Matsushita Electric Industrial Co. Ltd v Council of the European Communities. (Common commercial policy) [1993] EUECJ C-104/90 (13 October 1993)

Judgment 1 By application lodged at the Court Registry on 17 April 1990, Matsushita Electric Industrial Co. Ltd (hereinafter "MEI"), established in Osaka, brought an action under the second paragraph of Article 173 of the EEC Treaty for the annulment of Council Regulation (EEC) No 112/90 of 16 January 1990 imposing a definitive anti-dumping duty on imports of certain compact-disc players originating in Japan and the Republic of Korea and collecting definitively the provisional duty (OJ 1990 L 13, p. 21, hereinafter the "contested regulation"), in so far as it concerns the applicant. 2 MEI comprises more than 30 manufacturing and sales divisions, including the Hi-Fi Audio Division (hereinafter "HAD") which is responsible for the manufacture and sale of compact-disc players (hereinafter "CDPs"). In Japan the CDPs manufactured by HAD are sold under the "Technics" brand. During the period under investigation, CDPs were sold by HAD on the Japanese market to 77 related companies and two independent companies entrusted with the task of regional distribution to independent purchasers who in turn sell on to end users. 3 In June 1987 MEI was the subject of a complaint lodged with the Commission by the Committee of Mechoptronics Producers and Connected Technologies (Compact), which accused it of dumping its products in the Community. 4 The anti-dumping procedure was initiated by the Commission under 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 (OJ 1984 L 201, p. 1). Subsequently, it was governed by Council Regulation (EEC) No 2423/88 of 11 July 1988 on protection against dumped or subsidized imports from countries not members of the European Community (OJ 1988 L 209, p. 1), which repealed Regulation No 2176/84 and, by the second paragraph of Article 19, was declared to be applicable to procedures which had already been initiated. The result of the procedure was the adoption of Commission Regulation (EEC) No 2140/89 of 12 July 1989 imposing a provisional anti-dumping duty on imports of certain compact-disc players originating in Japan and South Korea (OJ 1989 L 205, p. 5). The rate of provisional anti-dumping duty was fixed at 33.9% of the net free-at-Community-frontier price. In the contested regulation the Council then fixed the definitive anti-dumping duty at 26.3%. 5 Reference is made to the Report for the Hearing for a fuller account of the facts of the case, the procedure and the pleas and arguments of the parties, which are mentioned or discussed hereinafter only in so far as is necessary for the reasoning of the Court. 6 MEI maintains in the first place that the institutions infringed Article 2(3) and (7) of Regulation No 2423/88, mentioned above, by determining normal value on the basis of the sales price charged by related distributors. Normal value ought to have been determined on the basis of the price paid to MEI by related distributors or, if not, on the basis of the comparable price of a like product exported to a non-member country, or of a constructed value, in accordance with Article 2(3)(b) of that regulation. 7 The applicant alleges that, in order to disregard the price paid by related distributors, the institutions incorrectly treated MEI and those companies as forming a single economic entity. 8 It should be recalled that, according to information before the Court, of the 79 distribution companies are wholly or partly owned by MEI and other companies in the Matsushita group. 9 The Court has consistently held that 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 in other cases are carried on by what is, also from a legal point of view, a single entity (Case 250/85 Brother v Council [1988] ECR 5683, paragraph 16; and in Case C-175/87 Matsushita v Council [1992] ECR I-1409 , paragraph 12). 10 It is clear from those judgments that, before deciding whether there exists a single economic entity, it is necessary to examine whether tasks which are normally the responsibility of a manufacturer' s internal sales department have been entrusted to distribution companies. 11 In that connection the applicant explains that, through the intermediary of HAD, it has its own sales force for distributors. HAD visits distributors and retailers, and provides them with technical assistance. It is also responsible, in close collaboration with MEI' s advertising division, for the promotion of CDPs in Japan. 12 The applicant also alleges that HAD in fact sold to unrelated distributors, which proves in its opinion that MEI was capable of selling to independent buyers without the intervention of related distributors. 13 These arguments, which seek to show that MEI and its distribution companies should not be treated as forming a single economic entity, cannot be accepted. 14 It is apparent from the documents before the Court that, even if the manufacturer itself performed certain sales functions through the intermediary of HAD, those were merely complementary to the functions performed by the distribution companies. The applicant has not established that HAD sold CDPs directly to a reseller, a retailer or an end user. The presence of two independent distribution companies cannot invalidate that finding since, apart from the fact that the applicant has not disputed that those sales were not representative, it is also common ground that the intermediary of a distributor, whether related or unrelated, has always been necessary. 15 It follows from the foregoing that, in view of the extent of the market in the present case and the nature of the product at issue, the sales function performed by the distributors must be regarded as an essential factor in the first sale to an independent buyer. 16 It follows that the sales functions of the distributors in the present case form part of the tasks which are normally the responsibility of a manufacturer' s internal sales department. Accordingly, the institutions were entitled to conclude that the companies concerned formed a single economic entity, thus allowing normal value to be properly determined on the basis of the price paid to the distributors since that is the price which may be regarded as actually paid or payable in the ordinary course of trade within the meaning of Article 2(3)(a) of Regulation No 2423/88, mentioned above. There was no ground for applying Article 2(3)(b) of that regulation, which comes into play only "when there are no sales of the like product in the ordinary course of trade". 17 The plea that normal value was incorrectly calculated must therefore be rejected. 18 Secondly, the applicant pleads an infringement of Article 190 of the Treaty, in that the Community institutions departed from the comprehensive scheme for determining normal value contained in the Council' s basic regulation without providing an appropriate statement of reasons. 19 In that connection, it should be recalled that, as the Court has consistently held, the statement of reasons required by Article 190 of the Treaty must disclose in a clear and unequivocal fashion the reasoning followed by the Community authority which adopted the measure in question in such a way as to make the persons concerned aware of the reasons for the measure and thus enable them to defend their rights, and to enable the Court to exercise its supervisory jurisdiction (Case 203/85 Nicolet Instrument v Hauptzollamt Frankfurt am Main [1986] ECR 2049, paragraph 10; and Case 255/84 Nachi Fujikoshi v Council [1987] ECR 1861, paragraph 39). 20 That requirement was satisfied in the present case by the reasoning set out at points 30 and 31 of the contested regulation. That regulation refers to the Commission' s provisional regulation from which it emerges that both the functions performed by the manufacturing company and those performed by the related companies are necessary for the sale to the first independent buyer, which led the institutions to conclude that the companies concerned formed a single economic entity. 21 The plea that the statement of reasons was inadequate must therefore fail and, accordingly, the application in its entirety must be dismissed. Costs 22 Under Article 69(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs. Since the applicant has failed in its submissions, it must be ordered to pay the costs, including those of Compact, intervener, which applied for them in its pleading. In accordance with Article 69(4) of the Rules of Procedure, the Commission must bear its own costs. On those grounds, THE COURT (Sixth Chamber) hereby: 1. Dismisses the application; 2. Orders the applicant to pay the costs, including those incurred by Compact, intervener. © European Communities, 2001 All rights reserved BAILII: Copyright Policy | Disclaimers | Privacy Policy | Feedback | Donate to BAILII