Case T‑300/16

Jindal Saw Ltd
and
Jindal Saw Italia SpA

v

European Commission

Judgment of the General Court (First Chamber, Extended Composition), 10 April 2019

(Subsidies — Imports of tubes and pipes of ductile cast iron originating in India — Implementing Regulation (EU) 2016/387 — Imposition of a definitive countervailing duty — Indian scheme establishing an export tax on iron ore and a dual railway freight charge placing the transport of iron ore for export at a disadvantage — Article 3(1)(a)(iv) of Regulation (EC) No 597/2009 (replaced by Regulation (EU) 2016/1037) — Financial contribution — Provision of goods — Action consisting of ‘entrusting’ a private body to carry out a function constituting a financial contribution — Article 4(2)(a) of Regulation No 597/2009 — Specificity of a subsidy — Article 6(d) of Regulation No 597/2009 — Calculation of benefit — Injury to the Union industry — Calculation of price undercutting and the injury margin — Causal link — Access to confidential data of the subsidy investigation — Rights of the defence)

1. Judicial proceedings — Measures of inquiry — Production of confidential data collected by the Commission in the framework of an anti-subsidy investigation — Measure of organisation of procedure granting the applicant access to that data for circumscribed purposes — Submission of new complaints based on that data but exceeding the scope of the measure of organisation of procedure — Inadmissibility

   (Rules of Procedure of the General Court, Arts 84, 88 to 92 and 103; Council Regulation No 597/2009, Art. 29)

   (see paragraphs 33-54)

2. Common commercial policy — Protection against subsidisation practices of non-Member States — Course of the investigation — Obligation of the Commission to disclose information to the parties concerned — Scope — Rights of defence — Infringement — Conditions — Undertaking concerned better able to ensure its defence in the absence of procedural irregularity

   (Council Regulation No 597/2009, Art. 30)

   (see paragraphs 74-94)

3. Common commercial policy — Protection against subsidisation practices of non-Member States — Subsidy — Definition — Interpretation in the light of the Agreement on subsidies and countervailing measures of 1994 — Decision of the WTO Dispute Settlement Body applying the relevant provision of that agreement — Relevance

   (Agreement on subsidies and countervailing measures of 1994, Art. 1; Council Regulation No 597/2009, Art. 3(1)(a)(iv))

   (see paragraphs 96-103)

4. Common commercial policy — Protection against subsidisation practices of non-Member States — Subsidy — Definition — Financial contribution by a government in the country of origin or export — Regime imposing restrictions on the export of iron ore which render the export commercially unattractive — Included

   (Council Regulation No 597/2009, Art. 3(1)(a)(iv))

   (see paragraphs 106-129)

5. Common commercial policy — Protection against subsidisation practices of non-Member States — Subsidy — Definition — Specificity of the subsidy — Subsidy specific to an enterprise, industry or group of enterprises or industries — Regime imposing restrictions on the export of iron ore which render the export commercially unattractive — Included

   (Council Regulation No 597/2009, Art. 4(2))

   (see paragraphs 159-168)

6. Common commercial policy — Protection against subsidisation practices of non-Member States — Subsidy — Definition — Benefit conferred on the beneficiary — Calculation of benefit — Reference period — Overall investigation period — Disappearance of the benefit after that period — Burden of proof

   (Council Regulation No 597/2009, Arts 3(2) and (5), and 15(1))

   (see paragraphs 180-182, 187-193)

7. Common commercial policy — Protection against subsidisation practices of non-Member States — Subsidy — Definition — Benefit conferred on the beneficiary — Calculation of benefit — Financial contribution consisting in the provision of goods — Calculation method that must make it possible to reflect the benefit actually conferred on each beneficiary — Consequences

   (Council Regulation No 597/2009, Art. 3(2) and (6)(d))

   (see paragraphs 205-227)

8. Common commercial policy — Protection against subsidisation practices of non-Member States — Injury — Establishing a causal link — Obligations of the institutions — Calculation of the price undercutting of the imports at issue — Obligation to make a fair comparison between the price of the product concerned and the price of the like product of the EU industry — Comparison of prices obtained at different levels of trade — Infringement

   (Council Regulation No 597/2009, Art. 8)

   (see paragraphs 235-259)

Résumé

By its judgment in Jindal Saw and Jindal Saw Italia v Commission (T‑301/16), ( 1 ) of 10 April 2019, the General Court annulled Regulation 2016/387 imposing a definitive countervailing duty on imports of tubes and pipes of ductile cast iron originating in India ( 2 ) in so far as it concerns Jindal Saw Ltd. That definitive countervailing duty was imposed by the Commission following an investigation initiated in response to complaints lodged by three companies of the Saint-Gobain Pam group, the main producer in the European Union, calling into question a number of subsidies introduced by India to benefit the Indian steel industry. The first applicant, Jindal Saw, is one of two Indian exporting producers that cooperated in the Commission’s anti-subsidy investigation. Jindal Saw Italia, the other applicant, is a subsidiary of Jindal Saw in the European Union.

First, the Court rejected as inadmissible the additional observations that the applicants had submitted after examining certain confidential documents relating to the anti-subsidy investigation, to which they had been granted limited access following the adoption of measures of inquiry and measures of organisation of procedure by the Court. In that regard, the Court pointed out that access to that data, whose classification as confidential data within the meaning of Article 29 of the basic anti-subsidy regulation ( 3 ) was not contested and whose disclosure the applicants could not claim pursuant to that regulation, had been granted for the purpose of verifying the explanations provided in the Commission’s defence in relation to a clerical error made during the administrative procedure. Since the applicants did not dispute the veracity of those explanations but claimed to have found other errors that supported some of their complaints, the Court specified that the present case could not be assimilated to a situation in which the Court had decided, pursuant to Article 103(3) of the Rules of Procedure, to generally bring to the attention of a main party confidential information or material produced by the other main party. Consequently, the applicants could not claim to have had general access to new information, the discovery of which would have enabled them to put forward new pleas or complaints which should have been regarded as admissible under Article 84 of the Rules of Procedure.

As regards the merits of the case, and, more specifically, the countervailable subsidies identified in the contested regulation, the applicants took issue, inter alia, with the conclusion that the restrictions on the export of iron ore, introduced by the Indian Government in the form of an export tax and the rail freight dual pricing regime for iron ore, constituted a ‘financial contribution by the government’ within the meaning of Article 3(1)(a) of the basic anti-subsidy regulation. In particular, according to the applicants, it could not be considered that, by those measures, the Indian Government had ‘entrusted’, within the meaning of the second indent of Article 3(1)(a)(iv) of that regulation, Indian iron ore producers to supply iron ore to the domestic steel industry. In that regard, however, the Court noted that the latter provision is an anti-circumvention measure and that, in order to ensure full effectiveness, the term ‘entrust’ is to be understood as any action of the government which amounts, directly or indirectly, to conferring on a private body the responsibility of performing a function of the type referred to in Article 3(1)(a)(i) to (iii) of that regulation. The Court found that that was so in the specific circumstances of the present case, since the export restrictions in question had been designed and introduced by the government with the explicit aim of providing iron ore on the Indian market and had subsequently been monitored and adjusted in order to achieve that aim, by rendering the export of iron ore commercially unattractive.

As regards the existence of a ‘benefit’ within the meaning of Article 3(2) of the basic anti-subsidy regulation, the Court also found that, when it concerns, as in the present case, a financial contribution relating to goods with fluctuating prices, what matters is whether the calculation of the benefit for the whole investigation period highlighted the existence of a positive subsidy margin for the recipients concerned. The Court consequently found that it was irrelevant, for the assessment of the legality of the contested regulation, that a more recent calculation may show that the financial contribution in question no longer provided any benefit to Indian recipients at a given time. In response to the complaint alleging an infringement of the second subparagraph of Article 15(1) of the basic anti-subsidy regulation, according to which no countervailing measures are to be imposed, inter alia, if it has been demonstrated that the subsidies no longer confer any benefit on the exporters concerned, the Court also noted that as long as the regulations which establish the export restrictions in question continue to exist, it cannot be excluded that, in the near future, international prices will increase again or that Indian prices will fall, with the consequence that there would be a benefit again.

On the other hand, the Court upheld the complaints alleging errors made by the Commission in the calculation of the benefit conferred on Jindal Saw by the export restrictions at issue. In that regard, the applicants claimed, inter alia, breach of Articles 3(2) and 6(d) of the basic anti-subsidy regulation, in so far as the Commission had determined the benefit conferred on Jindal Saw by taking into account an average price for the purchase of iron ore in India which did not include actual transport costs incurred by the latter, but a ‘standard weighted average transport cost’ calculated on the basis of the transport costs reported by the two Indian exporting producers that cooperated in the investigation. In that context, the Court found that, in the light of its wording, objective and context, Article 6 of the basic anti-subsidy regulation cannot be interpreted, in a situation such as that in the present case, where only three exporting producers were identified and where two of them cooperated in the investigation, as allowing the Commission to calculate the benefit conferred on each of the two exporting producers that cooperated in the investigation on the basis of an average purchase price including transport costs corresponding to an average based on costs incurred by those two exporting producers rather than on the basis of the prices actually paid by each of them, including their actual transport costs. Thus, as far as possible, the method used by the Commission to calculate the advantage must make it possible to reflect the benefit actually conferred on the recipient. Since it was apparent from the Commission’s replies to the questions put by the Court that the transport costs actually incurred by Jindal Saw were higher than the ‘standard weighted average transport cost’ taken into account by the Commission, the error made by the Commission was liable to call into question the legality of the contested regulation by invalidating the entire analysis relating to the very existence of a subsidy.

Lastly, the Court also upheld the complaints alleging errors made by the Commission in the determination of the existence of injury to the EU industry. In that regard, the Court recalled that the obligation to carry out an objective examination of the impact of the subsidised imports, as set out in Article 8(1) of the basic anti-subsidy regulation, requires a fair comparison to be made — which must therefore be made at the same level of trade — between the price of the product concerned and the price of the like product of the EU industry when sold in the territory of the European Union. However, investigation of the case had shown that the Commission had relied on the prices of sales made by the selling entities linked to the main EU producer in order to determine the price of the like product of the EU industry while not taking into account the prices of sales of Jindal Saw’s selling entities to determine the price of the product concerned produced by Jindal Saw, even though both the main EU producer and Jindal Saw made a very significant part of their sales in the EU through selling entities. Thus, the Court found that there had been a breach of Article 8(1) of the basic regulation in so far as the Commission had performed the undercutting calculation by comparing the prices of the products in question at different levels of trade. Since that error concerned assessments that constituted the necessary basis for the imposition of a countervailing duty on imports of the product concerned produced by Jindal Saw, the Court held that, for that reason too, the contested regulation should be annulled in so far as it concerns Jindal Saw.

( 1 ) The present judgment is linked to the judgment in Jindal Saw and Jindal Saw Italia v Commission (T‑301/16, EU:T:2019:234), by which the Court annulled Commission Implementing Regulation (EU) 2016/388 of 17 March 2016 imposing a definitive anti-dumping duty on imports of tubes and pipes of ductile cast iron (also known as spheroidal graphite cast iron) originating in India in so far as it concerns Jindal Saw Ltd.

( 2 ) Commission Implementing Regulation (EU) 2016/387 of 17 March 2016 imposing a definitive countervailing duty on imports of tubes and pipes of ductile cast iron (also known as spheroidal graphite cast iron), originating in India (OJ 2016 L 73, p. 1).

( 3 ) Council Regulation (EC) No 597/2009 of 11 June 2009 on protection against subsidised imports from countries not members of the European Union (OJ 2009 L 188, p. 93), as amended by Regulation No 37/2014.