JUDGMENT OF THE GENERAL COURT (Eighth Chamber)
7 February 2013 (*)
(Dumping – Imports of solutions of urea and ammonium nitrate originating in Russia – Request for an expiry review – Request for an interim review – Admissibility – Normal value – Export price – Articles 1, 2 and 11(1) to (3) of Regulation (EC) No 384/96 (now Articles 1, 2 and 11(1) to (3) of Regulation (EC) No 1225/2009))
In Case T‑84/07,
EuroChem Mineral and Chemical Company OAO (EuroChem MCC), established in Moscow (Russia), represented initially by P. Vander Schueren and B. Evtimov, lawyers, and subsequently by B. Evtimov and D. O’Keeffe, Solicitor,
applicant,
v
Council of the European Union, represented by J.-P. Hix and B. Driessen, acting as Agents, and by G. Berrisch, lawyer,
defendant,
supported by
European Commission, represented by H. van Vliet and K. Talabér‑Ritz, acting as Agents,
intervener,
APPLICATION for annulment of Council Regulation (EC) No 1911/2006 of 19 December 2006 imposing a definitive anti‑dumping duty on imports of solutions of urea and ammonium nitrate originating in Algeria, Belarus, Russia and Ukraine following an expiry review pursuant to Article 11(2) of Regulation (EC) No 384/96 (OJ 2006 L 365, p. 26),
THE GENERAL COURT (Eighth Chamber),
composed of L. Truchot, President, H. Kanninen (Rapporteur) and M.E. Martins Ribeiro, Judges,
Registrar: N. Rosner, Administrator,
having regard to the written procedure and further to the hearing on 8 December 2011,
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.
…
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 sub‑paragraph 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.
…
10. A fair comparison shall be made between the export price and the normal value. This comparison shall be made at the same level of trade and in respect of sales made at as nearly as possible the same time and with due account taken of other differences which affect price comparability. Where the normal value and the export price as established are not on such a comparable basis due allowance, in the form of adjustments, shall be made in each case, on its merits, for differences in factors which are claimed, and demonstrated, to affect prices and price comparability. Any duplication when making adjustments shall be avoided, in particular in relation to discounts, rebates, quantities and level of trade …
…
(i) Commissions
An adjustment shall be made for differences in commissions paid in respect of the sales under consideration. The term “commissions” shall be understood to include the mark-up received by a trader of the product or the like product if the functions of such a trader are similar to those of an agent working on a commission basis.
…’
4 Article 11(1) to (3) and (5) of the basic regulation (now Article 11(1) to (3) and (5) of Regulation No 1225/2009) provides as follows:
‘1. An anti-dumping measure shall remain in force only as long as, and to the extent that, it is necessary to counteract the dumping which is causing injury.
2. A definitive anti-dumping measure shall expire five years from its imposition or five years from the date of the conclusion of the most recent review which has covered both dumping and injury, unless it is determined in a review that the expiry would be likely to lead to a continuation or recurrence of dumping and injury …
3. The need for the continued imposition of measures may also be reviewed, where warranted, on the initiative of the Commission or at the request of a Member State or, provided that a reasonable period of time of at least one year has elapsed since the imposition of the definitive measure, upon a request by any exporter or importer or by the Community producers which contains sufficient evidence substantiating the need for such an interim review.
An interim review shall be initiated where the request contains sufficient evidence that the continued imposition of the measure is no longer necessary to offset dumping and/or that the injury would be unlikely to continue or recur if the measure were removed or varied, or that the existing measure is not, or is no longer, sufficient to counteract the dumping which is causing injury.
…
5. The relevant provisions of this Regulation with regard to procedures and the conduct of investigations, excluding those relating to time-limits, shall apply to any review carried out pursuant to paragraphs 2, 3 and 4. Any such review shall be carried out expeditiously and shall normally be concluded within 12 months of the date of initiation of the review …’
5 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.’
6 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
7 On 18 September 2000, the Council of the European Union adopted Regulation (EC) No 1995/2000 imposing a definitive anti-dumping duty and collecting definitively the provisional duties imposed on imports of solutions of urea and ammonium nitrate originating in Algeria, Belarus, Lithuania, Russia and Ukraine, and terminating the anti-dumping proceeding in respect of imports originating in the Slovak Republic (OJ 2000 L 238, p. 15). The measures imposed on imports of solutions of urea and ammonium nitrate (‘solutions of UAN’ or ‘the product concerned’) originating in Lithuania lapsed after the enlargement of the European Union (‘EU’) on 1 May 2004.
The request for an expiry review of the anti-dumping measures
8 On 20 June 2005, a request for an expiry review pursuant to Article 11(2) of the basic regulation was lodged with the Commission of the European Communities following the publication on 17 December 2004 of a notice of impending expiry of certain anti-dumping and countervailing measures (OJ 2004 C 312, p. 5). This request was lodged by the European Fertiliser Manufacturers Association.
9 Having determined, after consulting the Advisory Committee, that sufficient evidence existed for the initiation of an expiry review of the anti-dumping measures applicable to imports of solutions of UAN originating in Algeria, Belarus, Russia and Ukraine, the Commission published, on 22 September 2005, a notice of initiation of an expiry review of those measures, pursuant to Article 11(2) of the basic regulation (OJ 2005 C 233, p. 14).
10 The investigation of a likelihood of a continuation or recurrence of dumping covered the period from 1 July 2004 to 30 June 2005 (‘the review investigation period’). The examination of the trends relevant for the assessment of a likelihood of a continuation or recurrence of injury covered the period from 2002 to the end of the review investigation period.
11 Interested parties were given the opportunity to make their views known in writing and to request a hearing within the time-limit set out in the notice of initiation. All interested parties who so requested and showed that there were particular reasons why they should be heard were granted a hearing.
12 On 19 December 2006, the Council adopted Council Regulation (EC) No 1911/2006 imposing a definitive anti‑dumping duty on imports of solutions of [UAN] originating in Algeria, Belarus, Russia and Ukraine following an expiry review pursuant to Article 11(2) of the basic regulation (OJ 2006 L 365, p. 26) (‘the contested regulation’). According to the contested regulation, the Council decided to maintain the anti-dumping measures applicable to imports of UAN originating, inter alia, in Russia. In that regard, the Council imposed a definitive anti-dumping duty on imports of mixtures of urea and ammonium nitrate in aqueous or ammoniacal solution falling within CN code 31028000 and originating, inter alia, in Russia. The applicant, an exporting producer in Russia, is one of the undertakings concerned by that anti-dumping duty.
13 Recitals 58 to 63 to the contested regulation read as follows:
‘(58) 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. As regards gas costs, it was found that the domestic gas price paid by the Russian producers was around one fifth of the export price of natural gas from Russia. In this regard, all available data indicates that domestic gas prices in Russia were regulated prices, which are far below market prices paid in unregulated markets for natural gas. Therefore, as provided for in Article 2(5) of the basic Regulation, the gas costs borne by the Russian producers were adjusted on the basis of 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. Waidhaus, being the main hub for Russian gas sales to the [European Union], which is both the largest market for Russian gas and has prices reasonably reflecting costs, can be considered a representative market within the meaning of Article 2(5) of the basic Regulation.
(59) The construction of the normal value was done on the basis of the manufacturing costs of the product type exported, after the adjustment for the gas cost mentioned in recital 58, plus a reasonable amount [for sales general and administrative costs (‘SG&A costs’)] and for profits, in accordance with Article 2(3) and Article 2(6) of the basic Regulation.
(60) … SG&A costs and profit could not be established on the basis of the chapeau of Article 2(6), first sentence, of the basic Regulation because the related manufacturers 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 are only these two producers subject to the investigation. Article 2(6)(b) was not applicable either, since the manufacturing costs 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 58 above. As it was found to be impossible to establish the magnitude of the necessary adjustment for all products belonging to the same general category of goods sold domestically, it is equally impossible to establish the profit margins after such adjustment. Therefore, SG&A costs and profit were established pursuant to Article 2(6)(c) of the basic Regulation.
(61) … SG&A costs and profit were established on the basis of the weighted average SG&A costs and profit from the same three North American producers. It should be noted that the amount for profit so established did not exceed the profit realised by the Russian producers on sales of products of the same general category on their domestic market.
(62) It was found that the export sales of the two cooperating producers were made on the basis of an agent agreement through two related traders, one located in Switzerland and the other one on the British Virgin Islands. The latter ceased to operate at the beginning of 2005. The export price was established on the basis of export prices actually paid or payable to the first independent customer in the USA, their major export market.
(63) Data from the two related traders showed that export prices to third countries were lower than the constructed normal value in Russia. In fact, the investigation established that overall this price difference ranged in the [review investigation period] between 2 % and 6 %. This may indicate a likelihood of recurrence of dumping on exports to the Community should measures be repealed.’
The request for a partial interim review submitted by NAK and Nevinka
14 On 1 August 2005, the Commission also received, pursuant to Article 11(3) of the basic regulation, a request for a partial interim review of the measures adopted by Regulation No 1995/2000. That request was submitted by two exporting producers in Russia, Novomoskovskiy Azot (‘NAK’) and Nevinnomyssky Azot (‘Nevinka’), both subsidiaries of the applicant. In support of their request, NAK and Nevinka relied on two events which, in their submission, are significant, namely the grant to the Russian Federation of market economy status in 2002 and the enlargement of the European Union by 10 new Member States on 1 May 2004.
15 By letter of 10 August 2005, the Commission replied to NAK and Nevinka, requesting that they produce a full dumping calculation on the basis of transaction-by-transaction lists of all sales of the product concerned on the domestic market and export sales and also information on the corresponding production costs, supported by working documents.
16 In their reply of 9 September 2005, NAK and Nevinka sent a dumping calculation in the form of tables. On 27 October 2005, they submitted other documents, additional tables and supporting documents.
17 By letter of 16 December 2005, NAK and Nevinka complained of the delay in processing their application and on 23 December 2005 the Commission explained to them that the delay was attributable to the insufficiency of the documents submitted.
18 On 16 March 2006, the Commission wrote to NAK and Nevinka inviting them to provide certain missing information.
19 The latter submitted information on 12 May, 31 October and 23 November 2006, before the Commission, on 19 December 2006, initiated the interim review by publishing a notice of initiation in the Official Journal of the European Union (OJ 2006 C 311, p. 51). The Commission determined, after consulting the Advisory Committee, that the request contained sufficient prima facie evidence.
20 The review was limited in scope to the examination of dumping as far as NAK and Nevinka were concerned. The investigation of dumping covered the period from 1 October 2005 to 30 September 2006.
21 All interested parties who so requested and showed that there were particular reasons why they should be heard were granted a hearing.
22 On 10 March 2008, the Council adopted Regulation (EC) No 238/2008 terminating the partial interim review pursuant to Article 11(3) of the basic regulation of the anti-dumping duty on imports of solutions of [UAN] originating in Russia (OJ 2008 L 75, p. 14). The review was terminated without the measures in force being amended.
Procedure and forms of order sought by the parties
23 By application lodged at the Registry of the Court on 13 March 2007, the applicant brought the present action.
24 The applicant claims that the Court should:
– annul the contested regulation, in particular Article 1, insofar as it concerns the applicant and its related companies, as defined at recital 14(a) and (b) to that regulation;
– order the Council to pay the costs.
25 The Council contends that the Court should:
– dismiss the action;
– order the applicant to pay the costs.
26 Following its application to intervene of 3 July 2007, the Commission, by order of the President of the Third Chamber of the Court dated 7 September 2007, was granted leave to intervene in support of the form of order sought by the Council.
27 On 3 January 2012, following the lodging of a supplementary document at the hearing by the applicant, the Council sent to the Registry of the General Court observations challenging the relevance of such a document.
28 By letter of 31 January 2012, the Registry of the General Court informed the parties that the oral procedure was closed.
Law
29 In support of its action, the applicant relies on two pleas, alleging, respectively, infringement of Articles 1 and 2 of the basic regulation and infringement of Article 11(1) and (3) of that regulation.
First plea, alleging infringement of Articles 1 and 2 of the basic regulation
30 By its first plea, the applicant claims that there has been an infringement of Articles 1 and 2 of the basic regulation. The applicant divides this plea into three parts, by which in essence it submits, 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 applicant’s accounts and that it was therefore necessary to apply an adjustment. Second, the applicant states that the adjustment made for the price of Russian gas was incorrectly based on the price at Waidhaus (Germany) and that the export duty of 30 % applicable to Russian gas was not deducted from the amount of that adjustment. Third, the applicant submits that the commissions in respect of the related companies – which are part of the applicant’s single economic entity – were incorrectly deducted from its export price to the first independent customer.
31 It should be observed, as a preliminary point, that when the Council and the Commission (‘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).
32 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 31 above, paragraph 11; Climax Paper v Council, paragraph 31 above, paragraph 98; Shanghai Bicycle v Council, paragraph 31 above, paragraph 64; and Thai Bicycle v Council, paragraph 31 above, paragraph 33).
First part of the first plea
33 In this first part, the applicant seeks 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
34 In the applicant’s 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.
35 The applicant further submits 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.
36 First of all, it must be observed that the applicant does not challenge as such the Council’s decision to rely on the provisions of Article 2(3) of the basic regulation in order to calculate the normal value of the product concerned.
37 That provision refers, first, to the criteria for disregarding the method for establishing normal value based on the prices on the domestic market of the exporting country and, second, to the alternative methods for calculating that value.
38 In the present case, the institutions 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’).
39 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.
40 It is not in dispute that gas is the major input of the product concerned and that the price of gas from which the applicant benefited in producing the product concerned was regulated in Russia. The cost of gas actually borne by the applicant is not at issue, since the Council does not argue that that cost was different from that set out in the applicant’s accounts. The applicant complains 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.
41 It is apparent from a combined reading of the first sentence of Article 2(3) and the first sentence of the first subparagraph of Article 2(5) of the basic regulation that, in order to calculate normal value on the basis of the cost of production, costs must normally be calculated on the basis of records kept by the party under investigation.
42 The institutions contend that the second of those provisions 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.
43 The Council does not contend that the first requirement has been infringed in the present case. On the other hand, it argues that the applicant’s 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.
44 It must therefore be examined whether the Council was entitled to disregard the cost of gas actually borne by the applicant, as stated in its 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.
45 In that connection, it must first of all be observed that the first sentence of Article 2(3) of the basic regulation lays down the method for calculating normal value 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.
46 The second sentence of Article 2(3) of the basic regulation, which defines those cases in which a particular market situation is deemed to exist, was inserted by Regulation No 1972/2002. It states that a particular market situation exists, inter alia, when prices are artificially low, when there is significant barter trade, or when there are non-commercial processing arrangements.
47 It is apparent from recital 3 to Regulation No 1972/2002 that the insertion of the second sentence of Article 2(3) of the basic regulation seeks to clarify what circumstances could be considered as constituting a particular market situation in which sales of the like product do not permit a proper comparison. According to recital 3 to that regulation, 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.
48 The second sentence of Article 2(3) of the basic regulation provides that a particular market situation exists, inter alia, when prices on the market of the exporting country are artificially low.
49 At the hearing, the Council stated that recourse was had to the constructed normal value method because of the lack of comparable ordinary trade in Russia. It stated that, logically, a particular market situation could also be deemed to exist, since the cost of gas, the major input of the product concerned, was regulated and the price of natural gas was set at an artificially low level on the domestic market.
50 It must be pointed out that Article 2(3) of the basic regulation refers only to the criteria for disregarding the methods for establishing normal value based on the price of the product on the domestic market of the exporting country. That provision does not prescribe the detailed rules for calculating the production costs for establishing the constructed normal value, that calculation being governed by Article 2(5).
51 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 calculation of the constructed normal value is normally performed using information from those records.
52 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.
53 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.
54 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.
55 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.
56 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.
57 In the present case, the Council argued before the Court that a particular market situation existed, 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 applicant 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.
58 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.
59 In addition, the interpretation of the first sentence of Article 2(5) of the basic regulation put forward by the applicant, 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 are affected by a particular market situation, even though such recourse is expressly provided for in Article 2(3) of that regulation.
60 The institutions were therefore fully entitled to conclude that one of the items in the applicant’s 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.
61 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 applicant submits that the scope of Article 2(7) is restricted to an exhaustive list of non‑market-economy countries. The applicant states 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.
62 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 53 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.
63 The applicant also submits that the interpretation of Article 2(5) of the basic regulation proposed by the institutions has a number of inconsistent results.
64 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.
65 In that connection, as the Council correctly notes, its own approach and that of the Commission does not force the applicant to increase its domestic sales price. The anti-dumping measure in the contested regulation does not restrict the applicant’s ability to charge whatever prices it wishes 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).
66 Second, the applicant submits 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).
67 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.
68 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 applicant has not adduced any evidence to that effect.
69 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.
70 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 (see, by way of example, Case T‑462/04 HEG and Graphite India v Council [2008] ECR II-3685).
71 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.
72 It follows from the foregoing that the first complaint is unfounded.
– The second complaint
73 The applicant submits 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.
74 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).
75 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 74 above, paragraph 54; Case C‑351/04 Ikea Wholesale [2007] ECR I‑7723, paragraph 30; and Reliance Industries v Council and Commission, paragraph 74 above, paragraph 88).
76 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 74 above, paragraph 55).
77 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 74 above, paragraph 56).
78 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 74 above, paragraph 57, and Reliance Industries v Council and Commission, paragraph 74 above, paragraph 91, and the case-law cited).
79 To that end, it must be noted, first, that the applicant refers 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.
80 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.
81 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.
82 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.
83 It should be added that the WTO rules do not define the expression ‘a particular market situation’, as defined in the second sentence of the Article 2(3) of the basic regulation and which may be used as a basis by the institutions for assessing whether the records reasonably reflect the costs, pursuant to the second sentence of the first subparagraph of Article 2(5) of the basic regulation, as noted in paragraphs 51 to 60 above.
84 The second complaint is therefore unfounded.
85 It follows from all of the foregoing that the first part of the first plea is unfounded.
The second part of the first plea
86 The applicant claims 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, and did not deduct from the amount of the adjustment the export duty of 30 % applicable to Russian gas. The applicant contests in that regard the final sentences of recital 58 to the contested regulation.
87 Those sentences are worded as follows:
‘… [T]he gas costs borne by the Russian producers were adjusted on the basis of 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. 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 within the meaning of Article 2(5) of the basic Regulation.’
88 The applicant maintains, 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 applicant’s 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.
89 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 applicant.
90 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 its total production costs, the applicant would be based at the German/Czech border and would purchase gas directly on the Waidhaus market. Placing the applicant in a position in which it produces 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.
91 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’.
92 Second, the applicant submits 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 58 to the contested regulation.
93 The reasoning followed is inconsistent and contradictory, since, in the applicant’s 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 and the distribution of the gas were deducted – the duty of 30 % charged on exports of gas from Russia, which the applicant never pays for the production of the product concerned in Russia, ought to have been deducted as well.
94 The applicant further submits 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.
95 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).
96 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.
97 As was noted in recital 58 to the contested regulation, 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.
98 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 applicant’s assertions in the application.
99 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.
100 At the hearing, the applicant produced 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 applicant’s submission, it follows from that decision that the price of the Russian gas at Waidhaus is not the result of market forces.
101 Also at the hearing, the Commission expressed doubts as to whether a document filed at that stage of the proceedings was admissible, although the Council only challenged the relevance of such a document.
102 Without there being any need to rule on the admissibility of such a document, the E.ON/GDF decision (see paragraph 100 above) having been issued by the Commission after the adoption of the contested regulation, it is sufficient to note that, although it relates to sales of gas from Russia, it 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.
103 Lastly, although the applicant denies that the Waidhaus price is much higher than the price of the gas sold on the Russian domestic market, it acknowledges itself, in the reply, that the Waidhaus price may be lower than the price of gas negotiated in the United Kingdom, the United States or Canada. 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.
104 As regards, in the second place, the decision not to deduct the export tax collected in Russia, with only transport costs being deducted, the applicant relies on three cases that led to the adoption of Council regulations, which it claims demonstrate the Council’s inconsistent and erroneous approach in taking decisions.
105 The Council replies that, in the three cases cited by the applicant, the Commission and itself deducted only the customs duties payable on domestic sales of gas but made no deduction for export tax. In that regard, the Council states that it erred at recital 31 to Council Regulation (EC) No 1891/2005 of 14 November 2005 amending Regulation (EEC) No 3068/92 imposing a definitive anti-dumping duty on imports of potassium chloride originating in Belarus, Russia or Ukraine (OJ 2005 L 302, p. 14) when it stated that customs export tax is deducted from the price of exported gas. The Council states that it was informed by the Commission that no such adjustment was in fact made.
106 In that connection, notwithstanding Regulation No 1891/2005, which, at recital 31, refers to a deduction of customs export tax, which was not in fact applied, it is apparent that that tax was not deducted in the other regulations on which the applicant relies.
107 It is apparent from recital 97 to 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), relied on by the applicant, that the gas costs were adjusted on the basis of the price of gas for export to Western Europe, net of transport costs and excise duty.
108 Similarly, as stated in recital 54 to Council Regulation (EC) No 1050/2006 of 11 July 2006 imposing a definitive anti-dumping duty on imports of potassium chloride originating in Belarus and Russia (OJ 2006 L 191, p. 1), an adjustment to the price of gas was made using information concerning the price of gas for export, net of transport costs, value added tax and excise duty.
109 In any event, 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 of 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.
110 The applicant has 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.
111 In addition, it should be added that the fact that, in two of the cases cited by the applicant, excise duties were deducted and that, in the present case, transport costs were also deducted has no bearing on the issue of whether a manifest error of assessment could have been made in the present case as regards the refusal to deduct export tax.
112 Lastly, the Court rejects the applicant’s argument alleging failure to state the reasons for refusing to deduct the 30 % duty from the export of Russian gas, but deducting transport costs. 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).
113 In this case, at page 5 of the Commission’s letter of 12 December 2006, sent to the applicant during the administrative procedure and produced as Annex A.12 to the application, the applicant had been informed of the reasons why it was not appropriate to deduct the 30 % export duty on Russian gas, 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.
114 The second part of the first plea is therefore unfounded.
The third part of the first plea
115 The applicant claims that there has been an infringement of Article 2(10) of the basic regulation and a manifest error of assessment in that, in the contested regulation, the Council deducted from the applicant’s export price to the first independent customer the commissions of the related companies forming part of the applicant’s single economic entity. The applicant contests, in that regard, recital 62 to the contested regulation, in that it applied the Commission’s findings of 28 September 2006, namely that commissions for the applicant’s trading company subsidiaries – Eurochem Moscow and Eurochem Trading GmbH – were to be deducted from the export price.
116 In the applicant’s submission, the adjustments listed in Article 2(10) of the basic regulation are neither mandatory nor automatic and the party claiming the adjustment bears the burden of proof.
117 In the first place, it is necessary to outline the relevant factual context in which the institutions applied, in the present case, Article 2(10) of the basic regulation, which provides that the comparison between the normal value and the export price is to be made at the same level of trade and in respect of sales made at as nearly as possible the same time, with due account being taken of other differences which affect price comparability.
118 For the purposes of the application of that provision, the Council explained that the applicant and its manufacturing companies did not sell the product concerned directly to customers in the United States. It explained that the sales were carried out in the following manner: the manufacturing companies – subsidiaries of the applicant – concluded an agency agreement with the applicant, under which the latter received a commission for sales of the product. The applicant, as an agent, ensured that the product was sold by its manufacturing companies to two trading companies, also subsidiaries of the applicant, the first located in the British Virgin Islands, but which ceased to operate in 2005, and the other in Switzerland. Those trading companies sold the product concerned to the first independent customer with a mark-up.
119 Although the applicant states that it contested those findings during the administrative procedure, it is apparent that this was only in order to assert that all the companies related to it, including its manufacturing companies and its two trading companies, were owned, controlled and managed by the same single shareholder, the applicant. The applicant submits that Eurochem Moscow and Eurochem Trading performed the same functions as those of a fully integrated export sales department.
120 It is apparent from recitals 59 to 62 to the contested regulation that the normal value and the export price were determined at the ‘distributor’ level.
121 In that connection, as regards the normal value, recital 59 to the contested regulation states, as set out above, that that value was constructed on the basis of the manufacturing costs of the product type exported, after the adjustment for the gas cost mentioned in recital 58, plus a reasonable amount for SG&A costs and for profits. Recital 61 to the contested regulation states that the SG&A costs and profit were established on the basis of the weighted averages from three North American producers and that the amount for profit so established did not exceed the profit realised by the Russian producers on sales of products of the same general category on their domestic market.
122 As regards the export price, recital 62 to the contested regulation states that this was established on the basis of export prices actually paid or payable to the first independent customer in the USA, the applicant’s major export market.
123 Article 2(10) of the basic regulation provides that adjustments are possible.
124 However, according to the case-law, it is apparent from both the wording and the scheme of Article 2(10) of the basic regulation that an adjustment to the export price or the normal value may only be made to take account of differences in factors which affect the prices and therefore their comparability (Case T‑88/98 Kundan and Tata v Council [2002] ECR II‑4897, paragraph 94). In other words, the purpose of an adjustment is to re-establish the symmetry between normal value and export price.
125 In that connection, it should be observed that Article 2(10)(i) of the basic regulation provides that an adjustment is to be made for differences in commissions paid in respect of the sales under consideration. The second sentence of that provision states that the term ‘commissions’ is to be understood to include the mark-up received by a trader of the product or the like product if the functions of such a trader are similar to those of an agent working on a commission basis.
126 That second sentence of Article 2(10)(i) of the basic regulation was inserted by Article 1(5) of Regulation No 1972/2002. Recital 6 to that regulation states that the rationale for the insertion of the sentence in question was to clarify, in line with the consistent practice of the institutions, that such adjustments were also to be made if the parties did not act on the basis of a principal-agent relationship, but achieved the same economic result by acting as buyer and seller.
127 Therefore, Article 2(10)(i) of the basic regulation allows an adjustment to be made not only for differences in commissions paid in respect of the sales under consideration, but also for the mark-up received by traders of the product if they carry out functions which are similar to those of an agent working on a commission basis (Case T-299/05 Shanghai Excell M & E Enterprise and Shanghai Adeptech Precision v Council [2009] ECR II-565, paragraph 281).
128 In the present case, the respective roles played by the applicant, its manufacturing companies and its trading companies must therefore be examined.
129 The applicant has not disputed that commissions were paid, in accordance with the export sales agency agreement. The Council emphasised that that agreement was a fully fledged agency agreement that even included an arbitration clause.
130 The applicant submits that the institutions have not proved the effect of such commissions on the comparability of the export price and normal value.
131 However, it is apparent that the Council contended that the commission payments represented compensation for tasks performed in the context of functions similar to those of an agent working on a commission basis and that the commission payments were not a mere internal redistribution of profits that does not affect price comparability.
132 It has not been disputed that the product concerned was sold by the trading company, which set a price including a profit margin, thereby carrying out the role of trader. It should be added that the applicant has not denied its own role or the respective roles of its manufacturing and trading companies, as set out in paragraph 118 above, save to claim that the applicant and its companies constituted a single economic entity.
133 The applicant also referred to a Commission disclosure document which stated that all the applicant’s export sales were made directly via related companies. However, such a reference is not sufficient in order to challenge effectively the relationships between the companies in question as established by the Council.
134 It is not therefore apparent that there has been an infringement of Article 2(10)(i) of the basic regulation or that there has been a manifest error of assessment in relation to the application of that provision in the present case.
135 The third part of the first plea is therefore unfounded.
136 It follows from all of the foregoing that the first plea must be regarded as unfounded and, consequently, must be rejected.
Second plea, alleging infringement of Article 11(1) and (3) of the basic regulation
137 By its second plea, the applicant submits that there has been infringement of Article 11(1) and (3) of the basic regulation.
138 The applicant submits, so far as the infringement of Article 11(3) of the basic regulation is concerned, that the institutions ought to have initiated, carried out and finalised an interim review at the same time as the expiry review. The applicant supplied sufficient evidence when it submitted its request for an interim review on 1 August 2005 and, in any event, when it submitted evidence in response to the Commission on 9 September and 27 October 2005 for the calculation of the dumping margin.
139 The applicant further submits, so far as the infringement of Article 11(1) of the basic regulation is concerned, that in the light of the same evidence the institutions were wrong to adopt the contested regulation and to extend the antidumping duties at their original level. The applicant emphasises, in that regard, that the extended anti-dumping duties had been established in application of methodologies intended for non-market-economy countries and on the basis of a Community industry which was necessarily smaller, since the European Union was composed of only 15 Member States at the time.
140 The Council submits that the second plea is inadmissible on the ground that – in its view – the applicant’s main contention in this plea is that the Commission and the Council failed to initiate the interim review of the original measures in good time. That plea is not intended to support the applicant’s application for annulment of the contested regulation.
141 In the alternative, the Council contends that the plea is time-barred. It maintains that the applicant can no longer challenge, at this stage, the failure or refusal to initiate the interim review, as they have become definitive. The Council relies on Case C-188/92 TWD Textilwerke Deggendorf [1994] ECR 1-833 and Case C‑239/99 Nachi Europe [2001] ECR 1-1197.
142 The applicant contests the Council’s objection to admissibility on the ground that its second plea relates not only to the belated initiation of an interim review but also to the maintenance of the anti-dumping duties by the contested regulation. The applicant states that the Commission at no point refused to initiate the interim review, since it even initiated it on 19 December 2006, which demonstrates that the applicant was unable to bring an action for failure to act against a failure to initiate such a review or an action for annulment against a refusal to initiate that review. The applicant further submits that the Commission’s notices of initiation of investigations are not measures against which actions can be brought.
143 In any event, at the time of lodging the application the applicant could not bring an action for failure to act, since the Commission had already acted. Nor could it bring an action for annulment before the contested regulation had been adopted.
144 In that connection, it must be stated that, by its second plea, the applicant is not claiming that the Commission refused to carry out an interim review, that review having indeed been initiated by notice of initiation published on 19 December 2006. The applicant states that it is challenging the continued imposition of the anti-dumping duty, since it claims that it supplied sufficient evidence when it submitted its request for an interim review.
145 As the Council correctly observes, even if the refusal or failure by the Commission to initiate an interim review in good time were unlawful, that would not mean that the contested regulation – the only measure whose annulment is sought in the application – would thereby be unlawful. The contested regulation terminated the procedure initiated following a request for an expiry review and is not a response to the applicant’s request for an interim review, the latter having received a response by Regulation No 238/2008.
146 The second plea must therefore be declared inadmissible inasmuch as it is directed at the alleged unlawfulness in relation to the applicant’s request for an interim review.
147 Moreover, it should be added that, even if the second plea in law were considered to be based on the fact that the institutions ought to have dealt with the request for review under Article 11(2) of the basic regulation in conjunction with the request under Article 11(3), it is not indicated in what way the failure to examine both requests together could affect the lawfulness of the contested regulation. The applicant fails to show, in particular, how the substance of the dispute would have been altered if both requests had been joined.
148 The second plea must therefore be rejected as inadmissible.
149 It follows from all of the foregoing that the action must be dismissed in its entirety.
Costs
150 Under Article 87(2) of the Rules of Procedure of the Court, 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 applicant has been unsuccessful, it must be ordered, in accordance with the form of order sought by the Council, to bear its own costs and to pay those of the Council.
151 In accordance with the first subparagraph of Article 87(4) of the Rules of Procedure, the institutions which have intervened in the proceedings are to bear their own costs. Consequently, the Commission is to bear its own costs.
On those grounds,
THE GENERAL COURT (Eighth Chamber)
hereby:
1. Dismisses the action;
2. Orders EuroChem Mineral and Chemical Company OAO (EuroChem MCC) to bear its own costs and to pay those incurred by the Council of the European Union;
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]