19.11.2005   

EN

Official Journal of the European Union

L 302/1

(1)

The Commission, by Regulation (EC) No 771/2005 (2) (the provisional Regulation) imposed a provisional anti-dumping duty on imports of certain stainless steel fasteners and parts thereof, falling within CN codes 7318 12 10, 7318 14 10, 7318 15 30, 7318 15 51, 7318 15 61 and 7318 15 70 originating in the People’s Republic of China (PRC), Indonesia, Taiwan, Thailand and Vietnam.

(2)

It is recalled that the investigation of dumping and injury covered the period from 1 July 2003 to 30 June 2004 (IP). The examination of trends relevant for the injury analysis covered the period from 1 January 2001 to 30 June 2004 (period considered).

(3)

Following the imposition of the provisional anti-dumping measures, certain interested parties submitted comments in writing.

(4)

Those parties who so requested were granted an opportunity to be heard by the Commission.

(5)

The Commission continued to seek and verify all information it deemed necessary for its definitive findings.

(6)

Parties were informed of the essential facts and considerations on the basis of which it was intended to recommend the imposition of a definitive anti-dumping duty and the definitive collection of amounts secured by way of the provisional duty. They were also granted a period within which to make representations subsequent to this disclosure.

(7)

The oral and written comments were considered and, where deemed appropriate, taken into account in the definitive findings.

(8)

Following the imposition of provisional measures, one importer and its association questioned the representativeness of the Community industry, as set out under recital 113 of the provisional Regulation, within the meaning of Article 5(4) of the basic Regulation. However, no evidence was produced to substantiate this claim. The investigation has confirmed that the Community industry accounted for approximately 54 % of the Community production during the IP and has standing within the meaning of Article 5(4) of the basic Regulation.

(9)

The cooperating Thai exporting producers contended upon disclosure that the non-confidential questionnaire replies of the Community producers were not sufficiently detailed and not filed in accordance with Article 19 of the basic Regulation. It was alleged that a lack of information in the non-confidential questionnaire replies denied cooperating exporters an effective opportunity to defend their interests and allegedly put them at a disadvantage as compared with other parties, namely the Community industry, in this procedure. However, the injury information as set out in Section E of the provisional Regulation provides all interested parties with verified data on an aggregated basis. Thus, they all have a sufficiently precise picture of the facts with regard to the injury and causality situation to enable them to defend their interests. All parties are treated in the same way and there is no imbalance between the different interested parties with regard to disclosure. Furthermore, the non-confidential questionnaire replies together with the information contained in the provisional Regulation ensured respect for the rights of defence of all parties. The argument was therefore rejected.

(10)

It is recalled that, in the course of the provisional investigation, doubts arose as to whether nuts could be regarded as a single product with other stainless steel fasteners and parts thereof (SSF). In this respect, a number of aspects needed to be explored further, e.g. whether and to what extent bolts and nuts are marketed together as a system, to what extent these types are developed together, etc. Further examination was also needed as to what extent the producers in the Community are able to offer these systems. For the purpose of the preliminary findings, it was therefore provisionally decided not to include nuts normally declared within CN code 7318 16 30 in the product definition.

(11)

Following the imposition of provisional measures, Community producers as well as importers, provided evidence that nuts and bolts are neither developed nor produced and marketed together. While nuts are typically used in conjunction with bolts, they are not typically sold as a set. Also, bolts can be used as fastening devices without nuts, which shows that there can be different end–uses between bolts and nuts. This is borne out by the imports from some of those producers in the countries concerned, which produce and sell either nuts or bolts, as well as by the fact that the sampled Community producers manufacture screws and bolts but not nuts. This is particularly apparent in the case of the Philippines, from where virtually all imports consisted of nuts without any corresponding imports of bolts. Furthermore, as stated above, bolts are not necessarily combined with nuts and washers. This is also obvious from the description of the HS-code 7318 15: ‘other screws or bolts whether or not with their nuts or washers’. Furthermore, it is pertinent to note that the Community industry does not keep the necessary machinery to produce nuts and did not manifest any intention to produce nuts in the future.

(12)

Therefore, the findings set out in recital 13 of the provisional Regulation to exclude nuts, not imported as part of a set with their screws and bolts, from the product scope are confirmed. Consequently, in line with the conclusions drawn in recitals 14 and 105 of the provisional Regulation, the proceeding should be terminated as regards the Philippines.

(13)

Following the imposition of provisional measures, the cooperating Thai exporting producers alleged that nuts and bolts are normally marketed and developed together and, therefore, if nuts were to be excluded from the product scope, bolts should be excluded from the scope of the proceeding as well. However, they did not substantiate this allegation. Consequently, and in light of the findings set out in recitals 11 and 12 that nuts are not marketed and developed together with bolts, the claim was rejected and only nuts were excluded from the scope of the proceeding.

(14)

Furthermore, several importers and their association reiterated their claim to further limit the investigation to two CN codes, namely 7318 15 61 (hexagon socket head screws of stainless steel) and 7318 15 70 (hexagon bolts of stainless steel). To this end, they referred to an alleged lack of production by the Community industry of all other fasteners being subject to this investigation, i.e. SSF normally declared within CN codes 7318 12 10 (other wood screws of stainless steel), 7318 14 10 (self tapping screws of stainless steel), 7318 15 30 (screws and bolts without heads of stainless steel) and 7318 15 51 (slotted and cross-recessed screws of stainless steel). In this respect, they provided as evidence some orders which some Community producers could not deliver. Furthermore it was claimed that bolts and screws are manufactured on different machines.

(15)

It should be recalled, as stated in recital 15 of the provisional Regulation, that the investigation confirmed that types of SSF falling within CN codes 7318 12 10, 7318 14 10, 7318 15 30 and 7318 15 51 are produced in the Community. Consequently, the sampled Community producers (i) have the machinery to produce these other types of SSF; and (ii) face competition for these types from the dumped product concerned. The information with regard to some orders which could not be supplied by the Community industry relates to a period outside the IP which, normally, shall not be taken into account according to Article 6(1) of the basic Regulation. In any event, this fact does not show that these products are not produced by the Community industry. In addition, the investigation established that, in the absence of unfair dumped competition from the countries concerned, the Community industry is able to increase production in order to meet demand of such items. In this context, it should be considered that the Community industry has significant spare capacity (see table before recital 127 in the provisional Regulation). Consequently, the claim of the importers could not be accepted.

(16)

The cooperating Thai exporting producers asked to limit the product scope to the CN codes 7318 12 10 (other wood screws of stainless steel), 7318 15 30 (screws and bolts without heads of stainless steel) and 7318 15 61 (hexagon socket head screws of stainless steel). To this end, they argued that neither bolts (CN code 7318 15 70), nor self-tapping, slotted and cross-recessed screws of stainless steel (CN codes 7318 14 10 and 7318 15 51) should be considered as one single product category with the other fasteners under investigation because of alleged (i) different physical properties, nature and quality of these fasteners, (ii) different end-uses, (iii) different consumers’ tastes and habits and (iv) different CN codes, which in their view would show that bolts and screws do not constitute one single category of product.

(17)

In the case at hand, the investigation has shown that all types of fasteners under consideration share, from a user’s perspective, similar basic physical and technical characteristic and uses, i.e. they are threaded stainless steel metal pins, used to join things, by means of rotation of the fastening devices. Thus, all these fasteners fall under the same four digit heading of the Combined Nomenclature. Consequently, the claim to further limit the product scope has to be rejected.

(18)

Since no other comments were submitted, the findings concerning the product concerned and the like product as set out in recitals 10 to 18 of the provisional Regulation are hereby confirmed.

(19)

No comments concerning sampling of exporting producers in Taiwan, Community producers and importers have been submitted following the imposition of provisional measures. The findings set out in recitals 19 to 32 of the provisional Regulation are hereby confirmed.

(20)

No new comments concerning MET were submitted following the imposition of provisional measures. The findings set out in recitals 33 to 54 of the provisional Regulation are hereby confirmed.

(21)

One cooperating exporting producer in Vietnam expressed its disappointment at the rejection of its claim for IT, despite its cooperation with the investigation. It also said that the rejection of its claim for IT, as well as those of two other Vietnamese exporters, lead to the imposition of the same provisional anti-dumping duty on imports from all exporting producers in Vietnam.

As set out in recital 60 of the provisional Regulation, the company in question was not able to demonstrate that it met the conditions of Article 9(5) of the basic Regulation for being granted IT. Furthermore, no argument or evidence was submitted which could alter this finding and, therefore, Article 2(7)(a) of the basic Regulation had to apply to Vietnam, as a whole. This means that the same measure applies to all exporting producers in Vietnam.

(22)

In the absence of any other comments, the findings set out in recitals 55 to 61 of the provisional Regulation concerning individual treatment are hereby confirmed.

(23)

Taiwan had provisionally been chosen as the analogue market economy third country for the purpose of establishing normal value for exporting producers not granted MET. Following the imposition of provisional measures, no party raised any comments concerning the determination of the normal value in the analogue country. Thus, the findings set out in recitals 62 to 64 of the provisional Regulation are hereby confirmed.

(24)

Four Thai exporting producers argued that the selling, general and administrative (SG&A) expenses and the profit realised on domestic sales in another country, in this case Taiwan, cannot be used for constructing their normal value. However, as set out in recital 80 of the provisional Regulation, these exporting producers had no representative sales of the like product, or other products in the same general category, in the ordinary course of trade. It was therefore, necessary to rely on another reasonable method for the calculation of SG&A expenses and profit as provided for by Article 2(6)(c) of the basic Regulation. In this respect, the use of Taiwanese SG&A expenses and profit was considered the most reasonable method because of (i) the representative domestic market, in terms of volumes and competition in terms of prices, for the like product in Taiwan; and (ii) the fact that the Taiwanese SSF industry controls the majority of SSF producers in all the countries under investigation, including some in Thailand (see recital 71 of the provisional Regulation). No information was provided to show that the profit so used would exceed the profit normally realised by other exporters or producers on sales of the same general category of products in Thailand.

(25)

No other comments were raised concerning the methodology applied for the determination of normal value and thus the methodology set out in recitals 65 to 72 of the provisional Regulation is hereby confirmed.

(26)

In the absence of any comments, the findings set out in recital 73 of the provisional Regulation are hereby confirmed.

(27)

In the absence of any comments, the findings set out in recital 74 of the provisional Regulation are hereby confirmed.

(28)

In the absence of any comments, the findings set out in recital 76 of the provisional Regulation are hereby confirmed.

(29)

One Taiwanese exporting producer objected to the methodology used to determine normal value as set out in recital 79 of the provisional Regulation. The company claimed that it did not classify the different types of the product concerned according to the specifications given by the Commission as some of these fasteners were speciality fasteners. It also claimed that the company had demonstrated during the on-spot verification, by way of drawings, samples and sales documentation, the unique product characteristics of its speciality fasteners exported to the Community.

(30)

In fact, the evidence collected during the verification visit indicated that these products are not falling within the CN codes under investigation. In these circumstances, it was considered appropriate not to consider the exports of these products for the purposes of this investigation. Findings for this company, including those on normal value as set out in recital 79 of the provisional Regulation, are based on its remaining exports which fell within the description of the product concerned.

(31)

For the normal value of its remaining exports, the company suggested some adjustments to the cost of production used for the provisional determination of its normal value (see recital 79 of the provisional Regulation).

(32)

However, these adjustments were based on data which were not submitted either with the response to the questionnaire or during the verification visit and, thus, were not verifiable. Furthermore, these adjustments were not supported by any information available on the record. Consequently, this claim concerning the cost of production should be rejected.

(33)

Another Taiwanese exporting producer claimed that there was certain double counting in the cost of production and the SG&A expenses used for the determination of normal value. It argued that the SG&A expenses ratio submitted in the Profit and Loss table of its response to the questionnaire was not the correct one and that the SG&A expenses ratio given during the verification visit should be used instead.

(34)

In this respect, it should be noted that the company did not make any correction on its Profit and Loss table before the verification visit. The company provided a significantly revised table for the SG&A expenses at the very last stage of the verification, when it was too late for it to be verified. Consequently, and since the revised SG&A expenses did not link to other verified information available on the record, the claim was rejected and data derived from the Profit and Loss table submitted in the questionnaire response have been maintained in the dumping calculation, in line with the provisions of Article 6(8) of the basic Regulation.

(35)

The same Taiwanese exporting producer claimed that scrap materials must be deducted from the cost of the raw materials. The company claimed that since scrap is obtained from the production process, the income from its sales should be allowed to offset cost of production. However, it has not reported the amount of any such income. In any event, any income from other products or by-products is not relevant for the calculation of the cost of production of the like product as it has not been a practice historically utilised by the company in allocating costs. Therefore, the claim of the company should be rejected and the provisional findings confirmed.

(36)

No other comments were submitted and, therefore, the findings set out in recitals 77 to 79 of the provisional Regulation are hereby confirmed.

(37)

One Thai exporting producer having some domestic sales made several claims relating to the calculation of the cost of production and the SG&A expenses used for the determination of its normal value. Furthermore, it stated that should the claims be accepted its domestic sales in the ordinary course of trade would be representative and could be used for the determination of normal value in Thailand.

(38)

It should be noted that this company provided several revised versions of its questionnaire response during the verification visit to an extent that significantly impeded the investigation as it was not possible to reconcile any of the different versions with its accounts. Nevertheless, all this information was examined as far as possible in line with the provisions of Article 6(8) of the basic Regulation. It is noted that the cost of production, as reported by the company for a large number of product types, was significantly understated, in particular the cost of raw materials, and it was, therefore, corrected for the provisional dumping calculations. As the company has not provided any substantiated information regarding its cost of production that would require a change in the dumping calculations, its claim regarding calculation of the cost of production has to be rejected.

(39)

This exporting producer claimed that income from sales of scrap should be deducted from the cost of raw materials in the cost of production of the like product. However, no income from sales of scrap has been reported in the company’s Profit and Loss Table. In any event, any income from other products or by-products is not relevant for the calculation of the cost of production of the like product as it has not been a practice historically utilised by the company in allocating costs.

(40)

Concerning the exporting producer’s claim to use a different level of SG&A expenses, it was established that, even if the claim was accepted, it would not lead to a situation where the company’s domestic sales could have been used as a basis for establishing normal value, as they would still not be made in the ordinary course of trade.

(41)

Consequently, these claims regarding scrap and SG&A expenses should be rejected and the findings set out in recital 80 of the provisional Regulation are hereby confirmed.

(42)

In the absence of any comments, the findings set out in recital 81 of the provisional Regulation are hereby confirmed.

(43)

In the absence of any comments, the findings set out in recitals 82 to 91 of the provisional Regulation concerning the establishment of the export price pursuant to Article 2(8) of the basic Regulation for all countries concerned are hereby confirmed.

(44)

In the absence of any comments, the methodology and the findings set out in recitals 92 and 93 of the provisional Regulation concerning the comparison between normal value and export price are hereby confirmed.

(45)

In the absence of any comments concerning the determination of the dumping margin, the methodology set out in recitals 94 to 100 of the provisional Regulation is hereby confirmed.

(46)

In the absence of any comments, the definitive dumping margins, expressed as a percentage of the CIF import price at the Community border, duty unpaid, are the following:

(47)

In the absence of any comments, the definitive dumping margins, expressed as a percentage of the CIF import price at the Community border, duty unpaid, are the following:

(48)

In the absence of any comments on the calculation of the provisional dumping margin for the two cooperating exporting producers in Malaysia, the findings as set out in recital 104 of the provisional Regulation are hereby confirmed. Consequently, as no dumping was found for any Malaysian exporting producer, the proceeding should be terminated as regards imports of the product concerned from Malaysia.

(49)

In the absence of any comments on the situation concerning the Philippines, no dumping margin has been established. Consequently, as stated above in recital 12, the proceeding should be terminated as regards imports of the product concerned from the Philippines.

(50)

In the absence of any further comments on the calculation of the provisional dumping margins for Taiwan, as set out in recitals 106 to 108 of the provisional Regulation, the definitive dumping margins, expressed as a percentage of the CIF import price at the Community border, duty unpaid, are the following:

(51)

One Thai exporting producer made claims relating to the calculation of its individual dumping margin insofar as product type classifications, production quantities and the use of various grades of stainless steel were concerned.

(52)

The claims were examined on the basis of the verified information and certain appropriate corrections were made leading to the determination of a revised individual dumping margin for this exporting producer. As the basis for establishing the dumping margin for any non-cooperating Thai exporters was the level of the highest dumping margin found for a cooperating Thai exporter, the residual dumping margin was revised accordingly.

(53)

Consequently, the definitive dumping margins, expressed as a percentage of the CIF import price at the Community border, duty unpaid, are the following:

(54)

In the absence of any further comments on the calculation of the provisional dumping margin for Vietnam, as set out in recital 110 of the provisional Regulation, the definitive dumping margin for all companies in Vietnam, expressed as a percentage of the CIF import price at the Community border, duty unpaid, is confirmed as 7,7 %.

(55)

The cooperating Thai exporting producers contested the analysis methodology set out in recital 114 of the provisional Regulation, i.e. that some data have been established for the sampled Community producers only (transaction prices, investment and return on investment, wages, profitability, cash flow and ability to raise capital), whereas the other indicators (market share, production, capacity and capacity utilisation, sales volume and value, growth, stocks, employment and productivity) additionally included data of another Community producer, constituting with the sampled producers, the Community industry. They argued that this approach is (i) not objective within the meaning of Article 3(2) of the basic Regulation and that (ii) Article 17(4) of the basic Regulation allegedly does not permit such an approach.

(56)

It is normal practice in anti-dumping proceedings to analyse injury factors for the full Community industry. However, in cases where the industry consists of a high number of producers, resort is made to sampling. The purpose of sampling is to provide that detailed data can be collected and verified from a limited number of producers within the time available. This data concerns factors such as prices, wages, investments, profit, return on investment, cash flow and ability to raise capital, where it would be unfeasible to verify the data for the full industry within the time available. For other factors, such as market share, sales volume and production, data is usually readily available for the full industry. To base the injury analysis merely on data from sampled producers would ignore usable data from other producers, thereby leading to an incomplete assessment. Therefore, in the interests of having as complete an assessment as possible within the time available in this case, data received and verified for trends in all injury factors from the sampled producers was complemented by information relating to the full industry.

(57)

No other comment has been submitted concerning Community production and the definition of the Community industry and, therefore, the findings set out in recitals 111 to 114 of the provisional Regulation are hereby confirmed.

(58)

The cooperating Thai exporting producers claimed that Thai imports should not have been assessed cumulatively with dumped imports of SSF originating in the PRC, Indonesia, Taiwan and Vietnam, because of an alleged lack of competition with imports from the latter mentioned countries in terms of volumes, average prices and market share. They pointed out that in 2002, volume and market share of Thai imports dropped by 29 % and 35 % respectively, whereas already in 2002 an increase can be observed with regard to the other countries concerned. Furthermore, they noted that since 2003, average Thai import prices increased by 2 %.

(59)

It should be recalled that the margins of dumping established in relation to the imports from each country concerned are more than de minimis as defined in Article 9(3) of the basic Regulation, i.e. 2 %, and the volume of imports from each country concerned is above the threshold of 1 % market share set by Article 5(7) of the basic Regulation. Furthermore, it is pertinent to note that the analysis should not focus on 2002 in isolation, but on the overall picture during the period considered, i.e. from 2001 to the IP. Overall, Thai imports’ volume and market share in fact increased significantly whilst their prices dropped considerably. Consequently, overall, the pattern of Thai imports is in line with the trends established for all countries concerned. Furthermore, it is recalled that the SSF imported from the countries concerned were alike in all respects, they are interchangeable, they are marketed in the Community through comparable sales channels and under similar commercial conditions and compete with the SSF produced in the Community. Therefore, and in line with Article 3(4) of the basic Regulation, it is confirmed that a cumulative assessment of the effects of the dumped imports of the product concerned is appropriate.

(60)

No other comment has been submitted concerning the analysis of the situation on the Community market and, therefore, the findings set out in recitals 115 to 126 of the provisional Regulation are hereby confirmed.

(61)

Following the imposition of provisional measures, no comments were submitted concerning production, capacity, capacity utilisation, sales volume, sales price, market share, growth, stocks, employment, productivity, the magnitude of dumping and the recovery from past dumping of the Community industry. Therefore, the findings set out in recitals 127 to 133, 137, 142, 143, 145 and 146 of the provisional Regulation are hereby confirmed.

(62)

The cooperating Thai exporting producers contended that the profitability situation of the sampled Community producers had improved and did not reflect any injury. They further argued that the Community industry has not achieved the minimum profit margin of 5 % considered adequate and achievable in the absence of dumping because of the investments made by the sampled Community producers in 2002 and 2003. They also argued to disregard the fact that the Community industry benefited from the use of low priced stainless steel because this should be considered as a normal market situation from which all operators have benefited.

(63)

It should be recalled, as set out in recitals 149 and 150 of the provisional Regulation, that the profitability situation was neither the only factor, nor the central factor, showing injury in the present case. According to Article 3(5) of the basic Regulation, not any one or more of the injury factors set out in that Article necessarily give decisive guidance as to the state of the Community industry. Investments were necessary to remain competitive, as set out in recital 138 of the provisional Regulation, so that no negative impact on profitability can be attributed to such investment. Furthermore, as set out in recital 136 of the provisional Regulation, the positive effect on the sampled Community producers’ profitability from the rising stainless steel prices during the IP was strictly temporary and was a factor which may have benefited other economic operators for a very short period.

(64)

Thus, the allegation that the profitability situation does not reflect injury has to be rejected and the findings set out in recitals 134 to 136 of the provisional Regulation confirmed.

(65)

The cooperating Thai exporting producers pointed out that the rising investments, return on investment, cash flow as well as the ability to raise capital did not indicate any injury.

(66)

As mentioned in recital 147 of the provisional Regulation, it should be recalled that the factors ‘investment’ and ‘ability to raise capital’ have not been considered as factors showing injury during the period considered.

(67)

With regard to return on investment, however, the overall improvement over the period considered needs to be viewed in the context of (i) the temporary and exceptional nature of the profitability situation of the sampled Community producers during the IP as already set out in recitals 136 and 139 of the provisional Regulation and (ii) the increased usage of leased machinery, which has not been considered as an investment. Leased capital goods were not included in the investments, but their increased usage contributed to the profit earned. These two reasons explain the artificially high increase on return on investment during the IP.

(68)

Concerning cash flow, the fact remains that over the period considered its development deteriorated by 36 %, and this clearly indicates injury over the period considered. Consequently, the findings set out in recitals 138 to 141 of the provisional Regulation should be confirmed.

(69)

The cooperating Thai exporting producers further contended that the 10 % increase in labour costs per employee over the period considered does not show injury in the present case.

(70)

It is recalled that the provisional conclusion on injury with regard to wages had acknowledged an increase in wages to reflect reward for improved productivity and compensation for inflation. However, the fact remains that employment decreased by 5 % over the period considered, which was assessed as a sign of injury. Consequently, the findings set out in recital 144 of the provisional Regulation should be confirmed.

(71)

In summary, the conclusions set out in recitals 147 to 150 of the provisional Regulation are confirmed. Overall, the negative trend indicators (significant losses in market share, growth, loss in employment, unsatisfactory improvement of profitability/return on investments and cash flow) significantly outweigh the positive trends (small increase of production and sales volume, stocks reduction, continuing investments, decrease in labour costs in absolute terms and ability to raise capital).

(72)

The Thai exporting producers and an importers association submitted comments on the provisional causation analysis with regard to certain factors which are set out below. In the absence of any other comments, the findings set out in the provisional Regulation concerning the effect of dumped imports (recital 152 of the provisional Regulation), the impact of imports from other third countries (recitals 153 to 159 of the provisional Regulation) and the development of consumption on the Community market (recital 160 of the provisional Regulation) are hereby confirmed.

(73)

The cooperating Thai exporting producers, one importer and its association focused on the impact of the currency depreciation of the USD compared to the euro, notably during 2003, which they alleged favoured the Chinese and Thai exports to the Community. Thus, they argued that at least partially, the price decrease and consequent injurious effect on the Community industry should not be attributed to dumping practices by exporters in the PRC and Thailand, but to such exchange rate development (in case of the PRC in particular due to the Yuan/USD peg).

(74)

First of all, it is noted that the invoice currencies of all export transactions from the countries concerned are not known. Therefore, the effect of any exchange rates fluctuation cannot be estimated. Furthermore, as regards injury, irrespective of whether the low import prices may also be somewhat due to currency movements, actual import prices during the IP are used to establish the level of undercutting and the subsequent impact on the Community industry. The undercutting margins were found to be significant (see recitals 125 and 126 of the provisional Regulation).

(75)

In light of the above, the argument regarding the possible effect of exchange rate movements must be rejected.

(76)

The Thai exporting producers further submitted that the injury endured by the Community industry should be attributed to a lack of competitiveness due to allegedly outdated production facilities.

(77)

However, it should be recalled that the Community industry constantly invested over the period considered in order to replace obsolete machinery and to maintain ‘state of the art’ production facilities. Thus, no outdated non-competitive production technique exists which could have broken the causal link between dumped imports from the countries concerned and their injurious effects on the Community industry. The argument should be therefore rejected and the findings set out in recital 161 of the provisional Regulation concerning the competitiveness of the Community industry are confirmed.

(78)

The cooperating Thai exporting producers also contended that the injury might have been caused by unstable market conditions. In this context, they referred to the temporary steel price increases and the bargaining power of large customers.

(79)

It is noted, however, that the temporary steel price increases have not inflicted any injury on the sampled Community producers. To the contrary, it was beneficial to them, since profitability temporarily increased. With regard to the impact of large customers, it is noted that unfair competition in the form of dumped imports essentially contributes to their bargaining power. Thus, a direct linkage between imports from the countries concerned and the behaviour of importers/distributors can be observed. Overall, therefore, the conditions on the Community market have not broken the causal link between dumped imports and the injury sustained by the Community industry.

(80)

In summary, an appreciation of the above comments on causation and for the reasons set out in recitals 151 to 162 of the provisional Regulation, it is confirmed that no other factor has broken the causal link between the imports from the five countries concerned taken together and the material injury sustained by the Community industry.

(81)

A number of importers/distributors and Thai exporting producers alleged that measures may not be in the interests of the Community.

(82)

The importers/distributors, pointed out that measures would have a direct impact on their profit margins as they would not be able to pass on the costs of measures to their customers through higher prices.

(83)

First of all, these parties did not substantiate their allegations. Moreover, as already stated in the provisional Regulation, no indication exists that anti-dumping measures would put the economic viability of importers/distributors at risk. Moreover, their profit margins were, over the period considered, well above the profitability of the Community industry. It is therefore confirmed that any advantage importers/distributors may gain from the non-imposition of anti-dumping measures is outweighed by the interest of the Community industry in having the unfair and injurious trading practices from the countries concerned redressed. The findings set out in recitals 164 to 170 of the provisional Regulation should be therefore confirmed.

(84)

The Thai exporting producers commented that the imposition of measures would increase costs for the European car industry and this would not be in the Community’s interest. However, they did not substantiate this alleged impact on users. On the basis of information available, i.e. the reply of one user, a rolling stock vehicles producer, the impact of measures on downstream users would be negligible. The findings set out in recitals 173 and 174 of the provisional Regulation concerning interests of users and consumers should therefore be confirmed.

(85)

Having examined the various interests involved, it is confirmed for the reasons given in recitals 163 to 175 of the provisional Regulation that from an overall Community interest perspective no interest overweighs the Community industry’s interest to have anti-dumping measures imposed with the aim of eliminating the trade distorting effects resulting from dumped imports.

(86)

In view of the conclusions reached with regard to dumping, injury, causation and Community interest, it is considered appropriate to impose definitive anti-dumping measures in order to prevent further injury being caused to the Community industry by the dumped imports. For the purpose of determining the level of these measures, account was taken of the dumping margins found during the IP and of the amount of duty necessary to eliminate the injury sustained by the Community industry.

(87)

The necessary price increase to eliminate injury was determined on a per-company basis, by comparing the weighted average import price of the product concerned with the non-injurious price of the like product sold by the Community industry on the Community market. The price difference was expressed as a percentage of the CIF import value.

(88)

The non-injurious price has been obtained by taking the weighted cost of production of the Community industry together with a profit margin of 5 %. In the absence of comments, this profit margin is confirmed to be that that the Community industry could achieve in the absence of dumped imports. It reflects the achievable profit margin for similar product groups of the Community industry not subject to unfair competition, e.g. fasteners which do not fall under the CN codes of the product scope of the present investigation.

(89)

In the light of the foregoing, it is considered that, in accordance with Article 9(4) of the basic Regulation, a definitive anti-dumping duty should be imposed on imports of SSF from the People’s Republic of China, Indonesia, Taiwan, Thailand and Vietnam.

(90)

With regard to the level of duty, in the case of two cooperating exporting producers (one in Taiwan and one in the PRC), the injury elimination level was found to be lower than the dumping margin. In these cases, the level of the duty should be restricted to the injury elimination level. In all other cases, the level of the duty should be set at the level of the dumping margin found pursuant to Article 9(4) of the basic Regulation.

(91)

On the basis of the above, the definitive duty rates should be as follows:

(92)

The Thai exporting producers drew attention to Article 15 of the WTO Anti-dumping Agreement, which provides that special regard is to be given to the special situation of developing countries when consideration is being given to the imposition of anti-dumping measures. However, it was not substantiated that the case at hand affects the essential interests of Thailand, as stipulated by this provision. In these circumstances, it is considered appropriate to impose an anti-dumping duty on imports from Thailand at the abovementioned rates.

(93)

The individual company anti-dumping duty rates specified in this Regulation were established on the basis of the findings of the present investigation. Therefore, they reflect the situation found during that investigation with respect to these companies. These duty rates (as opposed to the countrywide duty applicable to ‘all other companies’) are thus exclusively applicable to imports of products originating in the countries concerned and produced by the companies and thus by the specific legal entities mentioned. Imported products produced by any other company not specifically mentioned in the operative part of this Regulation with its name, including entities related to those specifically mentioned, cannot benefit from these rates and shall be subject to the duty rate applicable to ‘all other companies’.

(94)

Any claim requesting the application of these individual company anti-dumping duty rates (e.g. following a change in the name of the entity or following the setting up of new production or sales entities) should be addressed to the Commission (3) forthwith with all relevant information, in particular any modification in the company’s activities linked to production, domestic and export sales associated with, for example, that name change or that change in the production and sales entities. If appropriate, the Regulation will then be amended accordingly by updating the list of companies benefiting from individual duty rates.

(95)

In view of the magnitude of the dumping margins found and in the light of the level of the injury caused to the Community industry, it is considered necessary that the amounts secured by way of the provisional anti-dumping duty imposed by the provisional Regulation, i.e. Regulation (EC) No 771/2005, be collected definitively to the extent of the amount of the duty definitively imposed by the present Regulation. For exporting producers whose rate of definitive duty is lower than the provisional duty, the amounts provisionally secured in excess of the definitive duty should be released,

19.11.2005   

EN

Official Journal of the European Union

L 302/14

(1)

Following an investigation (the previous investigation), the Council, by Regulation (EC) No 969/2000 (2), amended the measures originally imposed by Regulation (EEC) No 3068/92 (3) on imports of potassium chloride originating, inter alia, in Russia (the existing measures).

(2)

In March 2004, by means of a notice published in the Official Journal of the European Union  (4), the Commission launched, on its own initiative, a partial interim review of the existing measures to examine whether they should be amended to take account of the enlargement of the European Union to 25 Member States on 1 May 2004 (Enlargement).

(3)

The results of that partial interim review showed that it was in the interests of the Community to provide for the temporary adaptation of the existing measures so as to avoid a sudden and excessively negative impact on importers and users in the ten new Member States immediately following Enlargement.

(4)

To this end, in May 2004, by Regulation (EC) No 1002/2004 (5), the Commission accepted undertakings from two exporting producers in Russia, namely JSC Silvinit and JSC Uralkali for a period of one year. In June 2005, by Commission Regulation (EC) No 858/2005 (6) new undertakings, which expire on 13 April 2006, were accepted from the two exporting producers in Russia. In addition, in order to provide for the exemption from the anti-dumping duties imposed by Regulation (EEC) No 3068/92 on imports made under the terms of the undertakings, Regulation (EEC) No 3068/92 was amended by Regulation (EC) No 992/2004 (7).

(5)

It should also be noted that all references to ‘the Community’ or ‘the Community of 15’ in the present Regulation shall be taken to mean, unless otherwise specified, the Community as constituted immediately before Enlargement.

(6)

In January 2004, separate requests were received from JSC Silvinit and JSC Uralkali (the applicants) for individual partial interim reviews of the existing measures pursuant to Article 11(3) of the basic Regulation.

(7)

The applicants alleged and provided sufficient prima facie evidence that a comparison of normal value based on their own costs/domestic prices and their export prices to the Community would lead to a removal of dumping. Therefore, the continued imposition of the existing measures at the existing levels, which were based on the level of dumping previously established, were no longer necessary to offset dumping.

(8)

Having determined, after consulting the Advisory Committee, that sufficient evidence existed for the initiation of partial interim reviews, the Commission published notices of initiation and commenced an investigation (8).

(9)

The investigation was limited to dumping and covered the period from 1 April 2003 until 30 March 2004 (the investigation period or IP).

(10)

The Commission officially advised the representatives of the exporting country, the applicants and the Community industry of the initiation of the interim reviews and gave all parties directly concerned the opportunity to make their views known in writing and to request a hearing. The Commission also sent questionnaires to the applicants. Questionnaires replies were received from the applicants and from an exporting trader in Russia related to one of the applicant companies.

(11)

The Commission sought and verified all information it deemed necessary for the purpose of the determination of dumping and carried out verifications of the replies to the questionnaire at the premises of the following companies:

(12)

The product is the same as in previous investigation, i.e. potassium chloride (potash or KCl) and is generally used as agricultural fertiliser, directly, blended with other fertilisers or after transformation into a complex fertiliser known as NPK (nitrogen, phosphorus, potassium). The potassium content is variable and is expressed as a percentage of the weight of potassium oxide (K2O) on the dry anhydrous product. It is also used as a raw material in the manufacture of certain industrial and pharmaceutical products.

(13)

Potash is generally commercialised in either a standard/powder form (standard potash) or in other than standard form that includes — but is not limited to — a granular form (granular potash). The product is generally classified into three basic categories, based on the K2O content, namely:

(14)

It should be recalled that in the previous investigation it was found that imports of certain special mixtures or blends with an unusually high content of potash which do not fall under any of the CN codes for potash indicated above, should also be considered as the product concerned. This conclusion was reached as such mixtures and blends shared the same basic physical and chemical characteristics and have the same uses as the basic categories mentioned above. Accordingly, such mixtures or blends falling within CN codes ex 3105 20 10, ex 3105 20 90, ex 3105 60 90, ex 3105 90 91 and ex 3105 90 99 were also included in the present investigation and constitute part of the product concerned.

(15)

It was established that, as there were no differences in the physical or chemical properties between the product exported from Russia to the Community and the product produced in Russia and sold on the Russian domestic market, they were considered to be like products for the purposes of the present investigation.

(16)

As far as the determination of normal value is concerned, it was first established whether the total volume of each of the applicants’ total domestic sales of the like product were representative in comparison with their respective total export sales volumes to the Community. In accordance with Article 2(2) of the basic Regulation, domestic sales were considered to be representative when each of the applicants’ domestic sales volumes of the like product constituted at least 5 % of their respective total export sales volumes to the Community during the investigation period. On this basis, for both applicants, overall domestic sales of the product concerned during the IP were found to have been made in representative quantities.

(17)

Subsequently, by defining the product types in accordance with the TARIC codes under which the product is classified (i.e. by standard grade or other than standard grade, including granular) and by the packing or form in which it is shipped (i.e. in bulk, in bags or in containers), an analysis was made as to whether the domestic sales of each product type were representative. Domestic sales of a particular product type were considered sufficiently representative when the total domestic sales volume of that type during the IP represented 5 % or more of the total sales volume of the comparable product type exported to the Community.

(18)

As a result of this analysis, it was found that one exporting producer, JSC Silvinit, had only sold one exported product type in representative quantities on the domestic market. For the other exporting producer, JSC Uralkali, it was found that all exported product types had been sold in representative quantities on the domestic market.

(19)

An examination was also made as to whether the domestic sales of each product type could be regarded as having been made in the ordinary course of trade by establishing the proportion of profitable sales to independent customers of the type in question.

(20)

In this regard, it was found for JSC Uralkali that its domestic sales prices for the best sold product type exported to the Community (the best sold export type) accounting for over 99 % of such exports, showed unusual trends during the investigation period. It was established that, during the investigation period, 77 % of domestic sales of the best sold exported type had been made to one customer in Russia and that the sales price to this particular customer had, in the space of one month in the middle of the investigation period, more than doubled. Price rises for the same product type sold to other domestic customers also rose at the same time, but only by a margin of around 40 %. Examination of price rises for other potash types sold domestically showed similar price increases of around 40 % during the investigation period.

(21)

In view of this particular market situation with regard to pricing for a key product type used to calculate the dumping margin, pursuant to Article 2(3) of the basic Regulation it is considered that such sales do not permit a proper comparison. Given the significance of such sales in the domestic sales volumes of the type in question, and the importance of this type in the overall export volume of potash exported by the company concerned to the Community, it is considered reasonable to disregard these specific sales to the customer in question. The remaining domestic sales of this product type to other customers were found to be below the 5 % threshold considered necessary for them to be regarded as representative. Accordingly, normal value for this product type was calculated on the basis of the cost of production of the exporting producer concerned, plus a reasonable amount for selling, general and administrative costs and profit. The amounts for selling, general and administrative costs and for profit were based on actual data pertaining to production and sales, in the ordinary course of trade, of the like product, by the exporting producer under investigation in accordance with the first sentence of Article 2(6) of the basic Regulation.

(22)

It was submitted by Uralkali that the ‘particular market situation’ foreseen in Article 2(3) of the basic Regulation is not applicable for the sales of the product concerned to the customer in question and therefore the domestic prices for the product type concerned should have been used to establish normal value. In this regard it was argued (i) that the provision of Article 2(3) of the basic Regulation would not apply in case of ‘artificially high prices’ and (ii) that special conditions applied to only one specific client could not be considered to constitute a ‘particular market situation’ for the Russian domestic market as a whole. Moreover, it was claimed that the prices in question were resulting from ‘market forces’ and reflected ‘the actual situation on the market’.

(23)

With regard to the above, it should be noted that the particular market situations referred to in Article 2(3) of the basic Regulation are not exhaustive and that the particularity of the market should be assessed, inter alia, in light of price variations and trends rather than solely on the basis of the absolute level of the prices. In this case both low priced sales transactions and high priced transactions were excluded from the calculations since they did not reflect a level of prices of a lasting nature and since those prices did not appear to reflect market forces as such trends were not found for any other product type or for any other client of Uralkali. Secondly, Article 2(3) of the basic Regulation provides that normal value may be constructed in situations where ‘… because of a particular market situation such sales do not permit a proper comparison …’. This clearly allows that, as in the current situation, sales to a customer which are considered not to permit a proper comparison may be disregarded as a basis for establishing normal value. This conclusion does not relate to the Russian market as a whole but rather to these sales of Uralkali.

(24)

As concerns JSC Silvinit, where the sales volume of one product type, sold at a net sales price equal to or above the unit cost, represented more than 80 % of the total sales volume of that type, and where the weighted average price of that type was equal to or above the adjusted unit cost, normal value was based on the actual domestic price, calculated as a weighted average of the prices of all domestic sales of that product type made during the IP, irrespective of whether these sales were profitable or not.

(25)

For the other product type of JSC Silvinit, which was sold in insufficient quantities for the domestic prices to provide an appropriate basis for the establishment of the normal value, another method had to be applied. In this case, constructed normal value was used, in accordance with Article 2(3) of the basic Regulation. Normal value was constructed by adding to the adjusted unit cost of the exported type, a reasonable percentage for selling, general and administrative expenses and a reasonable margin of profit, on the basis of actual data pertaining to production and sales, in the ordinary course of trade, of the like product, by the exporting producer under investigation in accordance with the first sentence of Article 2(6) of the basic Regulation.

(26)

It was claimed by Uralkali that the profit margin used in the construction of the normal value did not properly take into account the adjustments of the gas costs, as the profits used for the constructed normal values were derived form the company’s accounts before adjustments. However, this claim could not be accepted since in accordance with the chapeau of Article 2(6) of the basic Regulation the actual profit amounts realised by the company in the domestic market should be used for the construction of the normal value.

(27)

As concerns energy costs, such as electricity and gas used in the mining and production processes of the product concerned, the investigation established that these costs form a significant proportion of the total cost of manufacturing of potash producers, not only in Russia but in other producing countries as well. In this regard, it was submitted by the Community industry that the energy cost per unit of electricity and gas paid by the Russian companies to their utilities suppliers did not reasonably reflect the actual production cost of the electricity and gas purchased.

(28)

In view of these allegations, it was considered appropriate in the present case to also compare the applicants’ energy purchase costs per unit to those of another major potash producer with similar production methods, output levels and similar natural advantages. As there are no other producers of potash in Russia, this information was sought and obtained from a large producer of potash in Canada.

(29)

The data provided showed that the energy requirements of the Canadian producer were similar to those of the applicant Russian producers and that electricity and gas purchased by this company was derived from domestic hydro-electric power and major gas fields, as is the electricity and gas used by the Russian companies. The comparison showed that the cost per unit for electricity paid by the Canadian producer was not too dissimilar to that paid by the Russian producers.

(30)

As concerns gas supplies, it was established on the basis of data found in the published annual report for 2003 of the Russian gas provider OAO Gazprom (whose regional distributor was also the supplier to the exporting producers in question), that the domestic price of gas paid by the two Russian Producers was around one fifth of the export price from Russia. The same report clearly stated that ‘OAO Gazprom did not make any profit in the domestic market’. While there is no officially available information as to the profitability of Russian domestic gas prices, quotes from Russian government sources in the press together with data obtained from specialized market intelligence sources and governmental websites all strongly suggest that the gas prices charged to domestic customers were made at prices far from cost recovery levels. Moreover, the price of gas paid by the two Russian Producers was significantly lower than the gas price paid by the Canadian producers.

(31)

In view of the above, it was therefore considered that the prices charged by the regional Russian gas provider to the Russian potash producers in the investigation period could not reasonably reflect the costs associated with the production of gas when compared to the exported price of gas from Russia and the price of a Canadian gas provider to a major industrial user in Canada. In accordance, therefore, with Article 2(5) of the basic Regulation, an adjustment to the cost of production for each of the applicants was made. In the absence of any other reasonable basis, such an adjustment was made using information concerning the price of gas for export, net of transport costs, customs export tax, value added tax and excise duty.

(32)

In this regard, it was submitted by one of the applicants that the charges for gas were properly reflected in its accounting records, therefore no adjustment was warranted under Article 2(5) of the basic Regulation. In response to this argument it is not disputed that the company has correctly accounted for the invoiced prices paid, rather the adjustment is justified by the fact that the price of the gas purchased does not reasonably reflect the cost of production and distribution of the gas.

(33)

On the adjustment for the gas costs, it was also submitted by the Russian Authorities that the Commission had not taken into account the different transportation costs between the gas sold domestically for industrial usage and the gas sold for export. It should be recalled (see recital 31) that the comparison which has led to the adjustment has been made between the gas prices actually paid by the companies and the export prices charged by the Russian gas provider OAO Gazprom for export from Russia, net of transport costs, customs export tax, value added tax and excise duty. Therefore, this claim was rejected.

(34)

One of the applicants submitted that it had a significantly lower unit cost of production during the first quarter of 2004 (i.e. the last quarter of the investigation period) due to increased efficiency and lower maintenance costs and that this lower unit cost should be considered as the basis for the cost of production for the whole investigation period. This request was not granted as the appropriate basis for establishing such costs is the full investigation period, rather than costs occurring in an exceptional, shorter, period.

(35)

As also concerns cost of production, it was submitted by the Community industry that depreciation of capital assets should, for the purpose of the applicants’ cost of production, be based on the replacement costs of such assets (e.g. new mine shafts and machinery etc.). In this regard, it was argued that depreciation based conventionally on the acquisition (historical) value of the capital assets would not, in accordance with Article 2(5) of the basic Regulation, reasonably reflect the costs associated with the production of the product concerned. It was submitted, therefore, that an upward adjustment to the Russian producers’ costs was required.

(36)

As concerns this submission, it was noted that depreciation based on the acquisition value and residual economical life of capital assets appears to be in line with accounting practices in the mining industry. Therefore, in order to establish whether the depreciation included in the cost of production data reasonably reflected the costs associated with the production of the product concerned, the investigation focused on the way the historical values of the assets had been established.

(37)

In this regard, the on-the-spot verification visits to the Russian producers showed that the original value of their assets had been determined on the basis of valuations carried out during the privatization process which took place in 1993. These asset values were subsequently revised between 1993 and 1997 as a result of the application of ‘revaluation coefficients’ issued by the Russian Government to deal with hyperinflation. At the end of 1997, following a Decree of the Russian Government, independent valuations of assets were carried out by independent evaluators. Three basic criteria were adopted in establishing these asset values, one of which was the replacement value of the asset. The result of these independent assessments are reflected in the opening Balance Sheet of the applicants in 1998.

(38)

Nevertheless, despite this upward valuation of the original values, it was noted that the asset values of the applicants, when expressed as a ratio of production to value of the assets, still appear to be significantly lower than the asset values of the companies comprising the Community industry and a major producer with similar extraction and production capacity in Canada. Such an assessment, however, does not take into account the obsolescence and lower technological level of the assets of the Russian producers obtained prior to the privatisation which took place in 1993.

(39)

Therefore in the absence of any substantive evidence showing that depreciation had not been correctly reflected in the accounts of the exporting producers, it is not considered possible at the present time to make any adjustment to depreciation costs in the cost of production data used for establishing the normal value of the applicants.

(40)

The Community industry also submitted that an allocation for environmental protection costs comparable to those incurred by the Community producers should also be factored into the cost of production calculations. It was found, however, that the applicants had incurred such costs and had accounted for them in the cost of production calculations. With regard to whether such costs should be of a similar proportion or magnitude to those of the Community producers, it is considered that as long as the applicants have met the environmental protection levels prescribed by the Russian authorities and that the costs involved in meeting such levels are correctly reflected in their records, no adjustment is required. As this was found to be the case for both of the applicants, no adjustment was warranted for environmental costs.

(41)

With regard to Silvinit, it was found that most of the company’s sales of potash to the Community in the investigation period were made via an unrelated Swiss trading company. For the purposes of the present investigation and pursuant to Article 2(8) of the basic Regulation, the prices, actually paid or payable to Silvinit by this trading company, were taken as the basis for calculating the export price.

(42)

However, it was found that two transactions were made via Silvinit’s related Russian trading company, International Potash Company (IPC), to a related company in Belgium called Ferchimex AS (Ferchimex), which processed the imported potash into a product not covered by the investigation. In accordance with Article 2(9) of the basic Regulation, the prices charged by IPC to Ferchimex may be disregarded if they are considered to be unreliable. It was noted that for both of the transactions, the sales price to Ferchimex were at a broadly similar price for the same types when sold to independent customers in the Community. Moreover, both transactions concerned only minor quantities. Therefore, they were both included in the overall determination of the export price.

(43)

As concerns Uralkali, it was found that all of the company’s sales of potash to the Community in the investigation period were made directly to a trader situated in Cyprus called Fertexim Ltd which acted as an exclusive distributor for Uralkali. For such sales, the export price was established in accordance with Article 2(8) of the basic Regulation, i.e. on the basis of the prices actually paid or payable by Fertexim.

(44)

The normal value and export prices for both of the applicants were compared on an ex-works basis. For the purpose of ensuring a fair comparison between the normal value and the export price, due allowance was made for differences which affect price comparability in accordance with Article 2(10) of the basic Regulation.

(45)

Accordingly, allowances for differences in respect of discounts, transport, insurance, handling, loading and ancillary costs, packing and credit costs have been granted where applicable and supported by evidence.

(46)

In accordance with Article 2(11) of the basic Regulation, for each exporting producer the adjusted weighted average normal value by product type was compared to the adjusted weighted average export price of each corresponding type of the product concerned sold to the Community.

(47)

The comparison showed the existence of dumping for both of the companies concerned, however, at significantly lower levels than those established previously. As a weighted average of all types exported to the Community, expressed as percentages of the total CIF Community frontier price, duty unpaid, the dumping margins established were as follows:

(48)

In accordance with Article 11(3) of the basic Regulation, an analysis was made as to whether the circumstances with regard to dumping had changed significantly and if any change could be said to be of a lasting nature. In this regard, it was found that the change in the dumping margins resulted from a lowering of the normal values of the applicants.

(49)

In this regard, it should be noted that in the present investigation, normal value was established on the basis of the applicants’ costs and prices. Moreover, contrary to the findings in the previous investigation, domestic consumption for potash has been steadily increasing in the last few years and, overall, the domestic sales prices of both Russian producers are profitable.

(50)

As concerns the lasting nature of export sales prices on markets other than the Community, neither of the applicants was able to provide detailed data on a transaction-by-transaction basis at producer level. Aggregated data was, however, provided by country of destination and by product type. This was considered sufficient for the purposes of the present partial interim review as an exact determination of sales prices on such markets is not an absolute requirement. In the absence of detailed data, and in view of (i) the variety of delivery terms used for such sales (e.g. cif, fob, FCA etc.) (ii) the different logistical arrangements and combinations (e.g. rail + sea, rail only etc.) (iii) the differences in distances and transport and handling costs to various destinations in Asia and South America, the Commission was not in a position to determine with exactitude the sales prices to each country. There were, however, indications that sales price levels to the non-Community markets were, allowing for transport costs, of the same order of magnitude as sales to the Community.

(51)

In view of all these factors, it is considered appropriate to amend the existing measures insofar as they concern the applicants by lowering the dumping margins to those established in the present investigation.

(52)

According to Article 9(4) of the basic Regulation, the amount of the anti-dumping duties should not exceed the margins of dumping established, but they should be less than those margins if such lesser duties would be adequate to remove the injury of the Community Industry. As the existing duties for the applicants had been calculated on the basis of the dumping margins, and as the new dumping margins are lower than the ones previously calculated, the duties should be adjusted to the lower dumping margins found in this investigation, namely 23,0 % for JSC Silvinit and 12,3 % for JSC Uralkali.

(53)

The interested parties were informed of the essential facts and considerations on the basis of which it was intended to recommend that the anti-dumping duties originally imposed by Regulation (EEC) No 3068/92 be amended. They were given the opportunity to comment and to request a hearing. All comments received were taken into consideration where appropriate.

(54)

Following disclosure of the essential facts and considerations on the basis of which it was intended to recommend that the anti-dumping duties originally imposed by Regulation (EEC) No 3068/92 be amended, both of the applicants offered price undertakings in accordance with Article 8(1) of the basic Regulation.

(55)

The Commission, by Decision 2005/802/EC (9) accepted the undertakings offered by the applicants. The reasons for accepting these undertakings are set out in that Decision.

(56)

The existing measures are applicable to eight CN codes and comprise fixed amounts ranging from EUR 19,61/tonne to EUR 40,63/tonne, depending on the product type. During the current investigation period, however, it was found that almost all the exports by the applicants to the Community were limited to a product type falling under one CN code.

(57)

Accordingly, in view of the absence of information on the other product types, and as the particular type of potash concerned appears now to be the most commercialised, the most reasonable approach for implementing the amended duties is considered to be the replacement of all the fixed amounts with a single ad valorem duty for all potash types manufactured by the applicants,

1.

Article 1 shall be amended as follows:

2.

in Article 1a, paragraph 1 shall be replaced by the following:

‘1.   Imports declared for release into free circulation shall be exempt from the anti-dumping duties imposed by Article 1, provided that they are produced by companies from which undertakings are accepted by the Commission and whose names are listed in the Commission Regulation (EC) No 858/2005 and in Commission Decision No 2005/802/EC, as from time to time amended, and have been imported in conformity with the provisions of the same Commission acts.’

19.11.2005   

EN

Official Journal of the European Union

L 302/22

(1)

On 9 September 1993, the Council, by Regulation (EEC) No 2474/93 (2) imposed a definitive anti-dumping duty of 30,6 % on imports of bicycles originating in the People’s Republic of China (the PRC), (the original measures). On 18 January 1997, following an anti-circumvention investigation, this duty was extended by Council Regulation (EC) No 71/97 to imports of certain bicycle parts originating in the PRC.

(2)

On 14 July 2000, following an expiry review pursuant to Article 11(2) of the basic Regulation, the Council, by Regulation (EC) No 1524/2000 (3), decided that the abovementioned measures should be maintained.

(3)

On 14 July 2005, following an interim review pursuant to Article 11(3) of the basic Regulation (the previous investigation), the Council by Regulation (EC) No 1095/2005, amended the definitive anti-dumping duty on imports of bicycles originating in the PRC. The amended rate of the duty applicable to the net, free-at-Community-frontier price, before duty, is 48,5 % for imports of bicycles originating in the PRC.

(4)

The Commission received a request lodged by Giant China Co., Ltd (the applicant) for a partial interim review pursuant to Article 11(3) of the basic Regulation.

(5)

The request was based on the prima facie evidence, provided by the applicant, that the circumstances on the basis of which measures were established have changed and that these changes are of lasting nature. The applicant alleged, inter alia, that the circumstances with regard to market economy status (MES) had changed significantly. In particular, the applicant claimed that it now fulfilled the requirements to be granted MES pursuant to Article 2(7)(b) of the basic Regulation. Furthermore, the applicant provided evidence showing that a comparison of normal value based on its own cost/domestic prices and its export prices to the enlarged European Union, would lead to a dumping margin significantly below the level of the current measure. Accordingly, the applicant alleged that the continued imposition of the measure at its current level was no longer necessary to offset dumping.

(6)

The Commission, after consulting the Advisory Committee, initiated on 19 February 2005 by a notice (4) a partial interim review limited in scope to the examination of whether the applicant operated under market economy conditions as defined in Article 2(7)(c) of the basic Regulation or alternatively whether the applicant fulfilled the requirements to have an individual duty in accordance with Article 9(5) of the basic Regulation.

(7)

The Commission sent a questionnaire and a claim form for MES pursuant to Article 2(7) of the basic Regulation to the applicant.

(8)

The investigation covered the period from 1 January 2004 to 31 December 2004 (hereinafter referred to as investigation period or IP).

(9)

The Commission officially advised the exporting producer, the representatives of the exporting country and the Community producers of the initiation of the review. Interested parties were given the opportunity to make their views known in writing, to submit information and to provide supporting evidence and to request a hearing within the time-limit set out in the notice of initiation. All interested parties who so requested and showed that there were reasons why they should be heard were granted a hearing.

(10)

The product concerned is the same as that covered by the original and previous investigations, namely bicycles and other cycles (including delivery tricycles), not motorised, currently classifiable within CN codes 8712 00 10, 8712 00 30 and 8712 00 80 (product concerned). No evidence was found suggesting that circumstances with regard to the product concerned had significantly changed since the imposition of the measures.

(11)

In the framework of the investigation which was concluded by Regulation (EC) No 1095/2005, it was established that all the Chinese exporting producers applying for MES did not meet the criteria set in Article 2(7)(c) of the basic Regulation, for the reasons set out in recitals 31 to 33 of the said Regulation. The applicant was amongst the companies denied MES within the framework of that investigation.

(12)

In view of the fact that findings regarding the MES claims of the previous investigation remain valid also for the year 2004, i.e. the IP of the current investigation, it was decided, after consulting the Advisory Committee, not to grant MES to the applicant, since it did not meet the criteria set in Article 2(7)(c) of the basic Regulation.

(13)

In the framework of the previous investigation it was also concluded that the Chinese exporting producers having applied for IT did not meet the necessary requirements for individual treatment as set out in Article 9(5) of the basic Regulation for the reasons set out in recitals 45 to 47 of Regulation (EC) No 1095/2005.

(14)

The applicant was amongst the companies that did not meet the necessary requirements for individual treatment in the framework of the previous investigation and the findings of that investigation remain valid also for the IP of the current investigation. In this respect, it was established, that all PRC exporting producers were subject to significant State control with regard to determining their export prices and quantities of the product concerned as explained in recital 13. It was, therefore, concluded that the applicant does not meet the requirements for individual treatment in the framework of the current investigation.

(15)

Given the above, neither MES nor IT could be granted to the applicant. On this basis, it is considered that, in the case of the applicant, the circumstances with regard to dumping have not changed significantly compared to the situation prevailing during the investigation period used in the investigation which led to the amended measures. Therefore, it is concluded that the partial interim review of the anti-dumping measures applicable to imports into the Community of bicycles originating in the People’s Republic of China should be terminated without amending the measures in force,

19.11.2005   

EN

Official Journal of the European Union

L 302/24

(1)

Regulation (EC) No 3223/94 lays down, pursuant to the outcome of the Uruguay Round multilateral trade negotiations, the criteria whereby the Commission fixes the standard values for imports from third countries, in respect of the products and periods stipulated in the Annex thereto.

(2)

In compliance with the above criteria, the standard import values must be fixed at the levels set out in the Annex to this Regulation,

19.11.2005   

EN

Official Journal of the European Union

L 302/26

(1)

Council Regulation (EC) No 27/2005 of 22 December 2004 fixing for 2005 the fishing opportunities and associated conditions for certain fish stocks and groups of fish stocks applicable in Community waters and for Community vessels, in waters where catch limitations are required (3), lays down quotas for 2005.

(2)

According to the information received by the Commission, catches of the stock referred to in the Annex to this Regulation by vessels flying the flag of or registered in the Member State referred to therein have exhausted the quota allocated for 2005.

(3)

It is therefore necessary to prohibit fishing for that stock and its retention on board, transhipment and landing,

19.11.2005   

EN

Official Journal of the European Union

L 302/28

(1)

To avoid risks to human health and barriers to the free movement of goods, Commission Directive 2002/16/EC of 20 February 2002 on the use of certain epoxy derivatives in materials and articles intended to come into contact with food (2), lays down specific migration limits for 2,2-bis(4-hydroxyphenyl)propane bis(2,3-epoxypropyl) ether (‘BADGE’ i.e. Bisphenol-A DiGlycidyl Ether), bis(hydroxyphenyl)methane bis(2,3-epoxypropyl)ethers (‘BFDGE’ i.e. Bisphenol-F DiGlycidyl Ether) and novolac glycidyl ethers (NOGE) and some of their derivatives.

(2)

Directive 2002/16/EC provides that the use and/or the presence of BFDGE and NOGE may only be continued until 31 December 2004. For BADGE the transitional period was extended until 31 December 2005 pending the expected submission of new toxicological data and their evaluation by the European Food Safety Authority (the Authority).

(3)

The toxicological data required for BADGE have been transmitted. The Authority concluded that BADGE, BADGE.H2O and BADGE.2H2O do not raise concern about carcinogenicity and genotoxicity in vivo and that a Tolerable Daily Intake of 0,15 mg/kg body weight can be established for BADGE, BADGE.H2O and BADGE.2H2O. Therefore a higher specific migration limit SML(T) can be established for BADGE BADGE.H2O and BADGE.2H2O. As regards the BADGE chlorohydrins, in view of the lack of data on genotoxicity in vivo, the Authority considers that the current specific migration limit of 1 mg/kg of food or food simulants remains appropriate.

(4)

Trade in and use of materials and articles containing BADGE in accordance with this Regulation shall therefore be permitted throughout the Community as from 1 January 2006.

(5)

The toxicological data required for NOGE and BFDGE have not been transmitted on time to permit their evaluation by the Authority and to continue their use. Therefore the use and/or presence BFDGE and NOGE is no longer permitted as from 1 January 2005 in accordance with Directive 2002/16/EC. However the exhaustion of existing stocks should be permitted.

(6)

For large containers, the use and/or presence of BADGE, NOGE and BFDGE are permitted. The high volume/surface area ratio, the repeated use over their long lifetime which reduces migration and the fact that contact with food usually occurs at ambient temperature suggests that it is not necessary to set a migration limit for BADGE, NOGE and BFDGE used in such containers.

(7)

Pursuant to Article 16 of Regulation (EC) No 1935/2004 materials and articles covered by specific measures are to be accompanied by a written declaration stating that they comply with the rules applicable to them. That requirement has not yet been included in Directive 2002/16/EC. Therefore it is necessary to introduce this obligation and to provide for a transitional period.

(8)

Having regard to the amendments required and in the interest of clarity, Directive 2002/16/EC should be replaced by a new Regulation.

(9)

Directive 2002/16/EC provides that its requirements concerning BADGE, BFDGE and NOGE do not apply to materials and articles brought into contact with food before 1 March 2003. Those materials and articles may continue to be placed on the market provided that the date of filling appears on them. This date may be replaced by the ‘best before’ date as provided for by Directive 2000/13/EC of the European Parliament and of the Council of 20 March 2000 on the approximation of the laws of the Member States relating to the labelling, presentation and advertising of food (3) or another indication, such as the lot number required by Council Directive 89/396/EEC of 14 June 1989 on indications or marks identifying the lot to which a foodstuff belongs (4) for the food packed in such materials and articles, provided a link is established between this indication and the date of filling so that the latter can always be identified.

(10)

Directive 2002/16/EC should therefore be repealed.

(11)

The measures provided for in this Regulation are in accordance with the opinion of the Standing Committee on the Food Chain and Animal Health,

(a)

2,2-bis(4-hydroxyphenyl)propane bis(2,3-epoxypropyl) ether, hereinafter referred to as ‘BADGE’ (CAS No 001675-54-3), and some of its derivatives;

(b)

bis(hydroxyphenyl)methane bis(2,3-epoxypropyl)ethers, hereinafter referred to as ‘BFDGE’ (CAS No 039817-09-9);

(c)

other novolac glycidyl ethers, hereinafter referred to as ‘NOGE’.

(a)

materials and articles made of any type of plastics;

(b)

materials and articles covered by surface coatings; and

(c)

adhesives.

19.11.2005   

EN

Official Journal of the European Union

L 302/33

(1)

Commission Regulation (EC) No 887/2005 (2) opened crisis distillation under Article 30 of Regulation (EC) No 1493/1999 for certain wines produced in Greece.

(2)

Since this is the first time that crisis distillation has been applied in Greece, some practical problems have been encountered in launching the system. Certain producers wishing to deliver their wine for distillation may be unable to do so by the deadline set. To ensure that the measure is effective, therefore, the period for delivering the wine to distilleries as provided for in Regulation (EC) No 887/2005 should be extended until 31 January 2006.

(3)

Regulation (EC) No 887/2005 should therefore be amended accordingly.

(4)

To ensure continuity of the measure, this Regulation should apply from 15 November 2005.

(5)

The measures provided for in this Regulation are in accordance with the opinion of the Management Committee for Wine,

19.11.2005   

EN

Official Journal of the European Union

L 302/34

(1)

In accordance with Article 4 of Regulation (EC) No 1051/2001, a world market price for unginned cotton is to be determined periodically from the price for ginned cotton recorded on the world market and by reference to the historical relationship between the price recorded for ginned cotton and that calculated for unginned cotton. That historical relationship has been established in Article 2(2) of Commission Regulation (EC) No 1591/2001 of 2 August 2001 laying down detailed rules for applying the cotton aid scheme (3). Where the world market price cannot be determined in this way, it is to be based on the most recent price determined.

(2)

In accordance with Article 5 of Regulation (EC) No 1051/2001, the world market price for unginned cotton is to be determined in respect of a product of specific characteristics and by reference to the most favourable offers and quotations on the world market among those considered representative of the real market trend. To that end, an average is to be calculated of offers and quotations recorded on one or more European exchanges for a product delivered cif to a port in the Community and coming from the various supplier countries considered the most representative in terms of international trade. However, there is provision for adjusting the criteria for determining the world market price for ginned cotton to reflect differences justified by the quality of the product delivered and the offers and quotations concerned. Those adjustments are specified in Article 3(2) of Regulation (EC) No 1591/2001.

(3)

The application of the above criteria gives the world market price for unginned cotton determined hereinafter,

19.11.2005   

EN

Official Journal of the European Union

L 302/35

(1)

Commission Directive 2002/72/EC (2) establishes a list of monomers and other starting substances, which may be used for the manufacture of plastic materials and articles. On the basis of new information related to the risk assessment of such substances, certain monomers provisionally admitted at national level as well as new monomers should be included in the Community list of permitted substances in that Directive.

(2)

Directive 2002/72/EC also contains an incomplete list of additives which may be used in the manufacture of plastic materials and articles. That list should be amended so as to include other additives evaluated by the European Food Safety Authority (the Authority).

(3)

For certain substances, the restrictions already established at Community level should be amended on the basis of the new information available. In particular for epoxidised soybean oil (ESBO) the Authority recommended to decrease its specific migration limit (SML) for PVC gaskets containing that substance which are used to seal glass jars containing infant formulae and follow-on formulae or containing processed cereal-based foods and baby foods for infants and young children. In fact the Authority noted that the exposure of infants who regularly eat such foods may exceed the TDI. Therefore the SML for ESBO is decreased for these particular applications from 60 to 30 mg/kg of food or food simulant while it remains unchanged for all other applications.

(4)

A transitional period should be provided for in respect of PVC gaskets containing epoxidised soybean oil, used to seal glass jars, which are brought into contact with food before the 19 November 2006.

(5)

Directive 2002/72/EC should therefore be amended accordingly.

(6)

The measures provided for in this Directive are in accordance with the opinion of the Standing Committee on the Food Chain and Animal Health,

(a)

permit the trade in and use of plastic materials and articles intended to come into contact with food and complying with this Directive, from 19 November 2006;

(b)

prohibit the manufacture and importation into the Community of plastic materials and articles intended to come into contact with food and which do not comply with this Directive, from 19 November 2007.

19.11.2005   

EN

Official Journal of the European Union

L 302/46

(1)

On 25 November 2003, the Council authorised the Commission to negotiate on behalf of the Community the revision of the International Agreement on Olive Oil and Table Olives, 1986, as amended and extended in 1993, and last prolonged in 2004.

(2)

On 29 April 2005, the New International Agreement on Olive oil and Table Olives was adopted by the United Nations Conference for the Negotiation of a Successor Agreement to the International Agreement on Olive Oil and Table Olives, 1986.

(3)

The International Agreement on Olive Oil and Table Olives, 2005, promotes international cooperation, contributes to the development and the stability of the markets for the product concerned and to the attainment of the objectives of the Community’s commercial and agricultural policy.

(4)

It is therefore in the Community’s interest to approve the 2005 Agreement,

19.11.2005   

EN

Official Journal of the European Union

L 302/68

19.11.2005   

EN

Official Journal of the European Union

L 302/69

(1)

Energias de Portugal, SA (EDP) is the incumbent electricity company in Portugal. As such, its main activities consist of generation, distribution and supply of electricity in Portugal. EDP also controls the Spanish company Hidrocantábrico, which is active in Spain in the sectors of electricity and gas. EDP is listed on the Euronext Lisbon and the Portuguese State holds directly or indirectly about 30 % of the shares.

(2)

ENI SpA (ENI) is active in the exploration and production of oil and natural gas worldwide. ENI is also active in the supply, transmission, storage, distribution and trade of natural gas. Moreover, ENI holds shares in companies with transportation capacities which are active in the operation of the trans-national pipelines for transmission of natural gas.

(3)

Gás de Portugal, SGPS, SA, (GDP) is the incumbent gas company in Portugal. GDP is a wholly-owned subsidiary of the Portuguese company Galp Energia, SGPS, SA (GALP), currently jointly controlled by the Portuguese State and ENI, with interests in both the oil and the gas sectors. GDP and its subsidiaries cover all levels of the gas chain in Portugal. GDP, through its subsidiary Transgás, imports natural gas into Portugal, through a Maghreb-Spain-Portugal pipeline and through the Sines LNG terminal, and is responsible for the transportation, storage, transport and supply through the Portuguese high-pressure gas pipeline network (the Network). GDP is also active in the natural gas supply to large industrial customers and in the development and future operation of the first underground natural gas storage caverns in Portugal. GDP, through GDP Distribuição (GDPD), also currently controls five of the six local gas distribution companies (LDCs) in Portugal.

(4)

Rede Eléctrica Nacional SA (REN) is not a notifying party for the present concentration but takes part in the overall transaction to which this concentration belongs. REN is a Portuguese company resulting from the 1994 spin-off from EDP of the Portuguese electric grid. REN currently manages the Portuguese electric grid and acts as Single Buyer, buying electricity from producers and reselling it to the distributor/supplier for the supply of the non-eligible clients. The Portuguese State controls directly or indirectly 70 % of REN while the remainder is held by EDP.

(5)

The present case concerns a concentration by which EDP and ENI (the parties) plan to acquire joint control over GDP. The operation foresees that the gas transmission network (i.e. excluding Sines LNG terminal, import pipeline and Carriço underground storage) will be transferred to REN, the Portuguese electricity grid operator within a given timeframe. During a transitory period, EDP will have control over the gas network, along with ENI and REN.

(6)

According to the second gas directive (2) and the derogation granted to Portugal, 33 % of the Portuguese gas market shall be liberalised at the latest by 2007, all non-residential customers at the latest by 2009 and all customers (including residential customers) at the latest by 2010. The Portuguese government may decide to start the liberalisation process earlier.

(7)

Taking into consideration the specifics of the Portuguese markets and the competitive and regulatory framework, the Commission has reached the conclusion that the following markets should indeed be distinguished:

(8)

The National Electric System is organised in two co-existing systems, the public electricity system or ‘bound system’ (Sistema Eléctrico de Serviço Público, SEP) and the independent electricity system (Sistema Eléctrico Independente, SEI). The national transmission grid is used for both systems and is exploited under a concession regime by Rede Eléctrica National (REN).

(9)

SEP is a regulated system that covers generation and distribution. It is composed of ‘bound’ generators and ‘bound’ distribution networks. In this system, REN is the single buyer of electricity at the wholesale level. It mainly acquires electricity from a group of power stations (the bound generators), pursuant to Power Purchase Agreements (PPAs).

(10)

Under the PPAs, bound generators undertake to supply electricity to the SEP on an exclusive basis for a term of more than 20 years and under a fixed price formula (4). The construction of those bound generation plants is not liberalised but regulated by the State. According to the applicable legislation, the following companies are integrated in the SEP: EDP (through EDP Produção and Companhia Portuguesa de Produção de Electricidade), Tejo Energia (5), and Turbogás (6). Most of the electricity in Portugal (83 % in 2003) (7) is supplied through these exclusive PPAs between REN and power producers.

(11)

The electricity acquired by REN is then sold to the regulated distributor, which is controlled by EDP, under a regulated tariff system. Regulated tariffs are set by the Portuguese energy regulator, ERSE.

(12)

The independent system (SEI) is composed of the unbound system (Sistema Eléctrico Não Vinculado, SENV), which operates under free market conditions (i.e. most of this power is finally sold to the customers who switch out of the regulated system), and the special regime system (Produtores em regime especial, PRE), in which generation by co-generation plants, mini-hydro plants, and other renewable energies such as wind power plants is supplied to REN at regulated tariffs.

(13)

Eligible customers are free to choose their electricity supplier and can therefore purchase electricity either from the SEP at regulated tariffs, or from the SENV (being supplied by a free retailer at market conditions). The Decree Law of 17 August 2004 finally provided that all clients are eligible (8).

(14)

(The existing regulatory framework is currently being amended.

(15)

Wholesale electricity encompasses the production of electricity at power stations as well as electricity physically imported through interconnectors for the purpose of resale to retailers. As in other Member States, a few very large electricity consumers may also decide to buy directly from the wholesale market (in Spain, they account for less than 5 % of the purchases in the wholesale market).

(16)

The Commission considers that, as from the termination of the PPAs, there will be an electricity wholesale market in Portugal encompassing the offer of the former bound generation, the unbound generation and imports. The assessment focuses on this wholesale market irrespective of the liberalised and regulated systems.

(17)

There is a technical necessity for such service as the transmission system operator is responsible for maintaining the tension in the grid within a very narrow bandwidth. If there is over-consumption, the tension in the grid would drop and this could cause at some point network stability problems. A problem also arises if there is under-consumption as then the tension in the grid rises above an acceptable tolerance level and the transmission system operator must make sure that either some generation capacity is switched off or that some consumption is added.

(18)

This service needs to be paid for and there will usually be a ‘penalty’ for deviation if demand of a customer exceeds, or falls below, the expected level which corresponds to the amount that each supplier purchases from the wholesale level or plans to produce himself and which he has to communicate in advance to the transmission system operator.

(19)

Currently, in Portugal, this service, as well as other similar ancillary services (congestion management services), is provided by REN to all agents in the system. There is as yet no established market for such services in Portugal. However, it is likely that, after the termination of the PPAs, such a market, or such markets, will emerge. For the purpose of this decision, the exact delineation of this emerging market, or these emerging markets, can be left open.

(20)

These markets are not affected by the proposed operation. In Portugal the transmission grid has already been unbundled and is operated by REN, the Portuguese Transmission System Operator. Distribution grids are owned by EDP and municipalities and are managed by EDP’s subsidiary EDP Distribuição Energia SA (EDPD). Access to both transmission grid and distribution grids is regulated by the Portuguese regulator ERSE.

(21)

The following electricity retail markets will be considered for the purpose of the present statement: (i) the supply of electricity to Large Industrial Customers (LICs) which are connected to the high and medium voltage (HV and MV) grid and (ii) the supply of electricity to smaller industrial, commercial and domestic customers which are connected to the low voltage (LV) grid.

(22)

HV/MV customers and LV customers are very different as regards their consumption and terms and conditions under which they purchase electricity. The commercial relationship is also very different. MV and HV customers are for the most part industrial costumers for which electricity may account for a significant part of their costs. On the contrary, most LV customers are small industrials, commercial or domestic customers whose consumption of electricity per consumers is quite limited in volume.

(23)

In past Commission decisions, the relevant geographic market for the wholesale supply of electricity has been considered to be no wider than national borders (9). In the present case, the investigation has shown that wholesale and retail electricity markets are clearly Portuguese in scope and will remain so in the foreseeable future.

(24)

The parties argued that an Iberian trading market called MIBEL would be established very soon and would thus lead to an Iberian market. This view has not been confirmed by the in-depth investigation carried out by the Commission. It appears that (1) the current level of interconnections between Spain and Portugal is not sufficient to consider the existence of a single market in the Iberian peninsula and (2) it is highly unlikely that the electricity wholesale market will become Iberian in scope in the near future for the following reasons:

(25)

The Commission has identified four distinct gas product markets which will be affected by the operation:

(26)

Six local distribution companies (LDCs) distribute and supply most end-customers through medium and low pressure (11) networks and operate in exclusive concession areas.

(27)

The market of gas supply to power producers will be the first to be opened to competition in Portugal. The parties claimed that CCGTs and LICs should be considered as part of a single, wider wholesale market. The Commission does not agree with the parties. Indeed, power producers have unique demand needs in terms of quantity and flexibility of supply. CCGTs therefore need to combine long-term contracts, which are necessary for establishing the basic economic and technical viability and supply security of the CCGT project, with short-term contracts for more limited periods. They also have different margins, customer relationship; commercial needs of resellers and growth dynamics.

(28)

On each relevant gas market, the Commission and the parties agree that the supply of natural gas in Portugal is no wider than national.

(29)

Following the Commission’s in-depth investigation, it appears that EDP holds a dominant position on the wholesale market in Portugal, irrespective of whether it is considered under the current structure or after the termination of the PPAs.

(30)

Indeed, in 2003, in the wholesale market, EDP holds 70 % of generation capacity, accounts for 70 % of generation and is the largest importer of electricity. Moreover, EDP’s Portuguese generation portfolio will remain unmatched after the abolition of the PPAs. After the termination of the PPAs, a stranded cost scheme (CMECs) is to be put in place to compensate existing power generators for any possible loss in the market in the future. This scheme favours incumbents. EDP is bound to get most of it, which will help shield EDP from future competition.

(31)

On the demand side, EDP holds close to 100 % of the distribution of electricity in Portugal. EDP Distribução’s future role as the retailer for the regulated system confer EDP crucial advantages.

(32)

On the supply side, the addition of EDP’s new gas fired power-plant (TER) is significant in EDP’s portfolio. As regard new generation capacities to be built by third parties, the Commission has come to the conclusion that CCGTs projects by competitors are uncertain and that EDP has influence over one of them (Tejo Energia).

(33)

As for the horizontal effects, the Commission came to the conclusion that, absent the merger, GDP would have been very likely to become the main competitor in the electricity markets in Portugal, considering (i) that having access to competitive gas resources confers a significant advantage in electricity as gas-fired power plants (CCGTs) now constitute the most common way of generating new power and (ii) that GDP, as a Portuguese company, could rely on its brand and gas customers, to which it could offer a joint supply of gas and electricity.

(34)

This significant potential competition would be lost after the merger, thereby strengthening further EDP’s dominant position.

(35)

Further to the proposed transaction, EDP will have the ability and the incentive to maintain a privileged and preferential access to natural gas to the detriment of companies actually or potentially involved in electricity generation.

(36)