Commission Implementing Regulation (EU) 2023/2605 of 22 November 2023 amending Implementation Regulation (EU) 2022/926 imposing a definitive anti-dumping duty on imports of tubes and pipes of ductile cast iron (also known as spheroidal graphite cast iron) originating in India, following a partial interim review pursuant to Article 11(3) of Regulation (EU) 2016/1036 of the European Parliament and of the Council

THE EUROPEAN COMMISSION,

Having regard to the Treaty on the Functioning of the European Union,

Having regard to Regulation (EU) 2016/1036 of the European Parliament and of the Council of 8 June 2016 on protection against dumped imports from countries not members of the European Union (1) (‘the basic anti-dumping Regulation’), and in particular Article 11(3) thereof,

Whereas:

(1) By Commission Implementing Regulation (EU) 2016/388 (2) (‘the original Regulation’), the European Commission (the ‘Commission’) imposed a definitive anti-dumping duty on imports of tubes and pipes of ductile cast iron (also known as spheroidal graphite cast iron), originating in India (3) (‘the original measures’). The investigation that led to the imposition of this anti-dumping duty will hereinafter be referred to as ‘the original anti-dumping investigation’.

(2) By Implementing Regulation (EU) 2016/387 (4), the Commission imposed a definitive countervailing duty on imports of the same product originating in India. The investigation that led to the imposition of this countervailing duty will hereinafter be referred to as ‘the original anti-subsidy investigation’.

(3) By Implementing Regulations (EU) 2022/926 (5) and (EU) 2022/927 (6), the Commission maintained, following an expiry review, the definitive anti-dumping duty and the definitive countervailing duty for another 5 years.

(4) In the original regulation, the dumping margin established for Electrosteel Castings Ltd (‘ECL’ or ‘the applicant’ or ‘the company’) was determined at 4,1 %. In the separate original anti-subsidy investigation concerning the same product from the same country concerned, the countervailing duty established for ECL was 9 %, out of which 6,04 % was based on export contingent subsidies.

(5) In line with the basic anti-dumping Regulation and Regulation (EU) 2016/1037 (7) (‘the basic anti-subsidy Regulation’), the Commission took account of the fact that three of the investigated subsidy schemes were export subsidies which effectively reduced export prices and thus increased the dumping margin accordingly.

(6) Thus, the Commission reduced the dumping margin by the subsidy amounts found in relation to the export contingent schemes in the original anti-subsidy investigation. Based on this method, the definitive anti-dumping duty for the applicant was reduced to 0 %.

(7) On 22 September 2022, the Commission announced, by a notice in the Official Journal of the European Union, the initiation of a partial interim review (‘Notice of initiation’) of the anti-dumping measures applicable to imports of tubes and pipes of ductile cast iron (also known as spheroidal graphite cast iron), originating in India, pursuant to Article 11(3) of the basic anti-dumping Regulation (8).

(8) The review, limited in scope to the examination of dumping of the exporting producer ECL, was initiated following a request by the applicant. It was requested on grounds of a merger that took place between the applicant and its related company Srikalahasthi Pipes Ltd (‘SPL’), decided by the Board of Directors in October 2020.

(9) The merger between ECL and SPL lead to the situation where the existing anti-dumping measure was likely either no longer necessary or no longer sufficient to counteract the dumping which is causing injury within the meaning of Article 11(3) of the basic anti-dumping Regulation. This was because the dumping margin calculated in the original anti-dumping investigation did not include the domestic sales of SPL. Moreover, the legal documentation of the merger envisaged ‘synergies’ which could have an effect on the cost structure, and consequently the dumping margin of the applicant.

(10) The Commission considered that the request contained sufficient evidence that the circumstances on basis of which the existing measures were imposed have changed and that these changes were of a lasting nature.

(11) The investigation of the level of dumping covered the period from 1 April 2021 to 31 March 2022 (the ‘review investigation period’ or ‘RIP’).

(12) The Commission officially informed the applicant, the authorities of the exporting country, the other known exporting producers and the Union industry of the partial interim review. Interested parties were given the opportunity to make their views known in writing and to request a hearing within the time-limit set out in the Notice of Initiation. A Union producer, Saint-Gobain PAM Canalisations (‘SG PAM’), provided comments upon initiation (see Section 1.8).

(13) To obtain the information necessary for its investigation, the Commission sent a questionnaire to the applicant, who responded within the given deadline. The Commission sought and verified all information it deemed necessary for the purpose of determining the level of dumping. Pursuant to Article 16 of the basic anti-dumping Regulation, the Commission held a verification visit at the premises of the applicant. The Commission also held videoconferences with the related companies to verify the information they submitted.

(14) By letter of 10 July 2023 (‘Article 18 letter’), the Commission informed the applicant about its doubts with regard to the reliability of the company’s data. In the letter, it provided details on why it considered that ECL may have supplied false or misleading information. The Commission also informed the applicant that it may apply Article 18 of the basic anti-dumping Regulation and about the consequences thereof.

(15) By letters of 24 July 2023, the Government of India (‘GOI’), ECL and SG PAM provided comments on the Article 18 letter, and on the disclosure.

(16) The Commission also received comments from European distributors on the Union market of ductile pipes produced by ECL – companies Valdro, Fusion Pipeline Products Limited (‘Fusion Pipelines Products’), CO.ME.CAR SRL, Deschacht, Idrovit SRL, Vodoskok d.d., and WAPPtech Ltd.

(17) At the request of ECL, a hearing took place on 26 July 2023.

(18) On 24 August 2023, the Commission informed all interested parties of the essential facts and considerations on the basis of which it intended to propose to amend the duty rate applicable to ECL. Interested parties were given the opportunity to comment by 6 September 2023, and to request a hearing with the Commission and/or with the Hearing Officer in trade proceedings.

(19) The Commission received comments in this regard from GOI, SG PAM, ECL, and from the European companies Deschacht, IBECO AB, VAPPtech Environrnental Ltd (‘VAPPtech’) and Vodoskok.

(20) On 4 September 2023, at the request of the GOI, a hearing took place between the GOI and the Commission services. At the request of ECL, another hearing between ECL and the Commission services took place on 6 September 2023. The Commission considered the comments made by all interested parties.

(21) On 3 October 2023, the Commission re-disclosed its findings with regard the use of facts available (Section 3.6 below) and invited interested parties to comment. Interested parties were given the opportunity to comment by 6 October 2023. Comments were received from the GOI, ECL and SG PAM. The Commission considered the comments made by all interested parties.

(22) On 16 October, the Commission re-disclosed its findings with regard the normal value and invited interested parties to comment. Interested parties were given the opportunity to comment by 17 October 2023. Comments were received from the GOI and ECL. The Commission considered the comments made by all interested parties.

(23) By letter of 28 August 2023, ECL informed the Commission that it wished to withdraw its request for the partial interim review. ECL reiterated the arguments provided in its comments on the general disclosure document that the investigation should be terminated.

(24) ECL referred to the findings of the Commission in its disclosure document on the use of ‘facts available’. It considered that it had provided significant evidence to convince the Commission about the accuracy of its data, and in particular about the metal weight of each pipe in the RIP and that it could not provide more evidence because the pipes had been already sold. ECL further argued that the method to record the data (on the metal weight) was applied across its accounting records and in the company’s SAP system (9). It committed that appropriate steps would be taken in the future to check and appropriately record the metal weight of each pipe produced. Hence, ECL considered that the review was unwarranted and should be terminated.

(25) Referring to conclusions detailed in Section 3.2 below on why it considered that the data was misreported, the Commission took note of the commitments of ECL for the future to record the weight of pipes. It considered however that such a commitment could not justify terminating the current review, as it had no bearing on the current findings that related to a period in the past.

(26) ECL further argued that should the Commission impose the residual duty of 12,9 % as mentioned in the general disclosure document, which would be in addition to the 9 % countervailing duty already applicable to the company, ECL would not be able to continue selling the product concerned on the Union market and would have to close its subsidiaries/offices in France, Spain, Italy and Germany. As a result, the around 60 persons employed directly by ECL would lose their jobs.

(27) ECL also referred to submissions by various independent distributors from Italy, France, Belgium, Ireland, and Croatia arguing that there was a serious problem of competition on the Union market. It submitted that if ECL could not supply these companies, they would have to – in most cases – close down their businesses, which would result in a loss of thousands of direct and indirect jobs in Member States across the Union. ECL considered that the economic loss in the various Member States would be thus even more significant. Moreover, in its view, the exit of ECL from the Union market would only strengthen the quasi-monopolistic position of SG PAM on this market to the detriment of the broader Union interest.

(28) Companies CO.ME.CAR S.r.l., Deschacht, Vodoskok d.d. and WAPPtech requested the Commission to terminate the review. The companies stressed the importance of the presence of ECL on the Union market, and they referred to the quasi-monopolistic situation of SG PAM and to what they described as its anti-competitive behaviour.

(29) All these companies also mentioned that if ECL left the Union market, it would have a significant economic impact on their operations and on the Union market of ductile pipes. Deschacht, for example, mentioned that it would drastically reduce the ductile pipes offer in Belgium, which would be detrimental to the ductile pipe industry. WAPPtech mentioned that a significant part of its annual turnover came from the sales of ductile pipes from ECL in Europe, providing the economic stability of the company. Vodoskok further mentioned that, in its view, the imposition of the proposed measures would have significant economic implications, affecting the supply chain and cause loss of jobs.

(30) SG PAM submitted that it opposed termination of the investigation on the basis of the review request withdrawal by ECL. In its view, the termination would be against the Union interest, particularly in light of the increase in low priced imports of ECL on the Union market. It referred to conclusions of the Commission on the injury to the Union industry in the original case and in the last expiry review.

(31) SG PAM also recalled that the review was opened at ECL’s request and that it was limited to the re-assessment of its dumping margin, and therefore, that it did not allow the Commission to re-assess the Union interest.

(32) Furthermore, SG PAM defended that no element suggested that ECL would have to leave the Union market if its level of duties would increase. It recalled that anti-dumping measures did not aim at preventing imports but ensuring that imports were at a fair price. It considered that allegations on SG PAM’s anti-competitive behaviour were unsupported and that they only aimed at damaging its reputation. Furthermore, alternative sources of supply existed in its view, such as sales of other European producers Duktus-VonRoll and TRM, and through imports from Turkey, UAE, China and Iran, and from the Indian company Jindal.

(33) SG PAM further argued that the market for ductile pipes was ‘multi-material’ because ductile pipes could be substituted by other types of pipes which were a suitable alternative. It referred to conclusions by national authorities and by the Commission in the framework of different analysis related to the competition on this market. SG PAM also pointed out that in some of the Member States, the market share of ECL was important, and that according to its own claims, ECL had a market share of 30 % in France and of 50 % in Spain. Therefore, ECL had, in its view, a considerable market power.

(34) SG PAM referred to the submissions of the different distributors. It considered that the share of the business activities of the distributors within the scope of ductile pipes for water transportation was low, on average between 3-10 % not exceeding 20 %. Therefore, in its view, even if these distributors could not source from ECL, the impact of this would not be disastrous for them. Also, SG PAM found that there was no indication that their situation was representative for the market for ductile pipes.

(35) Furthermore, SG PAM submitted after disclosure that in its view, any commitments for the future by ECL did not have a bearing on the findings of the current investigation, and that termination of the investigation would go against the principle of good administration, since it lasted over 1 year and included on-site and remote verifications. It also considered that the investigation could not be terminated in view of the Commission’s findings on false and misleading information provided by ECL.

(36) At the outset, the Commission noted that the wording of Article 9(1) of the basic anti-dumping Regulation, concerning the withdrawal of the complaint, employs the verb ‘may’ and, thus, the Commission is not placed under an obligation to terminate the proceeding, but merely has the possibility to do so, unless such termination would not be in the Union interest. In other words, the Commission is only required to examine whether termination is not in the Union interest if it considers such a termination. In this case, the Commission does not consider that there are reasons to terminate the investigation.

(37) Indeed, the Commission recalled that the review was initiated on the basis of the fact that ECL merged with its related company. The merger, as detailed in Section 3.1 below, constituted a change of circumstances of a lasting nature that, in line with Article 11(3) of the basic anti-dumping Regulation, which required a recalculation of the dumping margin established in the original investigation.

(38) In addition, the Commission considered that in view of the need to eliminate the trade distorting effects and to restore effective competition, an appropriate dumping margin needs to be established, in particular in this situation where misleading information was provided.

(39) Therefore, the Commission concluded that terminating the review, and thus disregarding the findings of this investigation, was not appropriate in this case and decided to continue the investigation.

(40) After initiation, the Union producer SG PAM submitted that it was, for the past 10 years, negatively affected by ECL’s unfair practices and increased level of dumping.

(41) SG PAM also submitted that the request did not contain any information supporting the alleged reduction in dumping or of the link between the merger and the variation of the level of dumping. It argued that the relationship between ECL and SPL was already accounted for in the original investigation and that the figures of both companies were used for the determination of the dumping margin of ECL. It also considered that the review would most likely result in the increase of the dumping margin.

(42) In response to this, ECL submitted that SG PAM’s arguments were not supported by facts. In its view, the market share of SG PAM increased since the original investigation, while ECL’s total sales volume on the Union market declined. ECL also argued that, at the same time, its sales prices increased above the level of the measures imposed on its exports to the Union. In its view, the financial results, new investments, and the increased level of sales proved an excellent performance of SG PAM.

(43) Moreover, ECL pointed out that a previous interim review against ECL on request of SG PAM was terminated after the request was withdrawn by the latter. This meant, according to ECL, that SG PAM was of the opinion that ECL’s dumping had decreased. In ECL’s view, SG PAM benefitted from excessively high anti-dumping and countervailing measures against the Indian exporting producers of the product under review. ECL also argued that the decision to initiate the current interim review was not based on their own but on the Commission’s assessment that the merger affected the cost structure of the company.

(44) In the context of these claims, the Commission noted that the purpose of the review was to determine the new level of dumping of ECL in light of the changed circumstances. It also clarified that the data of the related company SPL was not used in the original dumping calculations. Moreover, the fact that the data of SPL was not used in the original anti-dumping investigation was not the only factor to consider when initiating the review. In the Commission’s view, the fact that the merger resulted in synergies which alleviated certain costs that had an effect on the operation and costs of the company was also considered. Therefore, the review was justified, and the claim was rejected.

(45) SG PAM also argued that the request did not meet the standards for the treatment of non-confidential information, and that the applicant had not provided non-confidential summaries in sufficient detail to permit a reasonable understanding of the substance of the information submitted in confidence, to meet the requirements set out in Article 19 of the basic anti-dumping Regulation.

(46) The Commission observed that the entire request was non-confidential. Moreover, it noted that SG PAM did not specify concretely what information in the open file was in its view missing. It therefore rejected the claim.

(47) SG PAM further submitted that the Commission should extend the investigation period to account for the alleged change in circumstances. ECL’s merger with its related company SPL became effective as from 1 January 2022. However, the review investigation period chosen by the Commission was set to run from 1 April 2021 to 31 March 2022, to align with the traditional Indian financial reporting year. According to SG PAM, this meant that three quarters of the review investigation period (April 2021 to December 2021) covered a period prior to the alleged change in circumstances and the data of the three previous quarters would in any event not be representative of any change resulting from the merger.