Initially 121 Chinese exporting producers/groups of producers provided the requested information and agreed to be included in a sample. The cooperating companies represent more than 80 % of the total Chinese export volume. On the basis of the information received from the exporting producers and in accordance with Article 27 of the basic Regulation the Commission initially proposed a sample of seven exporting producers/groups of exporting producers.

The selected sample of seven groups of companies consists of the three cooperating exporters with the largest volume of exports of modules, the two cooperating exporters with the largest volume of exports of cells and the two cooperating exporters with the largest volume of exports of wafers. The sample of these seven groups of exporting producers served as the basis to determine the level of subsidisation for those groups as well as the level of subsidisation for all cooperating exporting producers not included in the sample, as required by Articles 15(2) and 15(3) of the basic Regulation. As explained in recital (46) below, the Commission excluded wafers from the product scope in the definitive stage of the investigation. Certain companies were selected into the sample on the basis of their largest volumes of exports of wafers. However, taking into account the fact that the Commission had already investigated these companies, verified the data submitted by them and also the fact that all of these companies had significant exports of modules and/or cells it was not deemed necessary to amend the sample.

The number of sampled exporting producers was eventually deemed to be eight companies/groups. This is because, although it was initially reported that the Jinko Solar Co. Ltd and Renesola Jiangsu Ltd were related, it was subsequently established that they were not.

The Commission announced in the Notice of Initiation that it had provisionally selected a sample of Union producers. All known Union producers and known producers' association were informed about the selection of the provisional sample of Union producers. This provisional sample consisted of nine Union producers out of the around 215 Union producers that were known prior to the initiation of the investigation to produce the like product, selected on the basis of the largest representative volume of production, taking into account the sales volume and the geographical location that could reasonably be investigated within the time available. It was ensured that the sample covers both vertically integrated and non-integrated Union producers. Interested parties were also invited to make their views known on the provisional sample.

1. (i)

   Some parties submitted that the limited information provided with regard to the provisionally selected sample was insufficient and prevented them from making any meaningful comments on the proposed sample. In particular, they criticised that the identity of the Union producers was kept confidential and requested that the Member States where the sampled Union producers were located should be disclosed, as well as the selected Union producers' share of production in the total production volume of PV modules and cells and the percentage of production and sales represented by the sampled companies individually and by the sample as a whole.

2. (ii)

   The method used for the selection of the sample was contested on the grounds that it ‘confuses three different steps’, namely the support for the initiation of the investigation, definition of the Union industry and sampling. Therefore, it was claimed that it was unclear whether the Union industry was already defined at the time of the selection of the sample, and therefore whether the sample could be considered as representative. Without defining the Union industry at sampling stage, interested parties were prevented from verifying whether the provisional sample was representative, and thus whether on the basis of the sample, the situation of the Union industry during the investigation period as defined in recital (38) below could be correctly assessed. Furthermore, it was claimed that it was inappropriate to select the provisional sample on the basis of the replies of the Union producers to the examination of the support for the initiation of the investigation.

3. (iii)

   It was also claimed that the provisional sample was selected merely on the basis of companies which have expressed their support to the present investigation.

4. (iv)

   One party claimed that, since vertically integrated companies are included in the provisional sample, the production volume of cells may be double or triple counted which casts doubts on the overall representativity of the sample. It was requested that for vertically integrated producers only the production volume of modules should be counted, but not the volume of cells.

5. (v)

   The same party alleged that the data on which the selection of the sample was based were at least partly unreliable which could have an impact on the representativity of the provisional sample as a whole.

6. (vi)

   One party provided a list containing allegedly around 150 additional Union producers of the like product, claiming that they should have been taken into consideration for the purposes of selecting a sample of Union producers.

The arguments raised by the parties were addressed as follows: The Union producers requested that their names be kept confidential due to the risk of retaliation. There were indeed real threats against Union producers to harm their business both in the Union and outside. The Commission considered that these requests were sufficiently substantiated to be granted. The disclosure of the location or share in production and sales of individual Union producers selected in the sample could easily reveal the identity of the producer concerned and the requests in this regard had to be rejected.

The Commission did not ‘confuse’ the determination of the support for the initiation of the investigation, the determination of the Union industry and the selection of provisional sample as these steps remained independent from each other and were decided upon separately. It was not demonstrated to what extent the use of production and sales data provided by the Union producers in the context of the examination of the support for the initiation of the investigation had affected the representativity of the sample. At initiation the Union industry had indeed been provisionally defined. All available information concerning the Union producers, including information provided in the complaint and data collected from Union producers and other parties before the initiation of the investigation, was used in order to provisionally establish the total Union production for the investigation period, as defined in recital (38) below.

All Union producers that replied to questions related to the support for the initiation of the investigation were considered for the sample, regardless of whether they supported, opposed or expressed no opinion on the investigation. This claim was therefore rejected.

The question of double/triple counting has been considered when the provisional sample was selected. It appeared that excluding production and sales of cells of the vertically integrated Union producers would not take into consideration the part of the production of cells sold on the free market. It was therefore considered that excluding sales of cells from the total production volume would not necessarily lead to a more representative sample. Furthermore, the representativity of the sample was established not only on the basis of the production volume but also on the basis of the geographical spread and a balanced representation of vertically integrated and non-integrated producers. The relative representativeness of the production volume was calculated at the level of each type of the like product. On this basis, it was considered that the methodology to select the provisional sample was reasonable and the sample is therefore considered representative for the Union industry of the product under investigation as a whole. Therefore, this claim was rejected. As far as the reliability of data is concerned, the sample was selected on the basis of the information available at the time of the selection of the sample as provided for in Article 27 of the basic Regulation. Concerning the reliability of data used in the support of the initiation of the investigation, the investigation found no evidence that the data collected prior to the initiation was significantly deficient. Therefore, it can be reasonably assumed that the basis on which the provisional sample was selected was sufficiently reliable. Therefore, this claim was rejected.

Concerning the list of around 150 additional Union producers, it should be noted that this information was submitted far outside the deadline set for interested parties to comment on the selection of the provisional sample and for Union producers to come forward and to request to be selected in the sample. Moreover, about 30 of the Union producers contained in this list were in fact known to the Commission at the time of the selection of the sample. Furthermore, all Union producers that made themselves known after the publication of the Notice of Initiation were considered when selecting the sample. On this basis, the representativity of the sample has not been affected. Therefore, this claim was rejected.

Following receipt of comments, the composition of the sample was revised on the ground that there were indications that one of the selected companies would not have been in the position to fully cooperate. In order to maintain the level of representativity of the sample an additional Union producer was selected. This revised sample consisted thus of ten companies, selected on the basis of the largest representative volume for each level of production, taking into account sales volume on the Union market and geographical location that could reasonably be investigated within the time available. Further to the exclusion of wafers from the definition of the product concerned, and thus from the scope of this investigation (see recitals (42) — (46) — and (349) below), the sample consisted of eight companies. As a result, the revised sample of Union producers accounted, expressed as a percentage of out of the total Union production, between 18 % and 21 % for modules and between 17 % and 24 % for cells and covered vertically integrated and non-integrated producers. Given that a precise percentage would allow calculating the production volume of the above mentioned additional Union producer and thus its identity could be determined, no such precise percentages could be disclosed.

The Union producers who supplied the Commission with information required for the selection of a sample in the present anti-subsidy proceeding coincide with the Union producers who supplied the relevant information in the parallel on-going anti-dumping investigation. Furthermore, all Union producers selected in the final sample in the anti-dumping investigation have supplied the relevant information in the present anti-subsidy investigation which allowed the Commission to select a sample. Therefore, it was considered appropriate that the final samples of Union producers in both proceedings were identical.

The GOC reiterated its claim that the use of confidentiality of the names of the Complainants and sampled Union producers is not warranted. As already stated in recital (9) to the provisional Regulation, the Union producers requested that their names be kept confidential due to the risk of retaliation. The Commission considered that these requests were sufficiently substantiated to be granted. The information that has been provided to the Commission in order to substantiate the risk of retaliation cannot be disclosed to third parties, as such disclosure would defeat the purpose of the request for confidentiality. Moreover, in a case, where, as reported by the GOC, a Union producer re-evaluated its position and revealed its identity by filing an application for a Court case against the provisional regulation, there is no longer ground to disclose information on the basis of which anonymity was granted, as the identity has been revealed.

Following the final disclosure, the China Chamber of Commerce for Import and Export of Machinery and Electronic Products (CCCME) reiterated the arguments about the method used for the selection of the provisional sample of the Union producers. It claims in particular that the Institutions have not taken into account 120 producers. The Commission already addressed this issue in recital (9) to the provisional Regulation. Moreover, the Institutions have verified the activities of the companies provided on that list. It turned out that that list mostly includes installers, distributors, related importers and exporting producer in China, Taiwan, and India. It therefore was not apt to demonstrate that the Institutions had overlooked a significant number of Union producers. Moreover, the CCCME has not contested the total Union production by providing alternative figures, nor has it put forward any evidence that the representativity of the sample could have been affected, as none of the alleged additional Union producers would have been selected into the sample, had it been known to the Commission.

Of the around 250 unrelated importers put forward by the complainant, that the Commission contacted, twenty parties replied to the sampling form attached to the Notice of Initiation, twelve for modules, one for cells. In addition, seven other parties made themselves known but reported no imports or resales of the product concerned. The sample was selected in accordance with Article 27 of the basic Regulation to cover the largest representative volume of imports which could reasonably be investigated within the time available. On this basis a sample of unrelated importers was selected consisting of two importers for modules and one importer for cells, representing around 2 % — 5 % of the total imports from the country concerned. After the receipt of the questionnaire reply, it became however apparent that the core activity of one of the three importers was in fact solar installations and not trading of the product concerned. As to the activity of a second importer, this was that of an importer of modules and not of an importer of cells. Nevertheless, the quality of the information provided in its reply to the questionnaire was not sufficient to include it in the analysis of unrelated importers. In addition, the investigation revealed that a majority of imports of the product concerned entered the Union market through companies related to the exporting producers in the PRC or through installers or project developers.

Following the imposition of provisional anti-dumping measures in the parallel anti-dumping investigation, the Commission contacted additional importers that had already cooperated in the investigation at the initiation stage by providing basic information on their activities related to the product under investigation during the investigation period, as specified in the Notice of Initiation. The purpose was to determine whether the size of the sample of unrelated importers could be increased. Six companies qualified as unrelated importers trading the product concerned (i.e. purchasing and reselling it) came forward and were willing to cooperate further in the investigation. Out of these six, five replied within the deadline. Out of the five replies received, only three were sufficiently complete and allowed for a meaningful assessment. On this basis, the sample of the unrelated importers was enlarged and consisted of four importers for modules, representing around 2 % — 5 % of the total imports from the country concerned. Given the structure of the unrelated importers, which were mostly small and medium-sized companies, it was not possible to have a sample representing a larger share, given the limited resources at the disposal of the Institutions.

The Commission sent questionnaires to the representatives of the PRC (including specific questionnaires for the China Development Bank, Export Import Bank of China, Bank of China, Bank of Shanghai, Sinosure, other relevant financial institutions and state-owned producers of polysilicon, glass and aluminium which supplied these raw materials to the industry concerned during the investigation period), the eight sampled exporting producers in the PRC, other exporting producers in the PRC that requested so, as well as to the sampled Union producers, the sampled unrelated importers and upstream and downstream operators and their associations that made themselves known within the time limits set out in the Notice of Initiation. The Commission also contacted a representative consumer association.

Replies were received from the GOC, all the sampled exporting producers and their related companies in the PRC, five exporting producers which requested individual examination, from all the sampled Union producers, all the sampled unrelated Union importers and 21 upstream and downstream operators and three of their associations.

1. (a)

   Government of the People's Republic of China

   • Chinese Ministry of Commerce, Beijing, China

   • Huaxia Bank, Beijing, China

   • China Development Bank, Beijing, China

   • Export Import Bank of China, Beijing, China

   • China Export & Credit Insurance Corporation (SINOSURE), Beijing, China

2. (b)

   Union producers

   • eight sampled Union producers

3. (c)

   Groups of Exporting producers (and related companies) in the PRC

   • Changzhou Trina Solar Energy Co. Ltd, China

   • Delsolar (Wujiang) Ltd. (Wujiang) Co. Ltd., China

   • Jiangxi LDK Solar Hi-tech Co. Ltd., China

   • JingAo Group, China

   • Wuxi Suntech Power Co. Ltd, PRC Power Co. Ltd, China

   • Yingli Green Energy Holding Company, China

   • Zhejiang Yuhui Solar Energy Source Co. Ltd and Renesola Jiangsu Ltd, China

   • Jinko Solar Co Ltd, China

4. (d)

   Unrelated importer in the Union

   • IBC SOLAR AG, Bad Staffelstein, Germany

5. (e)

   Upstream operators

   • Roth & Rau AG, Hohenstein-Ernsthal, Germany

   • WACKER Chemie AG, Burghausen, Germany

6. (f)

   Downstream operators

   • Juwi Solar GmbH, Worrstadt, Germany

   • ValSolar SL, Badajoz, Spain

   • Jayme de la Costa, Pedroso, Portugal

   • Sunedison, Spain Construction, Madrid, Spain

7. (g)

   Associations

   • European Photovoltaic Industry Association (‘EPIA’), Brussels, Belgium

8. (h)

   Independent consultant

   • Europressedienst, Bonn, Germany

The comments submitted by the interested parties were considered and taken into account where appropriate.

The Association for Affordable Solar Energy (‘AFASE’), representing importers, downstream and upstream operators questioned the legal basis for the visit carried out at the premises of Europressedienst, by claiming that an independent consultant is not an interested party under Article 26 of the basic Regulation. However, findings should be based on reliable and verifiable data wherever possible. Europressedienst has provided information on macroeconomic indicators on the basis of a contract. The Commission carried out an on-the-spot verification at its premises for the sake of the principle of good administration to verify the reliability and correctness of data on which the Commission has based its findings.

The GOC claimed that its rights of defence in relation to access to the files open for inspection by interested parties were violated because (i) information was missing from the non-confidential files without ‘good cause’ being shown or providing sufficiently detailed summaries, or exceptionally, the reasons for the failure to provide the non-confidential summary, (ii) the non-confidential version of an entire questionnaire response of a Union producer was missing and (iii) the delays to make non-confidential versions of the Union producers' questionnaire responses available for interested parties were excessive.

(i) Regarding the claim that information was missing from the open file, the interested party did not specify to which information it was referring to. (ii) Its claim that the non-confidential version of an entire questionnaire response has not been made available was incorrect. (iii) As to the delays in making available the non-confidential replies of the questionnaires of the sampled Union producers, it had been explained to the party concerned that the questionnaires were only added to the non-confidential file after having been checked as to their completeness and reasonableness of the summaries. In order to ensure the Union producers' right to anonymity, it was also ascertained that the non-confidential versions of the questionnaires did indeed not reveal the identity of the Union producer concerned. In some cases, the non-confidential versions needed therefore to be corrected accordingly by the party submitting it before they could be made available for other interested parties.

In any event, it is considered that this did in no way affect the interested parties' rights of defence. The Commission has given all the interested parties the opportunity to respond to the information included in the file open for inspection in time so that their comments could be taken into consideration, when substantiated and warranted before any conclusions were made in the investigation. The interested party had every opportunity to comment on the questionnaires from sampled Union producers also following the provisional and the final disclosure. Therefore, even if the disclosures and the access to the file open for inspection by interested parties are based on different legal provisions, it should be noted that there were ample opportunities for the interested parties to comment on all information made available by any party to the investigation. Therefore, this claim had to be rejected.

All interested parties were informed of the essential facts and considerations on the basis of which it was intended to recommend the imposition of countervailing duties on imports of crystalline silicon photovoltaic modules and key components (i.e. cells) originating in or consigned from the People's Republic of China (‘the final disclosure’). All parties were granted a period within which they could make comments on the final disclosure.

The comments submitted by the interested parties were considered and taken into account where appropriate.

Interested parties claimed that wafers should be removed from the product scope since wafers do not share the same basic physical, chemical and technical characteristics as cells and modules. In addition to the arguments brought forward before the publication of the Provisional anti-dumping Regulation, two additional arguments were brought forward in this respect thereafter.

Firstly, interested parties claimed that wafers can be used for other purposes than for the production of cells, notably the production of integrated circuits and other micro devices. In this respect, it is noted that not all wafers are included in the product scope of this investigation, which is limited to ‘wafers of the type used in crystalline silicon PV modules or panels’, and that those wafers have ‘a thickness not exceeding 400 micrometres’. While wafers certainly do exist in other applications, the investigation never covered wafers which are used in the production of other products such as integrated circuits. In addition, no producers, importers or users involved in the market for these different types of wafers came forwards alleging that their wafers would be subject to registration or provisional anti-dumping duties. It is therefore concluded that these other types of wafers are not subject to the product scope of this investigation. At the same time, this shows that wafers do not necessarily have the same end use as cells and modules.

Secondly, it is claimed that an unprocessed wafer possesses none of the essential electric properties which distinguish solar cells and modules from other products. In particular, wafers lack the ability to generate electricity from sunlight, which is the key function of crystalline photovoltaic cells and modules.

Indeed, the investigation showed that only once the wafer is transformed into a cell, the functionality to generate electricity from sunlight arises. The conversion is operated by cells which absorb light and convert it into electricity through crystalline silicon. Cells have a positive-negative junction to collect and forward the electricity that is generated by the cell. To assemble the modules, cells are soldered together with flat wires or metal ribbons to produce a string of cells. Those are laminated between sheets. Mostly glass is used on top and a polymeric backing sheet to the bottom. Frames are usually created to allow the mounting in the field (e.g. on rooftops). The module may or may not have an inverter.

Due to the different basic physical and technical characteristics, defined during the investigation inter alia as the functionality to generate electricity from sunlight, it was concluded on balance that wafers should be excluded from the definition of the product concerned, and thus from the scope of this investigation.

Several interested parties claimed that the investigation cannot cover two products with different physical, chemical and technical characteristics, and therefore modules and cells should be subject to two separate investigations. Moreover, they claimed that it is unclear whether the investigation covers one single product or two separate products and therefore they have no full opportunity to defend their interests.

The cell-module production is one single production process with different production steps. Cells determine the characteristics of the finished product (i.e. modules). The investigation showed that the cells production is directly and exclusively dedicated to produce modules; modules and cells share the same physical, chemical and technical characteristics (determined by the raw material used) and have the same basic end uses, i.e. are sold for integration into PV solar systems. The modules performance is directly linked to the performance of the cells.

The Notice of Initiation clearly expressed that modules and cells constitute the product under investigation. Interested parties had therefore full opportunity to defend their interests on the basis of the product concerned as defined. On these grounds, the arguments were rejected.

It was further claimed that modules and cells could not be considered as a single product as they have several different eight-digit CN codes, six-digit subheading and four-digit HS heading. In this respect it is noted that both cells and modules can be declared under customs heading 8541 40 90, while the customs headings under heading 8501 are for electric generators in general and not in particular for solar products. On these grounds, the argument was rejected.

Several parties claimed that the value added in the cell conversion process accounts for the largest part of the value of a module and therefore cells must be considered as a separate product.

The investigation revealed that the cells production is the most technologically sophisticated part in the production process. However, it also showed that the two processing steps are linked to each other and the value added is not concentrated in a particular stage of the production process but is spread over the whole production process. On these grounds, the claim was rejected.

Some interested parties claimed that modules and cells have separate merchant markets and therefore they should be treated as different products which would also be demonstrated by the fact that a large number of producers are not vertically integrated.

Modules and cells cannot be considered as separate products whose prices fluctuate only depending on market factors. As a matter of fact their prices are strictly interconnected and affected by the polysilicon price. Likewise, as it has been explained above in recitals (49) above, the product concerned is produced in one single production process with different steps. The fact that some producers are not vertically integrated is due only to business decision and economies of scale and does not reverse this conclusion. On these grounds, this argument had to be rejected.

Several interested parties claimed that modules and cells must be treated as different products given that they have different end uses and they were not interchangeable.

As mentioned above the investigation showed that the cell-module production process is one single production process and therefore the question of interchangeability between different steps of a single production process is not applicable. Moreover, modules and cells have the same end use, converting sunlight into electricity and therefore cannot be used in other applications.

One interested party claimed that modules and cells do not share the same distribution channels and should therefore not be considered as one single product. The investigation showed that modules and cells can be distributed within different or similar distribution channels. However, the main criteria to define a single product are the same physical, chemical and technical characteristics and end uses. Considering recitals (47) to (49) above, it is concluded that therefore different distribution channels are not considered as a determining element. The argument should therefore be rejected.

It was claimed that modules and cells differ substantially in terms of consumer perception and therefore they should not be considered as one single product.

Likewise as above the main criteria to define a single product are the same physical, chemical and technical characteristics and end uses. Considering recitals (47) to (49) above it is concluded that therefore different consumer perception is not considered as a determining element. The argument should therefore be rejected.

Interested parties reiterated that cells and modules are not a single product, and should therefore be assessed separately. Unlike wafers, however, cells and modules do share the same basic property, i.e. the ability to generate electricity from sunlight. These arguments were therefore rejected.

Following final disclosure, one exporter argued that cells by themselves cannot produce electricity. Allegedly, they need to be integrated into modules to do so. However, each cell by itself has a capacity to generate electricity from sunlight of typically around 4W. While this power may be insufficient for most applications which require an assembly of multiple cells into modules, this does not mean that a cell by itself does not already have the capacity to generate electricity.

Following final disclosure, one exporter further argued that cells are not just another type of module, but an entirely different product. In effect, a cell is the key component of a module. As a key component, a cell is clearly not ‘an entirely different product’, as modules and cells share the same basic characteristics of generating electricity from sunlight, as indicated in recital (60) above.

The same party argued in addition that when the samples for Union producers and Chinese exporters were selected, the difference between cells and modules was taken into account. Therefore, different duty rates for modules and cells should have been established. In this respect, it is confirmed that the difference between modules and cells was indeed taken into account when sampling Union producers and Chinese exporters, as indicated in recitals (10) and (14) to the provisional anti-dumping Regulation. This, however, was only done to ensure that the sample is representative and does as such not mean that cells and modules should not be considered a single product concerned, or that separate duty rates should be established for cells and modules. Indeed, in order to ensure that the sample was representative for all product types, it was important to distinguish between cells and modules when selecting the sample. Furthermore, as there was a certain degree of uncertainty with regards to the question as to whether cells and modules were to be regarded as one product or as two separate products, it was necessary to ensure representativity for both possible outcomes.

Exporting producers claimed that the fact that the undertaking imposes different minimum import prices and volumes for cells and modules allegedly confirms that modules and cells are distinct products requiring two distinct investigations. The different minimum import prices, however, are merely an indication that cells and modules are different groups of product types which are sold at different prices. Therefore, it is necessary to define different prices to make the minimum import prices meaningful.

Also, the fact that cells and modules are distinct groups of product types is not as such relevant for the definition of the product concerned. For the definition of the product concerned, it is sufficient that the products share the same basic characteristics and end uses, which is the case for modules and cells as described in recitals (46) and (71) respectively.

In addition, it is recalled that cells and modules have the same basic end uses, i.e. they are sold for integration into PV solar systems. The modules performance is directly linked to the performance of the cells, as indicated in recital (28) to the provisional anti-dumping Regulation.

One interested party argued that with the exclusion of wafers from the product scope, and due to the significant processing involved to make modules from cells, the argument that cells and modules have the same end uses also stands refuted. It is also argued that the assessment that modules and cells have the same end uses is based on the assumption that wafers, modules and cells have the same production process.

Firstly, the conclusion that the assessment that modules and cells have the same end uses is based on the production process is wrong. While both statements are indeed in the same recital (36) to the provisional anti-dumping Regulation, this does not mean that one conclusion is based on the other assumption. The word ‘moreover’ separating the two statements makes it clear that the second statement is not based on the first. In addition, the two statements are made to address separate issues under the heading ‘End use and interchangeability’. The first statement concerning the production process addresses interchangeability, while the second statement addresses end use. The underlying assumption that the assessment that modules and cells have the same end uses is based on the assumption that wafers, modules and cells have the same production process is therefore incorrect.

As to the actual end use of cells and modules, it is not disputed by interested parties that modules and cells are sold for integration into PV solar systems. The conclusion that modules and cells have the same end use is therefore confirmed.

One interested party claimed that thin film PV products should be included in the definition of product concerned, arguing that they share the same basic physical, chemical and technical characteristics and the same basic end uses.

Thin film PV products are clearly excluded from the product definition (see recital (40) above). Indeed, thin film PV products have different physical, chemical and technical characteristics compared to the product concerned. They are produced via a different production process and not from crystalline silicon which is the main raw material to produce modules and cells. They have lower conversion efficiency and a lower wattage output and therefore they are not suitable for the same types of applications than those of the product concerned. On these grounds, the arguments had to be rejected.

Furthermore it was claimed that cells should be considered as semi-finished feeder products while modules are end products, therefore they should not be considered as one single product.

As mentioned above, the main criteria to define a single product are the same physical, chemical and technical characteristics and end uses. Considering recitals (47) to (49) above it is concluded that therefore the difference between semi-finished or finished products is not considered as a determining element. The argument should therefore be rejected.

One interested party requested the exclusion of solar panels dedicated solely to 12V battery charging on the basis that they have a different end use than the modules for grid connection due to the fact that they generate much lower voltage and therefore are not suitable for grid connection.

According to the Notice of Initiation solar chargers that consist of less than six cells, are portable and supply electricity to devices or charge batteries are excluded from the product under investigation. Modules of more than six cells dedicated only to battery charging have the same basic characteristics and performance as the modules for grid connection. They use an open voltage circuit which has a lower voltage than the circuit used in modules for grid connection. Despite this difference the investigation has revealed that this type of modules can be connected to the grid. The lower voltage can be easily compensated by an increase in dimension and/or number of cells. Therefore modules dedicated to battery charging, and consisting of more than six cells, fall within the definition of the product concerned.

Interested parties also claimed that the definition of ‘solar chargers that consist of less than six cells’ is too narrow, and should be extended to products with a similar function which are not covered by this definition such as products with a similar size using a larger number of smaller cells.

In addition, interested parties claimed that the definition of ‘silicon PV products that are permanently integrated into electrical goods’ is too narrow, as only the complete electrical good is excluded, while solar components for integration into the electrical goods are not necessarily excluded.

Indeed, an analysis of the arguments brought forward by the various interested parties showed that it is more appropriate to define the exclusion of such products on the basis of technical standards rather than the number of cells. In particular, it was established that the definitions of standard ‘IEC 61730-1 Application Class C’ more appropriately define the products which should be excluded from the scope of the measures.

Following definitive disclosure, comments were received concerning the exclusion based on the international standard mentioned above. It was argued that rather than referring to the standard, it would be more appropriate to define the exclusion on the basis of the output voltage and the power output as ‘modules or panels with a output voltage not exceeding 50 V DC and a power output not exceeding 50 W solely for direct use as battery chargers in systems with the same voltage and power characteristics’. This claim could be accepted, and the exclusion is finally determined according to this definition.

Another interested party claimed that roof-integrated solar modules should be excluded from the product scope of the investigation, since they combine the functionality of a solar module with that of a roof tile or slate. As such, they are not directly interchangeable with a standard solar module.

The investigation has, however, shown that both standard modules and the roof-integrated solar module have to comply with the same electrical standards. And while the roof-integrated solar module cannot be simply replaced with a standard module, it can be replaced by a standard module plus roof tiles or slate. These products therefore have the same basic technical property of generating electricity from sunlight. The added functionality (which is otherwise provided by roofing material) is not considered substantial and does not warrant an exclusion of roof-integrated solar modules from the product scope.

The interested party also argued that roof-integrated solar modules should be excluded from the definition of the product concerned, since they are sold at substantially higher prices than standard modules. Also, in the footwear case STAF above a certain price were excluded from the definition of the product concerned. In this respect, it is noted that a roof-integrated solar module does combine the functionality of a solar module and roof tile or slate, as indicated in recital (83). A direct comparison of prices is therefore not meaningful, as the added functionality naturally leads to higher prices.

In response to this argument, the interested party argued that on the basis of this argumentation, it would be impossible to ever invoke price differences as an additional indicator warranting the exclusion from the product scope. However, this interpretation is too far-reaching. What is said in the previous recital is merely that in this particular case where the roof-integrated modules combine the functionality of the product concerned plus another product (in this case roof tile or slate), the price is naturally not meaningful. This in no way means that in other cases the price difference cannot be a useful indicator to establish whether a product should be excluded from the definition of the product concerned.

Lastly, the interested party argued that its supplier of roof-integrated solar modules should be granted access to the minimum price undertaking. However, it appears that the Chinese exporter did not co-operate in the investigation, and as a non-cooperating party is not eligible to participate in the undertaking. These requests can therefore not be accepted.

One interested party claimed that there was no production of mono crystalline cells in the Union, and that its exports of mono crystalline cells were not competing with the EU industry. Investigation showed however that there was indeed production of mono crystalline cells in the Union. This argument is therefore rejected. In any event, the General Court held in Brosmann that the absence of Community production of a particular product type is not decisive.

Some interested parties argued that the extension of the scope of the investigation to products ‘consigned from’ the PRC was unjustified, while the case was initiated only against products originating in the PRC.

However, goods consigned from the PRC were already covered at the initiation stage. In point 5 of the Notice of Initiation it is stated that ‘companies which ship the product concerned from the People's Republic of China but consider that part or even all of those exports do not have their customs origin in the People's Republic of China are invited to come forward in the investigation and to furnish all relevant information’. It is therefore clear that all companies consigning goods from the PRC had the opportunity to co-operate in this investigation. Furthermore, since the product under investigation frequently incorporates components and parts from different countries, it was also announced in point 5 of the Notice of Initiation that ‘special provisions may be adopted’ to address this issue.

It is therefore considered that all affected economic operators were duly informed of the possibility that special provisions in respect of goods consigned from the PRC may be adopted, if appropriate, and were invited to co-operate in the investigation. Thus the scope of the investigation was not extended to products ‘consigned from the PRC’, since these were covered from the outset.

Following disclosure, interested parties argued that irrespective of the provisions in the Notice of Initiation referred to in recital (91), the investigation was limited to goods originating in the PRC and did not assess the impact of goods consigned from the PRC.

• All companies which ship the product concerned from the PRC were invited to come forward in the investigation irrespective of the origin of the goods.

• In Annex A of the Notice of initiation, exporters were asked to report information for all products manufactured by the company. This information was not limited to goods originating in the PRC.

• On the basis of this information, which contained all exports to the EU irrespective of the origin of the goods, a representative sample was selected.

• The sampled producers received a questionnaire for ‘producers exporting to the European Union’, and the PRC was referred to as ‘country concerned’, not country of origin. It was therefore clear that all goods irrespective of the origin of the goods were investigated.

On this basis, it is concluded that the investigation covered all goods originating in or consigned from the PRC, and that the findings of the investigation, including subsidization and injury, cover all goods originating in or consigned from the PRC.

Following final disclosure, interested parties argued that the complaint contained only prima facie evidence concerning imports of solar panels originating in the PRC, not goods consigned from the PRC. In this respect, it needs to be clarified that the complaint indeed covered goods ‘from the PRC’, which can be seen from the cover page submitted by the applicant bearing the stamp. Before this page, there is another page on the file which indeed uses the wording ‘originating in the People's Republic of China’. But this case was not part of the document submitted by the complainant, but added as a cover page by the Commission Services, using the name of the investigation rather than repeating the title of the complaint. It is therefore considered that the complaint covered all goods from the PRC, whether originating in the PRC or not.

Chinese exporting producers further argued that exporting producers in third countries cannot reasonably be expected to have known that their products could also be targeted by the investigation. In this respect it is noted that the measures do not apply to goods which are in transit in the sense of Article V GATT. Therefore, exporting producers which have no operations in the PRC are not affected by the measures. Furthermore, no exporting producers in third countries came forward raising the issue that the products they export are subject to the measures.

The same exporting producers argued that exporting producers in third countries were not asked to come forward, and not given the opportunity to show that their products are not subsidised. The Institutions consider that those exporting producers without any operations in the PRC are not affected by the measures, as their goods, if consigned from the PRC, will have been in transit. All other exporting producers were informed by the Notice of Initiation that their operations are part of the investigation.

In view of the above, the product scope is definitively defined as crystalline silicon PV modules or panels and cells of the type used in crystalline silicon PV modules or panels, originating in or consigned from the People's Republic of China, unless they are in transit in the sense of Article V GATT. The cells have a thickness not exceeding 400 micrometers. This product is currently falling within CN codes ex 8501 31 00, ex 8501 32 00, ex 8501 33 00, ex 8501 34 00, ex 8501 61 20, ex 8501 61 80, ex 8501 62 00, ex 8501 63 00, ex 8501 64 00 and ex 8541 40 90.

• solar chargers that consist of less than six cells, are portable and supply electricity to devices or charge batteries,

• thin film photovoltaic products,

• crystalline silicon photovoltaic products that are permanently integrated into electrical goods, where the function of the electrical goods is other than power generation, and where these electrical goods consume the electricity generated by the integrated crystalline silicon photovoltaic cell(s).

• modules or panels with a output voltage not exceeding 50 V DC and a power output not exceeding 50 W solely for direct use as battery chargers in systems with the same voltage and power characteristics.

The Commission did not preclude the GOC from submitting any information throughout the proceeding and on a number of occasions reminded the GOC of the possibility to request hearings where the information and views of the GOC could be presented. It is noted that no information submitted by the GOC throughout the proceeding was rejected for the reason of timing. The claim of the GOC that the time granted for the response between the receipt of the questionnaire and the sampling decision was useless is not correct. A major part of the questionnaire concerned the overall level of subsidisation of the industry/product concerned and the GOC was not in any way limited by the sampling decision to collect information of general nature. More importantly, following the selection of the sample the GOC had still 43 days to collect information specific to the sampled exporting producers. The Commission acted in accordance with Article 12.1 of the SCM Agreement and granted to the GOC ample opportunity to present all evidence which it considered relevant, bearing in mind that such an obligation cannot be open-ended, in order to ensure timely completion of the investigation.

The GOC also claimed that the Commission initially requested detailed information about non-sampled exporting producers which was not ‘necessary information’ for the purpose of the investigation that is based on sampling. In this respect it is noted that at the time when the questionnaire intended for the GOC was dispatched, the decision on whether there will or will not be sampling applied in this proceeding was not final. After the Commission received sampling replies from the Chinese exporting producers and it was apparent that the cooperation from exporters' side was high, and once it became clear that the sampled exporters would cooperate by replying adequately to their questionnaires, the Commission did not insist on provision of company specific information on subsidisation from non-sampled exporting producers. Therefore the Commission does not agree with this.

The GOC claimed that in the definitive disclosure document the Commission erroneously stated that the GOC withheld certain information in the questionnaire reply and subsequent submissions. This is not correct. As the Commission already stated, in its letter of 23 May 2013 to the GOC, the GOC had failed to provide the requested information in respect to the state-owned financial institutions, documents related to Sinosure and provision of export credit insurance, documents related to the Golden Sun Demonstration Programme, and information related to the provision of Land-Use Rights.

The GOC further claimed that the Commission contradicted itself when in the definitive disclosure document it claimed that in this investigation it did request transaction specific information only with regard to the sampled exporters and elsewhere in the same document it stated that ‘the government questionnaire is not limited to the sampled exporters.’ This is not true. The Commission did not make contradictory statements. As already explained in the recital (378) above the Commission limited its initial request on the provision of the company specific information to the sampled exporting producers following the decision to apply sampling. However, in order to assess the countervailability of the alleged subsidy schemes, the Commission requested also other information than information related to sampled exporting producers, such as information concerning financial markets in China or market for land use rights. It is therefore mentioned that ‘the government questionnaire is not limited to the sampled exporters’.

The GOC also claimed that the Commission seems to overlook that information cannot simply be rejected if it is not made available for verification. This is not how the Commission treated information in this proceeding. On no occasion was the ‘non-availability of verification’ the sole reason for not accepting such information in full. However, when other information on the file was contradicting it and at the same time the GOC was not able to support it with any sort of evidence, such information could not be accepted at its face value.

According to the GOC, the Commission in paragraph 85 of the definitive disclosure document (replicated above in recital (117)) ‘acknowledged’ that the GOC does not control banking and financial institutions and cannot compel them to provide information. It is noted that the Commission is not aware of such statement and after reviewing the text of the recital it does not seem to be the case.

The GOC claimed that the Commission seemed to concur with the GOC that the national laws cannot be superseded in the case of an investigation by the requirements of the EU's basic Regulation or the SCM Agreement. The link the GOC made to the non-provision of allegedly confidential information is missing the point. The Commission however argued (recital (117) above) that the provisions of municipal law or internal rules of the WTO Member cannot absolve it from its WTO obligations to cooperate with the investigations and in case of conflict it is up to the GOC to suggest the ways in which access can be afforded to information so that it can be adequately verified. The GOC referred to the situation when one bank official provided one credit risk assessment for a sampled company as an example of suggesting a way to verify allegedly limited information and stated that ‘the Commission was still not satisfied’. On the contrary, as is clear from the wording of recital (148) above), the Commission did not take an issue with the verification of this particular document and took this information fully into account in its findings. However, this was an exceptional situation and unfortunately was not replicated for most of the information of similar nature requested in this proceeding.

In this regard, the GOC continued to claim that ‘sensitive internal documents’ of banks were envisaged to be relevant information under the SCM Agreement, and their non-production could not lead to the application of facts available. The Commission finds this statement much too sweeping and does not see how proper verification (carried out with due confidentiality procedures in place) could be undertaken in all cases if such documents (including those involving transactions with clients) are simply withheld. In the absence of verifications, facts available may have to be used to fill gaps in fact-gathering.

The GOC repeatedly claimed that the pre-verification letter did not contain specific questions concerning verification and referred to the Commission letter of 23 May 2013 which used this wording. The Commission, however, in paragraph 86 of the definitive disclosure document (replicated as recital (118) above) stated that the pre-verification letter of 25 March 2013 contained a very specific and detailed list of issues and documents which would be addressed during the verification, fully in line with the Article 26(3) of the basic Regulation and the WTO requirements. The absence of a list of specific questions, provision of which has no basis in the basic Regulation or WTO rules, is not an excuse for the GOC being unable to fully cooperate during the verification.

The GOC claimed that the Commission showed a complete absence of flexibility during the verification. This is a misinterpretation of facts and situation before and during the verification visit. As already explained in paragraphs 88 — 90 of the definitive disclosure document (replicated as recitals (120) — (122) above) the degree of flexibility shown by the Commission was full and unconditional. Unfortunately, attempts by the GOC to provide information which there was no possibility to verify within the schedule of the on-site visits meant that such information could not be cross-checked and given the weight of a verified document. The GOC also reminded the Commission of WTO case law from the EC-Salmon panel that whether documents are ‘verifiable’ is not always determined only by the possibility of on-the-spot investigations and claimed that the Commission cannot reject information simply because it is not available at verification visits. The Commission notes that such information, not being susceptible to on-spot verification to test is reliability and accuracy, may be given less weight that if it had been properly verified and that this sometimes happened in the present case.

The GOC contests the Commission's alleged practice not to accept new documents and evidence which require verification after the end of the verification session to which they belong. As already explained in the paragraph 89 of the definitive disclosure document (replicated in recital (121) above) this is not and never was the case. It is true that the Commission cannot normally accept documents as verification exhibits once the verification session is over and it is not practically possible to verify such documents, but nothing prevents the GOC from submitting such documents in writing which in fact happened in this case as well.

The GOC claimed that the Commission did not explain the reason for requesting the six documents referred to in recital (122) above and on this basis their verification was not permitted. This claim was already raised by the GOC in its letter of 3 June 2013 and the Commission fully replied to it in recital (122) above. It is noted once again that all these documents concern the industry concerned and even relate to particular subsidy schemes such as preferential lending or preferential tax schemes. Therefore it is obvious from their names and content that they were relevant for the investigation. However the GOC simply refused to answer any questions in this respect during the verification, citing the alleged irrelevance of the document for the proceeding as the only reason.

The GOC claimed that it could not provide the supporting evidence for the information it provided in the questionnaire reply concerning percentage of loans granted to the industry concerned as this information was held by the banks which are independent entities and not GOC departments and that the Commission should verify the figures at the banks. GOC referred to the provisions of the Commercial Banking Law which stipulates that the banks shall carry out their business in accordance with the law (Article 4) and there shall be no interference by local governments or government departments at various levels, public organisations or individuals in the business operation of the banks (Article 5). The fact is that the GOC made a statement in the questionnaire reply and it was not able to support it all. The banks which the Commission attempted to verify were also not able to support this information with any information whatsoever. If this is to be considered as acceptable practice, the investigated party could simply make any statement which supports its case and the investigated authority would have to accept it without having a chance to verify whether it represents reality. This is even more important taking into account that this particular information is in contradiction with other information on the file. There are also other articles in the Commercial Banking Law which oblige the banks to carry out their loan business upon the needs of national economy and the social development and with the spirit of the state industrial policies (Article 34). As correctly pointed out by the GOC in its comments, the banks shall carry out their business activities in accordance with law, i.e. also with the said provisions of Article 34 of the Commercial Banking Law. Therefore, this supposed bright line between the government and the banks was not borne out by the facts.

The GOC claimed that it provided all the information in respect to the ownership of the banks that it possesses. It also claimed that the reported figures concerning bank ownership are the official figures of CBRC and therefore there was no reason to believe that the information provided by the GOC is false or misleading and apply provisions of Article 28 of the basic Regulation. Further the GOC stated that it was not aware what the source for the Commission statement in paragraph 95 (replicated in recital (127) above) of the definitive disclosure document was (‘The publicly available information suggests that there are also other state-owned banks which provided loans to the sampled exporting producers’), i.e. in addition to those reported by the GOC as being state-owned in its reply to the deficiency letter. These claims could not be accepted. It is noted that the GOC initially claimed in its questionnaire reply that it does not possess any information concerning its ownership in the banks. Only after the Commission pointed out in the deficiency letter that, according to the Chinese legislation, the GOC must collect such information, did the GOC provide some information in this respect. During the verification the CBRC official refused to support the figures on bank ownership with any evidence, refused to provide the source of the information and did not explain where it comes from. It is also noted that the GOC did not contest the fact that at least 5 other banks named by the Commission in the definitive disclosure document (see footnote in recital (127)) are state-owned.

The GOC disagreed with the statement in the paragraph 97 of the definitive disclosure document (replicated in the recital (129) above) that CBRC refused to answer the question concerning the 10 biggest banks in China because it was not submitted in writing and claimed that the Commission misinterpreted the facts, because the main reason for not replying was that since this question was not in the pre-verification letter they needed time to prepare for it. In fact it is the GOC which misinterprets the facts concerning this issue. The Commission did not insist on immediate answer, but the CBRC refused to even look at the question on the pretext that it was not provided in advance in writing. If the reason was insufficient time to prepare the answer the GOC could have submitted the reply later during the verification or by email (although without possibility for the Commission to verify it) as it has done with several other documents. However the GOC did not do this.

GOC claimed that it provided all the documents concerning the establishment and the mandate of the CBRC which the Commission requested in the questionnaire, and that since the Commission did not raise any issues with this in the deficiency letter and did not ask for this documents in the ‘list of documents to be provided before the start of verification visit’ in Annex 2 to the pre-verification letter the GOC did not feel obliged to provide any other documents. This is not true. The Commission requested all documents which were basis for the establishment and the mandate of the CBRC but the GOC provided only some of them. It was only on the basis of the statement of the CBRC official that the Commission learned that there are also other documents in this respect. In fact the reply of the GOC in the questionnaire in this respect was incomplete and misleading as the GOC (CBRC) clearly knew about the existence of such additional documents as was admitted by the CBRC during on-the-spot verification.

GOC also claimed that the Commission statement that it took account of the summary of the PBOC circulars in question from the website submitted during the verification is incorrect and that this is proved by paragraph 133 of the definitive disclosure documents (replicated in recital (164) above). This is not correct. The recital (164) does not contradict the content of the website extracts. It takes it into account but also relies on the actual content of the Circular which was, in fact, never contested by the GOC to date as not being accurate.

The GOC claimed that the Commission ‘has extracted certain terms and phrases out of context from various documents’, misinterpreted others and tried to tie them together in order to establish that the GOC promotes the industry producing product concerned or to establish that the SOCBS are public bodies. It argues that a ‘complete reading’ of these documents (plans, outlines and decisions) would demonstrate that the Commission's findings lack legal basis and are not based on evidence. This is not correct. The Commission analysed and considered all the documents, including those referred to in recital (102) in their totality, in exactly the manner which the GOC advocates.

Concerning the Decision No 40, the GOC claimed that in the definitive disclosure document the Commission quoted from it out of contexts ‘to distort its correct meaning’. According to the GOC it is clear from other provisions of Decision No 40 that it is geared towards the development of the use of renewable energy sources rather than classifying solar modules and cells as target of any expected development policy as proposed by the Commission. It is not true that the Commission's reference to the text of Article V of the Decision No 40 was out of context. The Commission is not arguing whether one of the purposes was or was not the development of the use of renewable energy sources. The fact is that in the Decision No 40 the State Council identified new energy industry and solar energy as prioritised industries and therefore they fell under the encouraged category of projects in the Guiding Catalogue of the Industrial Restructuring. Taking into account Articles 17, 18 and 19 of the Decision No 40 the financial institutions may only grant loans to industries/companies belonging to this category. This is a clear indication that the PV industry producing, inter alia, solar modules and cells is prioritised.

According to the GOC, the Commission cited the Medium and Long-term Science and Technology Plan but failed to refer to single instance or provision where this document defines high-technology enterprises as including module and cell producing enterprises or the PV industry in general. According to the GOC the objectives of the Outline are only focused towards developing of alternative energy sources to reduce dependence on fossil fuels. The Commission disagrees. The majority of the investigated sampled exporting producers have been awarded high and new-technology enterprise certificates and on this basis benefited from subsidies the provision of which was limited to high and new-technology enterprises (e.g. tax exemptions). The same types of individual support programmes which are mentioned in this Plan were used by the sampled exporters.

The GOC claimed that the statement of the Commission that the Law of the PRC on the Scientific and Technological Progress lists a number of measures for the support of strategic industries including the solar PV industry is not based on any facts and that this law does not mention the PV industry or strategic industries and there is no basis to claim that the product concerned is included in the scope of this law. This is not correct. The basis for this statement are Articles 18 and 34 of this law. According to Article 18 the State shall encourage and give guidance to financial institutions on supporting the development of high and new technology industries. According to Article 34 the Policy-oriented financial institutions shall offer special aid to enterprises' projects encouraged by the State. The PV industry fall within the category of high and new technology industries and the also fall within the category of enterprises whose projects are encouraged by the State. Moreover Article 17 of the same law promises preferential tax policies to, amongst others, entities which are engaged in projects covered by national scientific and technological plans. From the recital (401) above it is clear that the projects of companies in the PV industry fall within this scope. In conclusion, there are at least three clear indications that the PV industry and companies producing and exporting product concerned are included in the scope of this law.

GOC cites the ‘guidelines issued by the Commission on reimbursement/refunds’ as an example of a similarly non-binding document in the EU context. The Commission supposes that the GOC refers to the ‘Commission Notice concerning the reimbursement of anti-dumping duties’ (OJ C 127 of 29.5.2002 p. 10). In fact, it is not accurate to characterise these guidelines as non-binding because they bind the Commission to the extent that they do not violate superior rules. The Commission has determined that China's plans are legally binding. However, even assuming hypothetically this was not the case, it is clear that the national, sectoral and regional plans, emanating as they do from the highest levels of government and setting out government policy with regard to economic and industrial development, would have a high probative value with regard to the de-facto mandatory nature of their stated objectives. It is equally clear that they could be invoked by the government to reprimand entities that were not implementing them correctly. Therefore, they would still be highly relevant to determinations relating to government intervention in the economy and to the direction and control of certain industries.

The GOC claimed that its failure to provide responses to Appendix A should not lead to the application of facts available in accordance with Article 28 of the basic Regulation. According to the GOC, if the Commission really intended to verify the allegations in the complaint that the Chinese state-owned banks are public bodies it would not have needed to load the questionnaires with requests for internal, sensitive, transaction-specific data concerning banks many of which were not in any way owned by the government. In this regard the GOC referred to the information concerning individual loans provided by the bank to the sampled exporting producers. The Commission does not agree with this claim. The purpose of the information requested in Appendix A was to verify whether the Chinese banks are public bodies and whether they are entrusted and directed by the government. With the exception to the information on individual loans the GOC did not specify which other requested information it considered not to be relevant for that purpose.

The GOC claimed that the Commission cannot disregard the information provided by the HuaXia Bank in regards of its ownership structure for the reason that it is not ‘ideal in all aspects’. The Commission notes that the reason for not accepting this information was not that it was not ideal in all aspects. As already explained in the recital (147) above, the HuaXia Bank did not disclose any information on the government ownership until the verification visit even though this was requested by the Commission already in the initial questionnaire. After the Commission pointed out that the HuaXia Bank has some state-owned shareholders the bank submitted a sheet of paper with the information from unknown source and in addition this information was in discrepancy with other information on the file. It was not possible to accept such information.

Concerning the verification of CDB the GOC made the same claim in regards of the questions on political affiliations of management and the role of CCP in the bank. In this respect the Commission refers to the justifications in recitals (151) and (411) above. The GOC also claimed that the CDB could not provide the requested credit risk assessment reports because of the confidentiality reasons and that it provided a template of the credit rating and also a concrete example of credit risk assessment with the company name blanked out. It is noted that the credit rating template and the credit rating for unknown company of unknown industry is not an evidence of the credit risk assessment of one of the sampled exporters as requested by the Commission. With regard to the confidentiality issues, the Commission refers to the explanation in Recital (410).

The GOC claimed that the Commission's finding that the SOCBs are public bodies is inconsistent with Article 1.1 of the SCM Agreement because the Commission has not based its determination on any evidence whatsoever and has not provided a reasoned and adequate analysis of its determination that government involvement in the Chinese financial sector is so substantial that banks are required to follow preferential policies. The Commission fundamentally disagrees with this claim. The independent information referred to in recitals (162) to (168) shows that the banks implement the preferential policies and this is also clear from several Chinese plans, laws and policy documents referred to in recital (102) above. The Commission reviewed, analysed and cited a number of documents published by the international organisations including WTO, World Bank, IMF and OECD all of which conclude that the Chinese banking sector is subject to the significant state interventions in particular with regards to privileged recipients of loans and interest-rate setting.

The GOC challenges the relevance of several documents used as best facts available to which the Commission referred in relation to the public body determination concerning the SOCBs. As a preliminary remark, it must be pointed out that the Commission had to resort to best facts available only because of the non-cooperation of GOC and its refusal to provide the requested information.

The GOC claimed that the Deutsche Bank Research report (‘DB report’) which the Commission cited in the recital (161) describes a historical situation in China and cannot provide a positive basis to assess the Chinese banking sector 7 years later. Firstly, the GOC is wrong in claiming that the report provides a basis to assess situation ‘7 years later’. The report is from 2007 and the IP, which is the relevant period for the assessment of the banking sector in China for the purpose of this proceeding, starts in the year 2011. Therefore the report refers to a situation 4 years before the relevant period. Secondly the DB report is not the only document on which the Commission relies in its findings but only a starting point of the Commissions analysis of the Chinese banking sector and its ownership structure in particular. Thirdly the other information which the Commission referred to for the purpose of establishing the ownership structure of the Chinese banking sector (WTO, IMF and OECD reports and working papers) is in line with the findings of the DB report. In this context it must be noted that the GOC itself only provided a minimum of the repeatedly requested information in this respect and never actually contested the Commission's findings on the level of state ownership in the banking sector and state interference in the banking system on factual basis.

The GOC also challenges the Commission's reference to the 2012 WTO Trade Policy Review report with the claim that the statement that ‘there has been generally little change in the market structure of China's banking sector’ was stated in comparison to the previous review period in year 2010. The Commission does not disagree with this claim. In fact the Commission, in its definitive disclosure document, cited the WTO Trade Policy Review reports from 2010 and 2012 in the same recital (161) in order to demonstrate that very little has changed in the period of two years. While the 2010 report stated that ‘the high degree of state ownership is another notable feature of the financial sector in China’ the 2012 report confirmed that little changed in this respect. The GOC also cited from the 2012 report and on the basis of these citations claimed that the report contradicts the Commission's assessment in recital (161) above. This claim could not be accepted. None of the citations from the report reproduced in the GOC's comments to definitive disclosure contradicts or even put in question the Commission's assessment in recital (161).

The GOC also claimed that the Commission's findings in recital (162) above lack positive evidence because the Commission (in addition to the DB report and WTO Trade Policy Reviews discussed in recitals above) ‘simply refers to the World Bank Report and the Economic survey etc., but does not provide any reasoned and adequate explanation to support its findings’. This claim could not be accepted. In this respect it is noted that the World Bank report states, inter alia, the following: ‘Despite impressive progress in reforming and deepening the financial sector in the past three decades, China's financial system remains repressed and suffers from key structural imbalances. The current system, characterized by dominance of state-owned banks, strong state intervention, and remaining controls on interest rates, has been remarkably successful in mobilizing savings and allocating capital to strategic sectors during China's economic take-off’, or ‘In parallel, direct and indirect controls of financial institutions must give way to armslength market-based arrangements. This would mean an autonomous central bank adopting open market operations and using interest rates, rather than credit ceilings, to manage liquidity. Commercial banks would use commercial principles and creditworthiness analysis, rather than follow government signals, to guide lending’ and ‘The government at all levels has been closely involved in the commercial operations of financial institutions, either through holding of shares or indirect influences, mainly because it is heavily dependent on the use of commercial bank credit for policy goals’. The 2010 OECD Economic Survey on China describes the PBOC policies on lending rates floor and deposit rate ceiling as a disincentive for the banks to price risk appropriately and a counter productive measure for competition in the banking sector and states that the purpose is to safeguard profitability of the predominantly state-owned banking sector.

The GOC further claims that the Commission's determination that the PBOC is involved in and influences the setting of interest rates by State-owned commercial banks lacks proper reasoning and evidentiary basis. In this respect the GOC stated that the Commission ought to have known that in July 2013, the floor lending rates were abolished. Firstly it must by noted that the Commission did not analyse the situation of the banking market in China in July 2013 as it was not relevant for this investigation. Secondly the claim that the Commission's determination lacks proper reasoning and evidentiary basis is incorrect. The relevant circulars clearly state the PBOC sets limits on lending as well as on deposit rates. And thirdly, the OECD Economic Survey: China 2010 cited in recital (162) above also confirms the existence of such limits.

The GOC claimed that the ‘Commission knew that the circulars, including the 8 June and 8 July 2012 circulars issued after the Coated Fine Paper findings had altered the interest rate practice of the PBOC in significant way’. This is incorrect. The Commission could not know if or how exactly the practice changed as the GOC refused to provide these circulars. Even the summaries from the PBOC websites submitted during the verification, but which the GOC incorrectly claims that the Commission completely disregarded, confirm that such limits still exist.

The GOC also claimed that ‘the Commission did not appear to base its finding on actual’ facts available ‘which contradicts the historical information that the Commission possessed, but rather made it incumbent upon the GOC to prove that the state of affairs examined during the Organic Coated Steel had changed.’ In view of the explanation in the recitals (415) — (419) above it is clear that this claim is incorrect. There are no facts available on the file which contradict Commission's findings and the findings are not based only on the historical information but on positive evidence, based on all the information relevant for the IP.

The GOC claimed that the four points claimed by the Commission in the recital (166) above are incorrect and lack proper legal assessment. GOC argued that the reference to the Article 34 of the Commercial Banking Law that banks are ‘to carry out their loan business according to the needs of the national economy’ is completely neutral. It is not clear what the GOC meant by the term ‘neutral’ but according to the plans, policy documents and laws cited in recital (102) above the development of the PV industry and its financial and other support seems to be amongst the needs of national economy in China. In the context of the financial support encouraged and expressed in these documents it is clear that the banks shall support the companies belonging to the PV industry. Concerning the finding that the banks are subject to legal rules which require them to provide credit supports to encouraged projects for which the Commission relied on the wording of the State Council Decision No 40, the GOC claimed that ‘it is absolutely misplaced’ because the Decision does not state or indicate that the solar industry is an encouraged project. This claim is also incorrect. From recital (399) above, it is clear that the solar industry belongs to the category of encouraged industries/ projects. The GOC made a similar claim concerning the Law of the PRC on Scientific and Technological Progress and the Commission's finding that it requires the banks to give priority to the development of high and new technology industries and that the sampled producers fall in the high-tech category. According to the GOC, the Commission did not make any legal analysis on the issue of whether the solar industry of modules and cells production described as high-tech industry falls within the scope of this law. This is not correct. The Commission made a clear link between the category high-tech industries and the solar industry producing modules and cells. This is explained in detail in recital (402) above.

The GOC claimed that the Commission statement that the state involvement in the Chinese financial sector is substantial and on-going is not supported by positive evidence. The GOC contested the evidence cited by the Commission and claimed that the 2009 IMF report which highlights the lack of interest rate liberalisation is irrelevant because the interest rates have been completely liberalised in China. This is not correct. The evidence on the file confirms that the interest rates liberalisation in China is not finished and this was also confirmed by the PBOC officials present during the verification visit. In regards of the 2010 IMF Country Report referred to by the Commission the GOC claimed that the Commission completely disregarded IMF findings on financial sector liberalisation. This is not true. The Commission did not disregard any relevant findings of the IMF in this report which were relevant. The IMF findings to which the GOC referred to in its comments are not contradicting any of the Commission's findings on the state involvement in the Chinese financial sector and certainly not in respect of the state ownership or loan and deposits interest rate policy. The fact that the Report stated that progress has been made in recent years in developing a more market-based financial system in China does not mean that the Report said that there actually is a market-based financial system in China. With regard to the OECD surveys cited by the Commission, the GOC claimed that it cannot be concluded that banks do not operate independently in China on the basis ‘of one phrase to the exclusion of significant progress with regard to the liberalisation of the banking sector’. Concerning this claim it must be noted that the Commission never made any conclusion on the basis of ‘one phrase’ but as demonstrated in the above text, on the basis of several documents compiled by independent international organisations.

The GOC claimed that the Commission's analysis concerning the public body determination ‘is completely flawed’ and its conclusion in recital (168) above is inconsistent with the WTO AB's interpretation of the term ‘public body’ in the US — Definitive Anti-dumping and countervailing duties on Certain Products for China. One exporting producer also claimed that the Commission's reasoning concerning public body determination is ‘legally erroneous’. The GOC claimed that the Commission failed to establish that SOCBs posses, are vested with, and exercise governmental authority and that it has not established i) that the functions in question which are alleged to be performed by the SOCBs are those that are executed by a government in general, i.e. are governmental functions in the first place, ii) the common features which the SOCBs share with the government besides the shareholding which was also not established for all the SOCBs; and iii) that all the SOCBs posses the requisite governmental authority in order to be able to exercise it or were vested with the power to execute the governmental functions concerned. These claims had to be rejected. The Commission refers to its analysis of this issue in recitals (158) — (167). Lending is mentioned in the subsidy definition under Article 3.1(a)(i) of the basic Regulation as a government function. In the present investigation SOCBs are instructed by a requirement, through plans and other policy documents, to promote certain sectors, including the PV sector. On the basis of facts available, it was also concluded that there is substantial government ownership of banks in China and that the government exercises meaningful control over the SOCBs. Since the GOC did not provide the requested information on the government ownership of all SOCB's in China, the Commission made its findings on the facts available. Thus, the Commission concludes that the SOCBs act as an arm of government performing a public function in implementing the GOC's preferential lending policies to certain sectors.

The GOC also claimed that the Commission failed to establish direction or entrustment of private banks in China and in particular that the Commission has not established that the GOC gave an explicit and affirmative delegation or command or responsibility or authority to the private banks and the SOCBs to provide preferential loans. The Commission does not agree with this claim. As explained in recitals (170) — (173), there is a government policy in China to provide preferential lending support the PV industry. Private banks are obliged to implement that government policy: The GOC through the Law on Commercial Banks instructed all banks in China to ‘carry out their loan business upon the needs of national economy and the social development and with the spirit of the state industrial policies’. These needs and state industrial policies are, inter alia, set in various plans and policy documents and the provision of preferential financing to selected industries including the PV industry is one of them. The GOC also claimed that the relevant Article of the Law on Commercial Banks has been extracted out of context and that it does not explicitly demonstrate any delegation or command, grant of responsibility or exercise of authority by the GOC on any commercial bank. The Commission does not agree that the Article 34 has been taken out of context as already explained in recital (390) above and considers its wording a clear, legally binding instruction to all banks in China. The Commission also does not agree with the GOC's claim that the documents providing for the preferential lending to the PV industry referred to in recital (102) are ‘inadequate legal basis’. This is explained in length in recitals (399) — (403) above.

One exporting producer claimed that the Commission has not demonstrated foreign-owned banks in China are entrusted and directed by the GOC. This claim had to be rejected. The Commission demonstrated entrustment and direction for all privately owned banks in China (inter alia recitals (169) — (172) and (424) above) and the banks with foreign ownership belong to this category.

In respect of the entrustment and direction determination the GOC also claimed that the Commission had made conclusions on the basis of credit risk assessment of one sampled exporter provided by one bank and applied them to all banks in China and thereby used adverse inferences in this regard. It is noted that the GOC as well as the banks refused to provide any other credit risk assessments of other sampled exporting producers. Since the Commission was forced to apply facts available in this regard and the credit risk assessment mentioned above is best facts available the Commission partly based its conclusions on this document. But it is reiterated that the conclusions were made on the basis of facts available and not adverse inferences.

The GOC also stated that the Commission's finding that certain banks were granted access to the SAFE foreign exchange reserves is misplaced because the evidence to which the Commission referred only named EXIM Bank and CDB and explained that the loans sourced from these reserves are only given to state-owned enterprises. The Commission does not agree. The evidence only states that when this program started it was initially available only to policy banks CDB and EXIM, but also mentions a major loan of the Bank of China, which indicates that the initial restriction has been removed. Also the claim that the evidence ‘clearly states that the loans are given to only state-owned enterprise like Sinopec’ is not accurate. It actually stated that major state-owned enterprises are preferred, but does not indicate that the provision of such loans was limited to them. And in any event, given the size of the EXIM Bank and CDB and their impact on the financial market in China, even if the program was limited to them it would mean a significant distortion of the financial market as a whole.

The GOC also claimed that the Commission has not established specificity in regards of preferential lending and its specificity analysis is legally incoherent because it did not establish whether the Decision No 40 refers to projects or industries. According to the GOC the fact that the ‘extremely wide array of economic sectors and industries are covered by Decision No. 40, this document does not explicitly limit access of the alleged subsidy to certain enterprises as is required to be established by the WTO jurisprudence’. The Commission does not agree with this claim. With respect to encouraged projects, it is recalled that these cover only certain activities within limited number of industrial sectors and thus this categorisation, covering only a subset of enterprises in China, cannot be considered as of a general nature and non-specific. The Commission considered this as the most natural interpretation in the absence of any explanation (and corroborating documents) as to how the GOC precisely applied the notion of the PV industry e.g. for the purposes of Decision 40 and the relatedGuiding Catalogue of the Industrial Restructuring. Moreover as explained in recital (102) above the solar PV industry also belongs to the category of strategic industries as defined by the 12^th five-year plan and on this basis enjoys access to preferential financing which is clear from the citations from various planning and policy documents and laws in the same recital.

The GOC also claimed that the Commission has not established the existence of benefit concerning preferential lending because the use for the external benchmark for the purpose of the benefit establishment was not supported by the Commission findings. According to the GOC, the Commission had no basis to apply the BB rating as it did not provide any evidence that the BB rating is more likely to be undistorted credit rating that any other rating and its application ‘reflects the impermissible adverse inferences made in violation of Article 12.7 of the SCM Agreement’. This claim had to be rejected. Given the distortions and the lack of proper creditworthiness or risk assessment of the sampled exporting producers by the lending banks, the Commission could not have taken the credit rating (if they had any at all) of the individual exporting producers at its face value. The BB rating is in this case not adverse inference and it is not unfavourable for the exporting producers because it is the best non- investment rating on the market.

The complainant claimed that the Commission should have used a less favourable credit rating than BB grade for the benchmark construction for some exporting producers which were in particularly bad financial situation. For the reasons explained in Recital (429) above, the Commission considered the BB rating (non-investment grade) to appropriately reflect the financial situation of sampled exporting producers during the IP.

The complainant also requested that the Commission discloses the calculation of mark-up for loans in Chinese currency. The Commission explained the methodology in paragraph 169 of definitive disclosure document (replicated in recital (198) above). In line with the methodology from Coated Fine Paper and Organic Coated Steel proceedings the Commission adjusted the Chinese interest rates by adding the interest differential between the best rated bonds and BB rated bonds traded on markets in the IP.

One exporting producer claimed that the Commission, in order to establish the benefit from preferential lending should compare the lending rates of the ‘favoured’ industries with those of the ‘non-favoured’ industries. In view of the Commission analysis of the financial market (recitals (181) — (185)) this claim had to be rejected. Taking into account the established distortions the interest rates in Chinese financial market are deemed to be unreliable.

The GOC also claimed that for the EUR and USD loans the Commission should not resort to the external benchmark because one of the key elements on which the Commission based its distortion analysis, i.e. the PBOC limitations on interest rates does not exist for such loans. This claim had to be rejected. The PBOC limitations on the interest rates are just one of the key elements which the Commission used in its analysis of the Chinese financial market. As explained in recitals (180) — (185) above there is number of other distortions which justified on their own the use of external benchmark also for EUR and USD denominated loans.

Several exporters and the GOC claim that the Agreements between exporters and certain state-owned banks (referred to as ‘the Agreements’ in this section) are not equivalent to credit lines and do not amount to a financial contribution because they do not contain an obligation or commitment for the bank to provide future funding under particular terms and conditions. They also refer to the conclusions of the EC-Aircraft panel, which stated that the ‘mere possibility’ that a government may transfer funds under the fulfilment of a pre-defined condition will not be sufficient to demonstrate the existence of a financial contribution. They noted the panel's statement that the contractual arrangement should ‘in and of itself, be claimed and capable of conferring a benefit on the recipient that is separate and independent to the benefit that might be conferred from any future transfer of funds.’

With regard the findings of the EC-Aircraft panel, the Commission notes that such findings are not exhaustive with regard to the scope of credit lines or other similar agreements an do not bind the Commission's interpretation of the basic Regulation in this case. Nevertheless, the Commission does not disagree with the panel's conclusions, but with the application of those conclusions to the present investigation by the GOC. The Agreements normally provide for the state-owned bank to lend up to the requisite amount of money, sometimes in conjunction with possible improvements in the performance of the firm involved. So, on the one hand, the text of the Agreements may contain textually less explicit or automatic obligations concerning the terms and conditions of future lending than those which feature some types of Credit Line Agreements. They are sometimes supplemented by separate loan or credit agreements. However, it has been noted that loans under these Agreements are usually made on very similar, not to say identical terms. On the other hand, the Agreements contain a number of provisions which go far beyond the normal language of credit line agreements and which amount to the creation of a guaranteed support mechanism by the bank in question. The Commission considers that in this case the written provisions of the Agreements are not necessarily conclusive, because ‘obligations’ or ‘commitments’ to transfer funds may be expressed in written or unwritten form and that their existence should be determined on the basis of the totality of the facts on the record.

1. (a)

   The text of the Agreements: The Commission notes that provisions in the most significant agreements involving large state-owned banks and particular exporting producers are broadly similar. The agreements establish a close link between the bank and exporter with regard to a transfer of funds. They provide for the transfer of the requisite amount of money, sometimes upon the fulfilment of certain conditions related to performance and credit rating. The Agreements entitle the firm to ‘favourable treatment’ when applying for a loan compared to firms which have not signed such agreements. Some of the amounts of potential funding are huge compared to the firms' annual turnover. The amounts of credit promised to the sampled exporters accounted for more than 3 times their annual turnover. Furthermore, the Agreements provide for the bank to give strong support to the development of the company in question. There are references to ‘a long-term stable strategic partnership’ between the bank and the firm, to the bank giving ‘priority’ to the firm's key construction projects, offering ‘long-term stable financial support’ to the firm ‘in respect of its asset acquisition and reorganization, fundamental formation of each business unit, technical improvement project, “Go Global” project and other businesses….’ and helping the firm to ‘formulate a medium and long term development planning by virtue of its professional advantages, institutional advantages and performance advantages.’ Agreements also mention that they comply with national macro-economic and industrial policy. Therefore, it would seem that the strategic support given to the firm, combined with the ‘favourable treatment’ accorded by the Agreements make it highly likely that the firm will be automatically eligible to draw down loans from the Agreements.

2. (b)

   The nature and objectives of the lenders: The lenders are state-owned banks which have been found to be public bodies or other banks which have been found to be entrusted and directed by the government and therefore act as an arm of the GOC. They have also been found to provide loans at well below market rates. For example, certain Agreements refers to the bank's ‘financing advantage’ and its support for ‘high-tech industry…having priority in development with the government concession’.

3. (c)

   The government attitude towards the borrower: Borrowers belong to the strategic emerging industries as shown in the recital (102) above.

4. (d)

   The degree of cooperation of the government with the investigation: The providers of the credit lines (state-owned banks and banks entrusted and directed by the government) have failed to fully cooperate with the investigation and findings relating to them have been made on facts available.

5. (e)

   The market perception of the Agreements: Companies seem to value the Agreements as evidence that they have the state backing behind them and publicly announce the conclusions of such agreements to send a positive signal to markets and potential investors. For instance, on 9 July 2010, Yingli Solar issued a press release announcing a ‘strategic cooperation agreement’ with CDB, under which CDB ‘expects to grant credit facilities with an aggregate maximum amount of RMB 36 million to support Yingli Group and its affiliates’. The Chief Financial Officer of Yingli stated that, ‘This agreement raised two parties' cooperation to a new level, which we believe will give us the ability to pursue opportunities that will allow us to strengthen our leadership position in the PV industry.’ Jinko Solar, on 26 January 2011, characterised an RMB 50 billion credit facility from the Bank of China as a ‘strategic cooperation agreement’ which would ‘further strengthen our position as a leading solar product manufacturer’. The press release went on to state that ‘With the long-term financial support of the BOC, we are confident we will deliver excellent results in 2011 as well as meet our long-term growth targets.’ On 14 April 2010, Trina Solar was reported as intending to use the $4.4 billion credit agreement with CDB ‘for market expansion’. All these announcements suggest that the exporting producers concerned see the Agreements as an established, rather than an uncertain, source of financing

6. (f)

   Operation of the Agreements: Numerous individual loans have been drawn down by exporting producers i.e. the agreements lead to an actual transfer of funds, usually at well below market rates.

With regard to the amount of the benefit, this has been established on the basis of the fees charged for credit line obtained by one of the sampled exporting producers. This credit line was granted by a bank whose headquarters is established in the financial jurisdiction other than PRC and it is shows all the elements of commercial credit lines available on world financial markets and other agreements found in the commercial sector. It is also noted that this credit lines is not substantially different in its conditions from the other commercial credit lines obtained by the sampled exporting producers, where fees are charged, including those from foreign banks. In view of the above analysis, this is a conservative benchmark, as the evidence indicates that the Agreements are in reality more valuable to firms as a stand-alone measure than a standard credit line. However, the Commission considered the required fees to serve as reasonably proxy for those that would be payable under the Agreements.

The GOC also claimed that the banks which undertook the Agreements with the sampled exporters are not public bodies or were not entrusted by the government to do so. This claim had to be rejected. The banks involved were the same banks which provided preferential financing and in the recitals (159) — (168) and (169) — (180) above the Commission provided a detailed explanation why they are public bodies and/or why they are entrusted and directed by the GOC.

The GOC also claimed that the Commission has not provided evidence to support its statement that the Government provision of credit lines (i.e. the Agreements) is part of preferential lending. This is not correct. The provision of credit lines is the standard part of financing provided by banks to companies and the Agreements are separate and distinct measures falling under the scope of preferential lending. As stated in recital (102) above the GOC provides through a number of planning and policy documents and laws for the preferential financing to the PV industry. In addition numerous loans were drawn under these agreements, which clearly shows that they are an integral part of preferential financing of the PV industry.

One exporting producer claimed that the provision of credit lines is not a specific subsidy. This claim had to be rejected. As explained in recital (441) above the provision of credit lines is an integral part of preferential lending and therefore the specificity analysis in recitals (191), (192), (209) and (428) above equally applies to the provision of credit lines.

According to the complainant, the Commission should have established a subsidy margin for the use of export buyers credits, as the EXIM Bank refused to cooperate. The Commission should have used the information in the complaint and the US DOC findings in the similar PV case. This claim could not be accepted. The Commission investigated the allegations in the complaint but no evidence was found that the sampled exporting producers benefited from such measures during the IP. It is noted that the investigation periods for the US case and for the case at hand were different.

With regard to the documents requested by the Commission at the verification visit as specified in recitals (220) and (221), the GOC claimed that it has not been clarified when the 840 Plan was requested, that Sinosure's 2012 financial statements were not available at the time of verification, and that information concerning the sampled companies were confidential and in any event the relevant contracts were not held at the headquarters of Sinosure. The Commission refers to its explanations included in recitals (219), (220), and (223) which deal with all these arguments. With regard to the 840 Plan, the Commission adds that it asked for all of the relevant documents concerning the activity of Sinosure and the alleged subsidy programme benefiting the sampled exporters, and that this 840 Plan is certainly relevant for its findings, together with all the other documents specified in recital (236), as supported by the explanations in recital (232). As for the Sinosure's 2012 financial statements, the Commission asked for the trial accounts, if the 2012 financial statements were not finalised, but Sinosure also refused to provide any trial accounts for 2012.

The GOC also claimed that there is no legal or factual evidence to support the conclusion that the photovoltaic industry is a ‘strategic industry’ and that this would be the result of a presumption. The Commission refers to the explanation in recital (231) and recalls that this point was specifically confirmed by the GOC during the verification visit. With regard to the similar claim concerning the 840 plan, the 421 plan and the measures to support ‘Strategic Emerging Industries’ and to the claim that the plans would not be legally binding, the Commission refers to the explanations in recitals (232) — (234) respectively. It further notes that the GOC has failed to submit these documents and discuss them with the Commission, and that there is no evidence on the record proving that the Commission conclusions are incorrect.

The GOC and one sampled exporter claim that the rebates and grants for the payment of export credit insurance premia granted by the local authorities have been illegally countervailed because it has not been established that they constitute subsidies within the meaning of the WTO SCM Agreement. The Commission refers to its analysis on the findings of the investigation and in particular to recitals (239) and (247). The Commission further notes that the rebates and grants are inextricably interlinked with the export credit insurance programme because their repayment is the consequence of the payment of the premium to Sinosure under the main export credit insurance policy. Last but not least, these rebates also fall under the scope of the Notice [2004] No. 368 issued jointly by MOFCOM and Sinosure, which provides that ‘the regional and local government authorities shall jointly make further effort to implement further support measures to the products included in the Directory and the high and new technological enterprises for export credit insurance’.

The GOC also challenge the finding concerning Item (j) of Annex 1 of the WTO SCM Agreement that Sinosure short-term export credit insurance programme was operated at premium rates inadequate to cover the long-term operating costs and losses of the programme. In support of this the GOC cites the jurisprudence of the WTO Panel finding in US-Upland Cotton and presents explanations based on different sets of figures and arguments contained in Sinosure Annual Reports. The GOC also questions the Commission reference to Article 11 of Sinosure's Articles of Association and to the article from the law firm Stewart Law. The Commission restates all of its arguments in recitals (242) — (245) and recalls that its conclusions are based on the best available evidence in the file due to the lack of cooperation of the GOC which prevented the Commission from obtaining the relevant information it had asked for. For its findings, the Commission considered a number of elements and evidence on file, among which were Sinosure's Article of Association and the article from the law firm Stewart Law. The Commission considers that, while none of these elements is determinant in itself, these and all the other elements are relevant for its determination. As for the US-Upland Cotton jurisprudence, the Commission has fully taken it into account in its findings and the quotes of this jurisprudence from the GOC are indeed very pertinent.

According to US-Upland Cotton as quoted by the GOC itself, ‘the reference to “long-term” in item (j) to refer to a period of sufficient duration as to ensure an objective examination which allows a thorough appraisal of the programme and which avoids attributing overdue significance to any unique or atypical experiences on a given day, month, trimester, half-year, year or other specific time period’. The Commission considers the period 2006-2011 as a sufficiently long-term period to consider, and Sinosure has incurred a loss in each year of this period. The situation of 2010 is either to be considered unique or atypical if one takes into account the adjusted figures in the 2011 Annual Report and thus of limited significance, or the ordinary unadjusted figures in the 2010 Annual Report must be taken into account as relevant which show that the result is just slightly above break-even. Given the significant losses incurred in other years, this confirms the Commission findings that Sinosure is, overall, in a position of long-term loss during the period 2006-2011. In addition, even if the data from 2010 were taken into account as being representative, the fact remains that Sinosure made losses in five out the six years from 2006 to 2011. The other tables and sets of figures submitted by the GOC to challenge the Commission findings on item (j) WTO SCM Agreement cannot be reconciled with other information present on the record and/or are not verifiable, In any event, they do not by themselves demonstrate that Sinosure broke even on its short-term export credit insurance programme during the period 2006-2011.

As for the benchmark for the calculation of the benefit, the GOC considers the establishment of an out-of-country benchmark inconsistent with the SCM Agreement, but it does not add any argument to justify this claim. The Commission refers to its explanation in recital (245).

The GOC and one sampled cooperating exporter challenge the benchmark used in that the Commission has not justified why: (i) the premium calculation is based on US EXIM bank data; (ii) it has used Italy as the importing country and not Germany, which is the main export market for the product concerned; (iii) it has taken the time period of 120 days and not 60 days or any other shorter period; (iv) it has not used the premium calculation for direct exports but rather for the Financial Institution Buyer Credit (FIBC) Export Insurance. With regard to (i), the Commission refers to recital (253). With respect to (ii), the Commission believes that Italy represents the right balance between the EU country with the lowest risk and EU countries with significantly higher risks and consequently premia charged, which are also markets for the product concerned. As for (iii), in the absence of a specific simulation based on a period of 90 days available on the EXIM Bank website the Commission considers the duration of 120 days as the most appropriate to represent the terms of sales during the investigation period. With regard to (iv), the Commission was not able to obtain a simulation for the calculation of the premium for direct exports and considers this benchmark to reflect the general risk situation in the country of purchase.

One sampled cooperating exporter claims that it has purchased export credit insurance for some of its exports but it has paid regular insurance premia and did not enjoy the Green Express programme or any other beneficial treatment alleged by the complaint. In the absence of evidence proving this claim, the Commission refers to its findings on this programme in Section 3.4.1.4 if this regulation. As regards ‘Green Express’, the Commission refers to its findings in recital (240) and notes that this constitutes a specific aspect of Sinosure's short-term credit insurance programme and that the Commission findings are not limited to this aspect but to the programme as a whole.

The GOC further argues that this programme provides grants for ‘distributed solar PV systems’ rather than for the producers/exporters of the product concerned and that the relevant criteria in the legislation are not directed to module and cell producers. In this respect the GOC claims to have provided the relevant documentation on the programme and that even coordinated with the sampled companies to prove this point. Three sampled cooperating exporters claim that this is a ‘user subsidy’ and does not confer a benefit to the product concerned, and therefore it is not countervailable within the meaning of Articles 1(1) and 3(2) of the basic Regulation, Article VI:3 GATT 1994, and Article 19.1 of the WTO SCM Agreement. These exporters refer to the EU decision in the Biodiesel from the United States case (Recital 97 of the Commission Regulation (EC) No 194/2009, OJ L 67 of 12.03.2009 p. 50 and to the WTO jurisprudence in U.S.-Lead Bars (Paras 6.50, 6.53, 6.56 and 6.57 of the Panel Report), Canada-Measures Affecting the Export of Civilian Aircraft (Para. 9.112 of the Panel Report), Brazil-Export Financing Programme for Aircraft (Para. 7.24 of the Panel Report), and Canada-Measures Affecting the Export of Civilian Aircraft (Paras. 157 and 159 of the Appellate Body Report).

The limited explanation provided by the GOC and the sampled cooperating exporter that the direct transfer of funds, in violation of the Chinese legislation, was necessary because the project operator was in financial difficulty and to ensure that the grants would be used only for authorised PV systems strongly indicates that, in the absence of this direct transfer from the government, the sampled cooperating exporter acting as supplier would not have been able to receive any money for the supply of the product concerned and that the government would not have been able to ensure that the subsidy would be used for its intended purpose. From this perspective and in the absence of further evidence these payments must be viewed as a direct grant from the GOC to the producer of the product concerned, which would not otherwise have received any money for the supply of the product concerned (assuming that this supply ever took place, for which again there is no evidence on the record). On this basis the Commission believes that the arguments raised by the GOC and by the sampled cooperating exporters are legally unfounded.

The GOC also claims that for situations in which the benefits from the programme concerned the supply of the product concerned to unrelated project operators, the Commission was obliged to conduct a pass-through analysis to establish this point, citing the WTO decision in US-Softwood Lumber IV (paras. 141 and 142 of the Appellate Body Report). The Commission refers to the explanations in Recitals (244) — (246) and in Recital (352) above to dismiss this claim. Furthermore, due to the non-cooperation of the GOC and interested parties, the Commission was not in a position to carry out a pass-through analysis. Therefore there is no question of pass-through and the WTO jurisprudence quoted is irrelevant in this situation given that the proceeds were directly paid to the producers of the product concerned and directly linked to the supply of inter alia the product concerned. Since these payments were non-repayable grants, there is a financial contribution (a direct transfer of funds) and the Commission is entitled to presume that they confer a benefit to the recipient (the producers), in the absence of any evidence on further use made of the sums concerned. Had payments under this programme been made by the government to third-party project operators and the equipment acquired for fair market value, there would be no benefit to the exporters concerned. However, in a situation where payments are made to the exporting producers, the amounts used by these companies for the installation of solar panels confer a benefit because it relieves them of costs they would otherwise have incurred in this process. If the exporting producer is unable to demonstrate that a part of the grant has been transferred to third-party users, it is presumed, on the basis of facts available, that this part of the grant confers a benefit to the exporter as a general subsidy which benefits the company's activities as a whole. This is the case here.

Therefore, also considering the absence of cooperation of the GOC that has failed to provide all the budget documents requested by the Commission (see Recitals (234)-(239)), it is concluded that this programme is also de facto specific under Article 4(2)(c) of the basic Regulation because mainly producers of the product concerned in fact benefit directly or indirectly from this programme. The subsidy is also used by a limited number of enterprises (the producers of the product concerned), or is used predominantly or disproportionately by these firms, since they are only a subset of the allegedly potential recipients but seem to receive all the funding.

The GOC claimed that the Commission did not determine the specificity under Articles 2.1 and 2.2 of the ASCM and did not clearly substantiate its determination of specificity on the basis of positive evidence, as required by Article 2.4 of the ASCM. According to GOC the Commission had not provided any factual evidence as to which are the certain industries that are accorded LURs at preferential rates and the legal basis of its assessment that the industry producing solar cells and modules forms part of these industries. One exporting producer made similar claim. These claims had to be rejected. The Commission cited in the recital (364) above the examples of the LUR notices where the relevant authorities limited the potential buyers for the set price to the photovoltaic industry and set price limits on the LUR purchased by the sampled exporting producers. In the absence of any other information requested from the GOC and, given the government support to the PV industry, along with discretionary and non-transparent nature of the allocation of land-use rights, the Commission considered that this information establish the existence of specificity.

Although the GDP per capita of Taiwan and these provinces and cities is not identical, the GDP of these provinces and cities has grown rapidly in recent years i.e. they are catching up with Taiwan. In addition, recent data suggest that the both PRC as a whole, as well as the provinces and cities concerned have much higher GDP growth rate than Taiwan, i.e. they are catching up very fast. However, it is important to note that the exact comparison made between the GDP of a non-market economy (the PRC) and the GDP of a well- established market economy (Taiwan) is not a decisive fact because it is normal for a non-market economy to lag behind a functioning market economy in terms of GDP. In addition, many other factors e.g. planning rules, environmental policy may affect the supply and demand of industrial land. The real issue is what would be the ‘prevailing market conditions’ with regard to LUR in the Chinese provinces concerned if it was a functioning market economy and on the basis of all evidence, it is concluded that they would be very similar to those of Taiwan.

The complainant claimed that the Commission should disclose additional subsidy schemes found during the investigation and also establish subsidy margins for such schemes not mentioned in the complaint. In this respect it is noted that the all the subsidies which met the legal requirements for initiation were investigated by the Commission.

The complainant claimed that the Commission should have established a subsidy margin with regards to the provision of polysilicon for less than adequate remuneration on the basis of the information in the complaint and on the basis of the US DOC findings in similar PV case. The Commission investigated this programme and, on the basis of the information received from sampled exporting producers and the GOC, concluded that there was no benefit from this programme during the IP, principally because import prices of polysilicon were lower than prices charged by Chinese suppliers. It is noted that the investigation period for the US case and for the case at hand were different.

The complainant also claimed that the Commission should have established a subsidy margin with regards to provision of electricity for less than adequate remuneration. This claim had to be rejected. The Commission did not find sufficient evidence that the sampled exporting producers, with the exception of LDK, benefited from preferential provision of electricity in the IP.

The GOC claimed that the Commission's calculation methodology resulted in the ‘double counting at the level of the ant-dumping and anti-subsidy margin calculations’. According to the GOC the Commission should have deducted the subsidy margin calculated for the export credit insurance programme from the dumping margins on the basis that it is an export subsidy. The GOC also claimed that the Commission should have deducted from the dumping margin the subsidy margins calculated on the basis of out-of-country benchmarks. It reasoned that ‘part of dumping calculated based on an analogue country normal value is actually same subsidisation that has been countervailed in the parallel anti-subsidy investigation’. Neither of these claims would have any impact on the level of the resulting measures as in the present case the combined duties are limited by the injury margin. The GOC also confirmed this in the comments to definitive disclosure document. Therefore it was not considered necessary to address the substance of these claims.

Over the period considered, import volumes to the Union from the country concerned increased considerably by around 300 % for modules and by more than 400 % for cells. This led to significant market share increases of the imports from the country concerned into the Union. More specifically, the market shares of imports from the country concerned increased from [60 % - 65 %] to [78 % - 83 %] for modules and from [5 % - 10 %] to [22 % - 27 %] for cells. In overall terms the imports of the product concerned from the PRC increased significantly in terms of volume and market share between 2009 and the IP.

It should be noted that the increase in imports from the country concerned was much higher than the increase in the Union consumption for the product concerned. Consequently, the exporting producers were able to benefit from Union's growing consumption and their position on the market became stronger due to larger market shares.

One interested party argued that data concerning import volumes of the product under investigation vary significantly, depending on the source used. This party argued that reliable data can only be established on the basis of the information gathered from specialised institutions or research centres. In view of the explanations and conclusions reached in the recitals (481) to (483) above, concerning the reliability of the data used in the investigation, this argument was rejected.

After final disclosure, one interested party contested the methodology to determine the total import value from the PRC claiming that it had been based on transactions made at CIF level duty unpaid and it is therefore doubtful whether these transactions had been destined for Union consumption. In respect of this claim, it is clarified that the total import value from PRC as provided by the consultant had not been used in the findings and that only import volumes and import prices were determined during the investigation. As the methodology to determine import prices was not contested as such by the interested party concerned reference is made to the relevant findings in recitals (520) to (528) below. Therefore, the above claim was rejected

The average import price from the PRC dropped significantly over the period considered for modules and cells. For modules, the average import price decreased by 64 %, from 2100 EUR/kW in 2009 to 764 EUR/kW in the IP. Likewise, the average import price of cells from PRC dropped by 42 %, from 890 EUR/kW to 516 EUR/kW.

In overall terms, the price of the product concerned decreased significantly between 2009 and IP.

One cooperating unrelated importer claimed that import prices should have been established on the basis of its imports of the product concerned in the Union as provided by this importer during the investigation. However, the data provided by this importer during the investigation only represented a fraction of the total imports in the Union and no meaningful conclusions could be drawn as to the average import price of all imports from the PRC during the whole period under consideration covering several years on this basis. Therefore, this claim was rejected.

Another party claimed that the methodology to determine the prices was not explained, in particular as to how the data of various sources had been merged and reconciled. In addition it was argued that importation costs should have been based on the verified information collected during the investigation rather than on estimates.

It is considered that the methodology made available to interested parties is sufficiently complete to understand as to how figures were established. As far as ‘importation’ cost is concerned, it is clarified that an adjustment was made to on-the-spot-prices to arrive to CIF prices. The estimation made was confirmed with the data collected during the investigation.

In order to determine price undercutting during the IP, the weighted average sales prices per product type of the sampled Union producers charged to unrelated customers on the Union market, adjusted to an ex-works level, were compared to the corresponding weighted average prices per product type of the imports from the cooperating Chinese exporting producers to the first independent customer on the Union market, established on a CIF basis, with appropriate adjustments for post-importation costs, i.e. custom clearance, handling and loading costs. The average post-importation costs of the sampled importers of modules were used when their data were available.

The price comparison was made on a type-by-type basis for transactions at the same level of trade, duly adjusted where necessary, and after deduction of rebates and discounts. The result of the comparison, when expressed as a percentage of the sampled Union producers' turnover during the IP, showed weighted average undercutting margins within the ranges of [19,8 % — 37,5 %] for modules and [12,6 %-53,8 %] for cells, and [19,8 %-37,5 %] in overall terms for the product concerned.

It should be noted that for one sampled exporting producer a negative price undercutting for cells was calculated. However, as the exported quantities were not significant this cannot be considered representative. Moreover, another sampled exporting producer, contested the source for the adjustment for mono cells to multi cells, without however substantiating the argument. Indeed the specific adjustment was not contested by the exporting producer nor did they provide any new information or evidence, therefore this claim was rejected.

Pursuant to Article 8(4) of the basic Regulation, the Commission examined all relevant economic factors and indices having a bearing on the state of the Union industry. As mentioned in recitals (14) to (22) above, sampling was used for the examination of injury suffered by the Union industry.

For the purpose of the injury analysis, the Commission distinguished between macroeconomic and microeconomic injury indicators. The Commission analysed the macroeconomic indicators for the period considered on the basis of the data obtained from the independent consultant as cross checked whenever possible with other available sources and from the sampled Union producers' verified questionnaire responses. The Commission analysed the microeconomic indicators on the basis of the sampled Union producers' verified questionnaire responses.

For the purpose of this investigation, the following macroeconomic indicators were assessed on the basis of information relating to all producers of the like product in the Union: production, production capacity, capacity utilisation, sales volume, market share, growth, employment, productivity, magnitude of the amount of countervailable subsidies and recovery from past subsidisation or dumping.

The following microeconomic indicators were assessed on the basis of information relating to the sampled producers of the like product in the Union: average unit prices, unit cost, labour costs, inventories, profitability, cash flow, investments, return on investments and ability to raise capital.

One interested party claimed that market conditions of the product concerned differ per Member State and that therefore the injury analysis should be made at the level of each Member State separately. This allegation was not substantiated. In addition, the investigation did not reveal any particular circumstances justifying an injury analysis per Member State. This claim was therefore rejected.

Some parties questioned the overall reliability of macroeconomic injury indicators used by the Commission for the purpose of this investigation. They argued that the trends established for a number of these indicators diverged from the trends for the same indicators established for the sampled Union producers. Particular reference was made to Union production, productivity, sales, average labour costs and employment.

The macroeconomic indicators were established in relation to all producers in the Union. In case the same data are compiled in relation to individual Union producers or a group of Union producers (i.e. the sampled Union producers), the trends are not necessarily identical, as e.g. the weight of each company considered is not taken into consideration in such comparison. Therefore, the results of the exercise of comparing the macroeconomic indicators for all Union producers and those for sampled Union producers are not necessarily meaningful and do not allow for the conclusion that the one or the other set of data is unreliable. In any event, when comparing the trends of the macroeconomic indicators of the Union industry with the same consolidated indicators of the sampled Union producers, differences in trends can be noted for several indicators, such as the production, production capacity, sales volumes, employment and productivity of the Union industry between 2011 and the IP. For all these indicators, the sampled Union producers performed better than the overall Union industry. The reason is that in the IP many Union producers, not included in the sample, stopped their production or became insolvent, thus having a negative impact on the macroeconomic indicator calculated at the Union level. These claims were therefore rejected.

One interested party claimed that the conclusion as set out in recital (153) to the Provisional anti-dumping Regulation that the analysis of the situation of the Union industry showed a clear downward trend of all main injury indicators was based on data provided by the consultant. In this respect, it is clarified that, on the one hand, the macroeconomic indicators, as listed in Tables 4-a to 6-c to the Provisional anti-dumping Regulation, were based on data obtained from the consultant and cross-checked when possible with other available sources. On the other hand, the microeconomic indicators, as listed in the Tables 7-a to 11-c to the Provisional anti-dumping Regulation, were based on data collected from the sampled Union producers and verified on-the-spot by the Commission. It should also be noted that determinant factors for the injurious situation of the Union industry such as the profitability levels of the Union industry, the average sales price in the Union as well as price undercutting calculations were based on data collected from the sampled Union producers and exporting producers as verified on-the-spot. The above claim was therefore rejected.

The volume of imports from other third countries during the period considered for modules increased by 19 % while the market share decreased over the period considered from 18,4 % to 6,8 %. Taiwan is the second largest exporter after the PRC.

The volume of imports from other third countries for cells increased by 186 % during the period considered which translated in an increase of market share from around 24 % in 2009 to around 36 % during the IP. As for cells, Taiwan is second largest exporter after the PRC, by far exceeding import quantities and market shares from the other third countries, but still below those from the PRC.

The import prices of third countries of modules and cells were on average higher than the average unit price of the Chinese imports. The information available as regards imports from Taiwan shows that the average import price for modules was higher than the average Chinese import price for modules, while the average import price for cells was in the same range as the average Chinese import price for cells. However, since no detailed price information per product type was available, the price comparison on an average basis can only be used as an indication but no firm conclusions can be drawn on this basis. Throughout the period considered, volume of imports of cells from Taiwan increased continuously, resulting in a gain of market share of around 14 percentage points. Therefore, even if it is acknowledged that imports of cells from Taiwan may have contributed to the injury suffered by the Union industry, it cannot be concluded that they broke the causal link between the subsidised imports from the PRC and the injury suffered by the Union industry, as the import volume of cells from the PRC was slightly higher than the import from Taiwan. As far as the prices are concerned, although the average indicative prices are in the same range, no conclusion can be drawn on that basis since no information are available concerning the specific types of the imported cells. However, overall for the product under investigation, despite their increase in market share, the volumes were lower than the PRC and their price levels were generally higher with the exception of cells during the IP. On these grounds, in particular in view of the import volumes and market shares from other third countries as well as their price levels, which are on average similar or higher than those from the Union industry it can be concluded that third country imports did not break the causal link between the subsidised imports and the injury suffered by the Union industry.

Several interested parties made comments following the final disclosure with regard to the findings concerning imports from other third countries. However, these parties did not bring into light new information and supporting evidence which could have altered the relevant findings.

Non subsidised imports from the PRC were carefully analysed and were found not to have any significant impact on the situation of the Union industry, susceptible of breaking the causal link established between the subsidised imports and the injury suffered by the Union industry.

As mentioned in recital (509) above, Union consumption increased by 221 % for modules and by 87 % for cells during the period considered. Consumption reached a peak in 2011 and dropped during the IP while still remaining far above the level at the beginning of the period considered in 2009. The Union industry could not benefit from this increase in consumption as its market share fell from 19 % to 13 % for modules and from 68 % to 38 % for cells during the same period. At the same time, the market share of the PRC was increasing sharply, until 2011 and then remained stable at significant high level during the IP, when consumption fell. Therefore, in view of the fact that, despite a decrease in Union consumption in the IP, the subsidised imports from the PRC either maintained their market share (modules) or increased it (cells) to the detriment of the Union industry over the period considered, it cannot be concluded that the decrease in consumption was such as to break the causal link between the subsidised imports and the injury suffered by the Union industry. Moreover, the investigation showed that, as the capacity of the Union industry was in any event much lower than the levels of consumption, the shrinking consumption in the IP could not have had an impact on the injurious situation of the Union industry.

Based on the information available it is difficult to establish to what extend the demand is driven by the Member States support schemes. Indeed, as mentioned below in recital (632) a variety of support schemes exists and interaction between those and demand is highly complex and therefore their precise impact is difficult to quantify. However, the evidence available also indicates that even in the absence of support schemes the demand for solar energy will continue to exist and will even grow over time, albeit at lower levels than in the context of support schemes. In this context, several parties argued that grid parity had already been reached or nearly reached in some regions of the Union.

One interested party argued that the imports from the PRC did not capture the entire increase in consumption and that, while in the case of modules the Union industry lost market share between 2009 and 2010, it still increased its profitability during the same period. Furthermore, it was argued that in 2009 when imports for cells from PRC had only 8 % market share, the Union industry still suffered 8 % loss.

As already mentioned in recitals (609) to (616) above, despite the decrease in Union consumption in the IP, the subsidised imports from the PRC either maintained their market share (modules) or increased it (cells) to the detriment of the Union industry over the period considered. Therefore, it cannot be concluded that the decrease in consumption was such as to break the causal link between the subsidised imports and the injury suffered by the Union industry. Moreover, the investigation showed that as the capacity of the Union industry was in any event much lower than the levels of consumption, the shrinking consumption in the IP could not have had an impact on the injurious situation of the Union industry. Therefore, this claim was rejected.

Another interested party contested that the demand in the Union will continue to exist even in the absence of the national support schemes. This party argued that there is a correlation between demand and support schemes and that in the absence of such schemes projects in the PV sector it would not be profitable anymore and therefore the demand for solar panels will disappear as well. However, the party did not provide any evidence which could devaluate the findings above under recital (626). In the absence of any new information in this regard, this claim was rejected.

Following final disclosure, the GOC argued that the fact that the Union industry's capacity did in any event not meet the Union demand is irrelevant since the sales volume of modules of the Union industry decreased in line with the decrease in consumption and reiterated that the decrease in consumption between 2011 and the IP caused the material injury suffered by the Union industry. While indeed between 2011 and the IP the Union consumption decrease and the sales volume of modules decreased with a similar trend, this has to be seen in relation to the development of the Chinese subsidised prices, significantly undercutting the Union industry prices, thus forcing the Union industry selling at losses. In this regard it is recalled, as mentioned in recital (111) to the provisional anti-dumping Regulation that imports from the PRC either maintained their market share (modules) or increased it (cells) when the consumption was decreasing. At the same time Chinese import prices decreased significantly and substantially undercut the Union industry's sales prices. Therefore, this claim was rejected.

It has been claimed by several interested parties that the cause of the injury suffered by the Union industry was linked to the reductions in the feed-in-tariffs implemented by the Member States. Those cuts had allegedly led to a decrease of the solar installations and reduced demand for the product under investigation in the Union market, thus causing material injury to the Union industry.

Member States introduced FITs, quota obligations with tradable green certificates, investment grants and tax incentives to support renewable energy generation. Support is also granted in certain Member States from EU structural funds. The most frequently implemented support instruments for solar energy were FITs. The analysis of the Commission focused on this type of support scheme.

In spite of the national differences, three phenomena could be observed as regards the evolution of FITs in the Union: (i) the reduction of the FIT rates, (ii) the suspension of the FIT scheme as a whole (Spain) and (iii) the introduction of capacity thresholds (‘caps’) for the installations eligible for financing as well as overall caps on the yearly installed new supported capacity at the Member State level. As regards the caps, they appear to have been introduced mainly during 2012 and, most likely, do therefore not have any effect on the consumption during the IP. Consequently, the analysis focused on the recent FIT suspensions in Spain and reductions of FIT rates in most Member States. It was analysed whether they had an impact on the demand in the Union market and whether this could have caused the material injury suffered by the Union industry. In this regard, it was considered that the impact of the evolution of FITs with regard to the demand of modules was also representative for the situation with regard to cells. Indeed, as cells are indispensable for the production of modules and as they are not used in other production processes, a decrease in demand for modules triggers automatically a decrease in demand for cells.

While the investigation confirmed the link between the evolution of FITs and consumption, the investigation established that the decrease in consumption between 2011 and the IP did not contribute to break the causal link between the subsidised imports from the PRC and the material injury suffered by the Union industry as described in detail in recital (625) above. Indeed, the investigation showed that while the situation of the Union industry was deteriorating, the exporting producers were able to maintain their high market shares for modules (80 %) and even increased their market shares slightly for cells (from 20 % in 2011 to 22 % during the IP). In addition it should be noted that the average price of modules charged by the Union industry dropped by 53 % over the period considered, mainly due to the significant increase of subsidised imports and the substantial price pressure they exerted on the Union market. Therefore, the loss in profitability suffered by the Union industry cannot be mainly attributed to the FIT cutbacks.

Consequently, it is acknowledged that FITs generated demand for solar energy and that recent FIT suspensions (as in Spain) and reductions in other Member States lowered the consumption for the product under investigation during the IP, thus possibly having contributed to the injury suffered by the Union industry. However, the decrease in consumption during the IP was not such as to break the causal link between the subsidised imports and the injury suffered by the Union industry.

Several parties argued that FITs cutbacks rendered the solar investment opportunities unattractive for investors and thus lowered the demand for the product concerned in the Union.

While the investigation confirmed a link between the FIT rates and the level of investments in the solar industry, it also showed that investments in the solar energy are less dependent in regions with high sun exposure where production of solar energy is more efficient and in regions with high electricity prices. Indeed, showed that investments are still being made (e.g. in Spain) in spite of the suspension of the FIT scheme. Moreover, the investigation showed that solar energy investment opportunities still remained attractive even with lower FIT rates. On the basis of the above, this claim was rejected.

Several parties claimed that the FIT developments exercised a strong downward pressure on prices and therefore on the profitability of the Union industry. One interested party claimed that only the impact of the development of FITs on the demand was examined, while the impact on prices should also have been analysed instead. In the same context, several interested parties argued that most of the Member States implemented major cutbacks already in 2010 thus putting a downward pressure on the prices for modules.

In respect of this claim it should be noted that the Member States implemented FIT cutbacks at different moments in time and at different speeds and that drawing a general picture for the entire Union is rather difficult. Irrespective of the moment when the FIT rates reached very low levels, the significant decrease in the Union prices and profitability during the period considered cannot be solely or mainly explained by the reduction of FITs. First, on the basis of the information collected for Germany and Italy that represented together around 75 % of the Union consumption in 2011, the drop in the average sales price was more pronounced than the decrease in the FIT rates during the IP. Second, the evidence collected shows that, for some countries such as Italy, even in the context of very generous FIT rates, the Union industry had to decrease significantly their prices. Finally, during the IP, the Union industry had to sell at prices below their cost of production, which was mainly a consequence of the fact that the Chinese exporting producers had 80 % of the Union consumption and therefore the power to influence the price-setting mechanism.

The investigation further established that up to 2011 the higher FIT rates together with the decrease in the prices of modules in the Union rendered the investments in solar energy extremely attractive as investors were earning very high rates on return. Therefore, this resulted in a high number of investments and consequently high demand of solar panels. As a consequence of the increased demand, the total amount of FITs paid increased significantly and most Member States revised the existing FIT schemes downwards to avoid inter alia an increase of electricity costs. This shows that FIT cutbacks may also have been the result of the decreasing prices and not vice versa. Therefore, this claim was rejected.

After final disclosure one party claimed that there was a contradiction between the recital (640) above, that an assessment of the demand for the Union as a whole is difficult, and the recital (608) above stating that a causation analysis per Member State would not lead to meaningful results. In this respect, it is clarified that in the assessment made as described in recital (640) above, reference is made to the difficulty to draw a general picture of the FIT developments for the entire Union and not to the Union demand as claimed by the interested party. As a consequence, it follows that no contradiction exists between the two recitals and therefore the claim was rejected.

After final disclosure, one party claimed that even in the context of high FIT rates, the module price may decrease significantly due to technological development, economies of scale, cost reductions and growing global production capacity. In respect of this claim, it is noted that the evidence collected shows that the Italian producers had to reduce their prices below the cost of production even when FIT rates were high. While the factors mentioned above may indeed have had an impact on the average costs they cannot explain why Union producers had to reduce their prices below their cost of production. Therefore, it is concluded that it was mainly the subsidised imports from the PRC that pushed the prices to unsustainable levels and this claim was rejected.

After final disclosure, one party claimed that the conclusion drawn in recital (641) above, that FIT cutbacks may have also been the result of the decreasing prices and not vice versa, is not supported by any evidence.

It is noted that the conclusions drawn in recital (641) above were based on the information available during the investigation and the scenario described was indeed considered as reasonable given the circumstances in this specific market. Therefore, this argument was rejected.

After final disclosure, one party disagreed with the conclusion that the downward price pressure on Union producers was mainly exerted by the subsidised imports and claimed that, to the contrary, it was the FIT cutbacks that forced the Union producers to reduce their prices. The same party reiterated that when FITs were reduced, the PV system prices decreased in line with the decrease in FITs so that costs for project developers do not increase, which ultimately caused the price pressure on the Union producers.

Since no conclusive evidence was brought in support of these claims, the Commission maintained its analysis and conclusions as stated in recitals (640) to (641) above.

The same party claimed that markets are driven by the development of FITs and provided information showing the number of PV installations for the years 2012 and 2013 in the UK. The information provided by this party was a publication of the UK government based on the weekly registrations in the UK Central FiT Register (CFR). It is noted that this information related mostly to a period outside the IP and referred only to one Member State, while the current investigation focused on the situation of the Union market as a whole. In any event, it is not contested that FIT levels influence demand, as the profitability of investments in locations with less solar radiation depends on the FIT level. However, in order to show that the level at which FIT were set during the IP has caused the injury, interested parties would have had to show that a price increase of the Union producers to the non-injurious level would have meant that the Union producers would not have been able to sell the product concerned because investments into PV systems would not have been viable at those price levels. No such evidence has been provided. This argument was therefore rejected.

Several parties claimed that in the context of the low FIT rates, investments in PV projects were economically viable only when supplied with the lower priced solar panels imported from the PRC. Therefore, it was argued that the FIT cutbacks caused material injury to the Union industry. Another party argued that the level of the FIT rate influences the price setting mechanism for modules.

It should be noted that the cost of a module at which a project would still be economically viable varies by Member State or by region in function of numerous factors such as FITs, other regulatory incentives, sun exposure, conventional electricity prices, etc. In addition, the investigation showed that current installations depend less and less on the FITs as PV grid parity is likely to have been reached for certain types of installations in several regions in Europe, such as a large portion of Italy, Spain, Portugal, southern France and Greece. On the above grounds, the claims made in this regard were rejected.

One interested party claimed that the Commission did not investigate whether Union industry failed to anticipate that government support schemes would be abruptly withdrawn or decreased. No arguments were brought in support of this claim. However, it should be noted that, based on the evidence collected, there is no information indicating that the Union industry responded to the market signals (i.e. development in consumption) and other available information (i.e. reduction in support schemes) in an unreasonable way. Therefore, this claim was rejected.

One interested party argued that the FIT cutbacks caused Union industry sales decline because investments had been viable only at the affordable Chinese prices. The evidence collected in fact shows only a slight decrease in the sales of the Union industry during the IP, in contrast to what it would be expected had the PV projects been feasible only with Chinese modules. On the contrary, the sales of module of the Union industry increased until 2011 and then slightly decreased in the IP, following the same trend as of the consumption. Therefore, this claim was rejected.

One interested party argued that the decrease in FITs forced Union industry to decrease their prices to keep the interests of the investors in PV energy and to keep developing demand and growth.

The investigation showed that the Union industry was forced to decrease its prices mainly due to the pressure of the subsidised imports and not to the FIT cutbacks. This is indicated by the fact that the most significant decrease in the prices of the Union industry occurred in 2010 and 2011, before the major FIT cutbacks took place. Indeed, the increase in subsidized imports from the PRC significantly undercutting the Union industry's prices forced the Union industry to cut down their prices to increasingly low levels. On these grounds, the claim was therefore rejected.

Another interested party argued that the findings as set out in recitals (174) and (175) to the provisional anti-dumping Regulation that the FIT changes did not break the causal link has no factual or legal basis and is inconsistent with Article 8(5) of the basic Regulation because the Commission failed to assess the level of injury caused by the FIT reductions and because it considered that the significant drop in the Union industry's price had been a consequence only of the subsidised Chinese imports. The same party argued that the decrease in the price of modules and cells was a global phenomenon and not due to the pressure of the Chinese imports.

In respect of the claim that the Commission failed to assess the level of injury caused by the FIT cutbacks, reference is made to recitals (628) and (629) above as well as (640) and (641), where the Commission concluded that neither the decrease in demand nor the impact of FITs on Union prices were as such as to break the causal link between the injury suffered by the Union industry and the subsidized imports from the PRC, irrespective of whether and to which extent they were possibly caused by the FITs cutbacks. Therefore, the claim that the Commission's findings have no factual basis was rejected. As regards the claim that the decrease in the price of modules and cells was a global phenomenon, reference is made to recitals (619) to (621) above where import volumes and prices from other countries than the PRC into the Union are assessed. While indeed there was a global downward trend in the prices of modules and cells, the subsidized import prices from the PRC have exacerbated the downward trend to loss making levels. On the basis of the above, this claim was rejected.

In summary, FITs have been an important factor for the development of the PV market in the Union and the evolution of consumption of the product under investigation was influenced by the existence of the FITs. However, the investigation showed that the consumption did not decrease significantly despite important FIT cutbacks. Furthermore, the investigation showed that the decrease in Union prices did not occur mainly due to the FIT cutbacks. Therefore, it is concluded that the developments of FITs were not such as to break the causal link between the subsidised imports and the material injury suffered by the Union industry.

Some interested parties claimed that the material injury suffered by the Union industry was due to a decrease of financial support granted to the Union industry. In support of this claim, information was provided based on subsidies granted to one of the Union producers prior to the period considered (between 2003 and 2006).

The evidence provided did not reveal any link between the material injury suffered by the Union industry and any alleged subsidy received by one of the Union producers during the period preceding the period considered. Moreover, as this information predates the period considered, it seems to be irrelevant. Therefore, no link could be established between any alleged subsidy received by the Union industry and the material injury suffered. On this ground, the argument was rejected.

It has been claimed that the material injury suffered by the Union industry was due to an overcapacity in the Union market and in the global market in general. It was also argued that the overcapacity in the global market led to the consolidation of the Union industry that is currently taking place and that any injury suffered was a consequence of too many production facilities. Moreover, several interested parties claimed that the material injury suffered by the Union industry was linked to the self-inflicted overexpansion of capacity of the Union industry. On the contrary, some interested parties claimed that the injury suffered by the Union industry is due to the Union industry's failure to make the necessary investments in capacity additions.

While the Union industry indeed increased its production capacity, its total production volume did not cover the increasing consumption levels in the Union market during the period considered. Thus, the increase of the Union industry production capacity was reasonable and followed market developments, i.e. the increase in consumption. It cannot therefore be considered as a cause of the injury suffered.

Likewise, on this basis, the argument that the Union industry did not invest in capacity expansion was not confirmed during the investigation. To the contrary however, as mentioned above, throughout the period considered the Union industry progressively increased capacity and had available excess capacity throughout the period considered, indicating that it was capable of supplying additional demand. Therefore, this argument had to be rejected.

Some interested parties claimed that all operators in the market, including the ones in the downstream and upstream sectors were in a difficult situation which was due to the overcapacity in the global market and the resulted change of the market. In this regard it was argued that the product under investigation has become a commodity where individual producers are not able anymore to set prices but where prices are subject to worldwide demand and supply. It was alleged that this situation has caused the material injury of the Union industry rather than the subsidised imports.

The investigation confirmed the existence of overcapacity in the global market, mainly originating in the PRC. Concerning the market change that would allegedly bring the product under investigation to be a commodity, this would not justify unfair price behaviour and unfair trade practices. In this respect, it should be noted that the Union industry has been producing and selling the product under investigation for more than 20 years, while the PRC industry of the product concerned developed only recently (around mid of last decade), mainly attracted by the feed-in-tariffs and other policy incentives in Union and the subsequent increase in demand. On these grounds, the arguments above were rejected.

One interested party claimed that the overcapacity led to price rationalization. In this regard, it should be noted, on the one hand, that the overcapacity led in fact to a ‘race to the bottom’ and the suppression of the prices of Union industry, which on average exceeded the reduction of the costs of production. On the other hand, the capacity increases by the Union industry followed the market developments and were considered reasonable. Moreover, the increase in production capacity of cells was at a lower level than modules. The claim in this regard had therefore to be rejected.

Another interested party claimed that the injury suffered by the Union industry is due to the Union industry's focus only on specialized investments and its failure to make the necessary investments in capacity additions and cost reductions. Likewise, this claim could not be confirmed by the findings of the investigation which showed that the Union industry increased its production capacity and efficiency during the period considered. This claim was therefore rejected.

Moreover, an interested party claimed that the Union industry increased its production capacity in spite of already low capacity utilisation rates, thus resulting in self-inflicted injury. However this claim was based on the comparison between the trend of investments of the sampled Union producers and the trend of the capacity utilisation of the whole Union industry, which is not an appropriate basis for comparison. Furthermore, the investigation showed that the Union industry had not expanded its production capacities on a scale which exceeded the development of Union consumption, therefore this argument was rejected.

Moreover, the evidence collected indicates that through investments in new machinery, the Union industry could reduce its cost of production and become more cost competitive. Therefore, this argument had to be rejected.

Following the final disclosure, some interested parties contested that the capacity additions of the Union industry were reasonable and followed market developments and in particular the development of the Union consumption. However, as far as modules are concerned the production capacity increased by 106 %, while the Union consumption increased by 221 % over the period considered, i.e. more than double. Likewise, as far as cells are concerned, the production capacity increased by 39 %, while the Union consumption increased by 87 % during the period considered. This shows that the increase in capacity was substantially below the increase in consumption and can therefore not be considered as unreasonable given that there never was overcapacity in the Union. Moreover, the analysis whether the capacity additions were reasonable should not be based on a year to year analysis, but should take into consideration the trend during the whole period considered. Thus, capacity additions will typically only become fully operational after a certain period of time after the investment made and the isolated analysis of one year may lead to a distorted picture. This argument was therefore rejected.

Several interested parties claimed that the material injury suffered by the Union industry was linked to the evolution of prices of polysilicon, the main raw material for the production of wafers. It was argued that the Union industry concluded long term fixed priced supply contracts and could therefore not benefit from the decrease in polysilicon prices during the period considered.

The investigation showed that although the Union industry had long term supply contracts for polysilicon, the terms of these contracts were mostly renegotiated based on the price developments of polysilicon and contract prices reached levels close to or sometimes even lower than prices on the spot market.

Some interested parties argued that the Union industry or at least part of it could not benefit from the decrease in prices of polysilicon, during the IP, because of long term contracts for raw material. These parties claimed that the renegotiations or termination of long term contracts of polysilicon and/or wafers resulted in penalties. To support this argument, these parties provided press articles reporting that some Union producers were facing litigation or that they terminated their contracts. Some parties provided information allegedly confirming that the long term contracts could not be re-negotiated.

Polysilicon is the main raw material for the wafers producers. The investigation revealed that polysilicon prices increased in 2008 when they reached their peak at around 500 $/kg, but decreased again in 2009 reaching about 50-55 $/kg at the end of 2009 with only a slight upwards trend in 2010 and early 2011. Prices dropped significantly during the IP resulting in the 30 $/kg (JRC Scientific and Policy Reports, PV Status Report 2012). It should be noted that the impact of polysilicon prices on the Union industry could only be rather marginal as any effect on the cost of production of cells and modules was diluted through the value chain. Moreover, the above mentioned press articles referred to post-IP developments, which did not affect the situation of the Union industry concerned during the IP, and cannot therefore be taken into account. It can be confirmed that the Union industry was indeed able to renegotiate not only the prices of the long-term contracts but also any contractual penalties relating to these long-term contracts.

One interested parties argued further that it is sufficient that only some Union producers have been affected by the long term contracts and that the situation of the overall Union industry is irrelevant. It claimed that higher costs do not necessarily have to affect all operators in the same way. This argument ignores the finding that overall, for the Union industry, the average polysilicon prices were in many cases not found to be higher than the market prices or than the spot prices and that therefore the issue whether higher costs affect all or only few operators was not considered pertinent. This argument was therefore rejected.

Another interested party requested that the Commission separate, distinguish and quantify the effects of each factor having an impact on the situation of the Union industry; in particular the effect of the significant drop in polysilicon prices should be considered separately. In this regard, it was argued that it was the decrease in the polysilicon prices rather than the price pressure from the Chinese imports that caused the decrease in sales prices. As far as the Union industry is concerned its average selling prices decreased much further than the decrease of the average cost of production, on which the decline of raw material prices could have an impact. This argument was therefore rejected.

Following the final disclosure, some interested parties reiterated that the impact of the decrease of polysilicon prices on the Union industry's cost was not limited or diluted through the value chain as concluded in the investigation. However, as already mentioned in recital (255) above, polysilicon is the main raw material for wafers producers, thus any impact on the production cost of cells or modules was found to be diluted in the value chain. The interested parties did not provide any evidence which could have devaluated this finding. Moreover, the investigation showed that the decrease of polysilicon prices over the period considered was reflected in the average cost of production of cells and modules of the sampled Union industry which decreased to a similar degree than the polysilicon prices. One interested party questioned the impact of alleged penalties that the Union industry had to pay due to the re-negotiation of the supplier contracts. In this regard, it cannot be excluded that some producers may have had to pay penalties for the cancellation of wafers supply contracts during the period considered. However, the Commission did not find any evidence that these penalties could have had an effect on the situation of the Union industry as a whole or would be representative. Such evidence was also not provided by the interested party in question. While it can therefore not be completely excluded that penalties could have had a certain negative impact on limited number of Union producers, the overall impact on the Union industry is at best marginal and hence could not break the causal link between the subsidised imports and the material injury suffered by the whole Union industry. Therefore, these arguments had to be rejected.

Another interested party claimed that the decrease of sales prices of the product under investigation in the Union is partly due to the reduction in the price of polysilicon. However, in this regard, it should be noted that the investigation showed that the imports from the PRC were subsidised and substantially undercutting the prices of the Union industry. The price decrease therefore goes beyond the reduction in production costs that can be explained by the decrease in the raw material prices. If the price decrease was merely the effect of the decrease of the raw material prices, the Union industry would not have been forced to decrease their sales prices below their cost of production. Therefore, this claim has to be rejected.

Another interested party reiterated that the litigation of one Union producer after the IP may has affected the situation of at least this Union producer already during the IP. This party did not explain however how and to what extend such event that occurred after the IP could indeed have had an effect on this producer's situation during the IP. Likewise, the investigation did not reveal any evidence showing such effects. Therefore this claim had to be rejected.

Moreover, the same interested party questioned the above mentioned findings, as allegedly no evidence was shown. However, the findings of the investigation were based on facts and positive evidence, non-confidential versions of which were available to all interested parties.

On the basis of the above, it is concluded that even if some specific Union producers may have been affected by long term contracts, the Union industry, overall, did not suffer from these long term contracts and was able to fully benefit from the price decrease in raw material prices. The long term contracts were therefore not found to break the causal link between the subsisdised imports and the material injury suffered by the Union industry.

Several interested parties claimed that the injury suffered by the Union industry was due to the high degree of automation of the production process. It was claimed that the small-scale producers had a disadvantage compared to the larger vertically integrated producers and therefore any injury suffered by the small scale producers cannot be attributed to the subsidised imports. In this context it was also claimed that in any event, overall, the Union industry was of a small size and therefore was not able to benefit from economies of scale.

The investigation showed that also the small-scale producers in Union market had a high level of automation in their production process with a positive effect to their production costs. Most Union producers have specialised in one part of the production process (cells or modules), which, through specialisation, increased their competitiveness with regard to the specific product type they were producing. The argument that impact of the high degree automation caused the injury suffered by the Union industry, had therefore to be rejected.

Some interested parties claimed that the price pressure resulted in the consolidation of the Union industry and the Chinese industry, the latter being the cause of the material injury suffered by the Union industry. However, the investigation showed that the consolidation was rather a consequence of the subsidised imports and the unfair trade practices. Furthermore, this party did not support with any evidence to what extend the consolidation process could have been the cause of the injury suffered.

Moreover, it was claimed that the lack of vertical integration of the Union industry is the cause of the injury suffered. In general the vertically integrated producers in normal market conditions should have more security over their supply chain. However, the investigation showed that the advantage of vertical integration by part of the Union industry that was vertically integrated could not be fully exploited as the price pressure from subsidised imports was extremely high. Moreover, the Union industry, even the vertically integrated Union producers, due to the subsidized imports could not fully benefit from high capacity utilisation rates to achieve economies of scale. Furthermore, the investigation did not reveal any correlation between vertical integration and better profitability rates, as the high price pressure has altered this correlation.

Some interested parties claimed that the Union industry lacked technical innovation as well as investments in new technology. However, the investigation did not bring to light any factual evidence confirming these allegations. To the contrary, the investigation showed that the majority of the investments made by the Union industry were dedicated to new machinery and R&D and that there are no meaningful differences in technology between the products world-wide.

Moreover, one interested party claimed that the material injury suffered is due to the poor project execution (failed projects). In this respect, it should be noted that the argument was not substantiated. In addition, any failed project could rather be considered as a consequence of the subsidised imports. The argument had therefore to be rejected.

Several interested parties claimed that the Union industry was not able to rationalize its costs in time to respond to the developments in the world market. Other parties claimed that labour and overhead costs are higher in the Union than in the PRC.

The investigation showed that the cost of production of the Union industry was steadily decreasing during the period considered. Productivity increased for modules and cells. As mentioned above, due to the surge of subsidised imports from the PRC and the consequent significant price pressure on the Union market, the Union industry was not able to benefit from the reductions in cost.

It is noted that the exporting producers in the PRC do not enjoy any comparative advantage with regard to raw materials (polysilicon) and the machinery used as both were mostly imported from the Union. As far as labour and overhead costs, including depreciation are concerned, they represented on average less than 10 % of the total cost of a module in the IP and are not considered to have played any significant role. As far as electricity costs are concerned, they represented on average less than 1 % of the total cost of a module in the IP and are not considered to have played any significant role. Moreover, the claim that the Chinese were using the newest equipment was not substantiated.

Moreover, it was claimed that some Union producers sourced cells and/or modules from the country concerned, and re-sold those products on the Union market as their own. Injury resulting from these transactions should not be attributed to the subsidized imports. However, the investigation revealed that imports from the Union industry of the product concerned were complementary in nature as well as limited in terms of volume when compared to the total Union production and therefore their effect, if any would only be marginal and could not be considered breaking the causal link between the subsidized imports and the injury suffered by the Union industry.

Therefore, in order to match the decreasing price trend of the imports from the PRC, the Union industry had to make considerable efforts to rationalize its cost of production. Despite the efforts of the Union industry, this cost rationalization could not be reflected in the sales price due to the significant undercutting exerted by the subsidised imports.

Certain interested party claimed that the injury suffered by the Union industry was due to the Union industry's lack of sufficient economies of scale. It was argued that small-scale producers had a disadvantage compared to larger vertically integrated producers and therefore any injury suffered by these producers cannot be attributed to the subsidised imports. Another interested party argued that the automation of the production process is costly and that therefore economies of scale are even more important to reduce the cost of production.

The investigation showed that the Union industry, even the larger and vertically integrated ones, due to the subsidised imports, could not fully benefit from high capacity utilization rates to achieve economies of scale. In any event, the investigation did not reveal any correlation between size, vertical integration and better profitability rates, as the high price pressure from subsidised imports has altered this correlation. The investigation has showed that the benefit of economies of scale no longer existed in a market where the utilization rates were low, which was also true for the Chinese producers. Therefore, these arguments were rejected.

Furthermore, one interested party claimed that investors and banks would not finance projects if the module manufacturer is too small, as larger producers provide better guarantees and are more ‘bankable’. In other terms, investors and banks are reluctant to finance PV related projects using modules produced in the Union. However, the investigation showed that any possible preference of investors and banks to finance Chinese producers which have larger production capacities is the result of the distortion that subsidised imports have created on the Union market. As mentioned above, the size of the production lines does not play a role if utilisation rates remain low. Therefore, this argument was dismissed

One interested party claimed that the Union industry had an unfavourable cost structure compared to its Chinese competitors, as the latter enjoyed lower labour, electricity and depreciation costs, and in addition had the newest equipment. However, the party concerned was unable to provide new information or supporting evidence that could reverse the findings of this investigation in this regard. In particular, the claim that the Chinese producers were using the newest equipment was addressed by the findings in recital (203) to the Provisional anti-dumping Regulation, stating that the exporting producers in the PRC did not enjoy any comparative advantage, in particular because machinery and equipment was imported from the European Union. The above claims were therefore rejected.

Another party claimed that the Chinese enjoyed a comparative advantage with regard to polysilicon prices and to economies of scales which resulted in lower cost of the machinery. This party did not provide any new information or supporting evidence in this regard. The claim of this party had therefore to be rejected.

Moreover, one interested party claimed that some Union producers sourced cells and/or modules from the country concerned, and re-sold those products on the Union market as their own. It requested that injury resulting from these transactions is not attributed to the subsidised imports. However, the investigation revealed that imports from the Union industry of the product concerned were complementary in nature as well as limited in terms of volume when compared to the total Union production and therefore their effect, if any, would only be marginal and could not be considered as breaking the causal link between the subsidised imports and the injury suffered by the Union industry.

One unrelated importer argued that the fact that the number of employees increased should be considered in the analysis. In respect of this claim, it is noted that employment increased between 2009 and 2011 for modules and then decreased during the IP. For cells, the employment increased until 2010 and then decreased in 2011 and further decreased in the IP. It is further noted that for modules, employment followed the trend of the Union production. For cells, as the Chinese imports increased their market share during the entire period to the detriment of the Union industry, the Union industry could not benefit from the growing consumption as expected. Therefore, the employment decrease in 2011 and in the IP corresponds to companies that either had become insolvent or stopped their cell production.

Following the final disclosure one interested party reiterated that the injury suffered by the Union industry was due to the small scale and the lack of economies of scale. As already explained in the recital (682) above and in recitals (195) and –(196) to the provisional anti-dumping Regulation, even in the global market, the size and therefore the benefit of economies of scale cannot longer exist where the utilization rates were generally low, and where enormous overcapacities existed world-wide. Therefore this claim had to be rejected.

Moreover, the same party reiterated that the injury suffered by the Union industry was due to the inability of the Union industry to realize any cost advantage. This party claimed that this was in particular due the fact that most of the Union producers were vertically integrated. However, this party did not provide any further information to what extend the fact that producers are vertically integrated could have had a negative impact on their cost structure. Therefore this claim had to be rejected

On these grounds, all the above mentioned arguments had to be rejected.

Several interested parties claimed that the injury suffered by the Union industry was caused by the competition from thin film PV products and other PV technologies, as these technologies were interchangeable and with same end use. It was also argued that thin film was competing with the product under investigation especially for ground-mounted and commercial/industrial rooftop systems, which constitute a substantial part of the total Union PV market.

The investigation showed that thin film PV products are produced from different raw materials and do not use crystalline silicon wafers. In general, they have much lower conversion efficiencies and a lower wattage output than crystalline silicon modules. As a result, they cannot be used on restricted areas such as roof-tops, i.e. they are not fully interchangeable with the product concerned. The investigation also showed that although thin film PV products are less expensive than the product under investigation, they only capture a limited market share of the total Union solar market, during the period considered. Therefore, although there may be some competition between the thin film products and the product concerned, this competition is considered to be limited.

Following the final disclosure, one interested party reiterated that the competition from thin film products likely caused the material injury suffered by the Union industry. In this regard, the party submitted that in Germany the market share of thin film products in the total solar market was substantial during most of the IP and only declined towards the beginning of 2012.

The investigation showed indeed that the average prices of thin film products were at lower levels than the average price levels of the product under investigation.

However, as set out in recital (703) above thin film products have much lower conversion efficiencies and a lower wattage output than crystalline silicon modules and therefore competition between these product, if any, could not contribute to the injury of the Union industry, as crystalline silicon modules are the dominant technology in the Union solar market. The JRC PV Status Report 2012 stated that as a consequence of the drop in polysilicon prices, thin film has in the last years lost market share to crystalline silicon modules.

On these grounds, these arguments were rejected.

It was claimed that the financial crisis and the economic recession had a negative effect on the access to finance for the Union industry and thus caused the injury suffered by the Union industry.

The ability of the Union industry to raise capital decreased significantly during the period considered. As the solar industry is capital intensive, the ability to raise capital is crucial. The economic recession had a certain impact on the situation of the Union industry. The investigation showed, however, that despite the growth of the Union market between 2009 and 2011, the situation of the Union industry deteriorated as a result of the subsidised imports from the PRC heavily undercutting the Union industry's sales prices. It was therefore concluded that the potential effects of the financial crisis was aggravated by the increase of subsidised imports from the PRC and that the limited access to finance was largely a consequence of the negative market climate, the situation and prospects of the Union industry a consequence of the subsidised imports.

Moreover it was examined whether the injury suffered by the Union industry was due to the Union's industry failure to seek appropriate financing while they were profitable. The investigation showed that e.g in 2010 that Union industry was still profitable, the level of investment increased for modules by 315 % compared to 2009, while at the same time for cells by 10 %. As the PV industry is capital intensive, it is expected that the Union industry is continuously seeking appropriate financing in order to improve its cost efficiency and compete with the unfair subsidised imports. Therefore, it is concluded that, the lack of access to finance was a result of the distorted situation and not the cause.

Following the final disclosure, one interested party reiterated that the injurious effects of the financial crisis should be separated and distinguished and not be attributed to the subsidised imports. This party referred to publicly available information indicating that at least one Union producer perceived the financial crisis as the main cause for its injurious situation. The current investigation based its findings on specific company data which go significantly beyond publicly available statements of specific companies. Therefore, the publicly available statement to which reference was made cannot devaluate the findings that while the financial crisis had a certain impact on the situation of the Union industry, it could not break the causal link between the subsidised imports and the material injury suffered by the Union industry. Therefore, this claim had to be rejected.

Another interested party claimed that the different access to financing between the Union industry as compared to the Chinese exporting producers should be taken into consideration. This party claimed that this was one of the main factors which caused the material injury to the Union industry and not the subsidised imports. However, the preferential access to financing of a number of Chinese exporting producers has been found to distort the market and may well be one of the main reasons allowing Chinese exporting producers to export the product concerned at subsidised prices. This factor can therefore not break the causal link between the subsidised imports and the material injury suffered by the Union industry. This claim was therefore rejected.

On these grounds, it was concluded that, while the financial crises had a certain impact on the situation of the Union industry, it could not break the causal link between the subsidised imports and the injury suffered by the Union industry. The arguments were therefore rejected.

Some interested parties claimed that the Union industry's export sales dropped significantly during the period considered and especially between 2009 and 2011 for modules and between 2009 and first quarter of 2012 for cells and that this has caused the material injury suffered by the Union industry.

On these grounds, it was found that the impact of the Union's industry's export performance was not such as to contribute to the material injury suffered by the Union industry. Therefore, the parties' arguments in this respect had to be rejected.

One interested party claimed that the injury suffered by the Union industry was caused by the discovery of shale gas deposits in the Union and the prospect of increasing production of cheap shale gas in the Union has reduced public and private investments in renewable energy projects.

The investigation found that the consumption for the product under investigation increased substantially throughout the period considered, as already mentioned in recital (509) above. Moreover, the investigation did not bring into light any factual evidence that the injury suffered by the Union industry was due to the discovery of shale gas deposits in the Union. The claim was therefore rejected.

The same party claimed that the injury suffered by the Union industry was caused by the low investments in solar energy production due to the low market prices for the European Union's Emissions Trading Scheme CO2 emission credits.

No evidence was however provided and the investigation did not bring into light any factual circumstances confirming these allegations. To the contrary, the investigation showed that the consumption of the product under investigation was increasing substantially during the period considered. On these grounds, the claim was rejected.

Some interested parties claimed that the material injury suffered by at least one of the Union producers was caused by a wrong management decisions. These allegations were based on the annuals accounts, some information contained in a letter sent by a shareholder of the company to the other shareholders and a press article.

None of the information in the file showed that any of the management decisions of the company concerned were unusual or imprudent or had an impact on the entire Union industry. Therefore, the arguments in this respect were rejected.

One interested party claimed that the material injury suffered by the Union industry was caused by other government policies such as renewable energy policies, policies aimed at encouraging innovation, policies of cutting red tape, trade facilitation policies and grid access regulations, as these policies benefit the exporting producers. However, even if it is true that certain of the claimed policies might facilitate imports from other third countries and overall growth of solar industry, these policies would also benefit the Union industry. Moreover, these policies should not be meant that such imports in the Union should be made at injurious subsidised prices. Therefore, the arguments in this respect were rejected.

One interested party claimed that the injury suffered by the Union industry was due to the forerunner disadvantage and the lack of political support from the European Commission in previous years. This party also claimed that apart from the national support schemes, also population, GDP, electricity consumption, financing opportunities and connectability to the grid are important factors in each market. However, the above party was not able to substantiate its claims which were therefore rejected.

Following the final disclosure, the same interested party reiterated that the injury suffered by the Union industry was due to the forerunner disadvantage. However, the claim was neither analysed nor substantiated; therefore it had to be rejected.