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