JUDGMENT OF THE GENERAL COURT (Eighth Chamber)
7 February 2013 (*)
(Dumping – Imports of ammonium nitrate originating in Russia – Request for a partial interim review – Normal value – Export price – Articles 1 and 2 of Regulation (EC) No 384/96 (now Articles 1 and 2 of Regulation (EC) No 1225/2009))
In Case T‑235/08,
Acron OAO, established in Moscow (Russia),
Dorogobuzh OAO, established in Moscow,
represented initially by P. Vander Schueren and B. Evtimov, lawyers, and subsequently by B. Evtimov and D. O’Keeffe, Solicitor,
applicants,
v
Council of the European Union, represented by J.-P. Hix and B. Driessen, acting as Agents, and initially by G. Berrisch and G. Wolf, lawyers, and subsequently by G. Berrisch,
defendant,
supported by
European Commission, represented by H. van Vliet and K Talabér‑Ritz, acting as Agents,
and by
Fertilizers Europe, established in Brussels (Belgium), represented by B. O’Connor, Solicitor, and S. Gubel, lawyer,
interveners,
ACTION for annulment of Council Regulation (EC) No 236/2008 of 10 March 2008 concerning terminating the partial interim review pursuant to Article 11(3) of Regulation (EC) No 384/96 of the anti‑dumping duty on imports of ammonium nitrate originating in Russia (OJ 2008 L 75, p. 1),
THE GENERAL COURT (Eighth Chamber),
composed of L. Truchot, President, H. Kanninen (Rapporteur) and M. E. Martins Ribeiro, Judges,
Registrar: J. Weychert, Administrator,
having regard to the written procedure and further to the hearing on 19 January 2012,
gives the following
Judgment
Legal context
1 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 amended (‘the basic regulation’) (replaced by Council Regulation (EC) No 1225/2009 of 30 November 2009 on protection against dumped imports from countries not members of the European Community (OJ 2009 L 343, p. 51, corrigendum OJ 2010 L 7, p. 22)) constitutes the basic anti-dumping legislation.
2 Article 1(1) and (2) of the basic regulation (now Article 1(1) and (2) of Regulation No 1225/2009) provides:
‘1. An anti-dumping duty may be applied to any dumped product whose release for free circulation in the Community causes injury.
2. A product is to be considered as being dumped if its export price to the Community is less than a comparable price for the like product, in the ordinary course of trade, as established for the exporting country.’
3 Article 2 of the basic regulation (now Article 2 of Regulation No 1225/2009) provides:
‘1. The normal value shall normally be based on the prices paid or payable, in the ordinary course of trade, by independent customers in the exporting country.
However, where the exporter in the exporting country does not produce or does not sell the like product, the normal value may be established on the basis of prices of other sellers or producers.
Prices between parties which appear to be associated or to have a compensatory arrangement with each other may not be considered to be in the ordinary course of trade and may not be used to establish normal value unless it is determined that they are unaffected by the relationship.
…
2. Sales of the like product intended for domestic consumption shall normally be used to determine normal value if such sales volume constitutes 5% or more of the sales volume of the product under consideration to the Community.
However, a lower volume of sales may be used when, for example, the prices charged are considered representative for the market concerned.
3. When there are no or insufficient sales of the like product in the ordinary course of trade, or where because of the particular market situation such sales do not permit a proper comparison, the normal value of the like product shall be calculated on the basis of the cost of production in the country of origin plus a reasonable amount for selling, general and administrative costs and for profits, or on the basis of the export prices, in the ordinary course of trade, to an appropriate third country, provided that those prices are representative. A particular market situation for the product concerned within the meaning of the preceding sentence may be deemed to exist, inter alia, when prices are artificially low, when there is significant barter trade, or when there are non-commercial processing arrangements.
4. Sales of the like product in the domestic market of the exporting country, or export sales to a third country, at prices below unit production costs (fixed and variable) plus selling, general and administrative costs may be treated as not being in the ordinary course of trade by reason of price, and may be disregarded in determining normal value, only if it is determined that such sales are made within an extended period in substantial quantities, and are at prices which do not provide for the recovery of all costs within a reasonable period of time.
If prices which are below costs at the time of sale are above weighted average costs for the period of investigation, such prices shall be considered to provide for recovery of costs within a reasonable period of time.
…
5. Costs shall normally be calculated on the basis of records kept by the party under investigation, provided that such records are in accordance with the generally accepted accounting principles of the country concerned and that it is shown that the records reasonably reflect the costs associated with the production and sale of the product under consideration. If costs associated with the production and sale of the product under investigation are not reasonably reflected in the records of the party concerned, they shall be adjusted or established on the basis of the costs of other producers or exporters in the same country or, where such information is not available or cannot be used, on any other reasonable basis, including information from other representative markets.
Consideration shall be given to evidence submitted on the proper allocation of costs, provided that it is shown that such allocations have been historically utilised. In the absence of a more appropriate method, preference shall be given to the allocation of costs on the basis of turnover. Unless already reflected in the cost allocations under this subparagraph, costs shall be adjusted appropriately for those non‑recurring items of cost which benefit future and/or current production.
Where the costs for part of the period for cost recovery are affected by the use of new production facilities requiring substantial additional investment and by low capacity utilisation rates, which are the result of start-up operations which take place within or during part of the investigation period, the average costs for the start-up phase shall be those applicable, under the abovementioned allocation rules, at the end of such a phase, and shall be included at that level, for the period concerned, in the weighted average costs referred to in the second subparagraph of paragraph 4. The length of a start-up phase shall be determined in relation to the circumstances of the producer or exporter concerned, but shall not exceed an appropriate initial portion of the period for cost recovery. For this adjustment to costs applicable during the investigation period, information relating to a start-up phase which extends beyond that period shall be taken into account where it is submitted prior to verification visits and within three months of the initiation of the investigation.
6. The amounts for selling, for general and administrative costs and for profits shall be based on actual data pertaining to production and sales, in the ordinary course of trade, of the like product, by the exporter or producer under investigation. When such amounts cannot be determined on this basis, the amounts may be determined on the basis of:
(a) the weighted average of the actual amounts determined for other exporters or producers subject to investigation in respect of production and sales of the like product in the domestic market of the country of origin;
(b) the actual amounts applicable to production and sales, in the ordinary course of trade, of the same general category of products for the exporter or producer in question in the domestic market of the country of origin;
(c) any other reasonable method, provided that the amount for profit so established shall not exceed the profit normally realised by other exporters or producers on sales of products of the same general category in the domestic market of the country of origin.
7. (a) In the case of imports from non-market economy countries, normal value shall be determined on the basis of the price or constructed value in a market economy third country, or the price from such a third country to other countries, including the Community, or where those are not possible, on any other reasonable basis, including the price actually paid or payable in the Community for the like product, duly adjusted if necessary to include a reasonable profit margin.
An appropriate market economy third country shall be selected in a not unreasonable manner, due account being taken of any reliable information made available at the time of selection. Account shall also be taken of time-limits; where appropriate, a market economy third country which is subject to the same investigation shall be used.
…’
4 Recitals 3 and 4 in the preamble to Council Regulation (EC) No 1972/2002 of 5 November 2002 amending the basic regulation (OJ 2002 L 305, p. 1) state:
‘(3) Article 2(3) of Regulation (EC) No 384/96 stipulates, inter alia, that where because of a particular market situation sales of the like product do not permit a proper comparison, the normal value is to be calculated on the basis of the cost of production in the country of origin plus a reasonable amount for selling, general and administrative costs and for profits, or on the basis of the export prices, in the ordinary course of trade, to an appropriate third country provided that those prices are representative. It is prudent to provide for a clarification as to what circumstances could be considered as constituting a particular market situation in which sales of the like product do not permit a proper comparison. Such circumstances can, for example, occur because of the existence of barter-trade and other non-commercial processing arrangements or other market impediments. As a result market signals may not properly reflect supply and demand which in turn may have an impact on the relevant costs and prices and may also result in domestic prices being out of line with world-market prices or prices in other representative markets. Obviously, any clarification given in this context cannot be of an exhaustive nature in view of the wide variety of possible particular market situations not permitting a proper comparison.
(4) It is considered appropriate to give some guidance as to what has to be done if, pursuant to Article 2(5) of Regulation (EC) No 384/96, the records do not reasonably reflect the costs associated with the production and sale of the product under consideration, in particular in situations where because of a particular market situation sales of the like product do not permit a proper comparison. In such circumstances, the relevant data should be obtained from sources which are unaffected by such distortions. Such sources can be the costs of other producers or exporters in the same country or, where such information is not available or cannot be used, any other reasonable basis, including information from other representative markets. The relevant data can be used either for adjusting certain items of the records of the party under consideration or, where this is not possible, for establishing the costs of the party under consideration.’
5 Article 2.2.1.1 of the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 (OJ 1994 L 336, p. 103, ‘the 1994 Anti-Dumping Agreement’), which appears as Annex 1A to the Agreement establishing the World Trade Organisation (‘WTO’), approved by Council Decision 94/800/EC of 22 December 1994 concerning the conclusion on behalf of the European Community, as regards matters within its competence, of the agreements reached in the Uruguay Round multilateral negotiations (1986-1994) (OJ 1994 L 336, p. 1), provides:
‘For the purpose of paragraph 2, costs shall normally be calculated on the basis of records kept by the exporter or producer under investigation, provided, that such records are in accordance with the generally accepted accounting principles of the exporting country and reasonably reflect the costs associated with the production and sale of the product under consideration. Authorities shall consider all available evidence on the proper allocation of costs, including that which is made available by the exporter or producer in the course of the investigation provided that such allocations have been historically utilised by the exporter or producer, in particular in relation to establishing appropriate amortisation and depreciation periods and allowances for capital expenditures and other development costs. Unless already reflected in the cost allocations under this sub-paragraph, costs shall be adjusted appropriately for those non-recurring items of cost which benefit future and/or current production, or for circumstances in which costs during the period of investigation are affected by start-up operations.’
Background to the dispute
6 On 15 April 2002, the Council of the European Union adopted Regulation (EC) No 658/2002 imposing a definitive anti-dumping duty on imports of ammonium nitrate originating in Russia (OJ 2002 L 102, p. 1).
7 The Commission of the European Communities received a request for a partial interim review pursuant to Article 11(3) of the basic regulation. That request was submitted by the applicants, Acron OAO and Dorogobuzh OAO (previously called OJSC Acron and OJSC Dorogobuzh), two related Russian exporting producers belonging to the same holding company.
8 Having determined, after consulting the Advisory Committee, that sufficient evidence existed for the initiation of a partial interim review, the Commission published on 19 December 2006 a notice of initiation of a partial interim review of the anti-dumping measures applicable to imports of ammonium nitrate originating in Russia, pursuant to Article 11(3) of the basic regulation (OJ 2006 C 311, p. 55).
9 The investigation of dumping covered the period 1 October 2005 to 30 September 2006.
10 Interested parties were given the opportunity to make their views known in writing and to request a hearing. All interested parties who so requested and showed that there were particular reasons why they should be heard were granted a hearing.
11 On 10 March 2008, the Council adopted Regulation (EC) No 236/2008 of 10 March 2008 concerning terminating the partial interim review pursuant to Article 11(3) of the basic regulation of the anti-dumping duty on imports of ammonium nitrate originating in Russia (OJ 2008 L 75, p. 1; ‘the contested regulation’). According to the contested regulation, the Council decided to terminate the partial interim review without amending the anti-dumping measures in force.
12 Recitals 16 to 19 and 46 to 48 to the contested regulation read as follows:
‘(16) The Commission … examined whether the domestic sales could be considered as being made in the ordinary course of trade pursuant to Article 2(4) of the basic Regulation. To this end, the cost of production of the product produced and sold by the applicant on the domestic market was examined.
(17) Gas is a main raw material component in the manufacturing process of the product concerned and represents a significant proportion of the total cost of production. In accordance with Article 2(5) of the basic Regulation, it was examined whether the costs associated with the production and sales of the product under consideration were reasonably reflected in the records of the parties concerned.
(18) It was established on the basis of data published by internationally recognised sources specialised in energy markets, that the prices paid by the applicant were abnormally low. By way of illustration, they amounted to one fifth of the export price of natural gas from Russia and were also significantly lower than the gas price paid by the Community producers. In this regard, all available data indicate that domestic gas prices in Russia were regulated prices which are far below market prices paid in unregulated markets for natural gas.
(19) Since gas costs were not reasonably reflected in the applicant’s records, they had to be adjusted accordingly. In the absence of any undistorted gas prices relating to the Russian domestic market, and in accordance with Article 2(5) of the basic Regulation, gas prices had to be established on “any other reasonable basis, including information from other representative markets”. The adjusted price was based on the average price of Russian gas when sold for export at the German/Czech border (Waidhaus), net of transport costs and adjusted to reflect local distribution costs. Waidhaus being the main hub for Russian gas sales to the EU, which is both the largest market for Russian gas and has prices reasonably reflecting costs, can be considered a representative market.
…
(46) It was … considered that domestic prices did not provide an appropriate basis for the establishment of the normal value and another method had to be applied. In accordance with Article 2(3) and (6) of the basic Regulation, normal value was constructed by adding to the exporter’s manufacturing costs of the product concerned, adjusted where necessary as mentioned in recital (19) above, a reasonable amount for [sales, general and administrative costs (‘SG&A costs’)] and a reasonable amount for profit.
(47) SG&A costs and profit could not be established on the basis of the chapeau of Article 2(6) of the basic Regulation because the applicant did not have representative domestic sales of the product concerned in the ordinary course of trade. Article 2(6)(a) of the basic Regulation could not be applied, since there is only one producer subject to the investigation. Article 2(6)(b) was not applicable either, since the manufacturing cost of the applicant for products belonging to the same general category of goods would also need to be adjusted in respect of gas costs, for the reasons indicated in recital (18) above. Therefore, SG&A costs and profit were established pursuant to Article 2(6)(c) of the basic Regulation.
(48) In accordance with Article 2(6)(c) of the basic Regulation, the SG&A costs [and the amount for profit] were based on a reasonable method. The North American market showed a significant volume of domestic sales and a considerable level of competition from both domestic and foreign companies. In this respect, consideration was given to publicly available information relating to major companies operating in the fertilisers business sector. It was found that the corresponding data from North American (USA and Canadian) producers would be the most appropriate for the purpose of the investigation, given the large availability of reliable and complete public financial information from listed companies in this region of the world…’
Procedure and forms of order sought by the parties
13 By application lodged at the Court Registry on 9 June 2008, the applicants brought the present action.
14 The applicants claim that the Court should:
– annul the contested regulation, in so far as it imposes an anti‑dumping duty on the applicants and their related companies;
– order the Council and the Commission (‘the institutions’) to discontinue the imposition of the anti-dumping duty with respect to the applicants and their related companies, until the institutions have adopted the measures necessary to comply with the judgment to be delivered;
– order the Council to pay the costs.
15 The Council contends that the Court should:
– dismiss the action;
– order the applicants to pay the costs.
16 Following an application to intervene submitted by the Commission on 24 September 2008, the latter was, by order of the President of the First Chamber of the Court of 2 March 2010, granted leave to intervene in support of the form of order sought by the Council. The Commission lodged a statement in intervention at the Court Registry on 27 April 2010 and the applicants and the Council responded by pleadings lodged on 1 July and 6 July 2010 respectively.
17 By orders of the President of the First Chamber of the Court dated 14 August 2008, 3 June 2009 and 17 December 2009, the present case was stayed between 14 August 2008 and 17 December 2009.
18 Following an application to intervene submitted by Fertilizers Europe on 9 February 2011, the latter was, by order of the President of the Eighth Chamber of the Court of 11 May 2011, granted leave to intervene at the hearing in support of the form of order sought by the Council.
19 In the written observations on the application to intervene which they lodged at the Court Registry on 18 March 2011, the applicants argued that Fertilizers Europe’s claim, submitted in the application to intervene, that the applicants should be ordered to pay Fertilizers Europe’s costs was inadmissible, since Article 40 of the Statute of the Court of Justice provides that the application to intervene is to be limited to supporting the form of order sought by one of the parties. The applicants further submitted that it is this Court’s practice that orders on costs incurred by non-institutional interveners take account of the relevance of the intervention and the extent to which it assists the Court in clarifying the issues before it. In the present case, if Fertilizers Europe’s intervention is limited to making observations during the oral procedure, such intervention would not contribute substantially to the Court’s analysis. The applicants claimed that Fertilizers Europe should be ordered to bear the costs incurred in its intervention, pursuant to the third subparagraph of Article 87(4) of the Rules of Procedure of the Court.
20 As the applicants had lodged an application for confidential treatment pursuant to Article 116(2) of the Rules of Procedure on 18 March 2011, the President of the Eighth Chamber of the Court, in his order of 11 May 2011, reserved the decision on whether the applicants would receive the Report for the Hearing in order to identify the elements that might be considered to be confidential.
21 By letter of 14 November 2011, the Court Registry provided a draft of the Report for the Hearing to the applicants, and the applicants stated, by letter dated 29 November 2011, that the draft did not contain any elements that might be considered to be confidential.
Law
22 In support of their action, the applicants put forward a single plea in law, alleging infringement of Articles 1 and 2 of the basic regulation. They divide this plea into two parts, whereby, in essence, they maintain, first, that, for the purposes of calculating normal value, it was incorrectly found that the production costs and sales costs of the product concerned were not reasonably reflected in the applicants’ accounts and that it was therefore necessary to apply an adjustment. Second, the applicants state that (i) the adjustment made for the price of Russian gas was incorrectly based on the price at Waidhaus (Germany), (ii) the export duty of 30% applicable to Russian gas was not deducted from the amount of that adjustment and (iii) an adjustment of 15% was wrongly made to take account of local distribution costs.
23 It should be observed, as a preliminary point, that when the institutions, acting under the basic regulation, adopt specific protective measures against dumping, they enjoy a wide discretion by reason of the complexity of the economic, political and legal situations they have to examine (Case C-69/89 Nakajima v Council [1991] ECR I-2069, paragraph 86; Case C-26/96 Rotexchemie [1997] ECR I-2817, paragraph 10; Case T-164/94 Ferchimex v Council [1995] ECR II‑2681, paragraph 131; Case T-162/94 NMB France and Others v Commission [1996] ECR II-427, paragraph 72; Case T-155/94 Climax Paper v Council [1996] ECR II-873, paragraph 98; Case T‑170/94 Shanghai Bicycle v Council [1997] ECR II-1383, paragraph 63; and Case T‑118/96 Thai Bicycle v Council [1998] ECR II-2991, paragraph 32).
24 It follows that review of such assessments by the Courts of the Union must be limited to verifying whether the relevant 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 of assessment of the facts or a misuse of power (Case 240/84 NTN Toyo Bearing and Others v Council [1987] ECR 1809, paragraph 19; Case 258/84 Nippon Seiko v Council [1987] ECR 1923, paragraph 21; Case C-156/87 Gestetner Holdings v Council and Commission [1990] ECR I-781, paragraph 63; Rotexchemie, paragraph 23 above, paragraph 11; Climax Paper v Council, paragraph 23 above, paragraph 98; Shanghai Bicycle v Council, paragraph 23 above, paragraph 64; and Thai Bicycle v Council, paragraph 23 above, paragraph 33).
First part of the plea
25 In this first part, the applicants seek to show that, for the purposes of calculating normal value, the institutions incorrectly applied the principle of adjustment and also a method intended for non‑market‑economy countries, which is contrary not only to the wording of Article 2(5) of the basic regulation but also to that provision read in conjunction with the other provisions of Articles 1 and 2 of the basic regulation (first complaint) and, furthermore, to the provisions of the 1994 Anti-Dumping Agreement (second complaint).
– First complaint
26 In the applicants’ submission, the wording of Article 2(5) of the basic regulation allows the institutions to ascertain that the main costs associated with production and sales are duly entered and accounted for in the producers’ records. However, it does not provide that the institutions can ascertain whether those costs are reasonable by reference to the price levels on a different market. The wording of Article 2(5) of the basic regulation does not mean that it is necessary to ascertain the ‘reliability’ of the main elements of the production and sales costs of the product concerned in the light of the prices/values of similar inputs exported to the European Union or found on unregulated third-country markets.
27 The applicants further submit that Article 2(5) of the basic regulation, read in conjunction with the other provisions of Article 1 and Article 2(1) to (6) of that regulation, does not endorse the adjustment made to the price of gas by the institutions in the present case.
28 First of all, the Court notes that Article 2(3) of the basic regulation lays down, first, the criteria for disregarding the method for establishing normal value based on the prices on the domestic market of the exporting country and, second, the alternative methods for calculating that value. Article 2(3) provides that one of the grounds for having recourse to an alternative method is the fact that there are no sales of the like product in the ordinary course of trade.
29 Article 2(4) of the basic regulation sets out the conditions under which sales may be treated as not being in the ordinary course of trade. As provided in Article 2(4), sales of the like product in the domestic market of the exporting country, or export sales to a third country, at prices below unit production costs plus selling, general and administrative costs may be treated as not being in the ordinary course of trade by reason of price, and may be disregarded in determining normal value, only if it is determined that such sales are made within an extended period in substantial quantities, and are at prices which do not provide for the recovery of all costs within a reasonable period of time.
30 In the present case, it is apparent from the contested regulation that the institutions disregarded the primary methods of calculation on the ground that the sales had not been made in the ordinary course of trade. They then resorted to the method laid down in Article 2(3) of the basic regulation, according to which the normal value of the product is calculated on the basis of the cost of production in the country of origin plus a reasonable amount for selling, general and administrative costs and for profits (‘the constructed normal value’).
31 The parties disagree as to the determination of the cost of production of the product concerned pursuant to the first subparagraph of Article 2(5) of the basic regulation. More specifically, the dispute concerns the calculation of the cost of gas in the production of the product concerned.
32 It is not in dispute that gas is the major input of the product concerned and that the price of gas from which the applicants benefited in producing the product concerned was regulated in Russia. The cost of gas actually borne by the applicants is not at issue, since the Council does not argue that that cost was different from that set out in the applicants’ accounts. The applicants complain that the Council failed to calculate the normal value of the product concerned on the basis of that cost and used another, higher price of gas for that calculation, taken from a market other than the domestic market in Russia.
33 It is apparent from a combined reading of the first sentence of Article 2(3), the first and second subparagraphs of Article 2(4) and the first sentence of the first subparagraph of Article 2(5) of the basic regulation that, in order to calculate the cost of production, costs must normally be calculated on the basis of records kept by the party under investigation.
34 The institutions contend that the first sentence of the first subparagraph of Article 2(5) of the basic regulation contains two clarifications, which may be regarded as two requirements, namely (i) that the records must be kept in accordance with the generally accepted accounting principles of the country concerned and (ii) that the records must reasonably reflect the costs associated with the production and sale of the product under consideration. The second requirement entitles the institutions to ascertain whether the records ‘reasonably’ reflect the costs even if the generally accepted accounting principles of the country concerned are observed, and, where necessary, to make adjustments on the basis of sources of information other than the records, in accordance with the second sentence of the first subparagraph of Article 2(5) of the basic regulation.
35 The Council does not contend that the first requirement has been infringed in the present case. On the other hand, it argues that the applicants’ records do not reasonably reflect the costs associated with the production of the product concerned, given that the price of gas is artificially low, being considerably less than the prices of gas charged on non-regulated markets. Accordingly, the Council claims that it was entitled, in accordance with the first subparagraph of Article 2(5) of the basic regulation, to adjust the price of gas on the basis of information from other representative markets.
36 It must therefore be examined whether the Council was entitled to disregard the cost of gas actually borne by the applicants, as stated in their accounting records, for producing the product concerned, on the ground that – in the Council’s view – that cost was artificially low because of the regulation of the price of gas in Russia, and whether the Council was therefore entitled to adjust that cost upwards taking into account the price of gas on the market which it regarded as representative.
37 The first subparagraph of Article 2(5) of the basic regulation provides that production costs must normally be calculated on the basis of records kept by the party under investigation. Consequently, the costs are normally calculated using information from those records.
38 The second and third subparagraphs of Article 2(5) of the basic regulation contain specific provisions on (i) the allocation of costs and (ii) start-up costs. Those subparagraphs provide for the possibility of adjusting the costs in the records, and those costs may be adapted and allocated in a different manner under certain conditions.
39 It is also apparent from the first subparagraph of Article 2(5) of the basic regulation that the records of the party concerned do not serve as a basis for calculating normal value if the costs associated with the production of the product under investigation are not reasonably reflected in those records. In that case, the second sentence of the first subparagraph provides that the costs are to be adjusted or established on the basis of sources of information other than those records. That information may be taken from the costs incurred by other producers or exporters or, when that information is not available or cannot be used, any other reasonable source of information, including information from other representative markets.
40 In that connection, it must be observed that the second sentence of the first subparagraph of Article 2(5) of the basic regulation, concerning the method for calculating the normal value, was inserted by Regulation No 1972/2002.
41 It is apparent from recital 4 to that regulation that the insertion of the second sentence was designed to give some guidance as to what has to be done if the records do not reasonably reflect the costs associated with the production and sale of the product under consideration, essentially in particular market situations in which sales of the like product do not permit a proper comparison. In such a case, that recital states that the data should be obtained from sources which are unaffected by such distortions.
42 In recital 4 to Regulation No 1972/2002, it is also stated that recourse may be had to the costs of other producers or exporters in the same country or, where such information is not available or cannot be used, any other reasonable basis, including information from other representative markets. It is also apparent from that recital that the relevant data can be used either for adjusting certain items of the records of the party under consideration or, where this is not possible, for establishing the costs of that party.
43 In the present case, the Council argued before the Court that there was no ordinary course of trade, as the price of gas, the major input of the product concerned, was regulated so that it was artificially low on the domestic market. The applicants did not deny that the price of gas on the Russian market was regulated and that it represented a considerable proportion of the cost of the product concerned.
44 Since the price of gas in Russia was regulated, it may indeed be presumed that the cost of producing the product concerned was affected by a distortion of the domestic Russian market regarding the price of gas, as that price was not the result of market forces.
45 In addition, the interpretation of the first sentence of Article 2(5) of the basic regulation put forward by the applicants, namely that the costs of production are calculated solely on the basis of the records of the party under consideration, would be tantamount in fact to precluding recourse to the constructed normal value in particular where the costs of production do not result from the ordinary course of trade, even though such recourse is expressly provided for in Article 2(3) of that regulation.
46 The institutions were therefore fully entitled to conclude that one of the items in the applicants’ records could not be regarded as reasonable and that, consequently, that item had to be adjusted by having recourse to other sources from markets which the institutions regarded as more representative and, consequently, the price of gas had to be adjusted.
47 As regards the argument that only Article 2(7) of the basic regulation allows the institutions to establish the normal value by reference to price/cost data in a market-economy third country rather than to price/cost data in the exporting country or the country of origin, the applicants submit that the scope of Article 2(7) is restricted to an exhaustive list of non-market-economy countries. The applicants state that, as at the date of the initiation of the expiry review in the present case, the Russian Federation was not on the list of countries in question. It had obtained country-wide market-economy status in 2002 and such status constitutes an irrebuttable presumption that the costs of investigated producers based in that country are sufficiently reliable for the normal value to be established on the basis, in particular, of Article 2(3) to (6) of the basic regulation.
48 In the present case, the normal value was not established on the basis of Article 2(7) of the basic regulation, since the Russian Federation was not, at the material time, a country covered by Article 2(7), and Article 2(1) to (6) of the basic regulation applied to the facts. As noted in paragraph 37 above, the first subparagraph of Article 2(5) of the basic regulation allows, under certain conditions, information from markets other than that of the exporting country or the market of origin to be taken into account.
49 The applicants also submit that the interpretation of Article 2(5) of the basic regulation proposed by the institutions has a number of inconsistent results.
50 First, a producer enjoying low prices on the domestic market of major inputs of its products will be in a dilemma, as it can either not increase its prices, in which case it may well be considered to be importing dumped products into the European Union, or increase its prices in order to avoid any anti-dumping investigation, in which case its prices may well become prohibitive on the domestic market. The same producers, in order to avoid an anti-dumping investigation, will be induced to enter in their records, in breach of their national law, not the real costs of inputs of their products but the average cost of those inputs on foreign unregulated markets.
51 In that connection, as the Council correctly notes, its own approach and that of the Commission does not force the applicants to increase their domestic sales price. The anti-dumping measure in the contested regulation does not restrict the applicants’ ability to charge whatever prices they wish in the Russian market (see, to that effect, Joined Cases T-159/94 and T-160/94 Ajinomoto and NutraSweet v Council [1997] ECR II-2461, paragraph 196).
52 Second, the applicants submit that the costs of producing a product in a market economy country might be considered too low by comparison with the costs of an equivalent product found in the European Union or on other foreign markets. The anti-dumping investigation carried out by the institutions in the present case unjustifiably replaces the rules on State aid and more particularly Council Regulation (EC) No 2026/97 of 6 October 1997 on protection against subsidised imports from countries not members of the European Community (OJ 1997 L 288, p. l).
53 In that connection, it must be noted that, as is apparent from recital 5 to Regulation No 2026/97, both the basic regulation and Regulation No 2026/97 seek to lay down in sufficient detail the requirements for the application of those two trade defence instruments.
54 However, nothing indicates that the issue in the present case, which concerns the legislation obliging Gazprom to supply natural gas at a low price in Russia, ought to have been considered only from the perspective of State aid. It must be noted that the applicants have not adduced any evidence to that effect.
55 Nor does anything indicate that the mere fact that the issue might be examined from the perspective of State aid prevented the institutions from analysing the present case also from the perspective of the basic regulation.
56 As the Council noted at the hearing, both the Commission and itself have already examined certain situations from both State aid and anti‑dumping perspectives (Case T-462/04 HEG and Graphite India v Council [2008] ECR II-3685).
57 At most, as provided for by Article 14(1) of the basic regulation and Article 24(1) of Regulation No 2026/97, no product is to be subject to both anti-dumping and countervailing duties for the purpose of dealing with one and the same situation arising from dumping or from export subsidisation.
58 It follows from the foregoing that the first complaint is unfounded.
– The second complaint
59 The applicants submit that the provisions of the basic regulation are intended to implement the rules of the 1994 Anti-Dumping Agreement and that the institutions are required to interpret and apply the provisions of the basic regulation in accordance with that agreement.
60 In that connection, it is apparent from settled case-law that, in view of their nature and structure, the WTO agreements are not in principle among the rules in the light of which the Courts of the European Union are to review the legality of measures of the EU institutions under the first paragraph of Article 230 EC (Case C-76/00 P Petrotub and Republica v Council [2003] ECR I-79, paragraph 53, and Case T-45/06 Reliance Industries v Council and Commission [2008] ECR II‑2399, paragraph 87).
61 However, where the European Union intended to implement a particular obligation assumed in the context of the WTO, or where the EU measure refers expressly to precise provisions of the WTO agreements, it is for the Courts of the European Union to review the legality of the EU measure in question in the light of the WTO rules (Petrotub and Republica v Council, paragraph 60 above, paragraph 54; Case C-351/04 Ikea Wholesale [2007] ECR I-7723, paragraph 30; and Reliance Industries v Council and Commission, paragraph 60 above, paragraph 88).
62 It is apparent from recital 5 to the basic regulation that the purpose of that regulation is, inter alia, to transpose into EU law as far as possible the new and detailed rules contained in the 1994 Anti-Dumping Agreement, which include, in particular, those relating to the calculation of the dumping margin, so as to ensure a proper and transparent application of those rules (Petrotub and Republica v Council, paragraph 60 above, paragraph 55).
63 The Community therefore adopted the basic regulation in order to satisfy its international obligations arising from the 1994 Anti-Dumping Agreement and, by means of Article 2(5) of that regulation, it intended to implement the particular obligations laid down by Article 2.2.1.1 of the 1994 Anti-Dumping Agreement (see, to that effect, Petrotub and Republica v Council, paragraph 60 above, paragraph 56).
64 It follows that Article 2(5) of the basic regulation must, so far as possible, be interpreted in the light of Article 2.2.1.1 of the 1994 Anti‑Dumping Agreement (see, to that effect, Petrotub and Republica v Council, paragraph 60 above, paragraph 57, and Reliance Industries v Council and Commission, paragraph 60 above, paragraph 91, and the case-law cited).
65 To that end, it must be noted, first, that the applicants refer to one of the final drafts preceding the adoption of the 1994 Anti-Dumping Agreement which provided, so far as the provisions which became Article 2.2.1.1 of that agreement are concerned, that ‘[a]s a rule, costs should be allocated in accordance with the generally accepted accounting principles of the exporting country, provided that these principles reasonably reflect the costs associated with the production and sale of that product’. It follows from that wording that the initial object of Article 2.2.1.1 of that agreement, and consequently of Article 2(5) of the basic regulation, was to ensure that a producer under investigation applied good accounting principles objectively reflecting the actual costs borne by the producer under investigation and not to ascertain whether the prices of the inputs paid by the producer correspond to prices on unregulated markets.
66 However, invoking a provision in draft form is not sufficient to demonstrate that the intention of the drafters of that provision remained unchanged, especially if it appears that the wording of the provision in its final version is different from the corresponding provision at the draft stage, as in essence the Council correctly notes.
67 Second, it is apparent that the wording of Article 2.2.1.1 of the 1994 Anti‑Dumping Agreement does not differ significantly from the text of the first sentence of the first subparagraph of Article 2(5) of the basic regulation which seeks to ensure that records are kept in accordance with the generally accepted accounting principles of the exporting country and reasonably reflect the costs associated with the production and sale of the product under consideration.
68 However, as the Council correctly noted at the hearing, the provisions mentioned in the second sentence of the first subparagraph of Article 2(5) of the basic regulation are not mentioned in the 1994 Anti‑Dumping Agreement. An interpretation in the light of the 1994 Anti-Dumping Agreement cannot therefore be relied upon fully in relation to those provisions covering the situation where the costs of the product concerned are not reasonably reflected in the records.
69 The second complaint is therefore unfounded.
70 It follows from all of the foregoing that the first part of the plea is unfounded.
The second part of the plea
71 The applicants claim that there has been (i) an infringement of the second sentence of the first subparagraph of Article 2(5) of the basic regulation, (ii) a manifest error of assessment and also (iii) a failure to state reasons in that, by the contested regulation, the Council applied the adjustment of the gas price paid, on the basis of the Waidhaus price, did not deduct from the amount of the adjustment the export duty of 30% applicable to Russian gas, and made an upwards adjustment of 15% to take account of local distribution costs. The applicants contest in that regard recital 19 to the contested regulation.
72 Recital 19 is worded as follows:
‘… The adjusted price [of gas] was based on the average price of Russian gas when sold for export at the German/Czech border (Waidhaus), net of transport costs and adjusted to reflect local distribution costs. Waidhaus being the main hub for Russian gas sales to the EU, which is both the largest market for Russian gas and has prices reasonably reflecting costs, can be considered a representative market.’
73 The applicants maintain, first, that if the institutions had chosen a different basis, such as the export price of Russian gas to the Baltic States or any representative market with gas price levels closest to the level of the applicants’ levels of gas prices, the dumping margin would have been negative or different. The institutions ought to have chosen a ‘reasonable basis’ within the meaning of the second sentence of Article 2(5) of the basic regulation rather than the Waidhaus price.
74 The manifest error of assessment is the consequence of the fact that, first of all, the representative markets indicated by the Commission as possible bases for the adjustment (namely the European Union, the United Kingdom, the United States, Canada or Japan) have the highest gas prices in the world and are not close to the levels of gas prices paid by the applicants.
75 Next, the adjustment relating to the gas price was applied on the basis of an intra‑Community price, namely the German/Czech border, which reflects not only the production and sales costs of the gas but also the intra-Community profit margin for the Waidhaus hub. The basis for the adjustment applied amounts to taking the view that, for the greater part of their total production costs, the applicants would be based at the German/Czech border and would purchase gas directly on the Waidhaus market. Placing the applicants in a position in which they produce the product concerned in Russia, while paying export duty and intra‑Community profit margins, does not constitute a ‘reasonable basis’ within the meaning of Article 2(5) of the basic regulation.
76 Lastly, the Waidhaus market merely reflects Waidhaus’s geographic location, namely on the route of the main gas pipelines between Russia and the European Union, and the number of gas supply contracts and the volume of gas negotiated. Those factors are not relevant for the qualification of the price of gas at Waidhaus as a ‘reasonable basis’.
77 Second, the applicants submit that the Council also made a manifest error of assessment and failed to state reasons in the contested regulation when it refused to deduct the export duty of 30% on Russian gas, while deducting the costs of transport, as is clear from recital 19 to the contested regulation.
78 The reasoning followed is inconsistent and contradictory, since, in the applicants’ submission, just as Russian consumers do not have to pay for the gas to be transported from Russia to Waidhaus – which is why the costs of transport of the gas were deducted – the duty of 30% charged on exports of gas from Russia, which the applicants never pay for the production of the product concerned in Russia, ought to have been deducted as well.
79 The applicants further submit that, even if the institutions intended to penalise the dual pricing applied by the Russian authorities in the gas sector, that did not release them from their duty to establish the adjustment relating to the price of gas on a reasonable basis within the meaning of Article 2(5) of the basic regulation.
80 In that connection, the Court points out, as regards, in the first place, the choice of Waidhaus as the reference price, that the institutions are not required to consider every reference price during an anti-dumping proceeding, but must be prepared to examine in depth the proposals made by the parties, in the event of doubt concerning the choice of the reference price (see, to that effect, Case C-16/90 Nölle [1991] ECR I‑5163, paragraph 32).
81 In the present case, it is not apparent that, in the contested regulation, the Council made a manifest error of assessment in selecting the price of gas at Waidhaus. That price seems reasonable on a number of accounts.
82 It is not disputed that Waidhaus is the main hub for Russian gas sales to the European Union. It is apparent from the case-file that Waidhaus is a German town on the route of the main gas pipelines between Russia and the European Union and, in terms of the number of gas supply contracts negotiated and the volume of gas concerned, is the main hub for gas exported by Russian producers to the European Union.
83 The price of gas negotiated at Waidhaus is therefore that charged by the Russian sellers to their European customers and not an intra‑Community price, contrary to the applicants’ assertions in the application.
84 Next, having regard to the volume of gas concerned and the number of contracts negotiated, there is no indication that the price of Russian gas at Waidhaus is not the result of market forces free from distortion.
85 In their reply, the applicants referred to the Commission Decision of 8 July 2009 relating to a proceeding under Article 81 of the EC Treaty (Case COMP/39.401 — E.ON/GDF) (Summary in OJ 2009 C 248, p. 5), in order to argue that the agreement penalised by such a decision had affected the data used by the Commission to calculate the adjustment in the present case. In the applicants’ submission, it follows from that decision that the price of the Russian gas at Waidhaus is not the result of market forces.
86 It is sufficient to note that, although it relates to sales of gas from Russia, the E.ON/GDF decision only concerns the examination of a market-sharing agreement in Germany and France between E.ON and GDF for sales of gas to their customers. The decision does not relate to an examination of the market for the wholesale export of Russian gas to the European Union as a whole, or the examination of the relationships between E.ON and GDF with their supplier of Russian gas.
87 Similarly, the applicants referred to Case C‑358/89 Extramet Industrie v Council [1992] ECR I-3813 and Case T‑58/99 Mukand and Others v Council [2001] ECR II‑2521 to substantiate the impact that anti‑competitive behaviour might have on dumping assessments.
88 The Court notes that those judgments do not address the issue of whether the basis on which the institutions determined gas costs was reasonable. In particular, the judgment in Extramet Industrie v Council addresses the institutions’ obligation to consider whether the injury on the basis of which they intend to impose an anti‑dumping duty actually derived from dumped imports or from other factors (Extrament Industrie v Council, paragraph 87 above, paragraph 16). The judgment in Mukand and Others v Council also addresses the issue of whether, when deciding whether or not injury had been caused and whether or not there was any causal link between any such injury and the subsidised imports, other factors were capable of causing the damage to the Community industry (Mukand and Others v Council, paragraph 87 above, paragraph 41). Those judgments do not support the conclusion that the institutions made a manifest error of assessment in the basis chosen in order to determine the gas costs to be taken into account in the present case.
89 Lastly, although the applicants dispute that the Waidhaus price is much higher than the price of the gas sold on the Russian domestic market, they have not argued that the Waidhaus price is indeed higher than the price of gas negotiated in the United States or Canada. The applicants stated that the price of the gas from Qatar, Trinidad, Australia and Libya was lower than the Waidhaus price, although they did not specify whether the gas imported from those countries amounted to a significant or representative volume for the European Union. The institutions did not therefore choose the highest reference price on the market. Nor is it certain that the export price of gas to the Baltic States is not comparable to that of the gas which passes through Waidhaus.
90 As regards, in the second place, the decision not to deduct the export tax collected in Russia, with only transport costs being deducted, the applicants maintain that that decision is inconsistent and mistaken, and rely in that regard on a case that led to the adoption of Council Regulation (EC) No 954/2006 of 27 June 2006 imposing definitive anti‑dumping duty on imports of certain seamless pipes and tubes, of iron or steel originating in Croatia, Romania, Russia and Ukraine, repealing Council Regulations (EC) No 2320/97 and (EC) No 348/2000, terminating the interim and expiry reviews of the anti-dumping duties on imports of certain seamless pipes and tubes of iron or non-alloy steel originating, inter alia, in Russia and Romania and terminating the interim reviews of the anti‑dumping duties on imports of certain seamless pipes and tubes of iron or non‑alloy steel originating, inter alia, in Russia and Romania and in Croatia and Ukraine (OJ 2006 L 175, p. 4).
91 The Council replies that, in that case, the Commission and itself deducted only the customs duties payable on domestic sales of gas but made no deduction for export tax.
92 It is apparent from recital 97 to Regulation No 954/2006 that the costs of the Russian gas were adjusted on the basis of the price of gas for export to Western Europe, net of transport costs and excise duty. No reference is made to export tax, contrary to what the applicants claim.
93 The Council justifies export tax not being deducted by the fact that Gazprom’s prices are not influenced by the amount of the export tax. In support of that statement, the Council communicated, in Annex B.2 to the defence, data on the trend in Russian gas prices which show that that price appears, in large measure, not to depend on the amount of the export tax. The Council also stated, inter alia, that Gazprom always tried to maximise the price of gas which it sold and that the price setting was not influenced by the amount of the export tax but only by what price its customers were willing to pay. At the hearing, the Council repeated its view that what matters is the price paid at Waidhaus, and that knowing the composition of that price is irrelevant.
94 The applicants have not been able to explain or to show how the price setting by Gazprom at Waidhaus could have been influenced by the amount of the export tax. It must therefore be found that the Council has not made a manifest error of assessment in not deducting that tax from the price paid at Waidhaus.
95 Since the applicants have simply denied, without adducing further evidence, that the local distribution costs used to calculate the constructed normal value were reasonable, it must also be found that the Commission did not make a manifest error of assessment in that regard.
96 Moreover, it is important to note that, since transport costs had been deducted in order to calculate the price of gas, it appears logical to adjust that calculation in addition by taking into account local distribution costs.
97 In recital 42 to the contested regulation, which the applicants have not challenged, the Council explained why it had decided to make an upwards adjustment in order to take into account local distribution costs. In that connection, the Council stated that the Russian exporters had not been able to submit any further information or evidence which showed whether distribution costs were indeed included in the Waidhaus price. It further stated that, since domestic customers were purchasing the gas from local suppliers, it had to be assumed that they would have to pay, at least for sales services, local distribution costs which were not as such included in the unadjusted Waidhaus price.
98 Lastly, the applicants’ argument alleging failure to state the reasons for the refusal to deduct the export tax on Russian gas and the adjustment made for local distribution costs must be rejected. The statement of reasons for the contested regulation must be appraised having regard, in particular, to the information disclosed to the applicant and to the observations which it has made during the administrative procedure (Case T-410/06 Foshan City Nanhai Golden Step Industrial v Council [2010] ECR II-879, paragraph 127).
99 In this case, it is apparent from Annex A13 to the application that the applicants had been informed of (i) the conclusions regarding SG&A costs, (ii) the non‑deduction of export tax and (iii) the upwards adjustment for local distribution costs with regard to the calculation of normal value and that they were able to submit observations in that regard, which relieved the Council of the need to repeat those explanations in the body of the contested regulation, so that it could confine itself to the matters of law and of fact on which that regulation is based.
100 The second part of the plea is therefore unfounded.
101 It follows from the foregoing that the plea must be rejected and that, consequently, the action must be dismissed in its entirety.
Costs
102 As regards, first of all, the applicants’ argument that Fertilizers Europe’s claim that they should be ordered to pay its costs is inadmissible, it is sufficient to note that costs are a matter ancillary to the main proceedings and that, as a matter of course, only the intervener has an interest in requesting that its costs be borne by another party.
103 Under Article 87(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. Since the applicants have been unsuccessful, they must be ordered, in accordance with the form of order sought by the Council and by Fertilizers Europe, to bear their own costs and to pay those incurred by both of the latter.
104 In accordance with the first subparagraph of Article 87(4) of the Rules of Procedure, the Commission is to bear its own costs.
On those grounds,
THE GENERAL COURT (Eighth Chamber)
hereby:
1. Dismisses the action;
2. Orders Acron OAO and Dorogobuzh OAO to bear their own costs and to pay those incurred by the Council of the European Union and by Fertilizers Europe;
3. Orders the European Commission to bear its own costs.
Truchot | Kanninen | Martins Ribeiro |
Delivered in open court in Luxembourg on 7 February 2013.
[Signatures]