Report for the Hearing in Case C-49/88

I — Facts and procedure

1. In July 1986 the Commission received a complaint lodged by the CMC-Engrais (Common Market Committee of the Nitrogen and Phosphate Fertilizer Industry) on behalf of producers of urea whose collective output accounts for substantially all Community production of the product in question. The complaint contained evidence of dumping and of material injury resulting therefrom, which was considered sufficient to justify the initiation of a proceeding.

2. The product allegedly being dumped is a nitrogen compound from the group of amides with the chemical formula CO(NH2)2. It is synthetically produced by the action of ammonia and carbonic acid. Its nitrogen content is in general 45-46%. Its physical form is usually pilled or granulated, sometimes liquid. Urea is mainly used as a nitrogen fertilizer. The product falls under Common Customs Tariff sub-headings ex 31.02 B and ex 31.02 C and corresponds to Nimexe codes ex 31.02 15 and ex 31.02 80.

3. On 11 October 1986 the Commission initiated an anti-dumping proceeding concerning imports of urea originating in Czechoslovakia, the German Democratic Republic, Kuwait, Libya, Saudi Arabia, the USSR, Trinidad and Tobago and Yugoslavia (Official Journal 1987 C 254, p. 3).

4. On 8 May 1987 the Commission adopted a regulation imposing a provisional anti-dumping duty on imports of urea originating in Saudi Arabia (Official Journal 1987 L 121, p. 11). The provisional antidumping duty was equal to the amount by which the duty per tonne net, free-at-Community-frontier, before duty, is less than ECU 133.

5. On 4 November 1987 the Council adopted a regulation imposing a definitive anti-dumping duty of 40% on imports of urea from Saudi Arabia (Official Journal 1987 L 317, p. 1).

II — Written procedure and conclusions of the parties

The application of Al-Jubail Fertilizer Company (SAMAD) and Saudi Arabian Fertilizer Company (SAFCO) was lodged at the Court Registry on 16 February 1988.

By order of 8 June 1988 the Court granted the Commission leave to intervene in Case 49/88 in support of the conclusions of the defendant.

Upon hearing the report of the Judge-Rapporteur and the views of the Advocate General the Court decided to open the oral procedure without any preparatory inquiry.

The applicants claim that the Court should:

The Council claims that the Court should:

The Commission claims that the Court should:

III — Submissions and arguments of the parties

Procedural guarantees

1. The applicants begin by explaining that Al-Jubail Fertilizer Company (SAMAD') and Saudi Arabian Fertilizer Company (SAFCO') manufacture urea in Saudi Arabia. The two companies are each joint ventures with a common shareholder, Saudi Basic Industries Corporation (SABIC)a company set up in 1976 by the Saudi Government for the purpose of establishing basic industries which utilize and upgrade the Kingdom's natural resources. In addition to being a producer, SAFCO acts as an agent for SAMAD on sales in Saudi Arabia and to some other countries, including the EEC. They claim that no urea manufactured by SAFCO has ever been exported to the EEC.

2. The Council contends that, throughout the proceedings, there was a constant and extensive exchange of information between the Commission and the applicants. Up to and including the letter from the applicants' lawyers dated 21 August 1987 there seems to be little dispute about the exchange of information as far as observance of the procedural guarantees is concerned. The Council considers irrelevant the applicants' argument that they requested disclosure of information concerning the basis on which the Commission intended to take provisional action. Article 7(4)(c)(iii) of Council Regulation (EEC) No 2176/84 provides only for the disclosure of information prior to the submission by the Commission of any proposal for final action. The Council contends that the disclosure provided for in Article (4)(b) and (c) of Regulation No 2176/84 relating to the contested regulation was granted.

Statement of reasons for the duty imposed

1. The applicants state that Article 190 of the Treaty requires that regulations, directives and decisions of the Council and the Commission shall state the reason on which they are based. They point out that the Commission regulation imposing provisional anti-dumping duties established a floor price. The regulation stated that the amount of the duty shall be equal to the amount by which the price per tonne net, free-at-Community-frontier, before duty, is less than ECU 133. The Council Regulation adopted a totally different method of imposing anti-dumping duties.

2. In the Council's opinion, the imposition of a provisional duty by the Commission and the imposition of a definitive duty by the Council are two separate acts. The Council in the case of the contested regulation did not change the relief from one form of the duty to another. By means of the contested regulation, the Council imposed a definitive duty for the first time, in the form of an ad valorem duty. The fact that the Commission had considered it necessary to prevent injury being caused to the Community industry during the proceeding and thus imposed a provisional duty does not bind the Council in any way.

3. The Commission in general agrees with the defence of the Council. Nevertheless, it wishes to submit arguments on inter alia the nature of the duty imposed.

Alleged manifest errors of appraisal in imposing a 40% duty

1. The applicants assert that the relatively high duty on urea from Saudi Arabia is manifestly inconsistent with the evidence. The decision that a higher level of duty would be necessary to relieve injury from Saudi Arabian urea rather than urea from Libya, Czechoslovakia and the German Democratic Republic, is manifestly incorrect and inconsistent with the evidence on the record. EEC import statistics, the antidumping complaint filed by the European urea producers and the replies given by the importers in the questionnaire all demonstrate that Saudi Arabian urea was priced consistently higher than that from other countries.

2. The Council states that, in setting the levy of duty imposed on urea from Saudi Arabia, the Commission used export price data supplied by Saudi Arabian exporters. The data was verified to the extent possible by Commission staff. The pricing data is more accurate for purposes of determining the appropriate level of duty than are average unit values derived from import statistics, or from unverified pricing data alleged in the complaint.

3. The Commission claims that the policy of the institutions is in general not to take into account developments since the reference period, because if recent developments always had to be considered the investigation would never end. That argument applies equally to events not under the control of the exporters. It would be inappropriate to take account of some developments occurring since the end of the reference period, and not others. To take all developments into account would mean, in effect, extending the reference period and bringing it up to date. It might often be difficult or impossible to do so, since companies themselves do not always have fully up-to-date information on all aspects of a reference period which have to be considered.

Alleged misinterpretation of the relevant rules and incorrect statement of the relevant facts

1. The applicants claim that several statements of fact set out in Council Regulation No 3339/87 with respect to imports from Saudi Arabia are extremely misleading. The Community institutions, by suggesting that a higher rate of duty would be necessary to relieve injury allegedly caused by imports from Saudi Arabia than that caused by imports from other countries, created the impression that Saudi Arabia was extremely aggressive in its pricing policy. As is demonstrated in the third ground of annulment, that finding is based on manifest errors of appreciation and is totally inconsistent with the evidence on the record available to the applicants.

2. With regard to the differences in quantities, the Council contends that, on the basis of the information verified by the Commission, it was considered appropriate to take account of differences in quantities by using a weighted average normal value, based on all sales. As many small deliveries benefit from the same quantity discount, since they are made under a contract covering a large amount, it was considered that by using a weighted average for determining normal value some account was taken of the differences in quantities.

3. With regard to the argument concerning the level of trade, the Commission states that it is always necessary to distinguish between arguments about discounts for quantities (which may exist irrespective of the nature of the customers who buy in large quantities) and the level of trade (which depends on the type of customer). The distinction must be kept in mind even though, in practice, different kinds of customers often buy in different quantities, and may obtain different quantity discounts. If an allowance is given for differences in quantities, the same allowance should not be given again under the heading level of trade. Article 2(10)(c) of Regulation No 2176/84 recognizes the point, by stating in so far as no account has been taken of them otherwise. Level-of-trade issues concern the type of customer, rather than the use which each customer makes of the goods he buys.

1 Language of the case: English.