Marsan Gida Sanayi Ve Ticaret A.S v. United States
| Decision Date | 16 February 2011 |
| Docket Number | Slip Op. 11-20,Court No. 09-00483 |
| Parties | MARSAN GIDA SANAYI VE TICARET A.S., Plaintiff, v. UNITED STATES, Defendant. |
| Court | U.S. Court of International Trade |
Before: Richard W. Goldberg, Senior Judge
Law Offices of David L. Simon (David L. Simon), for the Plaintiff.
Tony West, Assistant Attorney General; Jeanne E. Davidson, Director; Patricia M. McCarthy, Assistant Director, Commercial Litigation Branch, Civil Division, U.S. Department of Justice (Joshua E. Kurland); Office of the Chief Counsel for Import Administration, U.S. Department of Commerce (Deborah R. King), Of Counsel, for the Defendant.
[Plaintiff's Motion for Judgment on the Agency Record is denied and the final results of the countervailing duty changed circumstances review are sustained.]
Marsan Gida Sanayi ve Ticaret A.S. ("Marsan" or "Plaintiff), a Turkish producer and exporter of pasta brought this appeal to contest the final results of the changed circumstances review of the countervailing duty order on pasta from Turkey, published as Certain Pasta from Turkey: Final Results of Countervailing Duty Changed Circumstances Review, 74 Fed. Reg. 54, 022 (Dep't Commerce Oct. 21, 2009) ("Final Results"). The changed circumstances review examined whether Marsan was the successor-in-interest to Gidasa for countervailing duty cash deposit purposes. Commerce determined that Marsan was not the successor to Gidasa. Id. at 54, 023, 1 Consequently, Commerce determined that Marsan's merchandise was not entitled to Gidasa's countervailing duty cash deposit rate, and instead, should enter under the "all others" cash deposit rate of 9.38 percent. Id. Marsan challenges the methodology Commerce employed and its final determination as unsupported by substantial evidence and contrary to law.
In December 2006, several years prior to Marsan's petitions for an antidumping ("AD") and countervailing duty ("CVD") changed circumstances review ("CCR"), Commerce stated it might change the successor-in-interest analysis for CVD CCRs. See Stainless Steel Sheet and Strip in Coils from the Republic of Korea: Preliminary Results of Countervailing Duty Changed Circumstances Review, 71 Fed. Reg. 75, 937 (Dep't Commerce Dec. 19, 2006) ("Stainless Steel").
Thus, in January 2007, Commerce published a Federal Register notice indicating its intention to change the successorship analysis in CVD CCRs. Countervailing Duty Changed Circumstances Reviews: Request for Comment on Agency Practice, 72 Fed. Reg. 3, 107 (Dep't Commerce Jan. 24, 2007) ("Request for Comment"). At that time, Commerce applied the same criteria for both AD and CVD successor-in-interest CCRs to examine whether an alleged successor and predecessor company were the same business entity. Commerce's criteriacompared the companies' (1) management; (2) production facilities; (3) supplier relationships; and (4) customer base before and after the changed circumstances. Id. at 3, 108. Commerce stated it may not be appropriate to use the same analysis, given that AD and CVD determinations focus on different issues. Id. Commerce noted the analysis focused on pricing behavior, which is less relevant in the CVD context where subsidization, not price discrimination, is the analytical focus. Id.
According to Commerce, "an examination that focuses largely or solely on changes in the legal or managerial structure or the productive capacity of a company may overlook other important considerations that also may be relevant in the context of subsidies and countervailing duties." Id. In response to the Request for Comment, Commerce received comments from two parties, which were summarized in the Preliminary Results of Marsan's CVD CCR, published as Certain Pasta from Turkey: Preliminary Results of Countervailing Duty Changed Circumstances Review, 74 Fed. Reg. 47, 225 (Dep't Commerce Sept. 15, 2009) ("Preliminary Results").
In August 2007, the Sabanci Group, a Turkish conglomerate and then-owner of Gidasa, agreed to sell Gidasa to MGS Marmara Gida for cash. In March 2008, the parties finalized the agreement. In June 2008, Gidasa's new shareholders changed the name of the company to Marsan. In December 2008, Marsan filed petitions requesting that Commerce conduct CCRs for both the AD and CVD orders on pasta from Turkey.2 Marsan asserted it was the successor-in-interest to Gidasa for purposes of those orders. Thus, Marsan claimed it was entitled to Gidasa's AD and CVD cash deposit rates.
On January 28, 2009, Commerce published its Notice of Initiation regarding Marsan's CVD CCR.3 Notice of Initiation of Countervailing Duty Changed Circumstances Review: Certain Pasta from Turkey, 74 Fed. Reg. 4, 938 (Dep't Commerce Jan. 28, 2009) ("Notice of Initiation"). Commerce reiterated that the successor-in-interest test used in AD and CVD CCRs might not "fully address whether it is appropriate to apply the CVD cash deposit rate of a previously examined company" to a different company claiming to be its successor. Id. at 4, 939. Referencing its language from Stainless Steel and its Request for Comment, Commerce specifically stated that it did not intend to apply the AD CCR successor-in-interest methodology in Marsan's CVD CCR to determine whether Marsan was the successor to Gidasa for CVD cash deposit purposes. Id.
In September 2009, Commerce published the Preliminary Results of Marsan's CVD CCR. Commerce announced that, in consideration of the comments it received, and drawing on the Department's experience, it would be utilizing a new successor-in-interest methodology for CVD CCRs, including Marsan's CVD CCR. Preliminary Results, 74 Fed. Reg. at 47, 227. Under the new CVD CCR successor-in-interest methodology, Commerce makes "an affirmative CVD successorship finding (i.e., that the successor company is the same subsidized entity for CVD cash deposit purposes as the predecessor company) where there is no evidence of significant changes in the respondent's operations, ownership, corporate or legal structure" thatcould have affected the nature and extent of the company's subsidy levels. Id. Commerce provided a non-exhaustive list of the changes it considered "significant and would affect the nature and extent of the requesting party's subsidization: (1) changes in ownership, other than regular buying and selling of publicly owned shares held by a broad array of investors; (2) corporate mergers and acquisitions involving the respondent's consolidated or cross-owned corporate family and outside companies; and (3) purchases or sales of significant productive facilities." Id. at 47, 227-28.
In addition, under the new methodology, where a change occurs in a company's operations, ownership, corporate, or legal structure that is not reflected in the abovementioned non-exhaustive list, Commerce will assess whether the "change could affect the nature and extent of the respondent's subsidization." Id. at 47, 228. Commerce outlined additional non-exhaustive, objective criteria for this assessment: "(1) [c]ontinuity in the cross-owned or consolidated respondent company's financial assets and liabilities; (2) continuity in its production and commercial activities; and (3) continuity in the level of the government's involvement in the respondent's operations or financial structure (e.g., government ownership or control, the provision of inputs, loans, equity)." Id. According to Commerce, the particular criteria "better reflect [the] aspects of a company that are most impacted by, the target of, or the vehicle for subsidy benefits." Id. Commerce also highlighted that the successor-in-interest analysis focuses on whether a significant change occurred and not whether those changes, in fact, affected a company's subsidization. Id.
Using the new criteria, Commerce preliminarily determined that Marsan was not the successor to Gidasa for CVD cash deposit purposes because there was a significant change in the company's operations, ownership, corporate, or legal structure. Commerce reasoned that the change in ownership was a significant change because new investors and a new corporate entity owned and controlled all of Gidasa's assets, including its facilities and brand names. Id. According to Commerce, these changes "could impact the nature and extent of the respondent's subsidization." Id. However, Commerce did not analyze whether the change of ownership actually affected Marsan's subsidy levels because that analysis is only appropriate in a full administrative review. Id.
Ultimately, Commerce determined that Marsan's merchandise was not entitled to enter under the CVD cash deposit rate previously established for Gidasa. Id. at 47, 229. Instead, Marsan's merchandise should enter under the "all others" cash deposit rate of 9.38 percent. Id. Commerce published the Final Results of Marsan's CVD CCR on October 21, 2009, adopting its new successor-in-interest methodology for CVD CCRs, as well as the findings set forth in the Preliminary Results.
Marsan challenges Commerce's new CVD CCR successor-in-interest test as unlawful. Marsan also challenges Commerce's final determination that Marsan was not the successor to Gidasa for purposes of the CVD cash deposit rate, claiming it is not supported by substantial evidence and is unlawful.
This case deals with countervailing duty proceedings. Plaintiff brought this action pursuant to section 516A(a)(2)(B)(iii) of the Tariff Act of 1930, 19 U.S.C. § 1516a(a)(2)(B)(iii) (2006). This Court has jurisdiction pursuant to section 201 of the Customs Court Act of 1980, 28 U.S.C. § 1581(c) (2006).
This Court must "uphold Commerce's determination unless it is 'unsupported by substantial evidence on the record, or otherwise not in accordance with law.'" Micron Technology, Inc. v. United States, 117 F.3d 1386, 1393 (Fed. Cir. 1997) (quoting 19 U.S.C. § 1516a(b)(1)(B)(i) (1994)). "Substantial...
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