Goss Graphic System, Inc. v. U.S.

• Decision Date: 16 October 1998
• Docket Number: Court No. 96-10-02314.,Slip Op. 98-147.
• Citation: 33 F.Supp.2d 1082
• Parties: GOSS GRAPHICS SYSTEM, INC., Plaintiff, v. UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

33 F.Supp.2d 1082

GOSS GRAPHICS SYSTEM, INC., Plaintiff, v. UNITED STATES, Defendant.

Slip Op. 98-147.

Court No. 96-10-02314.

United States Court of International Trade.

October 16, 1998.

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Kirkland & Ellis, (Kenneth G. Weigel), for Plaintiff Koenig & BauerAlbert, AG, and KBA-Motter Corp.; Shearman & Sterling, (Thomas B. Wilner, Jeffrey M. Winton, Michael J. Chapman), for Plaintiffs MAN Roland Druckmaschinen AG and MAN Roland Inc.; Steptoe & Johnson LLP, (Richard O. Cunningham, Edward J. Krauland, Daniele J. Plaine, Eric C. Grimm), for Plaintiff Mitsubishi Heavy Industries; Perkins Coie LLP (Yoshihiro Saito) and Farkas & Manelli (Richard Toikka), Washington, DC, for Plaintiff Tokyo Kikai Seisakusho, Ltd.

Lyn. M. Schlitt, General Counsel, James A. Toupin, Deputy General Counsel, Neal J. Reynolds, Office of the General Counsel, U.S. International Trade Commission, Randi Rimerman Serota, Commercial Litigation Branch, Civil Division, Department of Justice, Washington, DC, for Defendant.

Wiley, Rein & Fielding, (Pujo,leslie Charles Owen Verrill, Jr., Alan H. Price, Leslie Johnson Pujo), Washington, DC, for Goss Graphics Systems, Inc., DefendantIntervenor.

OPINION

POGUE, Judge.

This action is before the Court on Plaintiffs' motions for judgment on the administrative record pursuant to USCIT Rule 56.2. Plaintiffs Koenig & Bauer-Albert AG and KBA-Motter Corp. ("KBA"), MAN Roland Druckmaschinen AG and MAN Roland Inc. ("MAN Roland"), Mitsubishi Heavy Industries, Ltd. ("MHI") and Tokyo Kikai Seisakusho, Ltd. ("TKS"), respondents in the underlying investigation, seek review of the final determination of the U.S. International Trade Commission ("ITC" or "Commission"), in Large Newspaper Printing Presses and Components Thereof, Whether Assembled or Unassembled, From Germany and Japan, Inv. Nos. 731-TA736 & 737, USITC Pub. No. 2988 (Aug.1996)("Final Determination"). Specifically, Plaintiffs challenge the ITC's determination that the industry in the United States producing large newspaper printing presses ("LNPPs") is threatened with material injury by reason of imports from Germany and Japan that are sold at less than fair value ("LTFV").¹ The German Plaintiffs also challenge the Commission's decision to cumulate imports of LNPPs from Germany and Japan for purposes of its material injury and threat of material injury analysis.²

Background

LNPPs are presses that are designed to print major daily papers for large metropolitan newspapers. LNPPs are capable of producing tens of thousands of newspapers per hour. They have a long life-expectancy and must be extremely reliable. LNPPs are individually designed to meet each newspaper's requirements and require sophisticated engineering, programming and manufacturing capabilities. Their design, construction and installation generally require long-term contracts covering all aspects of sale, delivery and construction.

In its determination, the ITC found that there was a single domestic industry, consisting of all LNPP producers of the domestic like product. Included in the domestic industry were Goss, the petitioner in the underlying investigation, as well as three LNPP producers that are owned or controlled by foreign LNPP manufacturers.

Standard of Review

In reviewing the Commission's determination, the Court must sustain a final determination unless it is "unsupported by substantial evidence on the record, or otherwise not in accordance with law." 19 U.S.C. § 1516a(b)(1)(B)(1994).

Discussion

I. Cumulation

In making its injury determination, the ITC may "cumulate"—i.e., consider the impact of imports from more than one country on the domestic industry—only if those imports "compete with each other and with domestic like products in the United States market." Section 771 of the Tariff Act of 1930, as amended, 19 U.S.C. § 1677(7)(G)(i),(H)(1994). In order to satisfy this provision, the ITC must determine that "a reasonable overlap of competition" exists between imports from different countries. Wieland Werke, AG v. United States, 13 CIT 561, 563, 718 F.Supp. 50, 52 (1989). "Completely overlapping markets are not required." Id.

German Plaintiffs argue that the ITC's cumulation decision was premised on the finding that during the investigation period, "`the German producers submitted final bids in direct competition with one or both of the Japanese producers on sales of LNPP press lines ... accounting for [a significant percentage] of the total final contract value of all LNPP press line contracts awarded....'" Mem. MAN Roland and Koenig & Bauer-Albert Support Mot. J. Agency R. ("Cumulation Brief") at 8 (emphasis in the original) (quoting Views of the Commission, List 2, Doc. 429M ("Views") at 36). Therefore, Plaintiffs argue, the decision to cumulate was inappropriate, because "[t]here was no competition between German and Japanese producers at the final bidding stage during the entire period of investigation." Cumulation Brief at 12.

However, the ITC's decision to cumulate German and Japanese imports was based on a variety of considerations. Specifically, in evaluating whether imports from different countries compete with each other and with the domestic like product, the ITC relies on a four-factor test. The four factors are as follows:

(1) the degree of fungibility between the imports from different countries and between imports and the domestic like product, including consideration of specific customer requirements and other quality related questions;

(2) the presence of sales or offers to sell in the same geographical markets of imports from different countries and the domestic like product;

(3) the existence of common or similar channels of distribution for imports from different countries and the domestic like product; and

(4) whether the imports are simultaneously present in the market.

Views at 32. See Wieland Werke, 13 CIT at 563, 718 F.Supp. at 52; Fundicao Tupy S.A. v. United States, 12 CIT 6, 10-11, 678 F.Supp. 898, 902 (1988), aff'd, 859 F.2d 915 (Fed.Cir.1988). "While no single factor is determinative, and the list of factors is not exclusive, these factors are intended to provide the Commission with a framework for determining whether the imports compete. ..." Views at 32 (citing Wieland Werke, 13 CIT at 563, 718 F.Supp. at 52). Plaintiffs do not directly challenge the ITC's four-factor test.

Evaluating the four factors, the Commission observed that, "during the period of investigation, subject imports from Germany and Japan ... were generally sold in similar channels of trade since the large majority of German and Japanese subject imports ... was sold directly by the manufacturer of the merchandise to the customer." Views at 33-34. As evidence for this assertion, the ITC cites the Staff Report in Large Newspaper Printing Presses and Components Thereof, Whether Assembled or Unassembled, From Germany and Japan, Inv. Nos. 731-TA-736 & 737 (Final), List 2, Doc. 311M (Aug. 7, 1996) ("Staff Report") at 1-15 ("LNPPs and additions are sold directly to the end user....").³

With respect to the simultaneous presence of the imports in the market, the ITC stated, "we examined the extent of simultaneous presence of subject imports from Germany and Japan in terms of both sales and offers to sell ... as well as actual imports entering the United States, because the bidding process is the point at which head-to-head competition occurs." Views at 34. The ITC found that subject importers were actively bidding for sales of press lines and additions in every year of the period examined. Id. As evidence, the ITC cites the Staff Report at V-11 to V-16 and V-28 to V-62. The cited pages contain tables and text describing domestic LNPP sales during the period of investigation. These descriptions demonstrate that even if German and Japanese manufacturers were not competing against each other at the final bid stage for specific sales, as Plaintiffs claim, producers from both countries were actively bidding for sales of press lines and additions during the period examined. Furthermore, "subject merchandise entered the United States from both Germany and Japan in 1991, 1994 and 1995." Id. This statement is supported by a table in the staff report listing U.S. imports of LNPPs for 1991-95. See Staff Report at IV-4, Table IV-3.

With regard to the "presence of sales or offers to sell in the same geographical markets," the ITC found that "the record evidence indicates that German, Japanese and domestic producers are not limited by geographic boundaries with respect to their submission of bids and are therefore able to— and do—submit bids on LNPP projects throughout the nation." Views at 34-35. This statement also is borne out by the staff report. See Staff Report at V-28 to V-62.

Finally, considering the remaining factor, the degree of fungibility of imports from different countries, the Commission said,

in a number of cases, ... RFQs [requests for quotations] were sent to domestic and German and Japanese LNPP producers, and initial bids, which are themselves detailed descriptions of the products being offered, were often submitted by these producers. The fact that purchasers solicited detailed initial bids from both German and Japanese producers ... indicates to us that purchasers perceived a reasonable degree of fungibility among various producers' presses....

Views at 35-36.

In response, the Plaintiffs argue that the German and Japanese manufacturers did not compete at the final bid stage, and therefore, cannot be considered to have been in competition at all. Implicit in Plaintiffs' argument is the view that only "direct competition" may be considered by the ITC in making a cumulation determination. See Cumulation Brief at 12 (arguing that certain sales did not involve "direct competition" between German and Japanese producers and therefore should not be included in the ITC's cumulation analysis). Plaintiffs imply...