Council Regulation (EC) No 1480/2003 of 11 August 2003 imposing a definitive countervailing duty and collecting definitively the provisional duty imposed on imports of certain electronic microcircuits known as DRAMs (dynamic random access memories) originating in the Republic of Korea

• (182) Nevertheless, the Commission established significant price undercutting ranging from 12 % to 32 % for the different DRAM densities on a substantial portion (41 %) of the Community producers transactions, representing 32 % of their sales value. In order to eliminate the effect of the sharp drop in prices during the IP, the calculation was based on the monthly average Hynix prices to independent customers by product type. Even if the daily average Hynix prices (by product type) were used, and taking account of the fact that the number of comparable transactions would be substantially reduced (by 38 %), there would be significant undercutting within the range set out above on 29 % of the total Community producers transactions. It is also noted that irrespective of whether the monthly or daily average of Hynix prices was used in the calculation, the proportion of the Community producers undercut transactions in relation to the total comparable transactions remained the same, i.e. around 47 %. It is noted that a typing error occurred at the end of the penultimate sentence of recital 122 of the provisional Regulation where the reference to Hynix sales should read Community industry sales. In the absence of further comments on price undercutting, the provisional findings as set out in recitals 119 to 123 of the provisional Regulation are hereby confirmed.

Market share of imports from Korea

• (183) Hynix, supported by the GOK, claimed that contrary to the upward trend of its market share as described in recital 124 of the provisional Regulation its market share decreased during the period under consideration. This claim is not warranted since the market share figures provided by Hynix to justify its claim were initially based on the total sales of its subsidiaries in the Community of the product concerned to unrelated customers in the Community during the period under consideration and not on the volume of its imports of DRAMs produced in Korea. After it was clarified to Hynix that its market share as described in recital 124 of the provisional Regulation was calculated on the basis of duly verified import data which it had itself reported in its questionnaire response, Hynix indicated that in establishing the trend of its market share during the period under consideration, imports from LG Semicon Co., Ltd that occurred before the date of the merger of this company with Hyundai Electronics Industries Co., Ltd should have been included in its import data. Hynix and the GOK provided certain ad hoc data in this respect.

• (184) For the reasons set out in recital 175 this claim is rejected and the provisional findings concerning market shares as described in recital 124 of the provisional Regulation are confirmed.

• (185) Even if import data of LG Semicon Co., Ltd for 1998 and 1999 as provided ad hoc by Hynix and the GOK, and which could not be verified, were taken into account, they should be added to the market share of imports from Korea and not to the market share of imports from Hynix. The market share of imports from Korea would then have decreased by 21 % during the period under consideration.

SITUATION OF THE COMMUNITY INDUSTRY

• (186) In the absence of any new information, the provisional findings concerning the situation of the Community industry as set out in recitals 125 to 138 of the provisional Regulation are confirmed.

CONCLUSION ON INJURY

• (187) Following the publication of the provisional Regulation, Hynix and the GOK claimed that most of the injury indicators show that the situation of the Community industry is improving. Therefore, no material injury could have been suffered by the Community industry.

• (188) However, no arguments which could alter the conclusions as set out in recitals 139 to 141 of the provisional Regulation were made. In accordance with the provisions of Article 8(5) of the basic Regulation, these conclusions were based on the evaluation of all relevant economic factors and indices having a bearing on the state of the Community industry. The details are set out in recitals 125 to 138 of the provisional Regulation and they have not been challenged. Though the position of the Community industry improved in certain respects during the period under consideration because of the growing market for DRAMs, this was more than offset by the very substantial injury caused by the drastic drop in sales prices and the consequent heavy losses suffered by the Community producers during the IP. These losses had a negative effect on their return on investments and their cash flow. Consequently, taking into account all the factors, the conclusions reached in recitals 139 to 141 of the provisional Regulation that the Community industry has suffered material injury within the meaning of Article 8 of the basic Regulation are hereby confirmed.

CAUSATION OF INJURYINTRODUCTION

• (189) As set out in recitals 143 to 157 of the provisional Regulation, it was examined, in accordance with Article 8(6) and (7) of the basic Regulation, whether the subsidised imports of the product concerned originating in Korea have caused injury to the Community industry to a degree that enables it to be classified as material. Known factors other than the subsidised imports, namely the general economic downturn during the IP, imports from other countries, exports of the Community industry and overcapacity, which could at the same time be injuring the Community industry, were also examined one by one to ensure that possible injury caused by these other factors was not attributed to the subsidised imports.

• (190) Following the imposition of provisional measures, Hynix and the GOK claimed that Hynix's imports could not have caused injury to the Community industry because their market share was decreasing during the period under consideration and their prices did not undercut the Community industry's prices. They further argued that any injury was self-inflicted and caused by the investments the Community industry made during the period under consideration, which largely contributed to the overcapacity during the IP. They also argued that the analysis in the provisional Regulation failed to take into account the severe cyclical downturn for IT during this period. It is noted that the comments of Hynix concerning causation referred to only one of the two Community producers composing the Community industry, i.e. Infineon. The analysis which follows concerns the Community industry as a whole.

EFFECT OF THE SUBSIDISED IMPORTS

• (191) As set out in recitals 176 and 177, subsidised imports from Hynix increased during the period under consideration even at a higher pace than the Community consumption. Over the same period, the development of their market share followed the same trend, i.e. increased (see recitals 184 and 185) and reached a very substantial level during the IP. Even if the alleged volume of imports from LG Semicon Co., Ltd was to be added to that of Hynix for the years 1998 and 1999, such an imports trend towards the IP would still be increasing (increase of 155 % between 1998 and the IP). It was found that the volume of Hynix's subsidised imports and their market share during the IP were sufficiently important in themselves to adversely affect the Community market and in particular the prices of the Community industry. Market analysts ([^E0063]) believed that Hynix was technically bankrupt and that it was kept alive only through debt-restructuring programs, thus maintaining artificially oversupply on the market. In this context, it should be noted that any additional supply not met by demand leads prices down. And Hynix, as set out in recital 148 of the provisional Regulation, was desperate to sell during the IP even below cost. No further comments which could alter the findings concerning the effect of Hynix's subsidised imports on the injurious situation of the Community industry as set out in recitals 144 to 148 of the provisional Regulation were made. These findings are hereby confirmed.

• (192) It is therefore concluded that the subsidisation alone, by enabling pricing irrespective of cost and by contributing substantially to the oversupply characterising the DRAM market, has led in a very substantial way to the very low price levels on the Community market. Without the subsidies in question it is reasonable to assume that the prices of the Community industry would have been higher, not only because Hynix would not have been able to charge the very low prices that they practised in the IP, but also because global supply would have been lower. Moreover, the magnitude of the volume of Hynix's low-priced subsidised imports had itself a significant negative impact on the situation of the Community industry.

IMPACT OF OTHER FACTORSGeneral economic downturn during the IP

• (193) Hynix and the GOK argued that the Commission did not take into account the impact of the cyclicality of the DRAM market. They further argued that worldwide demand for DRAMs grew in 2001 only by 59 % whilst the average year on year rate was 75 %. It is noted that these alleged worldwide growth rates are highly subjective and contradict other information available on the record. As set out in recital 150 of the provisional Regulation, it is recognised that the general economic downturn of the PC and telecommunication markets in 2001 may have had some downward effect on prices. However, it was found that DRAM consumption in the Community continued its upward trend throughout the period under consideration. The increased consumption in terms of Mbits during the IP stemmed to a large degree from the introduction of Microsoft XP, which has much higher Mbit requirements than previous systems, and increased sales of ‘upgrade’ products generated by the low prices. In fact, the consumption in Mbits in the Community increased almost at the same rate between the year 1999 and the good year 2000 (57 %) as compared to the increase between the good year 2000 and the bad year 2001 — the IP (51 %). It is therefore concluded that, whilst the economic downturn may have had some downward effect on prices, it can be assumed that, with consumption rising, this effect was not substantial.

Imports of the product concerned from other countries than Korea

• (194) Following the imposition of provisional measures, no comments were received concerning other imports. However, following final disclosure Hynix argued that, in accordance with data in the complaint, imports from other countries than Korea (mainly Taiwan) and imports from Samsung have increased more than Hynix's imports, in particular between 2000 and the IP, and thus any injury suffered by the Community industry could not have been caused by Hynix's imports. With regard to Samsung's imports see recital 200. With regard to imports from all other countries (including Taiwan), the investigation found that in Mbit terms they decreased between 2000 and the IP by 4,2 %. In fact, their market share decreased from 31,4 % in 2000 to 20 % during the IP. During the same period Hynix's subsidised imports in Mbit terms increased by 24 %. Therefore, the argument is considered groundless and the findings set out in recital 151 of the provisional Regulation that imports from other countries than Korea have not contributed in any significant way to the injury suffered by the Community industry are hereby confirmed.

Export activity of the Community industry

• (195) Following the imposition of provisional measures, no comments were received concerning the export activity of the Community industry. The findings set out in recital 152 of the provisional Regulation are hereby confirmed.

Overcapacity

• (196) Following the imposition of provisional measures, Hynix and the GOK claimed that any injury suffered by the Community industry during the IP was self-inflicted by its investments made during the period under consideration. They further claimed that these investments have largely contributed to the overcapacity during the IP.

• (197) As set out in recital 153 of the provisional Regulation, the worldwide DRAM market still suffered during the IP from structural overcapacity resulting from the expectations of the late 1990s that the market would continue its rapid growth. This overcapacity can be said to have contributed to the severity of the current downturn from which this industry is suffering. However, it is noted that the capacity of the Community industry in Mbit terms did not reach the consumption in the Community during the IP. Furthermore, it is generally recognised that the DRAMs industry constantly needs a high level of investment, in particular in research and development, to keep abreast with leading-edge technology. The investments of the Community industry during the period under consideration can therefore be viewed as reasonable and were undertaken in order to maintain its competitiveness in a growing market. In this respect, it is noted that both Korean producers made significant investments during the period under consideration. In fact, the worldwide investments of the Community industry were less than half the investments of the two Korean producers during that period. It is therefore reasonable to assume that any overcapacity was not created by the Community industry alone. On the contrary, it was the Korean industry which has mainly contributed to such overcapacity worldwide. It is also reasonable to assume that, had the Korean government not intervened with the subsidies, the situation in both the Community and worldwide as regards overcapacity would not have been so pronounced.

Stocks

• (198) Following the imposition of provisional measures, Hynix also argued that another reason for the declining prices of DRAMs during the IP was a significant ‘inventory burn’. It was argued that during the ‘near record year’ 2000 when DRAM prices increased significantly, many customers (e.g. distributors) built up their DRAM inventory because users feared shortages. During the IP, when it became clear that the collapse of the PC and telecommunications markets would depress demand, these inventories were disposed of quickly and further exacerbated the already declining prices.

• (199) However, first of all this argument is not supported by any factual evidence. Secondly, it is based on a wrong premise: during the IP DRAMs consumption continued to increase in the Community. Finally, it is not plausible: no company will build up stocks when the prices are high, in particular when a product like DRAMs has a short life cycle; on the contrary they may build up stocks when the prices are low. In this respect, it is recalled that the stocks of the Community industry as a percentage of production in Mbits declined during the good year 2000 as well as during the bad IP. This has been confirmed by the sole cooperating distributor which stated in its response to the questionnaire that ‘at present manufacturers move to just-in-time ordering’. The same distributor indicated during a hearing that its DRAMs stocks are renewed four times a month. Therefore, no link can be made in this regard between stocks and prices, and accordingly, this argument has to be rejected.

Samsung's imports

• (200) It was also examined whether factors other than those already considered above could have contributed to the material injury suffered by the Community industry during the IP. In this respect the imports from Samsung were examined. During the period under consideration, Samsung's imports have also increased but at a lower pace than Hynix's imports and in any event slower than the increase of Community consumption. It was also found that during the IP Samsung's prices were on average higher than those of Hynix. Furthermore, Samsung's prices decreased less than Hynix's prices during the period under consideration. It was therefore concluded that though Samsung imports may have caused some injury to the Community industry, this was not sufficient to break the causal link between Hynix's subsidised imports and the material injury suffered by the Community industry.

CONCLUSION ON CAUSATION

• (201) The arguments brought forward by the interested parties on causation following the imposition of provisional measures have not altered the overall conclusions reached in the provisional Regulation.

• (202) Factors other than the subsidised imports originating in Korea, such as other imports, the general economic downturn, the export activity of the Community industry and the pre-existing overcapacity in the market, may well have contributed to the injury suffered by the Community industry during the IP. However, their injurious effect, both individually and collectively, was considered of some importance but insufficient to undermine the material injury attributable to subsidised imports.

• (203) The reduced prices of the Community industry's export sales may have also contributed to the injury. However, given the lower volume of exports in relation to the volume of sales in the Community during the IP, the injury suffered by the Community industry cannot be attributed to its exports.

• (204) As far as overcapacity is concerned, this worldwide situation existed during a number of years including the period under consideration. Therefore, this overcapacity cannot be considered alone as the cause of the very significant sudden drop in prices that led to the injury suffered by the Community industry. Furthermore, subsidised imports are themselves a substantial cause of oversupply.

• (205) Indeed, the investigation has shown that during the period under consideration Hynix's subsidised imports were sold on the Community market at volume and prices that caused very considerable injury to the Community industry. These imports were found to be a substantial cause of prices in the Community falling dramatically to levels that generated huge losses. This situation had grave consequences on the profitability of the Community industry and its ability to maintain the necessary investment levels. In view of the analysis, which has properly distinguished and separated the effects of all known factors on the situation of the Community industry from the injurious effects of the subsidised imports, it is hereby concluded that these other factors are not such as to break the causal link between subsidisation and injury. Accordingly, it is concluded that these imports have caused material injury to the Community industry within the meaning of Article 8(6) of the basic Regulation.

COMMUNITY INTEREST

• (206) No user, importer or distributor submitted any comments concerning Community interest or any other aspect of the investigation following the imposition of provisional measures. Even the few cooperating users did not submit any comments on the provisional findings. The Community industry expressed its support for the provisional determination on Community interest.

• (207) Hynix, although not directly concerned, argued following the imposition of provisional measures that the Community industry has not the capacity to supply its clients, and that Hynix's disappearance from the Community market could only result in an increased market share of other non-Community producers.

• (208) The argument put forward by Hynix is not persuasive. It contradicts Hynix's previous argument that the Community industry has created itself an overcapacity situation. The fact is that the Community industry still has significant spare capacity available that can be used if the market conditions allow fair competition. On the other hand, the aim of the measures is not to eliminate Hynix from the Community market, but to countervail the subsidisation to the extent it has benefited Hynix's imports to the detriment of other suppliers on the market.

• (209) In the absence of any comments from the directly interested parties the findings and conclusions set out in recitals 158 to 174 of the provisional Regulation are hereby confirmed. It is therefore concluded that the imposition of definitive countervailing measures would not be against the Community interest.

DEFINITIVE COURSE OF ACTION

• (210) In view of the conclusions reached regarding subsidies, injury, causation and Community interest, it is considered that definitive countervailing measures should be taken in order to prevent further injury being caused to the Community industry by subsidised imports from the Republic of Korea.

INJURY ELIMINATION LEVEL

• (211) For the purpose of establishing the level of the definitive measures, account has been taken of both the subsidy amount found and the amount of injury sustained by the Community industry.

• (212) The definitive measures should be imposed at a level sufficient to eliminate the injury caused by these imports without exceeding the subsidy amount established. When calculating the amount of duty necessary to remove the effects of the injurious subsidies, it was considered that any measures should allow the Community industry to cover its costs and obtain overall a profit before tax that could reasonably be achieved under normal conditions of competition, i.e. in the absence of subsidised imports, on the sales of the like product in the Community. The pre-tax profit margin used for this calculation was 15 % on turnover, which is necessary for the industry to maintain reasonable levels of investment. This profit margin was the average realised by the Community industry during the last two years before the IP.

• (213) Following the imposition of provisional measures, Hynix argued that the 15 % profit was not in line with the 9,5 % profit margin used in earlier anti-dumping proceedings concerning DRAMs originating in Korea and Japan. It is noted that these anti-dumping proceedings referred to more than 10 years ago, when the market circumstances and the product itself were different. In any event, given the magnitude of the losses suffered by the Community industry during the IP, even a profit margin at this level will result in an injury elimination level that would still be higher than the subsidy amount established.

• (214) Considering the above, the methodology used for establishing the injury elimination level as described in recitals 177 to 179 of the provisional Regulation is confirmed.

FORM AND LEVEL OF THE DUTY

• (215) Since the subsidy amount for Hynix Semiconductor Inc. has been found to be lower than the injury elimination level, the rate of the definitive countervailing duty to be imposed should correspond to the subsidy amount established in accordance with Article 15(1) of the basic Regulation, i.e. 34,8 %. Given the de minimis subsidy finding, no countervailing duty should be imposed on Samsung Electronics Co., Ltd.

• (216) The individual company countervailing duty rates specified in this Regulation were established on the basis of the findings of the present investigation. Therefore, they reflect the situation found during that investigation with respect to these companies. These duty rates (as opposed to the countrywide duty applicable to ‘all other companies’) are thus exclusively applicable to imports of products originating in the country concerned and produced by the companies and thus by the specific legal entities mentioned. Imported products produced by any other company not specifically mentioned in the operative part of this Regulation with its name and address, including entities related to those specifically mentioned, cannot benefit from these rates and shall be subject to the duty rate applicable to ‘all other companies’.

• (217) Any claim requesting the application of these individual company countervailing duty rates (e.g. following a change in the name of the entity or following the setting up of new production or sales entities) should be addressed to the Commission ([^E0064]) forthwith with all relevant information, in particular any modification in the company's activities linked to production, domestic and export sales associated with, for example, that name change or that change in the production and sales entities. The Commission, if appropriate, will, after consultation of the Advisory Committee, amend the Regulation accordingly by updating the list of companies benefiting from individual duty rates.

COLLECTION OF THE PROVISIONAL DUTY

• (218) In view of the amount of the countervailable subsidies found for the exporting producers and in light of the seriousness of the injury caused to the Community industry, it is considered necessary that the amounts secured by way of provisional countervailing duty under Regulation (EC) No 708/2003 be definitively collected to the extent of the rate of the definitive duty imposed or the rate of the provisional duty if the latter was lower,

HAS ADOPTED THIS REGULATION:

Article 1

DRAMs defined in the preceding paragraph take the following forms:

• —DRAM wafers falling within CN code ex854221 01 (TARIC code 8542210110),

• —DRAM chips (dies) falling within CN code ex854221 05 (TARIC code 8542210510),

• —mounted DRAMs falling within CN codes 8542 21 11, 8542 21 13, 8542 21 15 and 8542 21 17,

• —multi-combinational forms of DRAMs (memory modules, memory boards or other aggregate forms) falling within CN codes ex847330 10 (TARIC code 8473301010), ex847350 10 (TARIC code 8473501010) and ex854890 10 (TARIC code 8548901010),

• — chips and/or mounted DRAMs incorporated in (non-customised) multi-combinational forms of DRAMs provided the (non-customised) multi-combinational form of DRAM is originating in countries other than the Republic of Korea, falling within CN codes ex847330 10 (TARIC code 8473301010), ex847350 10 (TARIC code 8473501010) and ex854890 10 (TARIC code 8548901010).

In cases where some of the DRAM chips and/or mounted DRAMs incorporated in multi-combinational forms of DRAMs are not clearly marked and their manufacturers are not clearly identifiable from the statement required in paragraph 4, such DRAM chips and/or mounted DRAMs shall — unless the contrary is proved — be considered as originating in the Republic of Korea and as having been manufactured by companies subject to the countervailing duty. In such cases, the countervailing duty rate applicable to multi-combinational forms of DRAMs shall be calculated on the basis of the percentage represented by the net free-at-Community-frontier price of the DRAM chips and/or mounted DRAMs originating in the Republic of Korea out of the net free-at-Community-frontier price of the multi-combinational forms of DRAM, as established in the table contained in paragraph 3, numbers 2 to 7. Should, however, the value of the aforementioned DRAM chips and/or mounted DRAMs be such to determine that the multi-combinational forms of DRAMs in which they are incorporated becomes of Korean origin, the countervailing duty rate of 32,9 % shall apply to the multi-combinational forms of DRAMs.

Article 2

The amounts secured by way of the provisional countervailing duty pursuant to Regulation (EC) No 708/2003 on imports of DRAMs originating in the Republic of Korea shall be collected at the rate of the duty definitively imposed or the rate of the provisional duty if the latter was lower. Amounts secured in excess of the definitive rates of the countervailing duty shall be released.

Article 3

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

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

[^E0001]: OJ L 288, 21.10.1997, p. 1. Regulation as amended by Regulation (EC) No 1973/2002 (OJ L 305, 7.11.2002, p. 4).

[^E0002]: Proposal of 25 July 2003 (not yet published in the Official Journal).

[^E0003]: OJ L 102, 24.4.2003, p. 7.

[^E0004]: Hynix business plan for 2001 filed with the FSC, 21 March 2002.

[^E0005]: Expert Report of Professor Anthony Saunders in the Matter of the Countervailing Duty Petition on behalf of Petitioner: Micron Technology, 10 March 2003 (‘Saunders Report’), p. 30-35.

[^E0006]: Saunders Report, p. 20-21.

[^E0007]: Standard and Poor's, Corporate Ratings Criteria, www.standardandpoors.com.

[^E0008]: Private financial experts Verification Report, Meeting 6, point 14.

[^E0009]: Public Fund Mismanagement Report, Special Committee on Parliamentary Inspection of Public Fund Administration, Grand National Party, November 2002.

[^E0010]: The FSC was established under the Act on Establishment of Financial Supervisory Agencies in 1996. It supervises financial institutions and also enacts or amends separate supervisory regulations for different financial sectors. It is funded by the GOK. It is considered as a public body in the meaning of Article 1(3) of the basic Regulation.

[^E0011]: English Translation of the Korean text.

[^E0012]: The name of Hyundai Electronics was changed to Hynix Semiconductor on 29 March 2001.

[^E0013]: GOK Verification Report, p. 16-17.

[^E0014]: The FSS is a public agency whose main task is to carry out financial supervision under the FSC's guidance. It is considered as a public body in the meaning of Article 1(3) of the basic Regulation.

[^E0015]: The Korea Economic Daily, 28 August 2001, following the disclosure of official correspondence by Members of the National Assembly of Korea.

[^E0016]: OJ C 394, 17.12.1998, p. 13.

[^E0017]: The Kyunghyang Shinmun Daily, 9 January 2001; The Joong'ang Daily, 7 January 2001.

[^E0018]: GOK Verification report, p. 14.

[^E0019]: Structural Change in the Corporate Bond Market After the Currency Crisis, BIS Papers No 11, Sungmin Kim and Jae Hwan Park, June-July 2002.

[^E0020]: It is interesting to note that the investigated measures KRW 800 billion syndicate loan, KRW 1,2 trillion refinanced by the KDB programme and KRW 1 trillion CB purchase by creditor banks in June 2001 result in KRW 3 trillion.

[^E0021]: GOK Verification Report, p. 16-17.

[^E0022]: In January 2001 a GOK official has been recorded as having stated the following: ‘Hyundai is different from Daewoo. Its semiconductor and constructions are Korea's backbone industries. These firms hold large market shares of their industries and these businesses are deeply linked with other domestic companies. Thus, these firms should not be sold off just to follow market principles.’

[^E0023]: Korea Times, 29 January 2001.

[^E0024]: Korea Economic Daily, 6 January 2001.

[^E0025]: Wall Street Journal, 29 January 2001.

[^E0026]: Business Week Online, 9 April 2001.

[^E0027]: Bloomberg, 31 January 2001.

[^E0028]: Reuters English News Service, 13 June 2001.

[^E0029]: ‘Collateralised bond obligations’ and ‘collateralised loan obligations’.

[^E0030]: KCGF is a special institution owned by the GOK.

[^E0031]: The document ‘Summary of the meeting’ of 4 January 2001 to discuss the KDB Fast Track Programme describes the functioning of the programme. It does not explain how the selection of participants was carried out and on what basis the companies were selected.

[^E0032]: The Council consists of the representatives of KDB, The Korea Credit Guarantee Fund and the creditor banks.

[^E0033]: KDB to acquire Huyndai Electronics bonds, KDB press release, 3 January 2001.

[^E0034]: Chosun Daily, 7 January 2001; The Kyunghyang Shinmun Daily, 9 January 2001.

[^E0035]: Regulation (EC) No 2603/2000, OJ L 301, 30.11.2000, p. 1.

[^E0036]: The participating company had to repurchase 3 %/5 % of any CBO/CLO issued under the programme. See recital 48 of the provisional Regulation.

[^E0037]: Bonds falling under the programme are 80 % of the bonds maturing under certain period. Hynix pays the 20 % of its maturing bonds under the conditions of the programme.

[^E0038]: The information on the record also indicates that in June 2002 KDB still held KRW 82,4 billion of bonds falling under the KDB programme.

[^E0039]: Shinhan Bank, ING Barings, 24 April 2001; KorAm Bank, ING Barings, 26 September 2001; Hana Bank, Morgan Stanley, Dean Witter, 30 October 2001; Kookmin Bank, Morgan Stanley, Dean Witter, 24 October 2001.

[^E0040]: It is noted that the CBs purchased in May 2001 were swapped into equity or written off by the banks only a couple of months later in the context of the October 2001 restructuring measures.

[^E0041]: The Naeoe Economic Daily, 10 March 2001.

[^E0042]: The Maeil Economic Daily, 11 March 2001.

[^E0043]: Korea Times, 24 April 2001.

[^E0044]: Maeil Economic, 24 April 2001.

[^E0045]: Korea Times, 21 June 2001; Dow Jones International News, 20 June 2001.

[^E0046]: Recital 39 of the provisional Regulation.

[^E0047]: Donga daily, 4 May 2001; Korea Economic Daily, 3 May 2001; Maeil Economic, 7 May 2001.

[^E0048]: Hynix business plan for 2001 filed with the FSC, 21 March 2002.

[^E0049]: Saunders Report, p. 30-35.

[^E0050]: Saunders Report, p. 20-21.

[^E0051]: Hynix business plan for 2001 filed with the FSC, 21 March 2002.

[^E0052]: Hynix business plan for 2001 filed with the FSC, 21 March 2002.

[^E0053]: Private financial experts Verification Report, Meeting 1, point 2, Meeting 2, point 6, Meeting 4, point 9, Meeting 5, point 11.

[^E0054]: Private financial experts Verification Report, Meeting 1, point 2, Meeting 2, point 6, Meeting 4, point 9.

[^E0055]: As regards KorAm being directed to participate in the CB purchase in June 2001, Korea Times, 21 June 2001; as regards Korea First Bank being directed to participate in the KDB Debenture programme, Far Eastern Economic Review, 15 February 2001.

[^E0056]: The scale being 1 to 10.

[^E0057]: The GOK owned 100 % of Woori Bank and 80 % of CHB.

[^E0058]: It is also noted that an internal Woori Bank document recommending participation in the October 2001 measures states the following: ‘Should Hynix go to Court receivership or be liquidated, the effect on the national economy will be immense. The company accounts for 4 % of the total exports and 150 000 workers, including the company itself and its upstream and downstream companies.’ This indicates that public interest considerations were taken into account.

[^E0059]: However, UBS Warburg stated in 18 September 2002 that given the high share of GOK ownership in the bank, additional exposure in the future might prove unavoidable.

[^E0060]: Korea Times, 25 November 2002.

[^E0061]: Public Notice on other major management topics, decision made by Hynix-CFIC meeting, 30 December 2002.

[^E0062]: Korea Times, 26 November 2002.

[^E0063]: Morgan Stanley, Hynix Semiconductor — September 25, 2002.

[^E0064]: European Commission — Directorate General for Trade — Directorate B — J-79 5/17 — Rue de la Loi/Wetstraat 200 — B-1049 Brussels.