Commission Implementing Regulation (EU) 2023/111 of 18 January 2023 imposing a definitive anti-dumping duty on imports of fatty acid originating in Indonesia

COMMISSION IMPLEMENTING REGULATION (EU) 2023/111 of 18 January 2023 imposing a definitive anti-dumping duty on imports of fatty acid originating in Indonesia

THE EUROPEAN COMMISSION,

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

Having regard to Regulation (EU) 2016/1036 of the European Parliament and of the Council of 8 June 2016 on protection against dumped imports from countries not members of the European Union (1) (‘the basic Regulation’), and in particular Article 9(4) thereof,

Whereas:

(1) On 30 November 2021, the European Commission (‘the Commission’) initiated an anti-dumping investigation with regard to imports of fatty acid originating in Indonesia (‘the country concerned’) on the basis of Article 5 of the basic Regulation. It published a Notice of Initiation in the Official Journal of the European Union (2) (‘the Notice of Initiation’).

(2) The Commission initiated the investigation following a complaint lodged on 18 October 2021 by the Coalition against Unfair Trade in Fatty Acid (‘the complainant’ or ‘CUTFA’). The complaint was made on behalf of the Union industry of fatty acid in the sense of Article 5(4) of the basic Regulation. The complaint contained evidence of dumping and of resulting material injury that was sufficient to justify the initiation of the investigation.

(3) On 13 May 2022, the Commission initiated an anti-subsidy investigation with regard to imports of fatty acid originating in Indonesia. It published a Notice of Initiation in the Official Journal of the European Union (3).

(4) In the Notice of Initiation, the Commission invited interested parties to contact it in order to participate in the investigation. In addition, the Commission specifically informed the complainant, other known Union producers, the known exporting producers and the authorities of Indonesia, known importers and users, about the initiation of the investigation and invited them to participate.

(5) Interested parties had an opportunity to comment on the initiation of the investigation and to request a hearing with the Commission and/or the Hearing Officer in trade proceedings.

(6) Hearings were held with a biodiesel producer, Campa Iberia SAU (‘Campa’) and its related company, IM Biofuel Italy S.r.l. (‘IMBI’), (collectively called ‘Campa/IMBI’), and a sampled Union producer, AAK AB (‘AAK’).

(7) The Commission received comments on initiation from the exporting producers P.T. Musim Mas (‘Musim Mas’) and its related exporter P.T. Intibenua Perkasatama (‘IBP’) (collectively called ‘Musim Mas group’), P.T. Wilmar Nabati Indonesia (‘Wilmar’), P.T. Nubika Jaya and P.T. Permata Hijau Palm Oleo (collectively called ‘Permata group’), and the Government of Indonesia (‘GOI’).

(8) The Musim Mas group, Wilmar and the GOI claimed that the definition of the product under investigation in the complaint was too broad as it included fatty acids that were not the target of the complaint (such as fatty acid used for the production of biodiesel, palmitic acids used for animal feed, vegetable oleic acid used for food and fatty acids derived from coconut oil). The GOI claimed that the failure of the complainant to correctly define the product scope in the complaint would have an effect on the validity of the complaint and justification to initiate the investigation.

(9) It was further claimed that due to the broad definition of the product under investigation, the data in the complaint (such as production, production capacity, employment, sales, market share, profit, causation and Union industry) was incomplete as it was compiled only for the types of fatty acid that were targeted by the complainant.

(10) Furthermore, the Musim Mas group and Wilmar claimed that the imports from Indonesia were overstated in the complaint as they include fatty acid imported into the Union for biodiesel production and other fatty acids not used in food, cosmetics, personal care and pharmaceutical applications such as palmitic acids. As a result, the consumption and the market shares stated in the complaint were not correct.

(11) Moreover, it was claimed that the price of imports from Indonesia in the complaint was understated as it included lower-priced fatty acid produced from waste and by-products which are used for biodiesel production. Consequently, the undercutting margins were also not correct.

(12) Finally, the Musim Mas group and the GOI claimed that because of the issues with the product concerned and the like product, the initiation of the investigation was based on unreliable, incomplete and inaccurate information. Consequently, also the investigation suffers from the same issues as the complaint and therefore the investigation should be terminated.

(13) The product definition in the complaint and in the Notice of Initiation was based on the information available to the complainant at the time the complaint was prepared and lodged. There was at that time no information that the product as defined might cover types of fatty acid not produced by the complaining industry. This matter came to the fore after initiation and was adequately addressed as explained below in recitals (91) to (102) and (108) to (124). As to the injury data contained in the complaint, the allegations summarised in recital (9) are factually incorrect or based on a misunderstanding. Indeed, the injury data in the complaint relate to the product concerned. The product definition was based upon the product produced by the complainant and reflected the targeted product scope. The injury analysis was based on the targeted product scope, which was the actual product that the complainant wanted to cover. Therefore, the data in the complaint with regard to the injury analysis was complete, which has been confirmed by the investigation.

(14) The Indonesian import figures reflected in the complaint were based upon the information available to the complainant at that time. The Commission carefully examined the accuracy and adequacy of the information provided by the complainant and reached the conclusion that the different fatty acid types shared the same basic characteristics, meaning that they belong to the same product category. At the same time, the basic characteristics of the product concerned allowed to separate it from other product types to the extent that these could be considered to be different and belong to another category of fatty acid. It therefore appeared, at initiation stage, that the product definition proposed by the complainant met all the relevant statutory requirements.

(15) This is not called into question by the fact that information and evidence collected after initiation gave rise to a clarification of the product scope after initiation, as well as to appropriate product exclusion as stated in recitals (94) to (124). The data in the complaint was in line with the clarifications provided by the Commission in recital (91). Therefore, the claims were rejected.

(16) Wilmar claimed that the complaint contained insufficient evidence in support of a finding of material injury or threat thereof to the Union producers. It particular, it was stated that production and capacity utilisation did not show injury, and also that the employment and investments have increased and do not reflect injury. Furthermore, it was claimed that the price undercutting allegations in the complaint were not conclusive as the Union producers increased their selling prices substantially. It was also stated that the complaint was silent on the complainant’s profitability data. Furthermore, it was stated that there was also no threat of injury as the Indonesian capacities were overstated and the domestic demand was rising.

(17) The Commission recalls that Article 5(2) of the basic Regulation requires a complaint to contain the information on changes in the volume of the allegedly dumped imports, the effect of those imports on prices of the like product on the Union market and the consequent impact of the imports on the Union industry, as demonstrated by relevant (not necessarily all) factors and indices having a bearing on the state of the Union industry, such as those listed in Articles 3(3) and 3(5) of the basic Regulation, as reasonably available to the complainant. Not all factors must show deterioration in order for material injury to be established.

(18) In that regard, the complaint showed an overall injurious trend in both the macro and micro indicators. The analysis indicated a decrease in production and capacity utilisation. With respect to the increases in the selling prices of Union producers, the Commission considered that such increases would not be sufficient to put into question the complainants’ claims on undercutting, and that they partially reflected the increase in the cost of raw materials. With respect to the information on the complainant’s profitability, Wilmar’s claim was factually incorrect. The complaint included sufficient information, in the form of indices, on the negative evolution of profit margins of the Union industry. The information was considered confidential because of the limited number of complaining and supporting Union producers, and the high business sensitivity of such data. The complaint furthermore set out that the reason for the increase in investment was not linked to capacity building, but to national environmental requirements. Even though the employment marginally increased, the Commission considered that overall the complaint did provide sufficient evidence tending to show the existence of an injurious situation of the Union industry. Finally, with respect to Indonesian capacities and domestic demand, the complainant did provide evidence that the Indonesian production was larger than its local demand and consumption. In addition, a lower level of capacities and a rising domestic demand would not be sufficient to disprove the existence of material injury. Therefore, the claims were rejected.

(19) The Musim Mas group and Wilmar also claimed that the complaint was not representative of the Union production of fatty acid as it did not include any data from the Union biodiesel producers who also produce fatty acids in substantial quantities.

(20) In this respect, the Commission notes that fatty acid produced as a by-product of biodiesel production was not included in the scope of the investigation. A note clarifying this point was included in the file by the Commission on 21 January 2022. Therefore, there was no issue with respect to the representativity of the Union industry in the complaint. Thus, the claim was rejected.

(21) The Musim Mas group and Wilmar also claimed that the Union producers which were related to Indonesian producers of fatty acid or Malaysian exporters of fatty acid to the Union should be excluded from the definition of the Union industry as such companies were subject to a conflict of interest and in this case it was stated that the Commission should re-evaluate whether the remaining complainants would meet the necessary threshold for the complaint.

(22) The Commission notes that in the pre-initiation analysis, no reason for exclusion of any producers in the Union was found. As regards Union producers related to Malaysian exporters of fatty acid, the Musim Mas group and Wilmar did not explain what is the nature of the alleged ‘conflict of interest’, why it should give rise to an exclusion of these producers from the definition of the Union industry, and what would be the legal basis for such exclusion. Therefore, the claim was rejected.

(23) The Musim Mas group also claimed that the Malaysian and Indonesian governments have adopted a similar policy concerning the export duty on crude palm oil (‘CPO’) and crude palm kernel oil (‘CPKO’), and if this policy was causing injury to the Union industry, then the investigation should cover Malaysia as well. It was further claimed that the objective of the complainant was to block the imports from Indonesia to the advantage of the Malaysian companies who are related to the Union producers.

(24) The complaint assessed the imports from Malaysia. However, according to the information available to the complainant, the import volume from Malaysia was much lower than the volume from Indonesia and showed a small decrease from 2018 until March 2021. Moreover, the Malaysian imports were made at a price above the target price of the Union industry and could have not caused any injury. Therefore, the claim was rejected.

(25) The Musim Mas group and Wilmar also claimed that the complainant wrongly attributed all the alleged injury suffered by the Union industry to the imports from Indonesia. Furthermore, the Musim Mas group claimed that any causal link between the alleged injury suffered by the Union industry and the imports from Indonesia was also affected by the issues mentioned in recital (8). Wilmar claimed that other causes of injury broke the causal link that the complaint attempted to established, such as: (1) the increase of the Union producers’ main raw material, tallow, in biofuels production, (2) the impact of the Covid-19 pandemic on the automotive sectors, (3) inefficiencies in the Union industry caused by a lack of investments in novel and better equipment, (4) the Union industry’s performance in terms of punctuality and quality, (5) excessive production costs as a result of inflated labour costs, (6) the geographically disadvantageous location of production facilities, which increased the cost of access to the raw materials and affected export opportunities, and (7) regulatory developments including the entry into force of the 3-MCPD legal requirements.

(26) The complaint did include an analysis of other factors that might have affected the causal link between the alleged dumped imports from Indonesia and the injurious situation of the Union industry, i.e. other imports, the cost of raw materials, and exports by the Union industry. However, none of the other factors did attenuate the causal link in the complaint. This was sufficient evidence reasonably available to the complainant tending to show that the apparent material injury was not caused by other factors. During the investigation, interested parties are offered the opportunity to put forward more detailed claims regarding other factors that might have affected the causal link and which are assessed by the Commission.

(27) The Musim Mas group also stated that because of the wrong definition of the product concerned and the corresponding like product, the complaint did not consider the Union interest with respect to producers, users and importers of fatty acids which do not compete with fatty acids manufactured by the complainant (such as the Union biodiesel industry and consumers of imported fatty acids not used in food, cosmetics, personal care and pharmaceutical applications, including palmitic acids and fatty acids produced from coconut oil).

(28) Article 5(2) of the basic Regulation does not require the complainant to include information on Union interest in the complaint, and the Union interest test is not relevant for the initiation of the investigation. In any event, as stated in recital (20), fatty acid produced as a by-product of biodiesel production was not covered by the complaint/investigation.

(29) Wilmar claimed that the complaint did not include sufficient evidence justifying the application of Article 7(2a) of the basic Regulation. In particular, it stated that the export levy, introduced with the purpose of financing the Oil Palm Plantation Fund, served as a legitimate revenue-generating tax on competitive commodities and the complainant’s allegation that the export levy had a price distorting effect on CPO and CPKO prices were unfounded. Furthermore, it claimed that the complaint failed to establish that the export tax and export levy operate as a dual-system that functioned as an export restraint, and that the alleged maximum price of CPO and CPKO and the system of tenders organized by the State-owned companies under the name of P.T. Perkebunan Nusantara (collectively referred to as ‘PTPN’) did not depreciate domestic CPO prices. The prices accepted by PTPN resulted from competitive tenders and the system of tenders amounted to a transparent price mechanism similar to other exchange-traded markets. According to them, there was no evidence that PTPN intentionally set prices artificially low. PTPN sells to the highest bidder and the prices that PTPN can get in public tenders will not only depend on the price at which PTPN would like to sell, but also the price that purchasers are willing to pay. Therefore, Wilmar claimed that the price, which PTPN eventually accepted, was a market price, reflecting supply and demand in Indonesia. Moreover, the fact that CPO prices in Indonesia were lower than in other international markets did not demonstrate that prices were artificially low, as Indonesia was the largest CPO producer in the world. Finally, it was stated that alleged price differences between the domestic prices for CPO and CPKO and international prices were misguided as the complainant has used two different and inconsistent benchmarks, i.e. for CPO the Malaysian domestic price and for CPKO CIF Rotterdam port prices. Wilmar and the Musim Mas group stated that the complainant should have used one benchmark for both CPO and CPKO. Wilmar stated that the alleged price differences of 14 % for CPO and 11 % CPKO fell short of the ‘significantly lower’ threshold required by Article 7(2a) of the basic Regulation.

(30) The Commission disagreed with this claim. The complainant was not required to establish that the export tax and export levy operate as a dual-system that functioned as an export restraint. The export tax is one of the distortions on raw materials mentioned in Article 7(2a) of the basic Regulation. Regarding the benchmarks, the complainant used the most representative benchmark available to it, which was considered appropriate by the Commission at the complaint stage. Furthermore, the Commission found that the price difference in this case as presented in the complaint was ‘significantly lower’ within the meaning of Article 7(2a) of the basic Regulation. Therefore, the claim was rejected.

(31) The Permata group claimed that the complainant erred in stating that the goal of the export tax was to contribute to the Indonesian policy aimed at transitioning the Indonesian economy towards the production of high-value goods, such as oleochemical products. According to the Permata group, the export tax was introduced with the specific purpose of securing local demand for, and ensuring the price stability of, cooking oil. Therefore, Permata group submitted that no raw material distortions existed within the meaning of Article 7(2a) of the basic Regulation because the export tax was not designed or introduced with the purpose of keeping CPO and CPKO prices at an artificially low level for the benefit of the oleochemical products.

(32) The Commission noted that the analysis on the existence of raw material distortions takes into consideration the effects of the distortions on the price of the raw materials, irrespective of the purpose of the measures which cause the distortions. Thus, the claim was rejected.

(33) In conclusion, the Commission recalled that the legal standard of evidence required for a complaint makes it clear that the quantity and quality of information in the complaint is not the same as that required for a definitive determination at the end of an investigation. As explained in recital (13), at initiation stage, the product definition proposed by the complainant was considered to meet all relevant statutory requirements. The existence of the elements necessary to adopt a measure or to terminate a proceeding is then gradually confirmed as the investigation moves forward. It is therefore not excluded that changes will occur between the stage of the complaint and the conclusion of the investigation. In view of this, the Commission disagreed that there had been any issues related to the information provided in the complaint which would merit the termination of the investigation.

(34) Overall, the Commission’s analysis confirmed that none of the elements mentioned above, whether factually correct or not, were sufficient to call into question the conclusion that the complaint contained sufficient evidence tending to show the existence of dumping of fatty acids imported from Indonesia causing injury to the Union Industry. These aspects were established on the basis of the best evidence available to the complainant at the time the complaint was lodged, and were found sufficiently representative and reliable for the purposes of initiating an investigation.

(35) In the Notice of Initiation, the Commission stated that it might sample the interested parties in accordance with Article 17 of the basic Regulation.

(36) In the Notice of Initiation, the Commission stated that it had provisionally selected a sample of Union producers. The Commission selected the sample on the basis of Article 17 of the basic Regulation, establishing as main criteria the representativity in terms of production and sales volume of the like product in the Union in the period between 1 October 2020 to 30 September 2021. This sample consisted of four Union producers, which accounted for 61 % of estimated total volume of production and 63 % of sales. The Commission invited interested parties to comment on the provisional sample and did not receive any comments. The sample was confirmed and deemed to be representative of the Union industry.

(37) To decide whether sampling was necessary and, if so, to select a sample, the Commission asked unrelated importers to provide the information specified in the Notice of Initiation.

(38) None of the unrelated importers provided the requested information and agreed to be included in the sample. In view of the absence of replies, the Commission decided that sampling was not necessary.

(39) To decide whether sampling is necessary and, if so, to select a sample, the Commission asked all exporting producers in Indonesia to provide the information specified in the Notice of Initiation. In addition, the Commission asked the Mission of Indonesia to identify and/or contact other exporting producers, if any, that could be interested in participating in the investigation.

(40) Sixteen exporting producers in the country concerned, belonging to eight groups, provided the requested information and agreed to be included in the sample. In accordance with Article 17(1) of the basic Regulation, the Commission selected a sample of three exporting producers, belonging to two groups, on the basis of the largest representative volume of exports to the Union which could be investigated within the time available. In accordance with Article 17(2) of the basic Regulation, all known exporting producers concerned and the authorities of the country concerned were consulted on the selection of the sample. No comments were received.

(41) Nine exporting producers in Indonesia, belonging to seven groups, requested individual examination under Article 17(3) of the basic Regulation. The Commission informed the non-sampled exporting producers that they were required to provide a questionnaire reply if they wished to be examined individually. Two non-sampled groups of exporting producers provided a questionnaire reply.

(42) Due to the complexity of the investigation and the complex structure of the sampled exporting producers (4) (one of the two groups of exporting producers included two producers in Indonesia and a trader in Singapore, whereas the other one was part of a multinational corporation with a complex distribution channel) the Commission concluded it was not possible to grant individual examination and finalise the investigation within the statutory deadline.

(43) In its comments following final disclosure (as defined in recital (57)), the Permata group claimed that the Commission violated the provisions of Article 17(3) of the basic Regulation and Article 6.10.2 of the WTO Anti-Dumping Agreement (‘ADA’). In particular, the Permata group claimed that the Commission rejected its individual examination request based on the complexity of the investigation and on the complex structure of the sampled exporting producers, and not based on the number of exporters or producers requesting the individual examination, which would make individual examinations unduly burdensome and would prevent the completion of the investigation in due time. Furthermore, the Permata group argued that its individual examination would not be unduly burdensome and would not prevent the timely completion of the investigation as the Commission still had 5 months until the deadline for the imposition of definitive measures. Furthermore, the Permata group added that the initial delay in the investigation due to the definition of the product scope was not due to the Permata group and could not result in the deprivation of Permata group’s procedural rights.

(44) The Commission noted that indeed it rejected the two individual examination requests based on the fact that these individual examinations would have been unduly burdensome. In fact, despite the mistaken reference to ‘sampled exporting producers’ in recital (42), it was clear from the context and the sentences immediately before and after that the correct reference was to the two ‘non-sampled exporting producers’ requesting individual examination, and as such recital (42) must be read. The sentence in brackets in the same recital clarified that the exporting producers mentioned were indeed the Permata group (‘one of the two groups of exporting producers included two producers in Indonesia and a trader in Singapore’) and P.T. Unilever Oleochemical Indonesia (‘Unilever Indonesia’ – ‘the other one was part of a multinational corporation with a complex distribution channel’), which both requested individual examination. The Commission thus applied the right legal test in its assessment and confirmed that it was not possible to grant individual examination due to the complexity of the investigation and the complex structure of the non-sampled exporting producers requesting individual examination, which would have made the individual examination unduly burdensome, so that the timely completion of the investigation could have been jeopardised.

(45) In fact, the Commission further noted that, despite the number of groups of exporting producers submitting the questionnaire reply for individual examination being limited to two, their complex structure would have involved the verification of several entities. In order to grant individual examination, the Commission would have had to verify all producers, related traders and importers involved in the sale of the product concerned to the Union, and analysed all their distribution channels, as done for the sampled exporting producers. Irrespective of the initial delay in the investigation due to the definition of the product scope, such verification and analysis, in particular involving more than one group with a complex structure, would have been unduly burdensome. Indeed, the 5 months mentioned by the Permata group in recital (43) are not fully dedicated to the investigation and findings stage of the procedure, as such procedures include several months of administrative proceedings (processing comments, holding hearings, internal approvals, consultations with other Commission’s services, translation, etc.). All these factors as well as the complexity of the companies involved (which will dictate the time necessary to conduct a proper analysis of each exporting producer) need to be taken into account together. Moreover, in this connection, it must be considered that the two sampled companies also had highly complex structures that required the dedication of significant investigative and administrative resources in order to sample them and obtain accurate results. Thus, the Commission cannot be faulted for having decided not to take on board two additional groups and running the risk of not being able to finalise and publish the results of the investigations on time. Therefore, this claim was rejected.

(46) In its comments following the additional final disclosure (as defined in recital (58)), Permata group reiterated previous comments and claimed that Unilever Indonesia appeared to no longer pursue its individual examination request. Therefore, the Commission’s workload would have been even more limited.

(47) The Commission noted that this claim was factually incorrect and was therefore rejected, since Unilever Indonesia reiterated its request up to the hearing following the final disclosure, as recalled in the following recital.

(48) During the hearing following final disclosure, Unilever Indonesia and Unilever Europe BV (‘Unilever’) argued that the timing of the investigation could not be a reason for rejecting Unilever Indonesia’s request for an individual examination, given the detrimental effects that anti-dumping measures could have on Unilever’s business in Europe.

(49) The Commission noted that it is in its rights to reject individual examination requests when they would be unduly burdensome and they would prevent the completion of the investigation in good time. As explained above, granting the individual examination to the Permata group and Unilever Indonesia would have been indeed unduly burdensome, so that the completion of the investigation in good time would have been jeopardised.

(50) The complainant provided in the complaint sufficient evidence of raw material distortions in Indonesia regarding the product concerned. Therefore, as announced in the Notice of Initiation, the investigation covered those raw material distortions to determine whether to apply the provisions of Article 7(2a) and 7(2b) of the basic Regulation with regard to Indonesia. For this reason, the Commission sent additional questionnaires to the Government of Indonesia.

(51) The Commission made questionnaires available online (5) for Union producers, importers, users and exporting producers on the day of initiation. In addition, the Commission sent a questionnaire to CUTFA.

(52) The Commission received questionnaire replies from CUTFA, the GOI, four Union producers: Oleon N.V. (‘Oleon’), KLK Emmerich GmbH (‘KLK’), AAK, Cailà & Parés S.A. (‘Cailà & Parés’), four users: Peter Greven Nederlands C.V., Peter Greven GmbH & Co. KG (collectively called ‘Greven group’), Schill + Seilacher ‘Struktol’ GmbH and Schill + Seilacher GmbH (collectively called ‘Schill + Seilacher group’), three sampled exporting producers: Musim Mas, IBP and Wilmar, their related traders: Inter-Continental Oils & Fats Pte. Ltd (‘ICOF Singapore’), Wilmar Trading Pte. Ltd, Volac Wilmar Feed Ingredients Ltd, and their related importers: ICOF Europe GmbH, IMBI, and Wilmar Europe Trading B.V. (‘WETBV’).

(54) The investigation of dumping and injury covered the period from 1 October 2020 to 30 September 2021 (‘the investigation period’). The examination of trends relevant for the assessment of injury covered the period from 1 January 2018 to the end of the investigation period (‘the period considered’).

(55) Given the technical complexity of the case, the Commission decided not to impose provisional measures and to continue the investigation.

(56) On 1 July 2022, in accordance with Article 19a(2) of the basic Regulation, the Commission informed Member States and all interested parties that no provisional duties would be imposed on imports of fatty acid originating in Indonesia and that the investigation would continue.

(57) On 1 August 2022, the Commission informed all interested parties of the essential facts and considerations on the basis of which it intended to impose a definitive anti-dumping duty on imports of fatty acid originating in Indonesia (‘final disclosure’). All parties were granted a period within which they could make comments on the final disclosure. The Commission received comments from the GOI, the exporting producers Musim Mas group, Wilmar, P.T. Ecogreen Oleochemicals (‘Ecogreen’), Unilever Indonesia, the users IMBI, Procter & Gamble International Operations SA (‘P&G’), Greven group, Schill + Seilacher group, Henkel Global Supply Chain B.V. (‘Henkel’), Kapachim S.A. (‘Kapachim’), Evonik Industries AG (‘Evonik’), Quaker Chemical Corporation (‘Quaker Houghton’), Omya GmbH (‘Omya’), Stéarinerie Dubois Fils (‘Stéarinerie Dubois’), NYCO Group (‘NYCO’), DHW Deutsche Hydrierwerke GmbH Rodleben (‘DHW’), E&S Chemie SAS (‘E&S’) and Unilever.

(58) On the basis of these comments, the Commission modified some of the considerations on the basis of which it intended to impose a definitive anti-dumping duty and informed all interested parties thereof (‘additional final disclosure’ and ‘second additional final disclosure’) on 4 October 2022 and 28 November 2022 respectively.

(59) Comments on the additional final disclosure were received from Wilmar, Musim Mas, Permata group, Stéarinerie Dubois and Henkel and on the second additional final disclosure were received from Wilmar, Musim Mas and Permata group. Although the Commission requested interested parties to provide comments limited exclusively to the additional final disclosures, Musim Mas, Permata group, Wilmar, Henkel and Stéarinerie Dubois reiterated their claims submitted after the final disclosure.

(60) Following final disclosure interested parties were granted an opportunity to be heard according to the provisions stipulated under point 5.7 of the Notice of Initiation. Hearings on final disclosure took place with Musim Mas group, Wilmar, Ecogreen, Unilever, Greven group, Schill + Seilacher group and AAK. Additionally, further to the request of Greven group, a hearing with the Hearing Officer in trade proceedings was held. The Hearing Officer found that the rights of defence of interested parties were respected in this proceeding.

(61) On 24 August 2022 CUTFA withdrew the complaint.

(62) Comments on the withdrawal of the complaint were received from the GOI, Musim Mas, Wilmar, P.T. Soci Mas and P.T. Energi Sejahtera Mas (collectively called ‘SOCI/ESM’), Ecogreen, P&G, Omya and Stéarinerie Dubois.

(63) The GOI stated that given the withdrawal of the complaint the Commission should immediately terminate the investigation for lack of legal standing. In this regard the GOI referred to Article 5.4 of WTO ADA which allegedly requires the fulfilment of the legal standing to justify the investigation. Furthermore, according to the GOI, the investigation would not be supported by more than 50 % of the production output of the like product produced by the Union industry, and not even by 25 % of the total Union producers of the like product, in view of the withdrawal of the complaint and considering that KLK, one of the largest Union producers, in a first letter dated 15 August 2022 considered that the proposed anti-dumping duties could create turbulences in the supply of fatty acid from Asia, and then opposed the imposition of anti-dumping measures altogether in a second letter dated 19 August 2022.

(64) At the outset, the Commission notes that Article 5.4 of WTO ADA refers to the initiation of the investigation. Therefore, the Commission needs to have legal standing only at the initiation of the investigation. Furthermore, the 50 % threshold and the 25 % threshold in Article 5.4 of WTO ADA refer to different groups of Union producers. Contrary to what stated by the GOI in its submission, the 50 % threshold relates solely to the relative weight of the Union producers supporting the complaint within the group of Union producers supporting or opposing it. Instead, the 25 % threshold refers to the ‘total production of the like product produced by the domestic industry’ and relates to the percentage of Union producers which support the complaint out of that total Union production. Furthermore, the Commission recalled that, according to established case-law (6), Article 5.4 of WTO ADA does not place any obligation on the proceeding authorities of a Member, in this case the Commission, to terminate an anti-dumping investigation in progress when the level of support for the complaint falls below a minimal threshold of 25 % of domestic production. Indeed, this article concerns only the degree of support for the complaint necessary for the Commission to be able to initiate a proceeding. A fortiori, this applies also to the 50 % threshold. This interpretation is confirmed by the wording of Article 9(1) of the basic Regulation, concerning the withdrawal of the complaint, which employs the verb ‘may’. Thus, even if the complaint is withdrawn by the Union industry, the Commission is not placed under an obligation to terminate the proceeding, but merely has the option to do so. Thus, this claim was rejected.

(65) Furthermore, the GOI claimed that, due to the withdrawal of the complaint and the opposition to the measures of KLK, the injury analysis carried out by the Commission did not cover the Union industry, understood as the ‘domestic industry’ which, pursuant to Article 4(1) of the WTO ADA, should refer to the domestic producers of the like product as a whole or to the major proportion of the total domestic production of the like product.

(66) The Commission observed that the concept of ‘domestic industry’ used for the purposes of determining injury does not necessarily have to comprise the same domestic producers as those making up the domestic industry taken into account in order to ascertain whether the complaint enjoyed sufficient support in accordance with Article 5(4) of the WTO ADA. Indeed, Article 5(4) of the WTO ADA concerns the issue of standing and does not address the separate question of what constitutes a major proportion under Article 4(1) of the WTO ADA (7). In addition, Article 4(1) of the WTO ADA does not preclude producers which did not support the complaint or which did not cooperate in the investigation from being included in the definition of the domestic industry (8). Moreover, the injury analysis carried out by the Commission covered the whole Union industry regardless of the support or the cooperation of each individual Union producer. Therefore, this claim was rejected.

(67) The GOI, Wilmar, Musim Mas, SOCI/ESM, Stéarinerie Dubois, P&G, and Omya argued that the letters of KLK and the withdrawal of the complaint showed that the imposition of anti-dumping duties would be against the Union interest. In particular, Wilmar, P&G and Stéarinerie Dubois argued that following the withdrawal of the complaint, the Commission should terminate the investigation based on Article 9(1) of the basic Regulation since the imposition of the measures would be against the Union interest. Furthermore, Wilmar referred to two investigations (9) terminated by the Commission after the withdrawal of the complaint, as well as to the Polyester staple fibres (PSF) case (10), where the Commission analysed five factors before concluding that it was not in the Union interest to continue the investigation. Ecogreen stated that the withdrawal of the complaint demonstrated that the termination of the investigation would be in the Union interest. Musim Mas stated that the withdrawal of the complaint and the two letters by KLK mentioned in recital (63), which confirm that KLK was not injured by imports from Indonesia, confirm that the Union industry was not injured by imports from Indonesia.

(68) The Commission recalled that the withdrawal of an anti-dumping complaint is governed by Article 9(1) of the basic Regulation, which provides that ‘(w)here the complaint is withdrawn, proceedings may be terminated unless such termination would not be in the Union’s interest’ (emphasis added). The General Court interpreted the provisions of Article 9(1) of the basic Regulation, inter alia, in the judgment in Philips Lighting Poland and Philips Lighting v Council, not challenged on appeal (11). The General Court acknowledged that the Union institutions enjoyed wide discretion to continue or terminate an investigation following a withdrawal and clarified that the Union interest strictly speaking only needs to be taken into account if the Commission is considering termination; in such case, the Commission must check that termination is not against the Union interest. In this context, the recent investigations that the Commission decided to terminate after the withdrawal of the complaint have no general value of binding precedent and correspond instead to a case-by-case analysis. Furthermore, the Union interest analysis performed by the Commission in the PSF investigation did not concern the continuation of the case but rather its termination. Moreover, in the current investigation the Commission carried out an injury analysis of the whole Union industry and the investigation showed that the Union industry was suffering material injury which were caused by the imports from Indonesia at dumped prices as stated in recitals (180) to (372). A simple statement in a letter from one Union producer, without any supporting evidence, does not contradict the Commission’s findings of the investigation. Therefore, these claims were rejected.

(69) Based on the above considerations, the Commission decided to continue the investigation despite the withdrawal of the complaint and examine whether the comments made further to the final disclosure would invalidate its findings that the conditions justifying the imposition of measures were met. As explained later in this regulation, the Commission came to conclusion that the conditions for the imposition of definitive measures remain fulfilled.

(71) In the Notice of Initiation, the term DoS was not included in the definition of the product under investigation. However, after the comments received from parties as explained in recitals (80) to (90), on 21 January 2022, through a Note for the file, the Commission confirmed the product scope as defined in the Notice of Initiation, clarifying that only fatty acids with a DoS of at least 97 % was covered by the investigation.

(72) Fatty acids are products of chemical transformation of any vegetable oil, including palm kernel oil and palm oil, or animal fat. As such, they rarely occur as free molecules in nature, and are rather obtained through distillation and fractionating of oils and fats.

(73) Fatty acid is used in a wide range of applications, and can thus be found in numerous common products, for example several food products, animal feed, soaps, detergents, pharmaceuticals, cosmetics and other personal and homecare products.

(74) The product concerned is the product under investigation originating in Indonesia (‘the product concerned’).

(76) The Commission decided at this stage that those products are therefore like products within the meaning of Article 1(4) of the basic Regulation.

(77) In its comments following final disclosure, Stéarinerie Dubois argued that the product concerned and the product produced and sold by the Union industry on the Union market are not like products, in particular, because there is no Union market for the product under investigation produced by the Union industry that is compliant with REACH (14), Kosher and Halal requirements.

(78) Article 1(4) of the basic Regulation states the ‘like product’ means a product that is identical or as characteristics closely resembling those of the product under consideration. The Commission found that the product produced and sold in the country concerned, and the product produced and sold in the Union by the Union industry, share the same main basic physical, chemical and technical characteristics. Furthermore, the Union industry is producing large quantities of fatty acid that are in compliance with REACH legislation and/or Kosher and/or Halal requirements, as stated in recital (337). The Commission therefore confirms that the product concerned and the products produced and sold in the Union market by the Union industry are like products.

(79) The Commission received comments on product scope from Musim Mas group, Wilmar, AAK, Campa/IMBI, EBB (the European Biodiesel Board), ASSITOL (Italian association of biodiesel producers), APPA Biocarburantes (Spanish association of biofuels producers), Neste (producer of renewable diesel), and two related companies of Ecogreen, Indonesian producer of fatty alcohol: DHW, producer of polyols, fatty esters, fatty amines and unsaturated fatty alcohols, and E&S, producer of fatty esters, ethoxylates and sulfonates. The complainant also provided comments in this regard.

(80) Neste requested confirmation from the Commission that palm fatty acid distillate (‘PFAD’) did not fall within the scope of the investigation. PFAD is a bio-based waste and residue raw material derived from the refining of food-grade palm oil used to produce renewable diesel and other renewable products.

(81) Wilmar requested clarifications whether palm oil mill effluent (‘POME’) fell within the product scope of the investigation. POME is a wastewater stream arising from the physical milling process of palm oil production and it is a feedstock used in the production of biofuels. POME consists mostly of water and a small percentage of oil and solid matter.

(82) AAK requested the exclusion of palm acid oil from the scope of the investigation when reference to CN code 3823 19 90 was made. In particular, the company claimed that palm acid oil, which falls under that CN code, was not the same as a fatty acid, and that it contained a significant share of oil that prevents it from being used as a fatty acid. It was explained that palm acid oil is a by-product of the upstream refinery operations and is used as an input for the production of stearic acids which were covered by the investigation.

(83) Campa/IMBI and EBB stated that biodiesel producers were also fatty acid producers as they produced fatty acid as a by-product during the biodiesel production process. In particular, it was stated that the refining process of the crude oil generated a waste called ‘fatty acid distillate’. Furthermore, fatty acid is obtained as a residue when biodiesel is manufactured though the transesterification of refined oil and methanol.

(84) In reply to these claims, the complainant confirmed that the fatty acid types used in the biodiesel production were not intended to fall under the scope of the investigation. In this respect, the complainant stated that these fatty acids could be differentiated because of differences in the production processes (oleochemical purposes and not those related to the biodiesel production). According to the complainant, the two types of fatty acid are different products that are not in competition with each other and cannot form part of the single product concerned.

(85) Furthermore, the complainant explained that producing oleochemical fatty acids involved a key process necessary to break apart the triglycerides to release and separate the fatty acids and the glycerines to obtain a highly purified product of at least 97 % fatty acids and only maximum 3 % of non-split fat. This process is called ‘splitting’. In order to obtain an almost 100 % pure product, fatty acid is further subject to distillation or fractioning process, which aim at eliminating the remaining non-split fat and any remaining impurities. Both distilled and fractionated fatty acid fall under the product scope provided that these products meet the iodine value threshold of 105 g/100 g.

(86) The complainant further explained that the process to produce biodiesel consisted in refining the oil in order to remove impurities but no splitting operation occurred. Several fatty acid distillate products such as FAD (fatty acid distillate), PFAD, PKFAD (palm kernel fatty acid distillate) are generated in the biodiesel production process as by-products.

(87) Therefore, the complainant argued that the DoS or splitting value, which indicates the percentage of split fatty acid in the oil, constituted a clear and objective dividing line to distinguish the product under investigation from other fatty acid types not concerned by the investigation. The DoS is calculated by dividing the acid value by the saponification value. The acid value (or neutralization value) and the saponification value were defined in the complaint. The complainant explained that while the DoS criterion had been contemplated at complaint stage, the reason it had not been retained as such (i.e. expressed as acid value over saponification value) was because all oleochemical fatty acids under the product scope shared this characteristic of having a fatty acid content of at least 97 %.

(88) According to the complainant, the fatty acids used in the biodiesel production have much lower DoS values (between 81 % and 97 %). Based on the above, the complainant argued that the value of 97 % DoS should be considered as a cut-off criterion to differentiate between fatty acids.

(89) AAK expressed its support of the complainant’s approach.

(90) Wilmar argued that the acid value used in the calculation of DoS would be the most appropriate manner to differentiate fatty acids. It claimed that the DoS was not as precise as a fixed limit based on the acid value. Wilmar asked the Commission to include the acid value in the product control number (‘PCN’).

(91) As stated in recital (71), the Commission took note of the comments provided by interested parties on the product scope and it clarified, through a Note to the file, that only fatty acids with a DoS of at least 97 % was covered by the investigation. Therefore, PFAD, POME, palm acid oil which falls under CN code 3823 19 90, and fatty acid obtained as by-product in the manufacturing process of biodiesel, were not covered by the investigation, as their DoS is lower than 97 %. The Commission also invited interested parties to identify any quantities of fatty acid with DoS of at least 97 % imported for the purpose of biodiesel production and to specify any distinctive physical, chemical and/or technical characteristics of this type of fatty acid as opposed to fatty acid for other applications.

(92) Wilmar argued that, as the introduction of the 97 % DoS threshold changed significantly the product scope, the complaint should be rejected as containing insufficient evidence of either dumping or injury. Furthermore, it claimed that the data in the complaint was based on a different product definition than the one used for the purpose of the current investigation.

(93) The Commission disagreed with this claim. The clarification provided with the introduction of the 97 % DoS in the definition of the product scope, as explained in recital (71), did not change either the product scope or the complaint as it merely clarified and better described the product captured by the complaint. Therefore, the claim was rejected.

(94) EBB, the Musim Mas group and Campa/IMBI stated that biodiesel producers used fatty acid produced from waste to produce biodiesel. Campa/IMBI and the Musim Mas group stated that fatty acid used to produce biodiesel in an esterification (15) production plant required as main raw materials fatty acids with DoS values of at least 97 %, and therefore the fatty acid used by Campa/IMBI for the production of biodiesel would still be covered by the investigation after the clarification provided by the Commission in recital (91). Campa/IMBI, the Musim Mas group and EBB stated that the end-use was the only relevant criterion to distinguish between fatty acids covered by the investigation and fatty acids used for biodiesel production. Furthermore, it was stated that the certification document was key to understand the end-use of the product. In particular, the fatty acid required by the cosmetic, pharmaceutical, chemical or food industries are designed to meet various certification requirements (such as Kosher, Halal, GMP+, FSSC 22000, RSPO certification, ISO 9001, ISO 14001, ISO 45001), while biodiesel producers only require a certification to comply with the Renewable Energy Directive (EU) 2018/2001 (RED II) (a voluntary scheme recognised by the European Commission pursuant to the RED II, such as ISCC EU or 2BSVS, or a national certification scheme established pursuant to the RED II). It was also stated that the Union industry did not, nor was capable of producing fatty acid with high DoS value destined for biodiesel production falling within the ambit of RED II, which encouraged the use of advanced feedstock in this regard. Campa/IMBI also stated that it imported this type of fatty acid through TARIC code 3823193089, which was neither included in the complaint nor in the Notice of Initiation.

(95) Campa/IMBI and EBB asked for confirmation from the Commission that fatty acids used for biodiesel production were not covered by the investigation. In particular, it was stated that the definition of the product scope covered the fatty acid used by Campa/IMBI used for the production of biodiesel. Furthermore, it was stated that the complaint did not list Union biodiesel producers as fatty acid importers or users, and that biodiesel was not among the uses of the product concerned listed in the complaint.

(96) Similarly, ASSITOL and APPA Biocarburantes expressed opposition to the use of DoS value to define the fatty acid covered by the investigation as it did not exclude all fatty acid used for biodiesel production. They argued that another mechanism should be adopted, namely based on the end-use of the product according to Article 254 of the Union Custom Code.

(97) In this regard, ASSITOL and Campa/IMBI requested the Commission to publish a Notice amending the Notice of Initiation.

(98) The Commission could not confirm whether the fatty acid with DoS of at least 97 % produced from waste was product concerned without assessing whether it shared the same basic physical, technical and chemical characteristics, had the same use and if it was in competition with the like product. Furthermore, the raw materials is not a decisive factor for excluding a product type from the product scope of the investigation if the final products are the same and share the same basic physical, technical and chemical characteristics.

(99) The verification visit conducted in the premises of the exporting producer in Indonesia, indeed revealed that the distilled fatty acids imported by IMBI were produced either from by-products such as PFADs, or from different palm waste raw materials.

(100) During the verification visit in Indonesia, the Commission assessed the physical characteristics of the product (such as appearance, odour, titer, colour), the technical characteristics (such as type and grade, quality, material forms, colour stability) and chemical characteristics (such as acid value, saponification value, iodine value and fatty acid composition) of the distilled fatty acid produced from waste as compared to the other type of fatty acid. However, the investigation revealed that distilled fatty acids produced from waste have very similar physical, technical and chemical characteristics as the fatty acids produced from CPO and CPKO. Therefore, the investigation did not reveal any basic physical, technical or chemical characteristic differentiating distilled fatty acid manufactured from waste from the other type of fatty acid.

(101) Furthermore, the investigation revealed that distilled fatty acid produced from waste is covered by Union legislation on the promotion of the use of energy from renewable sources (RED II (16)) establishing that biodiesel produced from fatty acid using waste materials or by-products may be taken into account by EU Member States for the targets established by the RED II (17). Pursuant to the RED II (18), in order for the biodiesel to be accounted by EU Member States for their sustainability targets, its feedstock, in this case the distilled fatty acids, must be certified to ensure the respect of sustainability and chemical standards.

(102) On this basis, the Commission found that fatty acids with DoS of at least 97 % produced from waste and certified by a voluntary scheme recognized by the Commission pursuant to Article 30(4) of the RED II (19) or a national certification scheme established pursuant to Article 30(6) of the RED II (20), while sharing the same characteristics with other fatty acids, have different uses and are not in competition with the like product. The Commission also confirmed that these fatty acids produced from waste have not been included in the complaint. Therefore, the Commission concluded that those fatty acids were not part of the product concerned and, therefore, they were excluded from the investigation. As a consequence, the imports of such fatty acids from, inter alia, the sampled exporting producer IBP, part of the Musim Mas group, which were being imported by IMBI, was found not to be concerned by this investigation.

(103) These further clarifications of the product scope, in addition to those published through a Note to the file as referred to in recital (71), are reflected in the definition of the product under investigation as set out in recital (70).

(104) Ecogreen affiliates, DHW and E&S, requested the exclusion of fatty acid C6 (Trade name: Ecoric 6), C8-C10 (Trade name: Ecoric 80), C16-C18, C18 unsaturated (Trade name: Ecoric 68 TA) and C18:1 (Trade name: Ecoric 18W) from the product scope. They claimed that these types of fatty acid were produced by their related exporting producer Ecogreen during the manufacturing process of fatty alcohol, and that they had certain unique characteristics and could not be produced with the same quality by the Union producers. DHW and E&S stated that the first three fatty acids in particular were only exported by Ecogreen to its affiliates in Europe for internal further processing because of quality stability, supply continuity and the established certification chain. In particular, DHW and E&S stated that Ecoric 6 could only be produced from CPKO and pure coconut oil in a very small volume. Furthermore, DHW and E&S stated that there were other C6 acids available in the Union but were produced by fermentation which was not usable for Ecogreen. In addition, they claimed that Ecoric 80 was mostly produced from CPKO and coconut oil, and was used to produce fatty esters, which after treatment by DHW using a particular patent, would result in an ester with high quality in terms of taste, smell and colour stability. Ecoric 68 TA was derived from CPKO, the carbon chain distribution was similar to the fatty acid from tallow, and was used to produce tallow-free fatty amines. Ecoric 18W was used to produce esters that had good cold temperature behaviour, better colour for the end product and less by-products. Finally, they stated that animal based oleic acid was forbidden in their ester plants due to strict kosher rules.

(105) In response, the complainant opposed the exclusion of these types of fatty acid, arguing that it would affect the entire scope of the product under investigation as the product exclusion requested by Ecogreen affiliates covered the entire chain length of the fatty acids concerned, from C6 to C18. Moreover, the complainant argued that contrary to the claims of DHW and E&S, the Union producers were capable of producing and were in fact supplying these type of fatty acids to Ecogreen affiliates as these products were not ‘unique’ for the Ecogreen group and in fact were interchangeable with the fatty acids produced by the Union industry.

(106) The Commission concluded that the Union industry produced similar fatty acids and therefore the products requested by DHW and E&S to be excluded from the product scope were in competition with the Union industry and caused injury. Therefore, the Commission rejected this exclusion request.

(107) In its comments following final disclosure, Ecogreen reiterated its exclusion request stated in recital (104). Ecogreen argued that, contrary to the claim of the complainant, its exclusion request did not cover the entire chain length of the fatty acids covered by the investigation, as C12 (Lauric acid), C14 (Myristic acid), C16 (Palmitic acid), C18 saturated (Stearic acid) as well as their blend products were not part of their exclusion request. Moreover, with respect to the products included in the exclusion request, Ecogreen claimed that there are no like products produced by the Union industry. In particular, Ecogreen argued that its Ecoric 6 products include a particular organic compound that cannot be found in the C6 acids produced by the Union industry. Furthermore, Ecogreen argued that the Union industry used a completely different production process for C6, C8-C10, C16-C18 and C18 (unsaturated) products. In particular for C6, Ecogreen argued that the Union industry used fermentation and that neither the Ecogreen group nor its customers have ever approved the fermentation process as a manufacturing process for fatty acid, as this might affect the basic characteristics of the fatty acids produced. For its C18:1 product, Ecogreen argued that it is of particularly high quality, and that Union users of this product have quality agreements in place, obliging them to supply their customers with esters that are produced with C18:1 fatty acid meeting strict specifications.

(108) The Commission agreed that the product exclusion request of Ecogreen did not cover all possible carbon chain lengths of fatty acids concerned, but nevertheless it covered a substantial subset thereof. In any event, for the products that were included in the exclusion request, Ecogreen did not substantiate its claim that there are no ‘like products’ produced by the Union industry. As regards the organic compound that allegedly distinguishes its C6 product from the respective products produced by the Union industry, Ecogreen has not provided evidence to demonstrate its relevance, including on the concentration of this substance in the product and on how it affects its basic characteristics and uses. Moreover, as no information about this substance, including its name, has been disclosed in the open version of the submission, other interested parties have been unable to provide comments on these aspects. As regards the alleged differences in the production process, the Commission recalls that, in principle, production processes are not relevant when assessing whether products are ‘like’. In this particular case, Ecogreen did not provide concrete evidence on how they would affect the basic characteristics of the final product. In particular for fermentation, Ecogreen itself presents the alleged differences in the basic characteristics of the product resulting from this process as a mere possibility, rather than as an established fact supported by evidence. In view of the above, the Commission rejected this exclusion request.

(109) AAK requested the Commission to exclude food grade oleic acid from the product scope of the investigation. AAK claimed that while oleic acid was covered by the investigation, two types of oleic acid could be distinguished: industrial grade oleic acid and food grade oleic acid. AAK stated that while the two grades have the same basic chemical properties, as the food grade is used in the production of food products, its production process must comply with stricter standards, i.e. the level of contaminants in the acid must not exceed a certain level as set out by the EU’s Foodstuffs Regulation (21). AAK also claimed that food grade oleic acid was considerably more expensive than the industrial grade, could not be substituted by industrial grade oleic acid and the Union industry was not able to supply increased quantities. AAK stated that there were only marginal imports of food grade oleic acid from Indonesia and therefore they could not cause injury to the Union industry. AAK stated that it was probably the only Union importer of any significant volumes of food grade oleic acid from other countries. AAK also stated that according to their information, there were no plants producing oleic acid in Indonesia that met the strict requirements of maximum level of contaminants in foodstuff. AAK stated that the increased prices of potential food grade oleic acid imports from Indonesia would as a result increase Union users’ prices for all categories of oleic acid also from Malaysia, which would negatively affect the activity of AAK. AAK suggested that the food grade oleic acid could be excluded by referring to the maximum levels of benso(a)pyrene and contents of trans fatty acid, which were officially sanctioned thresholds set out in the EU’s Foodstuffs Regulation.

(110) In response to the above claim, the complainant expressed its opposition to exclude food grade oleic acid from the scope of the investigation. In this respect, the complainant claimed that food grade oleic acid shared the same basic physical, chemical and technical characteristics as the other products under the scope of the investigation and therefore, the exclusion of this group of products would lead to a high risk of circumvention of the measures. In addition, the complainant maintained that the producers using food grade oleic acid were also users of technical grade oleic acid and therefore a distinction based on end-use would not avoid the risk of circumvention. Also, the complainant argued that food grade oleic acid was available from other sources of imports not targeted by the investigation and therefore there was no risk of shortage of supply.

(111) In this respect, the Commission concluded that food grade oleic acids had similar basic physical, technical and chemical characteristics as the industrial grade oleic acid. Although food grade oleic acid was subject to stricter quality and purity requirements, it had the same carbon chain length as oleic acid used for industrial applications. The price difference between the two grades is not per se a key element for product exclusion. Furthermore, the Union industry is indeed producing food grade oleic acid and other sources of supply exists such as Malaysia. In view of this, the Commission rejected the exclusion request.

(112) In its comments following final disclosure, AAK reiterated its request to exclude food grade oleic acid from the product scope of the investigation. AAK criticised the Commission for not properly addressing its claims and claimed it used inconsistent criteria in its decision to exclude fatty acid meant for biodiesel production as compared to food grade oleic acid. In particular, AAK claimed that in recital (102) the Commission’s conclusion of excluding fatty acid produced from waste was based on the fact that this particular fatty acid had different uses and was not in competition with the like product while sharing the same characteristics with other fatty acids. On the other hand, for not excluding food grade oleic acid from the product scope of the investigation, the Commission concluded in recital (111) that food grade oleic acids have similar basic physical, technical and chemical characteristics as the industrial grade oleic acid with the same carbon chain length. Furthermore, AAK stated that food grade oleic acid and industrial grade oleic acid have different uses and are not in competition with each other, and that the Commission’s statement that both types have similar physical, chemical and technical characteristics was not supported by the facts and unsubstantiated in the regulation. Finally, AAK claimed that had the Commission done similar analysis for food grade and industrial grade oleic acid, it would have found differences in type, grade and quality between the two types.

(113) The Commission disagreed with these claims. First, as concerns fatty acid made of waste, as stated in recital (102), fatty acid made of waste was not supposed to be covered by the investigation. However, because it shared the same physical, technical and chemical characteristics with other fatty acids, it was unintentionally caught by the product definition. In order to make sure the investigation and potential measures were correctly conducted and applied, the Commission investigated in depth this particular product before confirming that indeed it should not have been investigated/covered by measures, as explained in recitals (98) to (102). This is in contrast with fatty acids for food applications (such as food grade oleic acid), which were covered by the complaint and for which the complainants provided evidence of dumping, injury and causal link, which was confirmed during the investigation. Second, the criticism expressed by AAK is based on a misunderstanding of the factual and legal situation with regards to the exclusion request of food grade oleic acid. Even if industrial and food grades oleic acid were considered two different types of fatty acid as claimed by AAK, that would have no bearing on the Commission’s findings. The Union industry produces and sells food grade oleic acid, there are potentially imports of food grade oleic acid from Indonesia (22), which could be in direct competition with the product sold by the Union industry and, consequentially, causing injury. Thus, there is no reason why the Commission would conclude that an exclusion of food grade oleic acid is warranted. In fact, the logical conclusion must be the exact opposite: it is not possible to exclude food grade oleic acid without undermining the remedial effects of the measures to be imposed.

(114) AAK also stated that the marginal Union production of food grade oleic acid and the existence of one other third country supplying the product did not support the continued inclusion of food grade oleic acid in the product scope of the investigation. In particular, AAK stated that in product scope determinations, the Commission in the past gave weight to the fact that the Union production of a product type was limited. In this regard, AAK referred to the anti-dumping investigation on imports of synthetic staple fibres of polyesters (‘PSF’) originating in Malaysia and Taiwan (23). AAK also referred to a product scope review concerning the anti-dumping measures on imports of grain oriented flat-rolled products of silicon-electrical steel (‘GOES’) originating in the United States of America and Russia, claiming that a thin variant of this product was excluded because no producer had a direct interest in producing it.

(115) In addition to the two companies mentioned by the AAK in the submission, a third Union producer offers food grade oleic acid to the Union market (24). Furthermore, the Commission noted that in respect of this product, supply can also be obtained from suppliers from Malaysia. Therefore, the claim was rejected.

(116) AAK and the Musim Mas group requested the exclusion of palmitic acid used for animal feed from the product scope. AAK is a producer of palmitic acid in the Union. However, its total demand exceeds its production capacity. It was stated that pure palmitic acid, with carbon chain length C16, was produced from CPO and CPKO. According to them, tallow could not be used as a raw material for producing palmitic acid for animal feed production, as EU animal feed legislation prohibited the use of animal fat in feed for ruminants (25). It was further stated that European production of palmitic acid was negligible with only two other Union producers of palmitic acid, namely KLK and IOI Oleo GmbH. AAK estimated that the demand in the Union of palmitic acid was 45 000 tonnes per year. AAK stated that pure palmitic acid was not substitutable with other fatty acids, nor could other fatty acids replace palmitic acid. Furthermore, it was stated that fatty acids made from rapeseed/canola, which allegedly is the main raw material available in the Union, were not suitable for animal feed as it did not support cow milk production, as palmitic acid does. According to AAK, Union producers lack the incentives to produce palmitic acid in significant quantities due to the low demand for stearic acid, as these products are produced in parallel. AAK suggested that this exclusion could be implemented by removing C16 from the product definition.

(117) In response to the claims Cailà & Parés stated that it could produce 17 000 tonnes of palmitic acid per year once the level playing field is restored on the Union market, which Cailà & Parés stated constituted a significant share of the Union demand.

(118) In view of the above, the Commission accepted the argument that the profitability of palmitic acid production is associated with the demand for stearic acid. However, it took the view that restoring a level playing field in the Union for all fatty acids, including palmitic and stearic acids, would likely restore also the Union producers’ incentives to produce palmitic acid in significant quantities, including palmitic acid suitable for animal feed. Furthermore, there are other sources of supply for palmitic acid such as Malaysia. On this basis, and taking into account the information provided by Cailà & Parés on its production capacity that is higher that the volume of imports from Indonesia and also higher than the demand of AAK, the Commission rejected the request for the exclusion of palmitic acid.

(119) In their comments following final disclosure, the Musim Mas group and AAK reiterated their request to exclude palmitic acid from the product scope. Both companies questioned Cailà & Parés’ capability to increase its palmitic acid production after the imposition of the anti-dumping measures. In particular, the Musim Mas group stated that it was a speculative claim, without any evidentiary support. AAK reiterated that the production of palmitic acid was coupled with the production of pure stearic acid and that there was no market for the latter in the Union as the main use of pure stearic acid was the production of AKD (Alkyl-Ketene-Dimer) wax, which was no longer produced in the Union.

(120) The Commission did not accept these arguments, neither on technical capacity nor on incentives to produce palmitic acid. As regards technical capacity, the Commission confirmed during the verification visit at Cailà & Parés’ premises that the overall capacity of the company for fatty acid production was significantly higher than its stated capacity for the production of palmitic acid (including the respective co- or by- products) and it did not reveal any obvious bottlenecks that could be specific for an increased production of palmitic acid. As regards incentives, and as stated in recital (118), the investigation confirmed that palmitic acid production is coupled with the production of stearic acid. However, contrary to what AAK suggested, the latter is not limited to pure stearic acid. For Cailà & Parés in particular, the co-products of palmitic acid production are other types of stearic acid which are sold in significant quantities in the Union. Therefore, the Commission maintains that the imposition of measures on fatty acids, including palmitic acids and stearic acids, would likely also restore incentives for the production of palmitic acid in the Union.

(121) The Musim Mas group also argued that palmitic acid was not intended to be covered by the complaint as the complaint intended to address fatty acids for human consumption, and not for animal consumption. Moreover, according to the Musim Mas group, Union production of palmitic acid was unsuitable for animal feed applications because it used tallow as feedstock, and therefore could not meet certain requirements, such as Kosher and Halal. The Musim Mas group concluded that the Commission rejected the exclusion request merely due to the possibility of shifting the supply of palmitic acid to Malaysia.

(122) The Commission did not accept these arguments. In addition to ‘food’, the complaint explicitly makes reference to ‘feed’ (26), as an application of the products in its scope. Furthermore, the investigation has shown that Union producers use vegetable oils, including palm oil, for their palmitic acid production. Finally, the Commission notes that, as shown above, rather than relying merely on other non-Union producers, it has also assessed the ability and incentives of the Union industry to increase its palmitic acid production.

(123) The Musim Mas group stated that as there was no export duty or export levy on coconut oil, the fatty acid produced from coconut oil should not be the target of the complaint.

(124) The Commission notes that although the complaint alleges distortions of CPO and CPKO due to export duty and export levy for the purposes of Article 7(2a) of the basic Regulation, the complaint and the investigation cover all types of fatty acid covered by the product definition, and not only the types produced from CPO and CPKO. In any event, the investigation did not reveal any type of fatty acid being exported from Indonesia to the EU that was produced only from coconut oil. Therefore, the claim was rejected.

(125) In their comments following final disclosure, NYCO asked the Commission to exclude from the product scope C8-C10 fatty acids. In this regard, NYCO stated that C8-C10 fatty acids are a very specific form of fatty acid produced in limited quantities in the Union. This fatty acid was also imported from Indonesia and Malaysia. NYCO submitted that since September 2021 there was a worldwide shortage of C8-C10 fatty acid on the market, resulting in a significant price increase of this fatty acid. NYCO claimed that the imposition of anti-dumping duties on this product would have very negative consequences on its global competitiveness and profitability and asked the Commission to exclude this fatty acid from the product scope.

(126) The Commission noted that comments on the product scope should have been submitted in the early stages of the investigation, in order to allow sufficient time to assess their merit and to give the opportunity to other interested parties to react to them. Furthermore, NYCO did not submit any basic physical, chemical and technical characteristics that could differentiate this type of fatty acid from the other types of fatty acids covered by the investigation. As regards the substantive points of the request, and in particular in relation to Union interest, these are addressed in recital (470). In view of these considerations, the claim was rejected.

(127) In their comments following final disclosure, Wilmar stated the product covered by measures should explicitly exclude any products covered by Taric codes excluded from the calculation of imports.

(128) The Commission confirmed that the description of product concerned above was compatible with the calculation of imports. The Taric codes used to describe the product are given for information only.

(129) According to Article 2(1) of the basic Regulation, ‘the normal value shall normally be based on the prices paid or payable, in the ordinary course of trade, by independent customers in the exporting country’.

(130) The Commission first examined whether the total volume of domestic sales for each sampled cooperating exporting producer was representative, in accordance with Article 2(2) of the basic Regulation. On this basis, the total sales by each sampled exporting producer of the like product in the domestic market were found representative.

(131) The Commission subsequently identified the product types sold domestically that were identical or comparable with the product types sold for export to the Union for both exporting producers.

(132) The Commission then examined whether the domestic sales by each sampled exporting producer in its domestic market for each product type that is identical or comparable with a product type sold for export to the Union were representative, in accordance with Article 2(2) of the basic Regulation. The Commission established that the domestic sales of certain product types were not representative for both sampled exporting producers.

(133) The Commission next defined the proportion of profitable sales to independent customers on the domestic market for each product type during the investigation period in order to decide whether to use actual domestic sales for the calculation of the normal value, in accordance with Article 2(4) of the basic Regulation.

(135) In this case, the normal value is the weighted average of the prices of all domestic sales of that product type during the IP.

(137) The analysis of domestic sales showed that at least 80 % of the domestic sales of each product type was profitable and that their weighted average sales price was higher than the cost of production. Accordingly, the normal value was calculated as a weighted average of the prices of all domestic sales for those product types during the IP.

(138) For certain product types for which there were no or insufficient sales of a product type of the like product in the ordinary course of trade or where a product type was not sold in representative quantities on the domestic market, the Commission constructed the normal value in accordance with Article 2(3) and (6) of the basic Regulation, unless it was considered more appropriate to use the price of a sufficiently comparable product type sold on the domestic market which could be adjusted for differences in physical characteristics for the purposes of ensuring a fair comparison with the relevant export price, as indicated in recital (145).

(140) For the product types not sold in representative quantities on the domestic market, the average SG&A expenses and profit of transactions made in the ordinary course of trade on the domestic market for those types were added. For the product types not sold at all on the domestic market, the weighted average SG&A expenses and profit of all transactions made in the ordinary course of trade on the domestic market were added.

(141) The sampled exporting producers exported to the Union through related companies acting as an importer in the Union.

(142) Thus, the export price was established on the basis of 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 for profits accruing.

(143) As to the profit margin, due to the non-cooperation of any unrelated importer as stated in recital (38), the Commission decided to resort to the profit margin used in a previous proceeding concerning another chemical product manufactured by a similar industry and imported under similar circumstances, namely a profit margin of 6,89 % (27) established in the recent PVA investigation.

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

(145) 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 differences in physical characteristics, handling, loading and ancillary expenses, freight in the country concerned, domestic insurance, domestic ocean freight, freight in the Union, credit costs, bank charges, ocean freight, ocean insurance, packing expenses, warranty and guarantee expenses, and commissions.

(146) An adjustment under Article 2(10)(i) was made for sales through related trading companies. It was found that the functions of the traders in Singapore and the United Kingdom were similar to those of an agent. Those traders were looking for customers, established contact with them, bore the responsibility of the selling process, received a mark-up for their services, and traded a broad array of goods other than the product concerned. The adjustment consisted of the SG&A of the trading companies and the profit stated in recital (143).

(147) In their comments following final disclosure, Wilmar claimed that it formed a single economic entity with its related trader in Singapore, WTPL and therefore no adjustments on the basis of Article 2(10)(i) of the basic Regulation should be made for sales made by WTPL. In the confidential version of its submission, Wilmar elaborated on its claim in more detail. Furthermore, Wilmar claimed that even if Wilmar and WTPL did not form a single economic entity, the conditions for the application of Article 2(10)(i) of the basic Regulation were not satisfied in case of Wilmar sales through WETBV and Volac Wilmar Feed Ingredients Ltd (‘VWFI’). Wilmar stated that it was WETBV and VWFI – and not WTPL – that looked for customers, established contact with them, bore the responsibility of the selling process and received a mark-up for their services. Wilmar referred to the sales contracts, purchase orders, invoices, bills of lading, clearance documents, clearance confirmations and bank statements that are all addressed to WETBV and VWFI, and not to WTPL. WTPL thus had no involvement in sales made by WETBV and VWFI to unrelated parties in the EU and thus did not perform any functions similar to those of an agent. Therefore, there should be no adjustment for WTPL’s SG&A and profit for EU sales that Wilmar made through WETBV and VWFI. Wilmar also referred to the anti-dumping investigation of imports of mixtures of urea and ammonium nitrate originating in Russia (28). In that investigation, a Russian exporter had sold the product under investigation first to a related trader in Switzerland that subsequently re-sold it to the related importer in the EU, and the Commission adjusted the sales prices to an unrelated customer in the EU only for the SG&A and profit of the related importer in the EU under Article 2(9) of the basic Regulation, but not for the profit of the related trader in Switzerland. In their comments following the additional disclosure, Wilmar claimed that as the Commission used the methodology from the Biodiesel investigation (referred to in recital (163)) for P.T. Musim Mas for the calculation of export price, based on the principle of non-discrimination, the Commission should also use for WINA the methodology in the Biodiesel investigation and in particular construct an export price without deductions of WTPL’s SGA and profit.

(148) The Commission carefully reviewed the comments by Wilmar received following final and additional disclosures, and on the basis of all relevant factors, considered that the evidence put forward by Wilmar justified treating Wilmar and WTPL as a single economic entity.

(149) Furthermore, Wilmar contested the use of the profit margin of 6,89 % stated in recital (143) claiming that it was outdated, did not take into account the recent market development such as significant fluctuations of raw material prices and transport costs and was not applicable to the product concerned.

(150) As explained in recital (38), no unrelated importers cooperated in the current investigation. Therefore, in the absence of any alternative data on file which could be used, the Commission decided to use the profit margin established in the recent PVA investigation. This profit margin is the most objective basis available for the purpose of arriving at a satisfactory estimate of an arm’s length and therefore reasonable export price, based on detailed sales data for a similar product. The Commission noted that Wilmar did not suggest other alternatives. Therefore, the claim was rejected.

(151) Wilmar also stated that the profit margin established in the PVA investigation was for an unrelated importer in the Union and therefore it claimed that it was inapplicable in the present case for the adjustment of profits of a trader in a third country, whose activity is different than the one of an importer in the Union.

(152) It is the Commission practice to use the profit of an unrelated importer in the Union as a proxy for a profit of a trader in a third country in the absence of any alternative data on file which could be used. The Commission noted that Wilmar did not suggest other alternatives. Therefore, the claim was rejected.

(153) In relation to the construction of the normal value for the PCN (product control number) whose sales were considered not to be in the ordinary course of trade by reason of price, Wilmar claimed that the Commission should have calculated the profit margin on the basis of all domestic sales including the sales pertaining to the PCN for which the normal value needed to be constructed. According to Wilmar, since overall for all PCNs taken together, profitable domestic sales account for more than 80 % of total domestic sales, all the domestic sales have to be considered to be in the ordinary course of trade.

(154) The Commission noted that Wilmar’s argument is intrinsically contradictory and, in any event, is mixing two provisions of the basic Regulation. First, as to the intrinsic contradiction, Wilmar’s argument loses sight of the fact that the ordinary course of trade test is conducted at the level of each PCN. The purpose is to determine, for each PCN, whether the relevant sales are in the ordinary course of trade in relation to the relevant costs. In the case at hand, it is because the sales of the said PCN were considered not to be in the ordinary course of trade that the normal value for that PCN needed to be constructed. While Wilmar does not contest that conclusion reached on the basis of Article 2(4), third subparagraph, it argues that the very same sales should nevertheless be used for the computation of a profit margin in the ordinary course of trade pursuant to Article 2(6). The Commission disagreed. Sales that were lawfully considered not to be in the ordinary course of trade and could therefore be excluded from the normal value determination (which Wilmar does not contest) cannot subsequently be used to compute a profit margin in the ordinary course of trade. Therefore, the claim was rejected.

(155) Wilmar also claimed that for the product types sold on both the domestic and export market, when constructing the normal value, the Commission should have used the data of cost of production for export (table EUCOP and not DMCOP). In this regard Wilmar referred to the judgment in joined cases C273/85 and C-107/86 (29), which stated in paragraph 16 that ‘the purpose of constructing the normal value is to determine the selling price of a product as it would be if that product were sold in its country of origin or in the exporting country’.

(156) The Commission noted that the same judgment in the same paragraph states that ‘Consequently, it is the expenses relating to sales on the domestic market which must be taken into account’, and therefore the cost of production on the domestic market. Furthermore, it is recalled that normal value is the price paid or payable, in the ordinary course of trade, by independent customers in the exporting country and therefore for constructing the normal value the Commission must use the cost of production for the product sold on the domestic market and not the exported ones. Therefore, the claim was rejected.

(157) Wilmar also claimed that the related sales of its importer in the Union should be excluded from the calculation of the dumping margin, arguing that it was the Commission’s standard practice to exclude sales made to related parties for captive use from the dumping margin calculation, as it is impossible in such cases to establish an export price on the basis of 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.

(158) The Commission disagreed with this claim. The Commission does not have such a practice. In fact, pursuant to the Appellate Body compliance report in EC – Fasteners (DS397) (30), the dumping calculations must cover 100 % of export transactions. Furthermore, as specified in Article 2(9) of the basic Regulation, if the products are not resold to an independent buyer, the price may be established on any reasonable basis. Therefore, in view of the fact that the volume of these sales represent around 1 % of total exports to the Union, and as the related price is slightly lower than the unrelated price, the Commission revised the calculation of the export price by using the price to unrelated customers as a proxy for the price to related customers for the same product types.

(159) Wilmar also claimed that the SG&A expenses of its related importer in the Union should be determined without the financial costs. In the confidential version of its submission, Wilmar elaborated in more details this claim.

(160) The Commission disagreed with this claim. More details regarding the Commission’s assessment were provided to Wilmar in its specific disclosure as it included business confidential information.

(161) Wilmar also claimed that the Commission deducted twice certain expenses of WETBV, once as an allowance in the calculation of the export price and then as included in the SG&A. In the confidential version of its submission, Wilmar elaborated in more details on this claim.

(162) This claim was found to be justified and therefore the Commissions agreed to revise the calculation of the export price accordingly.

(163) In their comments following final disclosure, the Musim Mas group claimed that in view of the fact that the Commission concluded in recitals (388) to (400) that the cost of production of domestic sales was distorted by the Indonesian government’s export duties and levies imposed on crude palm oil and crude palm kernel oil along with a maximum price, this meant that also the profit margin resulting from comparing the cost of production for domestic sales with the domestic sales was distorted and could not be used as the profit margin for constructed normal value. In this regard the Musim Mas group referred to the Biodiesel investigation (31) in which the Commission did not use the actual profit of domestic sales. Furthermore, the Musim Mas group stated that the Commission used a 6 % profit as a benchmark for its analysis of the Union industry, while it used a profit margin nine times higher to construct normal value. Therefore, Musim Mas group stated that the Commission used an unreasonable profit margin for constructing normal value. Furthermore, Musim Mas group stated that, as the Commission used distorted costs to calculate a distorted profit, this resulted in a distorted dumping margin higher than the injury margin, which in turn created a situation whereby the Commission could invoke Article 7(2a) of the basic Regulation to investigate those same costs and conclude that those costs were distorted. Therefore, Musim Mas group stated that the Commission should either use an undistorted profit rate for constructing normal value in its dumping calculation before applying Article 7(2a), or not apply Article 7(2a) at all.

(164) The Commission disagrees with this claim. Musim Mas is mixing different provisions of the basic Regulation, i.e. Article 2(1) to (7) for the determination of the normal value, and Article 7(2a) for setting the level of measures. The Commission normally cannot disregard the actual profit of the exporters of domestic sales for the construction of normal value in a country, unless it can be rejected pursuant to Articles 2(6) or 2(6a) of the basic Regulation. Furthermore, Article 7(2a) of the basic Regulation does not cover the calculation of the normal value. Article 7(2a) allows the Commission to set the measures at the level of the dumping margin in situations where the complainant claimed the existence of raw materials distortions and the investigation confirms such allegations. The normal value is calculated in isolation of this provision. Therefore, the Commission cannot disregard the profit margin of the domestic sales made in the ordinary course of trade. As regards the methodology used by the Commission in the Biodiesel investigation mentioned by the Musim Mas group, it is highlighted that this methodology was rejected by both the General Court in Musim Mas v Council (32), Pelita Agung Agrindustri v Council (33) and Wilmar Bioenergi Indonesia and Wilmar Nabati Indonesia v Council (34), and the WTO Panel in EU – Biodiesel (Indonesia) (35). As regard the profit margin of 6 % referred to by the Musim Mas group, this is the target profit of the Union industry which is a different concept than the profit margin of the domestic sales made in the ordinary course of trade for the exporters. The target profit is the minimum profit provided for in the basic Regulation for the calculation of the target price and the injury margin. Therefore, the claim was rejected.