industry, and it is uncertain
      whether its limited PPC operations in the Community would qualify as production.
      The volume of PPCs involved was, in any case, quite small.
        D. THE PRESENT SITUATION IN THE COMMUNITY MARKET
                                       1. Introduction
(27) In order to establish whether the expiry of the measures in force would lead again to
     dumping and injury or threat of injury, it was first necessary to examine the present
     economic situation of the Community industry. This analysis consists of three parts.
     The first part briefly recollects the economic situation of the Community industry at
     the time of the original investigation. In a second part, developments in that situation
     between 1988 and the end of the investigation period are analysed in detail. Finally,
     those recent developments are compared with the situation at the time of the original
     investigation and a conclusion is drawn on the state of the present economic situation
     of the Community industry.
              2. Situation of the Community industry at the time of the
                                    original investigation
(28) In the original investigation period (1 January 1985 to 31 July 1985), the Community
     market share of the Community industry for its own-manufactured PPCs had dropped
     from 21% in 1981 to 11.2%. Price undercutting in the form of the sale of more
     highly-featured models imported from Japan at prices comparable to or below those
     of lesser-featured Community industry models was found. Price depression was taking
     place. The PPC hardware profitability of the Community industry had decreased from
     8% net profit before tax in 1983 to 4% in the investigation period, while the target
     profit for the Community industry had been determined at 12%. Taking these elements
     into account, the Council considered that material injury to the Community industry
     existed.
                    3. Current situation of the Community industry
     Introduction
(29) The indicators for the Community industry analysed below relate to the period from
      1988 to the end of the investigation period of the review (1 July 1991 to 30 June
     1992). They pertain to the own-manufactured PPCs of the Community industry.
     Refurbishing (the re-working of existing models taken back from the field with a view
     to placing them again in the market) was included in the data. Data for OCI were
     limited to production for and sales via Olivetti.
     Production, production capacity, utilization of capacity, stocks
(30) Production of the Community industry decreased by 16% from 226 480 units in 1988
     to 190 375 units in the investigation period. Over the same period, the Community
     industry decreased production capacity by 29%. As a result of this, capacity utilization
     improved 13% to a level of 81% in the investigation period, based on one work shift
     of 8 hours. Stocks increased by 7%.
                                             13
 ---pagebreak---      Employment, investments. R&D expenses
(31) The number of manufacturing personnel employed by the Community industry
     increased by 13%, reflecting a gradual shift to the manufacturing of larger and more
     complex PPCs and environmental concerns resulting in an increasing level of activity
     in refurbishing existing models, a procedure which is relatively labour-intensive The
     overall level of employment increased by 4%, to a total of 16 549 people in the
     investigation period (excluding suppliers to the Community industry). The level of
     investment of the Community industry decreased from 3% of turnover in 1988 to
     2.7% of turnover in the investigation period. Over the same period, R&D expenses
     increased from 5.3% of turnover to 5.4% of turnover.
     Sales volume and market share
(32) The number of placements made by the Community industry decreased 1%, from
      141 477 units to 140 186 units, in a Community market which expanded by 24% The
     market share of the Community industry consequently decreased by a fifth, from
      15.4% to 12.4%, measured in units. Weighting the number of units placed on the
     market by their copy volume, which takes account of differences between small and
     large PPCs, the market share of the Community industry was still 29% in the
     investigation period, but down by a sixth from 34.4% in 1988. Particularly notable
     was the decrease in the Community market share of the Community industry for
     medium-large PPCs, in which it used to have a strong market position and which
     formed a major source of profits. In segment 4, for instance, the market share of the
     Community industry decreased from 64.4% in 1988 to 42.1% in the investigation
     period, a dramatic drop of a third.
     Price development
(33) The measurement of PPC price developments in the Community over time is to some
     extent necessarily speculative, due to the lack of information on actual sales prices
     (as opposed to list prices) for the years prior to the investigation period, the rapid
     succession of PPC models, with changes in features, and the need to take account of
     developments in production costs, inflation and exchange rates. What can be observed,
     however, is that between 1988 and the investigation period, there were a number of
     instances where Japanese companies introduced new models with more features, or
     more advanced features, at list prices below those of the old models In other cases,
     list prices were kept stable for several years, despite inflation and appreciation of the
     yen. As for the Community industry, one company registered decreases in its list
     prices of between 21 and 29% for the period between 1988 and the investigation
     period, and another decreases in revenues for cost per copy contracts of 24%, as
     adjusted for inflation. The third Community producer showed a mixture of list price
     decreases and increases, with the decreases centred more on lower segment models
     All in all, therefore, there appears to have been a downward price spiral, in which
     most if not all companies participated, leading to price depression
     Profitability
(34) This price depression is reflected in the development of the profitability of the
     Community industry. While Community industry's turnover on own-manufactured
     PPCs increased by 3% from 1988 to the investigation period, its return on those sales
     decreased by 76%, from a weighted average level of 11.1% in 1988 to 2.7% in the
     investigation period. The profitability of the entire photocopier business of the
     Community industry, including service, consumables, spare parts, and financing,
     decreased by 42% from a weighted average level of 11.1% in 1988 to a level of 6.4%
     in the investigation period. These figures demonstrate that, starting from the same
     level of profitability in 1988, sales of own-manufactured PPC hardware have become
     much less profitable than the accompanying sales of maintenance contracts, financing
                                             14
 ---pagebreak---       contracts, paper, toner, etc. This suggests that price competition on sales of PPC
      hardware has become especially fierce.
      Some exporters argued that the profitability of the Community industry should be
      evaluated on the basis of their overall photocopier business, and not just on sales of
      PPCs. Several observations should be made in this respect First, the other elements
     involved in the overall photocopier business, such as the servicing, consumables, spare
      parts and financing elements mentioned above, are not the subject of this investigation.
      Secondly, the profit figures used for normal value are based on sales of PPCs only,
     and might have been higher, leading to a finding of more dumping, had they been
     based on the overall photocopier business. Indeed, in the original investigation, several
     exporters insisted that the Commission should base profitability for normal value on
     sales of PPC hardware only. The Commission then adopted this approach at their
     request, and, with a view to consistency, applied it also for the injury determination.
     The same approach was duly maintained in the review investigation. Finally, if the
     Community industry were not allowed to expect a reasonable return on the investment
     it has made to produce PPCs, it would have no incentive to continue manufacturing.
     Instead, the Community producers would probably become OEM distributors, merely
     selling and servicing PPCs produced by Japanese companies. It was therefore
     considered that a reasonable return should be available on the manufacture and sale
     of PPCs as such.
     Some exporters and importers also argued that the profitability of the Community
     industry had improved after the end of the investigation period to such an extent that
     the Community industry was no longer in a precarious situation. Events after the end
     of the investigation period are not normally taken into account, as the investigation
     would otherwise never end. However, given the unusual length of the investigation,
     this particular claim was, exceptionally, checked. It was found that while the overall
     profitability of the Community industry had improved somewhat, in line with the
     general improvement in the economy in the Community, profitability on sales of PPCs
     continued to lag far behind. The findings for the investigation period therefore still
     provided a reliable basis for the conclusion drawn below.
         4. Conclusion on the current situation of the Community industry
(35) Several key indicators of the economic performance of the Community industry
     deteriorated significantly from 1988 to the end of the investigation period, such as
     production (down 16%), market share (down from 15.4% to 12.4%), and PPC
     hardware profitability (down from 11.1% to 2.7%).
     Comparing the injury data of the original investigation period with those of the review
     investigation period, it was observed, first, that the size of the Community market
     expanded over this period by 75% from 53 913 units placed per month (in ten
     Member States) to 94 286 units placed per month (in twelve Member States) In
     comparison with this market expansion, the sales in the Community of Community
     industry's own-manufactured PPCs increased by 94%, from 6 016 units per month to
     11 682 units per month. The market share in the Community of the Community
     industry for its own-manufactured PPCs consequently increased from 11.2% to 12 4%,
     measured in units. However, this gain in market share was won at the expense of a
     reduction in profits, down from 4% net profit before tax on PPC hardware in the
     original investigation period to 2.7% in the review investigation period.
                                           15
 ---pagebreak---       In this capital-intensive industry which is currently developing major new successor
     products to PPCs such as digital copiers and multi-purpose office machines, both
     reasonable profits and significant market shares are important to ensure that the
     necessary investments in R&D and production facilities can be made in order to
     remain viable in the medium term. Comparing the original investigation period, when
     the Council determined that material injury existed, with the investigation period of
     the review, it could not, on the whole, be said that the Community industry had come
     to be in a better position.
            E. THE BEHAVIOUR OF THE EXPORTERS CONCERNED
                                       1. Introduction
(36) It was also necessary to examine the behaviour of the exporters concerned In this
     respect, one exporter argued that for the purpose of determining whether the expiry
     of the measures in force would lead again to dumping and injury or threat of injury,
     its allegedly small and not well-known exports should not be cumulated with those of
     the other exporters. It must be observed, however, that, in principle, anti-dumping
     proceedings apply to imports from countries and not to individual exporters. Also, the
     impact of the dumped imports from the exporters concerned on the Community
     industry should be assessed globally, as every sale lost by Community industry to
     dumped imports hurts Community industry equally, whether it was lost to a small
     exporter or a large one. This particular exporter, whose sales to Community customers
     in any case represent as much as around 10% of total Community sales of Japanese-
     origin PPCs, would thus be unfairly favoured if it were treated differently from the
     other Japanese exporters.
                            2. Volume of imports from Japan
(37) The situation was found to be as follows:
     In absolute terms
     Between 1988 and the investigation period, the volume of imports from Japan
     decreased 16%, from 351 970 units to 294 195 units per year.
     Relative to consumption
     During the same period, the total number of placements of PPCs in the Community
     per year is estimated to have increased by 24% from 919 580 units to 1 137 910 units
     The market share of imports from Japan thus decreased from 38.3% in 1988 to 25 9%
     in the investigation period.
     Relative to total production in the Community
     Between 1988 and the investigation period, total production in the Community
     increased 30% from 640 263 units to 834 094 units per year, including Japanese
     production facilities in the Community. Imports from Japan thus represented 55% of
     total production in the Community in 1988, and 35.3% in the investigation period.
     Relative to the production of the Community industry
     The production of the Community industry decreased by 16% from 226 480 units in
     1988 to 190 375 units in the investigation period. Imports from Japan thus represented
      155.4% of production of the Community industry in 1988, and 154.5% in the
     investigation period.
                                              16
 ---pagebreak---      Conclusion on volume of imports
(38) The introduction of the definitive anti-dumping duty in February 1987 was followed
     by a substantial decrease in the volume of imports from Japan. This trend has become
     even stronger recently, in line with the appreciation of the yen. At the same time,
     Japanese exporters have significantly increased production in the Community, up by
     56% from 413 783 units in 1988 to 643 719 units per year in the investigation period
     They have also increased imports into the Community from factories established in
     third countries, up by 37.7% from 106 012 units in 1988 to 145 978 units per year in
     the investigation period.
     Nevertheless, the volume of imports from Japan during the investigation period still
     amounted to almost 300 000 units per year, representing 26% of the Community
     market, measured in units, and more than one and a half times the production volume
     in units of the Community industry. It also appeared that over time a larger part of the
     imports from Japan has come to consist of medium-large to large PPCs, putting extra
     pressure on the traditionally strong market position of the Community industry for
     such PPCs. On the whole, therefore, imports from Japan in the investigation period
     were still capable of having a very significant effect on Community industry,
     depending in particular on the price level at which they were sold.
                             3. Prices of imports from Japan
     Methodology to examine price undercutting
(39) The extent to which the weighted average sales prices of imports from Japan in the
     investigation period in the Community market undercut the weighted average sales
     prices of the Community industry during the investigation period was examined for
     the German, French, Italian and UK markets, which were considered representative
     for the Community market as a whole, as they represented the large majority of sales
     on the Community market, both by the Community industry and imported from Japan.
     As opposed to Japanese subsidiaries in the Community, who placed PPCs mainly with
     dealers for outright sale, the Community industry placed PPCs mainly with end-users,
     on leases, cost-per-copy contracts and rentals. To permit a fair price comparison, the
     Commission used only the outright sales and leases of the Community industry. To
     "unbundle" the latter type of contracts into a hardware element to be used for the price
     comparison, setting aside the financial element, companies' normal internal accounting
     rules, based on generally accepted accounting practices, were used. The weighted
     average PPC hardware price thus calculated for each model was then compared with
     the corresponding weighted average Japanese outright sales prices. Pure rentals,
     i.e contracts that do not qualify as sales under normal accounting rules, were excluded
     from the comparison. So were cost-per-copy contracts, whether or not qualifying as
      sales-type contracts, because of the difficulty of objectively "unbundling" them. As for
     the calculation of sales prices, these were net of directly linked discounts and rebates
     In this respect, trade-in discounts were not regarded as a discount on the sale of the
     new machine, in the same way as for the dumping calculation.
     Only newly-manufactured models were compared, as the use of re-furbished or re-
     manufactured models on one side of the equation might have distorted the price
     comparisons. Given the technical complexity of comparing the models of the
     Community industry with those of Japanese exporters, price undercutting was
     examined on the basis of a representative sample of 7 own-manufactured models of
     the Community industry, out of a total of 30. These models were selected to represent
     a broad range of PPC models, covering those product segments where the Community
     industry sold almost all of its own-manufactured models, i.e. segments 1 to 4.
      Together these models amounted to around 30% of the Community industry's PPC
     turnover in the Community in the investigation period, with each of them having a
      significant volume of sales. The total number of units sold of the 7 Community
                                              17
 ---pagebreak---      industry models in the four Member States concerned was around 15,000, and the
     distribution between outright sales and leases roughly 50/50. For each of these
     representative Community industry models a comparable imported model of each
     Japanese exporter was selected whenever available. Almost all of these models were
     also sold in substantial quantities. As for the few imported models that were sold only
     in small quantities, their prices were not observed to be significantly out of line with
     other, more frequently sold models. In any case, when calculating the weighted
     average undercutting margin for each exporter, small quantities carried little weight
     Two product segments not covered in the undercutting exercise were personal copiers,
     the smallest PPCs, and segment 6, the latest PPCs. Personal copiers competed with
     the segment 1 PPCs of the Community industry, just as Japanese segment 5 PPCs
     competed with the Community industry segment 6 models. However, in order to arrive
     at the most reliable price comparisons, with the smallest adjustments for differences
     in technical characteristics, Japanese segment 1 models were compared with the
     Community industry segment 1 models, and Japanese segment 5 models were
     compared with the Community industry segment 4 models. This does not mean that
     Japanese personal copiers were not undercutting the Community industry's segment
     1 models or that Japanese segment 5 models were not undercutting the Community
     industry's segment 6 models, as properly adjusted for differences in technical
     characteristics. It merely means that it was not considered necessary to include such
     comparisons in the undercutting exercise, as price comparisons based on more similar
     product segments, covering by far the largest part of Community production, were
     available.
(40) Where necessary, appropriate adjustments were made both for differences in technical
     characteristics and for differences in trade levels.
     Regarding adjustments for technical differences, the number of criteria used was
     substantial and differed according to product segment The adjustments were
     determined by the Commission on the basis of input from both the Community
     industry and exporters. In general, adjustments were made for the presence or absence
     of features, not for any alleged differences in quality for the same features. Such
     differences were considered too subjective and difficult to estimate to permit reliable
     quantification. The value of features was, in principle, calculated as the ratio between
     the list price of the feature concerned and the list price of the basic model without that
     feature, as determined for a number of other models in the same product segment The
     value of minor features was sometimes estimated as a percentage of the value of more
     important comparable features. The value of options, which often had to be added to
     Japanese models to make them comparable to the models of the Community industry,
     was calculated as the ratio of their list price to that of the basic Japanese model. The
     resulting percentage was then added to the actual sales price of the basic model, based
     on the assumption that the percentage discount on the list price of the option was
     similar to the percentage discount on the basic model.
     Following claims by exporters, the Commission examined whether an adjustment
     should be made for the generally higher weight of the Community industry models in
     comparison with Japanese models, especially in the higher copy speed range In this
     respect, it was considered that greater weight in itself does not have any value in the
     eyes of consumers. If anything, the opposite was more likely to be true. More
     importantly, as a measure for greater productivity or durability, the weight criterion
     was found to be inaccurate, as the actual and target monthly copy volumes of the
     Japanese models used in the sample, and their actual and target operational life, were
     in fact not significantly different from those of the Community industry models in the
     sample, both in absolute terms and relative to copy speed. With respect to durability,
      it was also found that lease periods with customers were generally comparable in
     length, meaning that customers write off PPCs after the same length of time, whether
      it concerns a Japanese model or an Community industry model. Leasing has overtaken
      renting as the normal mode of placement of the Community industry. As for a claimed
                                              18
 ---pagebreak---      second or third operational life of the Community industry models, Japanese models
     were also frequently sold second hand. Furthermore, the capacity of a model to be re-
     manufactured or re-furbished and then sold again does not affect its operational value
     in the eyes of the first-time user. No adjustment for weight or alleged differences in
     productivity/durability was therefore granted.
     Some exporters also argued that an adjustment should be made for the allegedly higher
     quality and greater length of the warranty provided by Rank Xerox and Océ. It was
     found, however, that those warranties are provided only to customers that conclude a
     maintenance contract, and are financed from the proceeds thereof. The Community
     industry's warranties without maintenance contracts were comparable to those of the
     Japanese exporters.
(41) Regarding levels of trade, sales were compared at the same level of trade whenever
     such sales were made in sufficient quantities. In this respect, Olivetti sales to end-users
     and Océ sales to dealers had been made in insufficient quantities and were
     disregarded. Sales of certain models by Rank Xerox to dealers in certain
     Member States were also disregarded as being too small in volume. Almost all
     Japanese companies sold in sufficient quantities at dealer level but only some at end-
     user level. Where the Community industry end-user sales nad to be compared with
     Japanese dealer sales, the former were brought to the dealer level. This adjustment was
     calculated based on the actual difference in price between the two levels of
     Rank Xerox (for models sold in sufficient quantities), the sales structure of which was
     considered comparable to Océ for this purpose. Japanese sales at distributor level were
     also adjusted to bring them to dealer level, based on price differences of
     Japanese companies between these two levels. All brand sales were thus compared at
     dealer level, or at end-user level if sufficient volumes had been sold by both sides.
     As for Japanese sales to OEM importers, these were compared as adjusted to CIF
     Community frontier level, customs and anti-dumping duties and customs clearance
     charges added, with prices of the Community industry adjusted from end-user or
     dealer level to ex-factory level. For this latter purpose, the percentage reduction in cost
     for selling ex-factory, based on the Community industry's own cost structure, was
     deducted from their actual sales prices.
     Results
(42) On this basis, the weighted average undercutting margin per exporter, for all of its
     imported models in the sample together, ranged from 7% to 36%. The weighted
     average degree of undercutting of all exporters together was 26%. The weighted
     average degree of undercutting for segments 4 and 5 was twice that for segments 1
     to 3 (38% compared to 19%). The weighted average degree of undercutting was higher
     in Germany and the UK than in France and Italy, but it was high in the latter two
     Member States as well. These figures show that, despite the existence of the
     antidumping measures in force, Japanese exporters were still selling their PPCs on the
     Community market at prices significantly below those of the Community industry.
     Underselling
(43) The same methodology as described above for undercutting was used to examine the
     price increase necessary at the CIF free-at-Community frontier duty unpaid level to
     raise the actual sales prices of the imported models in the sample to a level at which
     the Community industry would be able to sell at a profit permitting a reasonable return
     on investment. The weighted average actual sales prices of each exporter as calculated
     in the examination of undercutting were set against the target prices of the models of
     the Community industry. The absolute amounts by which they fell short of those target
     prices were then transformed, on a weighted average basis for each exporter, into the
      underselling margin at the level of CIF free-at-Community frontier duty unpaid For
     this purpose, in order to bring sales by related importers to first independent buyers
                                              19
 ---pagebreak---           in the Community back to the Community frontier, duty unpaid level, the existing
          anti-dumping and customs duties were deducted. For PPCs over 75 copies per minute,
          no anti-dumping duty was in force and no such deduction was made. On this basis,
          the weighted average underselling margin for each exporter ranged from 44% to
           141%. The weighted average degree of underselling of all exporters together at this
          level was 113%.
(44)      The target profit margin for the Community industry used in this examination was
          calculated before tax as a percentage of actual turnover in the investigation period
          sufficient to deliver a return on equity before tax of 18%, which was considered
          reasonable for publicly-quoted companies with a respectable financial status in this
          business sector. This 18% consisted of a market interest rate of 8% during the
          investigation period of the review, a premium of 4% required to compensate
          shareholders for the risks incurred in investing, and an average tax rate applicable to
          the Community industry of 35%. The turnover and assets used for this calculation
          covered the entire copier business of the Community industry, as it was not possible
          to reliably identify separately the assets used for PPC hardware sales. It was
          considered, in any case, that the return on equity for the PPC hardware part of the
          copier business should not be lower than for the other parts. The Community
          industry's sales outside the Community, but produced in the Community, were
          included in the turnover used. The resulting target return on sales was 9.4% on a
          weighted average basis for the Community industry as a whole.
     (45) Given that the weighted average actual profit before tax of the Community industry
          on PPC hardware was 2.7% in the investigation period, sales prices of the Community
          industry models in the sample were increased by an extra 6 7% profit on turnover
          This method, which is based on the weighted average actual profit of all Community
          industry own-manufactured models together rather than the actual profit or loss
          achieved on just the models in the sample, takes account of the higher profit rates
          achieved by the Community industry on segment 6 models, which were not included
          in the comparison table. For this reason, this method was preferred over the more
          common method of adding a 9.4% profit margin on turnover to the cost of production
          of each model in the comparison table
                                             4. Conclusion
     (46) Following the introduction of the original anti-dumping measures, PPC imports from
          Japan showed a significant fall in volume. The remaining volume of these imports
           was, however, still quite significant. The imports from Japan also showed a shift
          toward larger PPCs. The degree of undercutting found in the Community market for
           Japanese imports was high all around, and especially high for the larger PPCs. Given
          this strong price pressure exerted by substantial import volumes from Japan, it was
           considered necessary to examine whether dumping was occurring which contributed
           to the situation of the Community industry described above and whether the expiry of
           the anti-dumping measures in force would lead to a recurrence of dumping and injury
                                  F. RECURRENCE OF DUMPING
                                                1. General
     (47)  Dumping calculations, both for normal value and export price, were based on verified
           outright sales of PPCs only. Leases, rentals and cost-per-copy contracts were excluded
           in order to facilitate the calculations and render them more reliable. Since these types
           of contracts represented only a small percentage of total transactions for the Japanese
           companies, both in the Community and Japan, it was assumed that the results would
           not be significantly affected.
                                                    20
 ---pagebreak---  (48) Dumping margins were initially established separately for brand sales and OEM sales
      and combined to a single weighted average dumping margin for each exporter only
      in the last stage of the calculation. OEM sales, whether in the domestic market or for
      export to the Community, could generally be distinguished from brand sales by several
      factors: significantly lower sales, advertising, service and other costs were incurred for
      OEM sales than for brand sales; the OEM PPCs were re-sold to final customers under
      a brand name not owned by the exporter; and the relationship between the producer
      and the OEM purchaser was at arm's length.
(49)  The OEM importer Agfa Gevaert requested to have its own dumping margin and duty,
      arguing that there was less dumping on its imports from Japan, that it had not
      contributed to the dumping, and that it deserved special treatment because of the
      allegedly large contribution it made to the design and development of the PPCs it
      purchased in Japan. It was established in the investigation that the imports of
      Agfa Gevaert were dumped, albeit less so than the brand sales of its Japanese
      suppliers. As for the contribution of Agfa Gevaert to the PPCs it purchased from
      Japan, the value added was limited and focused on the outside appearance of the PPC
      and the lay-out and software of its control panel, rather than on the functioning of the
      PPC inside. It was clear, therefore, that Agfa Gevaert could not be considered the
      producer of its Japanese-sourced PPCs, but that it was an OEM importer. It is not
      possible under the legal framework established by Regulation (EEC) No 2423/88 to
      impose separate duties on individual importers, whether OEM or brand-sale, as
      opposed to exporters. Separate duties for importers could easily lead to selective
      dumping by the exporters concerned. Article 2 of Regulation (EEC) No 2423/88
      stipulates that an anti-dumping duty may be applied to any dumped "product" whose
      release for free circulation in the Community causes injury, where a product shall be
      considered to have been dumped if its "export price" to the Community is less than
      the normal value of the like product. For the calculation of this export price, the
      exports to all Community importers of all different types of the product concerned
      should be cumulated, in accordance with Article 2(8) of Regulation (EEC)
      No 2423/88. Article 13(2) of that Regulation confirms that regulations imposing anti
      dumping duties shall indicate the product covered, the country of origin or export and,
      if practicable, the name of the supplier. No provision is made for indicating the name
      of the importer.
(50)  So-called trade-in discounts were considered as representing the value of the traded-in
      PPC or, when such PPCs were destroyed, the value of preventing a second-hand
      market from overtaking sales of newly produced PPCs. Not being considered true
      discounts, they were not deducted from the sales price of the new machine, either for
      normal value or for export price. Such expenses were considered part of SGA costs.
      The fact that these expenses could be linked by some exporters to the sale of new
      PPCs is not surprising, since the old PPC is only traded in when a new one is
      purchased. This does not, however, mean that the money paid by the supplier for the
      traded-in PPC is a discount on the sale of the new PPC. Also, the fact that some
      exporters treated these expenses as deductions from gross turnover in their accounting
      records is not determinative for the legal interpretation of the concept of a discount
      in Article 2 (3) (a) of Regulation (EEC) No 2423/88. The same approach was followed
      in respect of the practice of paying off the remaining lease term of a PPC in the field
      in order to sell a new one, which is a scheme similar to a trade-in discount. The
      methodology was the same as that used in the original investigation, which has been
      accepted by the European Court of Justice(21).
(21)
      See for instance Case C-174/87, Ricoh Company Ltd v Council. [1992] ECR 1-1335,
      paras. 19, 20 and 21.
                                             21
 ---pagebreak--- (51)  Ordinary financial expenses were taken into account as a cost both for normal value
      and for export prices. Offsetting financial revenues resulting from the normal operation
      of the business were accepted, up to the level where they completely annulled the
      financial expenses. The argument of some exporters that financial revenues should be
      allowed to further offset other SGA costs was not accepted, as an excess of financial
      income should not be allowed to eliminate SGA expenses that were actually incurred
      Credit granted by suppliers was, in accordance with normal Commission practice, not
      regarded as an offsetting financial revenue, but as a potential cost not incurred, for
      which no allowance can be made. Extraordinary income and expenses were
      disregarded in all cases.
(52)  Also, in respect of both normal value and export price, the expenses and revenues
      involved in PPC service centres were included in certain cases in the calculation of
      SGA percentages applicable to sales of PPCs, namely when it was established in the
      course of verification that these centres provided certain benefits without charge to
      buyers of PPCs, for instance by giving technical training to dealers or providing free
      spare parts, the costs of which could not be identified separately. Since these centres
      were also involved in the conclusion and operation of maintenance contracts, the
      turnover produced thereby was, in those cases, included as well.
                                       2. Normal value
      Links between legally separate companies
(53)  Such links were the subject of discussion in two respects. First, the question arose
      whether two of the exporters did not, in reality, form a single economic entity. One
      of these two companies (company A) is majority-owned by the other (company B) and
      is included in the latter's consolidated accounts, even though it is a legal entity in its
      own right, listed separately on the stock exchange. Company A assembles, on the basis
      of a sub-contracting agreement, a large quantity of PPCs for company B. For this
      purpose, the latter supplies the results of its R&D, the technical designs, and a
      majority of the parts. Company B, which should be considered the producer of these
      PPCs, sells these and other PPCs both in Japan and for export to the Community
      A joint selling company of companies A and B sells, in Japan, PPCs of company B's
      brand. However, company A also produces - partially different - PPCs for its own
      account, with some R&D of its own and with royalty payments to company B for the
       remainder. Company A sells these PPCs for export to the Community (but not in
      Japan), partly to OEM purchasers and partly under its own brand name, for which it
       has set up a distribution network of its own. In this respect, company A exerts the
       complete functions of producer/exporter, and it is in this respect, therefore, that it
       should be considered a separate economic entity from company B, although it is
       clearly related. In the absence of domestic sales of own-manufactured PPCs, whether
       brand sales or OEM sales, normal value for company A was constructed, based partly
       on costs verified at the premises of company A, company B and their joint selling
       company, and partly on the weighted average cost and profit of other producers.
 (54)  The above situation where two companies operate at the same horizontal level and
       exert the same functions, even though one is majority-owned by and partly dependent
       on the other, should be distinguished from the situation where a division of production
       and sales activities is made within a group made up of legally distinct companies, with
       one company producing and the other company selling. Two companies operating such
       a vertical distribution of tasks, each incomplete in itself, do constitute a single
       economic entity, as confirmed by the European Court of Justice on many occasions.
       Thus, the Commission could not accept the claim made by certain exporters that the
       export prices and normal value used were not comparable within the meaning of
       Article 2 (3) of Regulation (EEC) No 2423/88. Both domestic and export prices were
       in fact compared ex-warehouse of the producer, with domestic sales subsidiaries
       forming part of the economic entity "producer", as they fulfilled tasks which are
       normally the responsibility of an internal sales department of the producer. Sales by
                                              22
 ---pagebreak---       such domestic subsidiaries have thus been properly compared with the sales made by
     the producer's export department for export to the Community Appropriate allowances
     for differences affecting price comparability were subsequently made in accordance
     with Article 2(9) and 1(10) of Regulation (EEC) No 2423/88.
      Selective normal value
(55) Two exporters claimed that they operated a separate sales channel for sales to
     unrelated distributors, that these sales were at a different level of trade than their sales
     to other types of clients, and that this level of trade should be used to establish normal
     value for comparison with export prices, to the exclusion of their sales to other clients.
     The Commission investigated these claims. For both exporters it was found, based on
     a representative sample of models, that the prices of their individual transactions with
     the claimed distributors overlapped to a considerable degree with the prices of
     individual transactions with other types of clients, whether dealers or end-users. With
     respect to quantities sold to the claimed distributors, whether model-by-model or in
     total, there was also significant overlap with quantities sold to other types of clients,
     whether dealers or end-users. The claimed distributors of one exporter were,
     furthermore, found to sell partly to end-users, meaning that in this respect they were
     exercising the same functions as dealers. As for the other exporter, it reported its sales
     to the claimed distributors as taking place through the same sales channel as its sales
     to large end-users, implying a similar cost structure for both types of clients. Finally,
     for both exporters the total of sales to claimed unrelated distributors by volume was
     very small in relation to the volume of their domestic sales and less than 5% of their
     export sales. Under these conditions, it was considered that the exporters had not
     demonstrated that the claimed sales channels of unrelated distributors were consistently
     distinguishable from sales to other types of clients in terms of costs, quantities, prices,
     and functions of buyer, and that the exporters had thus failed to prove why the
     claimed distributor channel should be used to the exclusion of other sales channels for
     the comparison with export prices.
     There was, furthermore, no reason to exclude sales to end-users, as requested by one
     of the above exporters, as the prices of individual transactions with end-users,
     especially large ones, overlapped to a great extent with the prices of individual
     transactions with dealers.
     Normal value for brand sales based on actual prices
(56) In the investigation period, all but one of the exporters visited had a volume of
     domestic PPC sales which exceeded 5% of their export sales to the Community.
     Normal value for this one exporter was constructed. For the other exporters, it was
     considered that their domestic PPC sales, taken as a whole, were sufficiently
     representative to serve as the basis for the determination of normal value. For those
     exporters, transactions covering at least 70% of domestic PPC turnover were the
     subject of verification. Some transactions that were, at the request of exporters, not
     used for the calculations pertained to sales channels with a very small turnover or to
     sales made by very small related sales subsidiaries.
     For these exporters, domestic PPC models that were comparable with models exported
     to the Community were identified, adjustments being made where necessary and
     feasible for differences in technical characteristics to the domestic models. For a
     number of export models, closely resembling domestic models were not found. Normal
     value for those models was constructed.
     For each comparable domestic model, the volume of domestic sales was compared
     with the volume of export sales to the Community of the export model. Where
     domestic sales did not exceed 5% of export sales in volume, those domestic sales were
     not considered representative for the model in question, and normal value for that
     model was constructed.
                                             23
 ---pagebreak--- (57) For each remaining comparable model, the number of units sold domestically at a
     profit was calculated, by comparing the net invoice value - after directly related
     rebates and discounts - of each transaction with the cost of production, calculated in
     the manner indicated further below. Where profitable sales exceeded 80% in volume
     of total domestic sales of the model concerned, normal value was calculated as the
     weighted average sales price of all transactions, including those at a loss Where
     profitable sales represented between 20 and 80% in volume of total domestic sales of
     the model concerned, normal value was calculated as the weighted average sales price
     of profitable transactions only. Where profitable sales represented less than 20% in
     volume of total domestic sales of the model concerned, normal value for that model
     was constructed, as it was then considered not to have been sold in the ordinary
     course of trade, within the meaning of Article 2 (4) of Regulation (EEC) No 2423/88.
     Constructed normal value for brand sales
(58) Where, in accordance with the above methodology, normal value had to be
     constructed, the cost of manufacturing of the export models was calculated. Amounts
     for depreciation of molds were based on normal Japanese accounting and tax practices,
     resulting in full depreciation over two years. In some cases where statements of
     manufacturing costs submitted by exporters were found to be significantly out of line
     with audited figures for cost of goods sold and stocks, corrections were made
(59) The reasonable amount for selling, general and administrative expenses to be added
     to arrive at the full cost of production was, for all producers, based on their own cost
     structure, including sales subsidiaries, in accordance with the single economic entity
     concept. This includes the one producer which did not sell PPCs of its own brand
     domestically, as in that case the SGA costs were taken which it incurred in selling,
     through its joint domestic sales subsidiary with another producer, PPCs of that other
     producer's brand. The same approach had been followed in the original investigation
     This producer argued that if it had sold its own brand PPCs domestically, it would
     have sold them in small quantities only and in a more direct manner with fewer costs
     However, this producer did have a domestic sales structure and there was no reason
     to assume, without any evidence, that it would not have sold its own brand PPCs
     through that structure. Furthermore, since the SGA was calculated as a percentage of
     turnover, the argument that a smaller quantity of sales, even through a different,
     simpler type of sales channel, would necessarily have led to a lower cost allocation,
     is flawed. Finally, that this producer's own brand would be less well known is already
     taken into account by the fact that its domestic sales structure, on which SGA costs
     were based, incurred few advertising expenses for the PPCs of the other producer's
     brand.
     SGA expenses were calculated specifically for PPCs, and separately for each sales
     channel, whenever the available accounting information permitted this.
     R&D expenses were normally based on those allocated, under internal company
     accounting rules, to the copier division as a whole (including digital and full colour
     copiers). Where a separate identification of the copier division was not possible, or
     where the company's allocation of R&D costs to the copier division did not take
     account of basic R&D that is not product-specific, the R&D costs for the company as
     a whole were taken, calculated as a percentage of the company's total cost of
     manufacturing for all products. The argument that R&D costs should be limited to
     those strictly incurred for PPCs was rejected: R&D expenses are general expenses,
     which have to be borne by the company on a current accounting basis and which must
     therefore be entered in the accounts for the financial year in which they are incurred
     on the turnover of similar products or, in the case of R&D that is not product-specific,
     on all products. Royalty income was allowed to offset R&D expenses.
                                             24
 ---pagebreak--- (60) In cases where exporters had a sufficient volume of profitable sales, the reasonable
     profit margin was the weighted average profit of their own sales, i.e. all sales if more
     than 80% in volume was sold at a profit and profitable sales only if between 20 and
     80% in volume was sold at a profit. In other cases, the weighted average profit margin
     of all other producers with a sufficient volume of profitable sales was applied.
     Although some exporters criticized this approach as leading to high profit margins,
     this approach results directly from the ordinary course of trade test described in recital
     57. Its correctness is confirmed by Article 2(3)(b)(ii) of Regulation (EEC) No 2423/88,
     which states clearly that the profit used in constructed normal value should be based
     on profitable sales.
     Normal value for OEM sales
(61) The general methodology applied to establish normal value for OEM sales was
     identical to that outlined above for brand sales. In contrast to the situation at the time
     of the original investigation, several producers now made OEM sales in the domestic
     market. Where such sales represented more than 5% in volume of OEM export sales
     to the Community, both overall and for each comparable model, normal value for
     OEM sales was established on the basis of prices actually paid, whenever such sales
     were made at a profit in sufficient volumes. In other cases, the OEM normal value
     was constructed, based on the producer's own cost and profit structure when possible,
     and on those of the OEM sales of other producers when necessary. In this latter case,
     given the availability of usable cost and profit data of other producers for domestic
     OEM sales of PPCs, the request of one exporter to use costs and profit incurred in its
     OEM sales of other products in the same business sector could not be granted, taking
     account of the order laid down in Article 2(3)(b)(ii) of Regulation (EEC) No 2423/88.
(62) When normal values had to be constructed on the basis of the SGA expenses of other
     companies, R&D expenses were considered as part of the cost of manufacturing, so
     that each company's own R&D figures were used, together with the weighted average
     SGA expenses (excluding R&D) of other companies. This approach was considered
     to be more reliable than using other companies' R&D figures.
                                      3. Export price
     General
(63) Export prices were verified for around 70% of each exporter's total export sales to the
     Community. All sales to OEM importers were verified, either at the premises of the
     exporters or of their subsidiaries in the Community concerned with OEM sales. As for
     brand sales, which were sold almost exclusively via subsidiaries established in most
     of the Member States of the Community, it was deemed necessary to verify only a
     representative portion, based on the largest Member States. A correcting weighting
     factor was accordingly used in the final dumping calculation to re-establish the
     original ratio between brand sales and OEM sales.
(64) Where models were sold in several different configurations, standard configurations
     were agreed with exporters, which were normally the most basic version of the model
     concerned. This standard configuration was then compared with domestic models, and,
     where necessary and feasible, appropriate adjustments were made to the normal value
     of tiie comparable domestic model.
                                             25
 ---pagebreak---      Status of importers
(65) Three importers which had claimed to be unrelated to an exporter were found in fact
     to be related.
     The first case concerned an importer, in which one of the Japanese exporters had
     acquired a significant minority share in September 1991. This shareholding was
     substantial and appeared to allow the exporter to exert considerable influence over the
     importer, the exporter's acquisition being accompanied by a structural programme to
     increase cooperation between the two companies. During the remainder of the
     investigation period of the review, this cooperation, as verified at the premises of the
     importer, appeared to be inconsistent with a normal arm's length commercial
     relationship. A particularly notable aspect of this cooperation related to the pricing of
     PPCs from the exporter to the importer, which, at least in one case, appeared to vary
     according to whether or not the PPCs were subject to anti-dumping duty, thus raising
     the suspicion of absorption of the anti-dumping duty. Under these circumstances, it
     was considered that the criteria of Article 2(8)(b) of Regulation (EEC) No 2423/88
     had been met, in the sense that both an association and a compensatory arrangement
     appeared to exist which rendered the prices paid or payable between the exporter and
     the importer concerned unreliable. This importer and its subsidiaries in the Community
     were consequently treated as related importers within the meaning of Article 2(8)(b).
(66) The same factual circumstances, and the consequent qualification as a related importer,
     also prevented this importer from being treated as an OEM importer. An essential
     characteristic of sales to OEM importers is that exporters incur significantly lower
     costs in respect of such sales, as marketing, distribution, and maintenance is all done
     by the OEM importer under the latter's own brand name and for its own account The
     exporter can therefore charge lower prices, resulting in the claim that genuine OEM
     export prices are at a different level of trade from brand sales and should, for the
     purpose of a fair comparison, be compared with a similar level of trade on the
     domestic market. In this respect, this importer did sell the PPCs imported from the
     exporter concerned under its own brand names in the Community However, this is
     not in itself sufficient to qualify as an OEM importer. If it were, it would be very
     simple indeed for exporters to have their subsidiaries in the Community qualify for
     the status of OEM importer, simply by having them sell under a different brand name,
     as some exporters were found to have done in this review. In order for export sales
     to qualify as having been made at the level of trade of an OEM importer, the
     information regarding sales prices between exporter and importer and the costs borne
     by each must be reliable. This criterion is, by definition, not met between related
     parties within the meaning of Article 2(8)(b).
     These conclusions were contested by the importer and exporter concerned. They
     argued that at least purchases ordered before the exporter's acquisition of its share
     holding should still be treated as unrelated. However, as described above, from the
     moment of that acquisition, the entire relationship between exporter and importer
     changed to a degree where the prices actually paid for all subsequent imports, whether
     ordered before or after the shareholding, became unreliable. The same applies to the
     costs. The fact that the Commission verified these costs and used them, with some
     corrections, to construct the export price, does not necessarily mean that these costs
     were accepted as entirely reliable.
(67) The same considerations applied even more strongly to a second importer. During the
     investigation period of the review, a majority of the capital of this importer was
     owned by one of the Japanese exporters. Given the exporter's majority share in the
     company, prices between exporter and importer and the costs incurred by each were
     considered unreliable. Although the importer sold the PPCs which it imported from
     the exporter concerned under the importer's brand name in the Community, that brand
     name is in fact owned and controlled by the exporter concerned. This importer could,
     therefore, not be treated as an OEM importer.
                                            26
 ---pagebreak--- (68) In September 1991, the European headquarters of one of the Japanese exporters took
     a significant minority shareholding in a third importer, the name of which was
     changed in line with the brand name of the exporter concerned. As in the case of the
     first importer, this shareholding was so large as to make it likely, in the Commission's
     view, that the exporter was in a position to exercise restraint or direction over the
     importer. During the verification visit to this importer it was also found that
     advertising support was received from the exporter. It was therefore considered that
     also in this case an association or compensatory arrangement within the meaning of
     Article 2(8) b) of Regulation (EEC) No 2423/88 appeared to exist, which rendered the
     sales prices and distribution of costs between this importer and the exporter concerned
     unreliable.
     Facts available
(69) A planned visit to a European subsidiary of one of the Japanese exporters could not
     take place, as the company did not supply necessary information regarding its cost
     structure in time. As a consequence, the Commission was not able to determine the
     costs incurred by this company in respect of sales made to first independent buyers
     by the other subsidiaries of the same group that had been visited. Based on the scarce
     information available to the Commission, it appeared, however, that the company
     clearly did perform functions that were of benefit to those other subsidiaries, such as
     collecting and disseminating marketing information, providing marketing assistance,
     standardising accounting practices, giving legal assistance, undertaking pan-European
     advertising, providing services in the financial area, assisting in product development
     and product adaptation to the market, etc. In the absence of better, verified
     information, facts available had to be used, in accordance with Article 7(7)(b) of
     Regulation (EEC) No 2423/88, in casu the SGA costs in the audited accounts of this
     company, to establish the costs incurred in providing the above - and possibly other -
      services.
     Export price for related importers
(70) For related importers, export prices were constructed from the sales prices to the first
     independent buyers in the Community, minus discounts and rebates directly linked
     (including items free of charge), by deducting all costs incurred between importation
     and resale and a reasonable profit margin of 5%. The profit levels found for unrelated
     importers could not be used to establish an appropriate profit margin, for two reasons.
     First, few unrelated importers replied to the questionnaire. Of these, the profit margin
     of one unrelated importer was verified, representing only a small percentage of total
     imports from Japan. Secondly, it was found that the profit margins of unrelated
     importers were artificially depressed, in line with the general price depression analysed
     further below for PPCs in the Community, as a result of having to compete with
     dumped Japanese brand sale imports sold through related subsidiaries in the
     Community. In the absence of reliable profit figures of unrelated importers, the
     Commission considered a 5% profit margin a reasonable minimum in the ordinary
     course of trade, taking account of Commission practice in other cases, including in the
     original investigation. As requested by exporters, a single profit margin, always of 5%,
     was used irrespective of the number of subsidiaries actually involved in the sales
     chain.
(71) PPCs sold to dealers at a lower price for demonstration purposes were included in the
     transactions used to calculate dumping, as the cost of demonstration should normally
     be borne by the dealer himself. Depreciation of stock, covering missing or stolen
     products or damaged or obsolete products destined for disposal, was considered as a
     cost incurred between importation and resale. Where old stocks of PPCs were not
     depreciated but sold, these transactions were included in the dumping calculation.
                                             27
 ---pagebreak---      Export price for unrelated importers
(72) Export prices to unrelated importers, normally OEM purchasers, were calculated based
     on the actual prices for these transactions, minus discounts and rebates directly linked
     (including items free of charge). Compensations paid to OEM purchasers for
     disadvantageous exchange rate fluctuations in connection with the sale of PPCs were
     considered as discounts. Where exporters' subsidiaries in the Community incurred
     costs in respect of these sales, by carrying out certain activities that would normally
     have been undertaken by the importer (for instance the provision of advertising
     support) or by performing a role similar to that of a re-invoicing agent, the costs
     involved and a reasonable profit margin were deducted, in accordance with
     Article 2(8)(b) of Regulation (EEC) No 2423/88. In this respect, the same 5% profit
     margin was applied as for all sales through related importers, based on the method of
     using the same profit margin irrespective of the number of subsidiaries involved.
     While one exporter commented that this percentage was relatively high in the case of
     sales to OEM importers, it was precisely this exporter which had insisted, in the
     original investigation, that one and the same profit percentage should be used
     irrespective of the number of subsidiaries involved in the sales channel. It was
     considered that the 5% deduction by the Commission for reasonable profit was low
     in respect of sales in Member Sates in which two or sometimes even three related
     subsidiaries were involved, as well as in respect of sales to end-users, which implied
     an integrated chain of distribution, and that, therefore, the approach followed was
     reasonable.
                                      4. Comparison
(73) Export prices and normal value were compared at the same level of trade. OEM
     export sales were compared with the weighted average normal value of OEM domestic
     sales. As for the own-brand export sales, which had to be constructed in almost all
     cases, these were compared with the weighted average normal value of all domestic
     own-brand sales channels, given that these were not consistently distinguishable from
     each other, and that therefore insufficient evidence existed that one type of sales
     channel would be better comparable to the export sales than another.
(74) Where sufficient evidence was submitted, appropriate adjustments were made in
     respect of differences in physical characteristics and selling expenses. No adjustments
     were claimed for any difference in import charges and indirect taxes. With respect to
     salesmen's salaries, only the salaries paid to personnel wholly engaged in direct PPC
     selling activities were deducted, to the exclusion of staff that partly or entirely
     exercised management functions, and to the exclusion of service and sales support
     personnel. This approach was based on Article 2(10)(c)(v) of Regulation (EEC)
     No 2423/88, which states that an allowance can be granted only for personnel wholly
     engaged in direct selling activities. Where PPC salesmen were found to be selling
     other products or services as well, the turnover concerned was included for the
     purpose of calculating the percentage deduction for PPCs.
     The total allowances for normal value were calculated as an absolute amount per
     model per unit sold. This absolute amount, representing the allowable cost per unit
     actually incurred, was then deducted from the normal value calculated for the model
     in question.
                                            28
 ---pagebreak---                                    5. Dumping margins
(75) Dumping margins were calculated as the total absolute amount of dumping on verified
     import sales divided by the total CIF value as declared to customs of all verified
     imports, whether or not dumped. The dumping margins for brand sales (only partly
     verified) and OEM sales (all verified) were weighted to take account of the actual
     ratio in terms of CIF value between these two types of export sales. In this respect,
     dumping found for the verified part of the brand sales was considered representative
     of all brand sales.
(76) In the case of related importers, the existing anti-dumping duty was deducted as a cost
     between importation and resale, in accordance with Article 2(8)(b) of Regulation
     (EEC) No 2423/88. For PPCs over 75 copies per minute, no anti-dumping duty was
     in force and thus no anti-dumping duty was deducted. On this basis, the dumping
     margins found varied between 21.5% and 83.9%. They were significantly higher for
     each exporter concerned than the rate of the original anti-dumping duty pertaining to
     that exporter. The weighted average dumping margin was 41.0%.
(77) The effect of this high degree of dumping on the Community market place was far
     from being completely offset by the existing anti-dumping duty. When, in order to
     evaluate tiie effectiveness of the original anti-dumping duty, this duty was not
     deducted as a cost in the case of related importers, and added to the export price in
     the case of unrelated importers, the weighted average effect of the dumping on the
     Community market was still as high as 28.8%, with individual rates varying between
      13.5% and 74.4%.
(78) In conclusion, the review showed that the existing anti-dumping duty has not led
     exporters to revise their pricing to an extent that dumping was eliminated, nor has it
     offset the effect of the dumping on the Community market. Given the high dumping
     margins found in the review investigation, it is considered that if the existing duty
     were allowed to lapse, dumping would be likely to continue at the same or even
     higher margins. The abolition of the anti-dumping duty can, if anything, only further
     increase the level of dumping to the extent that the lower costs for exporters selling
     in the Community through related importers could result in further price decreases
                            G. RECURRENCE OF INJURY
                        1. Effect of dumped imports from Japan
(79) Despite the existing anti-dumping duty, Japanese exporters, selling mostly through
     related importers, were, in the investigation period of the review, undercutting the
     prices of the Community industry in the Community market place with their PPCs
     imported from Japan by a weighted average of 26%, with a sales volume that,
     although significantly declining, still represented 26% of units placed in the
     Community. As PPCs are a mature product, with relatively limited technical
     differences among producers and with price thus playing an important role in the
     customer's choice, it is clear that such a large volume of imports at such low prices
     could not fail to have a significant negative impact on the economic performance of
     the Community industry, showing itself in insufficient profitability and declining
     market shares and production volumes for that industry.
(80) Any reduction in injury that might be derived from the decrease over time in the
     Community market share of Japanese PPCs, has been offset by the fact that in terms
     of models, those imports have become especially injurious. In the original
     investigation, the large bulk of imports from Japan consisted of small PPCs. These
     gave the Japanese exporters a large markiet share measured in units, but their injurious
      effect was limited by the fact that Océ afod Rank Xerox had traditionally focused on
     the more important large PPCs and continued to have a strong technical and market
                                                  i
                                             29 \
                                                  V
 ---pagebreak---      position and adequate profitability on those large models. Since then, however, almost
     all of the Japanese exporters have shifted a large part of their production of small
     PPCs (in particular mature models of relative simplicity) to the Community or to other
     third countries and have concentrated on exporting to the Community the more
     sophisticated segment 4, 5 and 6 models they have come to produce in Japan. In view
     of the fact that a weighted average degree of undercutting was determined for
     segments 4 and 5 which was twice the level of undercutting for segments 1 to 3
     (38% compared to 19%), the imports from Japan exerted very strong downward
     pressure on the prices, profitability and market share of the Community industry in
     these segments. For instance, in segment 4 (PPCs capable of making 45 to 59 copies
     per minute), Community industry's market share in the Community decreased from
     64.4% in 1988 to 42.1% in the investigation period of the review, a dramatic fall of
     22.3%. Most of the segment 4 PPCs and all segment 5 PPCs competing with the
     segment 4 PPCs of the Community industry in the investigation period of the review
     were produced in Japan.
(81) Given the pricing aggressiveness of the Japanese exporters already found with the
     existing anti-dumping duty in force, it is considered that undercutting and price
     depression caused by dumped imports from Japan could only deteriorate if the duty
     were allowed to lapse, as Japanese exporters would be likely to use at least part of the
     cost reduction resulting for their related importers from an expiry of the anti-dumping
     duty to decrease further resale prices in the Community. This likelihood is considered
     all the greater as the introduction of lower prices by just one major player in the PPC
     market would, for such a price-sensitive product, put great pressure on the other
     players to follow suit, leading to an even more ruinous price war than already exists
     The consequences of any further price decrease for the Community industry would be
     serious, as PPCs are for each producer the mainstay of their business, which should
     provide the profits necessary to make the investments required to remain viable in the
     medium term. Any of these firms could decide to stop production and become a mere
     OEM purchaser, deriving revenues from service and supplies only, as other
     Community producers have already been forced to do in past years. They could also
     replace part of their range of own-manufactured models with OEM purchases. The
     experience of recent years has shown that parts of the Community industry's own
     production, especially in the lower segments, had to be sacrificed when losses became
     too great. The aggressiveness of Japanese exporters' pricing in the higher segments
     means that danger could now arise even for the higher segments.
(82)  With respect to volumes of imports, during the investigation period of the review, the
     economic situation in Japan deteriorated, demand stagnated, and stocks increased by
      65% to a level of 300 000 units, more than the annual volume of exports to the
      Community during the investigation period. Capacity utilization was also decreasing
      If duties were allowed to lapse, the incentive to increase exports from Japan to the
      Community, at prices covering variable costs of production at most, would be great,
      quite possibly even to the extent of closing Japanese PPC factories in the Community
      in order to improve capacity utilization in Japan. The existing trend towards
      decreasing volumes of imports from Japan could thus be stopped or even reversed if
      duties were allowed to lapse. This would be even more likely if the yen were to
      depreciate in the coming years against the European currencies. With the behaviour
      of currencies being as volatile as it is, this development cannot be excluded.
                           2. Other allegedly injurious factors
(83)  The Commission examined whether a fall in demand for PPCs in the Community
      market could have caused the precarious situation of the Community industry This
      was not the case. Between 1988 and the investigation period of the review the
      Community market for PPCs expanded by 24%. However, the Community industry's
      sales in the Community declined by 1% over the same period, leading to a decrease
      in their market share in the Community from 15.4% to 12.4%.
                                              30
 ---pagebreak--- (84)  The argument by some exporters that a period of economic recession in the
     Community was the cause of the precarious situation of the Community industry in
     the investigation period of the review, is also considered unfounded The economic
     recession in the Community began, except in the United Kingdom, only in the second
      half of 1992, after the end of the investigation period. Thus, while total PPC
     consumption has decreased by around 10% following the end of the investigation
     period, it had still been climbing strongly between 1988 and the investigation period
     and remained stable during the investigation period itself. To the extent that demand
      may have shifted somewhat towards second-hand PPCs, the Community industry did
     not suffer from this, as it is strongly represented in this market (as are the dealers of
     the Japanese producers). Furthermore, while the profitability of the Community
     industry in the Community for its products and services other than PPCs declined from
     an index of 100 in 1988 to 76 in the investigation period of the review, Community
     industry's profitability on PPC hardware sales in the Community dropped much more
     steeply from an index of 100 in 1988 to 24 in the investigation period of the review.
     This suggests that sales of PPCs by the Community industry were under severe
     additional pressure from sources other than the general economic conditions Some
     exporters commented that the relatively better performance of overall profitability
     could be due to customers postponing the replacement of their PPC and spending more
     on maintaining their existing PPC. However, as mentioned above, between 1988 and
     the investigation period, sales of PPCs in the Community increased by 24%, which
     contradicts the argument that customers had postponed purchases of new machines.
(85) It was suggested by certain exporters that PPCs produced by Japanese companies in
     the Community and in third countries had also been causing injury to the Community
     industry, and that the Commission should quantify what part of the injury should be
     attributed to each. It may be observed, in this respect, that neither of these two other
     sources of sales in the Community was the object of the present review, so that the
     possibility for the Commission to obtain relevant information was limited.
     Furthermore, none of the Japanese exporters volunteered any information on the
     degree to which their PPCs produced in third countries other than Japan and in the
     Community were alleged to cause injury to the Community industry. Nevertheless, it
     was considered reasonable to assume that the prices of PPCs which Japanese
     companies produce in the Community and which they produce in and import from
     third countries other than Japan are not likely to be significantly out of line with the
     prices of PPCs imported from Japan, as major price differences in the Community
     between similar PPCs produced by the same company probably could not be sustained
     In this sense, it was considered likely that PPCs sold by Japanese companies from
     these other sources than Japan likewise contributed to the injury suffered by the
     Community industry. It was also noted that the relative importance in the Community
     market of PPCs from these other sources had increased continuously, to a market
     share of 61.8% in the investigation period of the review (consisting of 12.8% imports
     from third countries other than Japan and 49% estimated EC sales of PPCs produced
     by Japanese companies in the Community).
     Nevertheless, the market share of 26% held by the imports from Japan, combined with
     the undercutting level of 26% found for those imports, is considered to be in itself a
     significant cause of the poor economic situation of the Community industry. In order
     to defend its market share against such a large volume of unfairly low-priced imports,
     the Community industry was forced to lower its own sales prices to levels that resulted
     in an important shortfall of profitability on their sales of PPCs. That PPCs of Japanese
     companies from other sources were probably sold at similarly low prices, does not
     change the fact that even in their absence the Community industry would still have
     had no choice but to follow the price lead of the imports from Japan, sold as they
     were in such important volumes. Those imports were, therefore, taken in isolation,
     sufficient to cause price depression and a significant shortfall in profitability for the
     Community industry. As mentioned before, they were also the main cause of the
     dramatic loss of market share of the Community industry in segment 4 PPCs and the
     only cause of sales lost by the Community industry in segment 6, since all segment 5
                                             31
 ---pagebreak---           and segment 6 PPCs and the large majority of segment 4 PPCs introduced by Japanese
          companies on the Community market in the investigation period of the review
          originated in Japan. For the other segments, imports from Japan probably combined
          with PPCs from other sources to cause loss of market share and lack of profitability
          to the Community industry.
          Although Article 4(1) of Regulation (EEC) No 2423/88 requires the
          Community authorities not to attribute to dumped imports injuries caused by other
          factors, this requirement is satisfied where it is shown, as described above, that
          dumped imports, taken in isolation, have been an independent cause of the poor
          economic situation of the Community industry, even if other factors may also have
          contributed to that situation. Thus, even if it were assumed that imports from other
          third countries and sales from Japanese production facilities in the Community have
          contributed to the precarious situation of the Community industry, this would not alter
          the fact that dumped imports from Japan, taken in isolation, caused the poor economic
          situation of the Community industry.
(86)      As for the argument that the Community industry inflicted injury upon itself by
          importing and selling in the EC PPCs originating in Japan, it has already been
          mentioned that the number of PPCs imported from Japan by the Community industry
          and sold in the Community in the investigation period of the review declined
          dramatically in comparison with the original investigation. The percentage of PPCs
          imported by the Community industry from Japan and sold in the Community in the
          investigation period of the review represented less than 1% of its production of PPCs.
          Any negative impact of such imports on the situation of the Community industry can
          therefore be ignored.
          Not only was the quantity of PPCs imported from Japan by the Community industry
          very small, the fact of buying part of one's product range from other producers is now
          a common and normal business strategy even among Japanese producers. Selling
          dumped PPCs from Japan in the Community, as practised by Océ, but not by the other
          two Community producers, may be seen as a legitimate act of self-defence in view of
          the need to sell in the Community market in competition with other dumped PPCs
          from Japan. Indeed, had Océ failed to do this, the injury on its own-manufactured
          PPCs would in all likelihood have been larger still, as it would then have lost a
          number of customers needing an assortment of PPCs ranging from small to large.
                                            3. Conclusion
     (87) The above considerations, and in particular the finding that notwithstanding the
          existing anti-dumping duty, significant volumes of highly dumped imports from Japan
          were sold on the Community market at very low prices, causing serious detriment to
          the Community industry, lead to the conclusion that if the anti-dumping duty in force
          were allowed to lapse, material injury caused by dumped imports from Japan would
          recur.
                                  H. COMMUNITY INTEREST
                                              1. General
     (88) The general purpose of anti-dumping measures is to eliminate trade-distorting effects
          of dumping practices and thus to restore effective competition on the Community
          market. Effective competition is fundamentally in the Community interest, both as a
          general policy objective and in terms of the interests of Community producers and
          consumers.
                                                  32
 ---pagebreak---                                     2. Original findings
(89) With respect to the specific case of dumped PPC imports from Japan, the interests of
     producers, consumers and unrelated (mainly OEM) importers, such as Agfa Gevaert,
     in the Community had already been examined extensively in the original investigation
     At that time, it was concluded that the Community's interest in maintaining a viable
     Community PPC manufacturing industry capable of competing with imports from
     Japan on fair terms outweighed the short-term interest of consumers in profiting from
     unfairly low prices, for as long as they would last, as well as the interests of
     OEM importers, who profited from distributing, under their own brand, dumped
     imports from Japan at the expense of sales of PPCs produced by Community industry
     Regarding OEM importers it was considered, in particular, that the Community interest
     in a Community industry which both produces and distributes PPCs is, other things
     being equal, greater than in European companies which essentially distribute under
     their own brand PPCs produced in Japan
                                 3. Findings in the review
     Community interest in PPC production
(90) With respect to the Community's interest in maintaining a viable PPC industry in the
     Community, this has, if anything, increased from the time of the original investigation
     It is estimated that close to 23 000 people are employed full-time in the Community
     to manufacture, distribute, service and sell the PPCs produced by the Community
     industry, of which 12 000 are employed in manufacturing (including those working
     full-time at Community companies supplying parts and sub-assemblies for Community
     PPC producers). While PPC technology has become mature, it is still a highly
     complex and sophisticated process, combining chemical, optical, electronic, mechanical
     and software know-how. The PPC of today also forms an important technological
     starting point not only for the production of digital copiers, printers and faxes, but also
     for a whole new generation of multi-purpose, networked office products to be
     introduced in the years to come.
(91) Furthermore, after anti-dumping measures were introduced in 1986, almost all
     Japanese producers established or expanded PPC production facilities in the
     Community. As a result, Japanese PPC production in the Community, which had been
     less than 50 000 units in 1984, increased to 643 719 units in the investigation period
      of the review. Although the anti-dumping duties may not have been the only reason
     for this strongly increased Japanese production in the Community, it can hardly be
      doubted that they did significantly influence this development. In the wake of these
     factories, a strong supplier industry also developed within the Community,
      representing, in all likelihood, more employment than the Japanese factories in the
      Community themselves or than the 6 000 workers involved full-time in supplying the
      Community industry.
      As already mentioned, if duties were to lapse, there would be an incentive for the
      Japanese exporters to cut production in the Community to reduce the significant stocks
      existing in Japan and to improve capacity utilization there. This rationale would apply
      especially to the larger PPCs, which could be supplied world-wide from a single
      source, Japan. In addition, the lapsing of the duties in the face of high dumping would
      probably be interpreted by the Japanese producers as meaning that the Community
      authorities no longer attached importance to maintaining a photocopier industry in the
      Community. As a result, the economic advantages of producing small and relatively
      simple PPCs in third countries with low labour costs, rather than in the Community
      where most Japanese companies produce them now, would become more alluring
      There will be a point where cost^enefit considerations will outweigh even strategic
      considerations relating to maintaining a manufacturing presence in the main global
      markets, especially since at least one other Japanese producer has no production
      facilities at all in the Community and competes strongly on the Community market
                                             33
 ---pagebreak---      with PPCs made with low labour costs in a third country. If this trend were followed,
     the final result could be a severely limited Japanese PPC manufacturing presence in
     the Community. If the production of several if not all of the Japanese production
     facilities were to be closed or switched to other products, this would be serious in
     itself. However, probably the biggest disadvantage would be that a myriad of small
     and medium-sized Community suppliers now providing the Japanese assembly
     facilities with parts, would be without clients. It is precisely this strong reliance by the
     Japanese assembly facilities on outside suppliers, entailing minimal capital investment
     in assembly plants, that would limit their shutdown costs if they decided to cease
     assembly in the Community.
     Interest of importers
(92) Certain importers claimed that they suffered from the anti-dumping duty in that they
     were unable, whether partially or entirely, to pass this cost on to consumers, leading
     to reduced profitability and loss of employment in their companies. It is evident that
     the imposition of an anti-dumping duty is not to the advantage of importers, which
     have to pay the anti-dumping duty and which are therefore less able than before to
     undercut the prices of the Community industry with dumped imports. However, it is
     precisely the intention of the introduction of an anti-dumping duty that the sales
     prospects for the Community industry be improved in relation to those of importers
     selling dumped products. In addition, it was noted that this claim was made by
     importers, such as Agfa Gevaert, which sell the PPCs which they purchase in Japan
     under their own brand in the Community. The profitability of such companies is likely
     to have been affected at least as much by the tendency of their Japanese PPC suppliers
     gradually to expand their own brand sales network in the Community at the expense
     of sales under the importer's brand. While some employment in sales and service
     activities may have shifted from these importers to the Community industry or to
     Japanese sales subsidiaries in the Community, this employment remained in the
     Community. This situation should be distinguished from the net loss of manufacturing
     employment which, as described above, is at stake for the Community if duties were
     allowed to lapse.
     The importer Agfa Gevaert also made the argument that the anti-dumping measures
     on PPCs from Japan endangered its direct investments in PPCs in Japan. Upon
     verification, however, it was found that such no direct investments existed.
     Interest of Community consumers
(93) It was estimated that an amount of around ECU 500 million was collected in anti-
     dumping duties on PPC imports from Japan from their introduction in August 1986
     to the end of the investigation period. However, given the continued effect of dumping
     on the Community market and the high undercutting margins found, it would appear
     that a large part of this amount was not charged to Community consumers.
(94) If duties were allowed to expire, consumers would benefit to the extent that the
     Japanese exporters and unrelated importers decided to use their reduced costs to
     further decrease resale prices in the Community of PPCs imported from Japan. If
     maintaining the duty led to no price movement, the situation would continue as
     mentioned in recital 93. If maintaining the duty led to a price increase to consumers
     with the full amount of the anti-dumping duty, if imports continued at the same level
      as presently, and if PPCs not imported from Japan did not increase in price, the
     estimated cost to Community consumers of a continuation of the measures would be
     ECU 42.5 million per year. This figure is based on a weighted average anti-dumping
     duty of 16.3% for the exporters investigated, multiplied by a total customs value of
      PPCs imported from Japan in 1994 of ECU 260.8 million. Such a price increase on
     PPCs imported from Japan would, however, be quite unlikely, given that the duty
     would remain at the same level as before. Even if a price increase of PPCs from Japan
      did take place, it would be likely to lead to their partial or complete replacement by
                                             34
 ---pagebreak---      PPCs from other sources, whether sales by the Community industry or sales of PPCs
     produced by the Japanese companies in the Community or in other third countries.
     The Community industry would probably want to use part of the breathing space
     created to increase sales volumes rather than increase prices up to the full margin
     possible. As for the Japanese producers, there is no reason why they would change the
     pricing strategy of their PPCs not imported from Japan, especially because they
     compete among themselves and are still subject to competition from low-priced
     imports from third countries other than Japan. A general price increase of all PPCs
     sold in the Community is therefore extremely unlikely. In general, in a competitive
     market for a mature product such as photocopiers, it takes only one or a few large
     sellers to force the general price level down, but it takes a general cost increase or the
     participation of all or most large sellers to get the general price level up. If one
     company increases its prices in isolation, it would be forced to rethink this strategy
     very quickly.
(95) It is in the long-term interest of consumers to maintain a variety of sources of supply
     and competition. Two of the smaller Japanese exporters observed that their continued
     operation might be endangered if the anti-dumping duty on PPC imports from Japan
     were maintained, which would reduce competition. However, of these two companies
     one was already majority-owned by one of the largest Japanese companies, while the
     other exported the bulk of its PPCs to the Community from a third country. The
     Community authorities were, therefore, more concerned about the reduction in sources
     and variety of supply which could result from the disappearance of one or more of the
     remaining Community producers. Around 85% of the Community market measured
     in units (and around 70% measured in units weighted by copy volume) was already
     in the hands of the nine Japanese exporters investigated, whether exporting from
     Japan, from third countries, or producing in the Community, even though, as
     mentioned above, these Japanese companies did compete among themselves during the
     investigation period of the review.
(96) Some exporters and one importer pointed to the strong position in terms of market
     share of the Community industry in segment 6 to argue that this segment, or part of
     it, should be excluded from the duties. However, given that Rank Xerox, Océ and
     Kodak sell in segment 6 and compete between themselves, and that anti-dumping
     duties will not prevent Japanese exporters from exporting segment 5 or segment 6
     PPCs to the Community (or from producing them in the Community or third
     countries), but merely from selling them at unfairly low prices, it was considered that
     this alleged risk to competition in segment 6 was outweighed by the Community
     industry's interest in receiving protection from dumped imports. This is the more so
     as segment 6 should not be considered as a product in itself, but merely as a small
     part of a product, PPCs, in which Japanese companies have a very strong market
     position in the Community.
                                       4. Conclusion
(97) It was considered that, on balance, it is in the overall Community interest that anti-
     dumping measures on PPC imports from Japan should not be allowed to expire at this
     time.
                                       I. MEASURES
                                          1. General
(98) The question governing this review was, in accordance with Article 15(3) of
     Regulation (EEC) No 2423/88, whether the expiry of the measures in force would lead
     again to injury or threat of injury. Based on the above analysis, this question must be
     answered in the affirmative. Taking account of the Community interest, the Council
     concluded that anti-dumping measures should be maintained.
                                              35
 ---pagebreak---                                       2. Product scope
(99)  When the anti-dumping measures on PPCs from Japan were first introduced, PPCs
      capable of operating at a speed of more than 75 copies per minute of A4 size paper
      were excluded from the scope of the measures, as there were, at that time, no imports
      from Japan of those copiers. Since then, however, such imports, at dumped prices,
      have increased strongly and were shown to be especially injurious to the Community
      industry. It was therefore deemed necessary now to include such PPCs in the scope
      of the measures.
      The new measures will thus cover the entire product investigated, i.e. PPCs ranging
      from personal copiers to segment 6. Personal copiers, although not produced by the
      Community industry, compete with segment 1 PPCs that were produced by the
      Community industry during the investigation period, and their continued inclusion is
      therefore justified. For segment 6 PPCs, already one Japanese exporter had started
      importing such PPCs into the Community, while there is also competition with
      segment 5, which is dominated by the Japanese exporters. If either personal copiers
      or segment 6 copiers were excluded from the measures, not only would dumped
      imports in these segments continue to injure the Community industry, but the risk of
      circumvention of the anti-dumping measures on segments 1 and 5 would be
      considerable, as it would be possible for exporters to change the copy speed or
      features of the PPC in such a manner as to fall within the adjoining segment, without
      essentially changing the model.
      These considerations are not invalidated by the fact that on a weighted average basis,
      the Community industry obtained an adequate return on sales of segment 6 PPCs
      during the investigation period. First, the operating results for individual Community
      producers on segment 6 PPCs differed substantially, with one of the two Community
      producers suffering losses in that segment. Secondly, injury was determined for the
      like product as a whole, in accordance with Article 4(4) of Regulation (EEC)
      No 2423/88. The profitability of the Community industry, one of the key injury
      criteria, would have been worse if segment 6 had been excluded. Thirdly, in contrast
      to the situation prevailing in the original investigation period, segment 6 is now both
      produced in the Community and imported from Japan. It would be inappropriate to
      identify injury for each product segment or each model separately and to exclude from
      the measures segments or models that happened to be commercially more successful
      during the investigation period.
                                    3. Rates of the duty
(100) It was considered that the existing anti-dumping duty has been effective in
      significantly reducing the volume of PPC imports from Japan, and that other factors,
      notably the prices and volumes of PPCs sold in the Community and produced by
      Japanese companies in the Community and in third countries other than Japan, were
      likely to be contributing to the precarious situation of the Community industry
      On balance, therefore, the Council considered that confirming the existing duty at its
      current levels should give adequate protection to the Community industry, given the
      continuous downward trend in PPC imports from Japan and the fact that the measures
      will now cover PPCs capable of operating at a speed of more than 75 copies
      per minute of A4 size paper.
(101) Some exporters and the Community industry argued that the rate of the new anti-
      dumping duty should be amended for each exporter based on the lower of its dumping
       and underselling margins. They noted that the review investigation had been initiated
      not only on the basis of Article 15 of Regulation (EEC) No 2423/88, but also of
       Article 14 of that Regulation, and that Article 14(3) provided for the amendment,
      where warranted, of the measures in force. They claimed that discrimination occurred
      between exporters, as lower duty rates were applied to some than others whilst they
                                              36
 ---pagebreak---        had similar dumping or underselling margins, and the same duty rate was applied to
      other exporters even though they had different dumping or underselling margins
      In this respect, the following observations should be made: First, Articles 14 and
       15 appear together under the heading "review" in Regulation (EEC) No 2423/88
      Article 15 should, therefore, be read in conjunction with Article 14, especially the
      procedural provisions thereof. Secondly, the word "confirmed" in Article 15(1) would
      serve no purpose if the new measures always had to be based on the lower of the
      dumping and underselling margins, since it is highly unlikely that the duty rates
      derived from such a calculation would, for each exporter, be identical to the existing
      rates, resulting in the existing duties being "confirmed" by the review investigation
      The Community authorities nevertheless clearly have the right under Article 15(1) to
      "confirm" the existing measures. Thirdly, the confirmation of existing measures is
      especially appropriate where they have had some beneficial effect, as in this case
      through the significant reduction of the volume of imports, but not yet enough to
      permit their expiry. In the present case, it is considered that maintaining the duty rates
      at their current level will in fact provide adequate protection to the Community
      industry, and that it is therefore simply not necessary to increase the duty rates
      Finally, with respect to the claim of discrimination between exporters, it should be
      noted that the existing rates now confirmed by the Council are, for each exporter,
      significantly lower than its dumping and underselling margins found in the review,
      calculated in the manner indicated above. While the difference in benefit is larger for
      some exporters than for others, the same result is inherent in the "lesser duty" rule laid
      down in Article 13(3) of Regulation (EEC) No 2423/88, under which the same duty
      rate based on injury may be applied to all exporters, even though some have higher
      dumping margins than others. In the original investigation, for instance, the duty rate
      based on a global injury assessment was 20% for all exporters (except those with
      lower dumping margins), even though the dumping margin of those exporters varied
      between 22 and 60%. The degree to which the three exporters with lower duty rates
      now benefit, compared to the lower of their dumping and underselling margins, is not
      necessarily larger than the degree of benefit of exporters to which a 20% duty rate is
      applied, as compared to the lower of their dumping and underselling margins.
(102) The exporter Ricoh claimed that it was the only exporter whose dumping margin had
      decreased and that it should be rewarded for this is in the sense that the existing anti-
      dumping duty should not be deducted to calculate its new dumping margin On that
      basis, it claimed a lower duty than 20%. It was found that Ricoh was correct in
      claiming that it was the only exporter whose dumping had decreased since the original
      investigation. This circumstance cannot, however, lead to the non-deduction of the
      existing anti-dumping duty for the determination of the duty to be applied, since
      Article 2(8)(b) of Regulation (EEC) No 2423/88 clearly provides that anti-dumping
      duties should be deducted as a cost for related importers in the calculation of the
      export price. In terms of injury, the reduction in this exporter's dumping margin could
      just as well have been due to a decrease in its normal value. The undercutting margin
      for this exporter, which was just below the weighted average for all exporters,
      supports this hypothesis and indicates that its export prices contributed to the poor
      economic situation of the Community industry. Its claim for a reduced duty was
      therefore not considered justified or possible under Regulation (EEC) No 2423/88
                                   4. Period of operation
(103) With respect to the period of operation of the measures, the Council noted that, due
      to the unusual complexity of a number of aspects of this case, significant delays were
      incurred in its treatment. First, nearly six months elapsed between the notice of the
      Commission's intention to carry out a review of the measures and the actual initiation
      of that review. Then, the review investigation itself, which was initiated on 14 August
       1992, took more than two and a half years to complete. In accordance with
      Article 15(3) of Regulation (EEC) No 2423/88, the original anti-dumping duty on PPC
      imports from Japan remained in force during this entire period. The Council therefore
      considers it reasonable that, in these exceptional circumstances, the period of operation
                                              37
 ---pagebreak---       of the new measures should be limited, to expire on 14 August 1998, subject to the
      applicable provisions on reviews.
(104) Some exporters and importers commented that the Community industry had already
      had eight years of protection through anti-dumping measures, that this was long
      enough, and that the measures should now be allowed to lapse However, there is no
      statutory time limit to the period of operation of anti-dumping measures other than the
      five-year period mentioned in Article 15(1) of Regulation (EEC) No 2423/88. As that
      Article itself makes clear, a review held at the end of this time limit can, where
      warranted, lead to the confirmation, as in this case, of the existing measures for a new
      period. Also, while the existing anti-dumping measures have been in force for eight
      years, this review has shown that their effectiveness in protecting the Community
      industry has been limited by the fact that due to the behaviour of the Japanese
      exporters the effect of dumping on the Community market, manifested by price
      depression and undercutting, remains substantial.
                                       5. Residual duty
(105) The verification visits to cooperating exporters covered the near totality of PPC
      exports from Japan to the Community during the investigation period. It was
      considered appropriate that for those companies which did not cooperate in this
      review, the residual duty be set at the highest of the individual duty rates for the
      exporters investigated, i.e. at 20%, in the absence of any information justifying a
      higher or lower level. The same rate should apply for those companies which did not
      export to the Community during the investigation period. However, for the latter
      companies, this is subject to the possibility of a newcomer review pursuant to
      Article 11(4) of Regulation (EC) No 3283/94.
                                       6. Undertakings
(106) It was considered that the undertaking of Kyocera Corporation, Tokyo, under which
      it was committed to giving the Commission sufficient advance notice if it were to
      recommence exports to the Community, should be allowed to lapse.
(107) As regards the undertakings given under Article 13(10) of Regulation (EEC)
      No 2423/88, the Commission has received regular information enabling it to verify the
      undertakings given. The weighted average value of parts and materials of Japanese
      origin used in the assembly or production of PPCs in the Community has remained
      at less than 60% of the total value of all parts and materials. The undertakings will
      lapse at the end of the investigation,
HAS ADOPTED THIS REGULATION:
                                           Article 1
      A definitive anti-dumping duty is hereby imposed on imports of plain paper
      photocopiers falling within CN codes (ex) 9009 12 00 (Taric code: 9009 12 00*19)
       and (ex) 9009 21 00 (Taric code: 9009 21 00*19), originating in Japan.
      For the purpose of this Regulation, plain paper photocopiers shall be understood to
       mean analogue, indirect-process copiers incorporating an optical system, irrespective
       of their copy speed and whether imported as a whole or in modules. Such copiers are
      formed by four basic elements, i.e. imaging, photo-conducting or developing, transfer
       or fixing and paper transport system. Digital copiers, which use a scanner and an
       image processor to transform an original image into a digital signal and then
       recompose that signal, with or without changes, into a copy, are not part of this
       proceeding and are thus not subject to the duty. In addition, the following products
       shall not be subject to the duty:
                                              38
 ---pagebreak---              analogue full-colour copiers (machines which have the capacity to make full
             colour copies automatically from corresponding coloured originals in one copying
             cycle by means of a polychromatic process),
             aperture card reader printers and microfilm printers (machines which have the
             capacity to read images from and make enlarged copies of microfilms,
             microfiches and aperture cards),
             whiteboard copiers (machines which have the capacity to make copies from
             information displayed on screens), and
             large format copiers (machines capable of making copies of A2 size and larger
             from originals larger than A2 size)
        For the avoidance of doubt, highlight PPCs (PPCs which reproduce only a few colours
        to draw attention to certain segments of a document) and A2 size PPCs (PPCs capable
        of making A2 size paper copies - but not larger - from A2 size paper originals or
        larger) are subject to the duty.
3.      The rate of the duty shall be 20% of the net free-at-Community frontier price before
        duty (Taric additional code: 8841), with the exception of imports which are
        manufactured by the following companies, which shall be subject to the following
        rates of duty:
             Copyer Company Limited, Tokyo          7.2% (Taric additional code: 8838),
             Mita Industrial Company, Osaka         12.6% (Taric additional code: 8839),
        -     Toshiba Corporation, Tokyo            10% (Taric additional code: 8840)
                                            Article 2
Regulation (EEC) No 535/87 is repealed.
                                            Article 3
This Regulation shall enter into force on the day following that of its publication in the
Official Journal of the European Communities.
It shall expire on 14 August 1998, save that should any review of the measures adopted by
this Regulation be pending on that date, it shall remain in force until that review is concluded.
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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 ---pagebreak---  ---pagebreak---                                                                     ISSN 0254-1475
                                                             COM(95) 386 final
                                              DOCUMENTS
EN                                                                         02   il
                                     Catalogue number : CB-CO-95-410-EN-C
                                                              ISBN 92-77-92277-X
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