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Whereas: A. Provisional measures (1) By Regulation (EEC) No 550/93 (2), the Commission imposed a provisional anti-dumping duty on imports into the Community of bicycles originating in the People's Republic of China and falling within CN code 8712 00. By Regulation (EEC) No 1607/93 (3), the Council extended the validity of this duty for a period not exceeding two months. B. Subsequent procedure (2) Following the imposition of the provisional anti-dumping duty the following parties submitted comments in writing: Exporters in the People's Republic of China: - Guangzhou Five Rams Bicycle Industry Corporation, - Shanghai Bicycle Group, - Qingdao Bicycle Industrial Corporation, - Ghangzhou Golden Lion Bicycle Manufacturing & Trading Corp., - Xiamen Bicycle Company, - Anyang Bicycle Industry Company, - China Henan Light Industrial Products Imp., Exp., Corp., - Tianijn Bicycle Imp., & Exp., Corporation, - Hubei Provincial International Trade Corporation, - China Bicycles Company (Holdings) Limited, - Asia Bicycles Co., Ltd, - Catic Bicycle Co., Ltd, - Sino-Danish Enterprises Co., Ltd, - Hanji Town Waimanly Manufactory. Community Producers: - Hawk Cycles Ltd,

- Derby Cycle Werke GmbH, - Cycleurope, - Raleigh Industries Limited, - Bicicletas de Alava SA, - Gazelle BV. Independent importers and traders: - Scott (Europe) SA, Switzerland, - Chung Wai Manufactory Limited, Hong Kong, - Halfords Ltd, UK. Parties who so requested were granted an opportunity to be heard by the Commission.

(3) The parties were informed of the essential facts and considerations on the basis of which it was intended to recommend the imposition of definitive anti-dumping measures and the definitive collection of amounts secured by way of provisional duty. There were also granted a period within which to make representations subsequent to the disclosure.

(4) The parties' comments were considered, and the Commission altered its conclusions where it was deemed to be justified.

(5) The investigation overran the normal duration of one year provided for in Article 7 (9) (a) of Regulation (EEC) No 2423/88 due to the complexity of the investigation, in particular, in the light of the numerous models of bicycles, and the variety of technical specifications.

C. Product under investigation and like product (6) As set out in Regulation (EEC) No 550/93 (see recitals 9 to 11) the Commission established that all types of bicycle were to be considered as one product within the meaning of Article 2 of Regulation (EEC) No 2423/88.

(7) Some exporters continued to argue that various categories of bicycle should be considered as separate products on the grounds that the specific applications and the use of the bicycles in the various categories are perceived by the market as being different. More particularly they argued that the mountain bicycle was clearly a separate product in terms of components used, price and the perception of the average buyer.

(8) In Recitals 9 to 11 of Regulation (EEC) No 550/93, the Commission has already replied to most of the arguments made by the exporters and concluded that all bicycles constituted one single product.

Regarding the specific application, use and consumer perception of the bicycles under consideration, it is noted first that all bicycles have the same basic application and perfom essentially the same function. In this respect, and as far as the consumers' perception of the bicycles is concerned, it is true that the different categories are, in principle, intended to meet different end-user requirements. However, end users will regularly put a bicycle in a particular category to a variety of uses and applications. A mountain bicycle used for off-road cycling can easily be used by consumers as a normal touring bike. Mountain bikes are sometimes equipped with accessories which are designed for use on the road. Moreover, there is the trend of using bicycles which are designed for more than one specific application. The hybrid bicycle, which can be a cross between a mountain bicycle and a racing bicycle or between a mountain bicycle and a racing bicycle or between a mountain bicycle and a touring bicycle, is an example of this. This trend even increases the interchangeability between various categories of bicycles and thus increases the competition between the overlapping areas.

There is consequently no clear dividing line based on end-users' application and consumers' perception of different categories. The Commission has also found that the producers themselves often make no distinction between their bicycles, classified in different categories, with regard to production, distribution or accounting. Both Community and Chinese producers have, for all their different categories of bicycles, a similar manufacturing process. Further, almost always the same distribution channels are used for all categories of bicycle, The Council therefore considers that the similarities of all categories of bicycle, as far as their technical and physical characteristics as well as their application and end use are concerned, outweigh, for the purposes of these proceedings, any differences. D. Community industry (9) The investigation showed that the Community producers which fully cooperated in the investigation accounted for 54,3 % of total Community production of bicycles. Producers representing a further 10 % of Community output supplied some basic information on their production and expressed support for the complaint.

(10) One exporter requested, in view of the existence of business links between certain Community producers and the Chinese exporters for the purchase of components, that the Community industry should only consist of producers which did not have such links.

(11) It was found, with very few exceptions, that the bicycles sold by the Community producers were actually produced in the Community from parts which were sourced mainly in the Community, though certain parts were imported from Japan, Singapore, Taiwan and the People's Republic of China. Moreover, Article 4 (5) of Regulation (EEC) No 2423/88 only provides for a possible exclusion of Community producers in cases where they are themselves importers of the products subject to the investigation and not, as suggested by this exporter, when they are merely importing certain components from a country which also exports the finished product under consideration.

(12) With regard to the Community producers which had imported bicycles from Taiwan and the People's Republic of China, no new evidence was submitted and consequently the Council confirms the conclusion in recital 13 of Regulation (EEC) No 550/93.

(13) One exporter argued that the Community producers which fully cooperated by replying to the questionnaires sent by the Commission were not representative and that the producers which were sent questionnaires at a later stage of the proceedings should have been excluded from the scope of the Community industry.

(14) Firstly it should be noted that the Commission initially only sent questionnaires to the Community producers which were listed as complainants in the anti-dumping complaint. Only upon receipt of the replies to the original questionnaires was it found that the Community industry which replied to the questionnaires, represented an estimated 40 % of total Community production of bicycles. The Commission sent out further questionnaires to widen the basis of the injury investigation. This exercise allowed the Commission, without unduly delaying the investigation, to base its findings on a proportion of Community industry which then represented the majority of the Community industry. There was no reason to exclude the producers who had been asked to supply information at a later stage. E. Methodology 1. Individual treatment

(15) In Recitals 34 to 36 of Regulation (EEC) No 550/93, the Commission stated that it would continue to examine the question of individual treatment for Chinese exporters in this case.

(16) Although individual treatment has been given to certain exporters in the People's Republic of China in some previous anti-dumping cases, in particular where they have demonstrated their independence from the State in the conduct of their export policy and in establishing their export prices, the Commission has in the course of this proceeding come to the conclusion, which the Council shares, that for the reasons set out below the utmost prudence is required in this matter.

(17) Firstly, it must be borne in mind that Regulation (EEC) No 2423/88 merely requires that anti-dumping regulations specify the country and the product on which the duty is imposed. Individual treatment is therefore not a requirement of that Regulaiton Regulation and is appropriate only where this gives a more proportionate and effective remedy against injurious dumping than a single country-wide duty.

(18) Secondly, in the case of those countries referred to in Article 2 (5) of Regulation (EEC) No 2423/88 (which includes the People's Republic of China), it is not possible to take account of the efficiency or comparative advantage of individual exporters in the establishment of normal value since this must obligatorily be established on the basis of prices or costs in market economy countries. The only way individual treatment could be given to exporters in these countries is by taking account of their individual export prices. In general, this would tend to give rise to distorted, and therefore inappropriate, individual results since it would not take account of the eventual, however impossible to determine efficiency, comparative advantage or characteristics of the products of individual exporters.

(19) Thirdly, it is in practice extremely difficult to establish in the case of a country such as the People's Republic of China whether a company really enjoys, both in law and in fact, independence from the State and in particular whether a company has permanent independence where it appears to enjoy independence at a certain point in time. The economy of the People's Republic of China is in transition from a fully State controlled economy to a partially market orientated economy. State control subsists in very many aspects of economic life and the law and institutions necessary for the functioning of a market economy are not sufficiently developed and familiar to the economic operators and officials. It is not therefore possible to be certain that contracts and apparent legal guarantees will be effective and the actions of exporters free from governmental interference. Indeed it is clear that the influence of the State on all economic activity in China is still dominant. The State can at any time change the rules applicable to the employment and payment of workers, it controls the supply of energy and can impose limitations on the convertibility and transfer of currency.