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Language of document : ECLI:EU:T:2000:92

JUDGMENT OF THE COURT OF FIRST INSTANCE (Third Chamber,Extended Composition)

30 March 2000 (1)

(Anti-dumping - Breach of a price undertaking - Injury to the Community)

In Case T-51/96,

Miwon Co. Ltd, established in Seoul, South Korea, represented by J.F. Bellis, of theBrussels Bar, with an address for service in Luxembourg at the Chambers ofLoesch and Wolter, 11 Rue Goethe,

applicant,

Council of the European Union, represented by A. Tanca, of its Legal Service,acting as Agent, assisted by H.-J. Rabe and G. Berrisch, Rechtsanwälte, Hamburg,with an address for service in Luxembourg at the office of A. Morbilli, GeneralCounsel of the Legal Affairs Directorate of the European Investment Bank,100 Boulevard Konrad Adenauer,

defendant,

Commission of the European Communities, represented by N. Khan, of its LegalService, acting as Agent, with an address for service in Luxembourg at the officeof C. Gómez de la Cruz, of its Legal Service, Wagner Centre, Kirchberg,

intervener,

THE COURT OF FIRST INSTANCE

OF THE EUROPEAN COMMUNITIES (Third Chamber, ExtendedComposition),

composed of: M. Jaeger, President, K. Lenaerts, V. Tiili, J. Azizi and P. Mengozzi,Judges,

Registrar: A. Mair, Administrator,

having regard to the written procedure and further to the hearing on 27 April 1999,

gives the following

Judgment

The facts

1.

The applicant is a Korean company producing a wide range of foods and chemicalproducts, including monosodium glutamate (glutamic acid salts, hereinafter'MSG).

2.

On 2 March 1990 the Commission adopted Regulation (EEC) No 547/90 imposinga provisional anti-dumping duty on imports of certain glutamic acid and its saltsoriginating in Indonesia, the Republic of Korea, Taiwan and Thailand, andaccepting undertakings in connection with imports of certain glutamic acid and itssalts originating in these countries (OJ 1990 L 56, p. 23), in particular theundertaking offered by the applicant.

3.

On 27 June 1990 the Council adopted Regulation (EEC) No 1798/90 imposing adefinitive anti-dumping duty on imports of MSG originating in Indonesia, theRepublic of Korea, Taiwan and Thailand and definitively collecting the provisionalanti-dumping duty imposed on such imports (OJ 1990 L 167, p. 1). That regulationwas amended by Council Regulation (EEC) No 2966/92 of 12 October 1992 (OJ1992 L 299, p. 1) and by Council Regulation (EEC) No 2455/93 of 2 September1993 (OJ 1993 L 225, p. 1). MSG produced and exported by companies fromwhich undertakings had been accepted by the Commission pursuant to RegulationNo 547/90, Decision 92/493/EEC of 12 October 1992 accepting undertakingsoffered in connection with the review of anti-dumping measures applicable tocertain imports of MSG originating in Indonesia and terminating the investigation(OJ 1992 L 299, p. 40) and Decision 93/479/EEC of 30 July 1993 acceptingundertakings offered in connection with the review of anti-dumping measuresapplicable to certain imports of MSG originating in Indonesia, the Republic ofKorea, Taiwan and Thailand (OJ 1993 L 225, p. 35) was exempted from definitiveduties. The applicant was amongst the companies benefiting from exemption.

4.

On 10 May 1994 Orsan, the sole Community producer of MSG, lodged with theCommission a request for a review under Article 14 of Council Regulation (EEC)No 2423/88 of 11 July 1988 on protection against dumped or subsidised importsfrom countries not members of the European Economic Community (OJ 1988L 209, p. 1, hereinafter 'the basic regulation), on the ground, inter alia, that MSGhad been imported into the Community at prices lower than those required by theexisting price undertakings. By notice published on 9 July 1994 the Commissioninitiated a review of the measures concerned (OJ 1994 C 187, p. 13).

5.

On 12 July 1994 the Commission sent the applicant a questionnaire, and in October1994 it conducted a verification at the applicant's offices in Seoul. On thatoccasion, the applicant filed a submission with the Commission in which it statedthat Orsan imported substantial quantities of MSG from Brazil at pricessignificantly lower than the prevailing market prices.

6.

On 8 June 1995 the Commission, considering that even if the export prices, takenat their face value, did correspond to the terms of the undertakings, the level of theresale prices of the merchandise in the Community nevertheless constituted a clearindication of non-compliance with the undertakings, sent a disclosure letter to theapplicant announcing its intention to withdraw the latter's price undertaking andto replace it with a provisional anti-dumping duty based on the facts establishedprior to acceptance of the price undertaking.

7.

On 18 July 1995 the Commission adopted, pursuant to Article 10(6) of the basicregulation, Regulation (EC) No 1754/95 imposing a provisional anti-dumping dutyon imports of MSG originating in Indonesia, the Republic of Korea, Taiwan andThailand (OJ 1995 L 170, p. 4). MSG produced and exported by the applicant wassubjected to a provisional duty of ECU 0.163 per kilogram.

8.

On 19 January 1996 the Council adopted Regulation (EC) No 81/96 amendingRegulation (EEC) No 2455/93 imposing definitive anti-dumping duties on importsof MSG originating in Indonesia, the Republic of Korea and Taiwan and collectingdefinitively the provisional duties imposed and terminating the proceeding withregard to Thailand (OJ 1996 L 15, p. 20, hereinafter 'the contested regulation). MSG produced and exported by the applicant was subjected to a definitive duty ofECU 0.286 per kilogram.

9.

The recitals in the contested regulation relating to determination of the exportprice are worded as follows:

'(25) Export prices reported by all cooperating producers in Indonesia, Korea andTaiwan in their replies to the Commission's questionnaire corresponded tothe price levels of the price undertakings. However, a verification of theseexport prices confirmed the allegation in the review application that theprice undertakings had been violated and that the export prices reportedwere unreliable.

(26) The above conclusion was reached after consideration of the following facts:the Commission requested information on resale prices for the productconcerned as well as information on the costs between importation andresale from all importers having purchased monosodium glutamate fromthose exporters which cooperated in this review.

A number of importers supplied the requested information on resale pricesand costs and this information was verified at the premises of thoseimporters which agreed to cooperate further in the investigation. It wasfound that these latter importers, which had sourced the product concernedfrom the cooperating exporters in Korea, Indonesia and Taiwan, had all soldthe product concerned on the Community market at a loss during theperiod investigated and, in some cases, the resale price did not even coverthe purchase price. This was a regular pattern of pricing behaviour,spanning the entire investigation period, for which no convincing reasoncould be advanced other than the existence of compensatory arrangements. In addition, clear evidence was found during the verification visits to certainimporters that the undertakings accepted from Miwon Co. Ltd (Korea) andPT Indomiwon Citra Inti (Indonesia) had been violated, i.e. that the importprices were not at the level of the price undertakings as demonstrated. Inthe case of the Indonesian company, the violation was evidenced by theissue of credit notes relating to sales of the product concerned and, in thecase of the Korean company, [by] the existence of correspondence referringto prices substantially below the undertaking price. The above facts aloneshow that the actual export prices for the transactions concerned weresignificantly lower than those reported at the undertaking price level.

In the above circumstances, which strongly support the existence ofcompensatory arrangements and the unreliability of export prices reported,it was concluded that the export prices reported by the cooperatingexporters should be reconstructed in accordance with Article 2(8)(b) of thebasic regulation, i.e. on the basis of the prices at which the importedproduct was first sold to independent customers, allowance being made forall costs incurred between importation and resale and for a reasonableprofit margin for the importers concerned.

(27) Accordingly, for the cooperating exporters in Korea, Taiwan and Indonesia,the export price was constructed by deducting from the weighted averageresale prices of each of the cooperating importers to the first independentcustomer an amount which corresponded to the importers' costs betweenimportation and resale plus an amount for profit of 5%. This amount ofprofit was considered reasonable as it was in line with that consideredappropriate for the product concerned in previous investigations and wasnot contested. An additional deduction was made for customs duty andother costs, such as ocean freight and insurance, to arrive at an ex-workslevel in the countries of origin.

(28) For those transactions by the cooperating producers for which informationon resales by importers could not be obtained, it was concluded that, in thelight of the facts revealed by the verification of resale prices of monosodiumglutamate exported by those producers carried out at the seven importersreferred to in recital 13, the export prices submitted by exporters had to bedisregarded for the above same reasons. The export price therefore had tobe established, in accordance with Article 7(7)(b) of the basic regulation, onthe basis of the facts available, i.e. it was considered that actual exportprices in these cases were at the same level as the export pricesreconstructed as described in recitals 25 to 27.

Procedure and forms of order sought by the parties

10.

The applicant brought the present action on 12 April 1996.

11.

By application lodged on 28 August 1996, the Commission sought leave tointervene in support of the form of order sought by the Council. By order of thePresident of the Fifth Chamber, Extended Composition, of the Court of FirstInstance of 16 October 1996, the Commission was granted leave to intervene. However, the Commission has not lodged any written statement in intervention.

12.

Upon hearing the report of the Judge-Rapporteur, the Court of First Instance(Third Chamber, Extended Composition) decided, first, to adopt measures oforganisation of procedure pursuant to Article 64 of the Rules of Procedure,consisting of written questions to the Council, and, second, to open the oralprocedure.

13.

The Council replied to the written questions by letter sent by registered post on22 April 1999. The parties presented oral argument and their replies to the Court'soral questions at the hearing on 27 April 1999.

14.

The applicant claims that the Court should:

- annul the contested regulation in so far as it concerns the applicant;

- order the Council to pay the costs.

15.

The Council contends that the Court should:

- dismiss the application;

- order the applicant to pay the costs.

Law

16.

The applicant relies on two pleas in support of its application. The first pleaalleges infringement of Article 2(8) of the basic regulation. By its second plea, theapplicant maintains that the Council erred in its assessment of the injury caused tothe Community industry.

1. The first plea, alleging infringement of Article 2(8) of the basic regulation

Arguments of the parties

17.

The applicant maintains that the Commission and the Council wrongly determinedthe export price by reference to the export prices constructed on the basis of theresale prices charged by some of the applicant's independent importers, pursuantto Articles 2(8)(b) and 7(7)(b) of the basic regulation, instead of using the exportprices actually charged by the applicant, as required by Article 2(8)(a) of the basicregulation.

18.

The applicant observes, as a preliminary point, that the findings concerning thealleged unreliability of the export price were based on information obtained fromthe importers at whose premises verification visits took place in the autumn of1995, whereas the Commission had already informed the applicant that itconsidered its export price to be unreliable in a letter of 8 June 1995. Thus, thedocumentary evidence on which the Commission purportedly relied was discoveredseveral months after the Commission had made the findings in question.

19.

The applicant also argues that there is nothing to justify a lowering of the standardof proof to which the institutions are subject in anti-dumping proceedings comparedwith that required in other fields, particularly competition cases. It observes in thatconnection, first, that Article 7(3)(a) of the basic regulation authorises theCommission to request Member States to supply it with information and to carryout all necessary checks and inspections, particularly amongst importers, tradersand Community producers. The Commission has accused the applicant of havinggranted secret compensation, which is tantamount to an accusation of serious taxevasion, whereas it could have called on the Member States to carry out allnecessary checks at the importers' premises. The Member States could have usedall the investigative powers available to them under their domestic customs and taxlegislation to determine whether secret compensation was indeed received by theimporters concerned. Next, the applicant points out that the Court of Justice hasstated that the institutions must be particularly scrupulous with regard to respectfor fundamental rights in anti-dumping proceedings, in view of the fact that suchproceedings do not provide all the procedural guarantees for the protection of theindividual which may exist in certain national legal systems (judgment of the Courtof Justice in Case C-49/88 Al-Jubail Fertilizer and Saudi Arabian Fertilizer v Council[1991] ECR I-3187 and point 73 of the Opinion of Advocate General Darmon inthat case, at I-3221). Lastly, it recalls that one of the fundamental principles of lawcommon to all the Member States is that guilt cannot be presumed.

20.

The applicant notes that, according to Article 2(8)(a) of the basic regulation, theexport price must be determined on the basis of the actual export price, that is tosay, the price actually paid or payable for the product sold for export to theCommunity, and that recourse should be had to constructed export prices only inthe three cases provided for in Article 2(8)(b), namely, where there is no exportprice, where it appears that there is an association or a compensatory arrangementbetween the exporter and the importer or a third party, or where for other reasonsthe price actually paid or payable for the product sold for export to the Communityis unreliable.

21.

The applicant puts forward seven arguments to show that the institutions' findingthat the reported export prices were unreliable is flawed.

22.

First, the applicant maintains that the institutions were wrong to assume that theonly possible explanation for the relatively low resale prices charged byindependent importers was the grant of compensation by the exporter. In its view,the premiss on which the institutions' reasoning rests, namely that each and everyimporter always resells every single item which it imports at a price covering itspurchase costs, its selling, general and administrative expenses plus a reasonableprofit margin, is incorrect. As explained by one of the applicant's independentexporters, Tang Frères, an importer may very well decide to realise a high profiton certain items and a lower one on others, and even to resell certain items at aloss for a variety of perfectly legitimate reasons, such as the level of market pricesor competition from local producers or other importers. Moreover, it is apparentfrom the 1960 Second Report of the GATT Group of Experts on Anti-Dumpingand Countervailing Duties that it is not uncommon for importers to resell at a lossand that there is no reason to assume automatically in such cases that the exporteris dumping. The applicant points out in that regard that its independent importersdid not make a loss on their purchases since they resold MSG at a price higherthan the purchase price.

23.

The applicant also observes that the information on resale prices relied upon by theCommission relates to only 20.48% of all its sales of MSG within the Community. It asserts that the inadequacy of the Commission's investigation undermines thevalidity of its conclusions.

24.

Second, the applicant points out that the independent importers investigated by theCommission explained that they had not been able to charge higher resale pricesfor MSG because of the low prices charged on the Community market by thecomplainant Orsan.

25.

Having been able to consult the Commission's confidential file concerning two ofits importers, namely Tang Frères and Scanchem UK Ltd, the applicant was ableto discover that resales of MSG purchased from it accounted for only 1.39% ofScanchem's turnover in 1994 and less than 0.19% of that of Tang Frères in thesame year. In view of those small percentages, the profit achieved on the resalesof MSG could not have perceptibly affected the overall profitability of theimporters concerned. The fact that, as pointed out by the Council, Scanchempurchased four shipments of MSG from Miwon during the investigation period isnot material, since those four shipments accounted for only a minuscule fractionof its turnover.

26.

Tang Frères explained to the applicant that it had purchased MSG because therewas a demand on the part of some of its customers for the size of crystals producedby Miwon. The applicant has produced a written statement by Tang Frères in thefollowing terms: 'It is incorrect that our resale prices for MSG purchased fromMiwon would have been abnormally low ... the margin obtained by Tang Frères forMiwon MSG is of the same order as that obtained for MSG purchased from Orsanand Ajinomoto.

27.

As regards the Council's statement that no reasons were given for Tang Frères'pricing behaviour, the applicant observes that there is no evidence in the file thatthe Commission ever requested Tang Frères to explain why it was reselling MSGat the price charged by it. The applicant requests the Court to order the Councilto produce the reports of the Commission's verification visits to Tang Frères'premises, in order to establish whether the Commission's investigators specificallyasked Tang Frères whether, and in what form, the latter had receivedcompensation from Miwon.

28.

Similarly, Scanchem stated, in a letter signed by Mr Currie which it sent to theapplicant on 15 December 1995, that its resale prices 'would be low in some casesbut only to get rid of the material by meeting the prices of Orsan. The applicantpoints out in its reply that the Council totally omits to comment on that statementby Scanchem. Orsan's sales at very low prices have never been denied by theCommission or by the Council.

29.

This appears to confirm that the explanation for Scanchem's resale price level isto be found in the pressure exerted by the pricing behaviour of the complainantOrsan. The applicant likewise requests the Court to order the Council to producethe reports of the Commission's verification visits to Scanchem's premises, in orderto establish whether the Commission ever asked Scanchem whether, and in whatform, the latter had received compensation and what reply was given.

30.

Third, the applicant maintains that the Scanchem correspondence referred to inrecital 26 in the contested regulation does not in any way confirm that the actualexport prices for the transactions concerned were significantly lower than thosereported at the undertaking price level.

31.

As regards the correspondence concerning an invoice dated 13 December 1992(purchase order No 92785), the applicant points out, first, that that correspondenceis outside the investigation period and cannot therefore constitute evidence thatMiwon's export prices were unreliable. Next, the lower price referred to in thecorrespondence simply related to purchases of MSG for resale outside theEuropean Community. Lastly, the Commission has found no evidence thatScanchem ever purchased MSG from the applicant at prices lower than the exportprices reported.

32.

As regards the correspondence relating to purchase order No 93088, invoiced byMiwon on 22 May 1993, the applicant notes, first, that that correspondence was notreferred to in the Commission's disclosure letter of 8 December 1995, in which theapplicant was informed by the Commission of the main facts and considerations onthe basis of which the Commission intended to recommend the imposition of anti-dumping duties, and that it was invoked for the first time in the Council's defence. Consequently, the use of that evidence is questionable. Next, the applicantmaintains that the 'support price referred to in that correspondence relates topurchases for resale outside the Community. The applicant asserts that, at the timeof Scanchem's purchase, it was not yet known where the MSG forming the subject-matter of purchase order No 93088 would be sold. For that reason, the applicant'scalculations were based on a world price for possible sales outside the Community. The difference between the undertaking price and the world price would have beentransferred to Scanchem's account if the shipment had ultimately been sold outsidethe Community, but, since that did not happen, the support price was never paid. Moreover, during the verification visit to Scanchem's premises, the Commissionfound no trace whatsoever of any compensatory payments. According to theapplicant, the documents in issue merely prove that there were two prices: theundertaking price for the Community and the world price for sales outside theCommunity. As regards the reference in certain faxes to inland freight fromFelixstowe to Manchester, the applicant questions whether the Commission everraised that point during the verification visit to Scanchem's premises, pointing outthat, since Manchester is only 25 km from Scanchem's premises, that transportationdid not necessarily mean that the MSG could not be subsequently transported toanother destination, possibly outside the Community.

33.

The applicant concludes from the foregoing that the Scanchem correspondencedoes not in any way confirm the existence of compensatory arrangements.

34.

Fourth, the institutions' findings are vitiated by the same defect as that identifiedby the Court of Justice in Joined Cases 29/83 and 30/83 Compagnie RoyaleAsturienne des Mines and Rheinzink v Commission [1984] ECR 1679, paragraph 16,in that it is manifest in the present case that the grant of compensation by theapplicant cannot be the only plausible explanation for the importers' pattern ofresale prices. First, the importers have explained that they were unable to chargehigher resale prices for MSG purchased from the applicant because of the pressureexerted on prices by, inter alia, the Community producer Orsan. Second, sinceMSG purchases from the applicant accounted for only a minuscule percentage ofthe importers' turnover, those importers were able to resell the products withreduced profit margins without jeopardising their overall profitability.

35.

Fifth, the Commission found no evidence whatsoever of payment of anycompensation by the applicant to its importers, or of the receipt of anycompensation by the importers from the applicant, in the course of the verificationvisits to the importer's premises and the applicant's premises in 1994 and 1995. The applicant adds that Scanchem and Tang Frères submitted written statementsin the course of the administrative proceeding (see paragraphs 26 and 28 above)confirming that they had 'not received any compensation, in whatever form, fromMiwon with respect to MSG purchased from Miwon for importation into theEEC.

36.

Sixth, the applicant asserts that, since the institutions wrongly found that theapplicant had granted compensation to the independent importers who cooperatedin the investigation, there was no valid basis for applying Article 7(7)(b) to thetransactions which it entered into with importers who did not provide theCommission with information concerning their resales.

37.

Seventh, the applicant maintains that the dumping margin calculated by theinstitutions is manifestly erroneous, since it is not based on the actual export pricescharged by the applicant, as required by Article 2(8)(a), given that the importersare independent and there is no basis for concluding that there was a compensatoryarrangement between the applicant and its exporters.

38.

The Council disputes the validity of the arguments put forward by the applicant.

Findings of the Court

39.

The applicant argues that the institutions were wrong to conclude that the pricesactually invoiced by Miwon to the independent importers were unreliable and thatit was necessary to apply a constructed export price in accordance with Articles2(8)(b) and 7(7)(b) of the basic regulation.

40.

According to Article 2(8)(b) of the basic regulation, the export price should beconstructed 'where there is no export price or where it appears that there is anassociation or a compensatory arrangement between the exporter and the importeror a third party, or that for other reasons the price actually paid or payable for theproduct sold for export to the Community is unreliable. As is apparent from thatlist of criteria, and in particular from the use of the words 'where it appears and'for other reasons, the institutions have a certain latitude in deciding whether toapply Article 2(8)(b) of the basic regulation, and recourse may be had to theconstructed export price not only where the institutions obtain actual evidence ofthe existence of a compensatory arrangement but also where such an arrangementappears to exist or the export price reported appears to be unreliable.

41.

In the present case, the institutions concluded, in the third paragraph of recital 26in the contested regulation, that the export prices should be reconstructed inaccordance with Article 2(8)(b) of the basic regulation, on the ground that thecircumstances of the case 'strongly support the existence of compensatoryarrangements and the unreliability of export prices reported.

42.

Moreover, consideration of the question whether or not the export prices reportedby the applicant were reliable necessarily entails complex economic assessments inrespect of which the institutions enjoy a wide discretion, so that the Court's powerof review is restricted (Case T-97/95 Sinochem v Council [1998] ECR II-85,paragraph 51).

43.

It is necessary, therefore, to consider whether the Council committed a manifesterror of assessment in finding that, having regard to the matters referred to in thecontested regulation, the export prices were not reliable.

44.

It is apparent from recital 26 in the contested regulation (as set out in paragraph9 above) that the institutions based their conclusions on the following three points:

- as regards the importers' pricing behaviour, it was found that those whopurchased MSG from the exporters (including the applicant) who agreed tocooperate had all sold the product concerned at a loss on the Communitymarket during the investigation period and that, in certain cases, the resaleprice did not even cover the purchase price;

- as regards the absence of any explanation other than that put forward bythe institutions, there can be no convincing reason, other than the existenceof compensatory arrangements, to explain that regular pattern of pricingbehaviour, spanning the entire investigation period;

- as regards the documentary evidence supporting the institutions' findings,the verification visits to certain importers clearly proved that theundertakings accepted from Miwon (Korea) and Indomiwon (Indonesia)had been violated. The violation was evidenced, in the case of theIndonesian company, by the issue of credit notes relating to sales of theproduct concerned and, in the case of the Korean company, by the existenceof correspondence referring to prices substantially below the undertakingprice.

45.

It is therefore necessary to consider, first, whether the importers' pricing behaviourwas such as to permit the institutions, in the absence of any alternative explanation,to infer the existence of compensatory arrangements, next, whether or not theapplicants have provided any such alternative explanation and, finally, whether thedocumentary evidence confirms or reinforces the conclusions reached with respectto the first two points.

The importers' pricing behaviour

46.

It must be noted, first, that, although the applicant has challenged the conclusionsreached by the institutions, it has not denied the findings of fact on which thoseconclusions were based. It has merely claimed that the independent importerssuffered no losses on their purchases since they resold the MSG for more than thepurchase price. That affirmation is not supported by any proof. On the contrary,in his statement of 15 December 1995, produced by the applicant itself, Mr Currie,on behalf of Scanchem, indicated that losses had been made on the sale of MSGpurchased from the applicant. In any event, the applicant's assertion does not inany way disprove the institutions' finding that all the independent importers resoldat a loss, since the institutions rightly considered that sales at prices which did notcover the purchase price plus a sum corresponding to selling costs, general andadministrative expenses and a reasonable profit margin constituted sales at a loss.

47.

The Court therefore finds it established that all of the importers who purchasedMSG from the applicant resold it at a loss and that three of them even resold theproduct at a price lower than the purchase price.

48.

Next, that pricing behaviour was adopted by all of the importers who cooperatedin the investigation. The applicant's argument that it is not unusual for an importerto resell at a loss - which is, indeed, recognised by the 1960 Second Report of theGATT Group of Experts - is therefore irrelevant in the present case, since, as thedefendant has asserted without being contradicted by the applicant, this was notsomething which happened occasionally but rather a constant, general practicefollowed by all the importers who cooperated in the investigation.

49.

It should also be noted that, according to a further assertion by the defendantwhich, again, has not been contested by the applicant, that pricing behaviour relatesnot merely to a few isolated transactions concluded by the importers but to theoverall profitability of the importation of MSG by each of them.

50.

Whilst, as the defendant rightly concedes, an importer may for one reason oranother decide not to make a profit on a given transaction, it would none the lessbe extraordinary if none of the importers who cooperated had made any profit onthe imports in question and yet they all, none the less, continued to import theproduct throughout the investigation period.

51.

Lastly, the applicant asserts that, inasmuch as the Commission's findings concerningthe importers' pricing behaviour concern only 20.48% of all Miwon's sales of MSGwithin the Community, they are not representative, and that they therefore lendinsufficient support to the conclusion that there was a breach of the undertaking.

52.

It should be noted in that regard, first, that the basic regulation contains no director indirect requirement that the information on which the Commission or theCouncil bases its view that an operator has committed a breach of his undertakingmust relate to a minimum percentage of his sales. On the contrary, any breach ofan undertaking is sufficient to justify the withdrawal by the Commission of itsacceptance of the undertaking and its replacement of that undertaking by an anti-dumping duty. The Commission has a discretion to accept or refuse a priceundertaking; in particular, it may refuse such an undertaking where it considers thatit would be difficult to verify its application. In the same vein, Article 10(5) of thebasic regulation provides that the mere failure by a party from whom anundertaking has been accepted periodically to provide information permittingverification of pertinent data is to be regarded as a violation of the undertaking. A fortiori, therefore, where such a violation is found actually to have beencommitted, even if it concerns only a relatively small percentage of the turnover ofthe operator in question, that is sufficient to lead to a withdrawal by theCommission of the undertaking. Second, it should be noted that the Council statedin its rejoinder that the percentage of 20.48% referred to the findings giving riseto the adoption of Regulation No 1754/95, but that, in the context of the contestedregulation, the Commission was able to obtain information from cooperatingimporters covering 30% of the applicant's total export sales during the investigationperiod. The determination of a value or the reaching of a finding based on sampledata is normal practice and is not per se open to criticism, especially in the contextof the anti-dumping rules, provided that the sample in question is sufficientlyrepresentative. However, it should also be noted in that regard that the closingwords of Article 2(13) of the basic regulation provide that sampling techniques maybe applied to establish export prices in cases involving a significant volume oftransactions. In the present case, the Commission's analysis, which related to eightimporters accounting for approximately 30% of the applicant's sales of MSG in theCommunity, must be regarded as representative. Third, the applicant has not citedany specific case casting doubt on the Commission's finding that the importers whoagreed to cooperate made no profit on the imports of MSG supplied by theapplicant. The fourth and final point to note is that the applicant has not deniedthat the Commission attempted to obtain information concerning resale prices fromas many importers as possible.

53.

It follows that, subject to any valid alternative explanation, the importers' pricingbehaviour must be regarded as a relevant factor for the purposes of establishing theunreliability of the export prices reported by the applicant and/or the existence ofcompensatory arrangements.

Alternative explanations

54.

It is necessary, in accordance with the case-law concerning the indirect method ofproof (see the judgments of the Court of Justice in Compagnie Royale Asturiennedes Mines and Rheinzink v Commission, cited above, and in Joined Cases C-89/85,C-104/85, C-114/85, C-116/85, C-117/85 and C-125/85 to C-129/85 AhlströmOsakeyhtiö and Others v Commission [1993] ECR I-1307), to consider whether theapplicant has supplied any alternative explanations which shed a different light onthe facts established by the institutions by providing reasons other thancompensatory arrangements to justify the importers' pricing behaviour.

55.

As regards, first, the allegation that the independent importers who cooperated inthe investigation were unable to charge higher resale prices for the MSG becauseof the pressure exerted on prices by, inter alia, the Community producer Orsan, itshould be noted at the outset that the applicant has produced no real evidence toshow that the Community producer actually charged low prices on the Communitymarket. Next, the Court notes that the applicant's argument is based only on thestatement made on 15 December 1995 by Mr Currie on behalf of Scanchem (seeparagraph 26 above), according to which the prices would be low in some cases,but only in order to dispose of the product. That attempt to explain is notpersuasive. Scanchem indicated in that statement that it had suffered losses on thatmarket and that Orsan was fixing market prices at a level which was so low thatnone of the parties to the undertaking could hope to match them, yet itnevertheless purchased four shipments of MSG from the applicant during theinvestigation period. However, any reasonable economic operator would havestopped importing the product once it realised that it could not make any profit onit whatsoever. Lastly, no argument has been put forward to the effect that it wouldhave been difficult for Scanchem to stop purchasing MSG from the applicant, onthe grounds, for example, that it was bound by long-term contracts with Miwon orthat MSG formed part of a wide range of products bought by Scanchem from theapplicant. It follows that, in the absence of any evidence other than that isolatedstatement by Scanchem, the pressure on prices allegedly exerted by Orsan has notbeen proven and cannot constitute an alternative explanation for the importers'pricing behaviour.

56.

As regards, second, the argument that, because the purchases of MSG made byTang Frères and Scanchem respectively accounted for only a tiny fraction of theirturnover, the resale by them of MSG purchased from the applicant could not havehad any perceptible effect on the overall profitability of the importers concerned,it must be observed that, contrary to the applicant's assertion, the institutions'reasoning is based not on the inference that the resales of MSG purchased fromthe applicant accounted for a significant proportion of the turnover of the variousimporters but on the finding that the MSG which the importers who cooperated inthe investigation purchased from the applicant was invariably resold by them at aloss. It would not normally be in the interests of any importer to suffer a loss onany percentage of his turnover, however small, by concluding loss-makingtransactions. Yet neither the applicant nor the independent importers concernedhave provided any specific, credible explanation for the fact that, despite the lossesmade, they continued to import MSG from the applicant throughout theinvestigation period.

57.

Third, the argument that Tang Frères purchased MSG from the applicant becausethere was a specific demand for the size of crystals produced by Miwon must alsobe rejected. Contrary to the applicant's assertion, a specific demand for a givenproduct enables the vendor to escape the pressure of competition and thus to makea profit, which may be sizeable, on the resale of that product. Once again, theapplicant has not even sought to claim that Tang Frères had any special reasonsfor purchasing the allegedly specific type of MSG from it, for example in order tomeet the needs or demands of certain of its customers with whom it had asubstantial turnover of business in other products and who might have withdrawntheir custom if Tang Frères did not also supply them, at a favourable price, withMSG purchased from the applicant. On the contrary, it is apparent from theminutes of the meeting between the applicant's adviser and Tang Frères that thelatter did not import from the applicant any product other than MSG. In theabsence of any other consistent evidence, the alternative explanation alleging aspecific demand for a certain type of crystals is unreliable and does not provide areasonable explanation for that importer's pricing behaviour.

58.

Fourth, the allegation that Tang Frères' profit margin was of the same order as thatobtained for MSG purchased from Orsan and Ajinomoto must be rejected, sinceit has been found that all the independent importers - including, therefore, TangFrères - made a loss on the resale of the MSG purchased from the applicant.

59.

Fifth, as regards the statements of Tang Frères and Scanchem (see paragraphs 26and 28 above) that they received no compensation, it will be noted that the wordingof those statements, including the opening words, is completely identical, andScanchem even appears simply to have signed the pre-drafted statement withoutgoing so far as to recopy it, as is shown by the fact that beneath the statement itselfthere appear the words '[signature] and '[date] and that Scanchem has addeda handwritten remark. Those statements do not, therefore, emanate directly fromthe two importers in question, having been drafted by a third person, probably theapplicant's adviser, whose fax number appears at the top of the letter. Moreover,the applicant maintains very good relations with those two importers, since theyallowed it, in particular, to consult the Commission's confidential file relating tothem. It follows that those statements, drawn up in tempore suspecto in order tomeet the requirements of the applicant's case, lack credibility and cannot be takeninto account.

60.

The applicant considers that it is necessary to establish whether the Commission'sinvestigators asked Tang Frères and Scanchem whether, and in what form, theyreceived any compensation from Miwon. It therefore requests the Court to orderthe Council to produce the Commission's reports on the verification visits made toTang Frères' premises. Since the Court already has before it written statementsmade in that connection by Tang Frères and Scanchem, there is no need to orderthe measure of inquiry applied for.

61.

Sixth, the applicant is wrong in its view that the Council cannot rely on the fact thatno reason has been put forward to explain Tang Frères' pricing policy, on theground that there is no evidence on the file showing that the Commission everrequested Tang Frères to explain why it was reselling MSG at the price charged byit. Since Tang Frères remains unable to provide a cogent explanation concerningits resale pricing policy, there is nothing to be gained from establishing whether ornot the officials of the Commission questioned it in that regard during the courseof the investigation. In addition, the Council states in its rejoinder that theCommission officials did in fact question Tang Frères in that connection and thatthe latter stated, by way of justification for its purchases of MSG from theapplicant, that there was a specific demand for it on the part of one of itscustomers. Be that as it may, that explanation is not persuasive, being based, asnoted above, on the existence of a specific demand.

62.

Seventh, the argument that Tang Frères suffered no loss because it resold the MSGat a price higher than the purchase price cannot constitute an alternativeexplanation either. As stated above (paragraph 46), the institutions rightlyconsidered that sales at prices which did not cover the purchase price plus a sumcorresponding to selling costs, general and administrative expenses and areasonable profit margin constituted sales at a loss. In addition, the applicant hasnot put forward any argument showing that the proposition on which theinstitutions based their findings is incorrect. Lastly, it must be borne in mind thatthe applicant has not in any event challenged the defendant's assertion that threeout of the eight independent importers who cooperated in the investigation resoldMSG at a price lower than the purchase price.

63.

Finally, the applicant's attempts to provide an alternative explanation for theimporters' resale policy concern only two of the importers, Tang Frères andScanchem, whereas the institutions based their findings on an analysis of the datarelating to eight importers. Consequently, even if those reasons put forward by theapplicant were capable of providing an explanation for the resale pricing policy ofthose two importers - quod non -, they are not enough in any event to entail theannulment of the contested regulation.

64.

It follows that none of the alternative explanations put forward by the applicant tojustify the independent importers' pricing behaviour is convincing.

The documentary evidence

65.

According to recital 26 in the contested regulation, the verification visits clearlyshowed that the undertakings given by Miwon were violated. The regulation statesthat the violation was evidenced, in the case of the applicant, by the existence ofcorrespondence referring to prices substantially below the undertaking price. Thatcorrespondence relates to transaction No 92785, dated 13 December 1992, andtransaction No 93088, dated 22 May 1993.

- The correspondence relating to transaction No 92785

66.

The applicant makes the preliminary point that that correspondence concerns adelivery made outside the investigation period, and that it cannot therefore berelied on as evidence that its export prices were unreliable.

67.

That objection must be rejected. Whilst it is clear that a finding by the institutionsof a breach of an undertaking can be based only on facts occurring after thatundertaking was given, the basic regulation contains no provision indicating, eitherexpressly or by implication, that, for the purposes of establishing a breach of aprice undertaking, only transactions relating to the investigation period may betaken into consideration. On the contrary, Article 10(6) of the basic regulationprovides that where the Commission has reason to believe that an undertaking hasbeen violated, it may apply provisional anti-dumping duties forthwith on the basisof the facts established before the acceptance of the undertaking. Since theCommission is not even bound to initiate a fresh investigation, it cannot berequired to consider only the documents relating to the investigation period. Moreover, the Commission generally refuses to accept undertakings offered byproducers who have previously committed a breach of their undertaking.

68.

The fact that the contested regulation was adopted in the context of a review underArticle 14 of the basic regulation - and not merely on the basis of Article 10(6) -which provides, where the circumstances so require, for the reopening of aninvestigation in accordance with Article 7, is not such as to limit the investigation,for the purposes of verifying whether the undertaking has been violated, solely tomatters arising during the investigation period. Quite apart from the reasonsmentioned above, it must be borne in mind, first, that the request for a review wasbased, in particular, on the allegation that the price undertakings had been violatedand, second, that the documents in question were not used to calculate the exportprice but only to determine the method to be used to calculate the export price,which was then calculated on the basis of the data relating to the investigationperiod, in accordance with Article 7 of the basic regulation. For the purposes ofdetermining whether reported prices are reliable, the institutions must be able totake all the relevant circumstances into account.

69.

It follows that it was legitimate for the institutions to take the correspondence inquestion into consideration for the purposes of determining whether the pricesreported by the applicant were reliable.

70.

As regards the conclusions drawn from the correspondence relating to transactionNo 92785, that correspondence clearly shows a breach of the price undertakinggiven by the applicant. Although the official price appearing on the invoiceindicates, in accordance with the undertaking, a rate of USD 1 515 per tonne, a faxsent to Scanchem by its agent in Korea, Kiyu, states: 'Mr S H Lee asking help thatalthough MWTS [Miwon Trading and Shipping Co.] agreed price netUSD 1 290/MT CIF Manchester per MWTS fax 27.11.92, now, MWTS to do priceadjust as net USD 1 310/MT, actual invoice USD 1 515 due to arised high inlandcharge GBP 264. Another fax from MWTS to Scanchem refers to the sameshipment in the following terms: 'As we informed you through Mr Yung Chul Kim,the net price for this order shall be USD 1 320.-/MT due to inland freight fromFelixstowe to Manchester.

71.

The applicant asserts that the lower price referred to in that correspondencerelated to MSG purchased for resale outside the Community, which was notcovered by the price undertaking. That explanation is not credible. The first faxrefers to 'arised high inland charge, whereas the second mentions inland freightfrom Felixstowe to Manchester. Similarly, the invoice addressed by the applicantto Scanchem states that the product was sold for direct export to the Communitymarket. In addition, the defendant has stated, without being contradicted by theapplicant, that Scanchem's internal calculation in respect of that shipment showedthat Community customs duty was in fact paid at Felixstowe following delivery. Lastly, the applicant itself has expressly confirmed in its reply that Scanchem didnot sell any shipment of MSG outside the Community during the investigationperiod.

72.

The Court finds that the documents relating to transaction No 92785 clearlymention an agreed price lower than the undertaking price and that they do not inany way contemplate a possible sale outside the Community. The explanationswhich the applicant attempts to provide in its reply, to the effect that the lowerprice referred to is that which would have been applied if the shipment hadultimately been sold outside the Community, cannot be regarded as credible.

- The correspondence relating to invoice No 93088

73.

It is common ground that the documents relating to this transaction were notannexed to the Commission's disclosure letter of 8 December 1995. Nevertheless,the Council considers that it is entitled to rely on them, on the grounds that thebehaviour which they demonstrate does not differ from that shown by thecorrespondence relating to transaction No 92785 and that they merely confirm whathas already been proven. The Council adds that the 'essential facts and findingscontained in the disclosure letter of 8 December 1995 are not the documents assuch but the fact that compensatory payments were agreed between Scanchem andthe applicant.

74.

The Council's argument cannot be accepted. Documents to which the applicanthas not been given access during the administrative proceeding and which are notreferred to in the contested regulation cannot be accepted as documentary evidenceof the applicant's breach of its price undertaking. If the concept of the right to afair hearing is not to be rendered meaningless, it is not enough to communicate tothe operator concerned the nature of the complaints made against him; he mustalso be given sight of the documents which allegedly substantiate those complaints.

75.

However, as is apparent from the case-file, and as the applicant confirmed at thehearing in response to a question put by the Court, the applicant, having submittedan authorisation emanating from Scanchem, was ultimately able to take copies ofall the documents relating to Scanchem, at a time when it was duly able to makeobservations on the disclosure letter. In those circumstances, the applicant'sobjection concerning the use of those documents must be rejected, since it wasgiven a proper opportunity to put forward its comments on those documents andtherefore to exercise in good time its right to a fair hearing.

76.

As regards the analysis of the documents relating to transaction No 93088, theCourt notes, first, that those documents refer, once again, to an official invoicedprice of USD 1 515 and to a 'support price of USD 1 260. Second, Kiyu's fax of28 June 1993 mentions a compensation mechanism in the following terms: 'YourP/O No MSG 93088. Total amount of support is USD 3 226.50. Wish to do thisway: MWTS wish to give you total commission USD 1 350 against yourPO/No 93121. In this case, 3 226.50 minus 1 350.00 = USD 1 876.50. If youacceptable commee [sic] USD 1 350.00 against P/O No 93121, your balance totalsupport will be USD 1 876.50 against your P/O No 93088. If you accept above,they will remit USD 1 876.50 to your account at National Westminster Bank.

77.

Those documents constitute direct evidence which clearly establishes, first, a saleprice lower than the undertaking price and, second, the existence of a mechanismaimed at compensating for the difference between the official price and the realprice.

78.

The applicant's attempts to explain and Scanchem's statement (see paragraph 28above) are totally lacking in credibility and cannot cast any doubt on theconclusions drawn from the analysis of that direct evidence. Thus, the term'support price cannot, as the applicant maintains, be interpreted as meaning'price for sales outside the Community. The documents make no reference toany sale outside the Community. On the contrary, the invoices state that theproduct was sold for direct export to the Community market; furthermore, thecustoms duties were paid immediately after delivery. The allegation that thecommission referred to in the document corresponds to the difference between theundertaking price and the world price which would have been paid to Scanchemif the shipment had ultimately been sold outside the Community is scarcely anymore credible, and is inconsistent with the unconditional offer to pay thatcommission. Similarly, as the defendant points out, the calculations made by theapplicant are incorrect, and the commission of USD 1 350 is not calculated byreference to transaction No 93088; instead, it relates to transaction No 93121,which concerns another of the applicant's products. Lastly, the fact that theCommission found no trace of that commission having actually been paid does notalter the fact that the applicant and Scanchem agreed compensatory arrangements. Moreover, since the documents at issue were not discovered until the end of thevisit, the Commission did not have an opportunity of checking all of Scanchem'sbank accounts.

79.

Furthermore, the Commission also discovered certain credit notes relating toexports by Indomiwon, an Indonesian producer of MSG owned as to 50% by theapplicant, which clearly show that compensatory payments were made.

80.

It follows that the documents relating to transaction No 93088 in fact show that theapplicant and Scanchem agreed that compensatory payments were to be made orthat the prices to be charged were to be lower than the undertaking price.

81.

As is apparent from the foregoing, the arguments put forward by the applicant donot provide an alternative explanation for the importers' pricing behaviour; nor dothey weaken the probative value of the documents relating to transactionsNos 92785 and 93088 confirming the institutions' findings. Consequently, thecontested regulation is correct in concluding that the circumstances of the casestrongly support the existence of compensatory arrangements and the unreliabilityof export prices reported and that it was therefore appropriate to reconstruct theexport prices in accordance with Article 2(8)(b) of the basic regulation.

82.

In the light of that finding, it is necessary to reject the last three arguments reliedon by the applicant. First, the argument based on the judgments of the Court ofJustice in Compagnie Royale Asturienne des Mines and Rheinzink and in AhlströmOsakeyhtiö and Others, cited above, is unfounded, since, in contrast to those cases,neither the applicant nor its importers have succeeded, in the present case, inproving any circumstances which shed a different light on the facts established bythe Commission and which thus provide a plausible explanation of the facts capableof displacing that given in the contested regulation.

83.

Second, since the arguments concerning the alleged misapplication of Article7(7)(b) of the basic regulation are founded solely on the assertion that theinstitutions erred in concluding that the reported export price was unreliable, theymust also be rejected, for the same reasons.

84.

Third, the applicant's allegation that the institutions wrongly failed to establish theexport price in accordance with Article 2(8)(a) of the basic regulation, and thatthey therefore established an excessively high dumping margin, is likewiseunfounded, since the institutions were right to reject the export price reported bythe applicant as unreliable and to construct the export price in accordance withArticle 2(8)(b) of the basic regulation.

85.

Moreover, the applicant is wrong to state that the Commission had alreadyconcluded, before it had even obtained all the evidence, that the export pricereported by the applicant was unreliable. Regulation No 1754/95, which wasadopted in the context of a review of the anti-dumping measures in force, is basedon Article 10(6) of the basic regulation, which expressly provides that theCommission may apply provisional anti-dumping duties forthwith where it hasreason to believe that a price undertaking has been violated. The Commission'sdisclosure letter of 8 June 1995 dealt only with the question whether there was anyreason to believe that the price undertaking had been violated. When RegulationNo 1754/95 was adopted, the Commission had not yet carried out its investigationsat the importers' premises, which could have revealed, by way of justification forthe importers' pricing behaviour, reasons other than the existence of compensatoryarrangements. However, no other reason of that kind emerged. On the contrary,the Commission discovered documentary evidence which confirmed its initial doubtsand clearly proved the existence of such compensatory arrangements.

86.

It follows that the first plea must be rejected.

2. The second plea, alleging that the injury was wrongly determined

Arguments of the parties

87.

The applicant maintains that the Council's finding that the dumped imports fromthe countries concerned had, taken in isolation, continued to cause material injuryto the Community industry is vitiated by fundamental contradictions.

88.

First, the applicant claims that the relevant factors analysed by the Council areinconsistent with a finding of injury as they indicate the existence of a positive trendas far as the Community producer is concerned. Production by the Communityproducer increased from an index figure of 97.58 in 1992 to 101.08 during theinvestigation period. In addition, the Community producer's sales volume andmarket share increased, rising from an index figure of 100 in 1991 to 106.12 and102.28 respectively during the investigation period. That analysis is confirmed bythe Council itself, which even observes that the Community producer's marketshare remained at all times substantial. Lastly, the applicant asserts that, althoughthe Community producer's prices and profitability showed a negative trend, theCouncil has not proved that that trend could be attributable to the imports underinvestigation, since those imports declined considerably, in terms of both volumeand market share, during the relevant period, decreasing from 11 228 tonnes (or21.8%) in 1991 to 7 478 tonnes (or 14.07%) in the investigation period.

89.

The applicant denies having undercut the prices charged by the Communityindustry, as the Council asserts. If the Council had compared the applicant's actualexport prices with the Community industry's prices, rather than using constructedprices, it would have found that it was solely the Community producer, Orsan, thatengaged in price undercutting. It refers in that regard to the statement made on15 December 1995 by Mr Currie, on behalf of Scanchem, that 'we made lossesoverall on the deals. Main reason was that the competition from Orsan andAjinomoto were too low to make any money. I remember the calculation we hadto consider was delivered cost to customers of $1 775. This price was laughed atby buyers who were paying Orsan $1 625 and below. In fact to get rid of the lastcontainer 17/18 tonnes at around $1 550 to match the Orsan price, we were told.... Orsan in our opinion were not content to compete but to create an exclusivemarket by making prices so low that no party to the undertaking could hope tomatch.

90.

Lastly, the applicant considers that the Council's argument that, because of theanti-dumping measures already in place, some improvement of the unfavourablesituation of the Community producer could be expected contradicts the Council'sown allegations that the undertaking was violated.

91.

Second, the applicant maintains that the Council failed to consider whether theinjury resulted from the importation by the Community producer of MSG fromBrazil. Imports from Brazil increased from 1 076 tonnes in 1991 to 4 376 tonnesduring the investigation period. In addition, as shown by the applicant during theadministrative proceeding, the prices concerned were very low. The Council'sassertion that the Community producer imported MSG from Brazil during theinvestigation period in order to meet a surge in demand and to counteract theeffects of industrial action (recital 50 in the contested regulation) cannot be correct,since the Community producer has imported MSG from Brazil since at least 1989.

92.

The applicant notes that the Council does not dispute the substantial increase inimports from Brazil during the relevant period, and observes that that increaseroughly corresponds to the decrease in imports from the countries concerned by theanti-dumping measures. The applicant denies that the imports were resold atnormal market prices, and claims to have shown that the average price of importsfrom Brazil was almost 11% below the undertaking price between 1991 and 1993. Whilst it is true that those average prices relate to imports from Brazil in general,and not solely to those made by Orsan, nevertheless, in view of Mr Currie'sstatement (referred to above), the Council should have submitted some evidenceto show that the Community producer did not sell MSG below normal marketprices.

93.

The Council disputes the validity of the arguments put forward by the applicant.

Findings of the Court

94.

It must be recalled, as a preliminary point, that, according to settled case-law, thequestion whether the Community industry has suffered injury and, if so, whetherthat injury is attributable to dumped imports (Case C-174/87 Ricoh v Council [1992]ECR I-1335, paragraph 56) and the question whether imports from other countriescontributed to the injury suffered by the Community industry (Case T-164/94Ferchimex v Council [1995] ECR II-2681, paragraph 131) involve the assessment ofcomplex economic matters in respect of which the Community institutions enjoy awide discretion. Consequently, judicial review of such an assessment must belimited to verifying whether the procedural rules have been complied with, whetherthe facts on which the contested choice is based have been accurately stated andwhether there has been a manifest error of appraisal of those facts or a misuse ofpowers (Case T-155/94 Climax Paper Converters v Council [1996] ECR II-873,paragraph 98).

95.

The plea alleging wrong assessment of the injury is in two parts. The applicantmaintains, first, that the factors analysed in the contested regulation are inconsistentwith a finding of injury and, second, that the Community producer's imports fromBrazil have not been taken into account.

The existence of injury

96.

It must be borne in mind that the contested regulation was adopted following areview initiated under Article 14 of the basic regulation.

97.

In the context of a review initiated under Article 14 of the basic regulation, nospecific provisions are laid down with regard to the determination of injury;consequently, where a regulation modifies existing anti-dumping duties upon theconclusion of such a procedure, the existence of injury within the meaning ofArticle 4(1) of the basic regulation must be established (Joined Cases T-163/94 andT-165/94 NTN Corporation and Koyo Seiko v Council [1995] ECR II-1381,paragraph 59).

98.

According to Article 4(2) of the basic regulation, an examination of injury mustinvolve the following factors, no one or several of which can necessarily givedecisive guidance: (a) the volume of the dumped imports, (b) the prices of thedumped imports and (c) the consequent impact on the industry concerned.

99.

It is apparent from the contested regulation, in particular recitals 35 to 45, that theinstitutions carried out a detailed examination of all those factors.

100.

However, the applicant claims that several factors considered in the examinationof injury, namely the increase in the Community industry's production, its salesvolume and its market shares, indicate the existence of a positive trend as far as theCommunity industry is concerned and are therefore inconsistent with a finding ofinjury, whereas there was a parallel decrease in the imports at issue in the presentcase.

101.

It should be noted, first, that, save as regards the allegation of price undercutting,which is considered below, the applicant has not challenged any of the findings offact or the figures contained in the contested regulation. As to the alleged priceundercutting, it is sufficient to note that the applicant does not deny that, on thebasis of the export price established by the Council, it engaged in substantial priceundercutting. Since it has been found with regard to the first plea that the exportprice was correctly established, the applicant must be regarded as having sought toundercut the prices charged by the Community industry.

102.

Second, the factors indicating, according to the applicant, a slight positive trendwere taken into account in the contested regulation. However, as the Councilpoints out, the applicant's analysis of the contested regulation is selective, since thatregulation mentions a series of other factors - including, in particular, thecontinuing low profitability of the Community industry and the low price levels -which show, by contrast, a negative trend.

103.

The applicant merely proposes that a different assessment should be applied to thedata relating to the various factors, without stating the reasons for which it shouldbe concluded that the Community industry has not suffered injury. The mere factthat the Community producer increased its sales, which rose from an index figureof 100 in 1991 to a figure of 106.12 during the investigation period, and its marketshare, which rose from an index figure of 100 in 1991 to 102.28 during theinvestigation period, does not mean that it ceased to suffer injury. The Court notesin that regard that the applicant has not disputed the assertion contained in recital41 in the contested regulation; nor, a fortiori, has it shown that the Councilcommitted a manifest error of assessment in finding that the Community industry'ssales never reached a satisfactory level of profitability during the period underconsideration despite its having reduced its production costs. In the circumstances,the applicant has not shown that the finding in recital 42 in the contested regulationthat material injury persisted despite certain positive effects of the anti-dumpingmeasures already in force is vitiated by a manifest error of assessment.

104.

The applicant further denies that the negative factors established, relating to pricesand lack of profitability, are attributable to the imports at issue, since those importsdecreased considerably, falling, in market share terms, from 21.8% in 1991 to14.07% during the investigation period.

105.

That argument must also be rejected. It is settled case-law that a reduction in themarket share of the dumped imports does not preclude a finding that significantinjury has been caused by them, provided that that finding is based on variousfactors which Article 4(2) of the basic regulation requires to be taken intoconsideration (Sinochem, cited above, paragraph 108).

106.

In the present case, it is apparent from the contested regulation, in particularrecitals 45 to 48, that, although the market penetration of imports from thecountries concerned decreased considerably, their market share remainedsubstantial, and the institutions found that there had been price undercutting ofbetween 9% and 26%. Given that - as stated in recital 57 in the contestedregulation - MSG is a commodity the price of which is the key factor in customerchoice, all customers being industrial users, the persisting low profitability of theCommunity industry results from the exporters' pricing behaviour. Taking thosematters into consideration, the Community institutions were able to conclude,without committing a manifest error of assessment, that, despite a fall in importsfrom the countries concerned, those imports, which occurred at dumping pricelevels and which remained substantial in terms of volume, had a decisive effect onthe persistently poor financial situation of the Community industry, thus causing itinjury.

The imports from Brazil

107.

The applicant maintains that the Council failed to take into account the possibilitythat the very substantial imports of MSG from Brazil, at low prices, which theCommunity producer allegedly made may have contributed to its own injury.

108.

It must be observed, first, that the applicant's complaint relates solely to theCommunity producer's imports from Brazil, and not to imports from Brazilgenerally.

109.

Second, recitals 50 and 51 in the contested regulation show that, contrary to whatis alleged by the applicant, the Council did in fact take account of the Communityproducer's imports from Brazil; however, it considered that, since they reflectedonly a small proportion of that producer's output, the purpose of those imports wasmerely to defend its competitive position and to maintain its market share. It wasalso found that those products were resold at normal market prices.

110.

In response to written questions put by the Court, the Council stated that theCommunity producer's imports of MSG from Brazil represented, during the periodcovered by the investigation into injury, between 1.5% and 7% of its totalproduction of MSG. It also stated that the Community producer had resold 90%of the MSG imported from Brazil at the same price as its own product, and theremaining 10% at a discount of less than 2.5%.

111.

In those circumstances, the Council cannot be regarded as having committed amanifest error of assessment in finding that those imports by the Communityproducer were not the cause of the injury suffered by the Community industry (see,to that effect, Joined Cases 260/85 and 106/86 TEC and Others v Council [1988]ECR 5855, paragraph 47, and Case C-156/87 Gestetner Holdings v Council andCommission [1990] ECR I-781, paragraph 57).

112.

It follows that the second plea must be rejected and that the action must bedismissed in its entirety.

Costs

113.

Under Article 87(2) of the Rules of Procedure of the Court of First Instance, theunsuccessful party is to be ordered to pay the costs if they have been applied forin the successful party's pleadings. Since the applicant has been unsuccessful andthe Council has applied for an order that it pay the costs, the applicant must beordered to pay, in addition to its own costs, the costs incurred by the Council. Inaccordance with Article 87(4) of the Rules of Procedure, the Commission, asintervener, shall bear its own costs.

On those grounds,

THE COURT OF FIRST INSTANCE (Third Chamber, Extended Composition)

hereby:

1. Dismisses the action;

2. Orders the applicant to bear its own costs and to pay the costs of theCouncil;

3. Orders the Commission to bear its own costs.

Jaeger

Lenaerts

Tiili

Azizi

Mengozzi

Delivered in open court in Luxembourg on 30 March 2000.

H. Jung

K. Lenaerts

Registrar

President

1: Language of the case: English.

ECR