Case T‑762/20
Sinopec Chongqing SVW Chemical Co. Ltd and Others
v
European Commission
Judgment of the General Court (Ninth Chamber, Extended Composition) of 21 February 2024
(Dumping – Imports of certain polyvinyl alcohols originating in China – Definitive anti-dumping duty – Implementing Regulation (EU) 2020/1336 – Calculation of the normal value – Significant distortions in the exporting country – Article 2(6a) of Regulation (EU) 2016/1036 – WTO law – Principle of consistent interpretation – Adjustments – Non-refundable VAT – Functions similar to those of an agent acting on a commission basis – Fair comparison of the export price and the normal value – Burden of proof – Article 2(10)(b) and (i) of Regulation 2016/1036 – Non-cooperation – Facts available – Article 18 of Regulation 2016/1036 – Double application – Punitive application – Different production processes – Price undercutting – Market segments – Product control number method – Article 3(2) and (3) of Regulation 2016/1036 – Rights of the defence – Confidential treatment – Articles 19 and 20 of Regulation 2016/1036)
1. EU law – Interpretation – Methods – Interpretation in the light of the international agreements concluded by the European Union – Interpretation of Regulation 2016/1036 in the light of the 1994 GATT Anti-Dumping Agreement – Account taken of the interpretation adopted by the Dispute Settlement Body – Interpretation contra legem of secondary EU law – Not permissible
(Art. 216(2) TFEU; Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade (1994 Anti-Dumping Agreement); European Parliament and Council Regulation 2016/1036, Art. 2(6a) and (7))
(see paragraphs 20-22, 28-33, 39-49)
2. International agreements – Agreement establishing the World Trade Organisation – GATT 1994 – Not possible to invoke WTO agreements to challenge the legality of an EU measure – Exceptions – EU measure intended to ensure the implementation of the agreements or referring to them expressly and precisely – Absence
(Art. 216(2) TFEU; Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade (1994 Anti-Dumping Agreement); European Parliament and Council Regulation 2016/1036, Art. 2(6a))
(see paragraphs 23, 24, 38)
3. Common commercial policy – Protection against dumping – Dumping margin – Comparison between the normal value and the export price – Adjustments – Account taken of commissions paid in respect of sales – Functions carried out by trader similar to those of an agent working on a commission basis – Distributor forming an economic entity with the producer – Not included – Determination of the existence of an economic entity – Elements to be taken into consideration
(European Parliament and Council Regulation 2016/1036, Art. 2(10)(i))
(see paragraphs 60-64)
4. Common commercial policy – Protection against dumping – Dumping margin – Comparison between the normal value and the export price – Adjustments – Conditions – Burden of proof
(European Parliament and Council Regulation 2016/1036, Art. 2(10)(i))
(see paragraphs 65-112, 126-138, 147, 279-281)
5. Common commercial policy – Protection against dumping – Dumping margin – Comparison between the normal value and the export price – Adjustments – Account taken of the non-refundable value added tax affecting the export price – Re-establishment of the symmetry between the export price and the normal value by the latter’s adjustment
(European Parliament and Council Regulation 2016/1036, Art. 2(6a) and (10)(k))
(see paragraphs 145, 153-158)
6. Common commercial policy – Protection against dumping – Course of the investigation – Use of the facts available where the undertaking refuses to cooperate – Obligation of the institutions to demonstrate that they used the best possible information – None – Discretion of the institutions – Judicial review – Limits
(Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade (1994 Anti-Dumping Agreement), Art. 6.8 and Annex II; European Parliament and Council Regulation 2016/1036, Arts 3 and 18(5) and (6))
(see paragraphs 181-207)
7. Common commercial policy – Protection against dumping – Course of the investigation – Use of the facts available where the undertaking refuses to cooperate – Determination of the normal value – Normal value presumed not to be below the highest normal value of the other exporting producers – Presumption based on the lack of cooperation of the undertaking – Unlawful
(European Parliament and Council Regulation 2016/1036, Art. 18)
(see paragraphs 211-220)
8. Common commercial policy – Protection against dumping – Injury – Factors to be taken into consideration – Effect of dumped imports on prices in the Union market for like products – Calculation of the undercutting margin – Calculation method – Discretion of the Commission – Obligation for the Commission to take account of the market segments of the product in question – None save in exceptional circumstances
(European Parliament and Council Regulation 2016/1036, Arts 1(4) and 3(2) and (3))
(see paragraphs 249-258, 261, 262, 267-269, 273)
9. Common commercial policy – Protection against dumping – Injury – Factors to be taken into consideration – Effect of dumped imports on prices in the Union market for like products – Calculation of the undercutting margin – Calculation method – Obligation for the Commission to take account of all sales of like products of the sampled EU producers – None
(European Parliament and Council Regulation 2016/1036, Art. 3(2) and (3))
(see paragraphs 288, 292-297)
10. Common commercial policy – Protection against dumping – Investigation – Observance of the rights of the defence – Duty of the institutions to keep the undertakings concerned informed, to respect the confidentiality of information, and to reconcile those obligations – Commission decision refusing a request by the undertaking concerned for access to confidential information – No error of law on the part of the Commission – Undertaking having failed to bring that refusal before the hearing officer – Circumstance confirming the finding that there was no error of law on the part of the Commission
(Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade (1994 Anti-Dumping Agreement), Art. 6.5; European Parliament and Council Regulation 2016/1036, Arts 6(7), 19 and 20)
(see paragraphs 308-315, 321-330)
11. Common commercial policy – Protection against dumping – Course of the investigation – Obligation of the Commission to disclose information to the parties concerned – Scope – Rights of the defence – Infringement – Conditions – Undertaking concerned better able to ensure its defence in the absence of procedural irregularity
(European Parliament and Council Regulation 2016/1036, Arts 19 and 20)
(see paragraphs 331-335)
Résumé
In an action brought by entities of the Chinese group Sinopec, the General Court annuls Implementing Regulation 2020/1336 of the European Commission imposing definitive anti-dumping duties on imports of certain polyvinyl alcohols (‘PVA’) originating in the People’s Republic of China. (1) In its judgment, in the context of a fair comparison of the export price and the normal value, the Court clarifies the extent of the Commission’s burden of proof for the purposes of making a downward adjustment of the export price, on the ground that a sales company affiliated to a producer carries out functions similar to those of an agent working on a commission basis. It also rules on the question whether, in the event that the Commission bases its conclusions on the facts available following a finding of a company’s non-cooperation, the Commission may apply a presumption that the normal value of products sold by that company corresponds to the highest normal value of those of the other exporting producers.
In the present case, the Commission, after receiving a complaint lodged by Kuraray Europe GmbH, the main PVA producer in the European Union, initiated an anti-dumping investigation at the end of which it adopted the contested regulation.
It is in that context that Sinopec group entities – Sinopec Chongqing SVW Chemical Co. Ltd (‘Sinopec Chongqing’) and Sinopec Great Wall Energy & Chemical (Ningxia) Co. Ltd (‘Sinopec Ningxia’), Chinese undertakings which produce PVA, and Central-China Company, Sinopec Chemical Commercial Holding Co. Ltd (‘Sinopec Central-China’), a related Chinese undertaking exporting, inter alia, to the European Union products manufactured by those undertakings – considering themselves to have been adversely affected by the anti-dumping duties imposed by the Commission, brought an action before the Court for annulment of Implementing Regulation 2020/1336 in so far as that regulation concerns them. (2)
Findings of the Court
In support of their action, the applicants submit, first of all, that the Commission’s application of Article 2(6a) of Regulation 2016/1036, (3) for the purpose of determining the normal value of the products manufactured by them, is contrary to the obligations arising from World Trade Organisation (WTO) law. That provision establishes a special regime laying down rules for determining normal value in the case of exports from countries whose domestic market has been shown to have significant distortions, as defined in that provision.
In that regard, the Court states that the Commission was not required to interpret that provision in the light of WTO rules. Although EU legislation must be interpreted, as far as possible, in the light of international law, in particular where it is intended to give effect to an international agreement concluded by the European Union, the fact remains that Article 2(6a) of the basic regulation cannot be considered to be a provision intended to give effect to specific obligations under WTO agreements, since WTO law does not include specific rules for calculating normal value in the situations covered by the provision concerned.
Next, as regards the comparison between the export price and the normal value of the products concerned, the Court finds that the Commission was wrong to make a downward adjustment to the export price, pursuant to Article 2(10)(i) of the basic regulation. It made an error of assessment in finding that, notwithstanding the existence of common control, the applicants did not constitute a common economic entity, since, according to the Commission, Sinopec Central-China, a sales company affiliated to the other two applicants, was not acting as an internal sales department; rather, it was carrying out functions similar to those of an agent working on a commission basis.
In that regard, it is apparent from settled case-law that where EU institutions consider that it is appropriate to apply a downward adjustment of the export price, on the ground that a sales company affiliated to a producer carries out functions similar to those of an agent working on a commission basis, it is the responsibility of those institutions to adduce at the very least consistent evidence showing that that condition is fulfilled.
Thus, the Commission was required to adduce sufficient consistent evidence to demonstrate that, notwithstanding the existence of common control, Sinopec Central-China was carrying out functions similar to those of an agent working on a commission basis and was not acting as an internal sales department. However, the Commission was unable to discharge its burden of proof, the evidence adduced being either irrelevant or of no probative value in the light of the functions carried out by Sinopec Central-China.
As regards the calculation of the normal value of the products sold by Sinopec Ningxia, the Court notes, moreover, that the Commission erred in law when it applied a presumption that that value corresponded to the highest of the normal values of the other exporting producers.
In the present case, since the applicants were unable to provide the Commission with the necessary data relating to Sinopec Ningxia, the Commission calculated the normal value of the products sold by that company on the basis of the facts available, within the meaning of Article 18 of the basic regulation. The data which it did have in its possession were thus compared. While the Commission is not required to explain why the facts available that were used were the best possible, since no such obligation is apparent either from Article 18 of the basic regulation or from the case-law, it must nevertheless explain why the facts used are relevant.
Thus, although, because of differences between the production processes of Sinopec Ningxia and Sinopec Chongqing, the Commission was entitled to reject, as relevant data, the data relating to the latter and to use those relating to the other exporting producers, it was required to justify its choice of using, for each product type sold by Sinopec Ningxia, the highest of the normal values of the other exporting producers. That choice cannot be based on a presumption which in turn is based on a mere finding of the applicants’ non-cooperation, since the Commission is not entitled to penalise an exporting producer for its lack of cooperation.
Furthermore, recourse to a presumption, even where it is difficult to rebut, remains within acceptable limits provided, inter alia, that it is possible to adduce evidence to the contrary. As it is, in the present case, rebuttal of the presumption in question is possible only if the applicants provide the Commission with the information the non-production of which specifically represents the factor that triggered the Commission’s use of the facts available within the meaning of Article 18 of the basic regulation.
Lastly, the Court finds that the Commission did not infringe the applicants’ rights of defence by refusing to disclose to them information about the quantities sold and sales prices of the EU industry or the price undercutting and underselling margins, since that information is by nature confidential.
The fact that there was no error is confirmed by the fact that when the applicants received the email from the Commission refusing their request for access to the abovementioned information, they did not bring the matter before the hearing officer, although they could have done so. (4) In so doing, they accepted the Commission’s decision which reflects the balance struck between the objectives pursued by the basic regulation, namely to allow the interested parties effectively to defend their interests, and to preserve the confidentiality of the information collected in the course of the investigation. (5)