US Mushroom Company to CAFC: Commerce, CIT Erred in Approving AD Comparison Market
The Commerce Department erred in picking Germany as the comparison market for determining antidumping duty respondent Prochamp's normal value in the AD investigation on mushrooms from the Netherlands, petitioner Giorgio Foods told the U.S. Court of Appeals for the Federal Circuit in its opening brief. Giorgio contested the four bases on which Commerce made its decision to use Germany as the comparison market, arguing that each isn't backed by substantial evidence (Giorgio Foods v. United States, Fed. Cir. # 25-2090).
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In the investigation, the agency used Prochamp's German market sales to determine normal value, since the German market was Prochamp's largest third-country market. The Court of International Trade initially remanded the selection on the grounds that the evidence didn't support the fact that Prochamp's German sales were actually sold in Germany (see 2407260023). The trade court noted that the respondent only made sales to a multinational retailer and they were actually exported to a warehouse outside of Germany, where they just as easily could have been meant for another German-speaking market.
On remand, Commerce reopened the record to quantify what portion of Prochamp's German market sales actually wound up in Germany (see 2411180045). CIT then reviewed the agency's new evidence, finding the selection of the German market to be supported this time around (see 2507160066). While Giorgio argued that Commerce should use the French market, the trade court noted that the agency, if anything, applied "conservative presumptions" regarding the amount of Prochamp's German sales that were actually sold in Germany, and that the French data underwent "no such comparable scrutiny."
On appeal, Giorgio said Commerce and CIT got it wrong. First, the agency said the volume of Prochamp's German sales was larger than other third-country markets. The petitioner said in assessing this claim, Commerce and the trade court "applied the wrong standard in relying on Commerce's finding that Prochamp's sales to all markets appeared to be very similar."
The AD statute explicitly identifies a "preference for 'identical' (not 'similar') matches between a respondent's U.S. and comparison market sales," the brief said. The record here shows that "France offered a much greater volume of sales that match Prochamp's U.S. sales," and Commerce itself said that Prochamp's sales to France have the most similar product characteristics to the goods the respondent sold to the U.S.," the petitioner argued.
Giorgio also said Commerce and the trade court failed to appropriately account for Commerce's "admittedly erroneous findings" regarding sales channels and customer types. The agency relied on Prochamp's statement in the investigation that the "sales channel and type of customer in Germany is similar to the sales channel and type of customer in the United States," since the sales in Germany and the U.S. are made directly to unrelated customers, while Prochamp's French sales are sold through an unaffiliated agent.
The petitioner argued that the record doesn't support the reliance on this statement, "either at the time of the third-country selection or at the time of the agency's final determination." Despite the respondent's statement, the record shows that "Prochamp's German sales were unique and quite different from sales to the U.S. and all other markets," the brief said. Prochamp relied on the "destination port/port of delivery" in identifying the destination of its sales made to non-German markets. However, the respondent couldn't use this same methodology to identify its German sales, since most of its German sales are on "Free Carrier (FCA) incoterms," and the German sales were believed to be in the Netherlands, the brief said.
During the investigation, Commerce said its original reliance on Prochamp's statement was in error, though it said the statement merely gave "additional corroboration for the selection of Germany." Both Commerce and CIT both appeared to consider this error "harmless" and the factor of sales channels to be neutral after the agency disclaimed its initial finding, Giorgio said.
However, the petitioner argued the "factor was not neutral and instead supported the selection of France as the most appropriate comparison market." The record showed that "France provides matches for the primary [control numbers] that Prochamp sold in the United States at much greater volumes than Germany and has sales channels and customer types that are more similar to Prochamp's U.S. sales channels and customer types," the brief said.
Giorgio argued that the record doesn't support Prochamp's reported volume of preserved mushroom sales in Germany. Lastly, the petitioner challenged Commerce's claim that Giorgio failed to identify an "appropriate remedy" in its case brief challenging the selection of Germany. Giorgio said this supposed failure "was entirely of the agency's own making," since the agency, at any time during the administrative proceedings, could have "instructed Prochamp to submit a database identifying Prochamp's sales for consumption in France to preserve the issue for reconsideration following the agency's preliminary determination," the brief said.