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A-146-81
Noury Chemical Corporation and Minerals & Chemicals Ltd. (Applicants)
v.
Pennwalt of Canada Ltd. (Respondent)
and
Anti-dumping Tribunal (Tribunal)
Court of Appeal, Pratte and Le Dain JJ. and Lalande D.J.—Montreal, January 22; Ottawa, February 16, 1982.
Judicial review — Anti-dumping — Application to review and set aside a decision of the Anti-dumping Tribunal that the dumping of benzoyl peroxide, t-butyl peroctoate, t-butyl per- benzoate and lauroyl peroxide was causing material injury to the production in Canada of like goods — Preliminary deter mination of dumping identified four product classes — Tri bunal held that it was not appropriate to deal with each product class as a separate case since the manufacturing and marketing of the products were closely related — Whether Tribunal erred in law in not making a separate inquiry as to material injury with respect to each of the four classes of goods — Whether the definition of "like goods" in subs. 2(1) of the Anti-dumping Act means that goods which closely resemble the dumped goods are to be considered only where there are no identical goods = Application allowed — Federal Court Act, R.S.C. 1970 (2nd Supp.), c. 10, s. 28 — Anti- dumping Act, R.S.C. 1970, c. A-15, ss. 2(1), 16.
APPLICATION for judicial review. COUNSEL:
J. C. Chipman, Q.C. for applicants. J. L. Shields for Tribunal.
SOLICITORS:
Ogilvy, Renault, Montreal, for applicants.
Soloway, Wright, Houston, Greenberg, O'Grady, Morin, Ottawa, for Tribunal.
The following are the reasons for judgment rendered in English by
LE DAIN J.: This is a section 28 application to review and set aside the decision of the Anti- dumping Tribunal on March 10, 1981 in which the Tribunal made the following finding pursuant to
section 16 of the Anti-dumping Act, R.S.C. 1970, c. A-15:
The Anti-dumping Tribunal, having conducted an inquiry under the provisions of subsection (1) of section 16 of the Anti-dumping Act, consequent upon the issue by the Deputy Minister of National Revenue for Customs and Excise of a preliminary determination of dumping dated December 10, 1980 respecting the dumping into Canada of benzoyl peroxide, t-butyl peroctoate, t-butyl perbenzoate, originating in or exported from the United States of America and lauroyl perox ide, originating in or exported from the Federal Republic of Germany, the United Kingdom and the Netherlands, finds, pursuant to subsection (3) of section 16 of the Act, that the dumping of benzoyl peroxide, t-butyl peroctoate, t-butyl per- benzoate, originating in or exported from the United States of America and lauroyl peroxide, originating in or exported from the Federal Republic of Germany, the United Kingdom and the Netherlands, but excluding benzoyl peroxide, 98% granular solid; benzoyl peroxide, 78% wet powder with water and silica; benzoyl peroxide, 60% granular with phlegmatizer and water; benzoyl peroxide, 50% paste in silicone oil; benzoyl peroxide, 50% granular with phlegmatizer; benzoyl peroxide, 40% emul sion with diisobutyl phthalate; and benzoyl peroxide, 35% powder phlegmatized with dicalcium phosphate, has caused, is causing and is likely to cause material injury to the production in Canada of like goods.
The applicants attack this decision on three grounds which may be summarized as follows:
1. The Tribunal erred in law in not making a separate inquiry as to material injury with respect to each of the four classes of goods for which the Deputy Minister made a prelim inary determination of dumping;
2. The Tribunal erred in law in not excluding benzoyl peroxide 70% from its finding of ma terial injury; and
3. In finding that the profitability of the complainant, Pennwalt of Canada Ltd., had declined or deteriorated as a result of the dumping, the Tribunal based its decision on an erroneous finding of fact made without regard to the evidence before it.
The preliminary determination of dumping made by the Deputy Minister of National Revenue for Customs and Excise, pursuant to subsection 14(1) of the Anti-dumping Act, identified four classes of goods—benzoyl peroxide, t-butyl peroc-
toate, t-butyl perbenzoate, and lauroyl peroxide— and found weighted average percentages of dump ing for each of the four classes as follows:
1979 1980
Benzoyl Peroxide 10.51% 13.36%
T-Butyl Peroctoate 15.91% 14.73%
T-Butyl Perbenzoate 19.58% 17.67%
Lauroyl Peroxide 30.68% 30.68%
The applicant Noury Chemical Corporation, an exporter of the first three classes of goods, and the applicant Minerals & Chemicals Ltd., an importer of all four classes of goods, contended in the hearing before the Tribunal that the Tribunal was obliged to make an inquiry as to material injury with respect to each of the four classes of goods. The Tribunal rejected this contention for the fol lowing reasons:
Counsel for Minerals & Chemicals Ltd. and Noury Chemi cal Corporation advanced the argument that each of the four product classes covered by the Deputy Minister's preliminary determination should be dealt with as separate cases. Notwith standing that the preliminary determination does name four distinct product classes which are not generally substitutable for each other, the Tribunal does not find the argument persua sive. There is one plant producing the subject goods in Canada. The production mix is dictated essentially by sales demand. The interdependence of one product upon another determines the overall efficiency of the plant, and the loss of one product out of the product line throws the burden of the substantial fixed overhead onto the remainder. It appears inappropriate and unjustifiable to separate, for the purpose of assessing injury, production activities that are so closely interdependent. Fur thermore, in its consideration of the evidence on market compe tition and price suppression, it is apparent to the Tribunal that there is a pattern of market behaviour on the part of both the major suppliers and the major buyers that is common to all four product classes.
In my opinion the Tribunal erred in law in adopting this approach and failed to conduct the inquiry required of it by the Act. The Tribunal is required by section 16 to inquire whether the dumping of the goods to which the preliminary determination of dumping applies has caused, is causing, or is likely to cause material injury to the production in Canada of like goods. The Tribunal found, as the foregoing passage from its statement of reasons indicates, that the preliminary determi nation of dumping applied to "four distinct prod uct classes which are not generally substitutable for each other." It was, therefore, the duty of the Tribunal to inquire whether the dumping of each
class of goods, for which separate margins of dumping had been determined, had caused, was causing, or was likely to cause material injury to the production in Canada of goods that could be considered to be like goods in relation to that class, and not to consider whether it was causing ma terial injury to the production of other classes of goods being produced by the same manufacturer, which, however closely related from a manufactur ing or marketing point of view, were not like goods within the meaning of the Act. The Act is con cerned with the effect of dumping on the produc tion of like goods, not with consequential effects on the production of other goods.
This conclusion is sufficient to dispose of the application, but since the matter will have to be referred back to the Tribunal I propose to consider briefly the other two grounds of attack.
The applicants' second point is that the Tribunal should have excluded benzoyl peroxide 70% from its finding of material injury for the same reason that it appears to have excluded certain other benzoyl peroxide products, namely, that Pennwalt was not manufacturing it in Canada, but chose as a matter of policy to import its limited require ments for the Canadian market. The applicants contended that the goods manufactured by Penn- walt which closely resembled benzoyl peroxide 70%, such as benzoyl peroxide 78%, could not be considered to be like goods for purposes of ma terial injury because Pennwalt was importing iden tical goods. It was argued from the definition of "like goods" in subsection 2(1) of the Act that goods which closely resemble the dumped goods are to be considered only where there are no identical goods. The definition reads as follows:
2. (1) ...
"like goods" in relation to any goods means
(a) goods that are identical in all respects to the said goods, or
(b) in the absence of any goods described in paragraph (a), goods the characteristics of which closely resemble those of the said goods;
The applicants emphasized the disjunctive form of the definition and the words "in the absence of any goods described in paragraph (a)". Although these features of the definition lend considerable force to the contention, I am of the opinion that that cannot be what was intended since the purpose of the Act must be to protect the production of goods which, because they are identical to or closely resemble the dumped goods, are in competition with the latter. The view contended for would mean that a manufacturer who produced both kinds of goods would only be protected from ma terial injury to identical goods. On this view of the definition it may be that the Tribunal could have properly concluded that there was no material injury caused to the production in Canada of like goods by the dumping of benzoyl peroxide 70%, but this was a question of fact, and I can see no basis for concluding that in failing to do so the Tribunal committed a reviewable error within the meaning of section 28.
The applicants' third ground of attack is that there was no evidence whatever to support the finding of fact, on which the conclusion as to material injury was based, that the "profitability" of Pennwalt's Lucidol Division had declined or deteriorated in 1979 and the first eight months of 1980 as a result of the "price suppression" caused by the competition of the dumped goods. The applicants argued that the only evidence of Penn- walt's profitability in these periods were unaudited financial statements that showed an increase in overhead costs that was attributable in some meas ure to a change in 1979 in the accounting method of allocating overhead costs. It was contended that in view of this change in the allocation of overhead costs it was impossible to compare the profitability in 1979 and the first eight months of 1980 with that in the previous years. I find considerable force in this contention, in so far as these financial statements are concerned, but I am unable to conclude that this was the only evidence before the Tribunal on which the Tribunal could base a find ing that there had been a decline or deterioration in profitability amounting to material injury. There was evidence, to which the Tribunal referred in its reasons, of "price suppression" and
loss of orders, from which the Tribunal could infer a decline or deterioration in profitability. Whether that amounted to material injury was a question of fact for the Tribunal. I would, therefore, reject the applicants' third ground of attack.
For these reasons I would allow the section 28 application, set aside the decision of the Tribunal, and refer the matter back to the Tribunal for a new inquiry upon the basis that the Tribunal must consider whether the dumping of each class of goods to which the preliminary determination of dumping applies has caused, is causing or is likely to cause material injury to the production in Canada of goods which are like goods in relation to each such class.
* * *
PRATTE J.: I agree.
* * *
LALANDE D.J.: I concur.
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