Council Implementing Regulation (EU) No 803/2011 of 4 August 2011 repealing the countervailing duty on imports of certain broad spectrum antibiotics originating in India and terminating the proceeding in respect of such imports, following review pursuant to Article 18(2) of Council Regulation (EC) No 597/2009

5.5.6.   Employment, productivity and wages

• (144) Employment increased by 9 % during the period considered in line with the investments in production capacity, while average wages increased by only 6 %. Productivity decreased by 11 % overall following the unexpected technical difficulties faced by one Union producer.

5.5.7.   Magnitude of the amount of countervailable subsidies and recovery from past subsidisation

• (145) Given the volume of the subsidised imports from India, the impact of the actual amount of subsidisation cannot be considered to be significant.

• (146) The situation of the Union industry improved significantly since the last review investigation and in the period considered. It can therefore be assessed that the Union industry managed to recover fully from past subsidisation.

5.6.   Conclusion on the economic situation of the Union industry

• (147) Between 2007 and the review investigation period, the volume of subsidised imports of the product concerned was negligible. With the exception of certain injury indicators such as market share, production volume and return on investment, most injury indicators including profitability (+ 153 %), sales price (+ 4 %), sales volume (+ 14 %), employment (+ 10 %) and investments (+ 29 %) developed positively during the period considered. The profit levels achieved in the Union market were, with the exception of year 2007, above the target profit margin established in the previous expiry review investigation; i.e. 10 %. The positive trend shown by the vast majority of indicators is mainly due to the reliability of the Union industry and the long standing customer relationship that it has developed over the past years, but also to the price level that it managed to achieve on the market.

• (148) One Union producer claimed that the analysis of the price and profit trends should take account of the shortages in raw materials in 2007 and 2008. It was claimed that these shortages led to exceptional increases in prices and profits in 2008 and to a limited extent in 2009. In this regard, as can be seen in Tables 5.5.2.1 and 5.5.4.1, the exceptional price and profit levels only pertain to 2008. The profit levels achieved in 2009 and the RIP appear no longer to be affected by the raw material shortages. The conclusion in recital 139, that profits throughout the period considered were above the target profit, remain valid.

• (149) Regarding captive sales, the option for the Union industry to sell part of its production on the captive market ensured high levels of capacity utilisation and enabled the Union industry to dilute fixed costs and to remain cost competitive.

• (150) In conclusion, in view of the positive development of the indicators pertaining to the Union industry, it is considered that the Union industry did not suffer material injury during the period considered.

5.7.   Effect of subsidised imports

• (151) Given the low volumes of the product concerned that were imported in the Union over the period considered, the subsidised imports did not adversely affect the performance of the Union industry. Indeed, as stated above, it is considered that the industry did not suffer material injury during the period considered.

6. LIKELIHOOD OF RECURRENCE OF INJURY

• (152) It is recalled that the Union industry did not suffer material injury during the period considered as most injury indicators showed positive trends over this period. In accordance with Article 18(2) of the basic Regulation, it was therefore examined whether the expiry of the measures in force would be likely to result in a recurrence of injury.

6.1.   Spare capacity in the country concerned

• (153) The investigation showed that the capacity utilisation of the three cooperating Indian producers had reached very high levels in the RIP. On that basis, spare capacities, which could be directed to the Union market in the absence of measures, would appear to be limited.

• (154) After disclosure it was claimed by several Union producers that the spare capacities in India were high and that the capacity utilisation rate of the cooperating Indian exporting producers was not representative for the Indian sector as a whole. One Union producer even claimed that the spare capacities of seven leading Indian exporters would represent volumes largely above the Union free market consumption.

• (155) In this respect it should first be underlined that the capacity utilisation rate of the three cooperating exporting producers was a weighted average calculation based on verified data and specifically relating to the product concerned. Moreover, the three cooperating exporting producers concerned were large producers and among the seven Indian exporters referred to, by the claimant, as ‘leading’. On the contrary, the data presented by the Union producers on these seven Indian producers’ spare capacity were mainly based on ‘market knowledge’ and, although this was specifically requested, they could not be substantiated by solid factual evidence. Therefore, that information had to be disregarded and it was confirmed that, based on the verified data on the file, Indian spare capacities appear to be limited.

6.2.   Export behaviour of the Indian exporting producers

• (156) On the basis of data from Indian official statistics, it was established that the prices of export sales to India’s ten main export markets were around 20 % on average lower than the prices of the Union industry sales on the Union market in the RIP. These Indian export prices were in line with the prices of the other main players on the Union market as set out in recital 119. It was found that low priced imports during the period considered from these other countries did not have a negative effect on the performance of the Union industry. In these circumstances, it is considered that, should measures be allowed to lapse, Indian export prices would likely not be harmful to the Union industry as it is already facing competition from other exporting countries with the same pricing behaviour without suffering any material injury.

• (157) Two Union producers also submitted that, if measures were to lapse, Indian producers would redirect exports currently sold on other markets to the Union on account of the attractiveness of the Union market in terms of prices. First of all it is noted that, if Indian producers were to re-direct their exports to the Union, they would enter in competition with other third countries that are already exporting significant quantities to the Union. Furthermore, as mentioned in recital 119, it has been concluded that imports from third countries, at prices similar to Indian export prices to other markets, have not affected the performance of the Union industry. On this basis, it is considered that if Indian export quantities to the Union increase at prices similar to those on other export markets, the Union industry would not suffer any material injury.

• (158) Two Union producers also claimed that the fact that there were import bans in place in the US against certain antibiotic production plants in India would lead to the re-direction of additional quantities to the Union market. However, in this regard, the conclusions in the preceding recital on the possible re-direction of exports remain valid.

6.3.   Captive market

• (159) While the captive market accounted for 50 to 60 % of the free and captive markets of the Union industry in the period considered, consumption in the Union industry captive market increased by more than 20 % over the same period. Considering the characteristics and size of this market, it is believed that, should measures be allowed to lapse, the captive market would not be affected by the likely increase in Indian exports and would therefore continue to ensure high capacity utilisation rates and economies of scale for the Union industry.

6.4.   Conclusion on the likelihood of recurrence of injury

• (160) On the basis of the above, it was concluded that, should measures be allowed to lapse, subsidised imports from India are not likely to cause material injury to the Union industry as most injury indicators developed positively over the period considered in spite of significant and increasing imports from other countries that were priced similarly to Indian exports to other countries. It was therefore concluded that material injury was not likely to recur, should measures be allowed to lapse.

7. UNION INTEREST

• (161) One Union producer claimed that a Union interest test analysis should have been carried out. In this regard, as it has been concluded that there is no likelihood of recurrence of injury, a Union interest test serves no purpose. In these circumstances, this claim was rejected.

8. SPECIAL MONITORING

• (162) In view of the finding on the likelihood of continuation of subsidisation as mentioned in recital 100 and the impact it might have on future trade flows, the Commission will monitor the import volumes of the product concerned. Should there be a significant change in these quantities, the Commission will give consideration to what action, if any, is to be taken.

• (163) The monitoring will be limited to a period of 2 years after the publication of this Regulation.

9. TERMINATION

• (164) In the light of the results of this review investigation, it is considered appropriate to repeal the countervailing duty on imports of certain broad spectrum antibiotics originating in India.

• (165) Interested parties were informed of the essential facts and considerations on the basis of which it was proposed to terminate the investigation and were given the opportunity to comment. The comments received were addressed under the relevant sections above and were not of a nature to change the above conclusions.

HAS ADOPTED THIS REGULATION:

Article 1

The expiry review of the countervailing measures applicable to imports of certain broad spectrum antibiotics, currently falling within CN codes ex 2941 10 00 and ex 2941 90 00 originating in India, initiated pursuant to Article 18(2) of Regulation (EC) No 597/2009, is hereby terminated and the measures in force on imports originating in India are repealed.

Article 2

This Regulation shall enter into force on the day following its publication in the Official Journal of the European Union.

This Regulation shall be binding in its entirety and directly applicable in all Member States.

Done at Brussels, 4 August 2011.

For the Council

The President

M. DOWGIELEWICZ

[^ntr1-L_2011206EN.01000101-E0001]: OJ L 188, 18.7.2009, p. 93.

[^ntr2-L_2011206EN.01000101-E0002]: OJ L 121, 13.5.2005, p. 1.

[^ntr3-L_2011206EN.01000101-E0003]: OJ L 273, 9.10.1998, p. 1.

[^ntr4-L_2011206EN.01000101-E0004]: OJ L 319, 29.11.2008, p. 1.

[^ntr5-L_2011206EN.01000101-E0005]: OJ C 21, 28.1.2010, p. 40.

[^ntr6-L_2011206EN.01000101-E0006]: OJ C 123, 12.5.2010, p. 11.