1 By applications lodged at the Court Registry on 9 September and 4 October 1985 respectively, the companies Canon France SA, Canon Rechner Deutschland GmbH and Canon ( UK ) Ltd, on the one hand, and the company Canon Inc ., whose registered office is in Tokyo, on the other, brought two actions under the second paragraph of Article 173 of the EEC Treaty for a declaration that Council Regulation ( EEC ) No 1698/85 of 19 June 1985 imposing a definitive anti-dumping duty on imports of electronic typewriters originating in Japan ( Official Journal 1985, L 163, p . 1 ) was void in so far as it related to the applicant companies . The applications were registered as Cases 277/85 and 300/85 .
2 Canon Inc . is a manufacturer of optical and electronic equipment which, since 1982-83, has also produced and marketed electronic typewriters both abroad, in particular in the European Economic Community where it operates through its subsidiaries Canon France SA, Canon Rechner Deutschland GmbH and Canon ( UK ) Ltd, and, in much smaller quantities, in Japan where it operates through an exclusive distribution subsidiary, Canon Sales Ltd . In 1984, Canon Inc . was the subject of a complaint made to the Commission by an association of European manufacturers, the Committee of European Typewriter Manufacturers ( Cetma ), which accused it of selling its products in the Community at dumping prices .
3 The anti-dumping proceeding initiated by the Commission on the basis of Council Regulation ( EEC ) No 2176/84 of 23 July 1984 on protection against dumped or subsidized imports from countries not members of the European Economic Community ( Official Journal 1984, L 201, p . 1 ) led initially to the imposition upon Canon of a provisional anti-dumping duty of 33.3 %. The Council, on a proposal from the Commission, then fixed the definitive anti-dumping duty at 35% by Council Regulation No 1698/85, against which Canon Inc . and its European subsidiaries have brought the present action .
4 By documents lodged on 7 October 1985, the applicants applied for interim measures suspending the operation, with respect to them, of Regulation No 1698/85 until the Court had given judgment . The applications for interim measures were dismissed by orders of the President of the Court of 18 October 1985, in which the costs were reserved .
5 By an order of 11 November 1985, Cases 277/85 and 300/85 were joined for the purposes of the procedure and judgment .
6 The Commission and Cetma were given leave to intervene in the two cases in support of the defendant' s submissions .
7 Reference is made to the Report for the Hearing for a fuller account of the facts of the case, the course of the procedure and the submissions and arguments of the parties, which are mentioned or referred to hereinafter only in so far as is necessary for the reasoning of the Court .
8 The Council raised doubts as to the admissibility of the action in Case 300/85 on the ground that it was brought by importers; however, it must be pointed out that, according to previous decisions of the Court and most recently the judgment of 21 February 1984 ( Joined Cases 239 and 275/82 Allied Corporation and Others v Council and Commission (( 1984 )) ECR 1005 ), importers associated with exporters may challenge a regulation imposing an anti-dumping duty, particularly where, as in the present cases, the export price has been calculated on the basis of their selling prices on the Community market .
9 The applicants ( hereinafter collectively referred to as "Canon ") rely upon the following five submissions in support of their actions :
( i ) miscalculation of the normal value
( ii ) miscalculation of the export price
( iii ) incorrect comparison between the normal value and the export price
( iv ) incorrect assessment of injury
( v ) procedural deficiencies .
The submission concerning the miscalculation of the normal value
10 Canon maintains, in the first place, that in so far as the institutions refused to take as the normal value the price charged in transactions in Japan between Canon Inc . and its associated distributor, Canon Sales Ltd, they should, pursuant to Article 2 ( 3 ) ( a ) and ( b ) of Regulation No 2176/84, have constructed the normal value on the basis of the production costs and should not have relied on the prices invoiced by Canon Sales Ltd for the first sale of the product to an independent purchaser .
11 It must be stated that, pursuant to Article 2 ( 3 ) ( a ) of Regulation No 2176/84, the normal value is taken in the first place to mean "the ... price actually paid or payable in the ordinary course of trade for the like product intended for consumption in the exporting country or country of origin ". Other factors mentioned in Article 2 ( 3 ) ( b ) ( i ) and ( ii ) may be used as the normal value "when there are no sales of the like product in the ordinary course of trade on the domestic market of the exporting country or country of origin, or when such sales do not permit a proper comparison ". It is clear from the wording and scheme of the above provisions that regard must primarily be had to the price actually paid or payable in the ordinary course of trade in order to establish the normal value, the other possibilities being merely subsidiary .
12 In the present case, the prices paid by the first independent purchaser of the product may be properly regarded as the prices actually paid for the product in the exporting country or country of origin in the ordinary course of trade and they must therefore be used in preference to any other factor .
13 Canon maintains secondly that the prices charged on the Japanese market were not representative, having regard to the number of electronic typewriters which it sold on that market . Those sales did not exceed the threshold of 5% of exports to the Community below which the institutions had decided to treat sales on the Japanese market as negligible . Canon also considers that the third recital in the preamble to Regulation No 2176/84 requires account to be taken of the practices of major trading partners of the Community . That threshold of 5% should therefore have been calculated in accordance with the practice followed in the United States of America, namely by reference to exports to all other third countries .
14 It must be observed, however, that Canon' s argument that the threshold below which sales should be disregarded must be calculated by reference to the total volume of exports of all models of electronic typewriters cannot be accepted since, as a result of the considerable differences between the characteristics of the various models, each model necessarily has its own normal value . The domestic sales of each of the two models produced by Canon for which reference was made to the domestic prices exceed 5% of the applicant' s exports to the Community on a model-by-model basis, whereas they account for barely 1.4% of Canon' s total exports to the Community .
15 Finally, as regards the argument relating to reference to the United States practice in such matters, it should be noted that the attitude of one of its trading partners, even a major partner, does not suffice to oblige the Community to follow the same course . Such reference cannot, therefore, determine how the Community legislation is to be interpreted .
16 Canon' s third argument is that if the domestic prices are not representative, the institutions are obliged, pursuant to Article 2 ( 3 ) ( b ), to take as a basis the price of a like product when exported to a third country .
17 Article 2 ( 3 ) ( b ) does not indicate that use of the price for exportation to a third country is to take precedence over construction of the normal value . The institutions therefore enjoy a margin of discretion in that respect and Canon has not shown that that discretion has been abused .
18 In the fourth place, Canon criticizes the institutions for failing to deduct from the normal value the particularly high costs which Canon Sales Ltd had to bear for advertising electronic typewriters in Japan, because of the wholly exceptional characteristics of the Japanese market .
19 In so far as that argument is based on the fact that advertising costs are deducted from the price at which the product is resold to the first independent buyer in the Community in order to establish the export price, it should be borne in mind that the requirement of comparability laid down in Article 2 ( 3 ) ( a ) is satisfied provided that the normal value and the export price are both determined by reference to the first sale to an independent purchaser . The comparison must therefore be between the figures arrived at in that way, subject to the allowances and discounts expressly provided for in Article 2 ( 9 ) and ( 10 ). However, it is apparent from Article 2 ( 10 ) ( c ) of Regulation No 2176/84 that no allowance is to be made "for differences in overheads and general expenses, including ... advertising costs ". That argument cannot therefore be upheld .
20 In the fifth place, Canon puts forward a number of arguments concerning the four electronic typewriter models for which the normal value was constructed .
21 In that connection Canon claims in the first place that Article 2 ( 3 ) ( b ) ( ii ) of Regulation No 2176/84 did not empower the institutions to construct a normal value taking as guidance elements - namely the profit margins - of the actual domestic price obtained for other models . It further maintains that its management accounts showed a profit on electronic typewriters of 7.2% during the reference period, which in its view demonstrates that the much higher profit margin attributed to it by the institutions is not "reasonable ".
22 It must be pointed out that the profit margin used to construct the normal value coincides with the profit margin attained by Canon for the two models whose domestic-market prices were taken into consideration . Taking account of the discretion enjoyed by the institutions, that margin may therefore be regarded as reasonable within the meaning of the abovementioned provision of Regulation No 2176/84 for construction of the normal value, in the absence of any evidence to the contrary furnished by Canon, which has not produced the management accounts referred to in support of its claims .
23 Canon also claims that by failing to take account of the real advertising costs for electronic typewriters, which in Japan are much higher than advertising costs for other products, the institutions overestimated the profit margin of the company concerned and consequently arrived at an excessively high constructed value .
24 However, it is clear from the documents before the Court that Canon has not substantiated its allegation that the institutions did not take due account, in accordance with Article 2 ( 3 ) ( b ) ( ii ) of Regulation No 2176/84, of the advertising and promotion costs which it actually incurred . It further appears from those documents that Canon agreed to the contested level of costs when it was used by the institutions to determine the "administrative, general and other expenses" component for inclusion in the production costs in the first phase of the procedure for construction of the normal value . In the light of those considerations, Canon' s argument cannot be upheld .
25 Canon also claims that the administrative, general and other expenses included in the constructed normal value should have been determined on the basis of the expenses relating to exportation of the product .
26 In that connection, it must be borne in mind that, according to the scheme of Regulation No 2176/84, the purpose of constructing the normal value is to determine the selling price of a product as it would be if that product were sold in its country of origin or in the exporting country . Consequently, it is the expenses relating to sales on the domestic market which must be taken into account .
27 Relying upon Article 2 ( 3 ) ( b ) ( ii ) of Regulation No 2176/84 which provides for determination of the normal profit margin by reference to the profit "normally realized on sales of products of the same general category on the domestic market of the country of origin", Canon also maintains that the institutions should have taken account of the profit margins achieved in Japan in the office equipment sector as a whole .
28 However, whilst it is not in dispute that the term "like product" within the meaning of Article 2 ( 2 ) and ( 12 ) of Regulation No 2176/84 signifies a product with the same characteristics, the term "products of the same general category" within the meaning of Article 2 ( 3 ) must be taken to denote only products within the category of electronic typewriters, which sufficiently resemble each other to provide reliable guidance, whereas the "office technology" sector comprises an extremely wide range of products, each of which may yield a different profit as a result of its special applications and specific customers . The institutions were therefore not in error when they established the normal profit on the basis of data relating to other electronic typewriter models .
29 In the light of the foregoing considerations, the first submission must be rejected .
The submission as to the miscalculation of the export price
30 Canon' s first argument in support of this submission is that the export price should have been calculated on the basis of the prices which it charged its European subsidiaries .
31 As is apparent from the documents before the Court, the European subsidiaries are wholly owned by the parent company . It follows that there is an association within the meaning of Article 2 ( 8 ) ( b ) of Regulation No 2176/84 between them and Canon and that the institutions were therefore entitled to calculate the export price on the basis of the price charged when the product was sold to the first independent purchaser in the Community .
32 In response to Canon' s second argument, to the effect that the profit margin to be deducted was 3 and not 5%, the institutions have rightly stated that, on the one hand, the latter percentage was based on the margins of independent importers, thus constituting the most objective basis for making a satisfactory estimate of the export price, and, on the other, that Canon has provided no evidence to justify the percentage proposed by it .
33 In the third place, Canon claims that the costs incurred in promoting certain models in Germany, France and the United Kingdom should have been allocated to a larger number of models over a wider geographical area and should have been amortized over a longer period .
34 Even though it is possible that an advertising campaign centred on certain models and carried out in certain countries may also benefit other models and have repercussions in other countries, that is not in itself a sufficient reason, if the applicant has failed to produce detailed evidence of such secondary effects, for allocating the costs of such a campaign to all the electronic typewriters marketed in the Community . There is therefore no reason in this case to derogate from the general rule in Article 2 ( 11 ) of Regulation No 2176/84 that costs should be allocated in proportion to the "turnover for each product and market under consideration ". The same applies as regards the period to which the costs were allocated . Since they were costs incurred during the period under review, the institutions did not exceed their discretionary powers when they treated them as expenses relating to that period .
35 The second submission must therefore be rejected .
The submission concerning the incorrect comparison between the normal value and the export price
36 Canon claims, in the first place, that, by using a calculation method which inflated the normal value and reduced the export price, the Community institutions failed to fulfil the obligation laid down in Article 2 ( 9 ) of Regulation No 2176/84 to make a fair comparison between those two factors . A comparison in which the two factors are not determined by similar procedures and in a symmetrical manner cannot be regarded as valid .
37 It must be pointed out that, by virtue of the judgments of the Court of 7 May 1987 ( in Cases 240, 255, 256, 258 and 260/84, concerning an anti-dumping duty on imports of ball-bearings, (( 1987 )) ECR 1809, 1861, 1899, 1923, 1975 ), the calculation of the normal value and the calculation of the export price are distinct operations, by virtue of the different calculation methods employed, which are provided for in Article 2 ( 3 ) to ( 7 ) and Article 2 ( 8 ) respectively of Regulation No 2176/84 . The validity of the comparison provided for in Article 2 ( 9 ) cannot therefore be conditional on calculation of the normal value and the export price by identical methods .
38 Canon maintains, in the second place, that the institutions also infringed Article 2 ( 9 ) in so far as, contrary to the requirements of that provision, they did not make a comparison at the same level of trade, which should normally be the ex-factory level, but compared an ex-factory export price with a normal value determined in respect of sales by Canon' s exclusive distributor in Japan .
39 It should be observed that, as is apparent from the documents before the Court, Canon markets its products in Japan through a distribution company which it controls financially and to which it entrusts tasks that are normally the responsibility of an internal sales department of the manufacturing organization .
40 The division of production and sales activities within a group made up of legally distinct companies can in no way alter the fact that the group is a single economic entity which organizes in that way activities that are normally carried out by what is in legal terms as well a single entity .
41 Accordingly, Canon' s argument cannot be upheld, since it is precisely by taking account of the first sale to an independent purchaser that the normal value at the "ex-factory" level can be correctly established where there are production and sale arrangements of the kind set up by Canon on the Japanese market .
42 In view of the foregoing, it is unnecessary to consider the arguments concerning the institutions' refusal to grant Canon allowances within the meaning of Article 2 ( 10 ) of Regulation No 2176/84, which were put forward in the alternative in the event of its being established that the normal value and the export price were compared at different levels of trade .
43 The third submission must therefore be rejected .
The submission as to incorrect assessment of the injury
44 Canon considers that the assessment of the injury called for a comprehensive analysis of the market as a whole and it criticizes the different approach adopted by the institutions; the latter reply, quite correctly, that Article 4 of Regulation No 2176/84 by no means prescribes such an analysis but merely requires the Community authorities to find whether the dumped imports are causing injury .
45 Canon had first claimed that the assessment of the injury was affected by the fact that "OEM ( Original Equipment Manufacturers ) imports", that is to say imports of machines of Japanese origin purchased by Community producers and sold by them under their own brand names, were treated by the institutions as imports from Japan .
46 It must be observed that Canon finally conceded that "OEM imports" were rightly treated as Japanese imports . In those circumstances, its argument is ultimately no more than that those imports are not mentioned in the preamble to Regulation No 1698/85 . In view of, on the one hand, the fact that the institutions never denied that OEM imports were taken into consideration and that that fact was, moreover, well known to Canon and, on the other, the impossibility of including all the details of an anti-dumping investigation in the statement of reasons for the regulation, that argument cannot be upheld .
47 Canon then alleges that the Community industry' s sales grew slowly because its insufficient production capacity prevented it from meeting the upsurge in demand . However, it is apparent from the information furnished by the Council that at no time between 1980 and the end of 1983 did Community producers operate at full capacity . That argument must therefore also be rejected .
48 Canon also criticizes the institutions for improperly disregarding certain factors suggesting that the dumping was not causing any injury and for relying almost exclusively upon prices, upon the market share and upon financial factors which are of no value in the absence of any distinction between losses caused by dumping and those due to the structural problems of the Community manufacturers, while completely ignoring the improvement in the latter' s production, sales, turnover and capacity utilization .
49 To determine whether that argument is well founded, it is necessary to refer to the provisions governing the procedures for determining injury, in particular Article 4 of Regulation No 2176/84, which incorporates the wording of Article 3 of the GATT Anti-Dumping Code . According to that article, there is no injury unless the dumped imports are causing or threatening to cause, "through the effects of dumping", material injury to an established Community industry, and injuries caused by other factors must not be attributed to the dumped imports .
50 According to Canon, the institutions wrongly attributed to the dumping injuries which were in fact due to other causes, principally the Community companies' failure to adapt to the new technology .
51 It is apparent from the documents before the Court that in point of fact European producers were the first to perfect the new technology for typewriters and they marketed electronic typewriters as from the end of the 1970s, before Japanese producers entered the market . In those circumstances, Canon' s assertion that the European electronic typewriter industry' s difficulties stem from its being technologically less advanced than the Japanese industry is incorrect .
52 Although the transition to the production of electronic typewriters was less easy for some Community undertakings than for others and although very substantial investment was required, the losses attributable to that investment must not in any event be confused with those due to dumping . Since the Community companies were manifestly in a position, throughout the period covered by the investigation, to offer a wide range of electronic typewriters, the fall in their market share is accounted for not by difficulties of adjustment but primarily by the dumping by the Japanese producers .
53 As regards Canon' s argument that the Community industry' s steep decline in profitability was accounted for by the nature of the electronic typewriter market, it must be stated that that argument is contradicted by the attitude of the Japanese companies themselves, in so far as they moved into the Community market at the precise moment when, according to Canon, the profitability of electronic typewriters was about to collapse .
54 The method used by the institutions to assess injury would appear, contrary to the view expressed by Canon, capable of distinguishing between the effects of dumping and those of structural difficulties in the Community industry . The injury was determined by reference to the extent to which the prices of imported products undercut those which the Community companies would have been able to obtain in the absence of dumping .
55 It follows from the foregoing considerations that the institutions correctly identified the specific injury caused by the dumping . No evidence has been adduced to show that the factors mentioned above or any others, such as the prices of other imports which were not dumped, or a contraction in demand, contributed to the injury as found .
56 As regards Canon' s complaint that the factors indicated in Article 4 ( 2 ) ( a ), ( b ) and ( c ) of Regulation No 2176/84 ( volume of dumped imports, the prices of such imports and their impact on the Community industry ) were not properly considered, the preamble to Regulation No 1698/85 shows that the institutions did examine those factors . If, in assessing the impact of the dumping on the Community industry, they did not examine all the relevant economic factors mentioned in the list contained in Article 4 ( 2 ) ( c ), it must be borne in mind that it is apparent from the wording of that provision that the list is merely indicative and the institutions were therefore free to take the view that the most relevant factors contained therein were in themselves a sufficient basis for forming a judgment .
57 Canon challenges the view that it is possible to establish the existence of injury with reference to a period in which the sales of Community producers increased in absolute terms .
58 As is apparent from the statistics contained in the documents before the Court, although Community producers increased their sales in absolute terms, they did not maintain their percentage share in a market which was expanding very rapidly . The institutions were therefore entitled to conclude that dumping by Japanese producers had prevented a much more favourable trend in sales by European companies .
59 Canon also maintains that the institutions did not sufficiently consider the extent to which the prices of the imported products undercut the actual prices of the Community products .
60 In that connection, it must be observed that the prices of the European products in 1984 could no longer be used for assessing injury for the purposes of Article 4 in so far as they had already been depressed for some time in order to meet the ever-increasing pressure from the Japanese imports which were subsequently the subject of the anti-dumping proceeding; furthermore, the impact of the dumping on the Community industry could already be assessed by reference to numerous other factors . A more detailed examination in the regulation imposing the provisional duty of the undercutting of the prices actually charged was therefore neither necessary nor of any value . In the regulation imposing the definitive duty it was possible to calculate in an appropriate manner the undercutting of the target prices, that is to say the prices which Community products would have fetched in the absence of dumping .
61 Canon also claims that no distinction was drawn by the institutions between efficient producers and inefficient producers, which led them to attribute to dumping the losses of the two Community producers whose difficulties had in fact been due to a lack of efficiency .
62 As stated above, the method used by the institutions made it possible to determine with sufficient precision the injury caused to the Community industry by the dumping and to impose an anti-dumping duty covering only the extent of that injury . Moreover, by contrast with the previous rules, Article 4 of Regulation No 2176/84 does not confine findings of injury to cases where dumping is the principal cause . It is therefore possible to attribute to an importer responsibility for injury caused by dumping even if the losses due to the dumping are merely part of more extensive injury attributable to other factors .
63 Canon has claimed that it is not in the interests of the Community to protect inefficient producers . As the institutions rightly pointed out, it is incumbent upon them, under Article 12 ( 1 ) of Regulation No 2176/84, to decide, where there is dumping and injury, whether "the interests of the Community call for Community intervention ". The fact that a Community producer is facing difficulties attributable in part to causes other than the dumping is not a reason for depriving that producer of all protection against the injury caused by the dumping .
64 Canon further maintains that no Community undertaking has ever achieved the profit margin of 10% used by the institutions in their calculation of the target price . That statement, which is based on very general considerations concerning the product cycle of electronic typewriters, is not supported by any evidence and must, therefore, be rejected .
65 The procedures for calculating the injury are contested by Canon on the ground that the undercutting of prices was established on the basis of a comparison between Japanese models and Community models whose commercial value was assessed on the basis of subjective considerations, whereas the only objectively verifiable indicator would have been the production cost of the features which accounted for the difference between those models .
66 It must be emphasized in that regard that, as Canon concedes, a direct comparison between the imported models and the most similar Community models was impossible because of the wide variety of models and their differing technical features . Since it was therefore necessary to make an adjustment in order to take account of those differences, the institutions asked the Japanese exporters and the Community producers to appraise in good faith the commercial value of each model on the basis of its technical features and determined the average of the two valuations .
67 In view of the fact that a technical device of moderate production cost may be very attractive to a prospective purchaser, in that it enables the machine to be used in a particular way, it must be stated that the commercial value of a machine does not necessarily vary in accordance with the production cost of its components . In the absence of any objective method of assessing the commercial value of electronic typewriters, it must therefore be concluded that the method adopted by the institutions, based on the average of the various subjective appraisals, was reasonable .
68 The minutes of the meetings between Canon and the institutions and the correspondence between the parties show, finally, that Canon cannot accuse the institutions of failing to provide it with all the information it requested, except, of course, information of a confidential nature .
69 In the light of the foregoing considerations, Canon' s fourth submission must also be rejected .
The submission as to procedural deficiencies
70 Canon observes that, in so far as the public has no access to the figures and information as to the trends on which the institutions relied, it is necessary for the regulations adopted by those institutions to incorporate a complete and cogent statement of the reasons on which they are based . That is particularly important because, in view of the unprecedented and extraordinary nature of the methods used by the institutions in calculating the extent of the dumping, interested parties must be given an opportunity of verifying in detail whether the procedures followed were fair and accurate . Canon maintains that since the institutions took no account of certain relevant factors, did not pay due attention to Canon' s arguments and failed to give an adequate statement of the reasons for their action Regulation No 1698/85 should be declared void on procedural grounds .
71 Having regard to the considerations set out in connection with the previous submissions, there is no reason to conclude that the calculation methods were not appropriate or that relevant factors were not taken into account . The preambles to the regulations adopted by the Commission and the Council, moreover, give a clear and detailed explanation of the methods adopted by the institutions .
72 In those circumstances, the fifth submission must also be rejected .
73 In view of the foregoing findings, the actions in their entirety must be dismissed as unfounded .
Costs
74 Under Article 69 ( 2 ) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs . Since the applicants have failed in their submissions, they must be ordered to pay, jointly and severally in Case 277/85, the costs, both of the main proceedings and of the proceedings for the adoption of interim measures, including the costs of the interveners which asked for them .
On those grounds,
THE COURT ( Fifth Chamber )
hereby :
( 1 ) Dismisses the applications .
( 2)Orders the applicants to pay, jointly and severally in Case 277/85, the costs, both of the main proceedings and of the proceedings for the adoption of interim measures, including the costs of the interveners which asked for them .
