CELEX: 51997PC0487
Language: en
Date: 1997-10-02
Title: Proposal for a Council Regulation (EC) imposing a definitive anti-dumping duty on imports of advertising matches originating in Japan and collecting definitively the provisional duty imposed

COMMISSION OF THE EUROPEAN COMMUNITIES
                                          Brussels, 02.10.1997
                                          COM(97) 487 final
                           Proposal for a
                 COUNCIL REGULATION (EQ
         IMPOSING A DEFINITIVE ANTI-DUMPING DUTY
 ON IMPORTS OF ADVERTISING MATCHES ORIGINATING IN JAPAN
AND COLLECTING DEFINITIVELY THE PROVISIONAL DUTY IMPOSED
                  (presented by the Commission)
 ---pagebreak---  ---pagebreak---                                    Explanatory Memorandum
  By regulation (EC) No 1092/97 , the Commission imposed provisional anti-dumping
  duties on imports of advertising matches falling within CN Code 3605 00 00 and
  originating in Japan.
  Subsequently, a number of parties presented written comments, requested and were
  granted hearings. Their comments were taken into account where appropriate. The
  Commission continued to seek all information it deemed necessary for its definitive
  findings.
 Japanese exporters requested that the proceeding be terminated because the duration
 of the investigation has exceeded the period set in art. 7. (9) (a) of Regulation
 2423/88. According to this provision an investigation shall be concluded normally
 within one year of the initiation of the proceeding. It is proposed to reject such
 request on the ground of the complexity of the investigation, as explained in detail in
 recitals 2 and 3 of the proposed regulation.
 Some Japanese exporters made comments on the calculation of the provisional
dumping margins. After careful analysis, two of the provisional dumping margins
were reduced. (See recital 27).
Comments were raised on injury, notably on cost allocation and market segments
targeted by the dumped imports. Injury margins were marginally modified to take
proper account of the adjustment of import prices to dealer level Remarks were also
made on causality on account of the decreasing market for advertising matches.
The Commission, on the basis of the deterioration of several injury indicators,
concluded that the Community industry has suffered material injury caused by
dumped imports and that it is in the Community interest to adopt definitive measures.
It is therefore proposed to impose definitive duties on the imports of advertising
matches originating in Japan, ranging from 9.8 % to 43.2%.
' O J N o L 1 5 8 , 17.06.97, p. 8
 ---pagebreak---                             COUNCIL REGULATION (EC) No....
                                            OF
                  IMPOSING A DEFINITIVE ANTI-DUMPING DUTY
    ON IMPORTS OF ADVERTISING MATCHES ORIGINATING IN JAPAN
  AND COLLECTING DEFINITIVELY THE PROVISIONAL DUTY IMPOSED
THE COUNCIL OF THE EUROPEAN UNION,
Having regard to the Treaty establishing the European Community,
Having regard to Council Regulation (EC) No 384/96 of 22 December 1995 on
protection against dumped imports from countries not members of the European
Community1, as amended by Council Regulation (EC) No 2331/962, and in particular
Article 23 thereof,
Having regard to Council Regulation (EEC) No 2423/88 of 11 July 1988 on protection
against dumped imports or subsidized from countries not members of the European
Economic Community3, and in particular Article 12 thereof,
Having regard to the proposal submitted by the Commission after consulting the
Advisory Committee
Whereas:
                               A. PROVISIONAL MEASURES
(1)   By Commission Regulation (EC) No 1092/974 (hereinafter referred to as the
      provisional duty Regulation) provisional duties were imposed on imports into the
      Community of advertising matches falling within CN code 3605 00 00 and
      originating in Japan.
'    O J N o L 56, 06.03.1996, p. 1.
2
     OJNoL317, 06.12.1996, p. 1.
3
     OJ No L 209, 02.08.1988, p.!.
4
     OJ No L 158, 17.06.1997, p. 8.
                                                  <X.
 ---pagebreak---                             B. SUBSEQUENT PROCEDURE
                           1. Duration of provisional measures
 (2)  In July 1997 exporters representing a significant percentage of the trade involved
      objected to the Commission's proposal to extend the 4 months validity of the
      provisional anti-dumping duties for two more months as allowed by Regulation
                          *
      2423/88 (hereinafter referred to as the Basic Regulation). In support of this
      position, they argued that the investigation had already taken an excessive length of
      time, thus prolonging uncertainty and damaging their business.
 (3)   This objection seems to be in contradiction with the request made by the exporters
     concerned that the Commission should analyse in more depth several key issues in
     the investigation: it should be recalled that the Commission has already stated in
     recital (7) of the provisional duty Regulation that the present investigation has been
     particularly complex.      In these circumstances, further      in depth analysis of
     arguments put forward by these parties, as well as extensions granted to them for
     submissions and replies, had to be restricted to a minimum.
(4)  Following the imposition of provisional anti-dumping measures, the following
     interested parties submitted comments in writing :
     (a) producers / exporters in Japan :
        - Kobe Match Co. Ltd, Ibo-gun
        -Yaka Chemical Industry Co. Ltd, Himeji,
        -Daiwa Trading & Industrial Co.Ltd, Himeji,
        -Harima Match Company Co.Ltd, Himeji,
     (b) the representative of the Community industry on behalf of their clients.
     (c) importers located in the Community :
        - Advertising support Werbetrager Vertriebs GmbH
(5)  The parties who so requested were granted an opportunity to be heard by the
     Commission.
^•-«tk
 ---pagebreak---  (6) The Commission continued to seek and verify all the information it deemed
      necessary for the purpose of its definitive findings within the period of time
      available.
(7)   Parties were informed of the essential facts and considerations on the basis of
     which it was intended to recommend the imposition of definitive anti-dumping
     duties and the definitive collection of amounts secured by way of provisional
     duties. They were also granted a period within which to make representations
     subsequent to this disclosure.
(8)  The comments submitted by the interested parties were considered; and, where-
     appropriate, taken into account in the definitive findings to the extent that they
     were fully substantiated.
                           2. Request for termination of proceeding
(9)  Japanese exporters requested that the proceeding be immediately terminated on the
     ground that the Commission had violated Article 7(9) (a) of the Basic Regulation.
     They claimed that the investigation was a very ordinary one and that it was veiy
     likely that it could have been concluded within the time limit provided for in the
     Basic Regulation.
(10) As already mentioned in recital (7) of the provisional duty Regulation, the length of
     the investigation was mainly due to its complexity, particularly the detailed
     examination of the many figures and arguments put forward as well as the different
     issues and problems which arose in the course of the investigation.
     In this respect, given the claim of the Japanese exporters and the views expressed
     by other interested parties on the duration of the investigation, it seems appropriate
     to explain in some detail the main events which had a significant impact on ils
     duration.
(11) Following the initiation of the investigation in August 1994, three different types oir
     questionnaires were sent to some 15 different companies in the Cpmmunity and in
     Japan. Verification visits were conducted and preliminary results were reached
     within the first half of 1995.
 ---pagebreak---   (12) As indicated in recital (39) of the provisional duty Regulation, the investigation had
        then shown that sales made by Japanese exporters in the Community were not at
        the same level of trade as the large majority of the Community industry sales.
        Accordingly a level of trade adjustment had to be calculated. Considering the
        importance of the adjustment, in particular its direct impact on the undercutting and
        underselling margins, and consequently on the level of the possible anti-dumping
        duties, this issue was carefully considered before a provisional decision was taken.
        This already indicates that, contrary to the allegation made by some Japanese
        exporters, complex issues had to be dealt with in this investigation. A considerable
        amount of time had to be spent on assessing the level of trade adjustment and a-
       preliminary conclusion on this issue could not be made until the end of 1995.
 (13) In the first half of 1996, the representative of the Community industry emphasised
       the weight and importance of the segmentation of the marketinto three main
       categories of customers. In this respect, the Community industry supplied
       complementary information on the link between the segmentation of the market and
       the level of prices and relative costs, thus elaborating on the data already submitted
       in the responses to the questionnaire.
       In accordance with Article 7 (2) (a) of the Basic Regulation, the Commission
       verified and analysed all the substantiated complementary information supplied and
       carried out the necessary reconciliation with the verified responses to the
       questionnaire of the Community industry and the Japanese exporters.             These
       additional tasks took until the end of 1996.
(14) Consequently, it has to be pointed out that contrary to the allegation of some
      Japanese exporters, the Commission did not accept any new responses to the
      questionnaire from the Community industry years after the deadline set. but
      considered it appropriate to investigate further substantiated information which
      completed the responses already received.
(15) During 1996, several other problems had to be solved. Thus, some unrelated
      importers and one Community producer itself importing dumped advertising
      matches from Japan, who were originally not opposed to the proceeding, made their
      views known and put forward arguments related to the assessment of (he
 ---pagebreak---       Community interest. All the submissions made, in some cases received late in
      1996, had to be given due consideration.
(16) In 1997 the Commission became aware that one Japanese exporter might have
      provided misleading information during the investigation and requested that
      additional information be provided in order to take a final decision on the matter.
      Conclusive evidence was only received recently.
(17) In the light of the above facts and considerations, even though the duration of the
      investigation was long, the Council refers to the statement'made in recital (7) of the
     provisional duty Regulation, namely that.the length of the investigation is mainly
      attributable to its complexity and, therefore, considers that there is no reason for
     terminating the proceeding on these grounds.
                C. PRODUCT CONCERNED AND LIKE PRODUCT
(18) For the purpose of its preliminary findings, the Commission considered advertising
     matches produced and sold in the Community, produced and sold in Japan, and
     those exported to the Community from Japan as 'like products' within the meaning
     of Article 2 (12) of the Basic Regulation because they are either identical or have
     characteristics closely resembling each other.
(19) An importer provided a list of around 50 models which Japanese exporters can
     offer to their Community clients alleging that the Community industry can only
     offer a few models.
(20) It should be pointed out that not all those Japanese models are also sold in the
     Community; they are simply part of a list of models that the Japanese exporters are
     offering to their Community customers. Furthermore, the investigation contradicted
     the allegation of another importer that the Community industry does not offer, in
     contrast to Japanese exporters, a wide range of models of advertising matches.
     Indeed, it was found that the Community industry sold over 30 different models to
     its customers and that numerous, other personalised models had been produced to
     clients' specifications.
 ---pagebreak--- (2iy Since no other comments were received on the product concerned and the
      definition of the 'like product'. The findings made on this issues, as established in
      recital (9) of the provisional regulation are confirmed.
                                        D. DUMPING
                                       1. Normal value
(22) Before imposition of the provisional measures, the Commission received
      information that the relationship between the producer-exporter YAK A with
      another Japanese producer - Nittosha Match Company Ltd., which did not make
      itself known in the framework of this proceeding - might not only be limited to a
     relatively small share-holding. The Commission considered that it could not be
     excluded that YAKA's export prices might have been influenced by its relationship
     with Nittosha, which would render YAKA's reply to the questionnaire unreliable
     for the purpose of this investigation. The Commission informed YAKA forthwith
     of the serious implications this might have.
     Nittosha eventually informed the Commission that during the period of
     investigation on dumping it had exported to the Community the product concerned:
     the quantities it exported, however, had been négligeable in relation to the exports
     made by Yaka during the same period.. Under these conditions, exports from
     Nittosha could not have influenced those of Yaka ; moreover, based on verified
     information Yaka demonstrated that transactions between the two companies had
     not been influenced by the existence of the small shareholding.
     It was concluded that there was no reason to reverse the findings in respect of
     YAKA as an independent exporter from Japan.
(23) One Japanese producer claimed that for export orders of 5,000 units the normal
     value should exclusively be based on such quantities and not also on orders fol-
     lower quantities since orders of for instance 1,000 or 2,000 units are usually sold at
     higher prices.
     Firstly, it should be noted that for the purpose of this proceeding an order category
     of up to 5,000 units was defined by this producer in its response to the
     questionnaire. Secondly, it was found for this industry that for orders up to 5,000
 ---pagebreak---         units no distinct difference in prices exists and that orders of substantially less than
        5,000 units only represent a relatively small part of the category up to 5,000 units.
       Thirdly, the normal value and the export price were both established on the basis of
       the same categories of products and so the comparison takes into account the order
       sizes in as far as they are considered to be relevant by industry standards.
       Consequently, the claim has to be rejected.
 (24) No further comments were received on the determination of the normal value. The
       Council therefore considers that the findings as established in recitals (10) to (J7)
       of the provisional duty Regulation are to be confirmed.
                                        2. Export price
 (25) As no comments were received on the determination of the export price as
       established in recital 18 of the provisional duty Regulation the Council considers
       that the findings made therein are to be confirmed.
                                        3. Comparison
(26) One Japanese producer claimed that no adjustment should be made for salesmen's
      salaries as on export sales no salesmen were involved. During the on the spot
      verifications, at the premises of the company concerned, it was established however
      that salesmen were indeed involved in the export of advertising matches.
      Consequently, in order to allow for a fair comparison, an adjustment was made to
      the export price on the basis the corresponding cost incurred in export sales of the
      product concerned.
(27) The same Japanese company repeated its claim, already made at the provisional
      stage of the investigation, to establish the normal value only on sales to unrelated
      distributors as, according to this company, export sales were taking place
      exclusively at this level of trade.
      Recital (20) of the provisional Regulation explains why the claim could not be
      accepted. Since no new arguments in support of this claim have been put forward
      by the company, the rejection of this claim is confirmed by the Council.
 ---pagebreak---  (28) Two Japanese producers reiterated their claim that an adjustment should be made
       for print film making and artwork.
       The claim was based on the fact that for sales to the Community, generally, the
       print film was supplied by the customer while for sales on the Japanese market, in
       general, it was the producer who supplied the artwork and the film making.
                            «
       One Japanese producer also further claimed that an adjustment should be made for
       those domestic orders for which a particular type of paper, called 'Japanese paper'
       was used, because this type of finishing of the product was not offered for sales to
       the Community.
       Both claims were rejected at the stage of the provisional duty Regulation as the
       company concerned was not in a position to quantify the market value of the
       adjustment claimed to the satisfaction of the Commission.
      After disclosure of the essential facts leading to the imposition of provisional
       measures     the  Japanese   producers    submitted   additional   information    and
      explanations on the basis of which it was possible to determine the market value of
      the adjustments claimed. One of the Japanese producers was not in a position to
      demonstrate the market value of the adjustment claimed. As the claim itself was
      considered to be justified the adjustment for this producer was made by reference to
      another producer in Japan.
      Consequently the claim was granted to the extent that it was justified.
(29) One Japanese producer maintained its request, already made at the provisional
      stage, that an adjustment should be made for the differences in time of delivery.
      This request was based on the grounds that the domestic delivery delay is.
      generally, much shorter than the one for export transactions and that the customers
      in the Community are charged lower prices because of the longer delay in delivery.
      In this respect the company concerned did not substantiate its claim, in particular by
      showing that customers consistently pay different prices on the domestic- and/or
      export markets because of the different delivery delays.
      Therefore the request has to be rejected.
 ---pagebreak---                                     4. Dumping margins
 (30) The complainant argued that as the export prices of the Japanese producers are,
       generally, at the same level and as the Japanese domestic market is homogeneous
       the individual dumping margins found should not have such a wide spread. The
       complainant asked the Commission to review the dumping findings, particularly as
       far as Kobe and Yaka are concerned.
       It has to be recalled that the dumping margin is determined individually for each
       exporter by comparing its normal value with its exports price as explained in
      recitals (10) to (24) of the provisional duty Regulation.
       In this respect, the Commission can confirm that the export prices charged by the
      Japanese exporters for comparable product types are, generally, for all exporters at
      a similar level. The investigation revealed however that the domestic prices of
      different Japanese producers vary significantly, thus constituting the principal
      reason for the variance in dumping margins established.
      The complainant further argued, in this context, that the sales channels of the
      Japanese producers on their domestic market are similar. The verification of the
      information submitted by the Japanese producers does not confirm this argument.
      Other arguments made by the complainant on the provisional findings concerning
      the margins of dumping related to the cost structure, age of the workers, low
      productivity, the fact that no manufacturer is left in Japan for match machines and
      the utilisation of old and insufficient machinery.
      Consequently, as the evidence provided by the complainant in support of its
      arguments is either merely circumstantial or not confirmed by the findings made
      during the investigation it is concluded that the arguments have to be rejected.
(31) After having considered the arguments raised by the parties and after having
      modified, when appropriate, the provisional findings, the definitive dumping
      margins for the co-operating producers/exporters, expressed as a percentage of the
      free-àt-Community frontier price are as follows:
      Daiwa Trading & Industrial Co. Ltd.              31.8%
      Harima Match Company Co. Ltd.                    63.5%
 ---pagebreak---        Kobe Match Co. Ltd.                             9.8%
       Yaka Chemical Industry Co. Ltd.                 23.3%
 (32) The approach followed in recital (24) of the provisional duty Regulation for the
       assessment of the dumping margin applicable to non-co-operating companies in
       Japan which is based on facts available and verified during the investigation is
       confirmed by the Council. On that basis, it is considered that the highest dumping
       margin found, i.e. 63.5% with regard to a producer in Japan which had co-operated
       in the investigation, should also apply to non-co-operating producers in Japan.
                               E. COMMUNITY INDUSTRY
(33) The large majority of the Community producers of advertising matches are
       members of FEFA (Federation Européenne des Fabricants d'allumettes), the
      European association who lodged the complaint on behalf of its members. These
      producers, located in France, Spain, Italy, Belgium, Portugal and United Kingdom,
      are usually small and medium size enterprises with limited                   resources.
      Consequently, even though they all supported the complaint, only the main
      producers, representing 78% of the total Community output of the product
      concerned and thus, clearly meeting the criteria set forth in Article 4(5) of the Basic-
      Regulation, have actively co-operated with the Commission in this investigation.
(34) A Japanese exporter questioned the exclusion from the published provisional
      determinations of a Community producer located in France, who replied to the
      Commission questionnaire.
(35) This situation is explained by the fact that this producer, although supporting the
      complaint, was not in a position to comply with the requirements of the
      Commission for the on-the-spot investigation due to important internal difficulties.
      Therefore it was decided that this producer could not be considered as actively co-
      operating in the proceeding and was not included in the definition of the
      Community industry.
(36) This decision is reflected in the contents of recital (25) of the provisional duty
      Regulation which indicates that the term 'Community industry' should be
      interpreted as referring to those Community producers of the like product whose
                                              10
 ---pagebreak---        collective output constitutes a major proportion of the total Community production,
       who supported the complaint and who actively co-operated in the proceeding.
 (37) Despite the explanation provided in recital (26) of the provisional duty Regulation,
       one importer of Japanese advertising matches in the Community claimed that the
       main complainant Community producer should not be considered as part of the
       Community industry on the grounds that he imported directly or via its related
       companies dumped advertising matches from Japan in volumes representing far
       more than 4% of its own production. In support of its claim a list of the subsidiaries
       of the above complainant which allegedly imported the advertising matches from
       Japan was supplied.
 (38) The Commission re-examined the level of imports made by this Community
       producer and confirmed its provisional finding, namely that the quantities imported
      by this producer represented around 4% of its own total production of advertising
      matches.
(39). Another exporter claimed that two of the complaining Community producers were
      no longer producing advertising matches. Even though this exporter is referring to
      events which allegedly happened after the investigation period, which therefore
      should normally not be taken into account, it has to be noted that no indication
      exists that any of the complaining Community producers stopped manufacturing
      the product covered by this investigation.
(40) In conclusion, the definition of the Community industry for the purposes of the
      present proceeding and the provisional findings made by the Commission in this
      respect are hereby confirmed.
                                        F. INJURY
                      1. Injury examination period and injury factors
(41) Some exporters argued that the Commission had not been consistent as far as the
      investigation period for the assessment of injury is concerned.
(42) The period covered by the injury examination is the whole period from I January
      1990 to 30 June 1994 as mentioned in recital (7) of the provisional duty Regulation.
      The 'investigation period' for dumping analysis covered a one year period from I
                                             11
 ---pagebreak---        July 1993 to 30 June 1994. The main injury indicators were assessed for the whole
       injury examination period. However, when the information submitted was not fully
       substantiated or not reliable and consequently could not guarantee an accurate
       analysis of a certain injury factor within the injury examination period, the
       Commission considered it appropriate to disregard the information and based its
       conclusion on the available, substantiated information.
 (43) As requested by some exporters the Commission has further verified the
       information available in order to complete its analysis of certain injury factors, the
       results of which are given below :
                                          (a) Prices
(44) With reference to recital (45) of the provisional duty Regulation, 80% of the sales
      of book and box matches taken together made by the Community industry in the
       Community market were taken into account in the price development exercise. It
      was found that from 1990 up to the investigation period sale prices charged by the
      Community industry increased on average by 4%.
(45) A further analysis has been carried out separately for book and box matches, the
      latter representing around 60% of the total Community industry sales of matches
      and around 80% of Japanese exporters' total sales in the Community. On that new
      basis it was found that from 1990 up to the investigation period the sales prices of
      box matches charged by the Community industry decreased by 2% whereas the
      sales prices of book matches of this industry, representing the minority of Japanese
      sales in the Community, had increased by 10% during the same period.
                      (b) Production capacity and capacity utilisation
(46) As requested by one Japanese exporter, the Commission, notwithstanding the
      difficulties described in recital (44) of the provisional duty Regulation, made the
      best possible estimate of the      production capacity of advertising matches and
      relative capacity utilisation of the Community industry. It appears that on average
      the Community industry worked 222 days per year and 2 shifts per day. On this
      basis whilst a reasonable average capacity utilisation ratio would be around 75%;
      for the type of business involved,         the estimated capacity utilisation of the
                                              12
 ---pagebreak---        Community industry from 1990 up to the investigation period was consistently low
       at around 56%, with a peak of 59% in 1991.
                                         (c) Cash flow
 (47) In addition to the provisional findings stated in recital (51) of the provisional duty
       Regulation, the operating cash flow of the Community industry established at
       company-wide level for the advertising division whose main activity is advertising
       matches, that is the product concerned, decreased by 7% from 1990 up to the
       investigation period.
                                        (d) Profitability
(48) For 1990, the first year of the injury period under examination, it was found that the
       sales of the product concerned by the Community industry were still profitable with
       a rate of return on turn-over of around 2.5 %.
                               2. Segmentation of the market
(49) Following the publication of the provisional duty Regulation, interested parties did
      not object to the provisional finding set out in recital (36) of the provisional duty
      Regulation, namely that advertising matches were sold in the Community to
      separate categories of customers depending on the size of their orders. In fact it
      should be pointed out that the Japanese market had also been similarly categorised
      for the establishment of dumping.             The investigation revealed that such
      categorisation is a crucial issue given its impact on prices and costs.
(50) One Japanese exporter noted that the Community industry had requested the
      exclusion from the determination of injury of one customer on account of the very
      high volume of purchases, which rendered it not directly comparable within the
      other customer categories.         The Commission established that the customer
      concerned was notable for the volume of its purchases.                However, these
      characteristics did not constitute a sufficient ground to exclude it from the overall
      injury assessment.
                                              13
 ---pagebreak---                                    3. Cost allocation method
  (51) Some exporters questioned the cost allocation method applied by the Community
        industry and provisionally accepted by the Commission. They argued that the
        selling, general and administrative (SG&A) expenses which the Community
        industry allocated either according to the number of orders or according to'the
        number of matchboxes should instead be allocated on a turnover basis.
  (52) Article 2 (11) of the Basic Regulation specifies for the examination of dumping
        that, in general, all cost allocations shall be based on available accounting data,
        normally allocated, where necessary, in proportion to the turnover for each product
        and market under consideration. An analogue approach seems appropriate in this
        case.
       This approach implies that the appropriateness of the cost allocation method has to
       be examined and appreciated on the basis of the consistency in its utilisation: and,
       that only in the absence of an appropriate method, the allocation of costs should be
       made on the basis of turnover.
 (53) After publication of the provisional duty Regulation, the Commission continued to
       seek the information it deemed necessary. In the light of the submissions received it
       was decided to conduct a very detailed on-the-spot investigation at the premises of
       the main Community producer which was part of the Community industry, to verify
       yet again its cost allocation method.
       This verification confirmed that the allocation method accepted by the Commission
       at the provisional stage of the investigation was consistently applied by the
       producer concerned and reasonably reflected the costs associated with the
       production and the sale of the product under consideration.        Accordingly, the
       contents of recitals (49) to (50) of the provisional duty Regulation are hereby
       confirmed.
                              4. Undercutting and underselling
(54) Some Japanese exporters claimed for price comparison an allowance for the
      difference in delivery time on the grounds that, particularly for the small size
      orders, delivery time affected consumer choice and thus price comparability. These
                                               14
 ---pagebreak---         exporters explained that longer delivery periods were the result of the fact that
        matches from Japan are usually shipped via ocean freight to the Community, thus
        significantly decreasing the cost of transport and lowering prices to clients, who are
        willing to wait several months for their orders. The Community industry delivery
        time, being much shorter, Japanese exporters have no choice but to lower prices to
        compensate for the longer delivery terms.
        These Japanese exporters consider that longer delivery time justified a price lower
        than that charged by the Community industry and estimate the amount of this price
        difference at around 5%, in line with the average undercutting found to exist. For
       the reasons given'in recital (29) this claim could not be accepted.
 (55) One Japanese exporter questioned its undercutting and underselling margins on the
       grounds that they were calculated on the basis of the prices of certain basic
       Community industry models which were not identical in all respects to the models
       exported by the company concerned to the Community. It was alleged that three
       basic models of the Community industry were wood-stem book matches, whereas
       the corresponding book matches exported by the company were made of carton
      paper (card-stem book-matches). The former material being more expensive than
       the latter, the exporter requested an adjustment reflecting the market value of the
      difference in physical characteristics between the above-mentioned models.
(56) In the absence of evidence to substantiate the exporter 's claim, the Commission
      has investigated this issue on the basis of the information available to it.          It
      appeared that sales of comparable models of woodstem and carton paper book
      matches were, not necessarily made at different prices.        As an example, for a
      particular model, although there were 20% more wooden matches in this model, its
      sales price was the same as the card-stem model. This seems to indicate that any
      adjustment to the Japanese prices should be made downwards rather than upwards.
      In conclusion, based on the information available and, as the exporter concerned
      did not provide any evidence to substantiate its claim, the Commission could not
      take it into consideration.
(57) The same exporter questioned the methodology applied by the Commission in
      calculating the undercutting and underselling amounts. It requested that the same
                                               15
 ---pagebreak---         methodology applied in another anti-dumping proceeding be applied to calculate
        its margins.
        In the anti-dumping proceeding referred to by the exporter an average sales prices
        and an average non-injurious price for all the different models of the product under
        investigation were calculated, whereas in the present proceeding the Commission
       compared prices on a model-per-model basis.
 (58) In cases where the product concerned is not sold under an homogeneous shape or
       form and there are no domestic standard models directly comparable with imported
       standard models of the like product, it is necessary to define the most appropriate-
       unit of measurement in order to allow prices to be compared.
       As explained in recitals (36) to (41) of the provisional duty Regulation, standard
       basic models of advertising matches and different categories of customers were
       found to exist in the Community market. They even represented the large majority
       of the trade involved. Sales prices of the different standard models of the like
       product sold by the Community industry could therefore be compared with those of
       the Japanese exporters on a model-per-model basis separately for the main
      categories of customers.
      As the method followed in this proceeding is the most accurate to determine the
      undercutting and underselling margins, the Council endorses the Commission's
      rejection of the request made by the exporter concerned to calculate their margins
      on the basis of overall weighted average prices.
                      5. Injury suffered by the Community industry
(59) While recognising that the Community industry may have suffered some injury, a
      number of Japanese exporters claimed that this injury could not be qualified as
      material. Firstly because only small and medium size orders, representing a limited
      share of the whole advertising matches market, were affected by a negative return
      on sales. Secondly, because the Commission claimed material injury exclusively on
      the basis of the negative trend of one single injury factor, namely profitability.
      Thirdly, because several factors were pointing to no injury at all.
                                             16
 ---pagebreak---  (60) With reference to the first argument raised by these exporters, small and medium
       size orders represent a large share of the total Community market, namely around
       59% in terms of volume but around 67% in terms of value. It can therefore be
       concluded that these segments are the main sources of revenue for the Community
       industry. Accordingly, even if this industry was still performing well in the large
       order segment, its ability to compete in this segment is dependent on maintaining
       overall financial viability. The deteriorating financial situation of the Community
       industry, which was found to be negative overall during the investigation period, is
       therefore a threat to the entire advertising matches sector in the Community.
 (61) The above exporters indicated that some injury factors pointed to a no injury
       situation but did not specify to which indicators they were referring. Furthermore
       the statement that the Commission based its conclusion on a single injury factor is
       not correct.
       During the whole period under examination, it was found that employment in the
       advertising matches sector decreased by 13%, the share of the Community market
      held by the Community industry in terms of value decreased by about 10%, cash
       flow decreased by 7% and overall profitability became negative after having shown
      profits of 2.5% in 1990.
      Furthermore, it must not be neglected that Community industry prices were
      depressed for box matches which represent 60 % of total sales by this industry and
      that the slight increase in overall sales prices for matches of 4.3% during the
      investigation period could not even cover the effects of inflation. This price
      suppression certainly played a significant role in the deteriorating financial situation
      of the Community industry.
(62) These exporters also supplied annual accounts of the main complaining Community
      producer and calculated a return on investment of 28.65% for this producer during
      the year 1995, that is after the end of the investigation period. According to them,
      such a high return should demonstrate that the financial situation of the Community
      producer concerned is excellent.
      To calculate such a return on investment, these exporters applied the profit of the
      large size orders, as stated in recital (50) of the provisional duty Regulation, to the
                                                17
 ---pagebreak---         overall turnover as reported in the annual accounts they supplied. Then they
        established the ratio between this extrapolated profit over the equity as reported in
        the annual accounts.
 (63) It appears that these exporters have confused the return on investment with the
       return on equity ratio.
       More importantly, the annual accounts they supplied were at a consolidated level,
       and thus included a number of activities not covered by the present investigation.
       By reference to the turnover as reported in the consolidated annual accounts , the
       sales value of the large orders segment only represents 0.4%. Consequently, such
       an estimate of the return on investment must be disregarded and considered
       erroneous and misleading.x
                                  o-
                                     6. Conclusion on injury
(64) On the basis of the facts and considerations developed above and based on the
       deterioration of several injury indicators such as profitability, market share in value
       terms, cash flow and employment, combined with low capacity utilisation and the
      effects of unsatisfactory price development, the Council confirms that the
      Community industry has suffered material injury in accordance with Article 4( I ) of.
      the Basic Regulation.
                               G. CAUSATION OF INJURY
(65) The Commission had provisionally examined the extent to which the material
      injury suffered by the Community industry was caused by the impact of dumped
      Japanese imports, and whether other factors had caused or contributed to that injury
      in order to ensure that injury caused by these other factors was not attributed to the
      dumped imports concerned. Such other factors considered were the evolution of
      consumption, competition from other producers in the Community, other imports,
      the export performance of the Community industry and the behaviour of the main
      economic operators during the period under investigation.
(66) In spite of this detailed analysis on the causation of injury, several exporters
      claimed that no causal relationship was established between the alleged dumped
      imports and the material injury suffered by the Community industry. They staled
 ---pagebreak---         that Japanese exporters had not increased the volume of their share of The
        Community market although their import prices had increased by 40%.
        Furthermore they could not understand why in the large size orders segment where
        the highest undercutting margin by Japanese exporters was found, no causal effects
        seemed to exist. On the contrary a profitable situation had emerged.
 (67) It should be borne in mind however, as mentioned in recitals (58) to (62) of the
       provisional duty Regulation, that low-priced dumped Japanese imports increased
       their Community market share in value terms by 24% whereas the Community
       industry lost 10% of this share. From 1990 up to the investigation period, the
       Community industry prices were constantly suppressed and despite a significant'
       price increase Japanese products still undercut the former prices by an average
       margin of 6,2%. Over the years, this situation has caused significant difficulties for
       the Community industry whose profitability became negative during the
       investigation period.
       An additional link between the negative situation of the Community industry and
      the dumped Japanese imports was established through the fact that the return on
      sales of the Community industry was found to be significantly worse in the sales
      segments where Japanese products were mainly present, that is in the small and
      medium size order segments.
(68) The Commission has further analysed separately the market share of advertising
      matches for each category of customer depending on the order size in terms of
      volume and value as shown in the table below. This table was established for the
      investigation period on dumping (1 July 93 to 30 June 94) on the basis of more than
      80% of sales made by the Community industry and around 80% of Japanese sales
      in the Community market:
          Order           Japanese             Community                Total
          size            Exporters              industry            Market share
                      volume      value     volume       value    volume      value
          Small         14%       16.5%       11%        16.5%      25%       33%
          Medium        14%        13%       20%          21%       34%       34%
          Large         4%         3%        37%          30%      41%        33%
                                              19
 ---pagebreak---  (69) This analysis shows that while the volume of the market for large orders represents
       around 41% of the total advertising matches market, the share held by the
       Community industry for large orders amounts to nearly ten times that of Japanese
       exporters. The limited volume sold by the Japanese exporters in this segment
       explains why limited effects were found. *
 (70) As to the other two segments of the markets, they represent around 60% of the
       volume and around 67% of the value of the overall market share, thus
       demonstrating that these are the key segments in the advertising matches business.
(71) It follows that low-priced dumped Japanese imports are, therefore, targeting these
      key segments of the Community market, the volume of their share of the market in
      these segments (47%) being comparable with that of the Community industry
      (53%). Consequently the large quantities sold by the Japanese exporters combined
      with their constant price pressure since 1990 in such key segments of the market
      has clearly caused material injury to the Community industry.
(72) As far as price development is concerned; and as already mentioned in chapter VI
      (Injury) above, sales prices of boxes and book matches of the Community industry
      developed differently from 1990 up to the investigation period. Prices of box
      matches decreased by 2% whereas prices of book matches increased by 10%-.
      Considering that box matches represent the large majority of Japanese sales (around
      80%) during the above period, the link between the negative price development for
      the box matches and the presence in the Community market of dumped Japanese
      imports can clearly be established.
(73) In conclusion, based on the findings as explained and developed in the recitals
      above, the Council confirms that low-priced dumped imports from Japan, taken in
      isolation, have caused material injury to the Community industry.
                              H. COMMUNITY INTEREST
(74) In its provisional duty Regulation the Commission indicated why the Community
      interest calls for intervention. In this respect it is recalled that the other producers
      in the Community are small and medium size enterprises representing up to 22%- of
      the total Community production of the product concerned. The fact that the large
      majority (90%) of these producers has consistently supported the complaint shows
                                               20
 ---pagebreak---         that they are of the opinion that it is in their interest to restore fair trade practices in
        the Community market with the imposition of anti-dumping measures.
 (75) As to the competition law investigations into the main Community producer in the
        Community market, the Commission is aware of the fact that a complaint was
        lodged with the competent services of the Commission, alleging that Swedish
        Match abused and was abusing its dominant position by practising a policy of
        acquisitions and of predatory pricing.'That complaint has been dismissed, without
        objections from the complainant, because no evidence was found or had been
        supplied of the existence of the alleged abuses.
 (76) As to the allegation according to which the main Community producer might adopt
       or has already adopted a long-term strategy of selling at a loss, while confirming
       what it stated at recital (94) of the provisional duty Regulation, it may be added
       that the allegations forwarded in this respect were based on a few price quotations
       referring to a very short period of time subsequent to the investigation period.
       These allegations cannot be taken in consideration because the number of
       quotations is very limited (three) and refers to a period of time subsequent to the
       investigation period.
(77) In summary, the Council, after an appreciation of all the various interests, taken as
      a whole, and for the reasons given in the provisional duty Regulation concludes
      that, on balance, it is in the Community interest to impose definitive measures.
                             I. ANTI-DUMPING MEASURES
(78) Based on the above conclusions on dumping, injury, causal link and Community
      interest, it was considered what level and form the anti-dumping measures should
      take in order to remove the trade-distorting effects of injurious dumping and to
      restore effective competitive conditions in the Community market.
(79) After the publication of the provisional duty Regulation the Commission became
      aware that the level of trade adjustment made in establishing the injury elimination
      level, had been applied to the unrelated importers' resales prices whereas such an
      adjustment should be applied to Japanese exporters' sales prices in the Community.
      Accordingly the injury margins have been recalculated.
                                                21
 ---pagebreak---  (80) Since the injury margin, that is the level of prices at which the ir rious effects of
        the dumped imports would be removed, was lower than the dumping margin found
        for three of the exporters concerned in the investigation, the injury margin was used
       in order to determine the level of the measures to be applied to these exporters.
       For one exporter the dumping margin, which was lower than the injury margin
       found, was used in order to determine the level of the applicable measures.
 (81) On the above basis, definitive duties, in the form of ad valorem duties, should be
       imposed.
 (82) The complainant claimed that, in order to avoid the possibility of circumvention of
       the duties, the same duty should be imposed on all the co-operating exporting
       producers. This claim was based on a report of a Japanese economic research
       institute alleging the existence of a close co-operation on domestic and export
       prices of the Japanese industry.
      The information collected by the Commission and verified on the spot did not
      provide any evidence whatsoever of a common price strategy by the Japanese
      industry, at least as far as domestic prices, and therefore the normal value, are
      concerned (see recital (22) and (23) above). Furthermore, the imposition of the
      same duty on all the exporting producers, regardless of their different normal
      values, would constitute arbitrary treatment that could not be justified by the mere.
      unsubstantiated possibility of circumvention of the duties.
      This claim is therefore rejected.
                  J. COLLECTION OF THE PROVISIONAL DUTIES
(83) In view of the magnitude of the dumping margins found for the exporting producers
      and in the light of the seriousness of the injury caused to the Community industry,
      it is considered necessary that the amounts secured by way of provisional anti-
      dumping duties should be definitively collected at the level of the definitive duties.
                                              22
 ---pagebreak--- HAS ADOPTED THIS REGULATION:
                                        Article 1
 1.  Definitive anti-dumping duties are hereby imposed on imports of advertising
     matches originating in Japan. The product as described falls within CN codes
     Ex 3605 00 00 (Taric code 3605000010).
    For the purposes of this Regulation, advertising matches are matches incorporating
     advertising matter other than or in addition to the logo or details of the match
    manufacturer.
2.  For the purpose of this Regulation, the rate of duty applicable to the net free-at-
    Community-frontier price before duty shall be 43.2% (Taric additional code , 8900)
    with the exception of imports manufactured and exported by the following
    companies, which shall be subject to the following rate of duty :
    (a)       27.8% for the products manufactured and exported by Daiwa Trading &
              Industrial Match Co. Ltd (Taric additional code 8022)
    (b)       9.8% for the products manufactured and exported by Kobe Match Co.
              Ltd (Taric additional code 8023)
    (c)       10.3% for the products manufactured and exported by Yaka Chemical
              Industrial Co. Ltd (Taric additional code 8024)
3.  Unless otherwise specified, the provisions in force concerning customs duties shall
    apply.
                                        Article 2
    The amount secured by way of provisional anti-dumping duty under Regulation
    (EC) No. 1092/97 shall be definitively collected at the duty rate definitively
    imposed.
    Amounts secured in excess of the definitive rate of anti-dumping shall be released.
                                           23
 ---pagebreak---                                   Article 3
This Regulation shall enter into force on the day following its publication in the
Official Journal of the European Communities.
This Regulation shall be binding in its entirety and directly applicable in all
Member States.
Done at Brussels,                                          For the Council
                                     24
 ---pagebreak---                                                                   ISSN 0254-1475
                                                            COM(97) 487 final
                                              DOCUMENTS
EN                                                                    02    il
                                    Catalogue number : CB-C0-97-496-EN-C
                                                             ISBN 92-78-25074-0
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