Commission Implementing Regulation (EU) 2021/2011 of 17 November 2021 imposing a definitive anti-dumping duty on imports of optical fibre cables originating in the People’s Republic of China

(317) In the Second Note, the Commission also informed the interested parties that due to the extremely large number of factors of production of the sampled exporting producers that provided complete information, it might group the ones representing a negligible weight of cost of manufacturing under consumables. As for their treatment in the calculation of normal value, the Commission informed that it would calculate the percentage of the consumables on the total cost of raw materials and apply this percentage to the recalculated cost of raw materials when using the established undistorted benchmarks in the appropriate representative country. The Commission did follow this approach as explained further below at recital (320).

3.4.

Undistorted costs and benchmarks

3.4.1.

Factors of production

(318) Considering all the information submitted by the interested parties and collected during the verification visits, the following factors of production and their sources have been identified in order to determine the normal value in accordance with Article 2(6a)(a) of the basic Regulation:

Table 1

Factors of production of OFC

Factor of ProductionCommodity Code in ArgentinaUndistorted ValueUnit of MeasurementRaw materialsAluminium alloy wire7605299032,60CNY/kgAluminium clad steel wire

72173010,

72173090

10,17CNY/kgAluminium rods

76052110

76052190

27,59CNY/kgAluminium strip

76061220,

76061290

21,68CNY/kgAluminium strip/tape7606910029,03CNY/kgAramid yarn54021100148,37CNY/kgCable jelly4002999026,58CNY/kgCable paste

27101993,

27101999

9,26CNY/kgEthylene vinyl acetate3905290015,93CNY/kgFill rope5607490033,44CNY/kgFlame retardant sheath material

39019010,

39019020,

39019050,

39019090

16,22CNY/kgGlass fibre reinforced polymer3921901925,31CNY/kgGlass fibre reinforced plastic3921901925,31CNY/kgGlass fibre reinforced polymer-covered with glue

39199010,

39199090

48,53CNY/kg

Glass fibre yarn70191900135,88CNY/kgHigh density polyethylene conventional sheath material

39012019,

39012029

7,81CNY/kgLow density polyethylene390140008,26CNY/kgLow density polyethylene conventional sheath material

39011010,

39011091,

39011092

7,88CNY/kgLow smoke zero halogen sheath material

39013010,

39013090

13,39CNY/kgOptical fibre90011011,660,5CNY/kgPhosphating rubber coated steel wire7217900012,54CNY/kgPolybutylene terephthalate

39079911,

39079919

14,00CNY/kgPolyolefin elastomer

39019010,

39019020,

39019050,

39019090,

39029000

19,06CNY/kgStainless steel optical unit85447090114,79CNY/kgStainless steel strip7219320016,63CNY/kgStainless steel strip/tape

72202010,

72202090

17,03CNY/kgSteel strand

73121010,

73121090

16,82CNY/kgSteel strip7212509026,16CNY/kgSteel wire

72171011,

72171019,

72171090

7,99CNY/kgTape3919102066,66CNY/kgYarn5402200016,01CNY/kgLabourLabour wages in producing sector[N/A]40,1CNY/hEnergyElectricity[N/A]0,3390CNY/Kwh

Raw materials

(319) In order to establish the undistorted price of raw materials as delivered at the gate of a representative country producer, the Commission used as a basis the weighted average import price to the representative country as reported in the GTA to which import duties and transport costs were added. An import price in the representative country was determined as a weighted average of unit prices of imports from all third countries excluding China and countries which are not members of the WTO, listed in Annex 1 of Regulation (EU) 2015/755 of the European Parliament and the Council. The Commission decided to exclude imports from China into the representative country as it concluded in recital (69) that it is not appropriate to use domestic prices and costs in China due to the existence

of significant distortions in accordance with Article 2(6a)(b) of the basic Regulation. Given that there is no evidence showing that the same distortions do not equally affect products intended for export, the Commission considered that the same distortions affected export prices. After excluding the imports into Argentina from China and non-market economy countries, the Commission found that imports of the main raw materials from other third countries remained representative (more than 70 % of total volumes imported to Argentina).

(320) Given the exceptionally high number of factors of production used by the exporting producers, for a number of them the actual costs incurred by the cooperating exporting producers represented a negligible share of total raw material costs in the investigation period. The Commission decided to include those costs into consumables, as the impact on the calculation of the normal value was considered very limited. The actual raw materials included in consumables were listed in the company-specific disclosure. The Commission calculated the percentage of the consumables on the total cost of raw materials and applied this percentage to the recalculated cost of raw materials when using the established undistorted prices.

(321) In order to establish the undistorted price of raw materials, as provided by Article 2(6a)(a), first indent of the basic Regulation, the Commission applied the relevant import duties of the representative country.

(322) The Commission expressed the transport cost incurred by sampled exporting producers for the supply of raw materials as a percentage of the actual cost of such raw materials and then applied the same percentage to the undistorted cost of the same raw materials in order to obtain the undistorted transport cost. The Commission considered that, in the context of this investigation, the ratio between the exporting producer’s raw material and the reported transport costs could be reasonably used as an indication to estimate the undistorted transport costs of raw materials when delivered to the company’s factory.

(323) In its comments on final disclosure, the FTT group claimed that the commodity code in Argentina for optical fibre 90011019 was not for single mode fibres but for multimode fibre and special fibres which were not used in the manufacturing of the product concerned. This was due to the fact that the fibres covered by the code had a diameter higher than 11 microns which was for multimode fibre.

(324) This claim was found to be justified and therefore the Commission agreed to revise the benchmark for optical fibres accordingly.

(325) In its comments on final disclosure, the ZTT group claimed that the Commission was wrong not to include in the calculation of the benchmark for optical fibres the imports via the Argentinian commodity code 90011020 on the grounds that it included optical cables as stated in recital (274) as the optical fibre cables were imported via the Argentinian commodity code 85447000. However, the FTT group stated that it had no objection to the Commission’s decision to disregard this Argentinian commodity code.

(326) The Commission notes that the HS code 854470 is for single mode optical fibre cables, made up of one or more individually sheathed fibres, with protective casing, whether or not containing electric conductors and excludes the cables in which all the optical fibres are individually fitted with operational connectors at one or both extremities and plastic insulated cables for submarine use containing a copper or aluminium conductor in which fibres are contained in metal module(s). On the other hand the heading 9001 is for optical fibres and optical fibre bundles as well as for optical fibre cables other than those of heading 8544. The description of the Argentinian commodity code 90011020 reads optical fibre bundles and cables. Therefore, the claim was rejected.

(327) The FTT group also claimed that the data used by the Commission for calculating the benchmark for optical fibre includes both coloured and non-coloured fibres and asked the Commission to deduct the cost of colouring the fibre that it incurred from the value of the benchmark.

(328) The Commission noted that the evidence submitted by FTT only in the confidential version of its submission cannot be properly assessed as it was only an excerpt of a certain set of data. Nevertheless, the Commission recalled that the calculation of the benchmarks is made on readily available data and the excerpt of the information provided by FTT in this regard is clearly not readily available. Therefore, the claim was rejected.

(329) The ZTT group claimed that for constructing the benchmark for the raw material cable jelly, out of the four commodity codes used by the Commission, i.e. 40029910, 40029920, 40029930, and 40029990, only 40029990 should be used. The ZTT group put forward supporting evidence that the other three commodity codes were not used for the manufacturing of the product concerned.

(330) This claim was also find to be justified and therefore the Commission revised the benchmark for cable jelly accordingly.

(331) The ZTT group also claimed that the commodity code for the raw material aluminium rods was not correct as under the Argentinian nomenclature they refer to aluminium hollows and other profiles, rather than bars and rods, which are not used for the manufacture of the product concerned and therefore the Commission should identify another code. The ZTT group did not suggest another alternative commodity code.

(332) The Commission confirmed that the Argentinian code covered aluminium hollows and other profiles and not bars and rods. After further analysis, the Commission decided to revise the code and instead use HS code 760521, which pertains to aluminium alloy rods that are used to manufacture aluminium clad steel wires for optical ground wires (OPGW)

https://www.prysmiangroup.com/sites/default/files/business_markets/markets/downloads/datasheets/OPGW-TUBAL_1.pdf

.

(333) The ZTT group also claimed that it did not use glass fibre yarns to manufacture OFC but glass fibre rovings and therefore the correct HS code would be 701912. The ZTT group stated that the decisive factor distinguishing yarns and rovings was whether the filaments are twisted or not. ZTT group claimed that the filaments it used were not twisted and therefore the correct HS code was the one for rovings i.e. 701912.

(334) The Commission disagreed with this claim. The HS code 701912 is for glass fibre rovings which are the raw materials to manufacture glass fibre yarns. Furthermore, the Union producers confirmed that glass fibre rovings are raw materials used by the suppliers of glass yarns and glass reinforced rods of the OFC industry. Therefore, the correct HS code is 701919.

(335) The FTT group stated that the factor of production water was wrongly included by the Commission in consumables while this factor of production was not a direct raw material cost but a direct cost.

(336) The Commission included the factor of production water in consumables as it represented less than 0,05 % of the total direct cost and therefore its impact on the dumping margin was negligible.

(337) The FTT group argued that the Commission was required to construct a benchmark for each factor of production as it concluded that all factors of production were distorted. Therefore, it claimed that the Commission was not allowed to group several factors of production under consumables and apply the calculation methodology explained in recital (320) as this would distort the data. The FTT group asked the Commission to use the reported data of FTT group for these factors of production. The ZTT group also disagreed with the Commission’s methodology for consumables and claimed that the Commission should calculate a benchmark for consumables separately from other inputs.

(338) As explained in recital (320), due to the high number of factors of production (for example more than 60 factors of production for FTT), the Commission included several factors of production (around 30 factors of production for FTT) that represented a negligible share of total raw material costs in the investigation period (around 4 % for FTT) into consumables. The Commission considered that the sourcing of all these factors of production would have entailed a significant administrative burden, also considering that for some of them the import values into the representative country was not representative, whereas the impact on the calculation of the normal value, of which these factors of production represent only a part, was considered very limited. Therefore the Commission applied its standard methodology for calculating the undistorted value of consumables i.e. by calculating the percentage of

the consumables on the total cost of raw materials and applied this percentage to the recalculated cost of raw materials when using the established undistorted prices. This methodology, concerning such a small share of the cost of manufacturing and an even smaller share of the normal value calculations, is considered to lead to very similar results to the methodology based on sourcing each factor of production. In any event, this methodology could very well result in a favourable outcome for the exporting producers, if the underlying actual value of the inputs would be higher than that calculated as a percentage of the total cost of raw materials. No interested party provided evidence that the approach followed by the Commission would lead to a less favourable result. Furthermore, the Commission noted that significant distortions were established in section 3.1.1 above. In that case, according to Article 2(6a) of the basic Regulation, domestic costs may be used but only to the extent that they are positively established not to be distorted, on the basis of accurate and appropriate evidence. No such evidence with regards to factors of production grouped under consumables was put forward by the exporting producers, nor found by the Commission. Therefore, the Commission cannot use the data reported by the FTT group. The Commission considers that its methodology for calculating an undistorted value for consumables is appropriate as no better information is available. The ZTT group also did not attempt to put forward the benchmark as calculated by using GTA import values into the representative country, nor has it suggested an alternative undistorted benchmark for consumables. Therefore, the claim was rejected.

(339) The ZTT group claimed that the six by-products/waste reported as factors of production should not be included in the consumables and the Commission should construct a benchmark for each of them.

(340) The Commission disagreed with this claim. As explained in recital (320) given the exceptionally high number of factors of production used by the exporting producers, the Commission included several factors of production whose actual costs incurred by the cooperating exporting producers represented a negligible share of total raw material costs in consumables. The six by-products/waste reported by the ZTT group represented, depending on the by-products/waste, between less than 0,005 % and less than 0,050 % of the total direct costs and in total less than 0,10 % of the total direct costs. Therefore, their potential impact on the normal value was immaterial, and the same considerations summarised at recital (338) are relevant in this respect. The claim was thus rejected.

(341) The FTT group stated that by using CIF values to construct benchmarks which includes transport costs outside Argentina, ocean freight charges and insurance, the Commission negates any comparative advantage producers may have on account of the availability of certain raw materials in their home market.

(342) Article 2(6a)(a) of the basic Regulation prescribes the use of corresponding data in an appropriate representative country provided the relevant data are readily available. The Commission did not have at its disposal on file data on domestic prices in the possible representative countries. By contrast, data on import prices are readily available and the Commission uses the GTA as the source of this data. This party also failed to submit possible relevant data from the representative country that could be used in the investigation. Therefore, the claim was rejected.

(343) The ZTT group also disagreed with the Commission’s methodology for calculating an undistorted cost of the transport of raw materials explained in recital (322). The ZTT groups argued that the Commission should calculate individually the transport cost for each raw material. It was further added that the transport cost might vary significantly from one factor of production to the other.

(344) The Commission notes that the ZTT group did not suggest how the Commission should calculate individually the transport cost for each raw material. As explained in recital (322) the Commission considered that, in the context of this investigation, the ratio between the exporting producer’s raw material and the reported transport costs could reasonably be used as an indication to estimate the undistorted transport costs of raw materials when delivered to the company’s factory. Therefore, the claim was rejected.

3.4.1.1.

Labour

(345) The Commission used the ILO statistics to determine wages in Argentina. The ILO statistics provide information on average labour cost for 2018 for several occupations. However, the average labour cost for the manufacturing sector was not available. Therefore, to establish the benchmark for labour cost, the Commission used the total average labour cost provided by ILO statistics together with readily available information on additional labour costs (such as taxes) incurred by an employer in Argentina

https://www.doingbusiness.org/content/dam/doingBusiness/country/a/argentina/ARG.pdf (page 44); https://www.argentina.gob.ar/trabajo/casasparticulares/empleador/remuneracionesyrecibos/aguinaldo; https://www.mondaq.com/argentina/employee-rights-labour-relations/536000/labor-costs-in-argentina

. The Commission also used the index

https://www.indec.gob.ar/indec/web/Nivel4-Tema-4-31-61

to adjust the 2018 data for inflation.

(346) In their comments on final disclosure, the ZTT group claimed that the Commission should use the labour cost of plant and machines operators and assemblers as they were mostly close to the type of labour force in the OFC.

(347) The Commission disagreed with this claim. ZTT group did not submit any evidence showing that most of the employees of ZTT group were plant and machines operators and assemblers. As the OFC industry is a high-tech industry, the OFC producers employ many engineers and technicians which are classified by ILO under the category professionals as well as information and communications technicians which are classified by ILO under technicians and associate professionals. The average labour cost of these three occupations is more than 20 % higher than the value of total labour cost used by the Commission for the calculation of the benchmark for labour. As the Commission does not have a breakdown of the proportion of the number of employees in these main categories in the total number of employees, it considered appropriate to use the average labour cost provided by ILO. Therefore, the claim was rejected.

3.4.1.2.

Electricity

(348) The price of electricity for companies (industrial users) in Argentina is published by the distributors of electricity Edenor and Edesur

https://www.argentina.gob.ar/enre/cuadros_tarifarios

during the investigation period. The information enables to identify the price of electricity paid by the industrial users (Tarifa T3). It also provides details on prices paid by industrial users that opted for differentiated rates based on the time of day when electricity is consumed and the voltage used. The Commission used these tariffs for calculation.

(349) Following final disclosure, the ZTT group claimed that there was an error in the formula for the calculation of the benchmark for electricity.

(350) The Commission corrected this error, whose impact was minor.

3.4.2.

Manufacturing overhead costs, SG&A, and profits

(351) According to Article 2(6a)(a) of the basic Regulation, the constructed normal value shall include an undistorted and reasonable amount for administrative, selling and general costs and for profits. In addition, a value for manufacturing overhead costs needs to be established to cover costs not included in the factors of production referred to above.

(352) The manufacturing overheads incurred by the cooperating exporting producers were expressed as a share of the costs of manufacturing actually incurred by the exporting producers. This percentage was applied to the undistorted costs of manufacturing.

(353) For establishing an undistorted and reasonable amount for SG&A and profit, the Commission relied on the financial data for 2019 for Prysmian Energia Cables y Sistemas de Argentina S.A. as extracted from Dun and Bradstreet (D&B)

https://globalfinancials.com/index-admin.html

. The Commission made this data available to interested parties in the Second Note.

(354) In its comments on final disclosure, FTT group disagreed with the calculation methodology applied to the overheads explained in recital (352) arguing that the Commission based distorted data to recalculate distorted valued which was contradictory to the legal principles and practice of the Commission and asked the Commission to keep the original data reported by FTT group. ZTT also disagreed with the Commission’s methodology for overheads and asked the Commission to build a benchmark for this separately from other inputs.

(355) The Commission noted that the overheads data was not readily available separately in the financial statements of the producer in the representative country. Furthermore, once significant distortions are established, according to Article 2(6a) of the basic Regulation, domestic costs may be used but only to the extent that they are positively established not to be distorted, on the basis of accurate and appropriate evidence. No such evidence with regards to overheads was put forward by the exporting producers, nor found by the Commission. Therefore, the claim was rejected. The Commission considered that its methodology for calculating an undistorted value for overheads is appropriate as no better information is available. The ZTT group has also not suggested an alternative undistorted benchmark for overheads. Therefore, the claim was rejected.

(356) In its comments on final disclosure, the ZTT group claimed that its own SG&A and profit should not be excluded from consideration as the Commission did not prove that it was distorted.

(357) The Commission disagreed with this claim. As explained in recital (142) the Commission concluded that it was not appropriate to use domestic prices and costs to establish normal value in this case. Therefore, in this case, as stated in recital (158), the Commission does not need to prove that the actual SG&A costs of the exporting producers were undistorted.

3.4.3.

Calculation

(358) On the basis of the above, the Commission constructed the normal value per product type on an ex-works basis in accordance with Article 2(6a)(a) of the basic Regulation.

(359) First, the Commission established the undistorted manufacturing costs (covering the consumption of raw materials, labour and energy). The Commission applied the undistorted unit costs to the actual consumption of the individual factors of production of the sampled exporting producers. The Commission multiplied the usage factors by the undistorted costs per unit observed in the representative country, as described in recital (318).

(360) Second, to arrive at the undistorted costs of production, the Commission added manufacturing overheads. Manufacturing overheads incurred by the cooperating exporting producers were increased by the costs of raw materials and consumables referred to in recital (317) and subsequently expressed as a share of the costs of manufacturing actually incurred by each of the exporting producers. This percentage was applied to the undistorted costs of manufacturing.

(361) Once the undistorted manufacturing cost established, the Commission applied the SG&A and profit as noted in recitals (351) to (353). They were determined on the basis of the financial statements of Prysmian Energia Cables y Sistemas de Argentina S.A. as explained in recital (353).

(362) To the costs of production established as described in the previous recital, the Commission applied SG&A and profit of Prysmian Energia Cables y Sistemas de Argentina S.A. SG&A expressed as a percentage of the Costs of Goods Sold (COGS) and applied to the undistorted costs of production, amounted to 15 %. The profit expressed as a percentage of the COGS and applied to the undistorted costs of production, amounted to 10,6 %.

(363) On that basis, the Commission constructed the normal value per product type on an ex-works basis in accordance with Article 2(6a)(a) of the basic Regulation.

3.5.

Export price

(364) The sampled group of exporting producers exported to the Union either directly to independent customers or through related companies acting either as an agent, trader or an importer.

(365) The export price for sales made directly to independent customers in the Union and through related trading companies was the price actually paid or payable for the product concerned when sold for export to the Union, in accordance with Article 2(8) of the basic Regulation.

(366) The export price for sales made through related importers was established based on the price at which the imported product was first resold to independent customers in the Union, in accordance with Article 2(9) of the basic Regulation. In this case, adjustments to the price were made for all costs incurred between importation and resale, including SG&A expenses, and a reasonable profit.

(367) The weighted average of the profits of cooperating importers (see recital (28)) was used as a reasonable profit margin. This profit margin ranges between 15 % and 25 %.

(368) In its comments on final disclosure, the ZTT and FTT groups claimed that there was double counting of certain allowances that were deducted both from the sales listing as well as in the selling, general and administrative expenses.

(369) These claims were found justified and the Commission revised the export price accordingly. The detailed assessment of this claim was provided to both groups in the specific disclosure as it contains confidential information.

(370) The FTT group claimed that the Commission should not deduct from the export price the total agent fee, which was made of four different types of fees, but only the export agent fee.

(371) The Commission requested FTT group to submit additional information concerning the payment of the agent fee to its related agent. The information submitted by the FTT group showed that in fact FTT paid its related agent the total amount of the agent fee and not only the export agent fee. Therefore, the claim was rejected.

(372) The FTT group claimed that the Commission used the wrong agent fee for the product concerned for 2020 and deducted twice the ocean freight and handling expenses; once as an allowance in the sales listing, and once as part of the agent fee.

(373) These claims were found to be justified and therefore they were accepted. The calculation of the export price was revised accordingly.

(374) The FTT group also claimed that when constructing the export price for the sales of its related entity NW, the Commission should not deduct the agent fee applied to the sales of FTT as (1) there was no agreement between NW and FTT nor with the FTT’s export agent, (2) such fees were reflected in transactions between FTT and its agent and (3) the transactions between NW and FTT were domestic transactions expressed by VAT invoice value.

(375) The contract between FTT and its related agent does not specify that the agent fee applies only to the sales of the OFC manufactured by FTT. As FTT also exports OFC manufactured by NW, the agent fee should be deducted for all exports of FTT irrespective of the manufacturer. Therefore, the claim was rejected.

(376) The FTT group also claimed that the profit margin of the unrelated importer stated in recital (367) is unrepresentative and not normally realized by importers. FTT group also claimed that the importers selected by the Commission have different business scope compared to the related importers part of FTT group.

(377) At the outset it is noted that the Commission has not selected the importers. The cooperation in the anti-dumping investigation of importers is on a voluntary basis. As explained in recital (28) five unrelated importers provided the requested information and agreed to be included in the sample. The Commission asked all cooperating importers to submit their replies to the questionnaire. As stated in recital (42) the Commission cross-checked the information submitted by the importers. Furthermore, as stated in recital (367) the profit margin used is the weighted average of the profits of cooperating importers mentioned in recital (28) that were able to submit data for the investigation period. Therefore, the Commission considered that this profit margin was representative and accurate.

3.5.1.

Comparison

(378) The Commission compared the normal value and the export price of the sampled exporting producers on an ex-works basis.

(379) Where justified by the need to ensure a fair comparison, the Commission adjusted the normal value and/or the export price for differences affecting prices and price comparability, in accordance with Article 2(10) of the basic Regulation. Adjustments were made for transport, insurance, handling and loading, credit costs, bank charges, other import charges, packaging expenses, agent fee, commissions and year-end rebates.

(380) An adjustment under Article 2(10)(i) was also made for sales through related trading companies. It was found that the functions of the traders in China or Hong Kong were similar to those of an agent. Those traders were looking for customers and established contact with them. They bore the responsibility of the selling process and received a mark-up for their services. The adjustment consisted of the SG&A of the trading companies and a 10 % profit. This profit margin was considered a conservative estimate of the appropriate level of profitability in view of the high margins (typically in the 20 % range) obtained in this sector by unrelated importers.

(381) The ZTT group claimed that its producing and selling companies form a single economic entity as regards the export sales of the OFC.

(382) The Commission disagreed with this claim. It is noted that this claim was made strictly for the product concerned and not for all products sold by the ZTT group. As confirmed by the General Court

Judgment of 25 June 2015, PT Musim Mas v Council, T-26/12, EU:T:2015:437, para. 53.

, the examination of whether a related company forms a single economic entity with the producing entities must go beyond the sales of the product concerned to the Union. An examination of the role of the producing entity and the selling entity for all products produced or sold by the group is required. The Commission’s examination revealed inter alia that there were significant direct sales and a lack of economic control. It was thus found that the ZTT Group’s sales companies could not be considered to be operating as merely internal sales departments. The further details of the Commission’s assessment have been disclosed to the ZTT group in their specific disclosure as they include business confidential information. Based on this assessment, this claim was rejected.

(383) In its comments on final disclosure, the ZTT group disagreed with the Commission’s conclusion that the ZTT group’s sales companies could not be considered to be operating as merely internal sales departments. It claimed that even if one of the producing entities had no share ownership in or economic control over the Chinese trader, there was control common to both of those companies.

(384) The Commission noted that even if this is the case, this condition is only a prerequisite and it is not decisive.

(385) Furthermore, ZTT group claimed that the Commission has not provided evidence that the trading company sold products from unrelated companies and that there was a written contract which indicated the arm’s length transactions between producers and the trader for export sales. It also argued that only the export sales were relevant for this assessment, while the domestic sales were irrelevant and that only the sales of the product concerned should be assessed. In this regard it claimed that it was irrelevant whether the producing entities sold other products directly as the trading company did not function as the internal sales department for those products.

It was stated that that there might be several sales departments in a company each specialised in a particular product. It was also stated that neither producer had export sales departments nor any sales staff to handle the exporting functions. ZTT group also claimed that it was not relevant what the business license of the trader stated, as that concerned the form and not the economic reality.

(386) The Commission maintains its conclusions that the Chinese trader could not be considered to be operating merely as an internal sales department. The examination of whether a related company forms a single economic entity with the producing entities must go beyond the sales of the product concerned to the Union

Judgment of 26 October 2016, PT Musim Mas v Council, C-468/15 P, EU: C:2016:803, para. 46.

. One of the producing entities had significant direct export sales of other products ranging between 17 % and 22 % of total sales and therefore it needed to have an export sales department and sales staff despite what ZTT claimed. Regarding the business license of the trader, it is noted that the documentary evidence on the nature of the functions is indeed relevant for the assessment of the role of the trader.

(387) The ZTT group also reiterated its claim that the related importer in the Union formed a single economic entity.

(388) The Commission maintained its conclusion that regarding the exports via the related importer in the Union, the existence or not of a single economic entity is not relevant to the application of Article 2(9) of the basic Regulation. Such a provision applies to adjust the export price in cases where the export price is unreliable because of an association or a compensatory arrangement between the exporter and the importer or a third party. In this case, it was not disputed that the ZTT group sells to the EU through a related importer and thus this provision is fully applicable.

(389) In their comments on final disclosure, the FTT group and CCCME claimed that the Commission did not explain the source of the 10 % profit margin and if this amount was reasonable and prevailing in the market.

(390) The Commission disagrees with this claim. This information was provided in recital (380).

(391) The FTT group and CCCME also claimed that when establishing the export price for NW no adjustments could be made for the SG&A (other than direct selling expenses) and profit incurred by its related traders in China and Hong Kong as the Commission had not demonstrated that the functions of these traders were similar to those of an agent working on a commission basis.

(392) The Commission disagreed with this claim. The Commission reiterated its assessment developed in recital (380). Furthermore, the Commission noted that there was a significant price variation when comparing the different sections of the sales flow to the Union ranging between 18 % and 30 % depending on the section. Therefore, it was clear that each trader received a mark-up which was in fact higher that the profit of the unrelated trading company deducted by the Commission as stated in recital (380).

(393) The FTT group also stated that it believed that the amount of SG&A of Prysmian Energia Cables y Sistemas de Argentina S.A. contained all its expenses incurred during the accounting period. FTT group asked the Commission to deduct the direct selling expenses (such as transport and handling expenses) from the total amount of SG&A as comparing an export price net of selling and financial expenses with a normal value without such deduction was not objective and fair. CCCME made a similar claim arguing that the Commission seemed to have adjusted only the export price pursuant to Article 2(10) and not also the normal value. The ZTT group also claimed that the financial data of Prysmian Energia Cables y Sistemas de Argentina S.A. were not adequately detailed to allow a full understanding of the SG&A items and their corresponding amounts. It argued that the further details were critical to ensure the fair comparison between ZTT group’s export price and the constructed normal value, as well as to

ascertain that the profit derived from the main business operation (such as selling cables), rather than from another business activity or non-operating income. Such income shall not be included in the profit used for constructing the normal value. Furthermore, the ZTT group stated that if the Commission was not able to provide a more meaningful disclosure of the financial data related to Prysmian Energia Cables y Sistemas de Argentina S.A., then the Commission should use the data of the Malaysian producers whose audited financial statements were available.

(394) The Commission disagreed with this claim. The SG&A was calculated as the difference between the cost of goods sold and the other operating expenses based on the readily available information. The Commission noted that the claim alleging that such expenses were included in SG&A costs reported for the producer in the representative country was not substantiated. Furthermore, the sampled exporting producers did not provide any quantification for this adjustment. As explained in recital (280) the Commission disclosed to interested parties the relevant readily available financial information of Prysmian Energia from Dun & Bradstreet in the Second Note. No interested party provided any more suitable SG&A data for a producer in Argentina. Furthermore, as the Commission concluded that Argentina met the criteria laid down in Article 2(6a)(a), first indent of the basic Regulation in order to be considered as an appropriate representative country as stated in recital (294), the Commission needs to use the SG&A for a producer from Argentina and not Malaysia. As the Malaysian producer did not register reasonable profits, the Commission could not use its financial data. Therefore, the claim was rejected.

3.5.2.

Dumping margins

(395) For the sampled cooperating exporting producers, the Commission compared the weighted average normal value of each type of the like product with the weighted average export price of the corresponding type of the product concerned, in accordance with Article 2(11) and (12) of the basic Regulation.

(396) On this basis, the weighted average dumping margins expressed as a percentage of the CIF Union frontier price, duty unpaid, are as follows:

CompanyDefinitive dumping margin

FTT group:

FiberHome Telecommunication Technologies Co., Ltd

Nanjing Wasin Fujikura Optical Communication Ltd

Hubei Fiberhome Boxin Electronic Co., Ltd

44,0 %

ZTT group:

Jiangsu Zhongtian Technology Co., Ltd

Zhongtian Power Optical Cable Co., Ltd

19,7 %

(397) For the cooperating exporting producers outside the sample, the Commission calculated the weighted average dumping margin, in accordance with Article 9(6) of the basic Regulation. Therefore, that margin was established on the basis of the margins of the sampled exporting producers.

(398) On this basis, the definitive dumping margin of the non-sampled cooperating exporting producers outside the sample is 31,2 %.

(399) For the margin for all other exporting producers in China, the Commission determined the level of cooperation of the exporting producers. The level of cooperation was established considering the volume of exports of the cooperating exporting producers to the Union and the total export volume based on imports – as reported in Eurostat import statistics – from China.

(400) The level of cooperation in this case was high. The Commission considered it appropriate to base the residual dumping margin at the level of the sampled company with the highest dumping margin.

(401) The definitive dumping margins, expressed as a percentage of the CIF Union frontier price, duty unpaid, are as follows:

CompanyDefinitive dumping margin

FTT group:

FiberHome Telecommunication Technologies Co., Ltd

Nanjing Wasin Fujikura Optical Communication Ltd

Hubei Fiberhome Boxin Electronic Co., Ltd

44,0 %

ZTT group:

Jiangsu Zhongtian Technology Co., Ltd

Zhongtian Power Optical Cable Co., Ltd

19,8 %Other cooperating companies31,2 %All other companies44,0 %

1. INJURY

4.1.

Unit of measurement

(402) Although official import statistics are reported in kilograms, the Commission considered, in line with comments by exporting producers and Union industry, that this unit of measurement is not suitable for a proper measurement of the volumes concerned. The investigation shows that the industry commonly does not use weight but length as a main volume indicator. This could either measure the length of the cable (cable-km), or the total length of the fibres contained therein (fibre-km). Given that the current investigation concerns cables, cable-km is considered the most appropriate unit of measurement, which will be used in the injury determination below.

(403) In its comments on final disclosure, the CCCME claimed that import volumes should be calculated on the basis of fibre kilometres instead of cable kilometres as fibre kilometre was the accepted industry standard and the only unit of measurement that reflected the immense differences in fibre numbers per cable.

(404) The Commission maintained that cable kilometre is the appropriate unit of measurement as the products subject to the investigation are cables and the number of fibres in a cable is a specific feature of the cable which is reflected in the PCN. Therefore this claim was rejected.

4.2.

Definition of the Union industry and Union production

(405) The like product was manufactured by 29 producers in the Union during the investigation period. With the exception of the two companies mentioned in the next section, they constitute the Union industry within the meaning of Article 4(1) of the basic Regulation. Following the withdrawal of the United Kingdom from the European Union, the injury determination is based on data of 27 Member States (EU27) for the whole period considered.

(406) The total Union production during the investigation period was established at 1,2 million cable-km. The Commission established the figure on the basis of all the available information concerning the Union industry, such as direct information from the 9 parties - 6 complainants, 3 companies supporting the complaint - and market intelligence for the remaining producers. As indicated in recital (26), three Union producers were selected in the sample representing 52 % of the total Union production of the like product.

4.2.1.

Exclusion of two producers from the Union industry

(407) According to Article 4(1) of the basic Regulation, producers who are related to Chinese exporters or importers and/or are themselves importers of the allegedly dumped product may be excluded from the Union industry. Article 4(2) defines when producers are to be considered related to exporters or importers.

(408) The Commission investigated the existing relationships of the Union industry with exporters or importers of the product concerned. The investigation showed that one sampled Union producer imported a marginal volume of optical fibre cables from China, and another one holds a minority shareholding in a non-sampled exporting producer. In light of the negligible volumes imported by the first producer and of the fact that the second one demonstrated that it does not control nor is controlled by this exporting producer and that the effect of this relationship did not cause it to behave differently from the non-related producers, the Commission concluded there was no reason to exclude either of these companies from the Union industry.

(409) Concerning a third non-sampled producer the Commission considered, in view of its relationship with a Chinese exporting producer (which is controlled by the same entity) and the significant quantities of imports from China, that it was appropriate to exclude such a producer from the definition of the Union industry, despite the significant production of this company within the Union.

(410) Similarly, concerning a non-cooperating producer in the Union, who declared significant amount of imports from China, the Commission decided that, taking into account the relationship with a Chinese exporting producer and the significant amounts of imports, it should be equally excluded from the Union industry.

(411) As the investigation did not show that any other producer was either related to Chinese exporters or imported from China, no further exclusions from the definition of the Union industry were necessary.

(412) CCCME argued that a number of Union producers had links to Chinese OFC producers and requested the Commission to conduct a segmented injury analysis by separately analysing this import stream.

(413) In its comments on final disclosure, CCCME reiterated this claim concerning the segregation and separate assessment of imports. CCCME also considered that the Commission should disclose the volume and percentage of the Union producers’ imports from related and unrelated Chinese producers during the IP.

(414) As set out above, the Commission duly took into account the links of Union producers with Chinese companies, excluding producers with significant imports from China, and also had regard to their relationship with Chinese exporters. The sampled Union producers imported marginal quantities (less than 1 % of their production) of the product concerned from related companies in China. Therefore, the claim was rejected.

(415) Connect Com submitted a list of other Union producers of optical fibre cables which were not taken into consideration in the complaint. The Commission noted that these companies did not cooperate with the investigation and that estimations for non-cooperating Union producers were provided on the basis of reliable market intelligence

CRU Cable market outlook (August 2020), complemented by complainants’ market intelligence.

.

4.3.

Determination of the relevant Union market

(416) To establish whether the Union industry suffered injury and to determine consumption and the various economic indicators related to the situation of the Union industry, the Commission examined whether and to what extent the subsequent use of the Union industry’s production of the like product had to be taken into account in the analysis.

4.4.

Captive use

(417) The Commission found that between 5,8 % and 4,4 % of the Union producers’ production was destined for captive use during the period considered. The cables were in that case delivered within the same company or groups of companies for further downstream processing, in particular for the production of cables fitted with connectors.

(418) The distinction between captive and free market is relevant for the injury analysis because products destined for captive use are not exposed to direct competition from imports. By contrast, production destined for free market sale is in direct competition with imports of the product concerned.

(419) To provide a picture of the Union industry that was as complete as possible, the Commission obtained data for the entire optical fibre activity and determined whether the production was destined for captive use or for the free market.

(420) The Commission examined certain economic indicators relating to the Union industry on the basis of data for the free market. These indicators are: sales volume and sales prices on the Union market; market share; growth; export volume and prices; profitability; return on investment; and cash flow. Where possible and justified, the findings of the examination were compared with the data for the captive market in order to provide a complete picture of the situation of the Union industry.

(421) However, other economic indicators could meaningfully be examined only by referring to the whole activity, including the captive use of the Union industry

These indicators were based on direct data collected by the complainant on the 8 complaining or supporting Union producers (excluding one company for the reasons explained at recital (409)), representing almost 80% of the Union production in the IP, plus an estimate for the remaining Union producers based on market research and intelligence.

. These are: production; capacity, capacity utilisation; investments; stocks; employment; productivity; wages; and ability to raise capital.

(422) In its comments on final disclosure, CCCME claimed that the captive market should not be disregarded when analysing the overall market position of the Union industry.

(423) In this respect, as described below, the Commission did not disregard the captive market, but rather identified it and assessed its evolution over time. This provided a complete picture of the situation of Union industry. The small and decreasing size of that market underscores that it does not have any meaningful impact on the situation of the Union industry. The Commission further recalls that cables with connectors are not the product concerned.

4.5.

Union consumption

(424) The Commission established the Union consumption on the basis of data on sales as determined by the complainant plus import data established in line with the methodology described in recital (427) - (432).

(425) Union consumption developed as follows:

Table 2

Union consumption (cable-km)

Source: Cooperating exporting producers, EU customs authorities, Eurostat, complainants.

201720182019IPTotal free market Union consumption1276902153799916557371760092Index100120130138Captive market61505598026271054205Index1009710288

(426) The free market consumption in the Union increased by 38 % during the period considered. Indeed, linked to the wide digital expansion in the EU, this is a market whose growth is strong and is slated to continue at a brisk pace

CRU cables market outlook report, August 2020, page 29, and CRU Worldwide Cable Market Summary by Application and Region, February 2021.

. The consumption kept growing until the IP, despite the fact that the second part of the period (i.e. the first half of 2020) coincided with the first months of the disruptions linked to the COVID-19 pandemic. The investigation’s findings show that the pandemic which started in the last months of the IP and the related prevention measures did slow down the growth, but did not prevent consumption of the product under investigation from increasing in the Union during the investigation period as a whole. The captive market is constituted by the use of optical fibre cables in connectivity solutions offered by the companies, including cables fitted with connectors; its volumes, very limited in proportion to the overall market, showed a decrease of 12 % throughout the period considered.

4.6.

Imports from the country concerned

4.6.1.

Volume and market share of the imports from the country concerned

(427) The volume of imports from China was established on the basis of the information provided directly by Chinese exporting producers pursuant to recital (47). This was highly representative, as the volume of imports in the IP constituted 89 % of the total imports declared by Chinese exporting producers in the sampling exercise at the outset of the investigation. Total imports were thus established at 11 % more than the quantities declared pursuant to recital (47).

(428) Imports from other third countries were established on the basis of the detailed exercise mentioned in recital (48), which identified imports of the product concerned in kg, and were converted into cable-km using the precise conversion factors declared by Chinese exporting producers in their replies to the additional request for information mentioned in recital (47).

(429) The market share of the imports was established on the basis of the import volume as compared to the volume of free market consumption shown in Table 2.

(430) Imports from the country concerned developed as follows:

Table 3

Import volume and market share

Source: Cooperating exporting producers, Eurostat, EU customs authorities.

201720182019IPVolume of imports from the country concerned (cable-km)189479354167434754498335Index100187229263Market share (%)14,8 %23,0 %26,3 %28,3 %Index100155177191

(431) Against a backdrop of significant Chinese excess capacity (estimated to amount to more than twice the entire EU market, on the basis of market analysis provided by the complainants

Estimations based on public sources (CRU article of 10 January 2020 Further instability on the horizon as tumultuous year ends and slides from CRU Wire Cable Conference, June 2019), elaborated on by the complainants (Complaint, footnote 36).

), imports from the country concerned increased from around 190000 cable-km to around 500000 cable-km over the period considered, a very rapid increase of more than two and a half times. This 163 % increase is more than four times higher than the increase in consumption, underscoring the depth and thrust of Chinese penetration of this market.

(432) As a result, the market share of those imports increased from 14,8 % to 28,3 % over the period considered, a massive increase of 91 %. It should be noted that the volumes of Chinese imports showed an increase in every year of the period considered, an element which highlights the rapidity and magnitude of the market penetration.

(433) In its comments on final disclosure, CCCME argued that the market share of the Union industry was understated and the market share of the Chinese imports was inflated. In this regard, CCCME further claimed that the market data should be based on fibre kilometres instead of cable kilometres which would result in a lower market share of Chinese imports.

(434) In this respect the Commission recalled that the investigation revealed that cable kilometre was the most appropriate unit of measurement for the product concerned as explained in recitals (402) to (404). Therefore, the claim was rejected.

4.6.2.

Prices of the imports from the country concerned, price undercutting, price depression

(435) The Commission established the prices of imports on the basis of the replies to the request for additional information from the cooperating exporters mentioned in recital (47).

(436) The average price of imports from the country concerned developed as follows:

Table 4

Import prices (EUR/cable-km)

Source: Cooperating exporting producers.

201720182019IPChina452,9401,9468,5349,1Index1008910377

(437) Import prices from China decreased from 452 to 349 EUR/cable-km over the period considered, a fall of 23 %. This development should be seen in the light of the increased aggressiveness of Chinese exporting producers, which is connected to the excess capacity in that country (see recital (431)). This indicator should further be seen against the backdrop of significant price variations for a given length between different product types as well as large differences in the product mix from year to year. The variation in product stemmed both from the variability and therefore price in the types of cables sold, and also from the fact that not all types of products were tendered or sold each year.

(438) To avoid the variations in product mix inherent to the price series over the period concerned, and to obtain more accurate and representative data, the Commission also analysed the comprehensive information from sampled Chinese exporters and Union producers based on more aggregated groups of directly comparable products. This led to the identification of 35 identical (matching) groups which are sold by both Chinese exporters and the Union industry, and for which there were sales in each of the years examined. In other words, the Commission obtained a

complete time series with price per product type for each year in the period under consideration. These prices can be seen as representative of overall Chinese exports over the period, covering 62 % of exports by sampled companies during the IP. The resulting representative time series developed as follows, on a weighted aggregated basis:

Table 4-bis

Chinese imports (EUR per cable-km)

201720182019IPAverage price854720593320Index100846938Representativeness94 %35 %59 %62 %

(439) This shows a significant, continuous price drop by Chinese exports. In other words, when sales of the same product types are compared on a year by year basis, there is a clear and discernible price drop of Chinese import prices in each year, which were well below the prices of the Union producers during the period 2018-IP (Table 8-bis).

(440) Against this backdrop, the Commission determined the price undercutting during the investigation period by comparing:

the weighted average sales prices per product type of the sampled Union producers charged to unrelated customers in the Union market, adjusted to an ex-works level; and

the corresponding weighted average prices per product type of the imports from the sampled Chinese producers to the first independent customer in the Union market, established on a Cost, insurance, freight (CIF) basis.

(441) When the export price is adjusted pursuant to Article 2(9) of the basic Regulation for the dumping calculation, for the calculation of undercutting and injury margin in recital (444), the export price (constructed CIF) was calculated on the basis of the invoice value to the first independent customer, from which importation related allowances to the CIF point, as well as the SG&A and profit of the related importer were deducted, applying Article 2(9) of the basic Regulation by analogy.

(442) In its comments on final disclosure, the ZTT group stated that the post-importation costs were calculated as a percentage of the CIF value and suggested that the Commission should actually calculate them as pro rata per volume of exports to be consistent with the same adjustments made to the export price in the dumping calculation. It was claimed that these costs were more relevant to the volume than to the value of the export transactions.

(443) This claim was found justified and therefore it was accepted.

(444) The price comparison was made on a type-by-type basis for transactions at the same level of trade, duly adjusted where necessary. The result of the comparison was expressed as a percentage of the sampled Union producers’ turnover during the investigation period. It showed a weighted average undercutting margin for the two sampled exporting producers were 30,0 % and 33,2 %, giving an overall undercutting margin of 31,5 %. As described in recital (502), the analysis of tenders confirms the existence of price undercutting at the level of tenders.

(445) In its comments on final disclosure, the ZTT group also argued that the Commission gave no explanation for the aggregated PCN groups which were therefore arbitrary. The CCCME claims that the use of these groups implies there is a problem of matching and comparability of Union industry and Chinese prices.

(446) The Commission disagreed with this claim for two reasons. First, these groups were not used for the purpose of undercutting and underselling calculations. Second, they were used precisely to ensure that price trends over time were not affected by significant changes in product mix over the period, thus enhancing the accuracy of comparability over time, based on groups which as explained above were representative of the product concerned. Absent any evidence showing that the grouping was manifestly inappropriate, the Commission rejected this claim.

(447) The FTT group also argued that the Commission did not establish price undercutting for around 30 % of its exports to the Union as there was no matching with the PCNs sold by the Union industry. The FTT group considered that the Commission was not allowed to limit its analysis to only those product types or market segments for which there were actual sales by the Union industry. It referred in this regard to Changshu City Standard Parts Factory and Ningbo Jinding Fastener Co. Ltd. v Council of the European Union

Judgment of 5 April 2017, Changshu City Standard Parts Factory and Ningbo Jinding Fastener v. Council, C-376/15 P and C-377/15 P, EU:C:2017:269, paras. 58-60.

that stated that the dumping margin should be calculated for all exports to the Union, and the FTT group further argued that this requirement should apply by analogy to the undercutting as well.

(448) The Commission disagreed with the FTT group’s interpretation of the Court of Justice’s judgement in Changshu City. The requirement to consider all exports applies only to the calculation of the dumping margin. Furthermore, the Commission noted that when assessing undercutting and underselling margins, the models exported to the Union from the countries concerned constitute the reference for comparison. It is in the nature of the comparison of the export sales of exporting producers and the sales of the Union industry that not all models exported are necessarily sold by the Union industry. In the current case, the matching rate was around 70 % for the sampled Chinese exporting producers, which the Commission considered amply sufficient to ensure a broad and fair comparison of the exported models and those sold by the Union industry. Third, the basic Regulation does not require the Commission to carry out the price analysis for each product type separately. Rather, the legal requirement is a determination at the level of the like product. Finally, the Commission concluded that all PCNs were part of the product concerned and competed with each other, at least to a certain extent. Therefore, the percentage of the exports of the sampled exporting producers not sold by the Union industry does not constitute a separate category of the product concerned but competes in full with the remaining grades for which a matching was found.

(449) This is in line with the prices identified in recitals (438) and (439) above.

4.7.

Economic situation of the Union industry

4.7.1.

General remarks

(450) In accordance with Article 3(5) of the basic Regulation, the examination of the impact of the dumped imports on the Union industry included an evaluation of all economic indicators having a bearing on the state of the Union industry during the period considered.

(451) The Commission have received several comments from parties concerning injury. The GOC claimed that imports from China did not cause injury or threat of injury, because the indicators showed that the situation of the Union industry was good and that the Union industry still occupied a dominant position with its market share. Connect Com noted that the decrease in market share of the Union industry was very limited and happened in the context of a possibly oligopolistic market.

(452) Connect Com submitted that injury, even if it existed, was insignificant if profits were made up to a minimum profit margin of 5 % and it recalled in this regard Commission Decision of 23 December 1988 terminating the anti-dumping proceeding concerning imports of certain cellular mobile radiotelephones originating in Canada, Hong Kong and Japan

OJ L 362, 30.12.1988, p. 59, recital 7.

, and the judgment of 17 December 1997, EFMA v Council

Judgment of 17 December 1997, EFMA v Council, T-121/95, EU:T:1997:198, paras. 105 et seq.

. However, it should be recalled that the Decision on radiotelephones considered the profit margin in the light of other improving indicators and that the mentioned Court case concerned a claim which the General Court rejected that the target profit established by the Commission during the investigation should have been higher. Therefore, these precedents do not support the

view that injury would be insignificant when profit margins are above 5 %. Injury is established on a holistic assessment of all the factors mentioned in Article 3(5) of the basic Regulation, analysed in the context of the specific market and industry concerned. Furthermore, the profit achieved by the industry was below the target profit established taking into consideration all the elements relating to the industry concerned, as required under Article 7(2c) of the basic Regulation.

(453) For the injury determination, the Commission distinguished between macroeconomic and microeconomic injury indicators. The Commission evaluated the macroeconomic indicators on the basis of data contained in the response to the questionnaire submitted by the complainant covering data related to all Union producers. The Commission evaluated the microeconomic indicators on the basis of data contained in the questionnaire replies from the sampled Union producers.

(454) The macroeconomic indicators are: production, production capacity, capacity utilisation, sales volume, market share, growth, employment, productivity, magnitude of the dumping margin, and recovery from past dumping.

(455) The microeconomic indicators are: average unit prices, unit cost, labour costs, inventories, profitability, cash flow, investments, return on investments, and ability to raise capital.

4.8.

Macroeconomic indicators

4.8.1.

Production, production capacity and capacity utilisation

(456) The total Union production, production capacity and capacity utilisation developed over the period considered as follows:

Table 5

Production, production capacity and capacity utilisation

201720182019IPProduction volume (cable-km)1062482119501712508811229252Index100112118116Production capacity (cable-km)1585738174866720195262084082Index100110127131Capacity utilisation (%)67 %68 %62 %59 %Index1001029288

(457) Throughout the period considered, the production volume of the Union industry increased by 16 %. A detailed analysis shows that from 2017 to 2019 Union production increased by 18 %, while in the investigation period Union production fell slightly by 2 percentage points.

(458) The overall increase over the period considered was due to the growth in demand described in Table 2. However, the Union industry only managed to increase their production by 16 % during the period considered, in a market growing by 38 %. The Union industry was therefore unable to fully benefit from the market growth.

(459) During the period considered, Union production capacity increased by 31 %. This reflects the investments made by some Union producers’ to follow market growth. This attempt was frustrated by the increased penetration of Chinese products, which, relying on unfair pricing strategies, increasingly absorbed market shares from the Union industry.

(460) As a result, capacity utilization fell by 12 %, reaching a level below 60 % in the IP: Union producers were prevented from increasing production in line with market growth.

4.8.2.

Sales volume and market share

(461) The Union industry’s sales volume and market share developed over the period considered as follows:

Table 6

Sales volume and market share

Source: Union industry.

201720182019Investigation periodSales volume on the Union market (cable-km)8827729458421009439995703Index100107114113Captive market61505598026271054205Index1009710288Captive market as a % of Union sales7,0 %6,3 %6,2 %5,4 %Index100918978Free market sales821268886040946729941498Index100108115115Market share of free market sales64,3 %57,6 %57,2 %53,5 %Index100908983

(462) Throughout the period considered, the total Union sales volume of the Union industry increased by 13 %. Yet, because of the increase in consumption, the market share in the free market decreased during the period concerned from 64,3 % to 53,5 %, a drop of more than 10 percentage points (-17 %).

(463) Union sales volume on the free market also increased by 15 % over the period considered. Union sales followed the trend of Union production very closely because the industry largely operates a production to order system.

(464) The Union’s industry captive market (expressed as a percentage over total sales in the Union) was at very low levels throughout the period considered, with a decreasing trend which saw the percentage decrease from 7 % in 2017 to 5,4 % in the IP. This had a marginal impact due to the limited size of this market.

4.8.3.

Growth

(465) It results from the fall in market share of Union sales volumes that the Union industry was not able to benefit from the growth on the Union market over the period considered.

4.8.4.

Employment and productivity

(466) Employment and productivity developed over the period considered as follows:

Table 7

Employment and productivity

Source: Union industry.

201720182019Investigation periodNumber of employees (FTE)4088458948154659Index100112118114Productivity (cable-km/FTE)260260260264Index100100100102

(467) The Union industry employment rose by 18 % from 2017 to 2019 on an FTE basis. This rise was followed by a fall of 4 percentage points in the investigation period. This development largely follows the trend in production volume shown in Table 4.

(468) As the figures for production and employment mirrored each other closely, productivity in terms of cable-km per employee remained largely stable.

4.8.5.

Magnitude of the dumping margin and recovery from past dumping

(469) All dumping margins were significantly above the de minimis level. The impact of the magnitude of the actual margins of dumping on the Union industry was substantial, given the volume and prices of imports from the country concerned.

(470) This is the first anti-dumping investigation regarding the product concerned. Therefore, no data were available to assess the effects of possible past dumping.

4.9.

Microeconomic indicators

4.9.1.

Prices and factors affecting prices

(471) The weighted average unit sales prices of the sampled Union producers to unrelated customers in the Union developed over the period considered as follows:

Table 8

Sales prices in the Union

Source: Sampled Union producers.

201720182019IPAverage unit sales price in the Union (EUR/ cable-km)816861944821Index100105116101

Unit cost of production (EUR/ cable-km)756785860758Index100104114100

(472) Sales prices on the Union market to unrelated parties (the free market) increased in the period 2017-2019 by 16 %, and then in the IP decreased, reaching a similar level as the one recorded in 2017 (+1 %). However, the level of prices is largely dependent on the complexity of the products sold, given that the price can vary greatly based on the characteristic of the cable (including the number of fibres, the number and type of coating, etc.).

(473) This is evident when comparing the evolution of the prices with the evolution of the cost of production, given that more complex cables, which can be sold at higher prices, also entail higher cost of production.

(474) The unit cost of production increased in the period 2017-2019 by 14 %, roughly in line with average prices in the free Union market (16 %). Subsequently, it dropped by 14 %, also, in line with the drop of prices in the same period 2019-IP (15 %). As set out in recital (540), the investigation confirmed that the cost of the main raw material (optical fibres), when purchased from related companies, reflected the market price for this input.

(475) As mentioned in recital (438) above, to avoid the variations in product mix inherent to the price series over the period concerned, the Commission analysed the comprehensive information from sampled Chinese exporters and Union producers based on more aggregated groups of directly comparable products. This led to the identification of 35 identical (matching) groups which are sold by both Chinese exporters and the Union industry, and for which there is a complete time series over each year in the period under consideration.

(476) These are representative of EU industry sales over the period, with more than 34 % of sales of such matching products in the investigation period. The resulting representative time series is as follows:

Table 8-bis

Union industry (EUR per cable-km)

201720182019IPAverage price817780792719Index100959788Representativeness42 %38 %35 %34 %

(477) This shows a significant drop of Union industry prices, similar to the price drop observed for Chinese exports mentioned in recital (438).

(478) Moreover, given that customers often ask for made-to-measure OFC types tailored to their specific needs, and that certain Member States also define specific technical requirements, comparing prices over time for the same customer and Member State generates an even more precise picture of price developments. The Union industry provided additional detailed information in this regard. The price trends for the most important twenty such product group-customer-Member State combinations developed as follows

These are representative, covering 36 % of EU industry sales in the IP.

:

Table 8-ter

Union industry (EUR per cable-km, index)

201720182019IP100735659

(479) This shows again a clear drop in Union industry prices over the period, following the price drops by Chinese exports mentioned in recitals (435) to (438).

4.9.2.

Labour costs

(480) The average labour costs of the sampled Union producers developed over the period considered as follows:

Table 9

Average labour costs per employee

Source: Sampled Union producers.

201720182019Investigation periodAverage labour costs per employee (EUR/FTE)39511358263915738966Index100919999

(481) The average labour cost per employee remained relatively stable in the period 2017-IP. The slight decrease in the year 2018 corresponds with the increase of 13 % in the number of FTE, and reflects the cost of this additional workforce.

4.9.3.

Inventories

(482) Stock levels of the sampled Union producers developed over the period considered as follows:

Table 10

Inventories

Source: Sampled Union producers.

201720182019IPClosing stocks (cable-km)134925161561161878171058Index100120120127Closing stocks as a percentage of production12,7 %13,5 %12,9 %13,9 %Index100106102110

(483) The stocks of the sampled Union producers increased by 27 % over the period considered. While, the increase in stocks signifies a slower turnover of the sale of certain recurring items and could be linked to the increasing difficulty of the Union industry in selling its products because of very aggressive price competition from Chinese exporting producers, the increase in the period 2019-IP can also be connected to a seasonal effect. In any case, given that the majority of the production takes place based on orders and customers specifications, inventories do not constitute a main indicator of injury.

4.9.4.

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

(484) Profitability, cash flow, investments and return on investments of the sampled Union producers developed over the period considered as follows:

Table 11

Profitability, cash flow, investments and return on investments

Source: Sampled Union producers.

201720182019IPProfitability of sales in the Union to unrelated customers (% of sales turnover)8,18,48,57,9Index10010410497Cash flow (EUR)33254746486444804170771539805852Index100146125120Investments (EUR)60405839677940238276171859886812Index10011213799Return on investments (%)34362420Index1001057058

(485) The Commission established the profitability of the sampled Union producers by expressing the pre-tax net profit of the sales of the like product to unrelated customers in the Union as a percentage of the turnover of those sales.

(486) The profitability of the sampled producers was positive but abnormally low throughout the period considered and declined from 8,1 % in 2017 to 7,9 % in the investigation period.

(487) In its comments on final disclosure, the ZTT group claimed that, through a reverse engineering analysis, the Union industry made very high profits by excessively pricing in the Union market which cast serious doubt on the injurious state of the Union industry, and claimed that the price undercutting was due to unreasonable pricing of the Union industry and not to the low-priced imports from China.

(488) The Commission disagrees with this claim. The reverse engineering analysis was partial and not based on a full assessment of costs and prices. The Commission verified the profit margins on the basis of such a comprehensive analysis and found them to be as just described. Therefore, the claim was rejected.

(489) The complainants claimed that the need for investments and research in the sector would require a profit margin of 15 %. The investigation showed that level of already planned investments that would have taken place under normal circumstances to keep up with market developments would need to be sustained by profits of 13,4 % on average on the basis of the period considered. These investments covered the following issues: retooling and maintenance costs to ensure efficiency of existing capacity, adapting capacity to changing product mix; expansion of capacity; research and development expenses (product and process innovation).

(490) The Commission found that the aforementioned order of magnitude is in line with historical profits in the absence of Chinese dumped imports, which as underlined in the analysis made in Table 11-bis is in the range of 12 %.

(491) This underscores that the profit level in the range of 8 % over the period considered is insufficient to sustain activity in an expanding high-tech market—and are thus an expression of injury to the Union industry.

Table 11-bis

Union industry pre-2017 profitability

201420152016Profit margin (in %)10,4 %12,6 %12,4 %

(492) However, this was not observed in the present case. Indeed profitability dropped as compared to 2014-2016. The lower level of profits throughout the period considered reflects significant price injury throughout the period considered. Because of the downward pressure caused by imports from China (both in terms of increased volumes and of low prices), the Union industry was unable to raise prices, to minimise costs and as a result reach the normal profit levels achieved before the brunt of the expansion—let alone any increase.

(493) After an increase in 2018, the cash flow decreased towards the second half of the period considered.

(494) As a direct result of the pressure from imported goods, Union industry had to postpone investments, including some which were already planned and approved. These investments, which were aimed at expanding existing Union production capacity, were put to a halt (even when the execution had already started) in the course of the period considered as a direct effect to the changed market circumstances caused by the aggressive pricing of Chinese imports. This led the investments to fall sharply towards the end of the period considered, in contrast to the previous years’ trend and overall growth of the market.

(495) The return on investments undertaken developed negatively over the period considered and in fact fell by 42 %. This negative development shows that, although investments continued to be made, in order to maintain and improve efficiency and competitiveness, the returns on those investments have fallen substantially over the period considered due to the impossibility for the Union industry to improve the profitability rate.

(496) With returns on investments falling so quickly, the sampled producing entities ability to raise capital in the future is clearly in jeopardy should the situation fail to improve.

4.10.

Analysis of sales based on tenders

(497) A vast majority of OFC is sold through tender procedures. In order to obtain the necessary insight into this important aspect of the market and to complement the rest of its injury analysis, the Commission requested detailed information on tenders from the sampled Chinese exporting producers, sampled Union producers, importers and users. Questions were asked on the nature, process, timing, and other relevant characteristics,

covering both concluded and ongoing tenders. From the tendering entities’ side the Commission had very little cooperation. No public tendering entity participated in the investigation and among the large telecom operators only Deutsche Telekom provided detailed information on tenders.

(498) After the non-imposition of provisional measures, the Commission requested from the sampled Union producers additional, detailed information on all tenders in which they participated during the period considered including information on bids, prices and competitors where available.

(499) The information submitted showed a highly heterogeneous and fragmented picture with a very large number of tenders organised every year in different Member States, a wide variety of tendering entities and bidders and different durations and terms. On the tendering entity’s side, tenders can be either public, organised by municipalities or other public entities, or private, organised by large telecom or network operators. There are also many other smaller types of bids, quotations, e-auctions and smaller amounts can also be sourced through direct customer contact. Each tender process is highly specific to the tendering entity, which may use a variety of processes depending on the specific tender at hand and market developments. There is also a wide variety of players bidding in the tenders. Chinese exporting producers participate directly (also through their subsidiaries) and indirectly by partnering with local companies in the different Member States. Importers, traders and distributors also compete with Union producers. There are also sometimes installers involved and sales by the winning suppliers to the telecom operators are made through these installers.

(500) The investigation has also shown that the number of tenders organised in the Union is very high. The three sampled Union producers reported a total of more than 500 tenders in which they participated directly during the investigation period. One of the cooperating unrelated importers participates in 150-200 tenders per year focusing on the German market alone.

(501) The duration of the tenders is highly variable—from immediate delivery to three years. In longer tenders, while prices are agreed, volumes are not fixed and therefore tendering entities can issue further tenders that replace existing ones when prices drop. Thus, while tenders provide a kind of general ceiling to price conditions, prices can and do change dynamically throughout the lifetime of the tender. As a result, they tend to adjust and to largely reflect the current market conditions.

(502) The Commission has analysed the detailed information on tenders reported by the sampled Union producers in response to its request. Of the reported tenders in which the Union producers presented a bid during the period considered, the Commission analysed those for which there was concrete evidence of Chinese participation. There were 55 such tenders during the period considered. The analysed tenders amount to 45 % of sampled Union producer sales, and for 14 % of total EU consumption during the investigation period. For these tenders, a granular analysis of price and volume injury per tender has been made, showing significant losses of sales (between 25 % and 100 %), and/or price depression (between 5 % and 55 %), and/or price undercutting (between 8 % and 39 %). This tender-specific analysis further confirmed the price depression and undercutting already established above throughout the period.

(503) Connect Com submitted comments in relation to tender procedures and pointed out that Union producers represented by the complainant did not lose a large number of tenders in general, but only one or a few large private tenders. It underlined that the complainant referred to a single invitation to a private tender and the pricing behaviour of a single Chinese producer as evidence of the price undercutting. Connect Com submitted a notice of the contracts awarded in a German district, where prices of the winning bidder were explicitly stated. It submitted that the complainant had omitted the entire market segment of public tenders from its presentation. According to Connect Com, the Union producers represented by the complainant were not successful in these tenders because they did not meet the requested criteria (e.g. warehouses, stock, wide range of products, logistics concept). In particular, Connect Com underlined the low storage capacity of Prysmian and Corning. Connect Com claimed that rejecting the existence of a market segment of public tenders would be wrong, because the prices on the public and the private tender markets correspond to a large extent or are mutually interdependent. According to Connect Com,

it would not be right to impose anti-dumping duties in an entire market which is segmented in public and private tenders. Reference was made to recital 42 of Commission Decision of 20 March 1998 terminating the anti-dumping proceeding concerning imports of tungstic oxide and tungstic acid originating in the People’s Republic of China (98/230/EC)

OJ L 87, 21.3.1998, p. 24.

. On the basis of that decision, Connect Com argued that in the case of segmented markets, there is no overall injury to the Union industry if, although there is a certain decline in sales in one market segment (here private tenders), the Union industry has sales opportunities in another market segment (here public tenders) which compensate for the decline in sales volume.

(504) The arguments and analysis in recital (502) contradict those claims. Despite significant efforts from the Union industry to maintain price competitiveness, large shares of the markets were taken over by Chinese exporters, whose offers could not be matched by the Union industry in terms of prices. As concerns the 1998 Commission Decision concerning imports of tungstic oxide and tungstic acid, the Commission found in that case that the decrease in market share of the Union industry on the open market should be seen in the light of Union industry’s tendency to use an increasing proportion of its production of the product concerned to produce downstream products. The underlying factual situation concerning these two different market segments of the Union industry (open market and captive use) is different from the competitive situation in this case where the size of the captive market is slightly decreasing throughout the period considered and represents a very small part of the production of the product concerned. Therefore those claims were rejected.

(505) In its comments on final disclosure, Connect Com claimed that the Commission did not disclose information about how many of the tenders were won by a Chinese producer and for what reason and reiterated its argument that price was never the only decisive criterion but rather quality and logistics. Also, Connect Com requested the disclosure of the results of the analysis in recital (502).

(506) In this respect, the Commission collected detailed information on tenders during the period considered. The Commission verified and analysed this information which is highly confidential and therefore cannot be disclosed to interested parties beyond the summary provided in the above recitals.

(507) The analysis on tenders points to a process of accelerated replacement of Union industry products by Chinese products, which is confirmed by tenders at the end of the investigation period. This revealed price erosion and further significant losses of volumes for the Union industry which are in line and confirm the overall injury picture.

4.11.

Conclusion on injury

(508) Several indicators showed a positive trend such as production, capacity, sales volume on the Union market and employment. However, the development of these indicators did not match the increase in consumption and, in fact, such indicators should have increased more strongly, if the Union industry had been able to fully benefit from the growing market. Indeed, despite the increase in sales volume, the Union industry lost 10,8 percentage points of market share (from 64,3 % to 53,5 %) in a growing market. This is linked to the price pressure generated by Chinese exports, with significant undercutting and, in any event, price depression throughout the period considered.

(509) The foregoing led to financial injury in the form of lower profits and a drop in investments and on the return thereon.

(510) In addition to that, as explained above in recital (502), the analysis of sales through tenders indicates that the market share and price erosion is accelerating and will continue to do so due to the extremely aggressive behaviour from Chinese exporting producers.

(511) In its comments on final disclosure, CCCME claimed that several key indicators did not show that the Union industry was suffering from injury as production volume and employment remained stable, its capacity increased, its sales prices remained stable with a slight decrease and its profitability and investments remained at high levels.

(512) As stated in recital (508), these indicators have to be assessed against the increased consumption on a growing market and this analysis showed that the Union industry could not adequately benefit from an expanding market, underscoring actual negative effects on Union industry growth. Therefore, the claim was rejected.

(513) CCCME also argued that the market share criteria alone could not be the basis of findings of material injury and, as demand increased, all market participants gained sales which was indicative of an open and competitive market. Moreover, CCCME claimed that the future deterioration of the Union industry’s situation could not be the basis of material injury as this investigation did not assess threat of injury, nor did it meet the evidentiary standard required for such a case.

(514) In this respect the Commission recalls that the finding of material injury is not based on market shares alone, but on the totality of several economic indicators assessed in recitals (426), (431), (437), (444) and (490), which included inter alia actual negative impacts on growth, price depression, price undercutting, price underselling, and depressed profits which indicate material injury. Therefore, the claim was rejected.

(515) On the basis of the above, the Commission concluded at this stage that the Union industry suffered material injury within the meaning of Article 3(5) of the basic Regulation.

1. CAUSATION

(516) In accordance with Article 3(6) of the basic Regulation, the Commission examined whether the dumped imports from the country concerned caused material injury to the Union industry. In accordance with Article 3(7) of the basic Regulation, the Commission also examined whether other known factors could at the same time have injured the Union industry. The Commission ensured that any possible injury caused by factors other than the dumped imports from the country concerned was not attributed to the dumped imports. These factors are: imports from third countries, the export performance of the Union industry, captive sales, and raw material prices.

5.1.

Effects of the dumped imports

(517) The deterioration in the Union industry market share throughout the period considered was simultaneous and directly connected with significant penetration of the Union market by substantial volumes of imports from China, which significantly undercut the Union industry’s prices and, in any event, exercised significant price depression on Union sales.

(518) The volume of imports from China increased (as shown in Table 3) from around 189000 cable-km in 2017 to around 498000 cable-km in the investigation period, a double and a half increase (+163 %). In terms of market share the increase over the same period was from 14,8 % to 28,3 %, an almost double increase (+91 %). Over the same period (as shown in Table 6), the Union industry sales on the free market increased by only 14 % and its market share fell from 64,3 % to 53,5 %, a fall of 10,8 percentage points (or -17 %). The sales on the smaller captive market showed a moderate decrease (-12 %). The dumped imports have increased in both absolute and relative terms. As shown by Table 1, consumption on the Union market has increased by 38 % over the period considered, and it is evident that it has been mainly imports from China that took advantage of this growth.

(519) The prices of the dumped imports decreased significantly over the period considered, for example by 62 % according to Table 4-bis. Comparable sales prices of the Union industry on the Union market to unrelated parties (the free market) dropped overall by 12 % over the period on the basis of the analysis in Table 8-bis and by 41 % with the more refined analysis in table 8-ter. The level of prices is largely dependent on the complexity of the product types

sold, and a type by type comparison of domestically produced and imported products from the country concerned (on the basis of the sampled companies) is the most accurate tool to examine price trends. During the investigation period, this shows weighted average undercutting margins for the two sampled exporting producers of between 30,0 % and 33,2 %.

(520) This aggressive behaviour started eroding the Union industry market share since the beginning of the period considered, and during the IP the availability on the market of Chinese products at extremely low prices (well below the Union industry’s cost of production) has continued. This occurred inter alia via the mechanisms described above in the section on tenders in recitals (499) to (502) and has generated price depression, losses in sales, decreasing market share, and financial injury both in terms of depressed profitability and waning investments—jeopardising the existence of Union industry.

(521) As described in recital (494) above, there was also evidence that certain planned investments and expansion projects of the Union industry had been cancelled or suspended due to the increase in aggressively priced Chinese imports and consequent loss in Union industry market share.

5.2.

Effects of other factors

5.2.1.

Imports from third countries

(522) Imports from other third countries developed over the period considered as follows.

Table 12

Imports from third countries

Source: Data from EU Customs Authorities, Comext (Eurostat).

Country201720182019Investigation periodKoreaVolume (cable-km)20450513394440545908Index100251217224Market share (%)1,6 %3,3 %2,7 %2,6 %Average price (EUR/ cable-km)79687316271073Index100110204135TurkeyVolume (cable-km)26732329322292237008Index10012386138Market share (%)2,1 %2,1 %1,4 %2,1 %Average price (EUR/ cable-km)428501776594Index100117181139NorwayVolume (cable-km)12143116222272826471

Index10096187218Market share (%)1,0 %0,8 %1,4 %1,5 %Average price (EUR/ cable-km)330271279261Index100828579Other third countriesVolume (cable-km)12630711452077787107334Index100916285Market share (%)9,9 %7,4 %4,7 %6,1 %Average price (EUR/ cable-km)1631172824471218Index10010615075Total of all third countries except the country concernedVolume (cable-km)185633210414167842216721Index10011390117Market share (%)14,5 %13,7 %10,1 %12,3 %Average price (EUR/ cable-km)128012471708964Index1009713375

(523) Imports from Korea increased over the period considered from around 20000 cable-km in 2017 to around 45000 in the investigation period. The market share of these imports increased from 1,6 % in 2017 to 2,6 % in the investigation period. Average prices from Korea appear significantly higher than both the ones from the Union industry and the exporting producers. Therefore, given the high prices and the limited volumes, imports from Korea did not appear to play a role in the injury suffered by the Union industry.

(524) Imports from Turkey appear to have been sold at a low price, although higher than the Chinese imports in the period 2018-IP and gradually increasing. The market share of Turkish exporters was basically stable in the period considered at just over 2 %. These trends are based on statistics which include many product types and therefore, given the overall limited volumes, the Commission cannot precisely estimate the impact of these imports on the situation of the Union industry. While it cannot be excluded that Turkish imports might have contributed to injury suffered by the Union industry, given their relative volume in relation to the imports of the product concerned and stable market share throughout the period, the Commission concluded that, even if these imports had a limited impact on the situation of the industry, they did not attenuate the causal link between dumped Chinese imports and the injury suffered by the Union industry.

(525) Finally, imports from Norway also increased in the period considered. Norwegian prices, which were already low in 2017, kept decreasing in the period considered (-21 % in the period 2017-IP), at a price level well below both the one of the Union industry and the one of the Chinese exporters. The market share of Norwegian exporters increased in the same period from 1 % to 1,5 %. These trends are based on statistics which include many product types and therefore, given the overall limited volumes, the Commission cannot precisely estimate the impact of these imports

on the situation of the Union industry. While it cannot be excluded that Norwegian imports might have contributed to injury suffered by the Union industry, given their relative volume in relation to the imports of the product concerned, the Commission concluded that, even if these imports had a limited impact on the situation of the industry, they did not attenuate the causal link between dumped Chinese imports and the injury suffered by the Union industry.

(526) Imports from other third countries decreased slightly in the period considered in absolute terms, and lost significant market share in the process. Average prices were high and therefore there are no indications that they caused material injury to the Union industry.

(527) In its comments on final disclosure, the GOC claimed that the Commission had not established that imports of the product concerned from China had an impact on the Union industry and argued, in particular, that the increase of inventory levels and decrease in the capacity utilisation rates were the result of an unreasonable capacity expansion by the Union industry resulting in overcapacity. Moreover, CCCME claimed that there was a complete absence of correlation between imports from China and the development of the Union industry. In particular, CCCME argued that amidst the strongest increase in import volume from China between 2017 and 2018, the Union industry increased its profitability. CCCME and the GOC also claimed that during the period 2018 to 2019, when Chinese imports increased and prices decreased, the Union producers increased their sales prices without losing market share.

(528) In this respect the Commission recalled that the vast majority of the market is based on long term supply contracts as explained in recitals (497) to (507). Moreover, the profitability of the Union industry was below the target profit throughout the period considered which shows that there was injury during this period. Therefore, the Commission considered that the above arguments of CCCME and GOC do not point to the absence of a causal link between dumping and injury. Indeed it only confirms that there was a certain delay between the rise of imports of the product concerned from China and the point at which the injury materialised and could be ascertained from the relevant trends.

(529) In its comments on final disclosure, Eku Kabel claimed in that the import volumes of OFC decreased from 2018 to 2019 and that a further decrease could be recorded for 2020 and that due to these declining imports no duties should be imposed.

(530) The investigation revealed a constant increase in the volume of imports of OFC from the PRC throughout the period considered. However, should circumstances change, measures may be reviewed pursuant to Article 11(3) of the basic Regulation.

(531) In view of the above, imports from countries other than China could not have caused the observed deterioration in the Union industry’s performance, and at any rate do not attenuate the causal link between the latter and Chinese import penetration.

5.2.2.

Export performance of the Union industry

(532) The volume of exports of the Union industry developed over the period considered as follows:

Table 13

Export performance of the Union producers

Source: Union industry.

201720182019Investigation periodExport volume (cable-km)856769929595397108672Index100116111127

Average price (EUR/cable-km)132911111282949Index100849671

(533) Exports of the Union industry increased by 27 % over the period considered from around 85000 cable-km in 2017 to around 108000 cable-km in the investigation period.

(534) The average price of the exports of the sampled Union producers decreased by 29 % over the period considered from 1329 EUR/cable-km in 2017 to 949 EUR/cable-km in the investigation period. Price levels were above those in the Union.

(535) Against a backdrop of increasing exports and relatively high price levels, it is clear that these exports would not have caused injury to the Union industry.

5.2.3.

Captive volumes

(536) As shown at Table 5, during the period considered the Union industry’s captive use decreased by 12 %.

(537) Bearing in mind the limited size of the market (estimated at less than 5 % of the Union production in the IP), the Commission found that the slight decrease in captive use did not cause material injury to the Union industry.

5.2.4.

Price of raw materials

(538) The main raw material used by the Union industry is optical fibres, either produced in the Union or imported. Several importers have argued that the sampled Union producers buy optical fibre from their related companies outside the Union at transfer prices which do not correspond to the market price of this raw material. In fact, importers suspected that this transfer price was too high and therefore resulted in a lower profit rate for the sampled EU producers.

(539) In particular, Connect Com and Cable 77 raised concerns on internal transfer prices for intercompany transactions taking place within the Prysmian and Corning groups.

(540) In order to investigate this claim, the Commission requested additional information from the sampled EU producers of their purchases of optical fibre used for the production of optical fibre cables in the IP. The Commission also requested information on the optical fibre produced by related companies of the sampled EU producers and on the sales of these fibres (volume and quantity) to both related and unrelated customers inside and outside the EU. By comparing sales of the same product types of fibre to related and unrelated parties, the Commission could establish that prices were in the same order of magnitude and therefore the sales of fibre to related companies were performed at arms’ length. Data on this activity is company-specific and confidential – it can thus not be disclosed.

(541) The Commission concluded therefore that the material injury suffered by the Union industry was not caused by the impact of transfer prices on the profitability of the sampled Union producers.

5.3.

Conclusion on causation

(542) The Commission distinguished and separated the effects of all known factors on the situation of the Union industry from the injurious effects of the dumped imports. None of the other factors explained the Union industry’s negative developments in terms of loss of market share, price depression and low profitability, decreasing investments and return on investments.

(543) The adverse impact on profitability caused by the dumped imports and continuous price pressure did not allow the Union industry to undertake the necessary investments for the long term survival of the industry. This is supported by the decreasing trend as described in recital (486) and the cancelling of planned investments discussed in recital (494).

(544) On the basis of the above, the Commission concluded at this stage that the dumped imports from the country concerned caused material injury to the Union industry. The other known factors, individually or collectively, were not capable of attenuating the causal link between the dumped imports and the material injury.

1. LEVEL OF MEASURES

(545) To determine the level of the measures, the Commission examined whether a duty lower than the margin of dumping would be sufficient to remove the injury caused by dumped imports to the Union industry.

(546) The Commission first established the amount of duty necessary to eliminate the injury suffered by the Union industry in the absence of distortions under Article 7(2a) of the basic Regulation. In this case, the injury would be eliminated if the Union industry was able to cover its costs of production, including those costs resulting from Multilateral Environmental Agreements, and protocols thereunder, to which the Union is a party, and of ILO Conventions listed in Annex Ia of the basic Regulation, and to obtain a reasonable profit (target profit).

(547) In accordance with Article 7(2c) of the basic Regulation, for establishing the target profit, the Commission took into account the following factors:

the level of profitability before the increase of imports from the country under investigation,

the level of profitability needed to cover full costs and investments, research and development (R&D) and innovation, and

the level of profitability to be expected under normal conditions of competition.

Such profit margin should not be lower than 6 %.

(548) The complainants claimed that a target profit of at least 15 % was required in this industry, which is particularly capital intensive and requires very high levels of investment in particular in the light of the upcoming 5G revolution.

(549) The Commission examined this claim, together with comments submitted and the data available on the case file relevant to the requirements of Article 7(2c) of the basic Regulation in order to set the target profit.

(550) CCCME submitted that the target profit of 15 % identified in the complaint was widely inflated. The complainant replied that this target profit was merely sufficient to cover costs of development and implementation of the Union’s digitalisation agenda and the 5G transition. CCCME responded that future investment opportunities cannot justify resorting to an unrealistically high profit margin and that since 2016 the Union industry was able to achieve developments for 4G technology with lower profit margins.

(551) The investigation shows that Union industry’s prices were depressed throughout the period considered due to the dumped imports. Therefore, the profits during this period were not considered a suitable basis for establishing the target profit. The Commission therefore examined the profitability of the Union industry on the basis of the profits achieved before the period considered.

(552) During 2015 and 2016, the sampled Union producers were able to maintain consistent profits of 12,6 % and 12,4 % respectively. These years represent the period just before the period under consideration and the sharp increase of significant volumes of injurious imports from China in 2017. Therefore, 2016 was considered to be the most representative year for the profitability under the normal conditions of competition in this industry. On that basis, the Commission considered that a target profit of 12,4 % would reflect the level of profitability before the increase of imports from the country concerned, and the level of profitability to be expected under normal conditions of competition.

(553) In its comments on final disclosure, the GOC claimed that the Commission used an excessively high target profit rate. Furthermore, CCCME also contested the use of the profit margin of 12,4 %, claiming that the Chinese imports were similar in 2016 and 2017, and that profits in the complaint for 2016 were between 5-10 %. Therefore CCCME considered that it would be more adequate to use 2017 as a base year for the target profit.

(554) The figures CCCME refer to show a more than 40 % increase between 2016 and 2017, indicating that import levels are clearly not similar in these two years. Given this significant increase in exports from China and their equally significant volume in 2017, the conditions of competition were affected by the dumped imports—excluding the use of that year as a reference period for profitability. The investigation confirmed 12,4 % as the profit margin of the sampled Union industry in 2016 on the basis of the responses to the questionnaire by such parties, as verified by the Commission. The claims by CCCME and GOC in this respect are thus rejected.

(555) The GOC further claimed that the injury elimination level was inconsistent with the situation of industry.

(556) This claim was not substantiated and can thus not be accepted on formal grounds. In any event, substantively this level results directly from the analysis of the information from parties as explained above, and is thus fully consistent.

(557) This level of target profit also appears adequate when comparing it with the profit needed by the industry in order to sustain the level of investment needed in order to ensure long-term viability, as mentioned at recital (489).

(558) In accordance with Article 7(2d) of the basic Regulation, the Commission assessed the future costs resulting from Multilateral Environmental Agreements, and protocols thereunder, to which the Union is a party, and of ILO Conventions listed in Annex Ia that the Union industry will incur during the period of the application of the measure pursuant to Article 11(2). There were no such future costs reported by the Union industry.

(559) On this basis, the Commission calculated a non-injurious price of the like product for the Union industry.

(560) The Commission then determined the injury elimination level on the basis of a comparison of the weighted average import price of the sampled cooperating exporting producers, as established for the price undercutting calculations, with the weighted average non-injurious price of the like product sold by the sampled Union producers on the Union market during the investigation period. Any difference resulting from this comparison was expressed as a percentage of the weighted average import CIF value.

(561) In its comments on final disclosure, the FTT group claimed that when establishing undercutting and underselling, the SG&A and the profit of its related importers in the Union should not be deducted. It referred in this regard to Jindal and Hansol Court rulings (Case T-301/16, Jindal Saw Ltd and Jindal Saw Italia SpA v European Commission and Case T-383/17, Hansol Paper Co. Ltd v European Commission). This should be particularly the case if sales prices by the Union industry do not only include direct sales by production entities but also sales through related selling entities. Furthermore, the ZTT group, also with reference to Jindal, claimed that when establishing undercutting the Commissions needs to ensure that the comparison between export prices and Union industry sales prices is made at

the same level of trade. Furthermore, it was stated that even if the target price for calculating the injury elimination level was calculated based on cost of production plus target profit, it was not clear whether the cost also included the SG&A or profit of the Union industry’s related trading entities. It was claimed that as the SG&A and profit were deducted from the export price of ZTT’s group, similarly the SG&A and profit shall be deducted from the trade entities of the Union OFC producers.

(562) When it comes to the elements taken into account for calculation of undercutting (in particular the export price), the Commission has to identify the first point at which competition takes (or may take) place with Union producers in the Union market. This point is in fact the purchasing price of the first unrelated importer because that company has in principle the choice to source either from the Union industry or from overseas suppliers. In this case, the import price for some of the export sales cannot be taken at face value because the exporting producer and the importer are related. Therefore, in order to establish a reliable import price at arm’s length basis, such price has to be constructed by using the resale price of the related importer to the first independent customer as a starting point. In order to carry out this reconstruction, the rules on the construction of the export price as contained in Article 2(9) of the basic Regulation are pertinent, and are applied by analogy, just as they are pertinent for the determination of the export price for dumping purposes. The application by analogy of Article 2(9) of the basic Regulation allows the establishment of a price that is fully comparable to the price that is used when examining sales made to unrelated customers and also comparable to the sales price of the Union industry. Therefore, in order to allow for a fair comparison, a deduction of SG&A and profit from the resale price to unrelated customers made by the related importer is warranted in order to arrive to a reliable price.

(563) Such a deduction must also be applied to the calculation of underselling

See also judgment of 22 September 2021, T-753/16, PAO Severstal, ECLI:EU:T:2021:612, paras. 260 – 273.

. The target price of the Union industry is based on its cost of production plus the target profit, without taking into consideration whether it is then sold in the Union to related or unrelated customers, which does not include by definition the SG&A and profit of related importers in the Union and therefore it must be compared to the CIF (landed) price of the exports.

(564) As stated in recitals (508), price depression on the Union market was clearly established. Furthermore, only around 30 % of the total export sales of the sampled Chinese exporters were made via related importers in the Union and thus a comparison on the basis of the landed price at the EU border for all imports is appropriate. Finally, it should be noted that the finding of undercutting would not be undermined even if the calculations would be adjusted for SG&A and profit of the traders in the Union.

(565) The injury elimination level for other cooperating companies and for all other companies is defined in the same manner as the dumping margin for these companies. The following injury margins were found, showing that they were higher than the dumping margins and thus the level of the measures should correspond to the dumping margins:

CompanyDumping marginInjury elimination level

FTT group:

FiberHome Telecommunication Technologies Co., Ltd

Nanjing Wasin Fujikura Optical Communication Ltd

Hubei Fiberhome Boxin Electronic Co., Ltd

44,0 %61,3 %

ZTT group:

Jiangsu Zhongtian Technology Co., Ltd

Zhongtian Power Optical Cable Co., Ltd

19,7 %42,0 %Other cooperating companies31,2 %52,7 %All other companies44,0 %61,3 %

1. UNION INTEREST

(566) In accordance with Article 21 of the basic Regulation, the Commission examined whether it could clearly conclude that it was not in the Union interest to adopt measures in this case, despite the determination of injurious dumping. The determination of the Union interest was based on an appreciation of all the various interests involved, including those of the Union industry, importers, users and other relevant economic operators.

(567) Several comments were submitted concerning the Union interest. In particular, the GOC claimed that imports from China effectively promote the development of technology in the industry and foster competition in the Union market. According to the GOC, if over protected, the optical fibre cables industry in the Union will only lose ground in comparison with third countries, therefore there is no Union interest in pursuing an anti-dumping investigation in the sector, which could damage the bilateral cooperation between China and the Union in the digital field.

(568) Also Connect Com claimed that anti-dumping measures would be detrimental to the industry because importers from China could no longer submit attractive offers to tenders. As a consequence, price level in tender procedures would rise with a negative outcome for public budgets.

(569) CCCME noted that the EU’s digitalization agenda and the 5G transition would be best served by not further restricting high-quality optical fibre cables supplies from China.

(570) Cable 77, instead, underlined that the imposition of anti-dumping duties on optical fibre cables would influence also other industries and that, if duties were to be imposed on cables, they should also be imposed on fibres because Union producers employ also fibres produced outside the Union.

(571) However, as detailed in the following recitals, the Commission found no compelling reasons to conclude it is not in the Union interest to impose measures on imports of optical fibre cables originating in China.

7.1.

Interest of the Union industry

(572) There are 29 companies producing OFC in the Union, employing around 4700 staff. The producers are widely spread throughout the Union.

(573) The imposition of measures would allow the Union industry to maintain a competitive position on the market and recover lost market share, while improving their profitability towards sustainable levels.

(574) The absence of measures is likely to have a significant negative effect on the Union industry in terms of further price depression and lower sales and production, with further financial deterioration in terms of profitability and investments, jeopardising its future.

7.2.

Interest of unrelated importers

(575) Relatively low cooperation was received from the importing sector. Five unrelated importers submitted a sampling form within the deadline. Out of these five importers, four submitted a questionnaire reply. A new importer came forward after the initiation of the anti-subsidy investigation into optical fibre cables from China and requested to cooperate also in the present investigation. The Commission granted interested party status to this importer for the present investigation as from the day in which it came forward, and to consider the information submitted for this investigation without prejudice to the procedural steps already lapsed.

(576) The five cooperating importers represent around 12 % of Chinese imports. Two importers provided complete information in their questionnaire reply, while three others were not in a position to provide accurate profit data for the product under investigation for the IP. All cooperating importers opposed the measures.

(577) The cooperating importers are located in four different Member States and they mainly focus their activity there. They import 70-90 % of their OFC purchases from China and they source the remaining part from Union producers and from producers in other third countries. They underlined the importance of having different sources of supply. Imports of OFC from third countries are not subject to customs duty in the Union.

(578) An important part of cooperating importers’ activity is to bid for smaller projects. Beyond these bids, they also offer additional products (e.g. ducts, connectors and cabinets) and complex services to customers (e.g. design and installation of network). On average, the product concerned accounts for around one third of their total turnover.

(579) None of the importers claimed that the COVID-19 pandemic would have had a major impact on their business activity. One importer stated that there was a certain slowdown in March 2020 due to the lockdown but stressed that the importance of fibre to the home (FTTH) projects was amplified by this crisis.

(580) Importers consider that their competitive advantage over the Union producers lies in their efficient sales structure and logistics. They shorten their delivery times by keeping a high amount of stock in their warehouse and aim to respond in a swift and flexible way to their customers’ needs.

(581) The importers claimed that they cannot source all their OFC from the Union industry because the industry cannot supply the required quantities under the required deadlines. They alleged there was a shortage of OFC and of its main raw material, optical fibre on the market in 2017-18 when the Union industry could not cover their demand and therefore they had to find other suppliers. Some importers stressed that with the rollout of fibre optic and 5G networks, the demand for OFC has been rising and is expected to rise further. They argued that this increased demand, in combination with potential trade defence measures, could lead to a new shortage on the market and to delays in the expansion of the fibre optic and 5G network.

(582) The Union industry rebutted the claim of supply issues stating that the Union industry has ample spare capacity. Indeed, the investigation found that the capacity utilisation of the Union industry was 59 % during the IP and the production capacity of optical fibre cables is over 2 million cable-km, well above the estimated Union consumption of OFC for the coming years. The Union industry provided evidence that the Union producers have capacity to produce more OFC if needed. Furthermore, alternative sources of supply exist in third countries.

(583) Importers have also claimed that they have long term supply contracts with their customers in which fixed prices are agreed for the total term of 2-4 years and there is no price adjustment clause for unforeseen increases in their purchase prices. Therefore it would not be possible to pass on the increased costs to their customers. Moreover, importers have argued that they are not able to bid in tenders which are announced during the present investigation as they do not know what price they will pay for OFC in case measures are imposed.

(584) Importers also argued that it would not be possible to shift the source of supply to other third countries in the case of current contracts as the cables have undergone complex approval processes, and therefore there would be the risk of serious time delays and considerable difficulties in the blowing process, which must be adapted to the rigidity of the cable which varies from supplier to supplier even for products of the same technical specification.

(585) In addition, some importers have also claimed that Chinese cables are of higher quality than the cables produced by the Union industry. Although the technical specifications are the same, they claim that Chinese OFC is produced on newer production lines and the finishing, the rolling up and the technical characteristics are of higher standard. These importers also argue that the difference in quality does not only concern the product, but Chinese producers serve their clients’ individual needs in a more flexible and timely manner and they provide better after sales services. Also, one importer claims that the price difference between Union and Chinese optical fibre cables is lower than stated in the complaint. This importer also claims that Union producers supply other products (ducts, handholes, closures) and considers that measures would allow Union producers to tie these other products to OFC and sell them part of a project. It also considers that measures would create a disincentive for Union producers to innovate as they would protect them from competition. In its view, this would lead to a slowdown of the deployment of networks.

(586) In their comments on final disclosure, the cooperating importers claimed that the proposed level of duties significantly exceeded their calculated margins and this would cause substantial losses to them as they would not be able to pass on the duties to their customers with whom they have existing long term contracts with fixed prices. Therefore the duties could eventually lead to the bankruptcy of importers and distributors. They also maintained that Union producers were not able or willing to supply the OFC corresponding to their requirements on time and that there would be a shortage of OFC and a considerable delay in lead times and in the rollout of networks if measures were introduced. One importer also claimed that Union producers could not increase their production capacities to compensate for the loss of quality products from the PRC. The cooperating importer have also expressed their disagreement with the finding that a 10 % margin would be sufficient for a distributor and claimed that with warehousing and pre-financing costs, a much higher margin of 20-25 % was needed. Some of the cooperating importers also claimed that they would be forced to import from other third countries if duties were imposed although this would entail serious difficulties, delays and additional costs and the quality of the product would be lower. Several cooperating importers considered that the different duty rates proposed for the cooperating Chinese producers was incomprehensible to them and they perceived it as unequal treatment. Also, it was claimed that measures would lead to a monopoly or oligopoly in the market.

(587) The Commission has found that while the cooperating importers have stable business ties with their suppliers of OFC in China, they do not have long-term contracts with these suppliers fixing volumes or purchase prices. In fact, the importers place regular orders for larger volumes of OFC and they receive a price offer for each order from the Chinese producers. Although the importers claim that it would be costly and time consuming to switch suppliers, they all buy from other sources too (i.e. in the Union, United States, India, Kazakhstan, Belarus, Ukraine) and they had successfully found new suppliers during the alleged 2017-18 shortage. This indicates that, while the importers would indeed need to pay a higher price for the orders already placed but not yet received before the imposition of measures, it would not be excessively difficult for them to switch to new suppliers in a relatively short time.

(588) While the anti-dumping measures are likely to have a certain negative impact on importers and may reduce their profitability, the importers will be able to absorb and/or pass on some of the cost increase caused by the duty to their customers given their significant profit margins of over 20 %, which have been confirmed by the comments mentioned in recital (586). They also have the possibility to find alternative sources of supply, including from other third countries and the Union industry. Therefore, the combination of other sources of supply for the product under investigation and the ability to absorb and/or at least partially pass on the effect of the duties to their customers would mean that the unrelated importers are not disproportionally affected by the imposition of the measures. Different duty levels reflect differences in behaviour amongst exporters, and in impact of Chinese exports on the Union industry, and not discrimination.

(589) It is further noted that the allegations regarding quality differences, shortage of supply, inability or unwillingness of the Union industry to supply the market, price differences, profitability of importers, risks of monopoly or oligopoly, incentives to innovate and deployment times for telecom networks were unsubstantiated and thus cannot be accepted.

(590) It is further noted that the investigation has shown that one of the important facets of injury in this case is precisely the fact that the Union industry cannot achieve the level of profits that would enable it to continue to invest inter alia in further capacity to meet the growing demand on the expanding Union market. The expected impact of measures is precisely to restore a level playing field and allow for such profits, investment and expansion of capacity to take place.

(591) Cable 77 also considers that if there shall be duty on cables, there shall also be duty on fibres at much higher level than on the cable. In this respect, the Commission recalls that this investigation covers OFC and thus measures can only be imposed on the product concerned. In fact, fibres are an input into OFC, but not the product concerned.

(592) In its comments on final disclosure, Connect Com argued that raw material costs were rising significantly across all sectors and that the production of broadband cables was also affected. In this regard, Connect Com gave examples of price increases of an undisclosed Chinese supplier from the second quarter of 2020 to the second quarter of 2021. In this respect, Connect Com argued that there was an urgent need to expand broadband cable networks in Europe but the demand could not be met by the Union producers in the short term at competitive and acceptable prices and therefore duties should not be imposed or should at least be suspended.

(593) Neither the representativeness nor the effect of this price increase on users and importers was substantiated. Therefore, the claim was rejected.

7.3.

Interest of users and distributors

(594) The product under investigation is sourced by several industries, mainly large telecom operators, public bodies (such as municipalities) responsible for expanding the broadband network, installers and operators, and distributors.

(595) A modest number of users cooperated in the investigation: two large telecom operators (Deutsche Telekom in Germany and Proximus in Belgium), five network installers and operators, one distributor and a small user. Together the cooperating users account for under 12 % of the total volume of imports of OFC from China and for under 9 % of the total volume of consumption of OFC in the EU during the IP.

(596) Many of the users’ replies to the questionnaire were very deficient and did not contain any arguments or information on Union interest. None of the public bodies which procure OFC cooperated in the investigation.

(597) BYCN Axione and another user who buy OFC mainly from Union producers did not express opposition to measures. Deutsche Telekom and Spanish distributor Comercial Electro Industrial S.A. (Comel) would oppose imposition of measures.

(598) Deutsche Telekom expects an increase in demand for OFC due to the massive 5G rollout and maintains that OFC is a worldwide market with standardized technology, global deployment and suppliers. It argues that anti-dumping duties on OFC from China can lead to significant issues to secure Union cable demands and risk hindering or delaying network rollouts and would lead to a significant cost increase for EU customers. It also claims that prices have decreased due to existing overcapacities and all players have invested in increasing capacity during the alleged shortage of supply a few years ago.

(599) The Commission concluded that it was inevitable that anti-dumping duties would have cost implications for users who purchase their OFC from China, but that this was due to the unfair export behaviour of Chinese exporters. Furthermore, the investigation established that OFC represents only a minor share of the total rollout cost of digital networks projects—in the case of 5G being much less than 5 %. The purchases of the product under investigation by the cooperating telecom operators represent a marginal percentage of company turnover, and the firm purchase a significant part of its OFC from other sources. With regard to the claim of the other user that it is difficult to switch suppliers, as explained at recital (587) other importers have also found to buy from different sources in third countries. Likewise, users also have the possibility to find alternative sources of supply, including suppliers from other third countries. As demand for OFC is expected to expand in the coming years, users and distributors will compete on a larger market than previously. This is an opportunity for them to keep and develop their business even if their prices increase due to the anti-dumping duties.

(600) It is further underlined that the existence of overcapacity driven by China does not justify unfair trade practices whose injury to the Union industry jeopardises its future, as well as diversity of supply and thus competition in the Union market.

(601) Therefore, the Commission concluded that users and distributors are not disproportionally affected by the imposition of the measures.

7.4.

Other factors

(602) Optical fibre cables are needed to build fast broadband networks and are therefore of high importance for citizens, businesses and public entities across the EU who depend on these networks for home working, home learning, for running a business or providing services. The investment through the NextGenerationEU programme

In her 2020 State of the Union address, Commission President Ursula von der Leyen stated: The investment boost through NextGenerationEU is a unique chance to drive expansion to every village. This is why we want to focus our investments on secure connectivity, on the expansion of 5G, 6G and fibre. NextGenerationEU is also a unique opportunity to develop a more coherent European approach to connectivity and digital infrastructure deployment. https://ec.europa.eu/commission/presscorner/detail/en/SPEECH_20_1655

is one of the main priorities of the European Union which also aims to deploy high technology broadband infrastructure reaching every corner of the EU. Optical fibre cables are thus key for the EU’s Digital Decade

Communication from the Commission to the European Parliament, the Council, the European Economic And Social Committee and the Committee of The Regions: 2030 Digital Compass: the European way for the Digital Decade, Brussels, 9.3.2021 COM(2021) 118 final.

and also for its digital sovereignty.

(603) Given the importance of the product under investigation in light of the above public objectives, the Commission has carefully analysed the impact of potential measures on the rollout of broadband network projects.

(604) Several parties argued that consumers and public budgets in the Union would be harmed in case anti-dumping measures were imposed as the price of OFC and thus the total price of network projects would rise.

(605) The Commission has therefore analysed the cost of OFC in the total cost of the network projects. The investigation has shown that OFC represents only a minor share of the total rollout cost of digital networks. In fact, the construction works (i.e. digging the ground in order to place the cables) is the most significant cost item in these projects accounting to around 80 % of the costs. The remaining 20 % is constituted by material costs which include also other products such as ducts, cabinets and connectors. The Commission has found that OFC represents a minor proportion of total network project costs—in the case of 5G being less than 5 % according to one of the large users. EU producers and the cooperating importers have also claimed that OFC represents around 5-10 % of the total costs of network projects.

(606) The modest level of cooperation of the major EU network operators and public bodies responsible for the large network projects also suggests that possible measures on OFC would not have a substantial impact on the cost and the timing of these projects.

7.5.

Conclusion on Union interest

(607) The investigation found that there is sufficient capacity in the Union and in other third countries to replace imports originating in China. Furthermore, the imposition of anti-dumping measures would enable the Union industry to invest in their Union production sites and new technologies to the benefit the user industry. At the same time, measures would not prevent imports from third countries (including China) from competing fairly on the Union market. Even if the demand for OFC increases in the coming years as expected by market players, importers and users of the product concerned would not run any noticeable risks of shortage of supply and the rollout of the optical fibre broadband network to homes and businesses would thus not be delayed.

(608) Overall, while in the absence of measures users, importers, final customers and public budgets may benefit from cheaper products in the short term, the dumped imports from China would inevitably drive the Union producers out of the Union market, resulting in the loss for the users industry of valuable sources of supply and potentially in increase of import prices in the absence of competition from the Union producers. Finally, survival of the Union producers is key for the EU’s digital sovereignty.

(609) On the basis of the above, the Commission concluded that there were no compelling reasons that it was not in the Union interest to impose measures on imports of OFC originating in the People’s Republic of China at this stage of the investigation.

1. DEFINITIVE ANTI-DUMPING MEASURES

(610) On the basis of the conclusions reached by the Commission on dumping, injury, causation and Union interest, definitive measures should be imposed to prevent further injury being caused to the Union industry by the dumped imports.

(611) On the basis of the above, the definitive anti-dumping duty rates, expressed on the CIF Union border price, customs duty unpaid, should be as follows:

CompanyDefinitive anti-dumping duty

FTT group:

FiberHome Telecommunication Technologies Co., Ltd

Nanjing Wasin Fujikura Optical Communication Ltd

Hubei Fiberhome Boxin Electronic Co., Ltd

44,0 %

ZTT group:

Jiangsu Zhongtian Technology Co., Ltd

Zhongtian Power Optical Cable Co., Ltd

19,7 %Other cooperating companies31,2 %All other companies44,0 %

(612) The individual company anti-dumping duty rates specified in this Regulation were established on the basis of the findings of this investigation. Therefore, they reflected the situation found during this investigation with respect to these companies. These duty rates are exclusively applicable to imports of the product concerned originating in the country concerned and produced by the named legal entities. Imports of the product concerned produced by any other company not specifically mentioned in the operative part of this Regulation, including entities related to those specifically mentioned, should be subject to the duty rate applicable to all other companies. They should not be subject to any of the individual anti-dumping duty rates.

(613) A company may request the application of these individual anti-dumping duty rates if it changes subsequently the name of its entity. The request must be addressed to the Commission

European Commission, Directorate-General for Trade, Directorate G, Rue de la Loi 170, 1049 Brussels, Belgium.

. The request must contain all the relevant information enabling to demonstrate that the change does not affect the right of the company to benefit from the 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 regulation about the change of name will be published in the Official Journal of the European Union.

(614) The individual company anti-dumping duty rates specified in this Regulation are exclusively applicable to imports of the product concerned originating in the People’s Republic of China and produced by the named legal entities. Imports of the product concerned produced by any other company not specifically mentioned in the operative part of this Regulation, including entities related to those specifically mentioned, should be subject to the duty rate applicable to all other companies. They should not be subject to any of the individual anti-dumping duty rates.

(615) To ensure a proper enforcement of the anti-dumping duties, the anti-dumping duty for all other companies should apply not only to the non-cooperating exporting producers in this investigation, but to the producers which did not have exports to the Union during the investigation period.

(616) In its brief submitted after the non-imposition of measures, CCCME claimed that there was a clear correlation between the downturn in sales for the Union (and global) OFC industry and the beginning of the pandemic, and that this situation would need to be addressed by either a suspension of the application of the anti-dumping measures for nine months, or by limiting the duration of the measures to two years. Furthermore, in its comments on the definitive disclosure of findings, CCCME claimed that the Commission did not take into account the effects of the COVID-19 pandemic and that the effects of the economic downturn that came with the pandemic were falsely attributed to Chinese imports. Moreover, two importers also argued that the Commission did not take into due consideration the effects of the pandemic. In addition, CCCME also argued that in the post-COVID-19 recovery phase, products like OFC would be crucial to industries in the Union in particular for the implementation of the 5G program. In this respect, CCCME maintained that the imposition of anti-dumping measures would result in critical shortages of the product concerned in the Union and that its price would increase significantly. According to CCCME, these latter circumstances also justify the suspension of the application of duties for a period of nine months or, alternatively, the limitation of the duration of the measures to two years. Connect Com also claimed that rising raw material costs and the effects of the COVID-19 pandemic were not duly taken into consideration and it required the suspension of measures.

(617) With regards to these claims, the investigation revealed that the COVID-19 pandemic only had a very limited and temporary impact on the industry (as described in recitals (426) and (579)), and did not prevent the significant increase of consumption in the Union during the period considered. In any event, as for suspension under Article 14(4) the request by the parties was generic and unsubstantiated. If evidence than market conditions temporarily changed in a way that injury would be unlikely to resume, and only if it would be in the Union interest, the Commission may examine whether the suspension would be warranted in due course. With regard to the shorter duration of measures, the findings on injury, causality and Union interest confirmed that the Union industry has been injured by the dumped import by the Chinese exporting producers and also that there are no compelling Union interest considerations to consider a shorter duration of the measures. For these reasons, these requests were rejected.

1. RETROACTIVE IMPOSITION OF ANTI-DUMPING DUTIES

(618) As stated in recital (4) the Commission made imports of the product concerned originating in China subject to registration by the registration Regulation in view of the possible retroactive application of any anti-dumping measures under Article 14(5) of the basic Regulation.

(619) Pursuant to Article 10(4) of the basic Regulation, duties may be levied retroactively on products which were entered for consumption no more than 90 days prior to the date of application of provisional measures.

(620) Since no provisional duties were imposed, no retroactive application could occur. Thus, the registration of imports should be discontinued.

1. FINAL PROVISIONS

(621) In view of Article 109 of Regulation 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.

(622) The measures provided for in this regulation are in accordance with the opinion of the Committee established by Article 15(1) Regulation (EU) 2016/1036,

HAS ADOPTED THIS REGULATION:

Article 1

1. A definitive anti-dumping duty is imposed on imports of single mode optical fibre cables, made up of one or more individually sheathed fibres, with protective casing, whether or not containing electric conductors, currently falling under CN code ex85447000 (TARIC code 8544700010) and originating in the People’s Republic of China.

The following products are excluded:

(i) cables in which all the optical fibres are individually fitted with operational connectors at one or both extremities; and

(ii) cables for submarine use. Cables for submarine use are plastic insulated optical fibre cables, containing a copper or aluminium conductor, in which fibres are contained in metal module(s).

1. The rates of the definitive anti-dumping duty applicable to the net, free-at-Union-frontier price, before duty, of the product described in paragraph 1 and produced by the companies listed below, shall be as follows:

CompanyDefinitive anti-dumping dutyTARIC additional code

FTT group:

FiberHome Telecommunication Technologies Co., Ltd

Nanjing Wasin Fujikura Optical Communication Ltd

Hubei Fiberhome Boxin Electronic Co., Ltd

44,0 %C696

ZTT group:

Jiangsu Zhongtian Technology Co., Ltd

Zhongtian Power Optical Cable Co., Ltd

19,7 %C697Other cooperating companies listed in Annex I31,2 %All other companies44,0 %C999

1. The application of the individual duty rates specified for the companies mentioned in paragraph 2 shall be conditional upon presentation to the Member States’ customs authorities of a valid commercial invoice, on which shall appear a declaration dated and signed by an official of the entity issuing such invoice, identified by his/her name and function, drafted as follows: I, the undersigned, certify that the (volume) of (product concerned) sold for export to the European Union covered by this invoice was manufactured by (company name and address) (TARIC additional code) in the People’s Republic of China. I declare that the information provided in this invoice is complete and correct. If no such invoice is presented, the duty applicable to all other companies shall apply.

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

1. The customs declaration shall indicate the length in kilometres of the product described in Article 1(1), provided this indication is compatible with Annex I to Council Regulation (EEC) No 2658/87

Annex I Combined Nomenclature to Council Regulation (EEC) No 2658/87 23 July 1987 on the tariff and statistical nomenclature and on the Common Customs Tariff (OJ L 256, 7.9.1987, p. 1).

.

Article 2

Where a new exporting producer from the People’s Republic of China provides sufficient evidence to the Commission, the Annex may be amended by adding that new exporting producer to the list of cooperating companies not included in the sample and thus subject to the appropriate weighted average anti-dumping duty rate, namely 31,2 %. A new exporting producer shall provide evidence that:

(a) it did not export the goods described in Article 1(1) originating in the People’s Republic of China during the period of investigation (1 July 2019–30 June 2020);

(b) it is not related to an exporter or producer subject to the measures imposed by this Regulation; and

(c) it has either actually exported the goods described in Article 1(1) originating in the People’s Republic of China or has entered into an irrevocable contractual obligation to export a significant quantity to the Union after the end of the period of investigation.

Article 3

Customs authorities are hereby directed to discontinue the registration of imports established in accordance with Article 1 of Commission Implementing Regulation (EU) 2021/548 of 29 March 2021 making imports of optical fibre cables originating in the People’s Republic of China subject to registration.

Article 4

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, 17 November 2021.

For the Commission

The President

Ursula von der Leyen

Annex

ANNEX

Cooperating exporting producers not sampled

NameTARIC additional codeAnhui Tianji Information Technology Co., LtdC698Dongjie Optical Technology (Suzhou) Co., LtdC700

Fasten Group:

Jiangsu Fasten Optical Communication Technology Co., Ltd

Jiangsu Fasten Optical Cable Co., Ltd

C701Hangzhou Futong Communication Technology Co., LtdC702Hangzhou Tuolima Network Technologies Co., LtdC703Jiangsu Etern Company LimitedC704

Jiangsu Hengtong Group:

Hengtong Optic-Electric Co., Ltd

Guangdong Hengtong Optic-electronical Technology Co., Ltd

Jiangsu Hengtong Smart Grids Co., Ltd

Zhejiang Dongtong Optical Network and IOT Technology Co., Ltd

C705Jiangsu Tongguang Optical Fiber Cable Co., LtdC706LEONI Cable (China) Co., LtdC707Liangang Optoelectronic Technology Co., LtdC724Nanjing Huamai Technology Co., LtdC708Ningbo Geyida Cable Technology Co., LtdC709Prysmian Wuxi Cable Co., LtdC710

SDG Group:

Shenzhen SDG Information Co., Ltd

Shenzhen SDGI Optical Network Technologies co., Ltd

C711Shanghai Qishen International Trade Co., LtdC712Shenzhen WanBao Optical Fiber Communication Co., LtdC713Sichuan Huiyuan Optical Communications Co., LtdC714Suzhou Furukawa Power Optic Cable Co., LtdC715Suzhou Torres Optic-electric Technology Co., LtdC716Twentsche (Nanjing) Fibre Optics LtdC717XDK Communication Equipment (Huizhou) LtdC718

YOFC Group:

Yangtze Optical Fibre and Cable Joint Stock Limited Company

Yangtze Optical Fibre and Cable (Shanghai) Company Ltd,

Yangtze Zhongli Optical Fibre and Cable (Jiangsu) Co., Ltd,

Sichuan Lefei Optoelectronic Technology Company Limited,

Everpro Technology Company Limited

C719