Koenig & Bauer-Albert Ag v. U.S.
| Decision Date | 16 March 1999 |
| Docket Number | Court No. 96-10-02298.,Slip Op. 99-25. |
| Parties | KOENIG & BAUER-ALBERT AG, et al., Plaintiff, v. UNITED STATES, Defendant, and Goss Graphics, Inc., Defendant-Intervenor. |
| Court | U.S. Court of International Trade |
Shearman & Sterling (Thomas B. Wilner, Jeffrey M. Winton, Michael J. Chapman, and Meredith Kolsky Lewis), for plaintiffs MAN Roland Druckmaschinen AG and MAN Roland Inc.
Kirkland & Ellis (Kenneth G. Weigel, Carol A. Rafferty, Nancy Kao), for plaintiffs Koenig & Bauer-Albert AG and KBA-Motter Corp.
David W. Ogden, Acting Assistant Attorney General, David M. Cohen, Director, Commercial Litigation Branch, Civil Division, United States Department of Justice; Boguslawa B. Thoemmes, Attorney, Office of the Chief Counsel for Import Administration, United States Department of Commerce, of counsel, and Randi Rimerman Serota, Attorney, Department of Justice, Civil Division, Commercial Litigation Branch, for defendants.
Wiley, Rein & Fielding (Charles Owen Verrill, Jr., Alan H. Price, Willis S. Martyn III, and Leslie Johnson Pujo), for defendant-intervenor.
On June 23, 1998, this Court remanded certain aspects of the Department of Commerce's ("Commerce") determination in Large Newspaper Printing Presses and Components Thereof, Whether Assembled or Unassembled, From Germany, 61 Fed. Reg. 38,166 (Dep't Commerce, July 23, 1996) (final determination) ("Germany Final"). See Koenig & Bauer-Albert AG v. United States, 22 CIT ___, 15 F.Supp.2d 834 (1998).1 Specifically, the Court directed Commerce: 1) to reconsider the decision not to combine MAN Roland's large newspaper printing press ("LNPP") production costs with those incurred by its subsidiary, MAN Plamag, and 2) to recalculate MAN Roland's selling, general, and administrative costs using an appropriate allocation ratio. See id. at ___, 15 F.Supp.2d at 858.
The Court will uphold a Commerce determination in an antidumping investigation 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)(i) (1994).
Where certain criteria are met, Commerce "collapses" related companies into one entity, deriving a single, weighted-average dumping margin for the collapsed entity as a whole. See Asociacion Colombiana de Exportadores de Flores v. United States, 22 CIT ___, ___, 6 F.Supp.2d 865, 893 (1998). Here, during the underlying administrative proceedings, MAN Roland argued that, because MAN Roland and its wholly owned subsidiary, MAN Plamag, met the criteria for collapsing, Commerce "should [have] average[d] the labor and overhead rates of both the MAN Plamag and [MAN Roland] facilities because LNPPs [were] produced at both locations." Germany Final at 38,187.
In its final determination, Commerce neither outlined its collapsing practice nor explained why MAN Roland and MAN Plamag did not meet the requisite criteria. See id. at 38,188. Instead, without addressing the fact that both companies produced LNPPs, Commerce stated that "MAN Plamag is an affiliated party to [MAN Roland] ... [that] supplies [MAN Roland] with one of the major production inputs[.]" Id. Commerce concluded, "[c]ontrary to [MAN Roland's] assertion, the Department's normal practice is not to automatically collapse affiliated suppliers and the respondent company." Id. In its brief, the government argued that it did not average MAN Roland's and MAN Plamag's costs because MAN Plamag was not a producer of identical merchandise. See Koenig & Bauer-Albert, 22 CIT at ___, 15 F.Supp.2d at 849, n. 7.
This Court found Commerce's response in its final determination to be insufficient. See id. at 849. Moreover, because Commerce's "identical merchandise" argument was a post hoc rationalization, the Court did not address it on the merits. See id. at 849, n. 7. Therefore, the Court remanded the issue for Commerce to reconsider. See id. at 850. The Court also instructed Commerce that, if it chose to rely on the "identical merchandise" argument, it would have to reconcile its determination with Certain Fresh Cut Flowers From Colombia, 55 Fed.Reg. 20,491, 20,497 (Dep't Commerce, May 17, 1990) (final determination) ("Fresh Flowers") and Silicon Metal From Brazil, 59 Fed.Reg. 42,806, 42,808 (Dep't Commerce, Aug. 19, 1994) (final determination) ("Silicon Metal").2 See id. at 849, n. 7.
In its redetermination, Commerce reconsidered the issue, but again decided not to combine the costs of MAN Roland and MAN Plamag for purposes of calculating the cost of production. See Final Results of Redetermination Pursuant to Remand (Dep't Commerce, Sept. 17, 1998) ("Redetermination") at 3. Commerce maintained that, pursuant to its "established practice," it only averages a company's production costs from multiple facilities where the facilities actually produce identical merchandise. Id. (). In addition, Commerce argued that its decision in Germany Final was consistent with Fresh Flowers and Silicon Metal. See id. at 5, 6.
Finally, Commerce addressed the policy argument advanced by MAN Roland as support for MAN Roland's position. In its comments to Commerce's redetermination, MAN Roland argued that Commerce's practice of averaging a respondent's production costs incurred at multiple facilities was designed "to avoid an opportunity for a respondent to escape dumping liability ... simply because of the choice of the facility in which the merchandise was produced." Cmts. of MAN Roland on Redeterm. Pursuant to Remand ("MAN Roland Cmts.") at 7. In other words, according to MAN Roland, Commerce's practice is to average a respondent's production costs incurred at multiple facilities where the various facilities have the capability to produce the subject merchandise.
Countering MAN Roland's assertion, Commerce stated,
We disagree with [MAN Roland's] argument that, where a respondent has the ability to produce the subject merchandise at more than one facility, the reported costs should reflect the weighted-average cost of manufacturing at all facilities. Contrary to [MAN Roland's] assertion, the Department does not weight-average the production costs incurred for non-identical merchandise simply because the respondent could have produced identical merchandise at one of its facilities.
In its redetermination, Commerce maintained that it properly did not average MAN Roland's and MAN Plamag's production costs because, under its "established practice," Commerce only averages a company's production costs from multiple facilities where the facilities produce identical merchandise. See Redetermination at 3. The Court here reviews whether in fact Commerce's identical merchandise requirement constitutes its established practice in the context of affiliated parties.
The Court first concludes that Commerce has failed to explain how its identical merchandise practice is consistent with its decisions in Fresh Flowers and Silicon Metal.
In Fresh Flowers, Commerce weight-averaged the production costs of two related companies, Floramerica and Cultivos de Caribe, that were collapsed for purposes of calculating constructed value. See Fresh Flowers at 20,497. The Floramerica farm produced standard chrysanthemums, while the Cultivos de Caribe farm produced spider chrysanthemums. See id. In its redetermination, Commerce contended that it averaged the two farms' production costs because Commerce regarded the two chrysanthemum varieties "as part of the identical product category, chrysanthemums[.]" Redetermination at 5.
Commerce's position here is not consistent with the reasoning articulated in Fresh Flowers. There, Commerce explained, "[a]lthough the flowers are somewhat different, we consider spider chrysanthemums and standard chrysanthemums to be the same type and therefore calculated one [constructed value] for both." Fresh Flowers at 20,497. The Court fails to see how the phrases "somewhat different" and "the same type" can be reconciled with "identical." Moreover, if, quoting Commerce, it is sufficient for the purpose of cost averaging that the products produced at each facility be "part of the identical product category," Commerce has not explained how different models of LNPPs are not members of an identical product category, LNPPs.
Similarly, Commerce failed to explain how its decision in Germany Final is consistent with Silicon Metal. In that determination, Commerce averaged a silicon metal producer's costs incurred by different furnaces. See Silicon Metal at 42,808. In its redetermination, Commerce asserted that Silicon Metal did not "support ... [MAN Roland's] contention that the Department normally computes a weighted-average cost for merchandise that is non-identical ... [because there the respondent] produced the identical merchandise in multiple furnaces during the period of review." Redetermination at 9.
While Commerce is correct that all the furnaces in question in Silicon Metal produced the subject merchandise during the period of review, see Silicon Metal at 42,808, Commerce's characterization of that determination ignores its stated rationale. In Silicon Metal, Commerce indicated that it averaged production costs incurred at multiple facilities to prevent the respondent from being able to avoid dumping liability through the manipulation of production:
The Department believes that it is inappropriate to specifically...
To continue reading
Request your trial
-
Koenig & Bauer-Albert Ag v. U.S.
..."collapsing" and cost-averaging; thus the Court remanded these issues for a second time. See Koenig & Bauer-Albert AG v. United States, 23 CIT ___, ___, 44 F.Supp.2d 280, 287 (1999) ("KBA II"). On August 10, 1999, Commerce issued its Final Results of Redetermination Pursuant to Second Court......