Case T‑143/20

PT Pelita Agung Agrindustri
and
PT Permata Hijau Palm Oleo

v

European Commission

Judgment of the General Court (Fourth Chamber, Extended Composition), 14 December 2022

(Subsidies – Imports of biodiesel originating in Indonesia – Implementing Regulation (EU) 2019/2092 – Definitive countervailing duty – Article 8(1) and (2) of Regulation (EU) 2016/1037 – Price undercutting – Price pressure – Article 8(5) of Regulation 2016/1037 – Causal link – Article 3(1)(a)(iv) and (2) of Regulation 2016/1037 – Action consisting in ‘entrusting’ or ‘directing’ a private body to carry out a function constituting a financial contribution – Less than adequate remuneration – Income or price support – Article 3(2) and Article 6(d) of Regulation 2016/1037 – Benefit – Article 3(1)(a)(i) and (2) of Regulation 2016/1037 – Direct transfer of funds – Article 7 of Regulation 2016/1037 – Calculation of the amount of the benefit – Article 8(1) and (8) of Regulation 2016/1037 – Threat of material injury – Rights of the defence)

1. Common commercial policy – Protection against subsidisation practices of non-Member States – Injury – Discretion of the institutions – Judicial review – Limits

   (European Parliament and Council Regulation 2016/1037, Art. 8)

   (see paragraphs 24-26, 87)

2. Common commercial policy – Protection against subsidisation practices of non-Member States – Injury – Factors to be taken into consideration – Effect of subsidised imports on prices in the Union market for like products – Calculation of the undercutting margin – Calculation method – Discretion of the Commission – Obligation to make a fair comparison between the price of the product concerned and the price of the like product of the Union industry – Judicial review – Manifest error of assessment – Burden of proof

   (European Parliament and Council Regulation 2016/1037, Art. 8(1) and (2))

   (see paragraphs 27-31, 39, 40, 58-63)

3. EU law – Interpretation – Methods – Interpretation in the light of the international agreements concluded by the European Union – Interpretation of Regulation 2016/1037 in the light of the 1994 GATT Anti-Dumping Agreement – Taking into account of the interpretation adopted by the Dispute Settlement Body

   (Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade (1994 Anti-Dumping Agreement); European Parliament and Council Regulation 2016/1037)

   (see paragraphs 47, 56)

4. Common commercial policy – Protection against subsidisation practices of non-Member States – Injury – Factors to be taken into consideration – Effect of subsidised imports on prices in the Union market for like products – Calculation of the undercutting margin – Calculation method – Discretion of the Commission – No obligation on the Commission to determine price undercutting for the like product of the Union industry as a whole

   (European Parliament and Council Regulation 2016/1037, Art. 1(1), Art. 2(c) and Art. 8(1)(a) and (2))

   (see paragraphs 72-76)

5. 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 crude palm oil which render the export commercially unattractive – Included

   (European Parliament and Council Regulation 2016/1037, Art. 3(1)(a)(iv))

   (see paragraphs 94-129, 144, 145)

6. Common commercial policy – Protection against subsidisation practices of non-Member States – Course of the investigation – Use of the facts available where the parties concerned refuse to cooperate – Discretion – No obligation on the institutions to use the best possible facts

   (European Parliament and Council Regulation 2016/1037, Art. 28)

   (see paragraphs 133-138)

7. Common commercial policy – Protection against subsidisation practices of non-Member States – Subsidy – Definition – Income or price support within the meaning of Article XVI of the GATT 1994 – Measures that aim to allow biodiesel producers to have access to their main raw material at a price below the world market price – Included

   (European Parliament and Council Regulation 2016/1037, Art. 3(1)(b))

   (see paragraphs 154-160)

8. Common commercial policy – Protection against subsidisation practices of non-Member States – Subsidy – Definition – Benefit conferred on the beneficiary – Calculation of benefit – Discretion of the Commission – Adoption by the Commission of guidelines for the calculation of the amount of subsidy – Consequences – Self-limitation of its discretion

   (European Parliament and Council Regulation 2016/1037, Art. 3(1) and (2), Art. 6(d) and Art. 7(1)(a))

   (see paragraphs 163-172, 196-201, 215-220)

9. 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 – Setting of the reference price – Payment by a body governed by public law of the difference between the diesel reference price and the biodiesel price to the biodiesel producer – Included

   (European Parliament and Council Regulation 2016/1037, Art. 3(1)(a)(i))

   (see paragraphs 176-191)

10. Common commercial policy – Protection against subsidisation practices of non-Member States – Injury – Threat of material injury – Proof – Analysis of the factors to be taken into consideration – Account taken of post-investigation period data – Judicial review – Manifest error of assessment – Burden of proof

    (European Parliament and Council Regulation 2016/1037, Art. 2(d) and 8(1), (4) and (8))

    (see paragraphs 238-245, 268-272, 285-297)

11. Common commercial policy – Protection against subsidisation practices of non-Member States – Injury – Factors to be taken into consideration – Impact of the subsidy on Union production – Existence of factors and indicators showing a positive trend – Fact not excluding the conclusion that material injury was caused to the Union industry

    (European Parliament and Council Regulation 2016/1037, Art. 8(5))

    (see paragraph 258)

12. 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 the defence – Infringement – Conditions – Undertaking concerned better able to ensure its defence in the absence of procedural irregularity

    (European Parliament and Council Regulation 2016/1037, Art. 30)

    (see paragraphs 302-311)

Résumé

At the end of an anti-subsidy investigation initiated in 2018, the European Commission adopted Implementing Regulation 2019/2092 imposing a definitive countervailing duty on imports of biodiesel originating in Indonesia ( 1 ) (‘the product under consideration’).

The Indonesian companies PT Pelita Agung Agrindustri and PT Permata Hijau Palm Oleo, which produce biodiesel and export it to the European Union, brought an action for annulment of that implementing regulation.

In dismissing their action, the General Court provides clarifications as regards the analysis of price undercutting of imports subject to anti-subsidy investigations. In addition, it clarifies the scope of several concepts in Basic Anti-Subsidy Regulation 2016/1037. ( 2 )

Findings of the Court

In the first place, as regards the question whether there had been significant price undercutting by the imports of biodiesel from Indonesia as compared with the price of biodiesel originating in the European Union, the Court rejects the complaint alleging that the Commission did not carry out a proper comparison of those two prices. In that regard, the applicants claimed, more specifically, that, by comparing, in the context of one of the three methods of calculation used, all imports of biodiesel from Indonesia to all sales of biodiesel in the European Union without adjusting the price, the Commission disregarded the difference in terms of the cold filter plugging point (‘CFPP’) level between Indonesian biodiesel and biodiesel sold by Union producers.

In that regard the Court notes, first, that the Commission’s decision not to make price adjustments on the basis of CFPP levels was based on objective factors, namely the complexity of the competitive relationships, the difference in market conditions between biodiesels with different CFPP levels and the absence of a direct correlation between the CFPP level and the price. Second, the applicants have not shown that the adjustment requested was necessary in order to make the prices in question comparable.

As regards the applicants’ argument that an obligation on the Commission to establish undercutting for the product under consideration as a whole can be based, in the present case, on an application by analogy of the judgment in Changshu City Standard Parts Factory and Ningbo Jinding Fastener v Council, ( 3 ) the Court notes that the conclusions drawn from that judgment, which concerns the determination of the dumping margin, are not applicable to the analysis of the impact of dumped or subsidised imports on Union industry prices. The latter analysis involves a comparison of sales not of the same undertaking, as is the case with the determination of the dumping margin which is calculated on the basis of the data of the exporting producer concerned, but of several undertakings, namely the sampled exporting producers and the undertakings forming part of Union industry included in the sample. Having made that clarification, the Court states that, in any event, the Commission calculated price undercutting first for 20%, then for 55%, and finally for all of the Union producers’ sales.

In the second place, the Court rejects the complaint alleging a manifest error of assessment inasmuch as the Commission considered that, by means of restrictions on the export of crude palm oil (‘CPO’), established by the Indonesian Government in the form of an export tax and an export levy, ( 4 ) and de facto control through PTPN of domestic CPO prices, the Indonesian Government sought to obtain from CPO producers the provision of that product on the Indonesian market for less than adequate remuneration. According to the applicants, it could not be considered that, by those measures, the Indonesian Government had ‘entrusted’ or ‘directed’, within the meaning of the second indent of Article 3(1)(a)(iv) of the basic anti-subsidy regulation, ( 5 ) CPO suppliers to provide their goods in return for less than adequate remuneration.

In that regard, the Court notes that the second indent of Article 3(1)(a)(iv) of the basic anti-subsidy regulation is an anti-circumvention provision and that, in order to ensure that that provision is fully effective, ‘entrusting’ must be understood as including 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, and ‘directing’ must be understood as including any act of the government which consists, directly or indirectly, in exercising its powers over a private body so that that body performs such a function. That was the situation in the present case, since the export restrictions at issue had been designed by the government with the express aim of benefiting the Indonesian biodiesel industry by keeping domestic CPO prices artificially low.

Moreover, those export restrictions may also be classified as subsidies in the form of ‘income or price support within the meaning of Article XVI of the GATT 1994’ within the meaning of Article 3(1)(b) of the basic anti-subsidy regulation, inasmuch as they contribute to the income received by biodiesel producers by allowing them to have access to their main raw material and main cost component at a price below the world market price. ‘Income or price support’ within the meaning of that provision encompasses any act of the government which amounts, directly or indirectly, to maintaining or increasing revenue stability or prices, and the reference to Article XVI of the GATT means that account must also be taken of the effects of that action on exports and imports.

In the third place, the Court holds that the payments made by the Oil Palm Plantation Fund, a public body, to Indonesian biodiesel producers also constituted a ‘financial contribution’ by a government in the form of a direct transfer of funds, in accordance with Article 3(1)(a)(i) of the basic anti-subsidy regulation. Under that provision, the concept of ‘financial contribution’ covers all the financial means a government may actually use. Furthermore, in order to determine whether a direct transfer of funds may justify the imposition of a countervailing duty, the absence of consideration, or of equivalent consideration, on the part of the undertaking receiving that transfer must be taken into account. In that context, since the applicants have not proved that those payments were due in a purchase contract concluded between the Indonesian Government and the biodiesel producers, the Commission was entitled to recognise the existence of a financial contribution in the form of a direct transfer of funds.

The Court also rejects the complaints alleging that the Commission made an error in its calculation of the advantage conferred on Indonesian biodiesel producers by the payments made by the Oil Palm Plantation Fund. According to the applicants, the Commission should have determined the advantage conferred on biodiesel producers by deducting from the amount of countervailable subsidy the transport costs for the delivery of biodiesel, in accordance with Article 7(1)(a) of the basic anti-subsidy regulation. In that regard, the Court notes that, in order to calculate the amount of the subsidy, the Commission was fully entitled to rely on its Guidelines for the calculation of the amount of subsidy in countervailing duty investigations. ( 6 ) According to those guidelines, fees or costs may be deducted only if, inter alia, they are paid directly to the government during the investigation period and it is shown that their payment is compulsory in order to receive the subsidy. Those conditions being compatible with the basic anti-subsidy regulation, the applicants failed to prove both that the transport costs at issue were paid directly to the Indonesian Government and that they were compulsory.

Lastly, referring to settled case-law on anti-dumping matters, the Court confirms the Commission’s conclusion that, during the investigation period, imports from Indonesia had constituted a threat of material injury to the Union industry, in accordance with Article 8(8) of the basic anti-subsidy regulation.

( 1 ) Commission Implementing Regulation (EU) 2019/2092 of 28 November 2019 imposing a definitive countervailing duty on imports of biodiesel originating in Indonesia (OJ 2019 L 317, p. 42).

( 2 ) Regulation (EU) 2016/1037 of the European Parliament and of the Council of 8 June 2016 on protection against subsidised imports from countries not members of the European Union (OJ 2016 L 176, p. 55), as amended by Regulation (EU) 2018/825 of the European Parliament and of the Council of 30 May 2018 (OJ 2018 L 143, p. 1) (‘the basic anti-subsidy regulation’).

( 3 ) Judgment of 5 April 2017, Changshu City Standard Parts Factory and Ningbo Jinding Fastener v Council (C‑376/15 P and C‑377/15 P, EU:C:2017:269).

( 4 ) Crude palm oil is a production source for Indonesian biodiesel.

( 5 ) In accordance with this provision, a subsidy is deemed to exist when a government ‘entrusts or directs a private body to carry out one or more of the type of functions illustrated in points (i), (ii) and (iii) which would normally be vested in the government, and the practice, in no real sense, differs from practices normally followed by governments’.

( 6 ) Information from the Commission – Guidelines for the calculation of the amount of subsidy in countervailing duty investigations (OJ 1998 C 394, p. 6).