Cleo Inc. v. United States

United States Court of Appeals for the Federal Circuit
2007-1036, -1037

CLEO INC. and CRYSTAL CREATIVE PRODUCTS, INC.,

Plaintiff-Appellants,

and

TARGET CORPORATION,

Plaintiff-Appellant,

v.

UNITED STATES,

Defendant-Appellee,

and

SEAMAN PAPER COMPANY OF MASSACHUSETTS, INC.,

Defendant-Appellee.

Frederick L. Ikenson, Blank Rome LLP, of Washington, DC, argued for plaintiffs-
appellants, Cleo Inc and Crystal Creative Products, Inc. With him on the brief were Larry
Hampel and Roberta Kienast Daghir.

Marguerite E. Trossevin, Mayer, Brown, Rowe, & Maw LLP, of Washington, DC,
argued for plaintiff-appellant, Target Corporation. With her on the brief were James J.
Jochum and Kristy L. Balsanek.

Mark B. Rees, Attorney, Office of the General Counsel, United States International
Trade Commission, of Washington, DC, argued for defendant-appellee, United States.
With him on the brief were James M. Lyons, General Counsel, and Neal J. Reynolds,
Assistant General Counsel for Litigation.

Kathleen W. Cannon, Kelley Drye Collier Shannon, of Washington, DC, argued for
defendant-appellee, Seaman Paper Company of Massachusetts, Inc. With her on the brief
was David A. Hartquist. Of counsel was Adam H. Gordon.

Appealed from: United States Court of International Trade

Judge Judith M. Barzilay
 United States Court of Appeals for the Federal Circuit

2007-1036, -1037

CLEO INC. and CRYSTAL CREATIVE PRODUCTS, INC.,

Plaintiff- Appellants,

and

TARGET CORPORATION,

Plaintiff-Appellant,

v.

UNITED STATES,

Defendant-Appellee,

and

SEAMAN PAPER COMPANY OF MASSACHUSETTS, INC.,

Defendant-Appellee.

__________________________

DECIDED: September 10, 2007
___________________________

Before RADER, BRYSON, and MOORE, Circuit Judges.

BRYSON, Circuit Judge.

Cleo Inc. and its subsidiary, Crystal Creative Products, Inc., (collectively, “Cleo”)

join Target Corporation in appealing a decision of the Court of International Trade. That

court upheld a determination by the International Trade Commission that imports of bulk
and consumer tissue paper from China are materially injuring the domestic tissue paper

industry. Although this case is a complex one that is close on several issues, we are

persuaded that the Commission’s decision is supported by substantial evidence, and we

therefore affirm.

I

This case began with an investigation instituted in response to allegations that

imports of tissue paper from China are materially injuring the domestic tissue paper

industry. On February 14, 2005, the Department of Commerce issued a final

determination that tissue paper from China is being sold at less than fair value in the

United States. Notice of Final Determination of Sales at LTFV: Certain Tissue Paper

Prods. from the People’s Republic of China, 70 Fed. Reg. 7475 (Feb. 14, 2005).

Shortly thereafter, the Commission issued its final determination that the domestic

industry is being materially injured by the dumped imports. Certain Tissue Paper

Products from China, 70 Fed. Reg. 15,350 (Mar. 25, 2005); Certain Tissue Paper

Prods. from China, Inv. No. 731-TA-1070B (Final), USITC Pub. 3758 (Mar. 2005).

Because the commissioners were evenly divided on the issue, the Commission was

deemed by statute to have made an affirmative determination of material injury. 19

U.S.C. § 1677(11). On appeal, Cleo and Target challenge the Commission’s material

injury determination. Both Cleo and Target are domestic companies that import tissue

paper from China.

After the Department of Commerce makes a determination that certain articles

under investigation are being sold in the United States at less than fair value, i.e., being

“dumped,” the Commission must determine whether a domestic industry is being

2007-1036,-1037 2
materially injured or threatened with material injury by the importation of those dumped

goods. 19 U.S.C. § 1673. The term “industry” is defined by statute to mean the

producers of a “domestic like product,” id. § 1677(4)(A), and the term “domestic like

product” is defined to mean “a product which is like, or . . . most similar in characteristics

and uses” to the relevant imported products, id. § 1677(10). The Commission’s

determination of what goods constitute “like products” therefore defines the scope of a

domestic industry and, in turn, the scope of the Commission’s material injury analysis.

See Allegheny Ludlum Corp. v. United States, 287 F.3d 1365, 1368 (Fed. Cir. 2002).

Commerce’s designation of the class or kind of merchandise that is sold at less than fair

value does not control the Commission’s “like product” determination and therefore

does not control its definition of the industry to which its material injury analysis must be

applied. Hosiden Corp. v. Advanced Display Mfrs. of Am., 85 F.3d 1561, 1568 (Fed.

Cir. 1996). It is thus possible that the class or kind of merchandise identified by

Commerce in its less than fair value determination may encompass more than a single

domestic industry under the “like product” standard applied by the Commission. Id.

The “like product” determination is a factual issue that the Commission resolves

by weighing six factors relating to the products in question: (1) physical characteristics

and uses; (2) common manufacturing facilities and production employees; (3)

interchangeability; (4) customer perceptions; (5) channels of distribution; and, where

appropriate, (6) price. See Torrington Co. v. United States, 938 F.2d 1278, 1280 (Fed.

Cir. 1991), (adopting 14 Ct. Int’l Trade 648 (1990)); NMB Sing. Ltd v. United States, 288

F. Supp. 2d 1306, 1313 (Ct. Int’l Trade 2003); Timken Co. v. United States, 913 F.

Supp. 580, 584 (Ct. Int’l Trade 1996). When weighing those factors, the Commission

2007-1036,-1037 3
disregards minor differences and focuses on whether there are any clear dividing lines

between the products being examined. Nippon Steel Corp. v. United States, 19 Ct. Int’l

Trade 450, 455 (1995). The legislative history of the Trade Agreements Act of 1979,

which added the “like product” provision, explains that the requirement that a product be

“like” the imported article “should not be interpreted in such a narrow fashion as to

permit minor differences in physical characteristics or uses to lead to the conclusion that

the product and article are not ‘like’ each other, nor should the definition of ‘like product’

be interpreted in such a fashion as to prevent consideration of an industry adversely

affected by the imports under investigation.” S. Rep. No. 96-249, at 90-91 (1979),

reprinted in 1979 U.S.C.C.A.N. 381, 476-77.

Once the Commission has defined the domestic industry at issue, it must

determine whether that industry is being materially injured by the subject imports.

When doing so, the Commission evaluates, among other things, the volume of imports

and their effect on the domestic industry. See 19 U.S.C. § 1677(7)(B). “An affirmative

injury determination requires both (1) present material injury and (2) a finding that the

material injury is ‘by reason of’ the subject imports.” Gerald Metals, Inc. v. United

States, 132 F.3d 716, 719 (Fed. Cir. 1997).

In this case, the Commission first considered whether bulk tissue paper and

consumer tissue paper constitute a single like product. The Commission defined bulk

tissue paper as tissue paper sold in bulk to stores and manufacturers, generally for use

in their own businesses to wrap customer purchases. It defined consumer tissue paper

as tissue paper sold in packages for retail sale. After evaluating the six like product

factors and examining whether there are any clear dividing lines between bulk and

2007-1036,-1037 4
consumer tissue paper, the Commission determined that the two types of tissue paper

constitute a single like product for purposes of the material injury analysis.

The Commission then considered whether the domestic tissue paper industry is

being materially harmed by reason of the imports of dumped tissue paper. It

determined that the volume of tissue paper imports has been steadily and quickly rising

at the expense of the domestic industry. It also found that imports have undercut the

price of the domestic product, resulting in a significant decline in the health of the

domestic industry. Based on those subsidiary findings, the Commission determined

that dumped tissue paper is materially harming the domestic industry.

The three dissenting commissioners found that consumer and bulk tissue paper

are separate products and therefore analyzed the domestic bulk tissue paper industry

and the domestic consumer tissue paper industry separately. They found that the U.S.

bulk tissue paper industry was materially injured by reason of imports of bulk tissue

paper, but that the U.S. consumer tissue paper industry was not materially injured or

threatened with material injury by reason of imports of consumer tissue paper.

Cleo and Target appealed the Commission’s determination to the Court of

International Trade. They argued (1) that the Commission incorrectly found that bulk

and consumer tissue paper are a single like product, (2) that the Commission

improperly considered Cleo’s and Target’s imports in its material injury determination

and that its causation analysis was thus flawed, (3) that the Commission erred in

concluding that the domestic products were being undersold by the imports, and (4) that

the Commission used flawed financial data when concluding that the domestic industry

was in poor health. The Court of International Trade rejected those arguments and held

2007-1036,-1037 5
that substantial evidence supported the Commission’s material injury determination.

Cleo and Target appeal, repeating the arguments they made in the trial court.

II

Like the Court of International Trade, this court reviews the Commission’s

determination for substantial evidence. Nippon Steel Corp. v. United States, 458 F.3d

1345, 1350 (Fed. Cir. 2006), (citing Atl. Sugar, Ltd. v. United States, 744 F.2d 1556,

1559 n.10 (Fed. Cir. 1984), and 19 U.S.C. § 1516a(b)(1)(B)(i)). When performing a

substantial evidence review, however, “we give great weight to ‘the informed opinion of

the Court of International Trade.’ Indeed, it is nearly always the starting point of our

analysis.” Nippon Steel, 458 F.3d at 1351 (quoting Suramerica de Aleaciones

Laminadas, C.A. v. United States, 44 F.3d 978, 983 (Fed. Cir. 1994)).

The substantial evidence test requires only that there be evidence that a

reasonable mind might accept as adequate to support a conclusion. Universal Camera

Corp. v. NLRB, 340 U.S. 474, 477 (1951). Although a reviewing court must take into

account contradictory evidence or any evidence in the record that undermines the

agency’s finding, the substantial evidence test does not require that there be an

absence of evidence detracting from the agency’s conclusion, nor is there an absence

of substantial evidence simply because the reviewing court would have reached a

different conclusion based on the same record. Id. at 487-88; Am. Silicon Techs. v.

United States, 261 F.3d 1371, 1376 (Fed. Cir. 2001); U.S. Steel Group v. United States,

96 F.3d 1352, 1357 (Fed. Cir. 1996). Having reviewed the administrative record and

the trial court’s analysis, we hold that substantial evidence supports the Commission’s

affirmative material injury determination.

2007-1036,-1037 6
 III

The appellants first challenge the Commission’s finding that bulk and consumer

tissue paper constitute a single domestic like product. They challenge the

Commission’s subsidiary findings on the factors that bear on the like product inquiry as

well as the Commission’s ultimate like product determination, which was based on its

assessment of those factors. The appellants also argue that the Commission’s like

product determination is contrary to previous material injury determinations with respect

to other industries.

A

In conducting its like product analysis, the Commission found that bulk and

consumer tissue paper are similar in physical appearance and use. Both products are

made from “jumbo rolls” of tissue paper and both have similar typical end uses, i.e., for

wrapping products or gifts. Both types of tissue paper come in a variety of grades,

colors, designs, and dimensions. While some consumer tissue paper undergoes

special treatment and some bulk tissue paper is cut in special ways, both types are

generally sold as solid color sheets. The Commission further found that both types of

tissue paper come in a variety of overlapping sizes, although bulk tissue paper is more

often sold flat or folded only once. Consumer tissue paper is generally sold folded more

than once, but is sometimes sold flat. The Commission noted that while bulk tissue

paper is generally sold in large quantities and consumer tissue paper is generally

packaged and sold in smaller quantities for retail sale, it is increasingly common for

retail sales to consist of larger quantity “club packs” or seasonal packages, and it is

increasingly common for smaller retail operations to use those larger packages of

2007-1036,-1037 7
consumer paper to wrap purchases. The Commission thus found that there is no sharp

distinction between the physical characteristics and uses of the two products.

Target argues that consumer tissue paper generally comes in more colors than

bulk tissue paper, and Cleo argues that the evidence is insufficient to support the

Commission’s conclusion that the two products come in similar sizes. It is true, as the

Commission noted, that there are some differences in the colors available in bulk and

consumer tissue paper. In addition, while the evidence cited by the Commission shows

that bulk and consumer tissue paper are often sold in similar or identical sizes, Cleo is

correct that the evidence also shows that the sizes fail to overlap a significant part of the

time. Despite those differences, however, substantial evidence supports the

Commission’s determination that bulk and consumer tissue paper share the same

general physical characteristics.

The Commission also found that the manufacturing and production process is

similar for the two types of tissue paper. The evidence shows that both types of tissue

paper are made from the same materials and that those companies that produce both

bulk and consumer tissue paper manufacture them on the same machines run by the

same employees. The appellants point out that fewer than half the domestic tissue

paper manufacturers produce both types of tissue paper and that only one domestic

manufacturer produces significant quantities of both. That one manufacturer, however,

produces a very large percentage of all domestic tissue paper. The appellants also

argue that consumer tissue paper is packaged and folded differently from bulk tissue

paper. While it is true that the manufacturing steps for the products are not identical,

there remains significant overlap in the overall manufacturing process. Thus, the

2007-1036,-1037 8
evidence is sufficient to support the Commission’s conclusion that the two products are

reasonably similar with respect to their manufacture.

With regard to consumer perceptions and interchangeability, the Commission

found the evidence to be mixed. Although some producers, importers, and purchasers

perceived the two types of tissue paper to be interchangeable, others did not. A review

of the individual responses to the Commission’s questionnaires relating to

interchangeability supports the Commission’s determination that consumer perceptions

regarding interchangeability are mixed.

Finally, the Commission found only limited overlap between the types of tissue

paper with regard to channels of distribution and price. The evidence shows that,

although the distinction has been lessening recently, consumer tissue paper is primarily

sold to retailers and then to retail customers, while bulk tissue paper is primarily sold

through distributors and then to end-users such as department stores. The evidence

also shows that the price of consumer tissue paper is generally higher than the price of

bulk tissue paper. The Commission noted, however, that those differences are

mitigated somewhat by the fact that there is a modest but significant market for

packages containing quantities of tissue paper falling between the traditional sheet

counts for bulk and consumer packages. Those seasonal packages and “club packs,”

according to the Commission, blur the line between the channels of distribution. The

pricing of those packages also indicates that the price of tissue paper depends largely

on the number of sheets sold in a package. Given that evidence, the Commission’s

determination that there is some limited overlap between the two types of tissue paper

with respect to price and channels of distribution is supported by substantial evidence.

2007-1036,-1037 9
 In sum, the Commission reasonably found that there is significant overlap in

physical characteristics and uses as well as in the manufacturing process; mixed

evidence regarding interchangeability and consumer perceptions; and only limited

overlap in channels of distribution and price. While the question on the facts is a close

one, a reasonable factfinder applying the Commission’s six-factor test could conclude

from the evidence before the Commission that bulk and consumer tissue paper are like

products, and accordingly that they are sufficiently similar that dumped imports of one

type of tissue paper have significant market effects on the other. 1 The fact that a

reasonable factfinder might have concluded otherwise does not mean that the

Commission’s decision was unsupported by substantial evidence. Nippon Steel, 458

F.3d at 1358.

B

The appellants argue that prior determinations by the Commission relating to

other kinds of products require that bulk and consumer tissue paper be classified as

separate products. They argue that it was arbitrary for the Commission to find those

types of tissue paper to constitute a single like product when it has found that particular

consumer or retail goods constituted separate products from similar goods produced for

industrial or nonconsumer use. They rely principally on the Commission’s decision in

1
Contrary to the appellants’ contention, we do not perceive that the
Commission’s like product analysis was biased towards finding that bulk and consumer
tissue paper are a single like product in order to conform its finding with the scope of
Commerce’s less than fair value finding. Although the less than fair value finding is
necessarily the starting point of the Commission’s like product analysis, see 19 U.S.C.
§ 1677(10), the Commission cited the settled rule that Commerce’s finding does not
control the Commission’s determination, and we see no sign that the Commission
allowed Commerce’s finding to shape its like product determination in this case.

2007-1036,-1037 10
Folding Gift Boxes from China, Inv. No. 731-TA-921 (Final), USITC Pub. 3480 (2001),

which involved gift boxes sold to stores to give to their customers and gift boxes sold to

merchants for resale.

As the trial court explained, each injury investigation by the Commission “is sui

generis, involving a unique combination and interaction of many economic variables.”

Nucor Corp. v. United States, 414 F.3d 1331, 1340 (Fed. Cir. 2005). For that reason,

prior determinations by the Commission with regard to one industry typically provide

little guidance for later determinations with regard to different industries. Each of the

prior Commission determinations on which the appellants rely involved significantly

different facts. In its decision in this case, the Commission specifically distinguished the

Folding Gift Boxes case, explaining that the production process for the two types of gift

boxes was different and that storage and warehousing requirements differed between

the two types of gift boxes in ways not present in the tissue paper industry. The

Commission also noted that nothing in the gift box market blurred the distinction

between the two products in the way that club packs and other large-count formats did

for the tissue paper market. Although the Commission in each of the cases on which

the appellants rely found that the domestic industry was not materially injured by

dumped imports, we discern nothing in those cases that reflects an inconsistent

application of legal standards by the Commission. The differences in outcome thus do

not indicate that the Commission either committed legal error in the methodology it used

in this case or departed from the mode of analysis it regularly employs in material injury

investigations.

2007-1036,-1037 11
 IV

The appellants also challenge the Commission’s determination that the dumped

imports are causing material injury to the domestic tissue paper industry. The

Commission found that the volume of dumped tissue paper from China increased

sharply over the period examined and that the price of the imported paper significantly

undercut the price of domestically produced paper during that period. Those factors,

the Commission found, led to a dramatic transfer of market share from the domestic

producers to the importers, which in turn resulted in a decline in the health of the

domestic tissue paper industry. The appellants assert that the Commission overstated

the volume of dumped tissue paper imports and that the Commission improperly

credited evidence of price undercutting. Cleo also argues that the Commission

misinterpreted the financial data relating to the domestic industry and that, when

properly analyzed, the data fails to shows that the domestic industry grew weaker

during the period examined.

A

The Commission overstated the pertinent volume of dumped tissue paper,

according to the appellants, because it impermissibly included Cleo’s and Target’s

imports of consumer tissue paper in the volume calculations for the period examined.

They argue that those imports were attributable to economic factors unrelated to the

availability of dumped imports and that those imports therefore did not cause injury to

the domestic industry. Cleo’s argument is as follows: In October 2002, Cleo purchased

Crystal, a tissue paper producer, and entered into a supply contract for jumbo rolls with

a paper-making company previously related to Crystal. In 2003, however, Crystal

2007-1036,-1037 12
halted production following what Cleo terms a “sudden and unexpected decision” by the

paper-making company to renege on its supply contract. Additionally, in 2003 Crystal

lost the services of its rotogravure printer. Cleo claims that it could not find adequate

replacements for those supplies domestically and therefore was forced to stop

production altogether. It contends that increased reliance on imports was necessary to

allow Cleo to fulfill its customer’s orders. Cleo thus argues that its decreased

production and increased reliance on imports was due to supply disruption and not to

the availability of low-price dumped imports. For that reason, Cleo contends that the

imports attributable to Cleo following its supply disruption must be excluded from the

Commission’s volume calculations.

Although acknowledging that the disruption of Cleo’s supply contributed to its

decision to import tissue paper from China, the Commission found that the evidence

before it did not support the conclusion that the supply shortage was the primary

motivation for that decision. The Commission noted that both Cleo and Crystal were

importing significant amounts of tissue paper from China prior to Crystal’s acquisition by

Cleo and prior to the supply disruption. It also noted that there was a domestic supplier

that could have provided Cleo with jumbo rolls of tissue paper and that jumbo rolls could

have been imported, but that Cleo elected not to purchase jumbo rolls and instead

opted to import finished tissue paper. After considering conflicting testimony about

whether sufficient rotogravure printing services or acceptable substitutes were available

domestically, the Commission also concluded that there were enough quality domestic

printing services to meet Cleo’s needs. Moreover, the Commission noted that prior to

its acquisition by Cleo, Crystal was investigating the possibility of filing an antidumping

2007-1036,-1037 13
petition covering tissue paper from China. Taking all that evidence into account, the

Commission determined that lack of supply was not the primary motivation behind

Cleo’s increased imports of finished tissue paper.

Cleo argues that any imports by Crystal or Cleo that predated Cleo’s acquisition

of Crystal are irrelevant because the business model of the combined corporate entity

changed at the time Crystal was acquired. In particular, Cleo contends that its decision

to purchase a paper manufacturer shows that Cleo did not regard the price of imported

goods as a reason to import tissue paper products. While that argument has some

appeal, the evidence can also be interpreted, as the Commission did, to indicate that

Cleo and Crystal were both interested in taking advantage of lower-priced tissue paper

from China. The record contains evidence that Cleo purchased Crystal in large part to

obtain Crystal’s name and its marketing and distribution facilities, not necessarily for its

production capabilities. That view is strengthened by the fact that Cleo did not act to

continue its “producer” business model by purchasing jumbo rolls domestically or

abroad after encountering supply issues, but instead opted to import all its consumer

tissue paper needs from China. The fact that Crystal immediately stopped pursuing an

antidumping action when it was purchased by Cleo lends further credence to the

Commission’s view.

The appellants also argue that the Commission impermissibly substituted its

business judgment for Cleo’s when it concluded that sufficient supplies of jumbo rolls

and printing services were available domestically. The Commission, however, came to

its conclusion on supply availability by comparing the testimony of various industry

leaders and finding some more credible than others. The Commission’s conclusion on

2007-1036,-1037 14
that issue is a factual determination that is amply supported by testimony and other

record evidence. In light of that conclusion, the prior imports by Cleo and Crystal, the

prior investigation into initiating an antidumping action, and the plausible alternative

business motivation for Cleo’s decision to rely on imported tissue paper, it was

reasonable for the Commission to conclude that Cleo’s imports were not solely

attributable to a disruption in supply.

In addition to challenging the Commission’s inclusion of Cleo’s imports in its

material injury analysis, the appellants argue that the Commission should have

excluded Target’s consumer tissue paper imports from consideration. They claim that

Target’s imports were not based on price but were necessary because the domestic

industry failed to meet Target’s needs. According to the appellants, Target created a

new market for tissue paper by introducing “fully coordinated mix-and-match color

programs” for gift bags. The appellants argue that the domestic industry did not have

the capacity to provide the “specialized collated presentations and packaging” Target

needed for that program and that no domestic producer attempted to meet Target’s

needs until 2004. Even at that time, the appellants argue, the one producer who made

such an offer was unable to qualify because it did not meet Target’s internal rules for

suppliers. Additionally, the appellants assert that the domestic producer from which

Target purchased consumer paper during the relevant period delivered inferior goods,

for which Target’s senior buyer was forced to issue an exemption from Target’s internal

gift bag purchasing policy. If the domestic industry could not or would not supply

Target’s requirements, the appellants argue, the volume of Target’s consumer imports

2007-1036,-1037 15
should not be included when determining whether the domestic industry was harmed by

dumped tissue paper imports.

The Commission found that, contrary to the appellants’ assertions, the domestic

industry was able and willing to supply Target’s needs. It credited evidence that Target

had purchased and was continuing to purchase consumer tissue paper from domestic

suppliers despite Target’s assertions regarding the quality of the purchased products.

The Commission also found that the domestic industry competed for and could produce

so-called “specialty paper,” a type of consumer paper Target uses in some of its gift bag

packages. That evidence is sufficient to support the Commission’s conclusion that

Target did not import its consumer tissue paper solely because of the domestic

industry’s unwillingness or inability to satisfy Target’s needs.

The Commission noted that even if Cleo’s and Target’s consumer imports were

excluded, there would still be “significant market share gains by subject imports of bulk

tissue at the expense of domestic producers,” as well as a “sharp drop in profitability of

the bulk tissue operations of domestic producers.” Our review of the data shows that

conclusion to be supported by substantial evidence. Accordingly, the Commission’s

material injury determination would be supportable even without consideration of the

Target and Cleo imports during the period examined.

B

The appellants next argue that the Commission incorrectly interpreted the price

data when it concluded that imported tissue paper significantly undercut the domestic

industry’s prices during the period examined. To evaluate that question, the

Commission looked at pricing information for four categories of goods: (1) white

2007-1036,-1037 16
consumer tissue paper, (2) solid color consumer tissue paper, (3) combination color

consumer tissue paper, and (4) white bulk tissue paper. The Commission calculated

the weighted average price for each category during each quarter for which there was

comparison data. The data showed that imports undersold the domestic product in 6 of

15 quarters for the first category, 12 of 13 quarters for the second category, 4 of 4

quarters for the third category, and 11 of 12 quarters for the fourth category.

The Commission also cited evidence that price was usually the most important

factor for domestic purchasers, that a great majority of domestic purchasers reported

that the Chinese imports were priced lower than the domestic product, and that virtually

all responding purchasers reported that they had shifted their buying to Chinese imports

since 2001. Based on that evidence, the Commission found that the imported tissue

paper was undercutting domestic prices.

The appellants first argue that, based on their contention that the Commission

erred in its like product analysis, the Commission should not have considered evidence

of underselling in the bulk tissue paper market in determining whether there was

underselling in the consumer tissue paper market. Because we have upheld the

Commission’s like product determination, that argument necessarily fails.

The appellants next challenge the averaged price data, specifically the first,

second, and third categories. Cleo contends that the imported tissue paper in the first

category undersold the domestic tissue paper in 4 quarters instead of 6. It notes that

the average price column of the Commission’s report for the first category only goes to

two decimal points and that, at that level of generality, there were 4 quarters in which

the imported tissue paper undersold the domestic product, 4 quarters in which the price

2007-1036,-1037 17
was equal, and 7 quarters in which imported tissue paper sold at a price higher than the

domestic product. The Commission, however, had and used reliable data going beyond

two decimal points to arrive at its conclusion that there was underselling in 6 quarters.

In the table cited by Cleo, there is also a column reporting the percentage by which the

imported tissue paper undersold the domestic tissue paper. That column lists 6

quarters in which the imported tissue paper undersold the domestic product, a

conclusion confirmed by examining the raw data in the report. Given the prices involved

in this market, even a small price difference can be significant. We therefore reject the

appellants’ argument that the Commission’s finding of underselling in 6 quarters with

regard to the first category is not supported by substantial evidence.

The appellants also argue that the data for the second category is fatally deficient

because it does not contain proper direct comparisons between domestic and imported

tissue paper. The data, however, contains information regarding both domestic and

import sales to retailers, and it shows that the imported tissue paper was priced lower

than the domestic product in 12 of the 13 quarters for which there is data. Comparing

prices for sales to retailers is a fair comparison and one on which the Commission

reasonably relied. Nor does the likelihood of volume discounts in the tissue paper

industry require this data to be discarded, as the appellants contend. The domestic

industry sold more tissue paper to retailers in many quarters, and the price for those

quarters was higher than the price of the imported paper.

The appellees agree with the Commission and the appellants that only limited

data is available for the third category. Even without the data from the third category,

however, the evidence is sufficient to support the Commission’s conclusion. Excluding

2007-1036,-1037 18
the third category, the data indicates that imported tissue paper undersold the domestic

products in 29 of 41 quarters and, overall, undersold the domestic products by a

significant margin. The appellants do not challenge the other price evidence.

Accordingly, the Commission’s determination that the imported products were

undercutting domestic prices is supported by substantial evidence.

C

Finally, Cleo argues that if its imports are removed from the calculations, the data

fails to show any decline in the wellbeing of either the domestic consumer tissue

industry or the combined domestic consumer and domestic bulk tissue paper industry.

We have already held, however, that the Commission’s determinations that consumer

tissue paper and bulk tissue paper are part of a single industry and that Cleo’s

consumer imports should be included in the material injury analysis are both supported

by substantial evidence. Viewed in light of those determinations, the data for domestic

producers of consumer and bulk tissue paper over the period examined supports the

Commission’s conclusion that the health of the industry has been declining as the

volume of subject imports has increased. 2 That data shows, for example, that during

the examination period the domestic industry’s output fell by 16.8 percent, its capacity

utilization fell by 10.5 percent, its domestic shipments fell by 18.3 percent, and its net

sales fell by 26.7 percent. In addition, the total wages and number of employees in the

2
Cleo also argues that there is a defect in the industry data due to the
relationship between the timing of one company’s fiscal year reporting and that
company’s purchase of a particular asset. Cleo acknowledges, however, that the
Commission obtained corrected data after discovering the deficiency. Because the
Commission was aware of that issue and considered the corrected data when
concluding that the domestic tissue paper industry is being harmed by subject imports,
Cleo’s argument on this point fails.

2007-1036,-1037 19
industry declined, the domestic industry’s operating profit margins decreased from 6.6

percent to 3.9 percent, and its operating income fell from $8.2 million to $3.6 million. In

light of that evidence, and accepting the Commission’s underlying determinations

regarding the scope of the industry and the justification for including data relating to

Cleo in its material injury analysis, we hold that the Commission’s material injury

determination is supported by substantial evidence and therefore must be sustained.

AFFIRMED.

2007-1036,-1037 20