Judgment of the General Court (Ninth Chamber, Extended Composition) of 21 February 2024

– Applicable rules

59 The terms of the relevant provisions of Article 2(10) of the basic regulation are, it should be recalled, as follows:

‘A fair comparison shall be made between the export price and the normal value. This comparison shall be made at the same level of trade and in respect of sales made at, as closely as possible, the same time and with due account taken of other differences which affect price comparability. Where the normal value and the export price as established are not on such a comparable basis, due allowance, in the form of adjustments, shall be made in each case, on its merits, for differences in factors which are claimed, and demonstrated, to affect prices and price comparability. Any duplication when making adjustments shall be avoided, in particular in relation to discounts, rebates, quantities and level of trade. When the specified conditions are met, the factors for which adjustment can be made are listed as follows:

…

(i) Commissions

An adjustment shall be made for differences in commissions paid in respect of the sales under consideration.

The term “commissions” shall be understood to include the mark-up received by a trader of the product or the like product if the functions of such a trader are similar to those of an agent working on a commission basis.’

60 It is apparent from the case-law that an adjustment under Article 2(10)(i) of the basic regulation cannot be made where the producer established in a third State and its related distributor responsible for exports to the European Union form a single economic entity (see, by analogy, judgment of 26 October 2016, PT Musim Mas v Council , C‑468/15 P, EU:C:2016:803, paragraph 39 ).

61 The division of production and sales activities within a group made up of legally distinct companies can in no way alter the fact that the group is a single economic entity which organises in that way activities that in other cases are carried on by what is, also from a legal point of view, a single entity (see, by analogy, judgment of 26 October 2016, PT Musim Mas v Council , C‑468/15 P, EU:C:2016:803, paragraph 40 and the case-law cited).

62 In those circumstances, recognition of the existence of a single economic entity avoids costs, which are clearly included in the sale price of a product when that sale is carried out by an integrated sales department in the producer’s organisation, no longer being included where the same sales activity is carried out by a company which is legally distinct, even though economically controlled by the producer (see, by analogy, judgment of 26 October 2016, PT Musim Mas v Council , C‑468/15 P, EU:C:2016:803, paragraph 41 and the case-law cited).

63 It follows that a distributor that forms a single economic entity with a producer established in a third State cannot be regarded as carrying out functions similar to those of an agent working on a commission basis, within the meaning of Article 2(10)(i) of the basic regulation (see, by analogy, judgment of 26 October 2016, PT Musim Mas v Council , C‑468/15 P, EU:C:2016:803, paragraph 42 ).

64 In the analysis of whether there is a single economic entity between a producer and its related distributor, it is crucial to consider the economic reality of the relationship between that producer and that distributor. In view of the requirement of a conclusion reflecting the economic reality of the relationship between that producer and that distributor, the EU institutions are required to take account of all factors relevant to the determination as to whether or not that distributor carries out the functions of an integrated sales department within that producer (see, by analogy, judgment of 26 October 2016, PT Musim Mas v Council , C‑468/15 P, EU:C:2016:803, paragraph 43 and the case-law cited).

– Proof

65 As regards the burden of proof relating to the specific adjustments listed in Article 2(10) of the basic regulation, according to the case-law, this must be borne by the party who wishes to rely on them (see, to that effect and by analogy, judgment of 26 October 2016, PT Musim Mas v Council , C‑468/15 P, EU:C:2016:803, paragraph 83 and the case-law cited).

66 Thus, where the EU institutions take the view that it is appropriate to apply a downward adjustment of the export price, on the ground that a sales company affiliated to a producer carries out functions similar to those of an agent working on a commission basis, it is the responsibility of those institutions to adduce at the very least consistent evidence showing that that condition is fulfilled (see, by analogy, judgment of 26 October 2016, PT Musim Mas v Council , C‑468/15 P, EU:C:2016:803, paragraph 84 and the case-law cited).

67 It follows that, where the EU institutions have adduced consistent evidence to establish that a distributor affiliated to a producer was carrying out functions similar to those of an agent working on a commission basis, it will have been for that distributor or that producer to adduce evidence that an adjustment under Article 2(10)(i) of the basic regulation was not justified (see, by analogy, judgment of 26 October 2016, PT Musim Mas v Council , C‑468/15 P, EU:C:2016:803, paragraph 85 ).

68 It follows from this that in order for the Commission to be fully entitled to make the first adjustment at issue, it was required to adduce consistent evidence to establish that that adjustment was justified.

69 The Commission cannot take the view that an adjustment under Article 2(10)(i) of the basic regulation must in principle be made once an undertaking sets up a related trading company to perform its export sales functions.

70 The existence of that general rule, which would effectively shift the burden of proof, has not been established, since the case-law which the Commission cites in that respect is not relevant.

71 First, the Commission relies on the judgment of 7 February 2013, EuroChem MCC v Council (T‑459/08, not published, EU:T:2013:66 ). In paragraph 132 of that judgment, the Court noted that the second sentence of Article 2(10)(i) of Council Regulation (EC) No 1225/2009 of 30 November 2009 on protection against dumped imports from countries not members of the European Community (OJ 2009 L 343, p. 51) was inserted by Article 1(5) of Council Regulation (EC) No 1972/2002 of 5 November 2002 amending Regulation (EC) No 384/96 on the protection against dumped imports from countries not members of the European Community (OJ 2002 L 305, p. 1). In the same paragraph, it was noted that, according to recital 6 of Regulation No 1972/2002, the rationale for the insertion of the sentence in question was to clarify, in line with the consistent practice of the institutions, that adjustments under that provision were also to be made if the parties did not act on the basis of a principal-agent relationship, but achieved the same economic result by acting as buyer and seller. However, it follows from paragraphs 133 and 134 of that judgment that an adjustment must be made if the company responsible for sales which is affiliated with an exporting producer carries out functions which are similar to those of an agent working on a commission basis and that, in order to determine whether that is the case, the respective roles played by the various affiliated companies must be examined. Accordingly, in that judgment, the Court did not recognise the existence of the general rule invoked by the Commission in the present case.

72 Secondly, the Commission invokes the judgment of 26 October 2016, PT Musim Mas v Council (C‑468/15 P, EU:C:2016:803, paragraph 39 ), which does not, however, make any reference to a general rule or to an exception thereto.

73 Thirdly, the Commission relies on paragraph 50 of the judgment of 28 October 2004, Shanghai Teraoka Electronic v Council (T‑35/01, EU:T:2004:317 ), and paragraph 49 of the judgment of 28 June 2019, Changmao Biochemical Engineering v Commission (T‑741/16, not published, EU:T:2019:454 ). In those judgments, the Court noted that the method of determining the normal value of a product set out in Article 2(7)(b) of Council Regulation (EC) No 384/96 of 22 December 1995 on protection against dumped imports from countries not members of the European Community (OJ 1996 L 56, p. 1) and Regulation No 1225/2009, in force, respectively, at the material time, was an exception to the specific rule laid down for that purpose in Article 2(7)(a) of those regulations, the latter provision being, in principle, applicable to imports from non-market-economy countries. However, in the present case, the Commission has not stated nor, a fortiori, has it demonstrated that the non-application of an adjustment under Article 2(10)(i) of the basic regulation where an exporting producer sells its products in the European Union through an affiliated company is an exception to a rule laid down in that regulation, under which that adjustment should, in principle, be made in such circumstances. Accordingly, those judgments support neither the existence of the general rule invoked by the Commission nor the exceptional nature of the non-application of such an adjustment in the case of a single economic entity.

74 Fourthly, at the hearing the Commission invoked the judgment of 14 December 2022, Xinyi PV Products (Anhui) Holdings v Commission (T‑586/14 RENV II, not published, EU:T:2022:799, paragraph 57 ), which, in its submission, confirms that there is a rule under which an adjustment under Article 2(10)(i) of the basic regulation is generally applied when an exporting producer sells its products through an affiliated company. However, it must be noted that, in that judgment, the Court ruled on a situation in which, as was undisputed, the company related to the exporting producer concerned operated in addition to the latter’s internal export department, as is apparent from paragraphs 52 and 57 of the abovementioned judgment. Since the situation in the present case is different, the Commission was wrong to rely on that judgment.

75 Nor can the Commission take the view that an adjustment under Article 2(10)(i) of the basic regulation must be made by relying on the fact that Sinopec Central-China is not directly controlled by Sinopec Chongqing and Sinopec Ningxia, as the applicants argued before the Court.

76 In that regard, while it is apparent from recital 366 of the contested regulation that the Commission accepts that there is common control, since Sinopec Central-China, Sinopec Chongqing and Sinopec Ningxia are ‘all controlled by the Sinopec Group’, the regulation does not contain a recital dedicated to examining the indirect nature of that control and to the consequences that that might have for what the Commission was required to demonstrate according to the case-law recalled in paragraphs 65 to 67 above.

77 In recital 366 of the contested regulation, the Commission also stated that ‘the existence of common control is a necessary prerequisite for the existence of a single economic entity and triggers the analysis of whether the totality of the relevant facts pertaining to the related trader demonstrate the existence of a single economic entity’ and that ‘the purpose is to determine whether the functions carried out by the related trader are similar to those of an internal sales department, or not’.

78 The Commission’s approach in the contested regulation must be endorsed, given that it is consistent with the case-law, according to which the capital structure of companies capable of forming a single economic entity is a relevant indicator of the existence of such an entity (see, to that effect, judgment of 10 March 2009, Interpipe Niko Tube and Interpipe NTRP v Council , T‑249/06, EU:T:2009:62, paragraph 179 ).

79 Accordingly, on the basis of that finding, it is necessary to ascertain whether the Commission has adduced sufficient consistent evidence to demonstrate that, notwithstanding the existence of common control, Sinopec Central-China could not be considered to be acting as an internal sales department and, therefore, that it was necessary to make the first adjustment at issue.

– The evidence gathered by the Commission

80 The Commission bases its decision on the following evidence:

• Sinopec Central-China was looking for customers and established contact with them;

• Sinopec Chongqing made direct export sales;

• Sinopec Chongqing and Sinopec Ningxia made direct sales in China;

• Sinopec Chongqing and Sinopec Ningxia incurred selling costs;

• Sinopec Central-China also traded goods made by producers other than Sinopec Chongqing and Sinopec Ningxia.

81 It must be determined whether it can be inferred from the evidence referred to above that the Commission has discharged its burden of proof.

82 As a preliminary point, it should be noted that the first element listed in paragraph 80 above, concerning the fact that Sinopec Central-China would look for customers and establish contact with them, appeared in the final disclosure. The applicants disputed the relevance of the first element in their comments on final disclosure, arguing that looking for customers and establishing contact with them were activities that an independent trader as well as an internal sales department would carry out. In recital 358 of the contested regulation, the Commission referred to that element without, however, responding to the applicants’ arguments.

83 Before the Court, the Commission merely maintained that the first element was relevant, although looking for customers and establishing contact with them are activities that may be performed both by an internal sales department and by a sales agent.

84 In those circumstances, the applicants are justified in maintaining that the fact that an entity is engaged in looking for customers and establishing contact with them is not relevant for the purposes of determining whether it is an internal sales department or a sales agent.

85 As regards the second element listed in paragraph 80 above, concerning the fact that Sinopec Chongqing made direct export sales, it is apparent from the case-law that the larger the proportion of those direct sales, the more difficult it is to maintain that the related distributor carries out the functions of an internal sales department (see, to that effect, judgments of 10 March 1992, Matsushita Electric v Council , C‑175/87, EU:C:1992:109, paragraph 14 , and of 25 June 2015, PT Musim Mas v Council , T‑26/12, not published, EU:T:2015:437, paragraph 69 ). By contrast, a single economic entity may exist where the producer assumes some of the sales functions that are complementary to those of the distribution company for its products (see judgment of 10 March 2009, Interpipe Niko Tube and Interpipe NTRP v Council , T‑249/06, EU:T:2009:62, paragraph 179 and the case-law cited).

86 In the present case, the applicants claim that the export sales made directly by Sinopec Chongqing, rather than through Sinopec Central-China, are merely complementary to the export sales made by Sinopec Central-China and do not concern sales of PVA to customers established in the European Union, but sales of PVA to customers established in the United States, for reasons linked to the US anti-dumping duty system, under which it is possible to benefit from a zero duty only if sales are made directly. The volume of PVA in relation to those direct export sales to the United States, which represent only 10.9% of combined exports to the European Union and United States, is not large enough for it to be concluded that the existence of those direct sales shows that there is no single economic entity.

87 In response, the Commission contends that the fact that Sinopec Chongqing made a substantial amount of direct sales to the United States, accounting for 12.1% of its sales to the European Union, shows that it has its own internal sales department. The reason why Sinopec Chongqing made those sales itself is ‘not necessarily determinative’ of the assessment of its economic relationship with Sinopec Central-China. Similarly, it is of little importance that all export sales to the European Union were made through Sinopec Central-China.

88 In the first place, it should be noted that, in paragraph 185 of the judgment of 10 March 2009, Interpipe Niko Tube and Interpipe NTRP v Council (T‑249/06, EU:T:2009:62 ), the Court, in finding that an adjustment under Article 2(10)(i) of Regulation No 384/96 had been wrongly made, accepted in particular that the direct export sales made by one of the applicants in the case giving rise to that judgment were marginal and complementary to those made by the distributor related to those companies. In that respect, the Court noted that those direct sales were destined for the new Member States during a transitional phase and, moreover, that they represented 8% of those companies’ sales to the European Union.

89 In the second place, in paragraphs 69 and 70 of the judgment of 25 June 2015, PT Musim Mas v Council (T‑26/12, not published, EU:T:2015:437 ), the Court found that the existence of direct export sales of 27.08% of total export sales was not such as to rule out the possibility that the distributor related to the producers concerned was carrying out the functions of an internal sales department, but nevertheless constituted an indication that supported other factors and therefore contributed to establishing that there was no single economic entity.

90 In the present case, it is common ground that the volume of direct export sales to the United States made by Sinopec Chongqing represented 10.9% of its combined EU and US sales, and 12.1% of its sales in the European Union, if direct sales to the United States are expressed as a percentage of EU sales alone, as opposed to EU and US sales combined. Moreover, at the hearing, the applicants explained that they also exported their PVA to other countries and that those export sales were made through Sinopec Central-China, and the Commission did not contradict them in that respect. Thus, if all export sales were taken into account, the volume corresponding to direct sales made by Sinopec Chongqing represented an even smaller percentage of all of the PVA produced by that company that were sold for export.

91 Accordingly, first, it should be stated that the Commission is wrong to maintain that the percentage of the volume of PVA relating to Sinopec Chongqing’s direct export sales is ‘clearly substantial’, in that it is higher than 8%, which was considered marginal in paragraph 185 of the judgment of 10 March 2009, Interpipe Niko Tube and Interpipe NTRP v Council (T‑249/06, EU:T:2009:62 ). As is apparent from paragraph 88 above, the Court, in that judgment, considered the volume of direct export sales to the European Union made by the exporting producers concerned as a percentage of the total volume of their export sales to the European Union. However, in the present case, the percentage of the volume of direct export sales made by Sinopec Chongqing to the European Union is zero, given that it is Sinopec Central-China that is responsible for all export sales to the European Union of PVA produced by Sinopec Chongqing.

92 Secondly, it must be held that, irrespective of the total sales by reference to which the percentage is calculated (see paragraph 90 above), the volume of PVA in direct export sales made by Sinopec Chongqing does not represent a percentage of that total that is even close to the figure of 27.08%, which, in paragraphs 69 and 70 of the judgment of 25 June 2015, PT Musim Mas v Council (T‑26/12, not published, EU:T:2015:437 ), the Court in that case considered to be an indication that could contribute to establishing that there was no single economic entity (see paragraph 89 above).

93 Furthermore, it should be recalled that, in paragraph 68 of the judgment of 25 June 2015, PT Musim Mas v Council (T‑26/12, not published, EU:T:2015:437 ), the Court also stated that it was not inconceivable that, within such an entity, a related company carries out the functions of an internal sales department by organising and negotiating the producer’s sales without issuing directly all of the invoices relating to those sales, since various reasons may explain the ‘on paper’ involvement of the producer. As it is, in the present case, the applicants explained that Sinopec Chongqing benefited from a zero anti-dumping duty in the United States, and this was not contradicted by the Commission. Moreover, at the hearing, Wegochem, again without being contradicted by the Commission, stated that the group to which it belonged imported PVA produced by the applicants both into the European Union and into the United States, and that, in both cases, that group negotiated with Sinopec Central-China, although the invoices relating to the imports into the United States were issued by Sinopec Chongqing, for the reason given above.

94 In the light of the foregoing, it must be concluded that the second element does not constitute conclusive evidence that Sinopec Central-China cannot be classified as an internal sales department.

95 With regard to the third element listed in paragraph 80 above, concerning the fact that Sinopec Chongqing and Sinopec Ningxia made direct sales on the Chinese market, the applicants claim that the existence of those direct sales does not preclude Sinopec Central-China from being classified as an internal sales department responsible for export sales. The applicants maintain that they have never claimed that Sinopec Central-China acted as an internal sales department responsible both for sales on the Chinese market and for export sales. They merely claimed that Sinopec Central-China was responsible for export sales. The way in which a producer sells its products on its domestic market is irrelevant for determining the existence of a single economic entity on the export side.

96 The Commission contends that the fact that Sinopec Chongqing and Sinopec Ningxia made significant sales on the Chinese market provides supporting evidence that they had internal sales departments which were capable of also serving their export markets, and that Sinopec Central-China operated as an autonomous trading entity.

97 It must be stated that the fact that direct sales of PVA were made by Sinopec Chongqing and Sinopec Ningxia on the Chinese market is capable of demonstrating that those companies had the necessary structure for selling their products without using the services of Sinopec Central-China or other, possibly unrelated, companies.

98 However, as the applicants argue, it follows from the case-law that export sales and sales on an exporting producer’s domestic market may involve related or unrelated companies, or different internal sales departments (see, to that effect, judgment of 10 March 1992, Minolta Camera v Council , C‑178/87, EU:C:1992:112, paragraphs 2, 9 and 13 , and Opinion of Advocate General Mengozzi in Joined Cases Council and Commission v Interpipe Niko Tube and Interpipe NTRP , C‑191/09 P and C‑200/09 P, EU:C:2011:245, points 65 and 66 ).

99 It follows that the third element is not conclusive evidence that might preclude recognition of Sinopec Central-China’s status as an internal sales department.

100 As regards the fourth element listed in paragraph 80 above, concerning the fact that Sinopec Chongqing and Sinopec Ningxia incur selling costs, the applicants claim that the selling costs incurred by those companies were incurred only in respect of sales on the Chinese market and, in the case of Sinopec Chongqing, in respect of sales made to the United States.

101 The Commission’s response in respect of the fourth element is that the fact that Sinopec Chongqing and Sinopec Ningxia incurred selling costs which were, for Sinopec Ningxia, higher than those incurred by Sinopec Central-China, constitutes further evidence that Sinopec Central-China was autonomous.

102 It must be noted that it is not disputed that Sinopec Chongqing and Sinopec Ningxia incurred costs only in relation to sales on the domestic Chinese market and, in the case of Sinopec Chongqing, direct export sales to the United States. Therefore, the fourth element does not change the Court’s assessment of the second and third elements.

103 With regard to the fifth element listed in paragraph 80 above, concerning the fact that Sinopec Central-China also traded goods made by producers other than Sinopec Chongqing and Sinopec Ningxia, the applicants submit that Sinopec Central-China’s purchases of PVA produced by unrelated producers represent only 2% of its PVA purchases from Sinopec Chongqing and Sinopec Ningxia. It is only when a related trader achieves a large part of its turnover from the sale of products from unrelated undertakings that the functions of that trader are not comparable to those of an internal sales department. Furthermore, Sinopec Central-China sold PVA produced by unrelated producers exclusively on the Chinese market.

104 Wegochem adds that the mere fact that Sinopec Central-China also traded some products manufactured by other producers does not provide any proof that that company operated as an independent trader. For that purpose, the Commission should have determined that those trading activities were sufficiently significant to enable Sinopec Central-China to act independently of the group to which it was related. Accordingly, the Commission should have assessed the significance of Sinopec Central-China’s sales of PVA produced by unrelated companies in terms of its turnover. However, the Commission did not carry out any such assessment.

105 The Commission contends that, while it did not assess the significance, as a share of Sinopec Central-China’s total turnover, of the sale of all products purchased by Sinopec Central-China from companies other than Sinopec Chongqing and Sinopec Ningxia, it nevertheless established that sales by Sinopec Central-China of PVA manufactured by other producers represented 10% of Sinopec Central-China’s total sales of PVA to the European Union and were therefore not negligible.

106 It should be recalled that, according to the case-law, the proportion of sales made by a distributor related to a producer covering products from unrelated producers is an important factor for the purposes of determining whether that distributor forms a single economic entity with the related producer. Thus, if the distributor achieves a large part of its turnover from the sale of products from unrelated undertakings, that may constitute evidence that the functions of that distributor are not those of an internal sales department (see judgment of 14 July 2021, Interpipe Niko Tube and Interpipe Nizhnedneprovsky Tube Rolling Plant v Commission , T‑716/19, EU:T:2021:457, paragraph 159 and the case-law cited).

107 The case-law also makes clear that, for the purposes of determining whether a single economic entity exists, the EU institutions are also entitled to take into account the activities of the related distributor relating to products other than the product that is the subject of the anti-dumping investigation as well as the proportion of sales made by that distributor that related to products from unrelated producers (see, to that effect, judgment of 26 October 2016, PT Musim Mas v Council , C‑468/15 P, EU:C:2016:803, paragraphs 44 to 46 and 49 ).

108 In the present case, it must be noted that the Commission admits (see paragraph 105 above) that it did not carry out the examination envisaged by the case-law referred to above. Accordingly, it cannot rely on the fifth element as relevant evidence that a single economic entity does not exist in this case.

109 In any event, even if the Commission had been entitled to confine itself to examining the turnover of Sinopec Central-China generated by its PVA sales, it must be noted that the Commission does not dispute that, as the applicants had already argued in their additional final disclosure comments, the purchases by Sinopec Central-China of PVA produced by unrelated producers represent only 2% of its PVA purchases from Sinopec Chongqing and Sinopec Ningxia. Thus, the turnover of Sinopec Central-China generated by its PVA sales came from PVA almost all of which it had purchased from Sinopec Chongqing and Sinopec Ningxia.

110 As to the Commission’s argument that the volume of Sinopec Central-China’s PVA purchases from unrelated producers represents 10% of the total volume of PVA exported by Sinopec Central-China to the European Union during the investigation period, it must be noted that the Commission does not explain how that information would serve to demonstrate that Sinopec Central-China was not acting as an internal sales department. The relevance of that information is undermined by the fact, highlighted in the applicants’ additional final disclosure comments and at the hearing, and not disputed by the Commission, that the PVA which Sinopec Central-China purchased from unrelated producers were not exported into the European Union but were sold, in China, to a related company.

111 Consequently, it must be concluded that the fifth element is of no relevance in demonstrating that Sinopec Central-China was performing functions similar to those of an agent working on a commission basis.

112 In the light of all of the foregoing considerations in relation to the first to fifth elements, it appears that the second and third elements are not sufficient to constitute a body of consistent evidence that would demonstrate that the functions of Sinopec Central-China were functions similar to those of an agent acting on a commission basis or that would preclude recognition of its status as an internal sales department. In those circumstances, it must be concluded that the Commission has not discharged its burden of proof in accordance with the case-law recalled in paragraphs 65 to 67 above, and therefore that, in finding that Sinopec Central-China was performing functions similar to those of an agent acting on a commission basis, it made a manifest error of assessment.

113 Accordingly, the first part of the second plea in law must be upheld.

– First complaint

141 The applicants maintain that although their export sales were eligible for a refund of input VAT, they were not subject to any output VAT, as is clear from their invoices. In addition, according to the applicants, since the normal value was constructed on the basis of data relating to a third country, Chinese VAT is, by definition, not taken into account. The Commission had not provided any evidence to the contrary. Accordingly, it does not matter if the VAT treatment for sales in the domestic market in China is different from the VAT treatment for export sales. The Commission had not explained the reason why the second adjustment at issue was necessary when the normal value had been constructed on the basis of those data.

142 The applicants conclude that the second adjustment at issue was not necessary to ensure a tax-neutral comparison between the normal value and the export price. The export price and the normal value are already at the same level of indirect taxation, in that both are expressed on a VAT-exclusive basis.

143 The Commission disputes the applicants’ arguments.

144 It should be recalled that Article 2(10)(b) of the basic regulation is worded as follows:

‘Import charges and indirect taxes

An adjustment shall be made to the normal value for an amount corresponding to any import charges or indirect taxes borne by the like product and by materials physically incorporated therein, when intended for consumption in the exporting country and not collected or refunded in respect of the product exported to the Union.’

145 In recitals 387 and 388 of the contested regulation, the Commission set out the reasons why it considered it necessary, in order to ensure that the comparison between the export price and the normal value was fair, that the second adjustment at issue should be made, despite the objections raised in particular by the applicants, in their comments on final disclosure.

146 Those recitals state as follows:

‘(387) In their comments on final disclosure, three sampled exporting producers and a Union producer/user claimed that no adjustment should be made for non-refundable VAT. Notably these interested parties argued that the Commission has not explained why such an adjustment is necessary, particularly in light of the fact that the normal value is constructed by (partially) using data from a third country. Also these interested parties claimed that the Commission has not explained why, without VAT adjustment, there would be a difference between the export price and the constructed normal value affecting price comparability. In their view, as the normal price is based on construction, there is no refund of input VAT and thus no adjustment should made for differences in VAT refund.

(388) The Commission disagreed with this claim. The Commission made an adjustment under Article 2(10)(b) of the basic Regulation for the difference in indirect taxes between export sales from [China] to the Union and the normal value where indirect taxes such as VAT have been excluded. The Commission does not need to demonstrate that the constructed normal value actually incur VAT that can be fully refunded upon sales on the domestic market, as this is irrelevant. The normal value that was constructed as stated in recitals (335) to (347) and (295) did not include VAT, as the undistorted values in the representative country are used for the calculation of the normal value in the exporting country net of their VAT. The actual situation concerning the VAT treatment of the sales in the domestic market and upon export occurs entirely in [China]. The investigation concluded that in the [investigation period] in [China] the exporting producers incur a VAT liability of 13% or 16% (13% is applicable from April to June 2019 and 16% is applicable for July 2018 to March 2019) at exportation while 5%, 9% or 10% is refunded (5% is applicable from July to August 2018, 9% is applicable from September to October 2018 and 10% is applicable from November 2018 to June 2019). Therefore, in line with Article 2(10)(b) of the basic Regulation, for the difference in the indirect taxation, in this case the VAT that is partially refunded with regard to export sales, the Commission duly adjusted the normal value …’

147 Since it is the Commission which took the initiative to make the second adjustment at issue, it was required, in accordance with the case-law recalled in paragraphs 65 to 67 above, to demonstrate that that adjustment was necessary.

148 Consequently, it is necessary to determine whether the Commission demonstrated sufficiently the need to make the second adjustment at issue.

149 It must be noted that the wording of recital 388 of the contested regulation is not easy to understand.

150 However, it must be recalled that, according to the case-law, the requirements to be satisfied by the statement of reasons for EU acts, within the meaning of the second paragraph of Article 296 TFEU, depend on the circumstances of each case, in particular the content of the measure in question, the nature of the reasons given and the interest which the addressees of the measure, or other parties to whom it is of direct and individual concern, may have in obtaining explanations. It is not necessary for the reasoning to specify all the relevant facts and points of law, since the question whether the statement of reasons meets the requirements of that article must be assessed with regard not only to its wording but also to its context and to all the legal rules governing the matter in question (see judgment of 20 January 2022, Commission v Hubei Xinyegang Special Tube , C‑891/19 P, EU:C:2022:38, paragraph 88 and the case-law cited).

151 Similarly, in the case of a regulation, the statement of reasons may be limited to indicating the general situation which led to its adoption, on the one hand, and the general objectives which it is intended to achieve, on the other. Consequently, it is not possible to require that the EU institutions should set out the various facts, which may be very numerous and complex, on the basis of which the regulation was adopted, or a fortiori that they should provide a more or less complete evaluation of those facts (see judgment of 20 January 2022, Commission v Hubei Xinyegang Special Tube , C‑891/19 P, EU:C:2022:38, paragraph 89 and the case-law cited).

152 It follows that a regulation imposing anti-dumping duties must contain the essential part of the Commission’s reasoning, but need not include specific reasons for each of the numerous factual arguments relied on by the interested parties. The Court may therefore ask the Commission for additional explanations and take them into account when carrying out its review, provided that they are based on material in the Commission’s file (see, to that effect and by analogy, judgment of 20 January 2022, Commission v Hubei Xinyegang Special Tube , C‑891/19 P, EU:C:2022:38, paragraphs 92, 93, 95 and 96 and the case-law cited).

153 In the present case, the Commission produced, as Annexes F.6 and F.7 to its replies to the written questions put by the Court, two documents entitled in each case ‘Verification report’, which it had sent to the applicants after two visits to the premises of Sinopec Chongqing and Sinopec Ningxia. It is apparent from page 12 of Annex F.6 and page 8 of Annex F.7 that when a Chinese export company purchases from another Chinese company products which it subsequently wishes to export, it pays the VAT at a rate that was 16% and then 13% during the investigation period. When the products are exported, part of that VAT which has already been paid may be the subject of a partial refund request, at a rate that was first 5%, then 9% and finally 10% during that period. The difference between the input VAT paid on exportation and that refund represents the non-refundable VAT.

154 Furthermore, at the hearing, the applicants explained that they were challenging recital 388 of the contested regulation in so far as the Commission asserted that, during the investigation period, there was VAT of 13% or 16% at exportation in China, whereas, according to them, that VAT was applicable to national sales, but not to export sales. The applicants also acknowledged that the only relevant issue was that of the non-refundable VAT.

155 In the light of the explanations thus given by the Commission, which the applicants had, recital 388 of the contested regulation must be understood as meaning that the Commission, as it confirmed at the hearing, found that the export price of the applicants’ products included an amount corresponding to the non-refundable VAT, whereas the normal value had been constructed net of VAT, and, moreover, that those circumstances justified an upward adjustment of the normal value, to ensure a fair comparison.

156 Consequently, it must be held that the Commission did demonstrate the need to make the second adjustment at issue.

157 However, it should be noted that Article 2(10)(b) of the basic regulation does not provide for the normal value of the representative country constructed according to Article 2(6a) of that regulation to be adjusted to take account of the non-refundable VAT affecting the export price in the country in which the dumped imports originate. Thus, the Commission made an error of law as to the legal basis of the second adjustment at issue. However, it should be borne in mind that, according to settled case-law, the annulment of an EU act because the wrong legal basis was used is not justified where that error had no decisive effect on the assessment made by the author of that act (see, to that effect and by analogy, judgments of 18 December 1997, Costantini v Commission , T‑57/96, EU:T:1997:214, paragraph 23 and the case-law cited, and of 9 June 2015, Navarro v Commission , T‑556/14 P, EU:T:2015:368, paragraph 26 and the case-law cited). That principle must be applied in the present case. It should be noted that Article 2(10)(k) of the basic regulation, according to which ‘an adjustment may … be made for differences in other factors not provided for under [Article 2(10)](a) to (j) [of that regulation], if it is demonstrated that they affect price comparability …, in particular if customers consistently pay different prices on the domestic market because of the difference in such factors’, allowed the Commission to make the second adjustment at issue in order to re-establish the symmetry between the normal value and the export price of the product concerned and to ensure a fair comparison between those two values (see, to that effect and by analogy, judgments of 19 May 2021, China Chamber of Commerce for Import and Export of Machinery and Electronic Products and Others v Commission , T‑254/18, under appeal, EU:T:2021:278, paragraph 597 ).

158 In that regard, it should be stated, in response to the argument raised by the applicants at the hearing and by Wegochem in its statement in intervention, that the second condition laid down in Article 2(10)(k) of the basic regulation is satisfied in the present case. While the non-refundable VAT has an upward effect on the export price, it is common ground that no VAT is included in the normal value that was constructed on the basis of information from a third country and which, by virtue of the application of Article 2(6a) of the basic regulation, replaces the price of the product concerned on the domestic market of the exporting country.

159 In the light of all of the foregoing, the first complaint put forward by the applicants in support of the third part of the second plea in law must be rejected.

– Second complaint

160 The applicants submit that, even if it were necessary to make an adjustment under Article 2(10)(b) of the basic regulation, the adjustment adopted in the contested regulation is inflated, since it disregards the fact that input VAT is calculated on the value of the input materials, whereas the export VAT refund is calculated on the sales value. They illustrate that complaint with a numerical example in which they calculate the amount of non-refundable VAT as being the difference between, on the one hand, the amount resulting from the application of the input VAT rate to the costs of certain inputs used to construct the normal value and, on the other hand, the amount resulting from the application of the VAT refund rate to the export price.

161 The Commission disputes the applicants’ arguments.

162 It must be recalled that the second adjustment at issue consists in an increase in the normal value constructed, net of VAT, on the basis of Turkish data, by a percentage that will ensure that a fair comparison can be made with the export price, in the light of the fact that the export price includes an amount corresponding to the non-refundable VAT. Thus, contrary to what the applicants seem to claim, the Commission did not apply the input VAT rate to the costs of inputs used to construct the normal value, nor did it subtract from the amount which it would thus have obtained an amount corresponding to the application of the VAT refund rate to the export price. It follows that the arguments of the applicants which are supposed to support the present complaint do not correspond to the facts of the present case, and therefore do not serve to demonstrate that the second adjustment at issue is inflated.

163 Consequently, the second complaint put forward by the applicants in support of the third part of the second plea in law must be rejected, as, therefore, must the whole of the third part of that plea.

164 In the light of all of the foregoing, it must be concluded that the first two parts of the second plea in law are well founded, while the third part is not.

– First part

241 The applicants submit that, contrary to the Commission’s finding in the contested regulation, the PVA market is divided into two segments. The first segment covers high-quality PVA grades, characterised by narrow viscosity and hydrolysis ranges, a low methanol content, a low ash content and a smaller particle size. Those PVA grades are sold at higher prices. The second segment concerns lower-quality grades, characterised by wide viscosity and hydrolysis ranges, a high methanol content, a high ash content and a larger particle size. Those PVA grades are sold at lower prices.

242 The applicants submit that while, in theory, certain industries using lower-quality PVA grades might be able to switch to high-grade PVA, such a switch would not be economically logical. Meanwhile, industries using higher-quality grades of PVA cannot replace them with lower-quality grades.

243 Due to the significant differences in prices and quality between the PVA grades pertaining to the abovementioned first and second market segments, those grades are not directly interchangeable on the demand side.

244 According to the applicants, since the PVA market is divided into the two segments referred to above, the Commission should have taken their existence into consideration in its price undercutting analysis, particularly given that many Chinese producers were primarily producing PVA pertaining to the low market segment, whereas PVA produced in the European Union were usually in the high market segment.

245 In support of their arguments, the applicants rely, inter alia, on the Report of the Appellate Body, China – Measures imposing anti-dumping duties on high-performance stainless-steel seamless tubes (‘HP-SSST’) from Japan (WT/DS 454/AB/R), adopted by the DSB on 28 October 2015 (paragraph 5.181) (‘the HP-SSST report’).

246 Following delivery of the judgment of 20 January 2022, Commission v Hubei Xinyegang Special Tube (C‑891/19 P, EU:C:2022:38 ), the applicants, in response to a written question from the General Court, explained their arguments in the light of the guidance stemming from that judgment, by which the Court of Justice set aside the judgment of 24 September 2019, Hubei Xinyegang Special Tube v Commission (T‑500/17, not published, EU:T:2019:691 ), which they had invoked in their pleadings. In their view, the present case entails the three exceptional circumstances, as set out in that judgment of the Court of Justice, in which the Commission cannot simply examine price undercutting on the basis of product control numbers (‘PCN’) but is required to carry out an analysis by market segment. First, according to the applicants, the PVA market is divided into two distinct segments; secondly, PVA prices are significantly different depending on the segment; and, thirdly, Union industry sales of PVA products are concentrated in the high-quality PVA segment, whereas imports from China are concentrated in the lower-quality segment.

247 The Commission, supported by Kuraray and Sekisui, disputes the applicants’ arguments.

248 The relevant provisions of Article 3 of the basic regulation were recalled in paragraph 227 above.

249 According to the case-law, the calculation of the price undercutting of imports is carried out, in accordance with Article 3(2) and (3) of the basic regulation, for the purposes of determining the existence of injury suffered by the Union industry by reason of those imports and it is used, more broadly, to assess that injury and to determine the injury margin, namely the injury elimination level (see, by analogy, judgment of 10 April 2019, Jindal Saw and Jindal Saw Italia v Commission , T‑301/16, EU:T:2019:234, paragraph 176 ). The Commission has a broad discretion for that purpose (see judgment of 20 January 2022, Commission v Hubei Xinyegang Special Tube , C‑891/19 P, EU:C:2022:38, paragraph 36 and the case-law cited).

250 The basic regulation does not contain any definition of the concept of ‘price undercutting’ and does not lay down any method for the calculation of that concept (judgment of 20 January 2022, Commission v Hubei Xinyegang Special Tube , C‑891/19 P, EU:C:2022:38, paragraph 73 ; see also, by analogy, judgment of 10 April 2019, Jindal Saw and Jindal Saw Italia v Commission , T‑301/16, EU:T:2019:234, paragraph 175 ).

251 However, it is apparent from the very wording of Article 3(3) of the basic regulation that the method used to determine possible price undercutting must, in principle, be applied at the level of the ‘like product’, within the meaning of Article 1(4) of that regulation, even though that product may consist of different product types falling within several market segments (see, to that effect, judgment of 20 January 2022, Commission v Hubei Xinyegang Special Tube , C‑891/19 P, EU:C:2022:38, paragraph 74 and the case-law cited).

252 Accordingly, the basic regulation does not, in principle, impose any obligation on the Commission to carry out an analysis of the existence of price undercutting at a level other than that of the like product (judgment of 20 January 2022, Commission v Hubei Xinyegang Special Tube , C‑891/19 P, EU:C:2022:38, paragraph 75 ).

253 That interpretation is confirmed by paragraph 5.180 of the HP-SSST report, relied on by the applicants, according to which the competent authority is not required, under Article 3.2 of the anti-dumping agreement, to establish price undercutting for each of the product types under investigation or for the entire range of products constituting the like domestic product (judgment of 20 January 2022, Commission v Hubei Xinyegang Special Tube , C‑891/19 P, EU:C:2022:38, paragraph 76 ).

254 However, as confirmed in paragraph 5.180 of the HP-SSST report, since, under Article 3(2) of the basic regulation, the Commission is required to carry out an ‘objective examination’ of the effect of the dumped imports on prices in the Union industry for like products, it is required to take account in its analysis of price undercutting of all the relevant positive evidence, including, where applicable, evidence relating to the various market segments of the product under consideration (judgment of 20 January 2022, Commission v Hubei Xinyegang Special Tube , C‑891/19 P, EU:C:2022:38, paragraph 77 ).

255 It is also apparent from the case-law that examination of price undercutting on the basis of a method consisting in a PCN-by-PCN comparison (‘the PCN method’) does enable, to a certain extent, account to be taken of the possible segmentation of the market for the product under consideration (see, to that effect, judgment of 20 January 2022, Commission v Hubei Xinyegang Special Tube , C‑891/19 P, EU:C:2022:38, paragraphs 106, 113 and 114 ).

256 The fact remains that, in order to ensure that the analysis of price undercutting is objective, the Commission may, in certain circumstances, be required to carry out such an analysis at the level of the market segments of the product in question, even though the broad discretion enjoyed by that institution, in particular in determining the existence of injury (see paragraph 249 above), extends, at the very least, to decisions on the choice of method of analysis, to the data and evidence to be gathered, to the method of calculation to be used in order to determine the undercutting margin and to the interpretation and evaluation of the data gathered (see, to that effect, judgment of 20 January 2022, Commission v Hubei Xinyegang Special Tube , C‑891/19 P, EU:C:2022:38, paragraph 78 ).

257 Accordingly, the Commission may, in certain exceptional circumstances, be required to carry out an additional analysis of price undercutting consisting of a comparison of the prices in each segment in addition to the application of the PCN method (see, to that effect, judgment of 20 January 2022, Commission v Hubei Xinyegang Special Tube , C‑891/19 P, EU:C:2022:38, paragraph 111 ).

258 Those exceptional circumstances relate to the existence both of a clear segmentation of the market for the product under consideration involving significant variations between market segments (‘the first condition’) and a situation characterised by a high concentration of domestic sales and dumped imports in separate segments (‘the second condition’) (see, to that effect, judgment of 20 January 2022, Commission v Hubei Xinyegang Special Tube , C‑891/19 P, EU:C:2022:38, paragraphs 79 to 81, 110 and 111 ).

259 The arguments put forward by the applicants in support of the present part of the fourth plea must be examined in the light of those considerations and of the considerations concerning the scope of judicial review set out in paragraphs 190 and 191 above.

260 In the contested regulation, the Commission stated as follows:

‘(60) The information collected during the investigation also showed that some of these grades (sold both by the Union industry and exporting producers) have a broad range of application and, generally, have a lower price. Other more specialised grades designed for applications with narrow specifications … are on average more expensive. These grades are also sold by Union and exporting producers.

(61) However, despite a large number of grades, the Commission found that there is no defined segments in the PVA market. Different users can source a number of PVA grades, depending on their required technical specifications. For some users the ash content is the most important element, for others the viscosity, and some are able to use mostly any of the specification. Each user industry can use a different set of PVA grades interchangeably. Even though certain users … are more limited in terms of the number of grades they can use, their grade range still overlaps with other type of users, which are able to source a wider range of grades.

(62) For the reasons above, the Commission concluded that all grades compete with each other, at least to a certain extent, and therefore a segment analysis was not warranted nor appropriate in this case …

(64) The analysis carried out by the Commission confirmed that the different grades, as explained in recital (61), are interchangeable between each other, at least to a certain extent. Even if it is true that certain users can source only a limited set of grades for their application, these grades do not pertain exclusively to one user’s downstream industry but overlap with the grades sourced by other downstream applications. Moreover, the investigation revealed that the Chinese exporting producers supply grades for all the four main applications of PVA and compete in full with the grades sold by the Union industry.

…

(78) [The] various grades of PVA share the basic characteristics and their uses are to a large extent identical and interchangeable. The sole ash or methanol content levels do not define, alone, the applications or the price of the product concerned as it is the combination with the other relevant characteristics, such as viscosity and hydrolysis, which defines the grade characteristics, its possible end use and the selling price.

(79) The evidence collected in the investigation revealed that, while the average price difference between the PVA grades with “low ash content” versus those with “standard ash content” is about 10%. However, PVA prices can vary up to 40% between PVA grades with the same ash content. In addition, certain allegedly cheaper grades with a “standard” ash content can be up to 27% more expensive than those with “low ash content” grades. Therefore it cannot be concluded, as the interested parties claimed, that the Union market was divided into high-quality PVA (produced by the Union industry) and low-quality PVA (imported from [China]) based on the ash and methanol content, neither that this alleged division is reflected in the prices and the production cost. On the contrary, … several grades with alleged “standard” specifications are also in competition with alleged “high-end” grades of the like product.’

261 It follows that the Commission ruled out the existence of any clear segmentation of the PVA market and a high concentration of Union industry sales and dumped imports in two distinct segments.

262 In so far as the Commission was required to carry out an objective examination of price undercutting (see paragraphs 254 and 256 above), it is necessary to ascertain whether its findings are sufficiently supported by the documents in the case file of the procedure which led to the adoption of the contested regulation, including those not explicitly referred to in the contested regulation (see paragraph 152 above).

263 In the present case, the Court asked the Commission to specify the elements of the case file which enabled it to rule out both the existence of a segmented market and the concentration of imports and Union industry sales in separate segments.

264 On that point, the Commission referred to the replies of PVA users to its request for information about their PVA purchases by PCN and to the information supplied to it by Kuraray.

265 As regards the lack of clear segmentation, the Commission produced an example of its request for information, although it did not produce the replies received, which were described as confidential. It also lodged an extract from Kuraray’s website. At the hearing, the Commission stated that an earlier version of that extract was included in the case file of the procedure which led to the adoption of the contested regulation, and this was not contradicted by the applicants.

266 It must be stated that the extract of Kuraray’s website shows that there are several grades of PVA whose main uses are both in industries that would use high-quality PVA and in industries that would use lower-quality PVA. As the Commission observes, several PVA grades used in the paper and adhesives industries are also used in the emulsion polymerisation and polyvinyl butyral production industries. Consequently, that extract serves to confirm that the PVA market is not clearly segmented.

267 Furthermore, it should be noted that, in so far as the first condition relates to the existence of clear segmentation of the product at issue, in order to rule out the possibility of that condition being satisfied, contrary to the applicants’ contention, it is not necessary that all users should be able to purchase all PVA grades and that those grades should therefore be completely interchangeable.

268 Thus, it must be held that the first condition is not satisfied in the present case.

269 Accordingly, it is not necessary to rule on the second condition, as it may already be concluded that the Commission was not required to carry out an additional analysis of price undercutting over and above that based on the PCN method.

270 In any event, as regards the second condition, the following must be noted.

271 The case file in the present case includes three tables that were in the case file of the procedure which led to the adoption of the contested regulation, each table relating to one of the three main Chinese exporting producers that cooperated, including the applicants. Displayed in those tables are the quantities of PVA, by PCN, imported into the European Union. However, on grounds of confidentiality, the tables do not show, by PCN, the importance of sales made by Kuraray. A study of the figures in those tables serves to establish that the imports, taken as a whole, cover eight different PCN, in their revised versions, which are not disputed by the applicants, and that the quantities in respect of two of those PCN are equivalent, in each case, to approximately 29% of total imports from those exporting producers, whereas the quantities in respect of six other PCN are, in percentage terms, between 3.24 and 9.54%.

272 Consequently, the imports cannot be considered to represent a high concentration and, therefore, even without the data relating to Kuraray’s sales, it must be held that the second condition is not satisfied.

273 Since the conditions laid down by the case-law recalled in paragraph 258 are not satisfied, it must be concluded that the Commission was not required to carry out an additional analysis of price undercutting over and above that based on the PCN method.

274 In the light of the foregoing considerations, the first part of the fourth plea in law must be rejected.

– Second part

275 The applicants submit that the Commission did not properly establish price undercutting because, while it made an adjustment of 10% to account for the lower quality, in terms of ash content, of the PVA imported from China compared to the PVA produced in the European Union, it refused to make other adjustments to reflect the other quality differences between those PVA.

276 The Commission, supported by Sekisui, disputes the applicants’ arguments.

277 It should be recalled that the relevant recitals of the contested regulation read as follows:

‘(423) Price undercutting of the imports was established on the basis of data of the cooperating exporting producers in the country concerned and domestic sales data provided by the Union industry for the period of investigation …

(424) The price comparison was made on a type-by-type basis for transactions at the same level of trade, and after deduction of deferred discounts. When necessary, the import price of the product concerned imported from [China] was duly adjusted when compared with the comparable product type sold by the Union industry.

(425) As regards the differences in certain characteristics between the product concerned and the like product … the product types imported from [China] compete with the product types produced and sold by the Union industry. However, as the ash content of the PVA produced and sold by the cooperating exporting producers was overall higher than the ash content of the PVA produced and sold by the Union industry, the Commission considered that an adjustment was warranted to ensure a fair comparison between the Chinese and EU product types on the basis of PCNs. The Commission established the adjustment on the basis of the difference found for PVA imports with high and low ash content from third countries on the basis of information provided by users. The price difference was established at 10%.

(426) On this basis, an adjustment of 10% was added to the CIF price of the PVA with high ash content sold by the cooperating exporting producers.

…

(429) Furthermore, as the methanol content and the packing have a negligible effect on the prices …, the Commission concluded that for undercutting purposes it was appropriate to disregard these characteristics.’

278 Before the Court, the Commission explained that, as could be seen from a questionnaire which it had sent to Chinese exporting producers, the PCNs had been established on the basis of five characteristics of PVA, that is to say, their viscosity, their degree of hydrolysis, their ash content, their methanol content and their packaging.

279 It follows that the Commission considered it necessary to apply an upward adjustment of 10% to the prices of certain product types imported from China, which corresponded, in terms of viscosity and degree of hydrolysis, to product types sold by the Union industry, because of differences in ash content, which was higher in the former than in the latter. By contrast, it ruled out the possibility of other adjustments being warranted on the basis of differences in respect of methanol content and packaging.

280 While the applicants do not challenge the merits of the 10% adjustment applied by the Commission because of differences in ash content, they claim that other adjustments were necessary.

281 However, they did not produce any evidence capable of demonstrating that the Commission had made a manifest error of assessment in finding that the differences, in terms of methanol content and packaging, between product types that were comparable in terms of their viscosity and their degree of hydrolysis did not have a significant effect on their prices.

282 Accordingly, the second part of the fourth plea in law must be rejected.

– Third part

283 The applicants submit that it is apparent from recitals 432 and 433 of the contested regulation and from the information they were able to obtain from the Commission and information provided by other exporting producers that, in its price undercutting analysis, the Commission compared 100% of the PVA imports from China with 82% of the Union industry’s sales of PVA. The Commission found that there was an 82% overlap between the PCNs sold by the Union industry and those sold by the Chinese exporting producers. The Commission thus excluded from its analysis 18% of the sales made by the Union industry. In so doing, the Commission infringed the obligation under Article 3(2) and (3) of the basic regulation to establish price undercutting for the product concerned as a whole.

284 The applicants dispute that the contested regulation can be interpreted as meaning that the Commission compared 100% of the Union industry’s sales with 82% of the sales made by the Chinese exporting producers, and rely for this purpose on the price undercutting calculations in relation to the applicants themselves and to the other exporting producers, from which it may be inferred that 100% of the imports were compared with 82% of the Union industry’s sales. In any event, in their view, even if that portrayal of the facts were accepted, the Commission nevertheless infringed Article 3(2) and (3) of the basic regulation, given that it was required to take 100% of the imports into consideration.

285 The Commission, supported by Sekisui, disputes the applicants’ arguments.

286 It should be recalled that recitals 432 and 433 of the contested regulation read as follows:

‘(432) Wacker and the Chinese exporting producers claimed that 18% of the exports from [China] were not sold by the Union industry since for this quantity no comparable PCNs were found. The parties referred to the judgement [of 24 September 2019, Hubei Xinyegang Special Tube v Commission (T‑500/17, not published, EU:T:2019:691 )] in support of their claim that the Commission’s injury analysis was only based on a limited volume of the Union industry’s sales and not the whole like product.

(433) First, the Commission noted that this judgment is under appeal before the Court of Justice and therefore cannot be taken as authoritative. Second, the basic Regulation does not require the Commission to carry out the price analysis for each product type separately. Rather, the legal requirement is a determination at the level of the like product. While PCNs are used as the starting point for such assessment, it does not mean that different PCNs are not in competition. Thus, the fact that certain PCNs of the Union industry were not compared to imports does not mean that they do not suffer price pressure from the dumped imports. Indeed, the establishment of price undercutting and underselling by first calculating margins at the level of the PCN is only an intermediary and preparatory step of that required price comparison. That step is not legally mandated, but constitutes the standard practice of the Commission. Third, in cases where sampling is applied it is not surprising that there is not a perfect matching between the imports of the sampled exporting producers and the sales of sampled Union industry. This does not necessarily mean that there are no imports of certain types, but that these types were not exported to the Union by the sampled exporting producers during the investigation period. Finally, … the Commission concluded that all PVA grades competed with each other, at least to a certain extent. Therefore, the 18% of the exports of the sampled exporting producers not sold by the Union industry does not constitute a separate category of the product concerned but competes in full with the remaining grades for which a matching was found. Moreover, the PCNs not sold by the Union industry were product types suitable for application in the adhesives, polymerisation and paper sectors, and therefore equivalent and in direct competition with other product types produced and sold by the Union industry for use in the same applications, even if not used for the quantification of price undercutting.’

287 It should be noted that, in recitals 432 and 433 of the contested regulation, the Commission summarised an argument which the applicants had based on the judgment of 24 September 2019, Hubei Xinyegang Special Tube v Commission (T‑500/17, not published, EU:T:2019:691 ), before going on to reject it.

288 It must be recalled that, in paragraphs 68 to 75 of the judgment of 24 September 2019, Hubei Xinyegang Special Tube v Commission (T‑500/17, not published, EU:T:2019:691 ), the Court held, in essence, that in so far as the Commission had not taken into account, in the analysis of price undercutting, a certain volume of the product under consideration produced by the sampled EU producers, namely 17 of the 66 product types identified, representing 8% of the sales volume of those producers, which were not exported by the sampled Chinese exporting producers, it had failed to take account of all the relevant data in the case at issue, in breach of Article 3(2) and (3) of the basic regulation (see, to that effect, judgment of 20 January 2022, Commission v Hubei Xinyegang Special Tube , C‑891/19 P, EU:C:2022:38, paragraph 22 ).

289 In rejecting the applicants’ argument based on the judgment of 24 September 2019, Hubei Xinyegang Special Tube v Commission (T‑500/17, not published, EU:T:2019:691 ), the Commission first of all pointed out, in the first sentence of recital 433 of the contested regulation, that that judgment was under appeal.

290 Next, in the second to ninth sentences of recital 433 of the contested regulation, the Commission defended the merits of its actions in the regulation that was being challenged in the case that gave rise to the judgment of 24 September 2019, Hubei Xinyegang Special Tube v Commission (T‑500/17, not published, EU:T:2019:691 ), while also setting out general considerations in relation to the analysis of price undercutting by the PCN method. It is in that context that it stated that ‘certain PCNs of the Union industry [had] not [been] compared to imports’. Accordingly, that part of the sentence cannot be interpreted as an admission by the Commission that, in the present case, it had failed to take account of certain PCNs produced by the Union industry.

291 Lastly, in the 10th to 12th sentences of recital 433 of the contested regulation, the Commission examined the circumstances of the present case. It is apparent from that passage that, first, for 18% of PVA exported to the European Union by the sampled Chinese exporting producers, it had not been possible to find any corresponding product type sold by the Union industry and, secondly, because of the fact that all PVA were in competition with each other to a certain extent, the PVA sold by the Union industry were also competing with the 18% of PVA imported from China.

292 It follows that the Commission associated an imported product type with each product type sold by the Union industry and that, in the case of imported product types that did not match product types sold by the Union industry, it found that a competitive relationship nevertheless existed. In so doing, the Commission carried out the assessment required by Article 3(2) and (3) of the basic regulation, which consists of examining the effect on the Union industry prices of ‘dumped imports’ (judgment of 20 January 2022, Commission v Hubei Xinyegang Special Tube , C‑891/19 P, EU:C:2022:38, paragraph 161 ) and analysed price undercutting for the product under consideration as a whole.

293 Contrary to the applicants’ contention, that interpretation of recital 433 of the contested regulation is compatible with the explanation given to them by the Commission in the procedure that led to the adoption of the contested regulation, that ‘the matching percentage between the [Union] industry and the sampled Chinese exporting companies is 82%’. While it is apparent from that explanation that a total match could not be established, the Commission’s choice of wording does not make clear whether it was the Union industry or Chinese exporting producers which sold more product types.

294 Furthermore, that interpretation of recital 433 of the contested regulation is not affected by the tables produced by the applicants in the annexes to the reply. Those tables show, for each of the exporting producers sampled, including the applicants, the PCNs in respect of which there is a match between imported product types and those sold by the Union industry. Although, for confidentiality reasons, the tables do not display the quantities sold by the Union industry, by PCN, it cannot be inferred from this that only 82% of Union industry sales were taken into account, as the applicants claim.

295 Therefore, it must be held that the applicants’ argument that the Commission analysed price undercutting without taking account of all PVA sales by the Union industry has no basis in fact.

296 In any event, assuming that the Commission did exclude certain product types sold by the Union industry from the price undercutting analysis, it must be noted that the judgment of 24 September 2019, Hubei Xinyegang Special Tube v Commission (T‑500/17, not published, EU:T:2019:691 ), was set aside by the Court of Justice, which concluded that the General Court had erred in law in that judgment in holding that, in the context of the analysis of the effects of the dumped imports on the Union industry prices provided for in Article 3(2) and (3) of the basic regulation, and, in particular, in the context of the analysis of price undercutting, the Commission was, in all circumstances, obliged to take account of all the products sold by that industry, including the types of product at issue that were not exported by the sampled producing exporters (judgment of 20 January 2022, Commission v Hubei Xinyegang Special Tube , C‑891/19 P, EU:C:2022:38, paragraph 159 ).

297 As the applicants point out, it follows from paragraphs 138 to 140 of the judgment of 20 January 2022, Commission v Hubei Xinyegang Special Tube (C‑891/19 P, EU:C:2022:38 ), that, in order for the Commission to be under that obligation, the first and second conditions (see paragraph 258 above) must be satisfied. As it is, contrary to the applicants’ contention, that is not the case here (see paragraphs 265 to 272 above).

298 Accordingly, the third part of the fourth plea in law must also be rejected.

299 Since all parts of the fourth plea, relating to the infringement of Article 3(2) and (3) of the basic regulation, have been rejected, the applicants also have no basis for claiming that, because of those infringements, the Commission also infringed Article 3(6) of that regulation (see paragraph 222 above).

300 In the light of all of the foregoing, the fourth plea in law must be rejected in its entirety.