CIT Says Use of Germany as Comparison Market Based on 'Speculation'

"Houston we have a problem," the judge quipped, noting that Congress hasn't allowed Commerce to use its authority divined from the Tariff Act of 1930 "based on speculation, conjecture, divination, or anything short of factual findings based on substantial evidence."

In the AD investigation on Dutch mushrooms, Commerce sought to use a comparison market to set respondent Prochamp's AD rate since the company's home market sales made up less than 5% of its U.S. transactions. Germany was Prochamp's largest third-country market, though the company reported that its German sales were only made to a multinational retailer and were actually delivered to a warehouse outside of Germany.

Commerce acknowledged that these mushrooms could just as easily have been shipped to other German-speaking countries for final consumption and that the actual German sales were "unknowable." However, the agency kept Germany as the comparison market, finding that there was no evidence that the German sales were more or less likely to end up in a non-German market.

Baker said this conclusion is "mere speculation" and cuts against Commerce's "finding that the retailer 'likely' resold the mushrooms in Germany and another country." This error is highly relevant due to the fact that the agency picked Germany in part because there was a much greater quantity of German sales compared with the other candidate comparison markets of France and Israel, the judge said.

The court sustained all of Commerce's other explanations for its selection of Germany. For instance, petitioner Giorgio Foods challenged the agency's supposed "reluctance to revisit" its pick of Germany in the final determination. Baker said Commerce actually did revisit its pick, making Giorgio's "quarrel" with "its own strawman."

And while Commerce acknowledged that the weight of the products sold to Germany and France would tend to favor picking France as the comparison market, the agency said that weight is one of only six characteristics to consider when picking a comparison market. The other factors favor Germany, and Commerce properly weighed all the evidence. The court said it wouldn't disturb Commerce's balancing of the product characteristics.

Giorgio also challenged Commerce's decision not to use adverse facts available against Prochamp. The petitioner alleged that the respondent failed to timely notify Commerce that its home-market sales didn't meet the statutory threshold and provided inaccurate information on product characteristics, sales volume, sales channels and customer types.

Baker held that while Commerce could have sought Prochamp's third-country data sooner, the agency said the delay made no difference. As a result, the delay didn't "significantly hinder the proceeding." The judge added that the "handful" of reporting errors from Prochamp didn't "significantly" impede the investigation, with "significantly" standing as the operative word. "The record here more than supports" Commerce's "subjective" determination that no significant hindrance occurred.

Lastly, Giorgio said AFA should have been used for Prochamp's failure to provide certain financial reporting, which Commerce excused due to the fact that the company wasn't required by Dutch law to keep the financial records at issue. The petitioner submitted a report from an accounting firm to show that Prochamp actually did have to keep the disputed financial records.

Baker said Giorgio "makes no effort to explain why the Department, and the court, should find that report more compelling than the quotations from Dutch law provided in Prochamp’s questionnaire response -- quotations that Giorgio, in turn, ignores.”

(Giorgio Foods v. United States, Slip Op. 24-79, CIT # 23-00133, dated 07/17/24; Judge: M. Miller Baker; Attorneys: John Herrmann of Kelley Drye for plaintiff Giorgio Foods; Brian Boynton for defendant U.S. government; Lizbeth Levinson of Fox Rothschild for defendant-intervenor Prochamp B.V.)