CELEX: 62012CJ0602
Language: en
Date: 2014-09-11
Title: Judgment of the Court (Seventh Chamber) of 11 September 2014.#Gem-Year Industrial Co. Ltd and Jinn-Well Auto-Parts (Zhejiang) Co. Ltd v Council of the European Union.#Appeal — Dumping — Regulation (EC) No 384/96 — First indent of Article 2(7)(c) — Regulation (EC) No 2026/97 — Regulation (EC) No 91/2009 — Imports of certain iron or steel fasteners originating in the People’s Republic of China — Market economy treatment — Costs of major inputs substantially reflecting market values — State subsidy for the steel sector in general — Effect.#Case C‑602/12 P.

JUDGMENT OF THE COURT (Seventh Chamber)
      11 September 2014 (*)
      
      (Appeal — Dumping — Regulation (EC) No 384/96 — First indent of Article 2(7)(c) — Regulation (EC) No 2026/97 — Regulation (EC) No 91/2009 — Imports of certain iron or steel fasteners originating in the People’s Republic of China — Market economy treatment — Costs of major inputs substantially reflecting market values — State subsidy for the steel sector in general — Effect)
      In Case C‑602/12 P,
      APPEAL under Article 56 of the Statute of the Court of Justice of the European Union, brought on 20 December 2012,
      Gem-Year Industrial Co. Ltd, established in Zhejiang (China),
      
      Jinn-Well Auto-Parts (Zhejiang) Co. Ltd, established in Zhejiang,
      
      represented by Y. Melin and V. Akritidis, avocats,
      appellants,
      the other parties to the proceedings being:
      Council of the European Union, represented by J.-P. Hix and S. Boelaert, acting as Agents, assisted by G. Berrisch, Rechtsanwalt, 
      
      defendant at first instance,
      European Commission, represented by M. França and T. Maxian Rusche, acting as Agents, with an address for service in Luxembourg,
      
      European Industrial Fasteners Institute AISBL (EIFI), represented by J. Bourgeois, avocat,
      
      interveners at first instance,
      THE COURT (Seventh Chamber),
      composed of J. L. da Cruz Vilaça (Rapporteur), President of the Chamber, G. Arestis and A. Arabadjiev, Judges
      Advocate General: Y. Bot,
      Registrar: A. Calot Escobar,
      having regard to the written procedure,
      having decided, after hearing the Advocate General, to proceed to judgment without an Opinion, gives the following
      Judgment
      1        By their appeal, Gem-Year Industrial Co. Ltd and Jinn-Well Auto-Parts (Zhejiang) Co. Ltd seek the setting aside of the judgment
         in Gem-Year and Jinn-Well Auto-Parts (Zhejiang) v Council (T‑172/09, EU:T:2012:532; ‘the judgment under appeal’) by which the General Court of the European Union dismissed the action
         brought by the applicants at first instance for annulment of Council Regulation (EC) No 91/2009 of 26 January 2009 imposing
         a definitive anti-dumping duty on imports of certain iron or steel fasteners originating in the People’s Republic of China
         (OJ 2009 L 29, p. 1; ‘the contested regulation’) in so far as that regulation imposes a definitive anti-dumping duty on them.
         
      
       Legal context
      2        At the material time, the application of anti-dumping measures by the European Union was governed by Council Regulation (EC)
         No 384/96 of 22 December 1995 on protection against dumped imports from countries not members of the European Community (OJ
         1996 L 56, p. 1), as last amended by Council Regulation (EC) No 2117/2005 of 21 December 2005 (OJ 2005 L 340, p. 17) (‘the
         basic regulation’). 
      
      3        Article 1(1) of the basic regulation set out the principle that an anti-dumping duty may be applied to any dumped product
         whose release for free circulation in the European Union causes injury to its industry. 
      
      4        Article 1(2) of the basic regulation provided that a product is to be considered as being dumped if its export price to the
         European Union is less than a comparable price for the like product, in the ordinary course of trade, as established for the
         exporting country. 
      
      5        As regards the determination of the value of the price of the like product, Article 2(1) to (6) of that regulation established
         the ‘normal value’ method, that method being based, in principle, on the prices paid or payable, in the ordinary course of
         trade, by independent customers in the exporting country.
      
      6        Article 2(7)(a) of the basic regulation laid down a special rule on the method to be used for determining the ‘normal value’
         for imports from non-market economy countries. 
      
      7        However, Article 2(7)(b) of the basic regulation provided that the general rules laid down in Article 2(1) to (6) were to
         apply to certain countries, including the People’s Republic of China, if it was shown on the basis of claims by one or more
         producers subject to an investigation that market economy conditions prevailed for that producer or those producers. 
      
      8        The criteria and procedures for determining whether that was the case were set out in Article 2(7)(c) of the basic regulation,
         under which:
      
      ‘A claim under [Article 2(7)(b)] must be made in writing and contain sufficient evidence that the producer operates under
         market economy conditions, that is if: 
      
      –        decisions of firms regarding prices, costs and inputs, including for instance raw materials, cost of technology and labour,
         output, sales and investment, are made in response to market signals reflecting supply and demand, and without significant
         State interference in this regard, and costs of major inputs substantially reflect market values, 
      
      ...’
      9        Paragraphs (2), (5) and (6) of Article 3 of the basic regulation, under the heading ‘Determination of injury’, provided: 
      
      ‘2.      A determination of injury shall be based on positive evidence and shall involve an objective examination of both (a) the volume
         of the dumped imports and the effect of the dumped imports on prices in the [Union] market for like products; and (b) the
         consequent impact of those imports on the [Union] industry.
      
      ...
      5.      The examination of the impact of the dumped imports on the [Union] industry concerned shall include an evaluation of all relevant
         economic factors and indices having a bearing on the state of the industry, including the fact that an industry is still in
         the process of recovering from the effects of past dumping or subsidization, the magnitude of the actual margin of dumping,
         actual and potential decline in sales, profits, output, market share, productivity, return on investments, utilization of
         capacity; factors affecting [Union] prices; actual and potential negative effects on cash flow, inventories, employment, wages,
         growth, ability to raise capital or investments. This list is not exhaustive, nor can any one or more of these factors necessarily
         give decisive guidance.
      
      6.      It must be demonstrated, from all the relevant evidence presented in relation to paragraph 2, that the dumped imports are
         causing injury within the meaning of this Regulation. Specifically, this shall entail a demonstration that the volume and/or
         price levels identified pursuant to paragraph 3 are responsible for an impact on the [Union] industry as provided for in paragraph 5,
         and that this impact exists to a degree which enables it to be classified as material.’
      
      10      According to Article 17(1) of that regulation: 
      
      ‘In cases where the number of complainants, exporters or importers, types of product or transactions is large, the investigation
         may be limited to a reasonable number of parties, products or transactions by using samples which are statistically valid
         on the basis of information available at the time of the selection, or to the largest representative volume of production,
         sales or exports which can reasonably be investigated within the time available.’
      
      11      Council Regulation (EC) No 2026/97 of 6 October 1997 on protection against subsidized imports from countries not members of
         the European Community (OJ 1997 L 288, p. 1; ‘the anti-subsidy regulation’), applicable ratione temporis to the facts underlying the dispute, establishes the possibility of imposing an import duty for the purpose of offsetting
         any subsidy granted for the manufacture, production, export or transport of any product whose release for free circulation
         in the Union causes injury to the Union industry. 
      
       Background to the dispute and the contested regulation 
      12      The appellants are Chinese companies which produce and export a product consisting of certain iron or steel fasteners as defined
         in paragraph B, section 1, of the contested regulation (‘the product concerned’).
      
      13      On 9 November 2007, following a complaint lodged on 26 September 2007 by European Industrial Fasteners Institute AISBL (EIFI)
         (‘EIFI’), the European Commission published a Notice of initiation of an anti-dumping proceeding concerning imports of certain
         iron or steel fasteners originating in the People’s Republic of China (OJ 2007 C 267, p. 31). The investigation covered the
         period from 1 October 2006 to 30 September 2007. The examination of the trends relevant for the assessment of the injury suffered
         by the Union industry took place from 1 January 2003 to the end of the investigation period mentioned above. 
      
      14      In view of the large number of parties involved, it was envisaged to apply sampling, in accordance with Article 17(1) of the
         basic regulation. In addition, in the Notice of initiation, the Commission stated that, in order to obtain the information
         it deemed necessary for its investigation, it would send questionnaires to the sampled exporting producers in China, to any
         association of exporting producers, to the sampled importers and to any association of importers named in the complaint, as
         well as to the authorities of the exporting country concerned.
      
      15      On 26 November 2007, Gem-Year Industrial Co. Ltd provided the Commission with the information required by the notice of initiation,
         in order to form part of the sample of exporting producers which the Commission proposed to establish. It also requested market
         economy treatment (‘MET’) or individual treatment. 
      
      16      Gem-Year Industrial Co. Ltd was not however selected for the sample of exporting producers established by the Commission.
         
      
      17      On 4 August 2008, the Commission sent the appellants an information document on the non-imposition of provisional anti-dumping
         measures. The appellants did not submit comments in reply to that document. 
      
      18      On 3 November 2008, the Commission sent the appellants the disclosure document setting out the essential facts and considerations
         on the basis of which it intended to propose to the Council of the European Union that a definitive anti-dumping duty be imposed
         on imports of certain iron or steel fasteners originating in China. 
      
      19      On 26 January 2009, the Council adopted the contested regulation, Article 1(1) and (2) of which imposed a definitive anti-dumping
         duty of 77.5% on the imports of the product concerned in respect of those companies, including the appellants, which had cooperated
         but had not been included in the sample. 
      
      20      By the contested regulation, the institutions denied MET to those exporting producers claiming it. In that respect, recitals
         63, 66 and 67 in the preamble to that regulation state:
      
      ‘(63) MET [was denied] … on the grounds that the costs of the major input, steel wire rod, did not substantially reflect market
         values, as required by Article 2(7)(c) of the basic [r]egulation. It was found that the prices of steel wire rod, or in some
         cases, drawn steel wire, charged on the Chinese market were significantly lower than those charged on other markets, such
         as Europe, India, North America and Japan. …
      
      ...
       (66) In reply to these arguments, it is noted that Article 2(7)(c) of the basic [r]egulation requires, inter alia, that the costs
         of major inputs substantially reflect market values. The main input of fasteners, steel wire rod, accounts for around 50%
         of the cost of manufacturing. Based on data obtained and verified during the investigation as well as from independent market
         sources, such as the “Steel Bulletin Board”, it is undisputable that prices of steel wire rod on the Chinese domestic market
         are significantly below prices on other markets. Given that the [People’s Republic of China] does not benefit from any natural
         comparative advantage with regard to iron ore, which it imports at international market prices, it is considered that there
         is no justification for the abnormally low prices of steel wire rod, which do not substantially reflect market values. This
         conclusion applies equally to the sector as a whole as well as individually to all of the investigated sampled companies.
         Therefore criterion 1 of Article 2(7)(c) is not considered to be met. 
      
       (67) As regards the interpretation of “market value”, “market value” has to be understood as a non-distorted market price. In this
         regard, as mentioned above, there are several sources and studies which point to State interference in the Chinese steel sector.
         Moreover, as mentioned above, some of the largest Chinese producers of steel wire rod received various types of subsidies
         in 2006 and 2007, as evidenced by their audited financial statements. It should also be borne in mind that it is up to the
         exporting producers to demonstrate that they operate under market economy conditions and that the costs of their major inputs
         substantially reflect market values. This has not been demonstrated in this case.’
      
       Procedure before the General Court and the judgment under appeal
      21      In order to challenge the legality of the contested regulation, the applicants at first instance put forward seven pleas in
         law before the General Court. 
      
      22      In particular, in their third plea, the applicants at first instance claimed that there had been a manifest error of assessment
         in the determination of the injury allegedly suffered by the Union industry. By their seventh plea, the applicants at first
         instance claimed an infringement of the anti-subsidy regulation. 
      
      23      By the judgment under appeal, the General Court rejected all the pleas in law raised by the applicants at first instance,
         and therefore dismissed their action and ordered them to pay the costs.
      
       Forms of order sought on appeal
      24      The appellants claim that the Court should: 
      
      –        set aside the judgment under appeal and uphold, by giving final judgment itself, the third and seventh pleas in law put forward
         before the General Court;
      
      –        in the alternative, refer the case back to the General Court, and
      –        order the Council and the interveners, in addition to bearing their own costs, to pay all costs incurred by the appellants
         in the course of the present appeal and the proceedings at first instance.
      
      25      The Council, the Commission and EIFI contend that the Court should dismiss the appeal and order the appellants to pay the
         costs. In the alternative, the Council contends that the application for annulment of the contested regulation should be dismissed.
         
      
       The appeal 
      26      This appeal is directed against the judgment under appeal only in so far as, by that decision, the General Court refused to
         uphold the third and seventh pleas put forward by the applicants at first instance, alleging a manifest error of assessment
         in the determination of the injury allegedly suffered by the Union industry and an infringement of the anti-subsidy regulation
         respectively.
      
       The first ground of appeal, concerning the absence of injury suffered by the Union industry on account of dumped imports 
       Arguments of the parties
      27      By their first ground of appeal, the appellants claim that, in view of the facts before the General Court, it is clear that
         there is no evidence that the Union industry suffered injury caused by dumped imports from China, for the purposes of Article 3(2),
         (5) and (6) of the basic regulation. This first ground is divided into two parts.
      
      28      In the first part of their first ground of appeal, the appellants claim, in the first place, that the General Court distorted,
         in paragraph 93 of the judgment under appeal, the clear sense of the evidence before it, by rejecting their argument that
         the institutions of the European Union were not entitled to consider that profitability was negatively affected by the imports
         in question. Since the profit margins of European Union producers were fluctuating upwards and increased precisely at the
         time when the dumped imports which are the subject of the contested regulation were at their highest level, those imports
         could not therefore have caused a material injury for the Union industry.
      
      29      In the second place, the appellants take issue in particular with the General Court’s finding, in paragraph 94 of the judgment
         under appeal, that the appellants did not dispute ‘the materiality of the figures indicated in the contested regulation’.
         In the appellants’ submission, that finding is open to two interpretations: (i) it means that the applicants at first instance
         did not challenge the fact that the profits achieved in the period under consideration were indicative of a material injury
         for the Union industry. In that case, in order to reach that conclusion, the General Court would have distorted the clear
         sense of the evidence put before it by the applicants at first instance, seeking to establish that, on account of the high
         level of the profit margins achieved by that industry during the period under examination, the industry had not suffered a
         material injury. Alternatively, (ii) that finding should be understood as meaning that the applicants at first instance did
         not dispute that the figures cited in the contested regulation are true. It would then be necessary to hold that the General
         Court, in so doing, manifestly erred in the legal categorisation of the facts in question, by finding that a difference of
         0.6% between the actual profit of the Union industry and the profit that it could have achieved in the absence of dumping
         is indicative of a material injury, within the meaning of the basic regulation.
      
      30      It follows that, whatever interpretation is adopted, on those grounds, the General Court was not entitled to find, as it did
         in paragraphs 92 to 95 of the judgment under appeal, that the profit margins of the Union industry were negatively affected
         by the dumped imports which are the subject of the contested regulation.
      
      31      In the second part of their first ground of appeal, the appellants complain, in essence, that the General Court based, in
         paragraphs 85 to 87, 101 and 102 of the judgment under appeal, the existence of a material injury for the Union industry on
         a series of indicators which, as a whole, depict the situation of an industry that was growing, but at a pace slower than
         that of the market as a whole. By those findings, the General Court, first, distorted the clear sense of the evidence submitted
         by the applicants at first instance and, second, erred in the legal categorisation of the facts in question, since that evidence
         does not depict a case of a material injury for the Union industry as a result of dumped imports, but at most a case of a
         missed opportunity for that industry to take full advantage of the growing market. 
      
      32      Moreover, in so far as the evidence adduced by the appellants revealed, as a whole, the existence of a positive situation
         for the Union industry, they claim that it is not possible, other than on a purely hypothetical and speculative basis, to
         base the existence of an injury on the same evidence. 
      
      33      The Council disputes the arguments put forward by the appellants in the two parts of their first ground of appeal and takes
         the view that those two parts must be declared unfounded or irrelevant. 
      
      34      The Commission and EIFI also contend that the first ground of appeal should be rejected in its entirety. 
      
       Findings of the Court
      35      By the two parts of their first ground of appeal, which it is appropriate to examine together, the appellants claim, in essence,
         that the General Court distorted the clear sense of the facts and evidence that they put before it, in so far as it upheld
         the validity of the contested regulation establishing the existence of an injury for the Union industry, although that evidence
         and those facts clearly establish that that was not the case. Moreover, by agreeing that the situation which gave rise to
         the contested regulation should be categorised as an injury, within the meaning of Article 3 of the basic regulation, the
         General Court also erred in the legal categorisation of the facts. 
      
      36      In that regard, it should be observed that it is clear from Article 256 TFEU and the first paragraph of Article 58 of the
         Statute of the Court of Justice of the European Union that the General Court has exclusive jurisdiction, first, to find the
         facts, except where the substantive inaccuracy of its findings is apparent from the documents submitted to it, and, second,
         to assess those facts. When the General Court has found or assessed the facts, the Court of Justice has jurisdiction under
         Article 256 TFEU to review the legal characterisation of those facts by the General Court and the legal conclusions it has
         drawn from them (see, to that effect, judgment in Moser Baer India v Council, C‑535/06 P, EU:C:2009:498, paragraph 31).
      
      37      By contrast, the Court of Justice has no jurisdiction to establish the facts or, in principle, to examine the evidence which
         the General Court accepted in support of those facts. Provided that the evidence has been properly obtained and the general
         principles of law and the rules of procedure in relation to the burden of proof and the taking of evidence have been observed,
         it is for the General Court alone to assess the value which should be attached to the evidence produced to it. Save where
         the clear sense of the evidence has been distorted, that appraisal does not therefore constitute a point of law which is subject
         as such to review by the Court of Justice (see, to that effect, judgment in Moser Baer India v Council, EU:C:2009:498, paragraph 32).
      
      38      In that regard, it should, in any event, be noted that a distortion must be obvious from the documents on the Court’s file,
         without there being any need to carry out a new assessment of the facts and the evidence (see, to that effect, judgment in
         Moser Baer India v Council, EU:C:2009:498, paragraph 33).
      
      39      In this case, the appellants seek to call into question, first, the General Court’s findings that the profit margins of the
         Union industry were negatively affected and, second, its finding that the institutions were legitimately able to conclude
         that the Union industry had suffered material injury. It follows that, by their first ground of appeal, the appellants seek,
         in essence, to call into question the General Court’s assessment of the facts.
      
      40      Accordingly, those assessments cannot be the subject of review by the Court of Justice at the stage of the appeal. 
      
      41      Moreover, in the light of the findings made in paragraphs 85 to 87, 93, 94, 101 and 102 of the judgment under appeal, which
         were expressly cited by the appellants in their appeal, it should be observed that no manifest distortion is evident from
         the General Court’s analysis, since the General Court demonstrated to the requisite legal standard the reasons that led it
         to uphold the validity of the measures adopted by the Council as provided in the contested regulation.
      
      42      It follows from the foregoing considerations that the appellants’ first ground of appeal must be rejected in its entirety
         as inadmissible.
      
       The second ground of appeal, alleging breach of the anti-subsidy regulation and misinterpretation of the first indent of Article 2(7)(c)
            of the basic regulation
       Arguments of the parties
      43      By their second ground of appeal, the appellants complain that, in paragraphs 152 to 154 of the judgment under appeal, the
         General Court erred in law in upholding the merits of the Council’s and the Commission’s position that the MET claim, which
         was lodged by the appellants pursuant to Article 2(7)(c) of the basic regulation, should be rejected on the ground that the
         steel industry upstream of the industry to which they belong was subsidised; according to the appellants, this constitutes
         a means of countervailing illegally such an advantage by means not envisaged in the anti-subsidy regulation.
      
      44      In particular, it follows from the judgment under appeal, first, that an MET claim may be rejected on the ground that a subsidy
         was granted to an industry other than that to which the claimant belongs and, second that, as long as MET is rejected on the
         basis of the first indent of Article 2(7)(c) of the basic regulation, compliance with the conditions and the procedures provided
         for in the anti-subsidy regulation is not necessary. 
      
      45      The appellants assert moreover that, in so far as it interpreted their argument, as summarised in paragraph 44 above, as seeking
         to support the need to initiate a proceeding as provided for in the anti-subsidy regulation, the General Court, in paragraph 153
         of the judgment under appeal, distorted the clear sense of the evidence before it. 
      
      46      Lastly, in the appellants’ submission, the General Court erred in law in its interpretation of the first indent of Article 2(7)(c)
         of the basic regulation by deciding that that provision permitted the institutions of the European Union to deny MET to a
         company on the sole ground that the non-member country on whose territory it is established practices a subsidy policy, without
         being required, to that end, to establish the specific and countervailable nature of that subsidy. Such an interpretation
         runs counter inter alia to the case-law as set out in the judgment in Council v Zhejiang Xinan Chemical Industrial Group (C‑337/09 P, EU:C:2012:471).
      
      47      The Council, supported by the Commission and EIFI, contends that the present ground of appeal should be rejected, stating
         in particular that it is based on false premises and a distortion of the findings of the General Court. 
      
       Findings of the Court
      48      It should be observed, as a preliminary point, that, according to the settled case-law of the Court of Justice, in the sphere
         of the common commercial policy and, most particularly, in the realm of measures to protect trade, the institutions of the
         European Union enjoy a broad discretion by reason of the complexity of the economic, political and legal situations which
         they have to examine. The judicial review of such an appraisal must therefore be limited to verifying whether the procedural
         rules have been complied with, whether the facts on which the contested choice is based have been accurately stated, and whether
         there has been a manifest error in the appraisal of those facts or a misuse of powers (judgment in Council and Commission v Interpipe Niko Tube and Interpipe NTRP, C‑191/09 P and C‑200/09 P, EU:C:2012:78, paragraph 63).
      
      49      Moreover, the method set out in Article 2(7)(b) of the basic regulation of determining the normal value of a product is an
         exception to the specific rule laid down for that purpose in Article 2(7)(a), which is, in principle, applicable to imports
         from non-market economy countries.
      
      50      In that context, the appellants claim, in essence, that the institutions of the European Union illegally countervailed the
         effect of the subsidies on the market of the major inputs by refusing their MET claim. 
      
      51      In that regard, it should be observed that, in granting MET, the institutions of the European Union ascertain whether, for
         the purposes of Article 2(7)(c) of the basic regulation, producers operate under market economy conditions. Amongst other
         conditions, under the first indent of that provision, the institutions examine whether the costs of the major inputs of the
         producers in question substantially reflect market values.
      
      52      In the context of that examination, as the General Court correctly holds in paragraph 152 of the judgment under appeal, the
         institutions of the European Union were right in taking the view that that criterion referred to a market in which the determination
         of prices was not distorted by State interference. As the judgment under appeal also held, it is with a view to carrying out
         such an examination, under Article 2(7)(c) of the basic regulation, that the institutions took account of the presence of
         the State subsidies granted in the Chinese steel sector.
      
      53      In those circumstances, it should be observed that, when applying Article 2(7)(c) of the basic regulation, those institutions
         merely took account of the economic reality of such State interference in favour of the industrial sector upstream of the
         sector to which the appellants belong, namely the steel sector in general, inasmuch as that interference has an effect on
         the market of the product concerned — steel wire rod — a separate market situated downstream, which remains, however, the
         only market which is the subject of the anti-dumping proceeding in question. Consequently, the Court observes that the General
         Court did not err in law in holding that such verification does not result in circumvention of the rules relating to subsidies
         by the illegal countervailing of those subsidies, by means of the refusal to grant MET. 
      
      54      In that context, the finding in paragraph 153 of the judgment under appeal that the institutions were in no way obliged to
         initiate and successfully bring to a conclusion a procedure as provided for in the anti-subsidy regulation in respect of products
         other than the product concerned and situated in the upstream market seeks merely to reinforce the idea that the institutions’
         objective was solely to take account of the elements necessary for the correct application, as regards the product concerned,
         of Article 2(7)(c) of the basic regulation. Consequently, that finding does not amount, contrary to the appellants’ submission,
         to a distortion of the clear sense of the evidence before the General Court.
      
      55      Accordingly, the appellants’ argument relating to an alleged illegal countervailing of the subsidies on the market of the
         major inputs by means of the refusal of MET must be rejected. 
      
      56      Lastly, as regards the alleged error of law made by the General Court in the light of the case-law as set out in the judgment
         in Council v Zhejiang Xinan Chemical Industrial Group (EU:C:2012:471), it should be recalled that, in the context of the examination provided for in the first indent of Article 2(7)(c)
         of the basic regulation, two conditions must be fulfilled by MET claimants. First, the decisions of those producers relating
         to costs, prices and output must be made in response to market signals reflecting supply and demand, and without significant
         State interference in this regard. Second, the costs of major inputs must substantially reflect market values. However, whilst
         the judgment in Council v Zhejiang Xinan Chemical Industrial Group (EU:C:2012:471) sought to determine whether the fact that the State controlled a company was sufficient for a finding of
         significant State interference, that is to say a determination relating to the first condition laid down in that provision
         of the basic regulation, in the present case, the institutions denied the appellants MET on the ground that the second condition
         laid down in that provision was not fulfilled. Moreover, it is apparent from paragraph 90 of that judgment that MET may only
         be granted to an operator if the costs to which it is subject are the result of the free operation of supply and demand. As
         the Council observes in its defence, that condition covers State subsidisation on the market of the major inputs. Consequently,
         the reference to the judgment in Council v Zhejiang Xinan Chemical Industrial Group (EU:C:2012:471) is irrelevant in the context of this appeal.
      
      57      In the light of all the foregoing considerations, the arguments raised in the second ground of appeal must be rejected as
         unfounded and, consequently, the appeal must be dismissed in its entirety. 
      
       Costs
      58      Under Article 138(1) of the Rules of Procedure of the Court of Justice, applicable to appeal proceedings pursuant to Article 184(1)
         thereof, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s
         pleadings. As the appellants have been unsuccessful and the Council and EIFI have applied for costs, the appellants must be
         ordered to pay the costs incurred by those parties in the present appeal. 
      
      59      Under Article 140(1) of the Rules of Procedure, also applicable to appeal proceedings under Article 184(1) thereof, the Commission
         is to bear its own costs.
      
      On those grounds, the Court (Seventh Chamber) hereby
      1.      Dismisses the appeal;
      2.      Orders Gem-Year Industrial Co. Ltd and Jinn-Well Auto-Parts (Zhejiang) Co. Ltd to pay the costs incurred by the Council of
            the European Union and by the European Industrial Fasteners Institute AISLB (EIFI) in the present proceedings; 
      3.      Orders the European Commission to bear its own costs.
      [Signatures]
      * Language of the case: English.