JUDGMENT OF THE GENERAL COURT (Fourth Chamber)
8 November 2011 (*)
(Dumping – Imports of ironing boards originating in the People’s Republic of China and Ukraine – Market economy treatment – Rights of the defence – Offer of price undertakings – Confidential treatment of the complainants’ identity)
In Case T‑274/07,
Zhejiang Harmonic Hardware Products Co. Ltd, established in Quzhou, Zhejiang (China), represented by R. MacLean, Solicitor, and Y. Melin, lawyer,
applicant,
v
Council of the European Union, represented by J.-P. Hix and B. Driessen, acting as Agents, B. O’Connor, Solicitor, and E. McGovern, Barrister,
defendant,
supported by
European Commission, represented by H. van Vliet and K. Talabér-Ritz, acting as Agents,
and by
Vale Mill (Rochdale) Ltd, established in Rochdale (United Kingdom),
Pirola SpA, established in Mapello (Italy),
Colombo New Scal SpA, established in Rovagnate (Italy),
represented by G. Berrisch and G. Wolf, lawyers,
interveners,
ACTION for annulment of Council Regulation (EC) No 452/2007 of 23 April 2007 imposing a definitive anti-dumping duty and collecting definitively the provisional duty imposed on imports of ironing boards originating in the People’s Republic of China and Ukraine (OJ 2007 L 109, p. 12), in so far as it imposes an anti-dumping duty on imports of ironing boards manufactured by the applicant,
THE GENERAL COURT (Fourth Chamber),
composed of I. Pelikánová, President, K. Jürimäe and M. van der Woude (Rapporteur), Judges,
Registrar: N. Rosner, Administrator,
having regard to the written procedure and further to the hearing on 5 April 2011,
gives the following
Judgment
Legal context
1 For the purposes of determining the existence of dumping, 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. l), as amended by Council Regulation (EC) No 2117/2005 of 21 December 2005 (OJ 2005 L 340, p. 17) (‘the basic regulation’), which has been replaced by Council Regulation (EC) No 1225/2009 of 30 November 2009 on protection against dumped imports from countries not members of the European Community (OJ 2009 L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 at OJ 2010 L 7, p. 22), lays down in Article 2(1) to (6) (now Article 2(1) to (6) of Regulation No 1225/2009) general rules on the method to be used for determining what is known as the ‘normal value’.
2 Article 2(7)(a) of the basic regulation (now Article 2(7)(a) of Regulation No 1225/2009) lays down a special rule on the method to be used for determining the normal value for imports from non-market economy countries.
3 However, Article 2(7)(b) of the basic regulation (now Article 2(7)(b) of Regulation No 1225/2009) provides that the general rules laid down in Article 2(1) to (6) are to apply to imports from certain countries, including the People’s Republic of China, if it is shown, on the basis of claims by one or more producers subject to the investigation and in accordance with the criteria and the procedures set out in Article 2(7)(c) of the basic regulation (now Article 2(7)(c) of Regulation No 1225/2009), that market economy conditions prevail for that producer or producers.
4 Article 20(2) of the basic regulation (now Article 20(2) of Regulation No 1225/2009) provides that the parties may request final disclosure of the facts and considerations on the basis of which it is intended to recommend the imposition of definitive measures. Article 20(4) and (5) (now Article 20(4) and (5) of Regulation No 1225/2009) provide as follows:
‘4. Final disclosure shall be given in writing. It shall be made … as soon as possible and, normally, not later than one month prior to a definitive decision or the submission by the Commission of any proposal for final action pursuant to Article 9. … Disclosure shall not prejudice any subsequent decision which may be taken by the Commission or the Council but where such decision is based on any different facts and considerations, these shall be disclosed as soon as possible.
5. Representations made after final disclosure is given shall be taken into consideration only if received within a period to be set by the Commission in each case, which shall be at least 10 days, due consideration being given to the urgency of the matter.’
Background to the dispute
5 The applicant, Zhejiang Harmonic Hardware Products Co. Ltd, established in Quzhou, Zhejiang (China), manufactures and exports ironing boards, inter alia to the European Union.
6 As a result of a complaint lodged by Vale Mill (Rochdale) Ltd, Pirola SpA and Colombo New Scal SpA (‘the intervening companies’), on 4 February 2006 the Commission of the European Communities published a notice of initiation of an anti‑dumping proceeding concerning imports of ironing boards originating in the People’s Republic of China and Ukraine (OJ 2006 C 29, p. 2).
7 On 20 February 2006, the applicant submitted a claim under Article 2(7)(b) of the basic regulation for market economy treatment. In June 2006, the Commission carried out investigations at the seat of the applicant and that of a company linked to the applicant for the purposes of establishing whether the applicant could be granted that status and determining the normal value of the products in question on the Chinese market.
8 By letter of 11 August 2006, the Commission informed the applicant that it did not consider that it met the criterion laid down in the second indent of the first subparagraph of Article 2(7)(c) of the basic regulation (now the second indent of the first subparagraph of Article 2(7)(c) of Regulation No 1225/2009) and that it could not therefore be granted market economy treatment. In the Commission’s view, the applicant’s accounting records and the audit reports were not in line with the requirements of the International Accounting Standards (‘the IAS’). By letter of 15 September 2006, the Commission responded to the observations made by the applicant by letter of 28 August 2006 and informed it of its decision not to grant the applicant market economy treatment.
9 On 30 October 2006, the Commission adopted Regulation (EC) No 1620/2006 imposing a provisional anti-dumping duty on imports of ironing boards originating in the People’s Republic of China and Ukraine (OJ 2006 L 300, p. 13) (‘the provisional regulation’). That regulation confirmed the rejection of the applicant’s claim for market economy treatment and consequently imposed a provisional duty of 26.5% on imports of ironing boards manufactured by it.
10 On 1 December 2006, the applicant submitted written observations on the provisional regulation. In particular, it claimed that the non-confidential version of the complaint did not enable it to exercise its rights of defence effectively. In addition, it requested the Commission to consider price undertakings offered in respect of its exports to the extent necessary to eliminate any margin of dumping. It also submitted oral observations during a hearing at the Commission’s premises on 14 December 2006.
11 By letter of 20 February 2007, the Commission, as a result of the observations from Foshan Shunde Yongjian Housewares & Hardware Co. Ltd (‘Foshan Shunde Yongjian’), one of the two other Chinese exporting producers whose requests for market economy treatment had also originally been refused on the ground that they did not meet the criterion laid down in the second indent of the first subparagraph of Article 2(7)(c) of the basic regulation, sent the applicant a final general disclosure document and a final specific disclosure document (together ‘the final disclosure documents of 20 February 2007’) in which it informed the applicant of its intention to grant market economy treatment to the applicant and to the other two abovementioned exporting producers. Consequently, the Commission planned to reduce the applicant’s definitive dumping margin to 3.1%.
12 By letter of 5 March 2007 the intervening companies sent their observations on the final general disclosure document of 20 February 2007. They claimed, inter alia, that Foshan Shunde Yongjian’s arguments were mistaken and that the applicant did not satisfy the criterion in the second indent of the first subparagraph of Article 2(7)(c) of the basic regulation.
13 On 6 March 2007 the Advisory Committee set up under Article 15 of the basic regulation (now Article 15 of Regulation No 1225/2009) (‘the Advisory Committee’) examined the final disclosure documents of 20 February 2007. It is clear from the judgment of the Court of Justice in Case C-141/08 P Foshan Shunde Yongjian Housewares & Hardware v Council [2009] ECR I-9147, paragraphs 16 and 90, and the evidence in the file that several members of the Advisory Committee objected to the grant of market economy treatment to the three exporting producers concerned, on the ground that the information submitted by one of them should not have led the Commission to alter its original decision not to grant that treatment.
14 By fax of 23 March 2007 the Commission sent the applicant a revised final general disclosure document (‘the revised final general disclosure document of 23 March 2007’) indicating that it had gone back on its position of 20 February 2007 concerning the grant to the applicant of market economy treatment. Consequently, it announced its intention to fix the applicant’s definitive dumping margin at 26.5%.
15 In the abovementioned fax, the Commission set the applicant a period of six days, expiring on 29 March 2007, in which to submit its observations on the revised final general disclosure document of 23 March 2007. On the same day the Commission sent the document to the Advisory Committee, which approved it on 27 March 2007 upon conclusion of a written procedure.
16 On 29 March 2007, the Commission adopted and submitted to the Council the proposal for definitive measures, based on the revised final general disclosure document of 23 March 2007.
17 On the same day, the applicant sent a fax within the prescribed period, setting out its observations on the revised final general disclosure document of 23 March 2007. It claimed, in particular, that in the absence of changed circumstances or new evidence justifying the withdrawal of market economy treatment which it had been granted in the final disclosure documents of 20 February 2007, the Commission could not make such a withdrawal.
18 By letter of 30 March 2007 the Commission replied to the applicant, stating in particular that it had reverted to its initial decision of 15 September 2006 as a result of comments of the Community industry.
19 By letter of 5 April 2007, the applicant submitted, in particular, that it had not been in a position properly to defend its interests because the grant of market economy treatment was revoked without any explanation and the period provided for making comments was too short. In addition, the applicant requested access to the Commission’s non‑confidential files in order to examine the comments and new evidence from the Community industry that had led the Commission to change its position.
20 On 23 April 2007 the Council adopted Regulation (EC) No 452/2007 imposing a definitive anti-dumping duty and collecting definitively the provisional duty imposed on imports of ironing boards originating in the People’s Republic of China and Ukraine (OJ 2007 L 109, p. 12) (‘the contested regulation’). That regulation imposed a definitive anti‑dumping duty of 26.5% on imports of ironing boards manufactured by the applicant.
21 In the contested regulation, the Council confirmed that the applicant had not established that it satisfied the criterion for market economy treatment set out in the second indent of the first subparagraph of Article 2(7)(c) of the basic regulation, which makes the grant of market economy treatment subject to proof that ‘firms have one clear set of basic accounting records which are independently audited in line with international accounting standards and are applied for all purposes’.
Procedure and forms of order sought
22 By application lodged at the Registry of the Court of First Instance (now the General Court) on 19 July 2007 the applicant brought the present action.
23 By documents lodged at the Court Registry on 25 and 26 October 2007 respectively, the intervening companies and the Commission sought leave to intervene in support of the form of order sought by the Council.
24 By letters lodged at the Court Registry on 3 and 7 December 2007 respectively, the Council and the applicant submitted requests, pursuant to Article 116(2) of the Rules of Procedure of the General Court, that certain documents annexed to the defence and the application instituting the proceedings be omitted from the pleadings disclosed to the intervening companies. For that purpose the Council and the applicant produced non-confidential versions of the annexes to the defence and to the application instituting the proceedings.
25 By order of 7 January 2008, the President of the Sixth Chamber of the Court granted the Commission leave to intervene in support of the form of order sought by the Council. The Commission failed to lodge its statement in intervention within the prescribed period.
26 By order of 5 May 2008, the President of the Sixth Chamber of the Court granted the intervening companies leave to intervene in support of the form of order sought by the Council and reserved the decision on the substance of the applications for confidential treatment in relation to the intervening companies. The intervening companies submitted their statement in intervention and the other parties submitted their observations thereon within the prescribed time-limit.
27 In their answers to the questions put by the Court on 27 June 2008, the Council and the applicant withdrew their applications for confidential treatment, entirely as regards the Council and partially as regards the applicant. By order of 18 November 2008, the President of the Sixth Chamber of the Court partially granted the application for confidential treatment maintained by the applicant with respect to the intervening companies, in relation to certain documents annexed to the originating application.
28 In the context of measures of organisation of procedure, the Court requested the parties to submit their observations on the effect, in the present case, of the judgment of the Court of Justice in Case C‑141/08 P Foshan Shunde Yongjian Housewares & Hardware v Council on the assessment of the legality of the contested regulation in the light of the applicant’s second plea, alleging infringement of Article 20(4) and (5) of the basic regulation and of the rights of defence. The applicant, the Council and the intervening companies complied with that request within the time-limit prescribed.
29 Owing to a change in the composition of the chambers of the Court, the Judge‑Rapporteur was assigned to the Fourth Chamber, to which, in consequence, the present case was assigned.
30 The applicant claims that the Court should:
– annul Articles 1 and 2 of the contested regulation in so far as they apply to imports of ironing boards which it has manufactured;
– order the Council to pay the costs.
31 The Council, supported by the Commission and the intervening companies, contends that the Court should:
– dismiss the action;
– order the applicant to pay the costs.
Law
32 The applicant puts forward four pleas, alleging, first, infringement of Article 2(7)(b) and (c) of the basic regulation, second, infringement of Article 20(4) and (5) of the basic regulation and of the rights of defence, third, infringement of Article 8(1) to (3) of the basic regulation (now Article 8(1) to (3) of Regulation No 1225/2009) and, fourth, infringement of Article 5(2)(a) and Article 19(1) of the basic regulation (now Article 5(2)(a) and Article 19(1) of Regulation No 1225/2009) and of the rights of defence.
33 It is appropriate to group the second and third pleas together (see paragraph 64 below) and to examine them after the other two pleas.
The first plea: infringement of Article 2(7)(b) and (c) of the basic regulation
34 In support of its first plea, the applicant submits that the Commission’s proposal for definitive measures and Articles 1 and 2 of the contested regulation infringe the second subparagraph of Article 2(7)(c) of the basic regulation (now the second subparagraph of Article 2(7)(c) of Regulation No 1225/2009), in so far as they are based on the Commission’s initial decision not to grant the applicant market economy treatment, whereas in the final disclosure documents of 20 February 2007 the Commission had taken the view that the initial decision was incorrect in light of new information which had been communicated to it by another Chinese exporting producer.
35 According to the applicant, in the revised final general disclosure document of 23 March 2007, the Commission failed to justify its reassessment of the question of market economy treatment with new information differing from that on which the final disclosure documents of 20 February 2007 were based.
36 The second subparagraph of Article 2(7)(c) of the basic regulation provides that the determination whether a producer who is subject to an anti-dumping investigation operates under market economy conditions ‘shall be made within three months of the initiation of the investigation, after specific consultation of the Advisory Committee and after the Community industry has been given an opportunity to comment’. The final sentence of this subparagraph states that ‘this determination shall remain in force throughout the investigation’.
37 According to the case-law, that provision is intended, in particular, to ensure that the question of whether to grant market economy treatment is not decided on the basis of its effect on the calculation of the dumping margin. Consequently, the last sentence of the second subparagraph of Article 2(7)(c) of the basic regulation is to be interpreted as precluding the institutions from re-evaluating information they had at the time of the initial determination as to market economy treatment. That provision does not, however, preclude the grant of market economy treatment from being discontinued if a change in the factual situation on the basis of which such treatment was conferred no longer permits the conclusion that the producer concerned operates under market economy conditions (Case T-138/02 Nanjing Metalink v Council [2006] ECR II-4347, paragraphs 44 and 47).
38 It follows from this that, where the Commission has granted market economy treatment to a producer, the institutions may go back on that initial decision only if new information, which it could not reasonably have been aware of when making the determination as to market economy treatment, shows that that producer does not fulfil or no longer fulfils the substantive criteria set out in the first subparagraph of Article 2(7)(c) of the basic regulation, which a firm operating under market economy conditions must fulfil.
39 However, it is conceivable that, in certain circumstances, the Commission may go back on its position in the absence of new information. The Court has stated that, in the light of the principles of legality and sound administration, the second subparagraph of Article 2(7)(c) of the basic regulation cannot be interpreted in such a manner as to oblige the Commission to propose to the Council definitive measures perpetuating to the detriment of the undertaking concerned an error made in the original assessment of the substantive criteria laid down in the first subparagraph of Article 2(7)(c) of that regulation (Case C-141/08 P Foshan Shunde Yongjian Housewares & Hardwares v Council, paragraph 111).
40 In the present case, it is to be noted that, after having duly heard the parties, the Commission initially decided, by decision of 15 September 2006, confirmed in the provisional regulation, not to grant the applicant market economy treatment on the ground that it did not satisfy the substantive criterion laid down in the second indent of the first subparagraph of Article 2(7)(c) of the basic regulation, relating essentially to the conformity of the accounting practices of the firm concerned with international accounting standards.
41 In that context, it is clear from the abovementioned case-law (see paragraph 39 above) that, subject to ensuring compliance with the procedural guarantees provided for by the basic regulation, the Commission was entitled to reconsider its initial assessment and subsequently grant the applicant market economy treatment if it finally took the view that that assessment was erroneous and that the applicant satisfied the substantive criterion set out in the second indent of the first subparagraph of Article 2(7)(c) of that regulation (see, to that effect, Case C‑141/08 P Foshan Shunde Yongjian Housewares & Hardwares v Council, paragraphs 111 and 112).
42 In the present case, in the final disclosure documents of 20 February 2007, the Commission planned to grant the applicant market economy treatment. In the final general disclosure document, the Commission explained in that regard that, in light of the new information and explanations that Foshan Shunde Yongjian had provided after the adoption of the provisional regulation, market economy treatment was to be granted to the three exporting producers concerned, including the applicant. The Commission took the view that the flaws in the accounting practices of those undertakings, which had been found at the stage of the provisional measures, had no significant effect on the financial results shown in the accounts. The Commission added that the provision of new data, relating to steel import prices in China, had enabled it to verify the reliability of the accounting data concerning the cost of steel.
43 However, in the revised final general disclosure document of 23 March 2007, the Commission, for the second time, fundamentally altered its position and it informed the applicant of its intention to refuse to grant it market economy treatment. It is clear from that document that the Commission reverted to its initial decision following a re-examination of the substantive criterion at issue, on the basis of matters of fact and law which were previously known to it. The Commission explained in that document that it took the view that the practice of the three exporting producers concerned of offsetting income and expenditure and grouping sales transactions together in their accounts on a summary basis, contrary to the accrual basis, constituted an infringement of the IAS, which was incompatible with the requirements laid down in Article 2(7)(c) of the basic regulation.
44 The Commission’s letter of 30 March 2007 confirms that its fresh assessment, differing from that expressed in the final disclosure documents of 20 February 2007, was not based on any new factual or legal argument. It is clear from the letter that the Commission’s reversal of position was based on the previous finding relating to the lack of conformity of the applicant’s accounting practices with the IAS and on the consideration that the arguments of Foshan Shunde Yongjian (see paragraph 42 above) relating in particular to import prices of steel did not justify the view that that lack of conformity had no effect on the financial results entered in the accounts. The letter indeed indicates that, after receiving the observations of the Community industry (see paragraph 12 above), and since the applicant had not submitted any new evidence or facts which could alter the findings set out in the decision of 15 September 2006 and in the provisional regulation, the Commission decided to confirm those provisional findings on the request for the grant of market economy treatment. It explained that it had finally been established that the effects of the accounting practices in question, which had already been found to be in breach of the IAS and the Chinese accounting standards, could not be considered immaterial.
45 Therefore, it must be determined whether, after the communication of the final disclosure documents of 20 February 2007, in which the Commission planned to grant the applicant market economy treatment, the Commission and the Council were entitled, in the absence of new matters of fact or law, but in the light of the arguments which had been submitted to the Commission by the intervening companies and by certain Member States (Case C-141/08 P Foshan Shunde Yongjian Housewares & Hardwares v Council, paragraph 90), to revert to the initial decision of 15 September 2006 refusing to grant the applicant market economy treatment.
46 In that connection, the function of those disclosure documents in the inter partes system put in place by the basic regulation must be examined in order to determine whether the case-law mentioned above – according to which the last sentence of the second subparagraph of Article 2(7)(c) of the basic regulation must be interpreted as prohibiting the Commission from revoking, in the absence of new factual information, market economy treatment granted in the initial decision relating to the determination of such status (see paragraph 37 above) – may be transposed to the specific situation in which, as in the present case, after an initial refusal the Commission announces its intention to grant such status in the final disclosure documents.
47 Article 20 of the basic regulation (now Article 20 of Regulation No 1225/2009) provides for information to be made available to the parties directly concerned by the outcome of the procedure (complainants, importers and exporters) and to their representative associations and representatives of the exporting country, so that they are in a position to defend their interests effectively. That information must be disclosed at two stages of the procedure, namely immediately following imposition of provisional measures, pursuant to Article 20(1) of the basic regulation (now Article 20(1) of Regulation No 1225/2009), and then prior to the imposition of definitive measures or the termination of an investigation or proceedings without the imposition of measures, pursuant to Article 20(2) of the basic regulation.
48 It is made quite clear by Article 20(2) and (5) of the basic regulation that the communication of final disclosure, at the request of a party, is intended to enable him to make representations on the essential facts and considerations on the basis of which the Commission intends to recommend the imposition of definitive measures, or the termination of an investigation or proceedings without the imposition of measures. Those provisions, which give effect to the right of the parties concerned, including exporters, to be heard, would be deprived of their effectiveness if the Commission was not able to alter its assessment in light of the arguments of the parties.
49 In that connection, Article 20(4) of the basic regulation confirms that final disclosure is not to prejudice any subsequent decision which may be taken by the Commission or the Council, but where such decision is based on any different facts and considerations, these are to be disclosed as soon as possible. It explicitly follows that the Commission may alter an assessment given in final disclosure not only on the basis of different facts, but also on the basis of different considerations, which allows the Commission the possibility of reconsidering its assessment not only in the presence of new evidence or facts but also in the light of the representations received.
50 It follows that a final disclosure document in which the Commission states that it is planning to go back on its initial decision refusing to grant market economy treatment to a producer is a purely informative act, which cannot confer on the undertaking in question any rights other than those relating to compliance with the procedural guarantees provided for by the basic regulation. That final disclosure document is thus distinguished from an initial decision to grant such status under the second subparagraph of Article 2(7)(c) of the basic regulation because such a decision is intended to close the discussion as to the status of the producer concerned and, therefore, to prevent the Commission from going back on its position to the detriment of that producer in the absence of new factual information.
51 In the present case, it follows that, contrary to the applicant’s assertions, and subject to compliance with the procedural guarantees provided for by Article 20 of the basic regulation (see paragraphs 64 to 93 below), the provisions of the second subparagraph of Article 2(7)(c) thereof did not preclude the Commission from deciding, in the absence of new information differing from that on which the final disclosure documents of 20 February 2007 were based, to revert, in its proposal for definitive measures, to its initial decision of 15 September 2006, after planning, in the final disclosure documents of 20 February 2007, to grant the applicant market economy treatment. Having regard to the very nature of those documents, in the general scheme of the basic regulation, the Commission was not required to justify by new data or information the evolution of its position between the final disclosure documents of 20 February 2007 and the revised final general disclosure document of 23 March 2007. In the present case, it was sufficient for the Commission to give reasons for its final position, confirming its initial decision of 15 September 2006, in relation to all the relevant matters of fact and law, for the purpose of determining whether to grant market economy treatment (see, to that effect, Case T-206/07 Foshan Shunde Yongjian Housewares & Hardware v Council [2008] ECR II-1, paragraph 52).
52 In those circumstances, the Commission’s proposal for definitive measures and the contested regulation cannot be regarded as contrary to the second subparagraph of Article 2(7)(c) of the basic regulation solely because they base the decision not to grant the applicant market economy treatment on a mere reassessment, prompted by observations from the Community industry, of the information which had already been taken into consideration in the final disclosure documents of 20 February 2007.
53 The plea alleging infringement of Article 2(7) (b) and (c) of the basic regulation must therefore be dismissed as unfounded.
The fourth plea: infringement of Article 5(2)(a) and Article 19(1) of the basic regulation and of the rights of defence
54 The applicant observes that Article 5(2)(a) of the basic regulation provides that a complaint must contain information on ‘the identity of the complainant’. Furthermore, in spite of the applicant’s repeated requests for that information, the Commission relied on Article 19(1) of the basic regulation to confer anonymity on the intervening companies. It thereby unjustifiably extended the confidential treatment provided for by that provision to the protection of the identity of the intervening companies, contrary to Article 19(1) and in breach of the applicant’s rights of defence. The applicant submits that it was impossible for it to analyse properly much of the key data in the complaint and to respond effectively to it in the early stages of the investigation.
55 It must be observed that, in recital 9 of the provisional regulation and in the final general disclosure document of 20 February 2007, the Commission indicated that it had agreed to treat the identity of the intervening companies confidentially since they claimed to supply, within the Community, customers who also obtained supplies from the exporting producers which were the subject of the investigation and they were exposed to the risk of commercial retaliation by those customers.
56 Before the Court, the intervening companies intervening in support of the Council stated that they were small and medium-sized undertakings whose main customers were large retail chains with considerable purchasing power. Therefore, they feared that those customers would bring pressure to bear to compel them to drop their case. In any event, the applicant knew the intervening companies’ names approximately one month before it lodged its reply.
57 It must be recalled that Article 19(1) of the basic regulation provides for confidential treatment, at the request of the party which has supplied it, for any information which is by nature confidential – that is to say, for example, whose disclosure would be of significant competitive advantage to a competitor or would have a significantly adverse effect upon a person supplying the information or upon a person from whom he has acquired the information – or which is provided on a confidential basis.
58 Contrary to the applicant’s assertions, all the elements of a complaint, including the identity of the intervening companies, may where appropriate be treated confidentially, if the request for confidential treatment is based on valid reasons.
59 However, the institutions’ obligation to ensure the confidential treatment of information the disclosure of which would have a significantly adverse effect upon the undertaking which has supplied it cannot deprive the other parties concerned, in particular exporters, of their procedural guarantees Those undertakings must, in any event, have been placed in a position during the administrative procedure in which they could effectively make known their views on the correctness and relevance of the facts and circumstances taken into consideration and on the evidence presented by the Commission in support of its allegation relating to the existence of dumping and to the resultant injury (see, to that effect, Case 264/82 Timex v Council and Commission [1985] ECR 849, paragraph 29, and Case C-49/88 Al-Jubail Fertilizer v Council [1991] ECR I‑3187, paragraph 17).
60 In the present case, the applicant has not explained the reasons why the non‑disclosure of the names of the intervening companies did not permit it to have a reasonable understanding of the substance of the complaint, in accordance with the provisions of Article 19(2) of the basic regulation (now Article 19(2) of Regulation No 1225/2009), and to defend its interests effectively, in particular as regards the assessment of the European Union’s interest.
61 As regards the applicant’s argument in its reply that the confidential treatment of the identity of the intervening companies did not permit the Chinese exporting producers to defend their interests as regards the question whether the investigation leading to the adoption of the contested regulation had been initiated, in accordance with Article 5(4) of the basic regulation (now Article 5(4) of Regulation No 1225/2009), following a complaint considered to have been made by or on behalf of the Community industry, it suffices to observe that, in any event, even assuming that the confidential treatment of the names of the intervening companies gave rise to an infringement of the applicant’s rights of defence, that could not have had any effect on the content of the contested decision, given the fact, not disputed by the applicant, that the intervening companies represent in effect the Community industry.
62 For all of those reasons, the Commission did not commit an error of law in taking the view that the alleged risk of pressure being applied to the intervening companies justified agreeing to their request for confidential treatment of their identity.
63 It follows that the plea alleging infringement of Article 5(2)(a) and Article 19(1) of the basic regulation and of the rights of defence must be dismissed.
The second and third pleas: infringement of Article 20(4) and (5) and Article 8(1) to (3) of the basic regulation and of the rights of defence
64 Since the period provided for in Article 20(5) of the basic regulation affects the admissibility of undertakings offered by the exporter concerned pursuant to Article 8 of the basic regulation (see paragraph 94 below), the second and third pleas are closely linked. Therefore, it is appropriate to examine them together.
65 As regards, first of all, the second plea, the applicant submits that the revised final general disclosure document, sent by fax to its lawyers on Friday 23 March 2007 at 20.00, was incomplete because the Commission had not set out therein, as required by Article 20(2) of the basic regulation, the essential facts and considerations on which it based its decision to revoke the market economy treatment previously granted in the final disclosure documents of 20 February 2007.
66 Furthermore, the Commission infringed Article 20(5) of the basic regulation by allowing the applicant a period of less than ten days, expiring on 29 March 2007, in which to submit its comments on the revised final general disclosure document.
67 The applicant submits that, for all those reasons, it had no opportunity to defend its interests effectively.
68 The Council acknowledged, at the hearing and in its response to the written question from the Court relating to the effect of the judgment in Case C-141/08 P Foshan Shunde Yongjian Housewares & Hardware v Council on the assessment of the present plea, that the Commission failed to fulfil its procedural obligations under Article 20(5) of the basic regulation by sending its proposal for definitive measures to it on 29 March 2007, that is to say, before the expiry of the ten-day period prescribed by that article, which started to run in the present case on 23 March 2007, the date on which the revised final general disclosure document was communicated to the applicant.
69 It must be recalled, first of all, that the Commission’s position on the determination as to market economy treatment changed fundamentally between the communication to the applicant of the final disclosure documents of 20 February 2007, indicating that the Commission was planning to grant it that treatment, and the communication of the revised final general disclosure document of 23 March 2007, in which the Commission reverted to its initial decision of 15 September 2006, confirmed in the provisional regulation, refusing to grant that treatment to the applicant. That change of position led the Commission to propose fixing a definitive anti-dumping duty of 26.5% instead of the rate of 3.1% envisaged in the final disclosure documents of 20 February 2007.
70 In a similar context, the Court of Justice held in Case C-141/08 P Foshan Shunde Yongjian Housewares & Hardware v Council (paragraphs 73 to 79) that the General Court was correct in stating that the Commission was required to inform the exporting producer concerned, in that case Foshan Shunde Yongjian, of its new position, as set out in the revised final disclosure documents of 23 March 2007, that in sending those documents to it the Commission was required to comply with the period prescribed in Article 20(5) of the basic regulation and that, therefore, it was not permissible for it to send its proposal for definitive measures to the Council before the expiry of that period. In that case, the period of six days initially given to Foshan Shunde Yongjian had been extended at the latter’s request until 2 April 2007, in accordance with Article 20(5) of the basic regulation, but the proposal for definitive measures was sent to the Council before the expiry of that period.
71 In the present case, the fact relied on by the intervening companies that, unlike Foshan Shunde Yongjian, the applicant did not request an extension of the six-day period imposed on it is irrelevant. Whilst, pursuant to Article 20(2) of the basic regulation, it was for the parties referred to in Article 20(1) thereof to request final disclosure of the essential facts and considerations on the basis of which it was intended to recommend the imposition of definitive measures, the Commission was required to fulfil the procedural obligations imposed on it by Article 20(5) of the basic regulation since that provision was applicable. Consequently, it was for the Commission to put the applicant in a position to submit its observations on the revised final general disclosure document of 23 March 2007, within a period of not less than 10 days.
72 In those circumstances, the fact that the applicant submitted its observations within the six-day period imposed on it does not lead to the conclusion that it was lawfully heard. Furthermore, and in any event, the applicant’s observations could not have been taken into consideration by the Commission since they were faxed to it on 29 March 2007, after the adoption by the Commission of its proposal for definitive measures – sent to the Council on the same day – as the Council states in its response to the written question put by the Court.
73 Therefore, it must be held that the Commission infringed Article 20(5) of the basic regulation, by granting the applicant a period, expiring on 29 March 2007, of less than the 10 days prescribed by that provision in which to submit its observations on the revised final general disclosure document of 23 March 2007, and by transmitting its proposal for definitive measures to the Council before the expiry of the ten-day period provided for by that provision.
74 However, failure to comply with the ten-day period prescribed in Article 20(5) of the basic regulation may lead to the annulment of the contested regulation only where there is a possibility that, due to that irregularity, the administrative procedure could have resulted in a different outcome, thereby in fact affecting the applicant’s rights of defence (Case C-141/08 P Foshan Shunde Yongjian Housewares & Hardware v Council, paragraph 81, confirming on that point Case T-206/07 Foshan Shunde Yongjian Housewares & Hardware v Council, paragraph 71).
75 In that connection, the Council and the intervening companies submitted in their pleadings that, since, in the revised final general disclosure document of 23 March 2007, which did not contain any new factual information, the Commission reverted to its initial decision of 15 September 2006 not to grant the applicant market economy treatment, which was confirmed in the provisional regulation, the infringement of the ten-day period in which to submit observations on the revised final general disclosure document did not in fact affect the applicant’s rights of defence, as it had been in a position to defend its position effectively, in particular in its observations of 28 August 2006 on the Commission’s letter of 11 August 2006 informing the applicant of its intention not to grant it that treatment.
76 That line of argument cannot be accepted. It follows from Case C‑141/08 P Foshan Shunde Yongjian Housewares & Hardware v Council that the fact that a party to the administrative proceedings which led to the adoption of the contested regulation was in a position to defend its interests effectively at the time of the initial determination as to market economy treatment and that that party also does not indicate any new argument which it might have raised in the absence of the procedural irregularity found does not lead to the conclusion that that party’s rights of defence were not in fact affected by the failure to comply with the period prescribed by Article 20(5) of the basic regulation.
77 In that connection, the Court of Justice held in Case C-141/08 P Foshan Shunde Yongjian Housewares & Hardware v Council that, taking account of the arguments put forward by Foshan Shunde Yongjian in its observations of 2 April 2007 on the revised final disclosure documents which had been communicated to it on 23 March 2007, it was conceivable that the Commission’s decision as to the determination of market economy treatment would have been different in content in the absence of the procedural irregularity found.
78 In particular, the Court of Justice observed that it was in light of the observations of the complainants and certain Member States that the Commission had revised its decision, envisaged in the final disclosure documents of 20 February 2007, to grant Foshan Shunde Yongjian market economy treatment. Therefore, the Court held that, ‘in light of the conduct of that procedure and the fact that the Commission had already altered its position twice as a result of the observations submitted to it by the interested parties, it [could not] be ruled out that the Commission might have altered its position once again because of the arguments put forward by [Foshan Shunde Yongjian] in its letter of 2 April 2007, which related … to the significance to be attached to the accounting shortcomings discovered and the inferences to be drawn from the information on the price of steel imports’ (Case C-141/08 P Foshan Shunde Yongjian Housewares & Hardware v Council, paragraph 92).
79 It should therefore be examined whether that reasoning may be transposed to the present case, having regard to its specific circumstances.
80 First, in their answers to the written question from the General Court on the effect of the judgment in Case C-141/08 P Foshan Shunde Yongjian Housewares & Hardware v Council, the Council and the intervening companies submit essentially that the reasoning adopted by the Court of Justice in that case is not applicable to the applicant inasmuch as it did not challenge, in its observations of 29 March 2007, the arguments of the Community industry. Unlike Foshan Shunde Yongjian, the applicant had not consulted the Commission’s non-confidential file, containing the observations of the parties, to which it had access in accordance with Article 6(7) of the basic regulation (now Article 6(7) of Regulation No 1225/2009).
81 In light of the judgment in Case C-141/08 P Foshan Shunde Yongjian Housewares & Hardware v Council, that argument must be rejected. The mere fact that, in its observations of 29 March 2007, the applicant did not challenge the arguments of the Community industry relating to the substantive criterion laid down in the second indent of the first subparagraph of Article 2(7)(c) of the basic regulation (see paragraph 12 above), with which the Commission and the Council ultimately concurred, is not sufficient to exclude the possibility that, if the Commission had fulfilled its procedural obligations to the applicant under Article 20(5) of the basic regulation, the administrative procedure could have produced a different result. In particular, there is nothing showing that if, in accordance with Article 20(5) of that regulation, the applicant had been granted a period of ten days instead of the six days which it was given, it would not have asked to consult the Commission’s non‑confidential file and that it would not therefore have been in a position to refute the arguments of the Community industry which led the Commission to revert to its initial decision.
82 Second, it cannot be completely excluded that a further period would have enabled the applicant to develop substantive arguments capable of leading the Commission to alter its position once again, without even having consulted the non-confidential version of the Community industry’s observations. The parties agree that those observations did not contain any new information as regards the criterion laid down in the second indent of the first subparagraph of Article 2(7)(c) of the basic regulation, but merely challenged Foshan Shunde Yongjian’s arguments on which the Commission had relied in the final disclosure documents of 20 February 2007. Furthermore, in the revised final general disclosure document of 23 March 2007, the Commission had given reasons for its refusal to grant the applicant market economy treatment by briefly summarising recital 25 of the provisional regulation relating to the failure of the applicant’s accounts to comply with the criterion laid down in the second indent of the first subparagraph of Article 2(7)(c) of the basic regulation. Inasmuch as that refusal was thus based on a mere reassessment of the information already taken into consideration in the final disclosure documents of 20 February 2007 (see paragraph 52 above), the applicant might have been able to submit relevant observations on the substance if it had had the period prescribed by Article 20(5) of the basic regulation.
83 In that connection, contrary to the Council’s assertions, after the communication of the revised final general disclosure document of 23 March 2007, the applicant was not in the same position – on account of the lack of consultation of the Commission’s non-confidential file – as after the decision of 15 September 2006 refusing to grant it market economy treatment. In light of Foshan Shunde Yongjian’s observations on the provisional regulation, then those of the Community industry on the final disclosure documents of 20 February 2007, the Commission had already changed its position twice since 15 September 2006, as the Court of Justice observed in Case C-141/08 P Foshan Shunde Yongjian Housewares & Hardware v Council (see paragraph 78 above).
84 Third, it must be observed that, in its observations of 5 March 2007, the Community industry also submitted that the last sentence of the second subparagraph of Article 2(7)(c) of the basic regulation precludes the institutions from modifying the assessment as to market economy treatment in the course of the procedure and that the Commission could not therefore depart from its decision of 15 September 2006.
85 If the applicant had had the period prescribed by Article 20(5) of the basic regulation and had used that period in order to consult the Commission’s non-confidential file, it might have been able to refute that argument.
86 In those circumstances, the simple fact that the Commission based its decision in the revised final disclosure document of 23 March 2007 not to grant the applicant market economy treatment on the substantive criterion in the second indent of the first subparagraph of Article 2(7)(c) of the basic regulation is not sufficient to rule out the possibility that an answer from the applicant to the procedural arguments of the Community industry could have influenced the content of the proposal for definitive measures (see, to that effect, Case C-141/08 P Foshan Shunde Yongjian Housewares and Hardware v Council, paragraphs 96 to 98).
87 Fourth, the argument put forward by the Council and the interveners that the applicant’s observations of 29 March 2007 did not show that it fulfilled the substantive criterion laid down in the second indent of the first subparagraph of Article 2(7)(c) of the basic regulation is totally irrelevant for the purpose of assessing whether the procedural irregularity in fact affected the applicant’s rights of defence. It cannot be presumed that the applicant would have been unable to defend itself better and to present relevant substantive and procedural arguments more effectively if it had had an extra three days.
88 It must be stated that, according to the case-law set out in Case C‑141/08 P Foshan Shunde Yongjian Housewares & Hardware (paragraph 94), the applicant cannot be required to show that the Commission’s decision would have been different in content, but simply that such a possibility cannot be totally ruled out, since it would have been better able to defend itself had there been no procedural error.
89 It is clear from all of the foregoing considerations that, in the context of the administrative procedure which led to the adoption of the contested regulation, it cannot be totally ruled out that the Commission would have reconsidered its assessment of market economy treatment once again in the absence of procedural irregularities, since the applicant could have defended itself more effectively.
90 It follows that the failure to comply with the period prescribed in Article 20(5) of the basic regulation was such as in fact to affect the applicant’s rights of defence.
91 Next, as regards the third plea, the applicant pleads an infringement of Article 8(1) to (3) of the basic regulation, laying down the right of the exporters concerned to offer undertakings.
92 In that connection, the Council observes that the applicant was informed by the Commission at the hearing on 14 December 2006 that undertakings are offered and negotiated after the final disclosure. It states that the Commission invited the applicant to examine certain difficulties with regard to price undertakings for the product concerned and to submit other proposals to it in a formal offer, but the applicant never submitted a formal offer.
93 The applicant observes that, in its request of 1 December 2006, it offered the Commission price undertakings which would have had the effect of eliminating any damage caused by alleged dumping. Following the communication of the final disclosure documents of 20 February 2007, in which the Commission planned to grant it market economy treatment and, consequently, to fix a dumping margin of 3.1%, the applicant took the view that that dumping margin was preferable to formal price undertakings. The applicant therefore criticises the Commission for preventing it from offering undertakings after the communication of the revised final general disclosure document of 23 March 2007, in which the Commission expressed its intention to propose a definitive anti-dumping duty of 26.5%.
94 It is apparent from Article 8 of the basic regulation that, save in exceptional cases, exporters are able to offer undertakings only up to the end of the period during which representations may be made pursuant to Article 20(5) thereof.
95 In the present case, it must therefore be held that, after the revised final general disclosure document of 23 March 2007 was drawn up, the setting by the Commission of a six-day period for the applicant to submit its observations deprived the applicant of its right to offer price undertakings, until the expiry of the period of at least ten days prescribed by Article 20(5) of the basic regulation.
96 It follows that, by failing to comply with the ten-day period, the Commission also infringed Article 8 of the basic regulation, which conferred on the applicant the right to offer undertakings up to the expiry of that period.
97 For all of those reasons, the second and third pleas must be upheld.
98 Therefore, the contested regulation must be annulled, in so far as it imposes a definitive anti-dumping duty and collects definitively the provisional duty on ironing boards manufactured by the applicant.
Costs
99 Under Article 87(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. Under Article 87(4) of those rules, institutions which intervened in the proceedings are to bear their own costs.
100 Since the Council has been unsuccessful and the applicant has applied for an order that it pay the costs, the Council must be ordered to pay, in addition to its own costs, the costs incurred by the applicant. The Commission and the intervening companies are to bear their own costs.
On those grounds,
THE GENERAL COURT (Fourth Chamber)
hereby:
1. Annuls Articles 1 and 2 of Council Regulation (EC) No 452/2007 of 23 April 2007 imposing a definitive anti-dumping duty and collecting definitively the provisional duty imposed on imports of ironing boards originating in the People’s Republic of China and Ukraine, in so far as they impose a definitive anti-dumping duty and collect definitively the provisional duty on ironing boards manufactured by Zhejiang Harmonic Hardware Products Co. Ltd;
2. Orders the Council of the European Union to bear its own costs and to pay those incurred by Zhejiang Harmonic Hardware Products;
3. Orders the European Commission, Vale Mill (Rochdale) Ltd, Pirola SpA and Colombo New Scale SpA to bear their own costs.
Pelikánová | Jürimäe | Van der Woude |
Delivered in open court in Luxembourg on 8 November 2011.
[Signatures]