Fiskeri og Havbruksnaringens Landsforening and Others v Council (Dumping) [2012] EUECJ T-115/06 (21 March 2012)

Judgment Background to the dispute The first applicant, the Fiskeri og Havbruksnæringens Landsforening (the Norwegian Seafood Federation) ('FHL'), and the second applicant, the Norske Sjømatbedrifters Landsforening (the Norwegian Seafood Association), are organisations established under Norwegian law and represent Norwegian seafood producers, processors and exporters. According to those organisations, together they represent approximately 85% of Norwegian production and sales of farmed salmon originating in Norway. They defend their members' interests, particularly in matters of international trade, and are authorised to represent them before the courts. The third applicant, Salmar Farming AS, is a salmon producer wholly owned by Salmar AS, which is the largest producer of salmon fillets in Norway. The fourth applicant, Hydroteck AS, is a salmon farmer, the fifth applicant, Hallvard Lerøy AS, is a salmon exporter and the sixth applicant, Lerøy Midnor AS, is a producer and processor of farmed salmon. On 6 March 2004, the Commission of the European Communities, acting pursuant to Council Regulation (EC) No 3285/94 of 22 December 1994 on the common rules for imports and repealing Regulation (EC) No 518/94 (OJ 1994 L 349, p. 53) and to Council Regulation (EC) No 519/94 of 7 March 1994 on common rules for imports from certain third countries and repealing Regulations (EEC) No 1765/82, (EEC) No 1766/82 and (EEC) No 3420/83 (OJ 1994 L 67, p. 89), opened a safeguard investigation concerning imports of farmed salmon. In parallel to the safeguard investigation, on 8 September 2004, a complaint concerning imports of farmed salmon originating in Norway was lodged by the European Salmon Producers Group on behalf of producers representing a major proportion of the Community production of farmed salmon. Following that complaint, the Commission opened an anti-dumping proceeding in accordance with Council Regulation (EC) No 384/96 of 22 December 1995 on protection against dumped imports from countries not members of the European Community (OJ 1996 L 56, p. 1), as amended ('the basic regulation') (replaced by Council Regulation (EC) No 1225/2009 of 30 November 2009 on protection against dumped imports from countries not members of the European Community (OJ 2009 L 343, p. 51, corrigendum OJ 2010 L 22, p. 7)), and in particular in accordance with Article 5 of the basic regulation (now Article 5 of Regulation No 1225/2009). Notice of initiation of that proceeding was published in the Official Journal of the European Union of 23 October 2004 (OJ 2004 C 261, p. 8). The investigation into the dumping and the injury arising from it covered the period from 1 October 2003 to 30 September 2004 ('the investigation period'). The examination of the trends relevant for assessing injury covered the period from 1 January 2001 to the end of the investigation period. The period used for the findings on undercutting, underselling and injury elimination is the same as the investigation period. The product concerned by the investigation was farmed (other than wild) salmon, whether or not filleted, fresh, chilled or frozen ('the product concerned'). That definition excluded any other similar farmed fish products such as large (salmon) trout, biomass (live salmon) as well as wild salmon and any other type of processed salmon such as smoked salmon. In view of the large number of exporting producers of the product concerned in Norway and the large number of producers of the same product in the European Union, the Commission indicated that it was planning to use the sampling technique in that investigation. In its determination of the dumping issue, the Commission, acting pursuant to Article 17 of the basic regulation (now Article 17 of Regulation No 1225/2009), chose a sample of 10 Norwegian exporting producers for the purposes of the investigation. For the purposes of determining the injury, the sample of Community producers was established on the basis of the largest representative production volume which the investigation could reasonably cover, and ultimately included five companies. On 8 March 2005, the Commission sent the sampled companies information notes concerning the figures relating to their own costs of production. By letter of 11 April 2005, FHL disputed the procedure chosen by the Commission and the changes made to the cost of production figures. On 22 April 2005, the Commission adopted Regulation (EC) No 628/2005 imposing a provisional anti-dumping duty on imports of farmed salmon originating in Norway (OJ 2005 L 104, p. 5) ('the provisional regulation'). Those provisional anti-dumping duties, which took the form of ad valorem duties ranging between 6.8% and 24.5% of the value of the imported products, applied as of 27 April 2005. On 30 June 2005, the Commission, through Regulation (EC) No 1010/2005 amending Regulation No 628/2005 (OJ 2005 L 170, p. 32), amended the form of the provisional measures, replacing ad valorem duties with minimum import prices ('MIP') for the different presentations of farmed salmon, and extended the application of the provisional measures by three months. On 28 October 2005, the Commission sent the sampled companies the final disclosure document detailing the facts and grounds on the basis of which it was proposing to adopt definitive anti-dumping measures. By letter of 8 November 2005, the applicants submitted their observations on the final disclosure document and challenged the Commission's findings as set out in that final disclosure document. On 22 December 2005, the Commission sent the Council of the European Union its proposal for a regulation imposing a definitive anti-dumping duty and collecting definitively the provisional duty imposed on imports of farmed salmon originating in Norway. On 17 January 2006, the Council adopted Regulation (EC) No 85/2006 imposing a definitive anti-dumping duty and collecting definitively the provisional duty imposed on imports of farmed salmon originating in Norway (OJ 2006 L 15, p. 1) ('the contested regulation'). The contested regulation imposed definitive anti-dumping duties on the imports concerned, consisting in a combination of fixed and variable duties. Under Article 1(4), the contested regulation thus imposed a definitive anti-dumping duty, the amount of which was to be the difference between the MIP fixed in paragraph 5 of that article and the net free-at-Community-frontier price, before duty, if the latter was lower than the former. No duty was to be collected where the net free-at-Community-frontier price was equal to or higher than the corresponding MIP fixed in Article 1(5) of the contested regulation. Under Article 1(5) of the contested regulation, where it was found, following post-import verification, that the net free-at-Community-frontier price actually paid by the first independent customer in the European Union (post-importation price) was lower than the net free-at-Community-frontier price, before duty, as resulting from the customs declaration, and that the post-importation price was lower than the MIP, a fixed anti-dumping duty was to apply. Procedure and forms of order sought By application lodged at the Registry of the General Court on 7 April 2006, the applicants brought the present action. On 27 July 2006, the Commission applied for leave to intervene in support of the form of order sought by the Council. By order of 6 September 2006, the President of the Fourth Chamber of the Court granted leave to intervene. By document lodged at the Registry of the Court on 5 October 2006, the Commission informed the Court that it was waiving its right to lodge a statement in intervention. On 22 February 2007, the present case was reassigned to a new Judge-Rapporteur sitting in the First Chamber. After a change in the composition of the Chambers of the Court, the Judge-Rapporteur was assigned to the Fifth Chamber. On 15 April 2009, the applicants lodged at the Court Registry an additional submission, which the Court (Fifth Chamber) placed on the file, pursuant to Article 64(4) of the Court's Rules of Procedure. By documents lodged at the Court Registry on 14 and 15 October 2009, the Council and the Commission lodged their observations on the additional submission. On 8 February 2010, by way of measure of organisation of procedure, the Court (Fifth Chamber) asked the Council for details of the factors on the basis of which it had considered the three-year period referred to in recital 18 in the preamble to the contested regulation, used to calculate the extraordinary costs, to be appropriate. The Council was also asked to provide the Court with any relevant document in that regard. By letter of 11 March 2010, the Council replied to the question put and included a report drawn up by an external consultant. After a change in the composition of the Chambers of the Court, the Judge-Rapporteur was assigned to the Second Chamber, to which this case was accordingly assigned. Owing to the partial renewal of the Court, the present case was then assigned to a new Judge-Rapporteur sitting in the same Chamber. Upon hearing the report of the Judge-Rapporteur, the Court (Second Chamber) decided to open the oral procedure. The parties presented oral argument and replied to the questions put by the Court at the hearing on 12 July 2011. The applicants claim that the Court should: - annul the contested regulation; - order the Council to pay the costs. The Council contends that the Court should: - dismiss the action; - order the applicants to pay the costs. Law Admissibility of the action in so far as it seeks annulment of the contested regulation as a whole At the hearing, the parties argued as to the admissibility of the present action in so far as it is not limited to seeking annulment of the provisions of the contested regulation which are of individual concern to the applicants. In that regard it should be borne in mind that the fourth paragraph of Article 230 EC makes the admissibility of an action for annulment brought by a natural or legal person subject to the condition that the contested measure, although in the form of a regulation, is of direct and individual concern to that person. According to settled case-law, the plea of inadmissibility based on the condition laid down in the fourth paragraph of Article 230 EC that proceedings brought by a natural or legal person against a decision not addressed to it are admissible only if the decision is of direct and individual concern to it raises an absolute bar to proceeding, so that the Courts of the European Union may raise that plea of inadmissibility at any time, even of their own motion (see, to that effect, Case C-417/04 P Regione Siciliana v Commission [2006] ECR I-3881 , paragraph 36). It therefore behoves the Court to examine the issue of admissibility of its own motion. Regulations introducing an anti-dumping duty are legislative in nature and scope, inasmuch as they apply to all traders generally. Nevertheless, some provisions of those regulations may be of direct and individual concern to producers and exporters who are able to establish that they were identified in the measures adopted by the Commission or the Council or were concerned by the preliminary investigations, or to importers whose resale prices for the goods in question are used as the basis for the construction of the export price, in the case of an association between exporter and importer (see, to that effect, Case C-156/87 Gestetner Holdings v Council and Commission [1990] ECR I-781, paragraphs 17 and 18). Moreover, a regulation imposing different anti-dumping duties on a series of undertakings may be of direct concern to any one of them only in respect of those provisions which impose on that trader a specific anti-dumping duty and determine the amount thereof, and not in respect of those provisions which impose anti-dumping duties on other undertakings ( Gestetner Holdings v Council and Commission , paragraph 27 above, paragraph 12), although the institutions must comply with their obligations under Article 233 EC in the event of annulment on grounds affecting the calculation of the anti-dumping duties imposed on those other undertakings. It follows that, as regards FHL and the Norske Sjømatbedrifters Landsforening, the present action is admissible only in so far as it seeks annulment of the provisions of the contested regulation which impose a definitive anti-dumping duty or collect definitively a provisional anti-dumping duty on imports of farmed salmon originating from the production of the applicants' members, legally registered at the time the present proceedings were brought, and which determine the rate of those duties. As regards Salmar Farming, Hydroteck, Hallvard Lerøy and Lerøy Midnor, the present action is admissible only in so far as it seeks annulment of the provisions of the contested regulation which impose a definitive anti-dumping duty or collect definitively a provisional anti-dumping duty on imports of farmed salmon originating from their production and determine the rate of those duties. On the other hand, the applicants do not have locus standi to apply for annulment of the provisions of the contested regulation that concern only other companies. The present action must, to that extent, be dismissed as inadmissible. Substance In support of their action, the applicants put forward four pleas in law, concerning, respectively: - first, the selection of the sample of Norwegian exporting producers; - second, the calculation of the MIPs and fixed duties; - third, the MIPs for salmon fillets; and - fourth, the assessment of injury and of the causal link. In the present action, the Court finds it appropriate to begin by examining the second plea in law, alleging infringement of Article 9(4) of the basic regulation (now Article 9(4) of Regulation No 1225/2009) in that the MIPs and the fixed duties were not fixed at the lowest level. This plea is divided into two parts. First, the applicants submit, in essence, that the MIPs and the fixed duties established by the contested regulation were not fixed at the lowest level between the dumping margin and the injury margin. Second, in calculating the non-dumped MIPs, the Council and the Commission ('the institutions') used a method of converting Norwegian kroner into euro based on a three-year average exchange rate. The first part of the second plea: infringement of the lesser duty rule contained in Article 9(4) of the basic regulation The applicants submit that the institutions failed to apply the lesser duty rule contained in Article 9(4) of the basic regulation in order to establish the MIPs and fixed duties provided for in Article 1(5) of the contested regulation. Thus, by virtue of recitals 127 to 136 in the preamble to the contested regulation, the institutions relied on the weighted average injury margin instead of the weighted average dumping margin. In that regard, the applicants rely in particular on recitals 127 and 136 in the preamble to the contested regulation, which indicate that the contested regulation is based, pursuant to Article 9(4) of the basic regulation, on a weighted average injury margin of 14.6%. At the same time, the contested regulation indicates, in recital 32, that the weighted average dumping margin was 14.8% and therefore the same as that in the final disclosure document, despite the fact that the individual dumping margins of three of the companies sampled, Pan Fish Norway AS, Hydroteck and Sinkaberg-Hansen AS, were reduced from 24.5% to 17.7%, from 21% to 18% and from 2.7% to 2.6% respectively. The applicants draw the conclusion from the reduction of those individual margins that the weighted average dumping margin should have been lower than 14.8%, or even than 14.6%. Therefore, the MIPs and the fixed duties ought to have been established, in accordance with Article 9(4) of the basic regulation, on the basis of the weighted average dumping margin, not on the basis of the weighted average injury margin. The Council submits, in essence, that, contrary to the applicants' assertions, the institutions properly applied the lesser duty rule in comparing the non-injurious MIP of EUR 2.80 per kilogram (whole fish equivalent) with the reconstructed non-dumped MIPs of the sampled Norwegian exporters. Those non-dumped MIPs were calculated on the basis of normal values, adjusted to the net free-at-Community-border price. In all cases, the reconstructed non-dumped MIP was well above the non-injurious MIP of EUR 2.80. Moreover, the Council argues that the reduction of the individual dumping margins for certain exporters following final disclosure, and therefore the reduction of the weighted average dumping margin, are irrelevant for the application of the lesser duty rule. In any event, the weighted average dumping margin for all exporters, including those who did not cooperate, was 18.4% and thus well above the weighted average injury margin. The institutions were therefore correct in finding, in recitals 127 and 136 in the preamble to the contested regulation, that the weighted average injury margin was lower than the weighted average dumping margin. It should be borne in mind, first of all, that Article 9(4) of the basic regulation lays down the lesser duty rule, which provides that '[t]he amount of the anti-dumping duty shall not exceed the margin of dumping established but it should be less than the margin if such lesser duty would be adequate to remove the injury to the Community industry'. In the first place, it is clear that the applicants' complaint, to the effect that the anti-dumping duties in the form of MIPs established by Article 1(5) of the contested regulation are incorrect because they are based on the weighted average injury margin instead of the weighted average dumping margin, is based on an incorrect presumption as to the method used by the institutions to calculate those anti-dumping duties. In fact, the institutions did not base the calculation of the MIPs on one of those two margins, but rather on the outcome of the comparison of the non-dumped MIPs and the non-injurious MIP. Thus, recital 129 in the preamble to the contested regulation states that, in order to apply the rule laid down in Article 9(4) of the basic regulation, the institutions established a company-specific non-dumped MIP on the basis of the normal value of the product concerned, adjusted to the net free-at-Community-border price. Those prices were then compared with the non-injurious MIP calculated for the Community industry for the like product. In accordance with recital 131 in the preamble to the contested regulation, in calculating the non-injurious MIP, it was considered that any measures should allow the Community industry to cover its costs of production and to obtain overall a profit before tax that could reasonably be achieved by an industry of this type in the sector under normal conditions of competition, that is in the absence of dumped imports, on the sales of the like product in the European Union. In each case, it was established that the non-injurious MIP was lower than the non-dumped MIP. Therefore, as regards the anti-dumping duties in the form of an MIP, the weighted average injury margin of 14.6% relied on by the applicants is not behind the application of the lesser duty rule provided for in Article 9(4) of the basic regulation. This conclusion is furthermore confirmed by recital 133 in the preamble to the contested regulation, which states that the MIPs were established at the level of the non-injurious MIP and applied to all imports of Norwegian salmon. It is thus stated that, in so far as imports of Norwegian salmon made at prices at or above the non-injurious MIP will remove the effects of the injurious dumping, it is appropriate that the MIP should apply to all of those imports except for those from one company, for which a de minimis dumping margin has been found. It follows that the applicants' complaint, to the effect that the institutions based the anti-dumping duties in the form of an MIP on the weighted average injury margin, which affected those duties, must be rejected. In the second place, as regards the anti-dumping duties in the form of fixed duties, it should be noted that the institutions made their calculation using a comparison of the weighted average dumping margin and the weighted average injury margin. It must be borne in mind at the outset that the 'lesser duty rule' means that a producer upon whom anti-dumping duties have been imposed cannot contest them on the ground that the investigation resulted in an exaggerated dumping margin if the rate of those duties has been fixed at the level of the injury margin and that injury margin is below both the dumping margin incorrectly adopted and the real dumping margin (see, to that effect, Case 250/85 Brother Industries v Council [1988] ECR 5683, paragraph 24). However, once it has been established that a calculation not invalidated by the alleged error is liable to give rise to a dumping margin which is lower than the injury margin, the only possible outcome is that the contested regulation must be annulled. In the present case, the applicants challenge the validity of the calculation of the dumping margin attributed to them and argue that that error gave rise to an infringement of the lesser duty rule. In particular, the applicants criticise the institutions for having failed to take account of the correction of the individual dumping margins established for three companies included in the sample, which affected the weighted average dumping margin resulting from that sample which was attributed to the applicants under recital 38 in the preamble to the provisional regulation, confirmed by recital 30 in the preamble to the contested regulation. The specific error alleged may entail the annulment of the contested regulation, since the weighted average dumping margin calculated according to the methods proposed by the applicants could be lower than the weighted average injury margin established by that regulation. This conclusion also holds true in respect of Hydroteck, an applicant included in the sample, which accordingly was assigned an individual dumping margin, and also in respect of the companies included in the sample which are members of FHL or the Norske Sjømatbedrifters Landsforening. As the fixed duties were established at the level of the weighted average injury margin for all the companies concerned irrespective of their inclusion in the sample, a definition of the weighted average dumping margin at a level lower than that of the weighted average injury margin will necessarily affect the level of those duties. It is thus stated in recital 136 in the preamble to the contested regulation that, '[i]n accordance with Article 9(4) of the basic regulation, the fixed duty was calculated on the basis of the weighted average injury margin as this was found to be lower than the weighted average dumping margin'. Consequently, the Court finds that, as regards the calculation of anti-dumping duties in the form of fixed duties, established in Article 1(5) of the contested regulation, the institutions acted on the basis of the weighted average injury margin. According to recital 30 in the preamble to the contested regulation, confirming recital 38 in the preamble to the provisional regulation, the weighted average dumping margin was calculated on the basis of the individual dumping margins established for the companies included in the sample. The weighted average dumping margin was found to be 14.8%, whereas the weighted average injury margin was fixed at 14.6%. In that context, it must be noted that, as evidenced by the documents in the file, the individual margins for the three companies in the sample, namely Pan Fish Norway, Hydroteck and Sinkaberg-Hansen, were revised downwards following final disclosure from the Commission, being reduced from 24.5% to 17.7%, from 21.9% to 18.0% and from 2.7% to 2.6% respectively. Since the weighted average dumping margin was calculated using the individual dumping margins of the companies included in the sample, it follows that the margin in question also had to be adjusted downwards. Yet, as indicated in recital 32 in the preamble to the contested regulation and as the applicants point out, the institutions did not adjust the weighted average dumping margin following the reduction in the individual margins of the three companies included in the sample, following final disclosure, instead keeping the same weighted average dumping margin of 14.8%. It is also clear that the applicants' argument concerning the necessary reduction in the weighted average dumping margin (see paragraph 35 above) has not been disputed by the Council. Nor has the Council shown that the reduction in question would not bring the weighted average dumping margin to a level below that of the weighted average injury margin. Moreover, in the light of the circumstances of the present case, it is highly likely that a reduction in the weighted average dumping margin would have removed the very slight discrepancy between that margin and the weighted average injury margin, thereby changing the very basis used to calculate the fixed duties. That finding is not affected by the Council's arguments to the effect that the reduction in the individual dumping margins of certain exporters, following final disclosure, and therefore in the weighted average dumping margin, is unrelated to the application of the lesser duty rule and, moreover, that the weighted average dumping margin for all exporters, including those who did not cooperate, was 18.4%. First, as stated in paragraph 49 above, it is clear from recital 136 in the preamble to the contested regulation that, pursuant to Article 9(4) of the basic regulation, the fixed duties were calculated on the basis of the weighted average injury margin, which proved to be lower than the weighted average dumping margin. The reduction in the individual dumping margins of the three companies in question was also supposed to lead to a reduction in the weighted average dumping margin. Consequently, under the lesser duty rule, the institutions ought to have taken account of that reduction in the calculation of the fixed duties. Therefore, the Council's argument that the reduction in the weighted average dumping margin is unrelated to the application of the lesser duty rule must be rejected as unfounded. Second, it should be observed that the Council's assertion that the weighted average dumping margin for all exporters, including those who did not cooperate, was 18.4% is not substantiated. The figure put forward follows neither from the contested regulation, the provisional regulation nor the documents in the file. Accordingly, this allegation by the Council must be rejected. It follows from the foregoing that the fixed duties provided for by the contested regulation are based on a comparison with an exaggerated weighted average dumping margin and, therefore, on an incorrect basis for the calculation, which has affected the calculation of those duties. The Court accordingly finds that the institutions infringed Article 9(4) of the basic regulation in that they failed to observe the lesser duty rule provided for in that article when they imposed fixed duties which were incompatible with that rule. Moreover, in the light of the conclusions set out in paragraphs 57 and 58 above, it must be held that the arguments put forward by the Commission at the hearing, to the effect that the sole purpose of the fixed duties was to ensure that the application of the MIPs was not circumvented, are irrelevant and, in any event, the fixed duties were not actually collected. First, the Commission's assertion that the fixed duties were not actually collected must be rejected as unsubstantiated. Moreover, at the hearing, the Council acknowledged that the possibility could not be ruled out that those duties may have been collected 'for a certain period of time'. Second, it must be observed that the fixed duties are an essential component in the overall scheme of the contested regulation. It is stated in point 9 in the contested regulation, entitled 'Enforceability of the [MIP]', in particular recital 136, that 'in view of indications that some circumvention of the MIP occurred since it was imposed on 1 July 2005 and the potential which exists for compensatory arrangements in this market sector, it is necessary to introduce a double system of measures'. It is clear that this double system is therefore based on fixed duties to ensure effective compliance with the MIP. In those circumstances, the Council's error in setting the fixed duties affects the entire contested regulation and, in particular, the enforceability of the MIP. That error is, therefore, not marginal, contrary to the Commission's assertions. In the light of all the foregoing considerations, the first part of the second plea, alleging infringement of the lesser duty rule provided for in Article 9(4) of the basic regulation, must be upheld. The second part of the second plea: infringement of Article 9(4) of the basic regulation, providing for increased non-dumped MIPs through the use of a three-year conversion rate The applicants allege, in essence, an infringement of Article 9(4) of the basic regulation based on the fact that, in calculating the non-dumped MIPs, the institutions used a method of converting Norwegian kroner into euro based on a three-year average exchange rate and not the average exchange rate for the investigation period. According to the applicants, the use of the three-year average exchange rate pushed up the non-dumped MIPs by 6.7%. Consequently, the comparison of the non-dumped MIPs and the non-injurious MIP is incorrect. In their replies to the questionnaire sent by the Commission at the investigation stage, which served as a basis for the calculation of costs, the companies included in the sample answered on the basis of the exchange rate indicated in that questionnaire, based on the investigation period. The applicants also dispute the three-year period corresponding to the average production cycle for farmed salmon used by the institutions and maintain, in their reply, that the average farming period for an average Atlantic salmon is 32 months in Norway. According to the Council, in order to ensure that the lesser duty rule was respected, the institutions calculated for each exporter a reconstructed non-dumped MIP for comparison with the non-injurious MIP. It was within the context of that calculation of the non-dumped MIPs that they established the production costs by converting Norwegian kroner into euro and used for that purpose a three-year average exchange rate in accordance with the approach based on the production cycle for farmed salmon. The Council argues in that regard that the large companies which make up the Norwegian salmon industry, including Marine Harvest Norway AS and Fjord Seafood Norway AS, used in the sample of Norwegian exporting producers, generally use project accounting corresponding to the average production cycle for farmed salmon. Under that accounting method, costs are accumulated into a stock account over the period from fertilisation and hatching all the way up to slaughtering, which is generally three years. Given that a number of important costs included in the normal value were incurred over that three-year production cycle, the Commission rightly applied a three-year average exchange rate. Moreover, as the applicants, in their application, have challenged only the use of the three-year average rate, as opposed to the average rate during the investigation period, the Council takes the view that the allegation put forward in the reply concerning the duration of the production cycle is a new plea and, accordingly, is inadmissible under Article 48 of the Rules of Procedure. It should be observed, as a preliminary point, that recital 130 in the preamble to the contested regulation states, in respect of the calculation of the non-dumped MIPs, that the institutions applied a three-year average exchange rate to convert the costs incurred by the Norwegian salmon industry into euro. That same recital indicates that the institutions' decision to apply a three-year average exchange rate is linked to the average production cycle for salmon which, under the contested regulation, is three years, and to the fact that a number of important costs included in the normal value are incurred over that production cycle. It should also be observed that a succinct explanation for the use of that three-year period is to be found in recital 18 in the preamble to the contested regulation, although only for the allocation of extraordinary costs in the construction of the normal value. It thus states as follows: '... [A]llocation of the costs over a period of time would remove any undue effect caused by the timing of the decisions of the companies to report these costs. Ideally, all extraordinary costs reported for each separate asset should be allocated over the useful life of that asset to arrive at an average annual cost. However, it is to be noted that none of the companies concerned carried out this exercise. Instead, the Commission has decided to take the extraordinary costs reported by companies in the sample during the last three years, based on the most recently available financial statements, and to allocate one third of these costs to salmon production in the [investigation period], on the basis of turnover. Three years was considered an appropriate time period as this is the average length of time that it takes to grow a salmon from a smolt to a harvestable salmon.' Yet the information given in recitals 18 and 130 in the preamble to the contested regulation does not afford a clear view of the costs actually taken into account by the institutions on the basis of a three-year period, including whether they in fact provide a sufficient, objective basis for the calculation of the normal value, thereby justifying coherently the use of a three-year average exchange rate for the calculation of the non-dumped MIPs. It should be borne in mind, in that context, that the Court asked the Council, by way of measure of organisation of procedure, to specify the factors which had led it to consider that the three-year period, referred to in recital 18 in the preamble to the contested regulation and used for the calculation of the extraordinary costs, was appropriate. In its reply of 11 March 2010 to the Court's question, the Council provided the report of an external consultant, together with additional information about the three-year period referred to in recital 18 in the preamble to the contested regulation. The Council observed that that report had been drawn up at the request of the producers represented by FHL. According to the Council, that report contains general observations on the cost structure of the Norwegian salmon industry, together with detailed information about the costs of the Norwegian exporters included in the sample. As indicated on page 2 of the external consultant's report, the background for that document was the divergences between the cost of production calculations made by the Norwegian salmon companies and the Commission, and the adjustment of those costs in respect of each company, including extraordinary costs. It is also explained on page 2 that the aim of the report was to present a methodology that was likely to be applied. Thus, on page 19 of the external consultant's report, the suggestion is made that production costs are spread over one generation of salmon, a period which is specified as being 36 months. The report corroborates the institutions' assessment in recital 18 in the preamble to the contested regulation, to the effect that growing one generation of salmon, from a smolt to a harvestable salmon, takes three years. However, it should be observed, first, that the applicants, in their reply, also challenge the duration of the production cycle for farmed salmon, stating that it is 32 months and not 36. It is clear in that regard that the institutions closely linked their choice of method for the conversion of Norwegian kroner into euro based on a three-year average exchange rate to the duration of the production cycle for farmed salmon, chosen by the institutions in order to spread certain extraordinary costs incurred by the companies included in the sample. Therefore, the applicants' allegation cannot be held to be a new plea and is accordingly admissible. Second, it is clear that the external consultant's report produced by the Council suggests the use of the 36-month period in order to spread the costs of restructuring, in this case extraordinary restructuring costs. Thus page 19 of the report refers to extraordinary restructuring costs and not to extraordinary costs in general. Obviously, the inclusion and correct allocation of restructuring costs in the final production costs are important, but those costs are merely one component in the final construction of a normal value for the purposes of the basic regulation. The institutions extended the use of the period indicated by the external consultant's report to the allocation of other costs. In that regard the external consultant's report cannot be regarded as an 'other reasonable basis' for the purposes of the first subparagraph of Article 2(5) of the basic regulation (now the first subparagraph of Article 2(5) of Regulation No 1225/2009) for the determination and adjustment of the costs associated with the production and sale of Norwegian salmon and on which the calculation of the normal value is based. Moreover, the external consultant's report, as lodged by the Council, does not confirm that all the companies included in the sample or, at the very least, the leading Norwegian exporting producers of salmon, as the Council maintains, used project accounting to determine production costs for the product concerned. Contrary to the Council's assertions, Annex R-2 to the letter of 11 March 2010, which contains a non-confidential table showing the cost accounting methods applied by the Norwegian companies in their answers to the questionnaire sent by the Commission at the investigation stage, indicates that only four companies in the sample replied relying on project accounting and that, even in those cases, the evidence does not indicate that it was a three-year project. Consequently, the external consultant's report does not justify the use of the three-year period to allocate all extraordinary or other costs, nor does it confirm that the companies included in the sample systematically used a three-year project accounting approach to determine production costs for the product concerned. Moreover, the three-year period, linked to the production cycle for farmed salmon to justify the allocation of production costs, is disputed by the applicants. It follows that, since the three-year period used by the institutions to allocate the costs in question is not justified, neither is the three-year conversion rate chosen to calculate the non-dumped MIPs. In any event, it should be observed that, even if all the companies included in the sample had adopted the three-year project accounting approach, which they did not, the institutions ought to have indicated clearly the scope and structure of the costs taken into account in such an approach. Recital 130 in the preamble to the contested regulation merely states that '[a]s a number of important costs which are included in the normal value are incurred over this production cycle, the Commission considers that three-year average rates are appropriate when calculating non-dumped MIPs'. Therefore, only certain costs were included in the normal value using the three-year project accounting approach. It follows that the institutions used the three-year conversion rate even though only part of the costs resulting from an average over that period was included in the normal value on which the calculation of the non-dumped MIPs was finally calculated for each company in the sample. Moreover, as indicated in recital 130 in the preamble to the contested regulation and the documents in the file, the applicants clearly disputed the institutions' approach, inter alia on the grounds that the production costs used as a basis for the calculation of the normal value were based on data relating to the investigation period, as provided by the Norwegian companies in the sample. It is clear that, in acting mainly on the basis of data relating to the investigation period, the institutions ought to have used an exchange rate corresponding to that same period so as to maintain methodological consistency in the calculation of the non-dumped MIPs in relation to the data gathered. In failing to do so, the institutions based those prices on incorrect facts, which casts doubt on the level of those prices, in that it should have been lower. It should be observed in that regard that the Council does not dispute the applicants' argument that the use of a three-year average exchange rate led to a 6.7% increase in the non-dumped MIPs, and merely reaffirms that the use of that exchange rate was justified. It should be borne in mind that, according to the explanations given in recitals 129 and 133 in the preamble to the contested regulation, the institutions based the anti-dumping duties in the form of MIPs on a comparison of the non-dumped MIPs and the non-injurious MIP. Thus the institutions found, in recital 131 in the preamble to the contested regulation that, in all cases, the non-injurious MIP was lower than the non-dumped MIPs, which, in relation to Article 9(4) of the basic regulation, justified the fixing of anti-dumping duties in the form of MIP at the level of the non-injurious MIP. In the present case, it is clear that the basis for the finding that the non-injurious MIP was, in all cases, lower than the non-dumped MIPs, is vitiated, given that the institutions relied on an inappropriate method for that purpose, namely the use of a three-year average exchange rate to convert into euro the costs included in the construction of the normal value. It follows from all the foregoing considerations that the institutions erred in using a three-year average exchange rate to convert the costs incurred by the Norwegian salmon industry, which is liable to affect the comparison of the non-dumped MIPs and the non-injurious MIP in the application of the lesser duty rule under Article 9(4) of the basic regulation. In those circumstances, the second part of the second plea in law must be upheld. It follows that the contested regulation must be annulled in so far as it concerns the applicants, and there is no need to consider the other pleas in law put forward by them. Costs Under Article 87(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party's pleadings. Since the Council has been essentially unsuccessful, it must be ordered to pay the costs in accordance with the form of order sought by the applicants. In accordance with Article 87(4) of the Rules of Procedure, the Commission must bear its own costs. On those grounds, THE GENERAL COURT (Second Chamber) hereby: 1. Annuls Council Regulation (EC) No 85/2006 of 17 January 2006 imposing a definitive anti-dumping duty and collecting definitively the provisional duty imposed on imports of farmed salmon originating in Norway in so far as it concerns the Fiskeri og Havbruksnæringens Landsforening, the Norske Sjømatbedrifters Landsforening, Salmar Farming AS, Hydroteck AS, Hallvard Lerøy AS and Lerøy Midnor AS; 2. Dismisses the action as to the remainder; 3. Orders the Council of the European Union to bear its own costs and to pay those of the Fiskeri og Havbruksnæringens Landsforening, the Norske Sjømatbedrifters Landsforening, Salmar Farming, Hydroteck, Hallvard Lerøy and Lerøy Midnor; 4. Orders the European Commission to bear its own costs. Forwood Dehousse Popescu Delivered in open court in Luxembourg on 21 March 2012. [Signatures] * Language of the case: English. The source of this judgment is the Europa web site. The information on this site is subject to a Disclaimer and a Copyright notice and rules related to Personal data protection. This electronic version is not authentic and is subject to amendment. BAILII: Copyright Policy | Disclaimers | Privacy Policy | Feedback | Donate to BAILII