Commission Implementing Regulation (EU) 2019/2092 of 28 November 2019 imposing a definitive countervailing duty on imports of biodiesel originating in Indonesia

(222) Following final disclosure, the GOI commented on the Commission’s three methods of price undercutting calculation, and said that the Commission had not taken into account various legal judgements of the European Court of Justice and the World Trade Organisation.

(223) The Commission disagrees. The three methods presented below analyse in detail the undercutting of Union prices by Indonesian imports of biodiesel and the three methods all result in a finding of undercutting.

(224) In their comments to final disclosure, the GOI also made some general observations regarding price undercutting, which are addressed here.

(225) Firstly, the GOI compared PME and rapeseed oil methyl ester (RME) and noted that they have different physical properties (one has a CFPP of +13C and the other -14C) and prices.

(226) The Commission agrees with the GOI and this is why the Commission has not made any direct comparison between sales of PME and RME.

(227) Secondly the GOI quotes recital 290 of the provisional Regulation, which states that PME is normally not used in its pure form but is usually mixed with other biodiesels to produce a blend with a lower CFPP.

(228) It is clarified that the fact that PME is usually mixed with other biodiesels does not mean that PME is not directly blended with mineral diesel. An analysis of the sales of the sampled Union producers showed significant sales of pure PME directly to mineral diesel refineries, which will be in direct competition with imports of pure PME from Indonesia.

4.3.1.

General observations concerning the EU biodiesel market

(229) Biodiesel is a homogeneous product with one predominant use, namely as a fuel in diesel engines. It is produced from different non-fossil raw materials. Depending on the raw material, there are certain differences in physical properties, namely the CFPP. The market often describes biodiesel at a particular CFPP as FAMEX

Chemically, biodiesel is typically a fatty-acid methyl ester, or FAME.

, such as FAME0 for biodiesel with a CFPP of 0 °C or FAME5 for biodiesel with a CFPP of 5 °C.

(230) Most types of biodiesel, including PME, are sold either pure, or as a blend with other types of biodiesel. In this context, the term blend refers to a blend consisting of different types of biodiesel, but not mineral diesel. This should not be confused with the blend usually sold at the pump, which for instance in the Union typically normally consists of no more than 10 % of biodiesel, and no less than 90 % of mineral diesel.

(231) The demand for biodiesel is driven by two major factors: the consumption of diesel fuel and the content of biodiesel in this fuel. The price of biodiesel has no noticeable impact on either of these factors, in particular due to the limited impact of the price of biodiesel on the price of diesel fuel at the pump.

(232) Therefore, unlike many other products, the demand for biodiesel is inelastic with regard to prices. Low-priced biodiesel does typically not lead to increased consumption on the biodiesel market. Price competition on the biodiesel market is therefore a zero-sum-game, where quantities gained by one market operator are lost at the same level by other market operators.

(233) Therefore, with stable demand, increasing import quantities of subsidised biodiesel, at low prices, will have an impact on the supply/demand balance, leading to oversupply on the whole biodiesel market. In a situation of oversupply on the biodiesel market as a whole, the availability of a cheaper option, such as the subsidised imports, will exercise a downward price pressure also on the biodiesel market as a whole, which negatively affects all producers of biodiesel, irrespective of the raw materials used.

4.3.2.

Method 1 — Comparing PME imports to PME produced in the EU

(234) The first method in recitals 292 to 295 of the provisional Regulation compared imports of PME from Indonesia to sales of PME produced in the European Union. The undercutting margins ranged from 6,0 % to 11,6 %.

(235) To clarify the calculation, on the request of those submitting comments, the exact comparison was between PME at cold filter plugging point (CFPP) + 13 from Indonesia and PME at CFPP +10 from the Union industry

PCNs P101P and P102P.

. The PME sold at CFPP +10 was not blended to reach that CFPP, an additive costing less than EUR 1 per MT, i.e. only around 0,1 % of the cost of production, was added to the biodiesel. The Commission does not consider that an adjustment for this additive is necessary as it would not have any impact on the calculations.

(236) After provisional disclosure, Wilmar commented that in recital 287 of the provisional Regulation, the Commission should explain further how they took into account the specific German system of double counting.

(237) To clarify the methodology, Germany has implemented mandatory greenhouse gas emission targets which have to be met by petroleum companies. As a result, transactions with low CO2 emission levels attract a price premium. Sales transactions for the German market were identified by using the indicator 2 in the PCN where appropriate (emissions less than 9g/MJ) so that the Commission could compare these transactions to the equivalent Indonesian imports to other Member States where a double-counting system is in place.

(238) The Commission noted that, as set out in recital 288 of the provisional Regulation, imports from Indonesia without a RED certificate were compared to sales of the Union industry with a RED certificate. Following provisional disclosure, the exporting producer Wilmar and the GOI stated that biodiesel without a RED certificate was cheaper than that with a RED certificate and requested an adjustment.

(239) The Commission noted that these parties did not contest that this product was identical to PME sold with a RED certificate, and did not provide any evidence that this product is not in direct competition with PME produced by the Union industry. The Commission therefore considered that an adjustment for the price difference was not necessary, in particular since no conclusive evidence concerning such a price difference during the investigation period was submitted.

(240) The Commission therefore continued to consider that this method accurately shows the undercutting caused by the type of biodiesel imported from Indonesia. In any case, the undercutting margin established for products without a RED certificate significantly exceeds the price difference alleged by Wilmar. Therefore, even if the adjustment claimed by Wilmar had been granted, the impact of such an adjustment would be moderate, and there would still have been significant undercutting for Indonesian imports.

(241) Following final disclosure, the GOI and Wilmar both requested an adjustment be made to account for the price difference between CFPP10 and CFPP13 biodiesel.

(242) No such price difference was found by the Commission and no evidence of a price difference was provided by the GOI or Wilmar. The Commission found that biodiesel was quoted on the markets as pure RME, FAME0, and pure PME. The quotes for pure PME made no reference to the actual CFPP of the product, but only to PME, which supports the Commission’s argument that all PME is sold at similar prices irrespective of the precise CFPP. This claim was therefore rejected.

(243) Following final disclosure the Commission received again a request from Wilmar and the GOI for a price adjustment to compare imports of PME without a RED certificate with production of PME in the Union with a RED certificate.

(244) The Commission reiterated its position that such an adjustment is not necessary and rejected the request. There are large quantities of PME imported into the Union from Indonesia during the investigation period without a RED certificate, and this PME is only useful for blending with mineral diesel if it has a RED certificate attached. Wilmar did not provide any evidence showing that PME imported without a RED certificate was not in competition with the PME production in the Union with a RED certificate.

4.3.3.

Method 2 — comparing PME imports to sales of EU produced PME and also EU produced biodiesel at CFPP0 (FAME0)

(245) The second method in recitals 296 to 297 of the provisional Regulation expanded the quantity of Union produced biodiesel that was compared to imports from Indonesia by including the sales of FAME0 biodiesel by the sampled Union producers in the comparison.

(246) To compare the Union sales of FAME0 to the countrywide imports of PME from Indonesia, the price of Union sales of FAME0 was adjusted and as a result reduced to the price level of Union sales of PME in order to take into account the market value of the differences in physical properties.

(247) To clarify the calculation, on the request of those submitting comments, the price of the reduction above was in the range of EUR 100 to 130 per metric ton. Also, to clarify the calculation, the 55 % of all sales of the Union industry covered by this comparison includes both PME and FAME0

The remaining 45 % of sales of the Union industry have a CFPP other than +10 and 0.

.

(248) The countrywide undercutting margin found under this method was 7,4 %.

(249) The Commission considered this calculation to be a reasonable estimate of the effect of Indonesian imports on the price of FAME0.

(250) Following final disclosure, the exporting producer Wilmar contested this comparison, quoting the findings in the WTO dispute settlement case European Union — Anti-Dumping Measures on Biodiesel from Indonesia

WT/DS480/R European Union — Anti-Dumping Measures on Biodiesel from Indonesia.

where the Commission made a similar adjustment. The Panel said at paragraph 7.157:

Even though both PME from Indonesia and blended CFPP 0 biodiesel might compete for sales to the companies who blend biodiesel with mineral diesel, this point nonetheless does not address the fact that the EU authorities failed to explain whether the comparison between sales of PME and blended CFPP 0 biodiesel was made at a proper comparison level, given that PME is an input to the blends, including CFPP 0 biodiesel.

(251) The Commission notes that the Union market has changed since the original investigation into imports from Indonesia. The Panel noted that at that time PME may only be used in a blend, and is actually a component of the different blends sold to end users in the EU market

Panel Report, EU — Biodiesel (Indonesia) para 7.156.

.

(252) In the original investigation against Indonesia, the Commission found that the Union industry was unable to produce PME from imported palm oil, as the price of PME was in fact lower than that of palm oil. The Union industry therefore purchased pure PME from Indonesia and blended it with their own production of other biodiesels before resale

OJ L 141, 28.5.2013, p. 19, recitals 133 to 135.

.

(253) However, in the current investigation the Commission found that PME made in the Union was sold directly to the oil companies and so the market dynamics have changed in this respect.

(254) The Commission does not dispute that PME is also imported into the Union to be mixed with other biodiesels to make, for example, FAME0. However the quantity of PME imported is driven by the price of these imports as well as their physical properties, and therefore the price of imported PME exerts a price pressure on blends as well. PME is among the cheapest types of biodiesel which can be used in blends such as FAME0 and FAME+5 which are suitable for use in a significant part of the Union market throughout the year. Imports of PME thus directly compete with other types of biodiesel produced in the EU which would otherwise be blended in larger quantities to achieve the same blend result.

(255) Following final disclosure, the GOI rejected this calculation method, saying that it only dealt with one segment of the Union market and did not cover all product types sold by the Union industry. The Commission disagreed, on the grounds that the calculation requested by the GOI which would cover all product types sold by the Union industry is detailed below as Method 3.

4.3.4.

Method 3 — comparing all imports of biodiesel from Indonesia to all Union sales of biodiesel without any adjustment to the price

(256) The third method in recitals 298 to 299 of the provisional Regulation compared the countrywide imports of biodiesel from Indonesia to all the sales of biodiesel of the sampled Union producers. The countrywide undercutting margin found under this method was 17,1 %

It is noted that the recital 298 of the provisional Regulation contained a clerical error and mentioned an undercutting margin of 17,5 %.

.

(257) The Commission considered that this calculation, which compares countrywide imports of the product concerned from Indonesia to sales of the like product on the Union market from the sampled Union producers, shows that even when comparing across all product types there is significant undercutting from Indonesia. This is also confirmed on the basis of the data available and referred to in recital 284 of the provisional Regulation.

(258) Following final disclosure, Wilmar referred to an inconsistency between the sales volumes disclosed for Methods 2 and 3, and the ratio of 55 % of all sales of the Union industry covered by Method 2.

(259) The Commission notes this difference at final disclosure, being that the total of Method 2 is not 55 % of the total of Method 3, as it was in the provisional Regulation recital 296.

(260) The Commission clarified that this was due to the different sources used to calculate undercutting between the three Methods, which were set out in the provisional Regulation recitals 292 to 299.

(261) Method 1 used the transaction-by-transaction sales listings of the Indonesian exporting producers to calculate a unit price per MT for each PCN, and then compared this unit price per MT using the transaction-by-transaction sales listings of the sampled Union producers.

(262) Method 2 took the same transaction-by-transaction listings of Method 1 for the Indonesian exporting producers, and then added the sales of FAME0 from the sampled Union producers listings.

(263) However Method 3 was calculated by comparing the transaction-by-transaction listings of Method 1 for the Indonesian exporting producers to the unit price of the sampled Union industry as reported in their questionnaire replies rather than their transaction listings. This was to ensure that for Method 3 the total coverage did not include the quantity purchased and then resold by the Union producers.

(264) Therefore the totals for Methods 1 and 2 are not directly comparable to the total for Method 3 as the sources are different.

(265) No interested party proposed another method for calculating undercutting between Indonesian imports and the sales of the Union industry, and no interested party put forward calculations that would show no undercutting in the investigation period.

(266) After final disclosure, Wilmar stated that the only correct way to calculate price undercutting is to compare product type to product type, making adjustments for differences in physical characteristics which affect prices … whilst addressing the complexities of the price comparability as found by the WTO panel.

(267) The Commission noted the suggestion of Wilmar as regards the calculation of price undercutting using all the sales of the Union industry as above. However, given that they did not make any suggestions or estimations on the amount of the adjustments for differences in physical characteristics, or any suggestion as to how to deal with the complexities of the price comparability as found by the WTO panel ruling, no further action on this suggestion was possible.

(268) The Commission conducted several price comparisons in order to capture all the possible configurations of product types, ensuring full comparability to the extent possible. The Commission also explained that the market situation during the investigation period was different to the situation examined by the WTO panel (with now direct sales of PME by Union producers). The Commission also examined the interaction and competitive relationship between Indonesian imports of PME and Union sales and concluded that PME, being among the cheapest types of biodiesel, is capable of exercising a price pressure on Union sales.

(269) Following final disclosure, the GOI described this calculation as the comparison of Indonesian PME at CFPP13 with Union-produced FAME0 and RME at CFPP -14, and stated that without adjustments for physical characteristics (that is to say, CFPP) this comparison is essentially meaningless.

(270) The Commission noted that this calculation is the comparison of Indonesian PME at CFPP13 to all EU sales of the Union industry’s own production, which also includes PME. As regards any possible adjustments, no substantiated and quantified claim for such an adjustment was submitted.

(271) Given the above, the Commission concluded that the imports from Indonesia during the investigation period significantly undercut the sales of the Union industry under all three methods examined.

4.3.5.

Post-importation costs

(272) The exporting producer Wilmar indicated that the level of adjustment used by the Commission for post-importation costs of EUR 8,50 per metric ton, established in the preceding anti-dumping investigation, was too low and provided documentation purporting to support an adjusted figure of EUR 14,50 per metric ton.

(273) The data submitted concerned one shipment which arrived after the investigation period and most of the costs were related to warehousing after importation which should not be part of importation costs. The Commission did not consider this to be a more reliable basis than the figure previously established from an unrelated importer and, therefore, did not accept the adjustment.

(274) The biodiesel trader Gunvor asked whether its data had been used to determine the importation costs used in the undercutting calculations. The costs submitted by Gunvor in its questionnaire response included a combined figure for importation costs (which are used in the undercutting calculation) and post-importation costs (which are incurred between importation and resale, and not taken into account in the undercutting calculation).

(275) During the on-spot investigation, Gunvor provided revised figures using different bases, while the final figures provided by Gunvor were based on estimates and not verifiable. As a result, the Commission decided to use the importation costs used in the investigation resulting in the anti-dumping duties imposed by Regulation (EU) No 1194/2013, which were also used in the previous investigation against imports from Argentina

Commission Implementing Regulation (EU) 2019/244 of 11 February 2019 imposing a definitive countervailing duty on imports of biodiesel originating in Argentina (OJ L 40, 12.2.2019, p. 1).

. The Commission considered these costs to be more reliable than those supplied by Gunvor.

(276) Since inflation in the Eurozone has been very low since 2012 (around 6 % in total between 2012 and 2018), the Commission considered it appropriate to use these importation costs without adjusting for inflation. In any event, any adjustment in this sense would have no impact on the final undercutting margins.

(277) In the absence of any other comments with respect to the imports from Indonesia, the Commission confirmed its conclusions set out in recitals 279 to 301 of the provisional Regulation.

4.4.

Economic situation of the Union industry

4.4.1.

General remarks

(278) In the absence of comments, the Commission confirmed recitals 302 to 308 of the provisional Regulation.

4.4.2.

Macroeconomic indicators

4.4.2.1.

Production capacity and capacity utilisation

(279) Following disclosure the GOI and Wilmar commented on the production capacity of the Union industry by noting the increasing production and capacity over the period considered, but did not dispute the level or trend of the indicators. They argued that these increases showed that Indonesian biodiesel was not harming the Union industry.

(280) These arguments are dealt with under Section 6 Causation, recitals 368 to 370 of the provisional Regulation.

(281) In the absence of any other comments with respect to production, production capacity and capacity utilisation, the Commission confirmed the conclusions set out in recitals 309 to 313 of the provisional Regulation.

4.4.2.2.

Sales volume and market share

(282) Following disclosure, the GOI noted that the market share of the Union industry in 2015 was due to the industry being almost an absolute monopoly with no free competition.

(283) The Commission noted that given that the Union industry consists of more than 100 companies who compete with each other, this cannot constitute a monopoly. No evidence concerning a monopolistic behaviour of the Union industry was provided throughout the investigation.

(284) The exporter Wilmar and the GOI both stated that recital 317 of the provisional Regulation was incorrect as it did not take into account the imports of biodiesel from Argentina into the EU at the same time.

(285) These imports are considered under Section 6 Causation, recitals 368 to 370 of the provisional Regulation.

(286) Following final disclosure, Wilmar argued that the decrease in market share of the Union industry after 2015 was not an indicator of injury to the extent that the Union industry occupied a virtual monopoly of the Union market. Wilmar also referred to the special situation created by the anti-dumping duties imposed as a result of the original investigation.

(287) The scope of the investigation is limited to the period considered, which is defined in the Notice of initiation. Also, the impact of the removal of the anti-dumping duties is recognised in recital 317 of the provisional Regulation. Consequently, the Commission rejected this claim.

(288) Following final disclosure, the GOI again said that the Commission had not addressed their arguments on the negative effect of Argentinian biodiesel imports on the performance of the Union industry.

(289) In this respect, the Commission referred to section 6.2.1 of the provisional Regulation, and section 6.2.1 of this Regulation, where the effect of the Argentinian imports on the Union industry was addressed.

(290) In the absence of any other comments with respect to sales volume and market share, the Commission confirmed the conclusions set out in recitals 314 to 317 of the provisional Regulation.

4.4.2.3.

Growth

(291) After disclosure, the exporting producer Wilmar noted that the Union industry’s performance from 2015 onwards should be looked at in the light of its virtual monopoly position. As described in recital 283, no evidence concerning a monopolistic situation was provided.

(292) In the absence of other comments, the Commission confirmed its conclusions set out in recital 318 of the provisional Regulation.

4.4.2.4.

Employment and productivity

(293) The GOI commented on the increasing trends set out in Table 10 of the provisional Regulation but did not dispute the levels or trends themselves. They alleged that these increasing trends show no signs of material injury to the Union industry.

(294) Given that the case is based on a threat of injury, these comments were rejected.

(295) In the absence of other comments with respect to employment and productivity, the Commission confirmed the conclusions set out in recitals 319 to 320 of the provisional Regulation.

4.4.2.5.

Magnitude of the amount of countervailable subsidies and recovery from past subsidisation or dumping

(296) In their post-disclosure comments, the exporting producer Wilmar noted that the Commission did not assess the effect of imports of subsidised Argentinian biodiesel in this section. The Commission noted, again, that analysis of Argentinian imports is set out in the Causation section, recitals 368 to 370 of the provisional Regulation.

(297) In the absence of any other comments, the Commission confirmed its conclusions set out in recitals 321 and 324 of the provisional Regulation.

4.4.3.

Microeconomic indicators

4.4.3.1.

Prices and factors affecting prices

(298) After provisional disclosure, the GOI referred to the trend in unit sales prices and unit cost of production, noting that both indicators rose by close to 10 % during the period considered. A link between the cost of production and the sales price was noted by the GOI and the exporting producer, Wilmar, which the Commission does not dispute.

(299) The exporting producer Wilmar noted the Commission’s comment in recital 328 of the provisional Regulation that biodiesel is a commodity and that a price undercutting of 10 % would have a significant downward pressure on prices. Wilmar disagrees, claiming that this is in conflict with the Commission’s own statement that there are limitations to the usage of PME due to its CFPP level.

(300) The Commission found no conflict between the two statements. Wilmar does not state whether the limit on use of PME was reached during the investigation period. Even if this supposed limit had been reached, the fact that PME can be used by itself, or in a blend to reduce the price of such a blend means that it inevitably has an effect on prices. The Commission noted this blending effect in recital 290 of the provisional Regulation.

(301) Wilmar further noted that the Commission was wrong to see a link between the price pressure caused by imports of PME and the profitability of the Union industry in recital 329 of the provisional Regulation and referred to the situation of the Union industry between 2012-2013 and September 2017 for this assertion.

(302) In this respect, the Commission noted that the conclusion in recital 329 of the provisional Regulation was reached having regard to the data from the period considered, which is set at the start of the investigation without reference to any outside factors. Wilmar does not dispute as such the correlation established between the increase in costs of production and the unsatisfactory profit margin due to the price pressure of the subject imports. This argument was therefore rejected.

(303) In addition, Wilmar indicated that there were stark differences in profitability, cash flow and return on investment for different Union producers in the sample, which emphasises that factors other than price pressure from Indonesian biodiesel producers are affecting the EU producer’s profits and financial situation.

(304) The Commission considered that sampled producers will all show individual trends but the effect of individual anomalies is reduced by establishing the findings on the basis of the sample as a whole. This argument was therefore rejected.

(305) Following final disclosure, Wilmar restated their arguments above without providing any new evidence for their assertions. Their claims were therefore again rejected.

(306) In the absence of any other comments, the Commission confirmed its conclusions set out in recitals 325 to 329 of the provisional Regulation.

4.4.3.2.

Labour costs

(307) In the absence of any comments, the Commission confirmed its conclusions set out in recitals 330 and 331 of the provisional Regulation.

4.4.3.3.

Stocks

(308) Following provisional disclosure the GOI referred to the trend in stocks of the sampled Union producers but without disputing the Commission’s finding in recital 333 of the provisional Regulation.

(309) In the absence of any other comments, the Commission confirmed its conclusions set out in recitals 332 and 333 of the provisional Regulation.

4.4.3.4.

Profitability, cash flow, investments, return on investments and ability to raise capital

(310) Following the imposition of provisional measures, the GOI noted the profitability of the Union industry in the period considered and therefore the return on investment. The GoI made comments on the trend of profitability of the Union industry against the volume of imports from Indonesia, saying that the negative profitability in 2015 could not be attributed to Indonesian biodiesel imports as they were negligible during that year.

(311) This point was dealt with under Section 6, Causation, of the provisional Regulation, recitals 361 to 365. Indeed, the slightly negative profitability in 2015 was not attributed to Indonesian biodiesel imports in the provisional Regulation.

(312) The exporting producer, Wilmar, commented that the statement in recital 329 of the provisional Regulation (namely, that the Union industry could not improve its unsatisfactory profit margin due to price pressure from subsidised imports) is unfounded.

(313) Wilmar indicated that the Union industry’s financial situation was not good when the EU biodiesel industry was shielded by the annulled biodiesel duties from 2012-2013 until at least September 2017 and therefore, the lack of improvement in their financial situation can only be explained by deficiencies that exist within the industry.

(314) The Commission noted that following the sudden increase in subsidised imports of Indonesian biodiesel after the annulment of the existing anti-dumping duties in March 2018, the Union industry could not improve their unsatisfactory profit margin which was substantially below the target profit in a growing market. Therefore, this confirms the Commission’s provisional finding.

(315) Following final disclosure, the exporting producer Wilmar restated their comments at provisional stage, as dealt with above. They also alleged that the low profits could not be linked to imports, given the virtual monopoly of the Union industry at the start of the period considered.

(316) This argument is unfounded, as the Union industry consisted of more than 200 companies in competition with each other on the Union market for biodiesel and there is no evidence that there is any kind of collusion between the Union producers.

(317) In the absence of any other comments on profitability, cash flow, investment, return on investments and ability to raise capital, the Commission confirmed its conclusions set out in recitals 334 to 340 of the provisional Regulation.

4.4.4.

Conclusion on injury

(318) Following the imposition of provisional measures, the GOI concluded that based on the indicators in the provisional Regulation, the Union industry was in a robust state.

(319) The Commission disagreed, noting that an industry whose profitability remains below 1 % of turnover, and which is losing almost 15 percentage points of market share, and is not able to benefit from a market growing by 33 % is not robust.

(320) In the absence of any further comments, the Commission confirmed its conclusions on injury set out in recitals 341 to 346 of the provisional Regulation.

4.5.

Economic indicators following the investigation period

(321) In order to further examine the state of the Union industry in the context of making findings on threat of injury, the Commission sent additional questions to and received replies from the sampled Union producers for data for the period October 2018 — June 2019 (the post-IP). The post-IP data given below, such as the microeconomic indicators, is presented as a weighted average of the three sampled Union producers.

(322) For the post-IP, for certain macroeconomic indicators such as capacity, capacity utilisation, production and sales the information could only be analysed for the sampled Union producers, due to the time limits of the investigation. Therefore, the figures for the investigation period are not directly comparable to the figures for the post-IP. It is also the case that the Commission is comparing the 12 months of the investigation period with the 9 months of the post-IP, but at this stage of the investigation, 12 months of post-IP data is not yet available.

(323) The figures nevertheless allow an analysis of the development of the situation of the sampled Union producers after the investigation period, and the figures are indexed to each other on an annualised basis.

(324) Following final disclosure, Wilmar again requested the Commission to collect 12 months of post-IP data (from October 2018 to September 2019), and also requested the Commission to collect data from all Union producers. However, collecting this additional information was not possible in the time available. Consequently, the request was rejected.

(325) The production, sales and unit costs, and unit sales prices of the sampled Union producers developed as follows:

Table 2

Union industry during and after the investigation period

Investigation periodOctober 2018-June 2019Total production (tonnes)25103561824599Index (annualised)

The production and sales volume data for the 9 month post-investigation period (October 2018 to June 2019) recorded in this table has been extrapolated to an annual basis by multiplying by a factor of 12/9 in order to obtain comparable annualised index figures.

10097Sales volume on the Union market (tonnes)25246461871962Index (annualised)10099Unit cost of production (EUR/tonne)791760Index10096Average unit sales price in the Union on the total market (EUR/tonne)794790Index100100Capacity utilisation rate82 %80 %Source: Sampled Union producers.

(326) Production post-IP was slightly down on the investigation period, whereas sales on the Union market remained rather constant.

(327) The unit cost of production for the sampled companies dropped slightly post-IP whereas the unit sales price remained stable.

(328) The profit of the sampled companies was calculated using data from the post-IP questionnaire, giving an average profit of the sampled companies of 3,8 % for the nine months post-IP. The sampled companies provided monthly cost and price data, which the Commission then aggregated to an average per quarter and disclosed below in Table 3.

(329) However, when that profit is analysed quarter-per-quarter a different trend emerges:

Table 3

Profits in the post-IP

Q4 2018Q1 2019Q2 2019Total post IPProfit of the sampled Union producers10,8 %0,1 %-5,0 %3,8 %Source: Sampled Union producers.

(330) Therefore, Tables 2 and 3 show that post-IP the Commission observed relatively little change compared to the investigation period apart from the level of profit of the sampled producers, which increased from 0,8 % for the investigation period to 3,8 % in the post-IP. The increase in profit in the post-IP is driven by Q4 2018.

(331) The higher profits in the winter of 2018-19 were exceptional. They were recorded by one sampled company which was able to take advantage of an uncertain transport situation in their region. The temporary shortage of supply caused by this situation allowed the company to increase their prices and therefore their profits in this period, which affected Q4 2018 and part of Q1 2019

For example see press article on AGQM dated 14 November 2018: https://www.agqm-biodiesel.de/en/news/news/price-european-rme-hits-all-time-high-due-low-rhine-levels (last accessed 22 October 2019).

.

(332) However, the profits of the other sampled companies remained significantly lower than the target profit during all quarters of the post-IP. In Q2 2019, when the uncertain transport situation had resolved itself, the profits of the sampled Union producers dropped to a loss of 5 %.

(333) The GOI argued that the negative profitability in Q2 2019 was caused by extraordinary events at Saipol during that quarter. However, while this Union producer indeed had an exceptional issue during the post-IP, this issue affected Q1 2019 and not Q2 2019. It is therefore considered that the drop in profitability is caused by the substantial quantities of subsidised imports entering the Union market at very low prices.

(334) Following the final disclosure, Wilmar commented that they felt that the non-confidential summaries of the post-IP questionnaires were not sufficient to allow interested parties to respond to the Commission’s conclusions.

(335) However, all questionnaire replies were accompanied by meaningful open versions. Where data was not capable of being summarised at a company level, the Commission has aggregated the data and published it in the final disclosure, and in Tables 2 and 3 above.

(336) For further transparency, the Commission identified relevant non-confidential information indicating that RME prices hit all-time high levels due to low levels of water in the Rhine during the winter of 2018-19 and added that information to the open file.

(337) The GOI responded to this information, and argued that the exceptional profits in the winter of 2018-19 were also due to the increased demand for RME in the Union in winter due to its physical characteristics and the decrease in costs of production in the Union industry in the post-IP.

(338) They further argued that the unit sales price remained stable and even decreased during the post-IP, indicating that the price increase was not exceptional.

(339) The GOI further argued that supply problems for raw materials in the winter of 2018-2019 could have impacted profitability figures for the EU industry for Q2 2019.

(340) The arguments of the GOI were rejected as they were based on conjecture and not related to the article that the Commission had placed on the open file to assist parties regarding the particular situation in winter 2018-19.

(341) Therefore, the Commission concluded that in the post-IP the economic situation of the Union industry further deteriorated.

1. THREAT OF INJURY

5.1.

The nature of the subsidies in question

(342) Following the imposition of provisional measures the exporting producer Wilmar commented that the Commission had not established a link between the subsidies found and the price undercutting and price depression.

(343) The Commission disagreed. There is a clear link between the availability of CPO at low prices and the price undercutting found during the investigation period, as members of the Union industry, having to source their CPO on the world market, pay much more for their raw materials and therefore cannot match the prices of the subsidised Indonesian biodiesel. The continuation of this programme, together with the other two subsidy programmes found in this investigation, are capable of keeping exports of Indonesian biodiesel at a price level affecting the Union industry.

(344) Wilmar then commented on recital 350 of the provisional Regulation, reiterating that there is a natural limit on imports of PME into the Union and therefore the Commission cannot say that imports would increase.

(345) Given that Wilmar did not explain what this natural limit is, this allegation could not be tested and is therefore rejected. In the Commission’s view, there are no impediments (other than market demand, subject to fair competition rules) to imports of biodiesel from Indonesia into the EU.

(346) Following final disclosure, Wilmar again restated their points that were made at provisional stage regarding the link between the subsidies found and the threat of injury. However, no new arguments were made and their claims were therefore again rejected.

(347) Wilmar also noted that Masol, the largest producer of PME in the Union was related to the Indonesian biodiesel producer Musim Mas Group, and raised the question at what price Masol could source their palm oil from Indonesia.

(348) The Commission did not comment on the confidential business operations of single companies in the Union or elsewhere. However, the Commission established that Masol sources its palm oil at arm’s length. The relationship between Musim Mas Group and Masol did therefore not influence the injury analysis.

(349) Following final disclosure the GOI argued once again that the OPPF was not a subsidy programme and that the export levy on CPO had been reduced to zero.

(350) The Commission noted the findings of Section 3 on subsidisation above, which clearly confirm the opposite.

(351) In the absence of any further comments, the Commission confirmed its conclusions set out in recitals 349 to 350 of the provisional Regulation.

5.2.

Significant rate of increase of subsidised imports

(352) Following the imposition of provisional measures, the GOI noted that the Commission should consider post-IP developments in biodiesel imports from Indonesia.

(353) The Commission analysed imports from Indonesia from the end of the investigation period to the end of June 2019 (therefore from Q4 2018 to Q2 2019):

Table 4

Imports from Indonesia during and after the IP

IP2018 Q42019 Q12019 Q2Total imports of biodiesel (metric ton) from Indonesia516068139091234677207310Source: Surveillance II.

(354) The Commission noted that although the investigation period covers four quarters from 2017 Q4 to 2018 Q3, there were only significant imports in the last two quarters. For reference, the four quarters of the investigation period are reproduced here:

Table 5

Imports from Indonesia during the IP

2017 Q42018 Q12018 Q22018 Q3Total imports of biodiesel (metric ton) from Indonesia025275227114263678Source: Surveillance II.

(355) The data shows that imports from Indonesia did continue after the end of the investigation period, and in significant quantities. However, the high point in 2018 of 263678 MT per quarter in Q3 cannot be compared to Q3 2019, since the imports during this quarter are affected by the imposition of provisional duties. Also, the first three quarters following the investigation period are not directly comparable to the last three quarters of the investigation period given seasonal differences, so the post-IP data is inconclusive as to whether substantially increased imports in the future should be expected.

(356) Following final disclosure, the GOI noted that when comparing Q2 2019 with Q2 2018, imports from Indonesia had fallen by 9 % and therefore this should show that substantially increased imports are not expected.

(357) The Commission rejected this claim, as the difference of 9 % equates to 20000 MT or one shipment of biodiesel. Therefore, the difference between the two quarters can be explained by a single shipment falling on one side or the other of a quarter. Also, evidence concerning a single quarter does not contradict the Commission’s finding of inconclusive data as to whether substantially increased imports should be expected in the future.

(358) The GOI and the exporting producer Wilmar also requested that the Commission considers substantial in reference to the quantity of imports of biodiesel from Argentina, given that the bulk of the increase in imports in general came from Argentina. The Commission already referred to the impact of imports from Argentina in recitals 368 to 370 of the provisional Regulation, which neither GOI nor Wilmar dispute. The effect of imports from Argentina is part of the causation assessment and does not put into question the substantial increase of imports from Indonesia.

(359) The exporting producer Wilmar requested the Commission to consider substantial in reference to the imports from Indonesia prior to the period considered. It is not the Commission’s practice to extend its analysis beyond the period considered and this argument was rejected. In any event, as noted before, the imports from Indonesia appear to have been reaching volumes similar to the ones already seen in the context of the 2013 anti-dumping investigation.

(360) Both Wilmar and the GOI then noted the provisions of the RED II Directive which will limit in future the imports of high-ILUC risk PME into the EU. The Commission noted that this limit starts to have effect as of end 2023

Article 26(2) of Directive (EU) 2018/2001.

. Given that the effect of this Directive cannot be forecast, and that PME can still be imported into the EU under this Directive under the conditions thereby set out, this argument was also rejected as it does not affect the current analysis of threat of injury that Indonesian imports pose to the Union industry in the near future.

(361) Following final disclosure, Wilmar restated their comments above regarding the likelihood of increased imports from Indonesia and again requested the Commission to open its period considered to prior to 2013.

(362) The Commission rejected those comments and in particular the request to artificially extend the period considered to take into account periods prior to the imposition of anti-dumping duties, which is not the Commission’s practice. Thus, the Commission considered it appropriate in this case to focus its examination on the period considered plus post-IP developments.

(363) Following final disclosure the GOI noted that some countries appear to be restricting market access to palm oil based biofuels, and made specific mention of Norway and France.

(364) The Commission notes that Norway is not a member of the European Union and therefore their legislation has no impact on the EU biodiesel market. Nevertheless the Commission noted that the Norwegian government appears to have imposed the same sustainability criteria (high risk ILUC) that is in force in the EU

For example see https://www.regnskog.no/en/news/palmoil-in-biodiesel-sees-massive-drop-in-norway (last accessed 21 October 2019).

. The Commission sees no link between the legislation in force in Norway and exports from Indonesia to the EU.

(365) The GOI also made specific reference to a Regulation passed in France which will ban the use of palm oil in biofuels from 31 December 2019

https://www.ofimagazine.com/news/france-bans-palm-oil-from-biofuels (last accessed 21 October 2019).

.

(366) Analysis of this law appears to show that the French government will stop tax exemptions for palm oil on 1 January 2020, and therefore in France palm oil will not be considered a biofuel unless it is from a low-ILUC risk plantation

https://www.reuters.com/article/us-total-biofuels-palmoil/french-court-rules-against-tax-breaks-for-palm-oil-biofuel-idUSKBN1WQ0ZG (last accessed 21 October 2019).

.

(367) The Commission noted that the law does not take effect until 2020. This is the start of the period under the RED II Directive where EU-wide imports of high ILUC risk feedstock biodiesel, such as PME, will be capped at the 2019 levels.

(368) The Commission also noted that since this law only takes effect on 1 January 2020, and in France only, it has no effect on the quantity of PME consumed in the Union in 2019, and given that the level of 2019 becomes the cap for 2020, as a consequence the French law will have no effect on the quantity of PME imported Union-wide which counts towards the blending mandate in the following years.

(369) In the absence of any further comments, the Commission confirmed its conclusions set out in recitals 351 to 352 of the provisional Regulation.

5.3.

Sufficient freely disposable capacity and absorption capacity of third countries

(370) Following the imposition of provisional measures, the GOI commented that the Commission had not provided any specific data to prove the potential capacity of the United States of America (USA) to absorb additional exports from Indonesia, which was set out in recitals 355 and 356 of the provisional Regulation.

(371) Given the high level of the measures in force in the USA, the Commission considered that it is not plausible that the USA would absorb exports from Indonesia in the near future.

(372) The Commission also noted that the latest US GAIN report from Jakarta

US GAIN Biofuels Annual Jakarta Indonesia 8.9.2019.

analysed the Indonesian export statistics and showed that exports of biodiesel to the USA ended in November 2016 and have not restarted.

(373) In their response to the post-IP set of questions sent to them, the EBB noted that capacity in Indonesia was expected to increase from 11,5 billion litres to 13 billion litres by 2021, according to the latest US GAIN Jakarta report.

(374) The GOI then also noted that Indonesia is moving from a B20 to a B30 mandate, that is moving from blending 20 % biodiesel with mineral diesel to blending 30 % biodiesel, and that this would increase domestic demand. The same point was also raised by the exporting producer Wilmar.

(375) In their comments to the submission of the EBB regarding post-IP data, the GOI noted that the implementation of the B30 mandate would absorb all production capacity of biodiesel in Indonesia.

(376) The Commission noted the ambition of the Indonesian government in increasing the mandate from B20 to B30, but also noted the comments of the EBB dated 29 April 2019 showing that Indonesian operators faced difficulties in distribution, availability of storage and blending infrastructure in implementing the B20 mandate and that the purpose of the mandate increase is to reduce the imports of mineral diesel, rather than reduce the exports of biodiesel to other markets such as to the EU.

(377) In addition, the Commission noted the comments from the EBB in their post-IP List B of questions, submitted on 6 September 2019, that although the number of blending points is being reduced and their size increased, the B30 mandate is expected to take time to implement. Certain sectors (for example mining) are requesting delayed implementation for the B30 mandate, technical adaptations may be necessary for vehicles to run on B30 fuel and in the non-PSO sector, machines subject to the ASTM standard may be out of warranty if they use B30 fuel.

(378) The Commission therefore does not consider that the move from a B20 to a B30 mandate will significantly limit the amount of biodiesel exported from Indonesia to the EU in the near future, in particular given the very significant spare capacities of the Indonesian biodiesel industry which US GAIN estimate at 30 % for 2019.

(379) Following final disclosure, the GOI commented that the Commission had not fully addressed its argument, which was that the implementation of the B30 mandate is a commitment of the GOI with full trials starting in November 2019. Furthermore, the GOI claims that the Commission simply restated the arguments of the EBB.

(380) The exporting producer Wilmar also asked the Commission to look again at the effect of the B30 mandate on the future spare capacity of the Indonesian biodiesel industry.

(381) The Commission noted the further comments of the GOI and Wilmar and considered the issue of the B30 mandate with due care.

(382) However, the latest US GAIN report from Jakarta supports the doubts of the EBB as to whether the B30 mandate can be reached within the timeframe alleged by the GOI. The GAIN report notes that the B20 mandate, which was a mandatory target already for 2016, will possibly be met for the first time only in 2019, that is three years after the set deadline.

(383) Given that the average increase in blending rates is between 2,5

Average 2011-2019.

and 3,2

Average 2016-2019.

percentage points per year, an increase from 19,9 % to 30 % in one single year seems extremely ambitious.

(384) The Commission therefore concluded that it is unlikely that a B30 mandate will be met in the near future, and significantly affect the spare capacity in Indonesia in the near future.

(385) In recital 357 of the provisional Regulation the Commission considered that there were no other significant markets available to the Indonesian producers considering the prohibitively high level of duties applicable on imports into the USA.

(386) In response Wilmar noted that exports to China exist and they consider that China has the capacity to absorb exports of PME from Indonesia in the future.

(387) The Commission noted that there is no blending mandate in force in China and therefore sales are not made on a long-term basis. The EBB provided data in their submission to the post-IP questionnaire showing that China only imports PME opportunistically when it is cheaper than mineral diesel. This cannot be considered as a viable long-term alternative for Indonesian exports to the steadily growing demand for biodiesel on the Union market due to the blending mandate.

(388) Following final disclosure, Wilmar re-stated that regarding the export of PME and also palm oil from Indonesia to China, stating that China was a confirmed and stable export market for Indonesian biodiesel.

(389) Wilmar however noted that China imports palm oil biodiesel thanks to the low price. This was the conclusion of the Commission at provisional stage that imports from Indonesia to China occur only when PME is cheaper than mineral diesel, and therefore exports to China are based on the existence of the subsidisation already found.

(390) Given that China has no mandates in force for blending biodiesel with mineral diesel, the Commission did not have evidence at its disposal that confirms Wilmar’s statement that China is a confirmed and stable export market for Indonesian biodiesel.

(391) During the post-IP, China accounted for only about 27 % of Indonesian exports, while the Union accounted for about 71 %. So despite the opportunistic sales of Indonesian biodiesel to China, the Union is still the most important export market for Indonesian producers.

(392) Following final disclosure, the GOI also noted that China was importing large quantities of palm oil from Indonesia and that imports of palm oil are expected to increase, lowering the amount of palm oil available in Indonesia to be transformed into biodiesel.

(393) The Commission noted that the GOI therefore expects that increased demand of palm oil in China would be supplied by diverting existing palm oil from biodiesel production to export sales. No evidence that the exports of palm oil would lead to a shortage of supply of palm oil for the Indonesian biodiesel producers was provided. The Commission would expect that the Indonesian reaction to increased demand for palm oil would be to increase the supply, rather than divert existing supplies away from industrial activities such as the production of biodiesel.

(394) The Commission also analysed exports of palm oil to China using the US GAIN reports for 2019 from Jakarta. Exports to China appear to have increased, but are substituting exports to India, where import duties on palm oil are high.

(395) The Commission considered therefore there is no evidence of a long-term increase in demand for biodiesel exported from Indonesia to China, and no evidence that increased demand for palm oil in China would cause a shortage of supply of palm oil to produce biodiesel for export to the European Union.

(396) In the absence of any further comments, the Commission confirmed its conclusions set out in recitals 353 to 357 of the provisional Regulation.

5.4.

Price level of subsidised imports

(397) Following the imposition of provisional measures, Wilmar stated that a finding of price undercutting cannot support a finding of threat of injury, since price undercutting is different from price depression and suppression.

(398) The Commission disagreed. The findings on significant undercutting are made in the context of a state of the Union industry which is extremely delicate although not yet materially injured by the observed undercutting. Such undercutting, if continued, poses a threat that the Union industry will suffer material injury.

(399) In any event, the Commission also established price depression in recital 328 of the provisional Regulation, concluding that due to the price pressure from subsidised Indonesian imports, the Union industry could not benefit from the decreasing costs during the investigation period, because it had to fully pass on this cost decrease to its customers to avoid an even larger loss of market share.

(400) The Commission notes in this context that exports of biodiesel from Indonesia to China were at the same price per metric ton as exports to the EU in 2018 and the first half of 2019.

(401) This equally shows the difficult situation of the Union industry and the current threat that the subject imports pose.

(402) Following final disclosure Wilmar again stated that a finding of price undercutting cannot support a finding of threat of injury. The Commission again responds by saying that the undercutting found poses a threat that the Union industry will suffer material injury.

(403) The Commission therefore rejected this claim and maintained its findings set out in recital 358 of the provisional Regulation.

5.5.

Level of stocks

(404) In the absence of any comments, the Commission confirmed its conclusions on injury set out in recital 359 of the provisional Regulation.

5.6.

Conclusion

(405) The Commission therefore concluded that during the investigation period, imports from Indonesia constituted a threat of material injury to the Union industry, and the Commission confirmed its conclusions on threat of material injury set out in recital 360 of the provisional Regulation.

1. CAUSATION

6.1.

Effects of the subsidised imports from Indonesia

(406) In the provisional Regulation, the Commission provisionally concluded that the subsidised imports from Indonesia were causing a threat of material injury to the Union industry.

(407) The Commission concluded that the increase of imports during the investigation period and the undercutting and depression of Union industry prices by the subsidised imports caused the Union industry to lose market share despite increases in production and capacity, and prevented the Union industry from benefitting from an otherwise favourable market situation.

(408) Following provisional disclosure, the GOI and Wilmar noted that production and capacity of the Union industry increased during the period considered, along with absolute sales quantities. They also noted that, as imports from Indonesia grew, the profitability of the Union industry increased.

(409) The Commission disagreed with these observations, in particular on the profits of the Union industry, which remained within a band of -1 % to 1 % throughout the period considered. Therefore, the change in profitability during the period considered is not significant.

(410) As regards production and capacity of the Union industry, even though these did increase in absolute terms during the period considered, the Union industry was unable to fully take advantage of the increase in consumption, with the imports from Indonesia taking market share from the Union industry.

(411) The Indonesian exporting producer Wilmar noted that in recital 346 of the provisional Regulation the Commission provisionally concluded that there was no conclusive existence of material injury. Wilmar then stated that this was in contradiction to recital 363 of the provisional Regulation where the Commission concluded that the subsidised imports from Indonesia had a negative impact on the Union industry.

(412) The Commission saw no contradiction between the absence of material injury to the Union industry, and yet a clear negative impact on the Union industry, when analysing threat of injury.

(413) Following final disclosure Wilmar again stated their points referred to in recitals 408 and 411, which the Commission again rejects.

(414) The GOI also commented on this point after final disclosure. They again stated that they see no causal link between the imports from Indonesia and the performance of the Union industry. The Commission noted the GOIs restatement of its opinion but still considered that the previous analysis showed that imports from Indonesia are a threat of injury to the Union industry in the absence of measures.

(415) In the absence of further comments the Commission confirmed its conclusions set out in recital 365 of the provisional Regulation.

6.2.

Other known factors

6.2.1.

Imports from Argentina

(416) Following provisional disclosure, both the GOI and Wilmar made comments regarding the effect of subsidised Argentinian imports of biodiesel on the Union industry. These comments suggested that the cause of the threat of injury to the Union industry was solely imports from Argentina.

(417) As the Commission already set out in recitals 368 to 370 of the provisional Regulation, these imports were part of a threat of injury to the Union industry during the investigation period, which is why the Commission imposed measures on these imports in February 2019, and accepted price undertakings.

(418) However, the fact that Argentinian imports were a threat of injury during the period considered does not mean that Indonesian imports were not also a threat of injury, in particular after the measures against imports from Argentina entered into force. In fact, when examining the threat of material injury in the near future, since there are already measures against imports of biodiesel from Argentina, such imports can no longer be among the threats to the Union industry.

(419) Therefore, the Commission separated and distinguished the effects which imports from Argentina may have on the Union industry from the effects of imports from Indonesia in the context of conducting the threat of material injury analysis

See Panel Report, United States — Anti-Dumping and Countervailing Measures on Certain Coated Paper from Indonesia, WT/DS491/R, adopted 22 January 2018, paragraphs 7.204-7.212.

.

(420) Following final disclosure Wilmar again restated their comments at provisional stage regarding imports from Argentina, calling the Commission’s response cursory. The Commission disagreed, noting that the effects of imports from Argentina are addressed in Section 6.2.1 of the provisional Regulation.

6.2.2.

Imports from other third countries

(421) Following provisional disclosure, the GOI stated that imports from China could be a significant factor in any future consideration of the cause of injury to the Union industry and noted both the increase in quantity of imports from China from 2017 to the investigation period of 25 % and that from 2016 to the investigation period the price of imports from China was below Union industry prices.

(422) The GOI further indicated that even though the prices of imports from China are at higher prices than those from Indonesia, this does not mean they cannot have a negative impact on the Union industry.

(423) They also noted that Chinese biodiesel uses a different feedstock (used cooking oil) than Indonesian biodiesel. Used cooking oil biodiesel has high greenhouse gas savings and is subject to the double-counting regime set out in the RED Directive. It therefore appears to be a preferable option for import to the EU.

(424) The Commission noted the existence of imports from China during the investigation period and examined their quantity and price in recital 372 of the provisional Regulation, noting that imports from China were in lower quantities than from Indonesia, and that the price of imports from China was higher than from Indonesia.

(425) The Commission noted that the Union price is a mix of various types of biodiesel sold within the Union, including sales with a double-counting premium and without. Chinese imports are also indeed of one type of biodiesel (made from used cooking oil) which attracts a double-counting premium.

(426) However in terms of volume, imports from China are smaller than those from Indonesia (with a market share of 1,7 % as opposed to 3,3 % for Indonesia) and Chinese imports, unlike imports from Indonesia, are also subject to the conventional customs duty of 6,5 %.

(427) The Commission has received no evidence that such imports are having or are likely to have a negative impact on the Union industry or any allegations of injury caused by imports from China. It is important to re-emphasise that prices of Chinese biodiesel are higher than prices of Indonesian biodiesel. In any event, even if the imports from China were to affect negatively the Union industry, these effects are not such that they would attenuate the causal link between the subsidised imports from Indonesia and the threat of injury found. Therefore, this claim was rejected.

6.2.3.

Imports from third countries after the investigation period

(428) In their submission after provisional disclosure, Wilmar made an analysis of imports of biodiesel into the EU from third countries after the end of the investigation period and noted that imports from China increased, and that imports from Malaysia increased significantly at very sharply decreasing prices. They further noted that import prices from China and Malaysia were below the sales price of the Union industry.

(429) In Wilmar’s view, these imports weaken and break the causal link on the threat of injury established in the provisional Regulation.

(430) Imports from third countries between October 2018 and June 2019 were as follows. The estimated market share for the 9 month period is based on the consumption for the investigation period.

Table 6

Imports from third countries October 2018-June 2019

Volume of imports (tonnes)Estimated market share (%)Average price (EUR)Argentina6676785,7673Indonesia5810865,0655Malaysia4054823,5727China2039611,7796Source: Surveillance 2

(431) Imports from Argentina were subject to countervailing measures during the latter part of the post-IP. While the quantities were somewhat higher than imports from Indonesia, Argentinian prices also exceeded Indonesian prices, despite being subject to a 6,5 % conventional customs duty. They can therefore not be considered as a price-setter during this period. Also, as indicated above, since there are already measures against imports of biodiesel from Argentina, such imports can no longer be among the threats to the Union industry.

(432) Following final disclosure, Wilmar again argued that the Commission should take Argentinian imports into account, given that the price of Argentinian biodiesel during the post-IP was below that of the Union industry.

(433) The Commission reiterated that the price of imports from Argentina increased after February 2019 when the measures on Argentinian imports came into force, and therefore the comparison of prices needs to take into account the fact that a price undertaking is in force.

(434) The Commission noted that the Chinese prices increased between the investigation period and post-IP. During the post-IP, they also exceeded the average price charged by the Union industry, despite being subject to a conventional customs duty of 6,5 %. In addition, their market share stabilised after the investigation period.

(435) Following final disclosure Wilmar again noted the imports from China and made a calculation to compare the landed price for Chinese biodiesel in 2018 (EUR 826 per MT) with the average sales price of the Union industry during the investigation period (EUR 794 per MT).

(436) As their calculations showed that the Chinese import price was above the average price of the Union industry, and that this is what would be expected given that the Chinese biodiesel would attract a double-counting premium, the Commission accepted that the calculation showed no price pressure from China.

(437) Whilst imports from Malaysia increased in quantity and decreased in price post-IP, the quantities remained below those of Indonesia, and the prices remained higher, despite being subject to a 6,5 % conventional customs duty. They can therefore not be considered as a price-setter during this period either.

(438) Following final disclosure Wilmar again noted the increase in quantity and decrease in price of imports from Malaysia. The Commission reiterated that the prices from Malaysia are higher than those from Indonesia and subject to a conventional customs duty.

(439) The import statistics show that although there are significant imports of biodiesel from Malaysia and China during the post-IP, the Commission remained of the opinion that they were neither in quantity nor in price such as to attenuate the causal link found between the threat of material injury and imports from Indonesia.

(440) Following final disclosure, the GOI noted that the prices of imports in Table 6 were not directly comparable, as the biodiesel from Argentina is pure SME, from Indonesia pure PME, and from China the biodiesel is made from used cooking oil (UCOME).

(441) The GOI noted that to calculate price undercutting, the Commission had made an adjustment to the price of FAME0 biodiesel (Argentinian SME) to compare it to PME (Indonesian biodiesel).

(442) The GOI presented data based on the same methodology showing that the comparable import price from Argentina during the investigation period was lower than the import price from Indonesia, and the comparable import price from China during the investigation period was in line with the import price from Indonesia.

(443) However, the calculation of the GOI overstated the magnitude of the adjustment by 30 %, and did not take the conventional customs duty applicable to imports from Argentina and China — but not applicable to Indonesian imports — into account.

(444) When correctly applying the adjustment, and correctly reflecting the conventional customs duty, the picture is quite different. The comparable import price from China significantly exceeds the import price from Indonesia, and the price difference between Argentinian imports and Indonesian imports is significantly reduced.

(445) The provisional Regulation already recognised that imports from Argentina were to a certain extent responsible for the negative development of some injury indicators of the Union industry, including the fact that the average import price from Argentina — even in absolute terms — was lower during the investigation period than the import price from Indonesia.

(446) The Argentinian prices in the post-IP do not fully reflect the imposition of the measures against them, since the measures were only imposed in February 2019, i.e. in the middle of the post-IP.

(447) Therefore, the price comparison as submitted by the GOI, does not attenuate the causal link between the imports from Indonesia and the threat of material injury. The fact that other factors may have contributed to rendering the domestic industry vulnerable — i.e. more susceptible to future injury — does not preclude a finding of causal link between subject imports and a threat of future injury to the domestic industry

See Panel Report, United States — Anti-Dumping and Countervailing Measures on Certain Coated Paper from Indonesia, WT/DS491/R, adopted 22 January 2018, paragraph 7.233.

.

6.2.4.

Export performance of the Union industry

(448) The Commission received no comments on the exports of the Union industry.

6.2.5.

Price of raw materials (feedstock)

(449) Following provisional disclosure, the GOI made comments regarding the financial situation of the Union industry and a link between this and the price of rapeseed oil in the Union. The GOI stated that prices of rapeseed were high throughout the period considered and this was the prime explanation why the Union industry failed to run large profits during this time.

(450) The biodiesel trader Gunvor also noted that rapeseed is an expensive raw material for biodiesel and that this was a likely cause of the financial situation of the Union industry.

(451) The Commission noted that the sampled biodiesel producers in the Union used a range of feedstock

The Commission has no precise information on the exact breakdown of feedstock used by the Union industry.

to supply the demand across the Union and across the seasons. Therefore, the Commission did not see a direct correlation between rapeseed prices and the profits of the Union industry on the grounds that rapeseed is only one of the feedstock used by the Union industry to supply the Union market.

(452) The Commission noted its comments in recital 327 of the provisional Regulation that the unit cost of production of the Union industry followed the trend of prices during the period considered.

(453) However, the Commission also noted that in winter of 2018-2019 the price of rapeseed oil biodiesel (RME) in the Union sharply increased, whereas the price of rapeseed oil itself remained stable. There is therefore no constant link between the price of rapeseed oil and the price of RME on the Union market.

(454) Following final disclosure, Wilmar contested this argument, saying that this was not reflected in Table 2 or elsewhere in the final disclosure document. Notably, such an increase of the sales price of RME should have an impact on the average sales price of the Union industry which remained stable, because RME is allegedly the most produced biodiesel in the Union.

(455) However, as stated in recital 296 of the provisional Regulation, FAME0 is the most common type of biodiesel sold by the sampled Union producers. Therefore, the average sales price is driven by FAME0, and also by the substantial quantities of PME and other blends sold by the sampled Union producers in addition to the price of RME. Indeed, the price increase for RME is fully reflected in the profitability figures, in particular for Q4 2018. It is also reflected to a certain extent in the average sales price which remained stable despite the price pressure exercised by the significant quantities of subsidised imports.

(456) Following final disclosure the GOI re-stated their argument that high rapeseed prices in the Union were the cause of lack of profitability during the period considered. The Commission rejected this argument for the reasons stated in recital 445.

(457) The Commission thus concluded that the prices of the raw materials used by the Union industry does not attenuate the causal link.

6.2.6.

Internal EU competition and performance differences between sampled Union producers

(458) Following final disclosure Wilmar requested that the Commission considers internal competition between the Union producers. However, this claim has not been substantiated. Wilmar also claimed that the performance of a particular producer that is reflected in the microeconomic data may cause the overall results of the sample to be skewed.

(459) The representativity of the sample in terms of production in the Union mentioned in recital 265 of the provisional Regulation, and in terms of sales volume remained virtually unchanged throughout the period considered.

(460) The Commission therefore concluded that the sampled Union producers are representative of the entire Union industry and their microeconomic data is representative of the Union industry as a whole. The Commission further noted that the analysis of the situation of the Union industry is always conducted for the whole Union industry. The claim was therefore rejected.

6.3.

Conclusion on causation

(461) The Commission confirmed its conclusions on causation set out in recitals 377 to 380 of the provisional Regulation.

1. UNION INTEREST

7.1.

Interest of the Union industry

(462) In the absence of comments, the Commission confirmed its conclusions set out in recitals 382 to 384 of the provisional Regulation.

7.2.

Interest of unrelated importers

(463) Following provisional disclosure, the GOI noted that the measures would hit those importers with their own biodiesel blending facilities or biodiesel distribution outlets.

(464) Given the substantial imports of biodiesel from Malaysia, China and Argentina combined, on which there are no measures, or where there is a price undertaking in force, the Commission disagreed with this conclusion.

(465) In the absence of any further comments, the Commission confirmed its conclusions set out in recital 388 of the provisional Regulation.

7.3.

Interest of users

(466) Following provisional disclosure, the GOI stated that imposition of measures on imports from Indonesia would create a monopoly for the Union industry on the Union market. This would increase biodiesel prices for the users.

(467) The Commission rejected those claims. Firstly a Union industry composed of so many competing companies is nowhere near a monopoly. Secondly, imports from Argentina, China and Malaysia are unaffected by the measures against Indonesia. Lastly, even with measures in force, the Union still receives significant imports of biodiesel from Argentina under the undertaking.

(468) The GOI states that affordable imports of biodiesel in sufficient quantities are of paramount importance to the Union. The Commission does not disagree with this statement, but noted that since the biodiesel content at the pump is normally no more than 10 %, the negative effect of price increase of biodiesel is only partially passed on to the consumer, and thereby insignificant.

(469) In its comments to final disclosure, Wilmar claims that the provisional Regulation did not consider the impact of the measures on the producers of diesel fuel.

(470) The producers of diesel fuel are the users of biodiesel, since they purchase the biodiesel before selling a blend of biodiesel and mineral diesel at the pump, as mentioned in recital 462. As no users cooperated in this investigation

Recital 389 of the provisional Regulation.

, this also means that no producers of diesel fuel cooperated in this investigation.

(471) In the absence of any further comments, the Commission confirmed its conclusions set out in recital 391 of the provisional Regulation.

7.4.

Trade distorting effects of subsidies and restoring effective competition

(472) In the absence of any further comments, the Commission confirmed its conclusions set out in recital 393 of the provisional Regulation.

7.5.

Conclusion on Union interest

(473) In summary, none of the arguments put forward by interested parties demonstrate that there are compelling reasons against the imposition of measures on imports of the product concerned.

(474) In the absence of any further comments, the Commission confirmed its conclusions set out in recitals 394 to 395 of the provisional Regulation.

1. REGISTRATION

(475) Following provisional disclosure the EBB disagreed with the conclusion of the Commission that registration of imports was not warranted.

(476) The EBB opposed the reasoning of the Commission saying that Article 24(5) of the basic Regulation only requires the Union industry to provide sufficient evidence to justify registration of imports and that there is no link between Article 24(5) and Article 16(4) in law. Article 16(4) sets out the conditions for retroactive collection of duties during the period of registration.

(477) Second, the EBB said that even if the criteria set out in Article 16(4) of the basic Regulation had to be complied with for registration to take place, the Commission is entitled to find critical circumstances where for the subsidised product in question injury which is difficult to repair is caused by massive imports in a relatively short period of a product benefiting from countervailable subsidies.

(478) The EBB stated that Article 2(d) of the basic Regulation allows the Commission to read threat of injury where injury is written in the Regulation.

(479) The Commission disagreed with the EBB’s allegations, given that Article 16(4) makes clear that the Commission has to find injury which is difficult to repair. Injury which is difficult to repair refers to a situation where, absent the retroactive collection of duties, the material injury suffered by the Union industry may be aggravated because of massive imports before measures can be adopted. This is not the case where the findings in an investigation are based on threat of material injury.

(480) Thus, the Commission considered that a threat of injury which is difficult to repair does not fall within Article 16(4) of the basic Regulation.

(481) The Commission therefore confirmed the findings of the provisional Regulation in recitals 403 and 404.

1. DEFINITIVE COUNTERVAILING MEASURES

(482) In view of the conclusions reached with regard to subsidisation, injury, causation and Union interest, definitive countervailing duties should be imposed to prevent the materialisation of the imminent threat of material injury caused to the Union industry by the subsidised imports from Indonesia.

9.1.

Level of countervailing measures

(483) Article 15(1), subparagraph 3 of the basic Regulation states that the amount of the countervailing duty shall not exceed the amount of countervailable subsidies established.

(484) Article 15(1), subparagraph 4 then states that Where the Commission, on the basis of the information submitted, can clearly conclude that it is not in the Union’s interest to determine the amount of measures in accordance with the third subparagraph, the amount of the countervailing duty shall be less if such lesser duty would be adequate to remove the injury to the Union industry.

(485) No such information has been submitted to the Commission, and therefore the level of the countervailing measures will be set with reference to Article 15(1), subparagraph 3.

(486) Following final disclosure, the exporting producer Wilmar noted the absence of an explicit injury margin analysis. In particular, Wilmar argued that the determination whether the amount of measures should be at the level of countervailable subsidies has to be made on the basis of all information submitted by the interested parties.

(487) All information submitted by interested parties has been taken into account when making this determination. While there are indeed a limited number of parties in the Union who expressed their opposition to the countervailing measures in general, they provided no information why it would not be in the Union interest to impose countervailing duties at the level of countervailable subsidies.

(488) In particular, Article 31(7) requires that for the Union interest analysis, information shall be taken into account only where it is supported by actual evidence which substantiates its validity. An unsubstantiated statement of opposition to the imposition of countervailing measures is therefore only of very limited relevance in this respect.

(489) Given that the definitive measures in this case will be based on the amount of countervailable subsidies established, the level of the injury margin is not relevant. Therefore, the test set out in Article 15(1), subparagraph five is not applicable.

9.2.

Price undertaking offers

(490) One Indonesian exporting producer (the applicant) submitted a voluntary price undertaking offer in accordance with Article 13 of the basic Regulation. The Commission analysed the undertaking offer and considered that its acceptance would be impractical for the following reasons.

(491) The minimum import price (MIP) proposed was inappropriate, as it was not sufficient to offset the amount of countervailable subsidies. According to Article 13.1 third paragraph of the basic Regulation, the price increase within the price undertaking shall not be higher than necessary to offset the amount of countervailable subsidies.

(492) The annual level, i.e. the annual limit of imports subject to undertaking proposed by the applicant, covered total exports of biodiesel from Indonesia and was binding for other Indonesian exporters not having submitted an undertaking offer. The offer did not mention how the annual level would be controlled so as to ensure its observance.

(493) The Commission found the annual level of imports at the MIP excessive. It exceeded the market share of Indonesian biodiesel imports during the investigation period. Together with the lack of a quarterly cap on imports the annual level proposed highly increased the risk that high level of imports would enter the Union market during certain months.

(494) The Commission noted that the applicant has a very complex structure and uses complex sales channels. Even under the additional commitment put forward concerning sales channels it would increase the likelihood of circumvention and cross-compensation and would make an effective monitoring impracticable.

(495) The Commission sent the applicant a letter, setting out the reasons to reject the undertaking offer and giving the applicant the opportunity to comment. The Commission received comments from the applicant with regard to the MIP, the annual level and risks of cross-compensation, also in the context of the EBB’s additional comments on the initial undertaking offer. Together with its comments, the applicant also revised certain elements of the undertaking offer outside the applicable deadline.

(496) In its comments, the applicant did not agree with the Commission’s conclusion that the MIP is not sufficient to offset the amount of countervailable subsidies. The applicant did not change the methodology of calculating the proposed MIP. The Commission maintained its findings and therefore rejected the claim.

(497) The applicant further clarified that the annual level set in the undertaking offer would solely cover imports into the Union of products produced or traded by the applicant. It also proposed to reduce the annual level and introduce a quarterly cap on the use of the annual level.

(498) The Commission welcomed the explanation with regard to the annual level and noted that the annual level, as explained by the applicant, was binding only for the applicant. This was among reasons for the Commission to consider the level to be excessive, as the annual level proposed exceeded the market share of imports of all Indonesian biodiesel exporters during the investigation period, whereas the level was intended for only one exporter — the applicant. The newly proposed level was lower that the annual level set in the undertaking offer, but still remained at a very high level since it was close to the total level of imports of biodiesel from Indonesia during the investigation period. The Commission also notes that the revised offer also did not mention how the annual level would be controlled so as to ensure its observance. The Commission maintained its findings and therefore rejected the claim.

(499) In its comments, the applicant disagreed with the Commission’s finding with regard to the applicant’s complex structure and complex sales channels. The applicant did not propose any additional commitment than those included in the undertaking offer. The Commission maintained its findings and therefore rejected the claim.

(500) The Commission considered the monitoring of the undertaking impracticable and unworkable for the reasons set out in recitals 490 to 499 above and therefore rejected the final offer.

9.3.

Definitive measures

(501) Definitive countervailing measures should be imposed on imports of biodiesel originating in Indonesia in accordance with the rules in Article 15(1) of the basic Regulation, which states that the definitive duty shall correspond to the total amount of countervailable subsidies established.

(502) On the basis of the above, the definitive countervailing duty rates, expressed on the CIF Union border price, customs duty unpaid, are as follows:

Company

Countervailing duty

PT Ciliandra Perkasa8,0 %PT Intibenua Perkasatama and PT Musim Mas (Musim Mas Group)16,3 %PT Pelita Agung Agrindustri and PT Permata Hijau Palm Oleo (Permata Group)18,0 %PT Wilmar Nabati Indonesia and PT Wilmar Bioenergi Indonesia (Wilmar Group)15,7 %All other companies18,0 %

(503) The individual company countervailing duty rates specified in this Regulation were established on the basis of the findings of this investigation. Therefore, they reflect the situation found during that investigation with respect to those companies. Those duty rates (as opposed to the countrywide duty applicable to all other companies) are thus exclusively applicable to imports of the product concerned originating in Indonesia and produced by those companies. Imported products concerned produced by any other company not specifically mentioned in the operative part of this Regulation, including entities related to those specifically mentioned, cannot benefit from those rates and shall be subject to the duty rate applicable to all other companies.

(504) A company may request the continued application of those individual duty rates despite subsequently changing its name or the name of one of its entities. The request must be addressed to the Commission. The request must contain all the relevant information enabling the company to demonstrate that the change does not affect the right of the company to benefit from the individual duty rate which applies to it. If the change of name of the company does not affect its right to benefit from the duty rate which applies to it, a notice informing about the change of name will be published in the Official Journal of the European Union.

(505) Should developments after the investigation period lead to a change in circumstances of a lasting nature, appropriate action in accordance with Article 19 of the basic Regulation may be taken.

(506) In view of Article 109 of Regulation (EU, Euratom) 2018/1046

Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council of 18 July 2018 on the financial rules applicable to the general budget of the Union, amending Regulations (EU) No 1296/2013, (EU) No 1301/2013, (EU) No 1303/2013, (EU) No 1304/2013, (EU) No 1309/2013, (EU) No 1316/2013, (EU) No 223/2014, (EU) No 283/2014, and Decision No 541/2014/EU and repealing Regulation (EU, Euratom) No 966/2012 (OJ L 193, 30.7.2018, p. 1).

, when an amount is to be reimbursed following a judgment of the Court of Justice of the European Union, the interest to be paid should be the rate applied by the European Central Bank to its principal refinancing operations, as published in the C series of the Official Journal of the European Union on the first calendar day of each month.

9.4.

Release of the provisional duties

(507) Article 16(2) of the basic Regulation states that it is for the Commission to decide what proportion of the provisional duty is to be definitively collected.

(508) Article 16(2) further states that in a case of threat of material injury, provisional duties are not to be collected unless it is found that the threat of material injury, in the absence of provisional measures, has developed into material injury.

(509) Given the findings of this case, the provisional amounts shall be released and not collected as set out in Article 16(2) of the basic Regulation.

(510) The measures provided for in this Regulation are in accordance with the opinion of the Committee established by Article 15(1) of Regulation (EU) 2016/1036 of the European Parliament and of the Council

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 (OJ L 176, 30.6.2016, p. 21).

,

HAS ADOPTED THIS REGULATION:

Article 1

1. A definitive countervailing duty is imposed on imports of fatty-acid mono-alkyl esters and/or paraffinic gasoils obtained from synthesis and/or hydro-treatment, of non-fossil origin, in pure form or as included in a blend, currently falling under CN codes ex15162098 (TARIC codes 1516209821, 1516209829 and 1516209830), ex15180091 (TARIC codes 1518009121, 1518009129 and 1518009130), ex15180095 (TARIC code 1518009510), ex15180099 (TARIC codes 1518009921, 1518009929 and 1518009930), ex27101943 (TARIC codes 2710194321, 2710194329 and 2710194330), ex27101946 (TARIC codes 2710194621, 2710194629 and 2710194630), ex27101947 (TARIC codes 2710194721, 2710194729 and 2710194730), 27102011, 27102015, 27102017, ex38249992 (TARIC codes 3824999210, 3824999212 and 3824999220), 38260010 and ex38260090 (TARIC codes 3826009011, 3826009019 and 3826009030) and originating in Indonesia.

1. The rate of the definitive countervailing duty applicable to the net, free-at-Union-frontier price, before duty, of the products described in paragraph 1 and manufactured by the companies listed below, shall be as follows:

CompanyDefinitive countervailing dutyTARIC additional codePT Ciliandra Perkasa8,0 %B786PT Intibenua Perkasatama and PT Musim Mas (Musim Mas Group)16,3 %B787PT Pelita Agung Agrindustri and PT Permata Hijau Palm Oleo (Permata Group)18,0 %B788PT Wilmar Nabati Indonesia and PT Wilmar Bioenergi Indonesia (Wilmar Group)15,7 %B789All other companies18,0 %C999

1. Unless otherwise specified, the provisions in force concerning customs duties shall apply.

Article 2

The amounts secured by way of the provisional countervailing duty under Implementing Regulation (EU) 2019/1344 shall be definitively released.

Article 3

This Regulation shall enter into force on the day following that of 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, 28 November 2019.

For the Commission

The President

Jean-Claude Juncker