JUDGMENT OF THE GENERAL COURT (Eighth Chamber, Extended Composition)
8 May 2024 (*)
(Dumping – Imports of certain hot-rolled flat products of iron, non-alloy or other alloy steel originating in Türkiye – Definitive anti-dumping duties – Implementing Regulation (EU) 2021/1100 – Adjustment – Article 2(10)(j) of Regulation (EU) 2016/1036 – Conversion of currencies – Hedging gains and losses – Article 2(5) and (6) of Regulation 2016/1036 – Calculation of costs – Exchange rate gains and losses – Manifest error of assessment – Right to be heard)
In Case T‑629/21,
Ereğli Demir ve Çelik Fabrikaları TAŞ, established in Istanbul (Türkiye),
İskenderun Demir ve Çelik AŞ, established in Payas (Türkiye),
Erdemir Çelik Servis Merkezi Sanayi ve Ticaret AŞ, established in Gebze (Türkiye),
represented by J. Cornelis and F. Graafsma, lawyers,
applicants,
v
European Commission, represented by G. Luengo and J. Zieliński, acting as Agents,
defendant,
THE GENERAL COURT (Eighth Chamber, Extended Composition),
composed of S. Papasavvas, President, A. Kornezov, D. Petrlík, K. Kecsmár (Rapporteur) and S. Kingston, Judges,
Registrar: M. Zwozdziak-Carbonne, Administrator,
having regard to the written part of the procedure, including the measure of organisation of procedure of 20 December 2022 and the parties’ responses lodged at the Registry of the General Court on 13 and 16 January 2023,
further to the hearing on 27 March 2023,
gives the following
Judgment
1 By their action based on Article 263 TFEU, the applicants, Ereğli Demir ve Çelik Fabrikaları TAŞ, İskenderun Demir ve Çelik AŞ and Erdemir Çelik Servis Merkezi Sanayi ve Ticaret AŞ, (‘Erdemir’, ‘Isdemir’ and ‘Ersem’, respectively), seek the annulment of Commission Implementing Regulation (EU) 2021/1100 of 5 July 2021 imposing a definitive anti-dumping duty and definitively collecting the provisional duty imposed on imports of certain hot-rolled flat products of iron, non-alloy or other alloy steel originating in Turkey (OJ 2021 L 238, p. 32; ‘the contested regulation’).
Background to the dispute
2 The applicants are companies incorporated under Turkish law. Erdemir and Isdemir are active in the production and sale of hot-rolled flat products. Ersem is their related trader.
3 On 14 May 2020, the European Commission initiated an anti-dumping investigation with regard to imports into the European Union of certain hot-rolled flat products of iron, non-alloy or other alloy steel (‘the product concerned’) originating in Türkiye (‘the investigation’).
4 The investigation covered the period from 1 January to 31 December 2019 (‘the investigation period’). The examination of trends relevant for the purpose of determining injury covered the period from 1 January 2016 to the end of the investigation period. The applicants submitted their written observations in the course of the investigation.
5 The applicants were selected among the three sampled Turkish exporters and submitted a questionnaire response on 7 July 2020 and a response to a deficiency letter on 26 August 2020 (in the case of Erdemir), on 10 September 2020 (in the case of Isdemir) and on 21 September 2020 (in the case of Ersem).
6 A remote cross-check was carried out from 28 September to 9 October 2020.
7 On 6 January 2021, the Commission adopted Implementing Regulation (EU) 2021/9 imposing a provisional anti-dumping duty on imports of certain hot-rolled flat products of iron, non-alloy or other alloy steel originating in Turkey (OJ 2021 L 3, p. 4), making the applicants’ exports of the product concerned to the European Union subject to a provisional anti-dumping duty of 5.4%.
8 On 23 April 2021, the Commission disclosed to the applicants the definitive facts and considerations on the basis of which it intended to impose definitive anti-dumping duties.
9 On 6 May 2021, the Commission communicated to the applicants an additional final disclosure, under which the anti-dumping duties which it intended to impose on the applicants were set at 5%. The applicants submitted their observations on that disclosure on 10 May 2021.
10 On 5 July 2021, the Commission adopted the contested regulation, imposing an anti-dumping duty of 5% on the imports into the European Union of the product concerned manufactured by the applicants.
Forms of order sought
11 The applicants claim that the Court should:
– annul the contested regulation;
– order the Commission to pay the costs.
12 The Commission contends that the Court should:
– dismiss the action;
– order the applicants to pay the costs.
Law
13 In support of their action, the applicants put forward four pleas in law. The first plea alleges infringement of the first three sentences and of the fifth sentence of Article 2(10), and of Article 2(10)(j) of Regulation (EU) 2016/1036 of the European Parliament and of the Council of 8 June 2016 on protection against dumped imports from countries not members of the European Union (OJ 2016 L 176, p. 21; ‘the basic regulation’), and infringement of Article 2(5) of that regulation. The second plea alleges that the Commission’s rejection of an adjustment for hedging gains and losses infringes Article 2(10)(j) of the basic regulation, Article 2.4 of the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 (OJ 1994 L 336, p. 103; ‘the Anti-Dumping Agreement’) and the principle of good administration. By their third plea, the applicants claim that Article 2(5) and (6) of the basic regulation and the first three sentences of Article 2(10) of that regulation were infringed. Lastly, the fourth plea alleges infringement of Article 2(6) of the basic regulation and of Article 2.2.2 of the Anti-Dumping Agreement.
The first plea in law, alleging, on the one hand, infringement of the first three sentences and of the fifth sentence of Article 2(10), and of Article 2(10)(j) of the basic regulation and, on the other hand, infringement of Article 2(5) of that regulation
14 The applicants complain that the Commission, in essence, converted into Turkish lira, for the purposes of calculating the dumping margin, data provided by them in United States dollars concerning domestic sales, export sales, sales adjustments, cost of production and certain selling, general and administrative costs (‘SG&A costs’), whereas, according to the applicants, such conversion was unnecessary.
15 The first plea is composed of two parts.
The first part of the first plea, relating to an infringement of Article 2(10)(j) of the basic regulation and a consequent infringement of the first three sentences and of the fifth sentence of Article 2(10) of that regulation
16 In the context of the first part of their first plea, the applicants submit, in essence, that both Article 2(10)(j) of the basic regulation and Article 2.4.1 of the Anti-Dumping Agreement establish the principle that currency conversions are permissible only where necessary to ensure a fair comparison. The applicants also submit that the infringement of Article 2(10)(j) of the basic regulation entails a breach of the requirement of a fair comparison, as set out in the first three sentences and the fifth sentence of Article 2(10) of the basic regulation and in Article 2.4 of the Anti-Dumping Agreement. Lastly, the applicants complain that the Commission included in the contested regulation, in order to justify the conversions which it made, new arguments in relation to those put forward in the context of the investigation, which prevented the applicants from making known their views.
17 The Commission disputes that line of argument.
18 As a preliminary point, it should be noted that, although the applicants communicated to the Commission and themselves converted all the data relevant to the dumping calculation into US dollars, the Commission found, in recital 127 of the contested regulation, that the applicants had carried out transactions in US dollars, euros and Turkish lira. It thus made its own conversions of currencies in order to express the values in a currency that would enable a comparison to be made, in this case Turkish lira.
19 Following measures of organisation of procedure, the Commission and the applicants clarified in their responses, lodged at the Court Registry on 13 January and 16 January 2023 respectively, the data declared by the applicants during the administrative procedure and the conversions made by the Commission.
20 Those responses show, as regards, first of all, domestic sales, that Erdemir invoiced them in Turkish lira (the value in US dollars was set out in a footnote to the invoice). However, Erdemir reported the invoiced value in the table of the questionnaire relating to domestic sales in US dollars only (the US dollar also being the declared accounting currency). The Commission converted into Turkish lira (invoicing currency) the value of the invoice declared in US dollars. In order to do so, the Commission first converted the US dollars into euros, and then the euros into Turkish lira.
21 Isdemir also invoiced domestic sales in Turkish lira (the value in US dollars was shown in a footnote to the invoice). However, the company reported the US dollar and the Turkish lira as invoicing currencies in the table of the questionnaire on domestic sales. Sales to independent customers and to the related trader Ersem were reported in US dollars and sales to Erdemir were reported in Turkish lira. The value of the invoice was reported only in US dollars, while indicating that the invoicing currency was the Turkish lira for certain transactions. The Commission therefore converted, via the euro, into Turkish lira (the invoicing currency) all the transactions reported in US dollars.
22 Lastly, as regards Ersem, namely the related trader which resold on the domestic market the product concerned, manufactured by Erdemir and Isdemir, the Commission stated that, out of the 10 sampled domestic sales invoices used during the remote cross-check, only one was actually issued in US dollars. For all the others, the situation was the same as for Erdemir and Isdemir (namely, the invoice was issued in Turkish lira and the value in US dollars was indicated in a footnote to the invoice). As regards the transactions reported in euros, the Commission converted them directly from the euro into Turkish lira (without taking into account the value reported in the accounting currency, the US dollar).
23 As regards export sales of the product concerned to the European Union, both Erdemir and Isdemir invoiced them either in euros or in US dollars. Erdemir and Isdemir reported the value of sales in the invoicing currency and in the accounting currency (US dollar). The Commission converted, on the one hand, the transactions invoiced in euros directly into Turkish lira and, on the other hand, the transactions invoiced in US dollars into Turkish lira via the euro.
24 As regards the costs of production, Erdemir and Isdemir reported them in US dollars. The Commission converted the values of those costs from US dollars into Turkish lira via the euro.
25 Lastly, since the SG&A costs were stated as percentages, no conversion was necessary for those values.
26 It should be noted that, in the sphere of the common commercial policy and, most particularly, in the realm of measures to protect trade, the EU institutions enjoy a broad discretion by reason of the complexity of the economic, political and legal situations which they have to examine. As regards the judicial review of that discretion, it must be limited to verifying whether relevant procedural rules have been complied with, whether the facts relied on in order to make the disputed choice have been accurately stated, and whether there has been a manifest error in the appraisal of those facts or a misuse of powers (see judgment of 12 May 2022, Commission v Hansol Paper, C‑260/20 P, EU:C:2022:370, paragraph 58 and the case-law cited).
27 Under Article 2(10) of the basic regulation, a fair comparison is to be made between the export price and the normal value. Where the normal value and the export price are not on such a comparable basis, that provision states that due allowance, in the form of adjustments, is to be made for differences in factors which are claimed, and demonstrated, to affect prices and price comparability. In particular, Article 2(10)(j) of the basic regulation states that ‘when the price comparison requires a conversion of currencies, such conversion shall be made using the rate of exchange on the date of sale, except that, when a sale of foreign currency on forward markets is directly linked to the export sale involved, the rate of exchange in the forward sale shall be used’.
28 In that regard, first of all, it should be noted that the Commission has a wide discretion in assessing the fairness of the comparison between the normal value and the export price, with the vague concept of ‘fairness’ to be applied by the Commission in the context of that provision having to be made concrete by it on a case-by-case basis, depending on the relevant economic context (see, to that effect, judgment of 20 September 2019, Jinan Meide Casting v Commission, T‑650/17, EU:T:2019:644, paragraph 50 and the case-law cited).
29 Next, it follows from the case-law that the adjustments provided for in Article 2(10) of the basic regulation are made by reference to objective factors which correspond to the particular features of each market (original and export) and have a varying impact on conditions and terms of sale, thus affecting price comparability (see judgment of 6 September 2013, Godrej Industries and VVF v Council, T‑6/12, EU:T:2013:408, paragraph 23 (not published) and the case-law cited).
30 Lastly, it must be noted that it is for the EU Courts to verify that, in choosing the methods for determining normal value and ensuring a fair comparison between normal value and export prices, the Commission did not fail to take into account essential elements in order to establish the appropriate nature of those choices and that all the elements of the file were examined with all the care required (see judgment of 20 September 2019, Jinan Meide Casting v Commission, T‑650/17, EU:T:2019:644, paragraph 53 and the case-law cited).
31 In the first place, it follows from the wording of Article 2(10)(j) of the basic regulation, in particular from the phrase ‘when the price comparison requires a conversion of currencies’, that the use of currency conversion presupposes that such a conversion is necessary in order to carry out a price comparison in the context of the determination of the existence of dumping. Where the comparison between the normal value and the export price is made in order to calculate the dumping margin and where the normal value and the export price are expressed in different currencies, that may justify the need to convert the currencies.
32 Moreover, the World Trade Organization (WTO) Panel Report in the case: United States – Anti-dumping measures on stainless steel plate in coils and stainless steel sheet and strip from Korea (WT/DS 179/R, paragraph 6.11), adopted on 1 February 2001, states that Article 2.4.1 of the Anti-Dumping Agreement establishes a general principle that currency conversions are permitted only where they are required in order to effect a comparison between the export price and the normal value. That interpretation is not disputed by the Commission, which nevertheless rightly states that the requirement which the WTO Panel intended to establish under Article 2.4.1 of the Anti-Dumping Agreement applied specifically to the ‘comparison between the export price and the normal value’.
33 In that regard, it should be noted that the primacy of international agreements concluded by the European Union over secondary EU legislation requires that the latter be interpreted, as far as possible, in a manner consistent with those agreements (see judgment of 20 January 2022, Commission v Hubei Xinyegang Special Tube, C‑891/19 P, EU:C:2022:38, paragraph 31 and the case-law cited).
34 The Court of Justice has already referred to WTO Panel and Appellate Body reports in support of its interpretation of certain provisions of agreements annexed to the agreement establishing the WTO (see judgment of 20 January 2022, Commission v Hubei Xinyegang Special Tube, C‑891/19 P, EU:C:2022:38, paragraph 33 and the case-law cited).
35 It follows that the first three sentences and the fifth sentence of Article 2(10) of the basic regulation, and Article 2(10)(j) of that regulation, read in the light of Article 2.4 of the Anti-Dumping Agreement, must be interpreted as meaning that the Commission may convert currencies only where that is necessary for the purpose of making a fair comparison between the export price and the normal value.
36 In the second place, the applicants submit that it follows from Article 2(10)(j) of the basic regulation and Article 2.4.1 of the Anti-Dumping Agreement that the obligation to justify the need for a currency conversion applies not only to export sales, which are used to calculate export prices, but also to domestic sales and costs of production, which may be used to calculate the normal value. The Commission contends that that alleged requirement applies only to currency conversions in relation to export sales.
37 In that regard, the express reference to the need for a ‘fair comparison between the export price and the normal value’ provided for in the first sentence of Article 2(10) of the basic regulation and Article 2.4 of the Anti-Dumping Agreement suggests, in the absence of further details, that a currency conversion may be made only where it is necessary as regards not only the export price but also the normal value, namely the value of domestic sales. Furthermore, it is apparent from the general scheme of Article 2 of the basic regulation that that article is divided into three sections, the first relating to the ‘normal value’, the second to the ‘export price’ and the third to the ‘comparison’, of which Article 2(10)(j) of that regulation forms part. It follows that the obligation to justify the need for a currency conversion concerns both the normal value and the export price.
38 That conclusion is not called into question by the WTO Panel Report in the case: European Communities – Anti-dumping duties on malleable cast iron tube or pipe fittings from Brazil, adopted on 18 August 2003 (WT/DS 219/R, paragraph 7.198), to which the Commission refers. In that case, Brazil did not dispute the currency conversions carried out for domestic sales, cost of production and export sales. The dispute concerned only the exchange rates used for the currency conversions relating to adjustments to the export price.
39 The same is true of the WTO Panel Report in the case: United States – Anti-dumping measures on stainless steel plate in coils and stainless steel sheet and strip from Korea (WT/DS 179/R, paragraphs 6.5 to 6.7), prior to the preceding case, which concerned only currency conversions related to sales on the South Korean market (called ‘local sales’ by the WTO Panel).
40 It follows that the first three sentences and the fifth sentence of Article 2(10) of the basic regulation and Article 2(10)(j) of that regulation, read in the light of Article 2.4.1 of the Anti-Dumping Agreement, must be interpreted as meaning that the obligation to justify the need for a currency conversion applies not only to export sales, but also to domestic sales and costs of production.
41 In the third place, the applicants state that they reported all data, namely domestic sales, export sales, adjustments to sales, cost of production and SG&A costs, required for the dumping margin calculation in US dollars, because those data were recorded in that currency in their records. Thus, the Commission’s conversion of all the data reported in US dollars into Turkish lira was not necessary under Article 2(10)(j) of the basic regulation.
42 In that regard, it should be noted that, according to the case-law, the burden of proving that the specific adjustments listed in Article 2(10)(a) to (k) of the basic regulation must be made lies with those who wish to rely on them (see judgment of 26 October 2016, PT Musim Mas v Council, C‑468/15 P, EU:C:2016:803, paragraph 83 and the case-law cited). Thus, it is for the Commission, when it considers that it must make an adjustment, to base its decision on direct evidence, or at least on consistent circumstantial evidence, pointing to the existence of the factors for which the adjustment was made, and to determine its effect on price comparability (see judgment of 9 November 2022, Cambodia and CRF v Commission, T‑246/19, EU:T:2022:694, paragraph 125 and the case-law cited). In the present case, it was therefore for the Commission to justify the conversions made.
43 Furthermore, it must be noted that the General Court’s review of the evidence on which the EU institutions based their findings does not constitute a new assessment of the facts replacing that made by the institutions. That review does not encroach on the broad discretion of those institutions in the field of commercial policy, but is restricted to showing whether that evidence was able to support the conclusions reached by the institutions. The General Court must therefore not only establish whether the evidence put forward is factually accurate, reliable and consistent but also ascertain whether that evidence contained all the relevant information which had to be taken into account in order to assess a complex situation and whether it was capable of substantiating the conclusions reached (see judgment of 20 January 2022, Commission v Hubei Xinyegang Special Tube, C‑891/19 P, EU:C:2022:38, paragraph 37 and the case-law cited).
44 In the present case, it is common ground between the parties that, as follows in particular from recital 127 of the contested regulation, the US dollar is the applicants’ main accounting currency.
45 On the basis of the applicants’ accounting reports, the Commission converted into Turkish lira, first, data provided in US dollars, namely domestic sales, export sales, adjustments to sales and costs of production, via the euro and, second, the export sales invoiced by the applicants in euros.
46 The Commission justified those conversions in recital 127 of the contested regulation by the fact that ‘[since] the exporting producers carried out transactions in [US dollars, euros and Turkish lira], currency conversions were necessary to express the values in one currency that would enable comparison’.
47 It should be noted, as acknowledged by the applicants in their pleadings, that their export sales to the European Union were made in euros and US dollars, whereas all the invoices for domestic sales, apart from one invoice from Ersem, had Turkish lira as their main billing currency, with US dollars being indicated only as an additional currency. Furthermore, the actual payment received was recorded in one or the other of those currencies. The Commission was therefore required to carry out a currency conversion in order to be able to make a fair comparison between the export price and the normal value, in accordance with the first sentence of Article 2(10) of the basic regulation.
48 In addition, the applicants acknowledge that, where such a conversion proves necessary, Article 2(10)(j) of the basic regulation does not require the Commission to convert the currency of export sales into the currency requested by the exporting producer.
49 In the light of the circumstances of the present case and the wide discretion enjoyed by the EU institutions, the applicants have failed to demonstrate that the conversion into Turkish lira – the currency of the exporting country – made by the Commission from the data which the applicants provided in US dollars and euros was not duly justified by the Commission in recital 127 of the contested regulation, for the purposes of a fair comparison between the export price and the normal value pursuant to Article 2(10) and Article 2(10)(j) of the basic regulation.
50 In the fourth place, the Commission contends that the applicants raise in the reply a plea in law that is new and, therefore, inadmissible pursuant to Article 84(1) of the Rules of Procedure of the General Court, when they claim that, when the Commission converted the export price denominated in euros into Turkish lira, it did not take account of the date on which the export sale was invoiced, as required by Article 2(10)(j) of the basic regulation, given that, in order to carry out that conversion, it used the monthly exchange rates and not the exchange rates applicable on the date of the sale.
51 In that regard, it must be observed that, in their responses of 16 January 2023 to the measures of organisation of procedure, the applicants stated that, by the argument summarised in the preceding paragraph, they had pointed out an error of fact or an inaccuracy in the Commission’s defence and that they did not intend to introduce a new plea in law. The applicants add that they do not directly dispute the Commission’s use of the monthly exchange rates instead of the daily exchange rates. They nevertheless state that the manner in which the currency conversions were carried out is relevant to the assessment of the second part of the first plea.
52 Consequently, there is no need to rule either on the admissibility or, in any event, on the merits of that argument of the applicants in the context of the first part of the first plea, which relates, in essence, to the very need for such a conversion.
53 In the fifth place, the applicants complain that the Commission included in the contested regulation, in order to justify the conversions which it made, new arguments in relation to those put forward in the context of the investigation, which prevented the applicants from making known their views in that regard. Those new arguments include the fact that the exporting producers had carried out transactions in US dollars, euros and Turkish lira, the Commission’s ‘standard practice’ in that area and the ‘appropriateness’ of using the currency of the exporting country in order to compare the normal value and the export price.
54 As regards the right to be heard, the EU Courts have established that, in anti-dumping proceedings, the parties concerned have the right to be informed of the facts and essential considerations on the basis of which it is envisaged that the imposition of definitive anti-dumping duties will be recommended. In addition, the parties concerned must be informed on a date which still allows them effectively to make their point of view known before the adoption of the contested regulation (see judgment of 10 March 2009, Interpipe Niko Tube and Interpipe NTRP v Council, T‑249/06, EU:T:2009:62, paragraph 200 and the case-law cited).
55 Nevertheless, that right does not require that, before taking a final position on the assessment of the evidence submitted by a party, the administration must offer that party a further opportunity to comment on that evidence (see judgment of 14 July 2021, Interpipe Niko Tube and Interpipe Nizhnedneprovsky Tube Rolling Plant v Commission, T‑716/19, EU:T:2021:457, paragraph 211 and the case-law cited).
56 In the present case, in its final disclosure of 23 April 2021, the Commission stated that ‘Article 2(10)(j) of the basic [r]egulation is applicable in situations where a currency conversion is necessary for the purpose of comparison between the normal value and the export price[; i]t is the standing practice to perform such comparison in the currency of the country concerned[;] therefore, in the present case the Commission used the Turkish lira as the currency of comparison’.
57 Since those assessments were communicated to the applicants, it must be noted that they had the opportunity to respond to them, in particular in their observations of 10 May 2021. It follows that the Commission had informed the applicants of the facts and essential considerations on the basis of which it was intended to recommend the imposition of definitive anti-dumping duties and that the Commission offered the applicants the opportunity to make known their views effectively before the adoption of the contested regulation, in accordance with the case-law referred to in paragraph 54 above.
58 Consequently, the Commission respected the applicants’ right to be heard.
59 The first part of the first plea must therefore be rejected as unfounded.
The second part of the first plea, relating to infringement of Article 2(5) of the basic regulation interpreted in the light of Article 2.2.1.1 of the Anti-Dumping Agreement
60 By the second part of the first plea, the applicants submit that, by failing to use their records for the purposes of calculating the costs of production, the Commission infringed Article 2(5) of the basic regulation, interpreted in the light of Article 2.2.1.1 of the Anti-Dumping Agreement.
61 In particular, the applicants complain that the Commission converted into Turkish lira the currency shown in their records relating to costs of production, namely the US dollar. They consider that those costs were thereby no longer ‘calculated on the basis of records kept by the party under investigation’ within the meaning of Article 2(5) of the basic regulation. In addition, according to the applicants, by converting the amounts provided in US dollars into Turkish lira, the Commission used the average monthly exchange rates, whereas those amounts, declared in their records, had been converted into US dollars on the basis of the exchange rate in force on the date of the transaction.
62 The Commission disputes that line of argument and considers that it calculated the costs ‘on the basis of records’ within the meaning of Article 2(5) of the basic regulation.
63 In that regard, the first subparagraph of Article 2(5) of the basic regulation states, in particular, that ‘costs shall normally be calculated on the basis of records kept by the party under investigation, provided that such records are in accordance with the generally accepted accounting principles of the country concerned and that it is shown that the records reasonably reflect the costs associated with the production and sale of the product under consideration’. Article 2.2.1.1 of the Anti-Dumping Agreement, on which the applicants rely, contains almost identical wording and therefore has no bearing on the interpretation to be given to the first subparagraph of Article 2(5) of the basic regulation.
64 In the present case, it is necessary to determine, first, whether the Commission calculated the costs of production on the basis of the applicants’ records, in accordance with Article 2(5) of the basic regulation, and, second, whether it infringed that provision by using the average monthly exchange rates when it converted into Turkish lira the values of those costs reported in US dollars.
65 In the first place, first of all, it should be noted that the wording of Article 2(5) of the basic regulation does not require the Commission to accept without reservation the records produced by the party concerned during the investigation.
66 That provision states that costs are ‘normally’ calculated ‘on the basis’ of the records of the party under investigation. The term ‘normally’ means ‘usually’ or ‘in principle’, whereas the expression ‘on the basis of’ means ‘from’ or ‘taking as a starting point’, which suggests that the Commission is not obliged to rely, without carrying out any verification, on the records produced by the party concerned during the investigation and that it is not required to use them as such.
67 In the present case, by converting into Turkish lira the costs indicated in US dollars in the applicants’ records, the Commission neither rejected nor replaced those records. Although the Commission admits that it carried out a ‘minor processing of those records’, it must be held that it did in fact calculate the costs of production on the basis of the applicants’ records, pursuant to Article 2(5) of the basic regulation.
68 Next, it must be noted that, since it was considered necessary to convert the export prices and the normal value into Turkish lira in order to ensure a fair comparison within the meaning of Article 2(10) of the basic regulation, it was also necessary to convert into Turkish lira the costs of production based on the applicants’ records, otherwise Article 2(5) of the basic regulation would have been deprived of its practical effect.
69 Lastly, the applicants submit that, in accordance with the WTO Panel Report in the case: Australia – Anti-dumping measures on A4 copy paper (WT/DS 529/R, paragraph 7.117), adopted on 27 January 2020, the Commission was required to rely on a ‘compelling reason’ in order to disregard the records, which it did not do.
70 In that regard, it is sufficient to note that, as stated in paragraph 67 above, the Commission did not disregard the applicants’ records, with the result that it was not, in any event, required to rely on a ‘compelling reason’ to justify its approach.
71 It follows that the conversion of the costs of production was not contrary to Article 2(5) of the basic regulation.
72 In the second place, as regards the applicants’ argument that, when converting the costs of production into Turkish lira, the Commission should have applied a daily and not a monthly exchange rate, it should be noted that Article 2(5) of the basic regulation, infringement of which is alleged in the context of the present part of the first plea, does not lay down any obligation to use a particular exchange rate.
73 In addition, it must be stated that, during the investigation, the applicants expressly requested the Commission to use the same approach for exchange rates for sales and costs by way of a monthly exchange rate. Next, during the administrative procedure, the applicants welcomed the Commission’s approach of aligning exchange rates by using a monthly rate. Moreover, in the ‘transaction-by-transaction’ list of domestic sales produced by the applicants before the Commission, the applicants had themselves included an average monthly exchange rate for the conversion of Turkish lira into US dollars.
74 Following discussions with the Commission and in particular the prior communication by which the Commission indicated its intention to convert into Turkish lira the data reported by the applicants relating to sales and costs of production, the applicants had the opportunity to communicate their own conversions of those figures into Turkish lira, using, where appropriate, a daily exchange rate; they did not do so.
75 In those circumstances, the Commission was entitled to use the average monthly rate for those conversions and, in so doing, did not infringe Article 2(5) of the basic regulation.
76 The second part of the applicants’ first plea, alleging infringement of Article 2(5) of the basic regulation, must therefore be rejected as unfounded.
77 It follows that the first plea must be rejected as unfounded.
The second plea in law, alleging infringement of Article 2(10)(j) of the basic regulation, Article 2.4 of the Anti-Dumping Agreement and the principle of good administration
78 In the context of the first part of the present plea, the applicants claim that the hedging gains and losses arising from exchange rate conversions on forward markets affect price comparability. The Commission refused, in the contested regulation, to grant the requested adjustment, in breach of Article 2(10)(j) of the basic regulation. In the second part of the present plea, the applicants complain that the Commission infringed Article 2.4 of the Anti-Dumping Agreement and the principle of good administration by not stating what information was necessary in order to ensure a fair comparison.
The first part of the second plea, regarding infringement of Article 2(10)(j) of the basic regulation
79 The applicants submit that the rejection of a hedging/currency conversion adjustment in the contested regulation infringes Article 2(10)(j) of the basic regulation. That provision is unambiguous and means that, where a sale of a foreign currency on forward markets is directly linked to an export sale, the Commission is under an obligation to apply the exchange rate of the forward sale.
80 The Commission disputes that line of argument.
81 As a preliminary point, it should be noted that this plea relates specifically to the second part of the first sentence of Article 2(10)(j) of the basic regulation, which provides that, when the price comparison requires a conversion of currencies, that conversion is to be made using the exchange rate in force on the date of sale, ‘except that, when a sale of foreign currency on forward markets is directly linked to the export sale involved, the rate of exchange in the forward sale shall be used’.
82 It is apparent from recital 98 of the contested regulation that the hedging contracts concluded by the applicants and relied on by them for the purposes of claiming an adjustment under Article 2(10)(j) of the basic regulation related to export sales denominated in euros and that the currency conversion risk arising from those transactions was, in all those contracts, covered against the US dollar. Since the Commission compared the export price and the normal value in Turkish lira and converted all the transactions denominated in euros into Turkish lira directly, without any intermediate conversion into US dollars, it considered that those hedging contracts, in so far as they concerned the rate of conversion between the euro and the US dollar, were irrelevant for the direct conversions of the euro into the Turkish lira in question and therefore did not take them into consideration.
83 The applicants maintain that the Commission was wrong to take the view that the rate of conversion between the euro and the US dollar agreed in the hedging contracts was irrelevant for the purposes of comparing the normal value and the export price. According to the applicants, the hedging was carried out in US dollars and not in Turkish lira through an intermediate conversion into US dollars. The Commission therefore unlawfully converted into Turkish lira all the amounts in US dollars, furthermore on the basis of a monthly exchange rate, contrary to the requirements of Article 2(10)(j) of the basic regulation.
84 In the present case, it is common ground between the parties that a ‘hedge’ is a type of financial instrument which enables a company to reduce or eliminate financial risk. Thus, a hedging contract makes it possible to lock in, at the time of concluding the contract, the exchange rate to be applied to the monetary transaction that will take place on a future date.
85 It is also common ground that there was no hedging for the transactions invoiced in dollars, but only for those invoiced in euros. In addition, the applicants’ export sales in euros had to be converted in order to ensure a fair comparison between those sales and domestic sales. It is apparent from the file that the Commission directly converted the value of those sales into Turkish lira. There was therefore no intermediate conversion into US dollars, as stated in recital 98 of the contested regulation, and contrary to what the applicants assert. The hedging contracts relied on by the applicants in support of their claim for adjustment under Article 2(10)(j) of the basic regulation provided for hedging in US dollars, agreeing on a rate of conversion between the euro and the US dollar. However, the latter conversion had nothing to do with the conversion carried out by the Commission, namely from the euro into Turkish lira. Accordingly, those contracts were irrelevant for the purposes of that conversion, as the Commission correctly stated in recital 98 of the contested regulation.
86 Given that the applicants’ other arguments are based on the incorrect premiss that the Commission was required to use the conversion rate provided for in the hedging contracts, which was rejected as unfounded above, those arguments must also be rejected.
87 The first part of the second plea must therefore be rejected.
The second part of the second plea, relating to infringement of Article 2.4 of the Anti-Dumping Agreement and the principle of good administration
88 The applicants argue that the Commission at no point indicated to them what information was necessary to enable them to receive a hedging adjustment, even though it was clear from the moment the questionnaire replies were submitted that such an adjustment was requested.
89 In addition, the contested regulation refers, for the first time, to two new grounds for rejecting the claim for adjustment, the first set out in recital 101 of the contested regulation, relating to the lack of evidence that the hedging operations were not adjusted after the sale, and the second, set out in recital 100 of that regulation, relating to the lack of evidence that the export sales transactions denominated in euros had originally been negotiated on their price in US dollars.
90 The Commission disputes that line of argument.
91 It follows from the examination of the first part of the second plea that the hedging contracts relied on by the applicants in support of their claim for adjustment under Article 2(10)(j) of the basic regulation were irrelevant, as the Commission was fully entitled to state in recital 98 of the contested regulation.
92 That conclusion is sufficient, in itself, to justify the rejection of that request.
93 Consequently, the applicants’ complaints directed against recitals 100 and 101 of the contested regulation, which contain grounds added by the Commission for the sake of completeness in order to justify that rejection, are ineffective.
94 The second part must therefore be rejected, as must the second plea in its entirety.
The third plea in law, alleging infringement of Article 2(5) and (6) of the basic regulation and of the first sentences of Article 2(10) of that regulation
95 The applicants submit, by the first part, that the contested regulation infringes Article 2(5) and (6) of the basic regulation, since the SG&A costs are counted twice. By the second part, they complain that the Commission infringed the first sentences of Article 2(10) of the basic regulation by failing to comply with the obligation to make a fair comparison between the export price and the normal value at the same level of trade.
The first part of the third plea, relating to infringement of Article 2(5) and (6) of the basic regulation
96 The applicants submit that Isdemir’s domestic sales are re-invoiced to independent customers by Erdemir, at the same value as that invoiced to Erdemir by Isdemir, and that the transport costs are invoiced by the freight suppliers to Erdemir, which then re-invoices them to Isdemir.
97 In that context, the applicants complain that the Commission, when calculating the dumping margin at the definitive stage for Isdemir, and, in particular, when calculating the SG&A costs incurred for the domestic sales, included not only the SG&A costs incurred by Isdemir but also an additional amount of SG&A costs for the involvement of Erdemir in Isdemir’s sales process on the domestic market.
98 The Commission disputes that line of argument.
99 In accordance with Article 2(1) of the basic regulation, the Commission calculates the normal value on the basis of the first sale to an independent customer. Thus, if the exporting producer makes (re)sales via related trading companies or distributors, the sales price used will be the sales price of the trader or distributor.
100 Furthermore, sales costs are added in the context of the determination of the amount of profitable domestic sales made by the applicants during the investigation, in accordance with Article 2(4) of the basic regulation. Domestic sales which are not deemed to be profitable are not considered to have been made ‘in the ordinary course of trade’ and are therefore excluded from the normal value pursuant to the first sentence of Article 2(1) of the basic regulation.
101 Accordingly, it is for the purposes of determining the profitability of domestic sales that the Commission takes into account, where appropriate, the SG&A costs of the related traders.
102 Article 2(6) of the basic regulation states that ‘the amounts for selling, for general and administrative costs and for profits shall be based on actual data pertaining to production and sales, in the ordinary course of trade, of the like product by the exporter or producer under investigation’.
103 In the case of indirect sales, it follows from the case-law that all costs which are necessarily included in the price paid by the first independent buyer must always be taken into account, in order to avoid discrimination, from the point of view of the calculation of the normal value, depending on whether a sale is made by an internal sales department of the manufacturing organisation or by a company which is legally distinct, even though economically controlled by the producer (see judgment of 14 July 2021, Interpipe Niko Tube and Interpipe Nizhnedneprovsky Tube Rolling Plant v Commission, T‑716/19, EU:T:2021:457, paragraph 87 and the case-law cited).
104 In the present case, first of all, the Commission stated, in recital 74 of the contested regulation, that it was unable to establish whether the services invoiced actually related to costs incurred in resales on the domestic market, since the recorded transactions or invoices issued were all marked as group services only. The Commission also found that the expenses for group services booked in the accounts of the exporting producer and allocated to the product under investigation represented a negligible fraction of net sales.
105 In the first place, the applicants submit that they had informed the Commission from the beginning of the investigation that all the expenditure incurred by Erdemir’s head office in connection with the sale of Isdemir’s products had already been taken into account in the SG&A costs incurred – and reported – by Isdemir. The Commission had that information but preferred to argue that it was difficult to conclude whether the services invoiced concerned costs that were incurred when the product was resold.
106 First, as regards the information provided by the applicants to the Commission on the role played by Erdemir in Isdemir’s sales during the investigation, it should be noted that, in their replies of 7 July 2020 to the Commission’s questionnaire, the applicants stated that the group’s head office, known as the mining and metallurgical group OYAK, was responsible for the essential functions of the applicants and of certain other companies belonging to the Erdemir group. The applicants thus failed to mention Erdemir’s role in Isdemir’s sales on the domestic market, Isdemir having indicated in its list of transactions on the domestic market that all those sales had been made directly to domestic customers and not through Erdemir.
107 Subsequently, in its reply to the deficiency letter of 26 August 2020, Erdemir stated that all expenditure incurred by the head office was then charged to the group companies, in accordance with the group’s transfer pricing policies. It also provided the group’s policy on the allocation of expenses, an overview of the invoices issued to related parties and the calculation of the cost allocation for the investigation period, in order to determine the costs incurred by each of the companies.
108 It must be stated that, at that stage, Erdemir’s role in Isdemir’s sales process and the possible passing on of that role in the SG&A costs were not clear from the applicants’ replies.
109 However, it is apparent from the report on the remote cross-check, carried out between 28 September and 9 October 2020, that all of Isdemir’s domestic sales were in fact made through Erdemir and then re-invoiced to the end customer. Following their observations on the final disclosure, on 3 May 2021, the applicants attempted to provide evidence that the expenses incurred by Erdemir in connection with sales of Isdemir’s products were invoiced to Isdemir and were already reflected in its SG&A costs.
110 Therefore, until that remote cross-check, the Commission considered that it was difficult to determine the exact nature of the services provided by Erdemir and the relationship between Isdemir and Erdemir as regards the domestic sales made through Erdemir. Next, in the context of the remote cross-check, it must be noted that the Commission was not able to determine and verify whether the services invoiced to Isdemir by Erdemir correctly reflected Erdemir’s participation. On the basis of the information provided by the companies, in particular invoices, and as is apparent from recital 74 of the contested regulation, it was mentioned only in those invoices that Erdemir had invoiced Isdemir for ‘group services’. It should be observed that, following the remote cross-check and despite the provision of invoices or balance sheet extracts, it remained difficult for the Commission to verify whether Erdemir’s sales functions were correctly reflected in Isdemir’s declared SG&A costs.
111 The applicants do not dispute those facts and the difficulties faced by the Commission in verifying the sales functions claimed to have been performed by Erdemir. The applicants admit that it is quite possible that the Commission understood the structure of their sales only at the stage of the remote cross-check. Nevertheless, according to the applicants, the Commission ‘could (and even should) have known’ about the structure of their sales and Erdemir’s participation in Isdemir’s sales, on the basis of the replies which they had provided to the questionnaire and to the deficiency letters.
112 Contrary to what the applicants claim, it was neither the Commission’s role nor its responsibility to infer from their replies to the questionnaire and to the deficiency letters that Isdemir’s domestic sales were invoiced through Erdemir. It follows from Article 6(2) of the basic regulation that a questionnaire is prepared and sent to the interested parties by the Commission’s staff, for the purposes of obtaining the information necessary for the anti-dumping investigation, and that those parties are required to provide those staff with the information that will enable it to complete the anti-dumping investigation (see, to that effect, judgment of 14 December 2017, EBMA v Giant (China), C‑61/16 P, EU:C:2017:968, paragraphs 50 and 51).
113 Furthermore, the replies of the parties to the questionnaire referred to in Article 6(2) of the basic regulation, and the subsequent on-the-spot verification which the Commission may carry out under Article 16 of that regulation, are essential to the conduct of the anti-dumping procedure (see, to that effect, judgment of 30 April 2015, VTZ and Others v Council, T‑432/12, not published, EU:T:2015:248, paragraph 29 and the case-law cited).
114 As stated in recitals 23 and 24 of Implementing Regulation 2021/9, due to the COVID-19 pandemic, the Commission was not able to carry out, at the provisional stage, on-the-spot verification visits. Instead, a remote cross-check was organised by videoconference. The Court has already held that the verification of the information gathered is intended to enable the Commission to perform its task and to ensure the accuracy of the information provided by the undertaking subject to verification which must, exhaustively and to the best of its abilities, answer the questions put by the Commission and must not omit to provide all the information and relevant explanations so as to enable the Commission to carry out the necessary cross-checking in order to verify the accuracy of the information provided and reach reasonably correct conclusions, in any event, before such verification is completed, failing which the information and explanations can no longer be taken into account (judgment of 3 December 2019, Yieh United Steel v Commission, T‑607/15, EU:T:2019:831, paragraph 78). The same applies to the remote cross-check, which must enable the Commission to verify the accuracy of the information provided and the relevant explanations, failing which they can no longer be taken into account.
115 It also follows from Article 18(3) and (6) of the basic regulation that the information which the interested parties are required to provide to the Commission must be used by the EU institutions for the purpose of establishing the findings of the anti-dumping investigation and that those parties must not omit relevant information. Whether an item of information is necessary must be assessed on a case-by-case basis (judgment of 14 December 2017, EBMA v Giant (China), C‑61/16 P, EU:C:2017:968, paragraph 52).
116 In the present case, it was therefore for the applicants to provide the Commission, from the beginning of the procedure and to the best of their ability, with all the information necessary for a proper understanding of their data so as not to run the risk of obstructing the proper conduct of the anti-dumping procedure and so as to allow the Commission to carry out the necessary verifications in a timely manner.
117 In view of the applicants’ failure to provide clear, correct and sufficient information, the Commission cannot be criticised for taking the view that it was unable to determine and verify whether the services invoiced to Isdemir by Erdemir correctly reflected Erdemir’s participation. In order to reflect Erdemir’s participation in Isdemir’s sales process, the Commission was therefore entitled to add a calibrated amount in relation to SG&A costs in order to cover the sales services provided by Erdemir in so far as they were based on the SG&A costs of Ersem, which was a related trader in the group.
118 Second, the applicants do not dispute that the Commission is entitled to quantify the cost of the services provided by a related party on behalf of another related party and to include that cost in the latter’s SG&A costs, as follows from the Court’s case-law (judgment of 14 July 2021, Interpipe Niko Tube and Interpipe Nizhnedneprovsky Tube Rolling Plant v Commission, T‑716/19, EU:T:2021:457, paragraphs 112 to 114).
119 It was on that basis that the Commission quantified the expenses relating to the group services.
120 That additional amount was set at 2.2% of the turnover or 2.75% of the cost of goods sold, on the basis of the SG&A costs incurred by the related trader Ersem for its (re)sales on the domestic market. In that regard, the Commission set out in detail its methodology for calculating the additional SG&A costs in Annex 2 to the final disclosure, which corresponded to those of the related trader Ersem. In any event, the applicants have not put forward detailed arguments capable of calling into question the methodology or the quantification of the additional amount set by the Commission.
121 It follows that the Commission was entitled to take into account the costs of the related trader in order to arrive at an estimate of the cost of the sales services provided by Erdemir.
122 It follows that, in view of the data available to it, the Commission did not make a manifest error of assessment in finding that it was unable to conclude whether the services invoiced to the exporting producer actually related to the costs incurred when reselling the product concerned on the domestic market and, consequently, in setting an additional amount of SG&A costs for Erdemir’s participation in Isdemir’s domestic sales process.
123 In the second place, the applicants submit that the expenses invoiced by Erdemir to Isdemir for group services already represented 0.4% of total sales and 0.75% of total domestic sales to independent customers, which constitutes a significant amount and not a negligible fraction, contrary to what is stated in recital 74 of the contested regulation.
124 As set out above, the Commission did not make a manifest error of assessment in concluding that Erdemir’s role as a reseller of the product concerned was not properly reflected in the group expenses invoiced, and then in calculating those expenses by taking into account the expenses of the related trader. Consequently, the argument that the expenses invoiced by Erdemir to Isdemir for group services do not constitute a negligible fraction of the sales is irrelevant and must be rejected as ineffective.
125 The first part of the third plea must therefore be rejected.
The second part of the third plea, regarding infringement of the first sentences of Article 2(10) of the basic regulation
126 By the second part of the third plea, the applicants complain that the Commission failed to comply with its obligation to make a fair comparison between the export price and the normal value at the same level of trade and, consequently, infringed the first sentences of Article 2(10) of the basic regulation.
127 In particular, as a result of the inclusion of an additional amount of SG&A costs which have no real connection with Isdemir’s domestic sales made through Erdemir or which do not relate to those sales, the comparison between the export price and the normal value made by the Commission is no longer at the same level of trade. That affects the determination of the normal value, since the inclusion of those additional SG&A costs reduces the percentage of profitable sales.
128 The Commission disputes that line of argument.
129 It should be noted at the outset that the applicants misread Article 2(10) of the basic regulation.
130 The determination of the profitable domestic sales is governed by Article 2(4) of the basic regulation and concerns the establishment of the normal value. However, Article 2(10) of that regulation, which, in the present part of the third plea, is alleged to have been infringed, governs the comparison between the export price and the normal value, once the normal value has been established in accordance with Article 2(1) to (7) of that regulation. The adjustment of SG&A costs for the purposes of determining the normal value is therefore not governed by Article 2(10) of the basic regulation. In that regard, recital 74 of the contested regulation, which deals with the issue of the additional SG&A costs related to Erdemir’s role in the domestic sales, is examined in the part of the contested regulation relating to the ‘normal value’, which precedes the part on the comparison between that normal value and the export price. It follows from the foregoing that the present part of the plea is ineffective and must be rejected.
131 Consequently, the second part of the third plea must be rejected, as must, therefore, that plea in its entirety.
The fourth plea in law, alleging infringement of Article 2(6) of the basic regulation interpreted in the light of Article 2.2.2 of the Anti-Dumping Agreement
132 By the present plea, the applicants complain that the Commission rejected their request to include the realised exchange rate gains and losses in their SG&A costs, in breach of Article 2(6) of the basic regulation interpreted in the light of Article 2.2.2 of the Anti-Dumping Agreement.
133 The Commission disputes that line of argument.
134 In that regard, it should be noted, as a preliminary point, that the Commission made a number of adjustments to the way in which the exporting producers had allocated their financial income and financial expenses in the context of their SG&A costs, as is apparent from recitals 45 to 57 of the contested regulation.
135 In particular, it is apparent from recital 50 of the contested regulation that the Commission considered that the valuation gains and losses were the result of closing operations and, therefore, were not linked to the production or sales of the product under investigation.
136 Furthermore, the Commission stated, in recital 56 of the contested regulation, that the information presented under the headings ‘financial income’ and ‘financial expenses’ had also been examined carefully. The Commission thus rejected the relevant undertaking’s argument regarding financial income since that argument was not related to the day-to-day production and sales activities of that undertaking, but rather to financial operations unrelated to the production or sales of the product under investigation.
137 As regards exchange rate gains and losses, it follows from the case-law that losses on foreign currency transactions and conversions must be included in the SG&A costs if they are linked to the main activity of the undertaking concerned. The SG&A costs are comprised of costs related to sales and to the overall working and operation of the undertaking (see, to that effect, judgment of 11 July 2017, Viraj Profiles v Council, T‑67/14, not published, EU:T:2017:481, paragraph 177). Moreover, it must be held that the gains on transactions and conversions into foreign currency, in so far as they are also related to the main production activity of the undertaking concerned, and to the sales related thereto, may also be taken into account, up to the level of the financial charges resulting directly from that production and sale activity (see, to that effect, judgment of 11 July 2017, Viraj Profiles v Council, T‑67/14, not published, EU:T:2017:481, paragraph 178).
138 It is in the light of those considerations that the arguments put forward by the applicants must be examined.
139 In the first place, the applicants submit that it follows from the wording of Article 2(6) of the basic regulation and Article 2.2.2 of the Anti-Dumping Agreement that the actual data as reported in the accounts of the exporter or producer must be used in order to establish the SG&A costs. They argue that there are only two exceptions to that rule. The first exception is when the data relate to production and sales outside the ordinary course of trade. The second exception is when the actual data do not relate to the production or sales of the product concerned.
140 The applicants argue that exchange rate gains and losses which cannot be linked to a particular product benefit all products, including the product under investigation. As the Commission did not exclusively link those exchange rate gains to other products not covered by the investigation, it was wrong to exclude those gains from the SG&A costs.
141 First of all, it should be noted that it is accepted by the case-law cited in paragraph 137 above that exchange rate losses and gains may form part of the SG&A costs in the context of the calculation of the normal value, which, moreover, the parties do not dispute.
142 However, the Commission considered that it had not been demonstrated that the exchange rate gains and losses were related to the production or sale of the product concerned.
143 In that regard, in its report, the WTO Panel in the case: United States – Final dumping determination on softwood lumber from Canada (WT/DS 264/R, paragraph 7.265), adopted on 31 August 2004, stated that ‘unless … particular G&A [(general and administrative costs)] can be tied to a particular product manufactured by a company, G&A costs – because normally they cannot be attributed to any particular product but are costs incurred by the company in the production and sale of goods – pertain or relate to all of those goods[; i]f G&A costs benefit the production and sale of all goods that a company may produce, they must certainly relate or pertain to those goods, including in part to the product under investigation’.
144 Moreover, as stated in paragraph 137, the case-law has clarified that losses on transactions and conversion into foreign currencies should be included in the SG&A costs if they were related to the main activity of the undertaking concerned.
145 On the basis of the foregoing, it must be held that exchange rate gains and losses may be excluded from SG&A costs if they have no connection with the production and sale of goods in general or if they are exclusively linked to a product that is not related to the investigation.
146 Next, it should be noted that the applicants’ initial presentation of their profit and loss account during the investigation was affected by intra-group transactions and by financial income and financial expenses not linked to the sales or production of the product concerned. Therefore, as the Commission notes, it was difficult to distinguish between the various items of financial income according to whether or not they were related to the production of the product concerned.
147 Each company subsequently provided a document showing a division of the accounts containing actual exchange rate and conversion gains and losses. Those documents also contained a description of the relevant accounts from which the exchange rate gains and losses arose. The Commission then carried out an analysis in order to determine whether the accounts, which, according to the applicants, contained the ‘actual’ exchange rate gains and losses, related to the production or sale of the product concerned. It became apparent that Erdemir’s most significant actual exchange rate gain was derived from the ‘outstanding shareholder dividends’ amounting to 100 887 953.80 US dollars (USD). Similarly, for Isdemir, the largest actual exchange rate gain, amounting to USD 70 732 650.12, came from the ‘dividend exchange to shareholders’.
148 As the Commission submits, it must be held that the revenue received by Erdemir through dividends is the result of equity investments. By their nature, they differ from gains or losses arising from the production or sale of products and do not have to be taken into account in Erdemir’s SG&A costs. The fact that the dividends come from companies which produce and sell the product concerned is irrelevant in that respect. Dividends remain income from financial investments and clearly do not form part of the SG&A costs of a producer; those costs are borne specifically by producers carrying out activities relating to the product under investigation.
149 The Commission was therefore fully entitled to take the view, in recital 50 of the contested regulation, that the valuation gains and losses were the result of closing operations and were therefore not linked to the production or sales of the product under investigation. In addition, in recital 56 of the contested regulation, the Commission was also fully entitled to reject the applicants’ argument concerning the financial income, on the ground that, in essence, that income was not related to the company’s day-to-day production and sales activities, but rather to financial operations unrelated to the production or sales of the product under investigation.
150 Lastly, it must be noted that, according to the case-law referred to in paragraph 113 above, the parties’ replies to the questionnaire referred to in Article 6(2) of the basic regulation are essential to the conduct of the anti-dumping procedure. It was therefore for the applicants to provide the Commission, from the beginning of the investigation and to the best of their ability, with all the information necessary for a proper understanding of their data.
151 It should be noted that, at no point during the investigation, or in their observations submitted before the Court, did the applicants seek to substantiate their claim that the exchange rate gains to be included in their SG&A costs concerned the production and sales of goods on the domestic market. The applicants were therefore wrong to consider that it was for the Commission to demonstrate that those costs and gains were not related to the production and sale of goods in general or that they were exclusively linked to a product which was not related to the investigation.
152 In the second place, the applicants submit that the Court confirmed in the judgment of 11 July 2017, Viraj Profiles v Council (T‑67/14, not published, EU:T:2017:481, paragraph 178), that the exchange rate gains linked to the overall functioning and operation or production activities had to be included in the determination of the amounts of SG&A costs. They also submit that the Commission confirmed in the case that gave rise to the judgment of 22 September 2021, Severstal v Commission (T‑753/16, not published, EU:T:2021:612), that exchange rate gains had to be included, since the Commission claimed that ‘if, in the present case, exchange rate differences formed part of the total cost of the loan at the end of each financial year, exchange rate differences consisting of a net gain, where appropriate, would likewise be taken into account’ (judgment of 22 September 2021, Severstal v Commission, T‑753/16, not published, EU:T:2021:612, paragraph 143).
153 First of all, it must be noted that the Court held, in paragraph 178 of the judgment of 11 July 2017, Viraj Profiles v Council (T‑67/14, not published, EU:T:2017:481), that exchange rate gains could also be taken into consideration, but did not, however, hold that the Commission was required to take them into account in every case.
154 Next, it should be noted that the judgments relied on by the applicants in paragraph 152 above did not concern an infringement of Article 2(6) of the basic regulation, as is the case here.
155 Lastly, it must be pointed out that it follows from those judgments that exchange rate costs may be included in SG&A costs, provided that there is a link between those costs, on the one hand, and the activity of producing and selling goods, on the other (judgments of 11 July 2017, Viraj Profiles v Council, T‑67/14, not published, EU:T:2017:481, paragraph 178, and of 22 September 2021, Severstal v Commission, T‑753/16, not published, EU:T:2021:612, paragraph 143). As follows from paragraphs 149 to 151 above, the applicants have not demonstrated that the exchange rate gains and losses were linked to the production or sales of the product under investigation and could therefore be taken into account in the calculation of the sales costs.
156 In the third place, the applicants consider that the Commission’s argument that the exchange rate gain of USD 101 million, linked to the dividend balance for Erdemir, and the exchange rate gain of USD 70 million, linked to the dividends to be distributed as regards Isdemir, do not relate to the production or sale of the product concerned was raised for the first time in the defence and cannot be taken into consideration.
157 According to settled case-law, the legality of an EU measure must be assessed on the basis of the facts and the law as they stood at the time when the measure was adopted, with the result that the General Court cannot substitute other grounds relied on for the first time before it for the grounds relied on during the investigation procedure (see, to that effect, judgment of 1 June 2017, Changmao Biochemical Engineering v Council, T‑442/12, EU:T:2017:372, paragraph 153 and the case-law cited).
158 In the present case, as early as the provisional disclosure, the Commission had explained that the applicants’ intra-group dividends had been excluded from the calculation of the SG&A costs following the investigation. The Commission definitively rejected the dividends in recitals 50 and 56 of the contested regulation, as follows from paragraph 149 above.
159 Moreover, the Commission rightly states that it is not required to specify all the often very numerous and complex matters of fact and law dealt with in a regulation imposing definitive anti-dumping duties. It is sufficient if it sets out the facts and the legal considerations having decisive importance (see, to that effect, judgments of 13 September 2010, Whirlpool Europe v Council, T‑314/06, EU:T:2010:390, paragraph 114, and of 30 June 2016, Jinan Meide Casting v Council, T‑424/13, EU:T:2016:378, paragraph 126). Similarly, in the case of a regulation, the statement of reasons may be limited to indicating the general situation which led to its adoption, on the one hand, and the general objectives which it is intended to achieve, on the other (see judgment of 20 January 2022, Commission v Hubei Xinyegang Special Tube, C‑891/19 P, EU:C:2022:38, paragraph 89 and the case-law cited).
160 It must be held that the essential part of the Commission’s reasoning relating to the rejection of the exchange rate gains linked to dividends was apparent from the contested regulation and, in particular, from recitals 50 and 56, with the result that the argument raised by the applicants in paragraph 156 above must be rejected.
161 In the light of the foregoing considerations, it must be concluded that the Commission did not infringe Article 2(6) of the basic regulation by excluding the exchange rate gains reported by the applicants from the SG&A costs.
162 In those circumstances, the fourth plea must be rejected as unfounded.
163 It follows from all of the foregoing that the action is dismissed.
Costs
164 Under Article 134(1) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. Since the applicants have been unsuccessful, they must be ordered to pay the costs, in accordance with the form of order sought by the Commission.
On those grounds,
THE GENERAL COURT (Eighth Chamber, Extended Composition)
hereby:
1. Dismisses the action;
2. Orders Ereğli Demir ve Çelik Fabrikaları TAŞ, İskenderun Demir ve Çelik AŞ and Erdemir Çelik Servis Merkezi Sanayi ve Ticaret AŞ to pay the costs.
Papasavvas | Kornezov | Petrlík |
Delivered in open court in Luxembourg on 8 May 2024.
V. Di Bucci | | S. Papasavvas |
Table of contents
Background to the dispute
Forms of order sought
Law
The first plea in law, alleging, on the one hand, infringement of the first three sentences and of the fifth sentence of Article 2(10), and of Article 2(10)(j) of the basic regulation and, on the other hand, infringement of Article 2(5) of that regulation
The first part of the first plea, relating to an infringement of Article 2(10)(j) of the basic regulation and a consequent infringement of the first three sentences and of the fifth sentence of Article 2(10) of that regulation
The second part of the first plea, relating to infringement of Article 2(5) of the basic regulation interpreted in the light of Article 2.2.1.1 of the Anti-Dumping Agreement
The second plea in law, alleging infringement of Article 2(10)(j) of the basic regulation, Article 2.4 of the Anti-Dumping Agreement and the principle of good administration
The first part of the second plea, regarding infringement of Article 2(10)(j) of the basic regulation
The second part of the second plea, relating to infringement of Article 2.4 of the Anti-Dumping Agreement and the principle of good administration
The third plea in law, alleging infringement of Article 2(5) and (6) of the basic regulation and of the first sentences of Article 2(10) of that regulation
The first part of the third plea, relating to infringement of Article 2(5) and (6) of the basic regulation
The second part of the third plea, regarding infringement of the first sentences of Article 2(10) of the basic regulation
The fourth plea in law, alleging infringement of Article 2(6) of the basic regulation interpreted in the light of Article 2.2.2 of the Anti-Dumping Agreement
Costs