Notice of Preliminary Determination of Sales at Less Than Fair Value, Postponement of Final Determination, and Affirmative Critical Circumstances Determination: Bottom Mount Combination Refrigerator-Freezers From Mexico, 67688-67703 [2011-28418]

Agencies

• DEPARTMENT OF COMMERCE
• International Trade Administration

[Federal Register Volume 76, Number 212 (Wednesday, November 2, 2011)]
[Notices]
[Pages 67688-67703]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-28418]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-201-839]


Notice of Preliminary Determination of Sales at Less Than Fair 
Value, Postponement of Final Determination, and Affirmative Critical 
Circumstances Determination: Bottom Mount Combination Refrigerator-
Freezers From Mexico

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.

ACTION: Notice of preliminary determination of sales at less than fair 
value.

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SUMMARY: We preliminarily determine that bottom mount combination 
refrigerator-freezers (bottom mount refrigerators) from Mexico are 
being sold, or are likely to be, sold in the United States at less than 
fair value (LTFV), as provided in section 733(b) of the Tariff Act of 
1930, as amended (the Act). In addition, we preliminarily determine 
that there is a reasonable basis to believe or suspect that critical 
circumstances exist with respect to the subject merchandise exported 
from Mexico by Samsung Electronics Mexico, S.A. de C.V. (Samsung). 
Interested parties are invited to comment on this preliminary 
determination. Because we are postponing the final determination, we 
will make our final determination not later than 135 days after the 
date of publication of this preliminary determination in the Federal 
Register.

FOR FURTHER INFORMATION CONTACT: David Goldberger or Kate Johnson, 
Import Administration, International Trade Administration, U.S. 
Department of Commerce, 14th Street and

[[Page 67689]]

Constitution Avenue NW., Washington, DC 20230; telephone: (202) 482-
4136 or (202) 482-4929, respectively.

Preliminary Determination

    We preliminarily determine that bottom mount refrigerators from 
Mexico are being sold, or are likely to be sold, in the United States 
at LTFV, as provided in section 733(b) of the Act. The estimated 
margins of sales at LTFV are shown in the ``Suspension of Liquidation'' 
section of this notice. In addition, we preliminarily determine that 
there is a reasonable basis to believe or suspect that critical 
circumstances exist with respect to the subject merchandise exported 
from Mexico by Samsung. The critical circumstances analysis for the 
preliminary determination is discussed below under the section 
``Critical Circumstances.''

Background

    Since the initiation of this investigation on April 19, 2011 (see 
Initiation of Antidumping Duty Investigations: Bottom Mount Combination 
Refrigerator-Freezers From the Republic of Korea and Mexico, 76 FR 
23281 (April 26, 2011) (Initiation Notice)), the following events have 
occurred.
    On April 21, 2011, we issued quantity and value (Q&V) 
questionnaires to four Mexican producers/exporters: Electrolux Home 
Products, Corp. NV/Electrolux Home Products De Mexico, S.A. de C.V. 
(Electrolux); LG Electronics Monterrey Mexico, S.A. de C.V. (LGEMM); 
Controladora Mabe, S.A. de C.V./Mabe, S.A. de C.V. (Mabe); and Samsung 
to determine which producers/exporters accounted for the largest volume 
of sales of bottom mount refrigerators from Mexico. On May 13, 2011, 
Electrolux requested that it be treated as a mandatory respondent in 
this investigation. On May 18, 2011, we selected the three largest 
producers/exporters of bottom mount refrigerators from Mexico as the 
mandatory respondents in this proceeding. See Memorandum entitled 
``Selection of Respondents for Individual Review,'' dated May 18, 2011. 
We issued section A of the questionnaire (i.e., the section covering 
general information) to LGEMM, Mabe, and Samsung on May 20, 2011. We 
issued sections B through E of the questionnaire (i.e., the sections 
covering comparison market sales, U.S. sales, cost of production (COP) 
information, and further manufacturing information, respectively) to 
these respondents on May 25, 2011. Subsequently, we re-evaluated our 
resources in the context of our casework and determined that we were 
able to examine four respondents. Therefore, on May 27, 2011, we 
included Electrolux as a mandatory respondent in this investigation and 
issued a questionnaire to Electrolux. See Memorandum entitled 
``Inclusion of Electrolux Home Products, Corp. N.V. as a Mandatory 
Respondent,'' dated May 27, 2011.
    On May 13, 2011, the United States International Trade Commission 
(ITC) preliminarily determined that there is a reasonable indication 
that imports of bottom mount refrigerators from Mexico are materially 
injuring the United States industry. See ITC Investigation Nos. 701-TA-
477 and 731-TA-1180-1181 (Publication No. 4232).
    Also, in May 2011, various interested parties, including Whirlpool 
Corporation (hereafter, the petitioner), submitted comments on the 
scope of this and the concurrent antidumping and countervailing duty 
investigations of bottom mount refrigerators from the Republic of 
Korea. See ``Scope Comments'' section of this notice.
    We received responses to section A of the questionnaire from the 
four respondents in June 2011, and to sections B, C, and D of the 
questionnaire in July 2011. No responses to section E of the 
questionnaire were necessary.
    We issued supplemental questionnaires from July through September 
2011, and we received responses to these supplemental questionnaires 
from July through October 2011.
    On July 29, 2011, the petitioner alleged that critical 
circumstances existed with respect to bottom mount refrigerators 
produced and exported from Mexico. On August 10, 2011, we requested 
monthly shipment data from the respondents for the period January 2008 
through July 2011 for purposes of this analysis. On August 16, 2011, 
LGEMM objected to this request, arguing that the petitioner's critical 
circumstances allegation did not meet the necessary statutory criteria. 
We responded to LGEMM's objection on August 18, 2011. All four 
respondents submitted the requisite shipment data between August 24 and 
26, 2011. In their submissions, Electrolux, LGEMM, and Samsung provided 
comments on how the Department should analyze whether critical 
circumstances exist with respect to their imports or bottom mount 
refrigerators from Mexico.
    On August 1, 2011, the petitioner alleged that Electrolux and LGEMM 
made third country sales below the COP and, therefore, requested that 
the Department initiate a sales-below-cost investigation of both 
respondents. On August 24 and 26, 2011, the Department initiated sales-
below-cost investigations of Electrolux and LGEMM, respectively. See 
the ``Cost of Production Analysis'' section, below.
    On August 11, 2011, the petitioner submitted allegations related to 
affiliated party transactions and the major input rule with respect to 
subject merchandise produced and exported from Mexico by Samsung and 
LGEMM. On the same date, the petitioner alleged that the ``Special Rule 
for Certain Multinational Corporations'' (MNC provision) applies in 
relation to bottom mount refrigerators produced and exported from 
Mexico by LGEMM. LGEMM objected to this allegation on August 23, 2011.
    Also on August 11, 2011, the petitioner requested that the date for 
the issuance of the preliminary determination in this investigation be 
fully extended pursuant to section 733(c)(1) of the Act and 19 CFR 
351.205(e). On August 16, 2011, pursuant to sections 733(c)(1)(A) and 
(c)(2) of the Act and 19 CFR 351.205(f), the Department postponed the 
preliminary determination until no later than October 26, 2011. See 
Bottom Mount Combination Refrigerator-Freezers From the Republic of 
Korea and Mexico: Postponement of Preliminary Determinations of 
Antidumping Duty Investigations, 76 FR 52313 (August 22, 2011).
    On September 6, 2011, we issued a letter to LGEMM requesting that 
it submit the responses to sections B and D of the Department's 
questionnaire that were filed on the administrative record of the 
investigation of bottom mount refrigerators from Korea, by its Korean 
affiliate, LG Electronics, Inc. (LGE), along with all of LGE's 
subsequent supplemental questionnaire responses. This request was made 
in the context of the petitioner's August 11, 2011, allegation 
(supplemented on September 26, 2011) that the MNC provision applies in 
relation to bottom mount refrigerators produced and exported from 
Mexico by LGEMM. LGE/LGEMM complied with this request on September 11, 
2011, and with subsequent submissions in September and October.\1\
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    \1\ We subsequently requested on October 11, 2011, that LGEMM 
submit LGE's response to section A of the Department's questionnaire 
(filed on the record of the Korea investigation by LGE), along with 
all subsequent supplemental section A questionnaire responses. LGEMM 
complied with this request on October 12, 2011.
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    On September 9, 2011, the petitioner alleged that targeted dumping 
was occurring with respect to bottom mount refrigerators produced and 
exported from Mexico by Electrolux, LGEMM, and Samsung.

[[Page 67690]]

    On September 26, 2011, the petitioner amended its critical 
circumstances allegation to include only Electrolux, LGEMM and Samsung.
    On October 3, 2011, the petitioner alleged that targeted dumping 
was occurring with respect to bottom mount refrigerators produced and 
exported from Mexico by Mabe. On October 7, 2011, we rejected as 
untimely the petitioner's targeted dumping allegation with respect to 
Mabe.
    On October 6, 2011, we requested updated shipment data from 
Electrolux, LGEMM, and Samsung for consideration in our critical 
circumstances analysis for the final determination of this 
investigation.
    We received various submissions from interested parties after 
October 11, 2011, including database corrections from Electrolux and 
LGEMM. However, these submissions were received too late to be 
considered for purposes of the preliminary determination. We will 
consider each of these submissions in our final determination.

Postponement of Final Determination

    Section 735(a)(2) of the Act provides that a final determination 
may be postponed until not later than 135 days after the date of the 
publication of the preliminary determination if, in the event of an 
affirmative preliminary determination, a request for such postponement 
is made by exporters who account for a significant proportion of 
exports of the subject merchandise, or in the event of a negative 
preliminary determination, a request for such postponement is made by 
the petitioner. The Department's regulations, at 19 CFR 351.210(e)(2), 
require that requests by respondents for postponement of a final 
determination be accompanied by a request for extension of provisional 
measures from a four-month period to not more than six months.
    Pursuant to section 735(a)(2) of the Act, on October 17, 19, 20, 
and 21, 2011, Mabe, Samsung, Electrolux, and LGEMM, respectively, 
requested that, in the event of an affirmative preliminary 
determination in this investigation, the Department postpone its final 
determination until not later than 135 days after the date of the 
publication of the preliminary determination in the Federal Register, 
and extend the provisional measures to not more than six months. In 
accordance with 19 CFR 351.210(b), because (1) Our preliminary 
determination is affirmative, (2) the respondents account for a 
significant proportion of exports of the subject merchandise, and (3) 
no compelling reasons for denial exist, we are granting the 
respondents' request and are postponing the final determination until 
no later than 135 days after the publication of this notice in the 
Federal Register. Suspension of liquidation will be extended 
accordingly.

Period of Investigation

    The period of investigation (POI) is January 1, 2010, through 
December 31, 2010. This period corresponds to the four most recent 
fiscal quarters prior to the month of the filing of the petition (i.e., 
March 2011).

Scope of Investigation

    The products covered by the investigation are all bottom mount 
combination refrigerator-freezers and certain assemblies thereof from 
Mexico. For purposes of the investigation, the term ``bottom mount 
combination refrigerator-freezers'' denotes freestanding or built-in 
cabinets that have an integral source of refrigeration using 
compression technology, with all of the following characteristics:
     The cabinet contains at least two interior storage 
compartments accessible through one or more separate external doors or 
drawers or a combination thereof;
     An upper-most interior storage compartment(s) that is 
accessible through an external door or drawer is either a refrigerator 
compartment or convertible compartment, but is not a freezer 
compartment; \2\ and
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    \2\ The existence of an interior sub-compartment for ice-making 
in an upper-most storage compartment does not render an upper-most 
storage compartment a freezer compartment.
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     There is at least one freezer or convertible compartment 
that is mounted below an upper-most interior storage compartment(s).
    For purposes of the investigation, a refrigerator compartment is 
capable of storing food at temperatures above 32 degrees F (0 degrees 
C), a freezer compartment is capable of storing food at temperatures at 
or below 32 degrees F (0 degrees C), and a convertible compartment is 
capable of operating as either a refrigerator compartment or a freezer 
compartment, as defined above.
    Also covered are certain assemblies used in bottom mount 
combination refrigerator-freezers, namely: (1) Any assembled cabinets 
designed for use in bottom mount combination refrigerator-freezers that 
incorporate, at a minimum: (a) an external metal shell, (b) a back 
panel, (c) a deck, (d) an interior plastic liner, (e) wiring, and (f) 
insulation; (2) any assembled external doors designed for use in bottom 
mount combination refrigerator-freezers that incorporate, at a minimum: 
(a) An external metal shell, (b) an interior plastic liner, and (c) 
insulation; and (3) any assembled external drawers designed for use in 
bottom mount combination refrigerator-freezers that incorporate, at a 
minimum: (a) an external metal shell, (b) an interior plastic liner, 
and (c) insulation.
    The products subject to the investigation are currently 
classifiable under subheadings 8418.10.0010, 8418.10.0020, 
8418.10.0030, and 8418.10.0040 of the Harmonized Tariff System of the 
United States (HTSUS). Products subject to this investigation may also 
enter under HTSUS subheadings 8418.21.0010, 8418.21.0020, 8418.21.0030, 
8418.21.0090, and 8418.99.4000, 8418.99.8050, and 8418.99.8060. 
Although the HTSUS subheadings are provided for convenience and customs 
purposes, the written description of the merchandise subject to this 
scope is dispositive.

Scope Comments

    In accordance with the preamble to the Department's regulations 
(see Antidumping Duties; Countervailing Duties; Final Rule, 62 FR 
27296, 27323 (May 19, 1997)), in our Initiation Notice we set aside a 
period of time for parties to raise issues regarding product coverage, 
and encouraged all parties to submit comments within 20 calendar days 
of publication of the Initiation Notice.
    On May 9, 2011, we received timely comments on the scope of the 
investigation from Samsung. Specifically, Samsung requested that the 
Department clarify the current description of a freezer compartment and 
exclude a certain type of refrigerator-freezer from the scope. These 
scope requests are as follows:
    1. Samsung requested that the Department use the Association of 
Home Appliance Manufacturers (AHAM) definition to revise the current 
description of a freezer compartment; and
    2. Samsung requested that the Department determine that a certain 
type of refrigerator with four compartments known as ``Quatro Cooling 
Refrigerators'' be excluded from the scope due to its upper-left non-
convertible freezer compartment.
    On May 18, 2011, Daewoo and LGEMM submitted comments in response to 
Samsung's May 9, 2011, submission. In their comments, Daewoo and LGEMM 
agreed with Samsung that the Department should amend the scope language 
to use the AHAM definition. Alternatively, LGEMM requested that at a 
minimum the Department exclude from the scope any refrigerator,

[[Page 67691]]

regardless of freezing capability, that is specifically designed to 
store kimchi.
    Also, on May 18, 2011, as well as on June 30, 2011, the petitioner 
submitted comments objecting to the requests filed by Samsung and 
LGEMM, respectively. As part of these comments, the petitioner proposed 
a modification to the scope language with respect to the positioning of 
the freezer in relation to the upper-most compartment. Samsung 
submitted rebuttal comments on July 25, 2011.
    Based on our analysis of these issues, we have preliminarily 
determined that the scope of this and the concurrent antidumping and 
countervailing duty investigations on bottom mount refrigerators from 
Korea remains fundamentally unchanged. We have not modified the 
description of a freezer compartment in the scope of this investigation 
to be consistent with the AHAM definition, nor have we excluded kimchi 
refrigerators or Quatro Cooling Refrigerators from the scope of the 
investigation. However, as suggested by the petitioner, we have 
clarified the scope to eliminate any ambiguity with respect to the 
inclusion of Quatro Cooling Refrigerators in the scope of 
investigation.\3\ See Memorandum entitled ``Scope Modification 
Requests,'' dated October 26, 2011.
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    \3\ The scope language has been revised as follows: the two 
references to ``the upper-most interior storage compartment(s)'' 
have been replaced with ``an upper-most interior storage 
compartment;'' and the two references in the footnote to ``the 
upper-most storage compartment'' have been replaced with ``an upper-
most storage compartment.''
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Targeted Dumping Allegations

    The statute allows the Department to employ the average-to-
transaction margin-calculation methodology under the following 
circumstances: (1) There is a pattern of export prices that differ 
significantly among purchasers, regions, or periods of time; and (2) 
the Department explains why such differences cannot be taken into 
account using the average-to-average or transaction-to-transaction 
methodology. See section 777A(d)(1)(B) of the Act.
    On September 9, 2011, the petitioner submitted allegations of 
targeted dumping with respect to Samsung, LGEMM, and Electrolux and 
asserted that the Department should apply the average-to-transaction 
methodology in calculating the margins for these respondents. In its 
allegations, the petitioner asserted that there are patterns of U.S. 
sales prices for comparable merchandise that differ significantly among 
time periods. The petitioner relied on the Department's targeted 
dumping test in Certain Steel Nails from the United Arab Emirates: 
Notice of Final Determination of Sales at Not Less Than Fair Value, 73 
FR 33985 (June 16, 2008), and Certain Steel Nails from the People's 
Republic of China: Final Determination of Sales at Less Than Fair Value 
and Partial Affirmative Determination of Critical Circumstances, 73 FR 
33977 (June 16, 2008) (collectively Nails), as applied in more recent 
investigations such as Multilayered Wood Flooring from the People's 
Republic of China: Preliminary Determination of Sales at Less Than Fair 
Value, 76 FR 30656, 30659-60 (May 26, 2011). See Petitioners' 
Submission of Targeted Dumping Allegations dated September 9, 2011, at 
pages 7-11.

A. Targeted Dumping Test

    We conducted time-period targeted dumping analyses for Samsung, 
LGEMM, and Electrolux using the methodology we adopted in Nails and 
most recently articulated in Certain Coated Paper Suitable for High-
Quality Print Graphics Using Sheet-Fed Presses From Indonesia: Final 
Determination of Sales at Less Than Fair Value, 75 FR 59223 (September 
27, 2010) and accompanying Issues and Decision Memorandum at Comment 1 
(Coated Paper), and Multilayered Wood Flooring From the Peoples' 
Republic of China: Final Determination of Sales at Less Than Fair 
Value, 76 FR 64318 (October 18, 2011) (Wood Flooring) and accompanying 
Issues and Decision Memorandum at Comment 4.
    The methodology we employed involves a two-stage test; the first 
stage addresses the pattern requirement and the second stage addresses 
the significant-difference requirement. See section 777A(d)(1)(B)(i) of 
the Act, Nails, Coated Paper, and Wood Flooring. In this test we made 
all price comparisons on the basis of identical merchandise (i.e., by 
control number or CONNUM). We based all of our targeted dumping 
calculations on the U.S. net price which we determined for U.S. sales 
by Samsung, LGEMM, and Electrolux in our standard margin calculations. 
As a result of our analysis, we preliminarily determine that there is a 
pattern of U.S. prices for comparable merchandise that differs 
significantly among certain time periods for Samsung and LGEMM, in 
accordance with section 777A(d)(1)(B)(i) of the Act and our current 
practice as discussed in Nails, Coated Paper, and Wood Flooring. We 
also preliminarily determine that no such pattern exists for 
Electrolux. For further discussion of the test and results, see the 
Department's memoranda entitled ``Preliminary Determination Margin 
Calculation for Electrolux Home Products, Corp. N.V. and Electrolux 
Home Products De Mexico, S.A de C.V.'' (Electrolux Calculation Memo); 
``Preliminary Determination Margin Calculation for LG Electronics 
Monterrey Mexico, S.A. de C.V.'' (LGEMM Calculation Memo); and 
``Preliminary Determination Margin Calculation for Samsung Electronics 
Mexico, S.A. de C.V.'' (Samsung Calculation Memo), dated October 26, 
2011.

B. Price Comparison Method

    Section 777A(d)(1)(B)(ii) of the Act states that the Department may 
compare the weighted average of the normal value (NV) to export prices 
(EPs) or constructed export prices (CEPs) of individual transactions 
for comparable merchandise if the Department explains why differences 
in the patterns of EPs or CEPs cannot be taken into account using the 
average-to-average methodology. As described above, we preliminarily 
determine that, with respect to sales by Samsung and LGEMM for certain 
time periods there was a pattern of prices that differed significantly.
    For Samsung, we find that these differences can be taken into 
account using the average-to-average methodology because the average-
to-average methodology does not conceal differences in the patterns of 
prices between the targeted and non-targeted groups by averaging low-
priced sales to the targeted group with high-priced sales to the non-
targeted group. Therefore, for the preliminary determination, we find 
that the standard average-to-average methodology takes into account the 
price differences because the alternative average-to-transaction 
methodology yields no difference in the margin or yields a difference 
in the margin that is so insignificant relative to the size of the 
resulting margin as to be immaterial. Accordingly, for this preliminary 
determination we have applied the standard average-to-average 
methodology to all U.S. sales made by Samsung. See Samsung Calculation 
Memo.
    For LGEMM, we find that these differences cannot be taken into 
account using the average-to-average methodology because the average-
to-average methodology conceals differences in the patterns of prices 
between the targeted and non-targeted groups by averaging low-priced 
sales to the targeted group with high-priced sales to the non-targeted 
group. Therefore, for the preliminary determination, we find that the 
standard

[[Page 67692]]

average-to-average methodology does not take into account the price 
differences because the alternative average-to-transaction methodology 
yields a material difference in the margin. Accordingly, for this 
preliminary determination we applied the average-to-transaction 
methodology to all U.S. sales made by LGEMM. See LGEMM Calculation 
Memo.
    For Electrolux, because we did not find a pattern of prices that 
differed significantly for certain time periods pursuant to section 
777A(d)(1)(B) of the Act, we applied our standard average-to-average 
price comparison methodology to all U.S. sales made by Electrolux 
pursuant to section 777A(d)(1)(A) of the Act. See Electrolux 
Calculation Memo.

Fair Value Comparisons

    To determine whether sales of bottom mount refrigerators from 
Mexico to the United States were made at LTFV, we compared the EP or 
CEP to the NV, as described in the ``Export Price/Constructed Export 
Price'' and ``Normal Value'' sections of this notice, below. In 
accordance with section 777A(d)(1)(A)(i) of the Act, we compared POI 
weighted-average EPs and CEPs to weighted-average NVs (for Electrolux, 
Mabe, and Samsung), and transaction-specific EPs and CEPs to weighted-
average NVs (for LGEMM) in accordance with section 777A(d)(1)(B) of the 
Act.
    All four respondents reported sales of damaged and/or refurbished 
merchandise in their U.S. and/or comparison markets during the POI. 
Because the quantity of such sales does not constitute a significant 
percentage of the respondents' total U.S. and/or comparison market 
sales made during the POI, we have excluded these sales from our margin 
analysis for purposes of the preliminary determination. See, e.g., 
Notice of Final Determination of Sales at Less Than Fair Value: Certain 
Frozen and Canned Warmwater Shrimp from Ecuador, 69 FR 76913 (December 
23, 2004), and accompanying Issues and Decision Memorandum at General 
Comment 2.

MNC Provision

    On August 11, 2011, the petitioner alleged that all of the criteria 
for invoking the MNC provision have been satisfied with respect to 
LGEMM. To determine whether sales of LGEMM's bottom mount refrigerators 
from Mexico to the United States were made at LTFV, we compared the 
U.S. price to the appropriate NV as required by the MNC provision.
    The MNC provision, contained in section 773(d) of the Act, requires 
the Department to determine if the following three criteria are 
satisfied:
    (1) Subject merchandise exported to the United States is being 
produced in facilities which are owned or controlled, directly or 
indirectly, by a person, firm or corporation which also owns or 
controls, directly or indirectly, other facilities for the production 
of the foreign like product which are located in another country or 
countries;
    (2) Sales of the foreign like product by the company concerned in 
the home market of the exporting country are nonexistent or 
insufficient as a basis for comparison with the sales of the subject 
merchandise to the United States; and,
    (3) The NV of the foreign like product produced in one or more of 
the facilities outside the exporting country is higher than the NV of 
the foreign like product produced in the facilities located in the 
exporting country. (In this comparison, we must adjust the NVs for any 
differences between the two countries (including taxes, labor, 
materials and overhead), pursuant to section 773(d) of the Act.)
    If the above criteria are satisfied, then the MNC provision 
instructs the Department to compare U.S. price to the NV at which the 
foreign like product is sold in substantial quantities from one or more 
facilities outside the exporting country.
    Regarding the first criterion, LGEMM reported that it is owned by 
LGE in part; LGE produces and sells bottom mount refrigerators in 
Korea. Thus, the first criterion is satisfied.
    Regarding the second criterion, we compared the reported volume of 
home market sales of bottom mount refrigerators to the reported volume 
of U.S. sales of bottom mount refrigerators, in accordance with section 
773(d)(2) of the Act and 19 CFR 351.404, in order to determine whether 
there were sufficient sales of bottom mount refrigerators in the home 
market to compare to sales of bottom mount refrigerators in the United 
States. We found that LGEMM's Mexican home market was not viable for 
comparison to sales to the United States. Based on LGEMM's 
questionnaire response, we determined, pursuant to 19 CFR 351.404, that 
Canada is the most appropriate third country market for purposes of the 
comparison of NVs under the MNC provision because Canada is LGEMM's 
largest third country market with respect to sales of bottom mount 
refrigerators.
    Regarding the third criterion, we compared the NV of sales made by 
LGEMM to Canada (Canadian NV) with the NV of the sales made by LGE in 
Korea (Korean NV). We used in this comparison only those sales to 
Canada and Korea made in the ordinary course of trade.\4\ We also 
excluded sales of refurbished merchandise, as discussed in the ``Fair 
Value Comparison'' section of this notice. To compare the NVs, we first 
calculated the Canadian and Korean NVs using our normal methodology 
under section 773(a) of the Act.
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    \4\ We initiated sales-below-cost investigations with respect to 
LGEMM's third country sales to Canada and LGE's home market sales in 
Korea. See Memorandum entitled ``The Petitioner's Allegation of 
Sales below the Cost of Production for LG Electronics Monterrey 
Mexico, S.A. de C.V.'', dated August 26, 2011, and Initiation 
Notice. Accordingly, we used in our analysis only those sales that 
passed the sales below cost test. With respect to LGEMM's affiliated 
party transactions in Canada, we used in our analysis only those 
Canadian sales that passed the arm's-length test, as described in 
the ``Affiliated Party Transactions and Arm's-Length Test'' section 
of this notice. With respect to LGE's affiliated party transactions 
in Korea, LGE reported downstream sales by its affiliated reseller 
rather than both sales to the affiliate and the affiliate's 
downstream sales. Therefore, we used only the downstream sales in 
our analysis.
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1. Canadian NV

    We calculated the Canadian NV based on ex-warehouse or delivered 
prices to unaffiliated customers. We made deductions, where 
appropriate, from the starting price for discounts, rebates, and 
billing adjustments. We also made deductions for movement expenses, 
including foreign inland freight, foreign brokerage and handling, 
international freight, Canadian brokerage and handling, Canadian 
warehousing, and Canadian inland freight expenses. In addition, we made 
deductions for commissions, advertising expenses, imputed credit 
expenses, warranties, and packing costs. See LGEMM Calculation Memo for 
further discussion of the adjustments to the Canadian NV.

2. Korean NV

    We calculated the Korean NV based on delivered prices to 
unaffiliated customers. We made deductions, where appropriate, from the 
starting price for discounts and rebates. We also made deductions for 
movement expenses, including inland freight, handling, and warehousing. 
Regarding inland freight, handling, and warehousing, LGE paid an 
affiliated company to arrange unaffiliated subcontractors to perform 
these services. Because LGE's affiliate did not provide the same 
service to unaffiliated parties, nor did LGE use unaffiliated companies 
for these services, we were unable to test the arm's-length nature of 
the expenses paid by LGE. Therefore, we based these expenses on the 
affiliate's costs.
    In addition, we made deductions for direct selling expenses 
(including bank

[[Page 67693]]

charges, direct advertising and promotional expenses, imputed credit 
expenses, and warranties), commissions, and packing costs. See LGEMM 
Calculation Memo for further discussion of the adjustments to the 
Korean NV.
    Once we had calculated the two NVs, we then matched the NVs, to 
LGEMM's U.S. sales according to the product-comparison criteria 
discussed below under the ``Product Comparisons'' section of this 
notice. We matched the U.S. sales with the NV at the most similar level 
of trade (LOT), where possible. See LGEMM Calculation Memo for 
discussion of our LOT analysis with respect to Canadian sales, and 
``Level of Trade'' section of this notice, below, for discussion of our 
LOT analysis with respect to Korean sales. Next, we calculated a 
comparison adjustment for each product-specific NV to determine whether 
any of the observed differences in value between the NV of products 
produced and sold in Korea and the NV of products produced in Mexico 
and sold in Canada were attributable to differences in COPs. The 
comparison adjustment included the costs of materials, labor, fixed and 
variable overhead, general and administrative (G&A) expense and 
interest incurred in producing the product. To calculate the comparison 
adjustment, the Department relied on the submitted cost information 
except in the following instances where the costs were not 
appropriately quantified or valued.

1. Mexican-Produced Merchandise

    We analyzed LGEMM's transactions with affiliated parties in 
accordance with section 773(f)(2) of the Act (the transactions 
disregarded rule) to determine whether the prices paid for the inputs 
used in the production of the merchandise under consideration reflect 
arm's-length prices. Based on our analysis, we found that the sum of 
the extended weighted-average prices paid by LGEMM for inputs purchased 
from LG Chemical America Inc. were at less than the sum of the extended 
weighted-average market prices. As such, we increased LGE's reported 
cost of manufacturing (COM) to reflect market prices.
    We adjusted LGEMM's reported costs to include research and 
development (R&D) expenses incurred by its affiliate, LGE. Because 
LGEMM appears to have benefited from LGE's R&D activities associated 
with the production of the merchandise under consideration, we added 
LGE's R&D expenses to LGEMM's reported costs. We also revised LGEMM's 
CONNUM-specific G&A expenses. We adjusted the denominator of LGEMM's 
G&A expense ratio for packing expenses and scrap revenue. We applied 
the revised G&A expense ratio to the reported CONNUM-specific COM to 
determine the revised G&A expenses. See Memorandum entitled ``Cost of 
Production and Constructed Value Calculation Adjustments for the 
Preliminary Determination--LG Electronics Monterrey Mexico, S.A. de 
C.V. and LG Electronics USA, Inc.'' (LGEMM Cost Calculation Memo), 
dated October 26, 2011.

2. Korean-Produced Merchandise

    We analyzed LGE's transactions with certain affiliated parties in 
accordance with section 773(f)(2) of the Act (transactions disregarded 
rule) to determine whether the prices paid for the inputs used in the 
production of the merchandise under consideration reflect arm's-length 
prices. Based on our analysis, we found that the sum of the extended 
weighted-average prices paid by LGE for inputs purchased from LG 
Chemical were at less than the sum of the extended weighted-average 
market prices. As such, we increased LGE's reported COM to reflect 
market prices. We also revised LGE's reported G&A expense ratio for 
certain R&D expenses. See Memorandum entitled ``Cost of Production and 
Constructed Value Calculation Adjustments for the Preliminary 
Determination--LG Electronics Inc. and LG Electronics USA, Inc.'' (LG 
Cost Calculation Memo), dated October 26, 2011, included at Attachment 
8 to LGEMM Calculation Memo.
    Next, we converted the COP and NV data to U.S. dollars, and 
calculated the comparison adjustment as the difference between the 
Canadian NV COP and the Korean NV COP. We applied the comparison 
adjustment to the Korean NV. We then multiplied the NVs by the quantity 
of U.S. product to which the NVs were compared in order to provide for 
an equitable comparison. Finally, we summed the total value for each 
market. From these aggregated values, we determined that the Korean 
value was higher than the Canadian value. Thus, the third criterion for 
invoking the MNC provision has been satisfied.
    Because all of the above criteria for the MNC provision have been 
satisfied, we are required to base NV for LGEMM on the prices of sales 
made by LGE in Korea (see LGEMM Calculation Memo for additional 
discussion of the Department's application of the MNC provision 
methodology).

Product Comparisons

    In accordance with section 771(16) of the Act, we considered all 
products produced and sold by the respondents in Mexico, or in Korea in 
the case of LGEMM under the MNC provision, during the POI that fit the 
description in the ``Scope of Investigation'' section of this notice to 
be foreign like products for purposes of determining appropriate 
product comparisons to U.S. sales. We compared U.S. sales to sales made 
in the comparison market, where appropriate. Where there were no sales 
of identical merchandise in the comparison market made in the ordinary 
course of trade to compare to U.S. sales, we compared U.S. sales to 
sales of the most similar foreign like product made in the ordinary 
course of trade. Where there were no sales of identical or similar 
merchandise, or there was no viable comparison market, we made product 
comparisons using constructed value (CV).
    In making the product comparisons, we matched foreign like products 
based on the Physical characteristics reported by the respondents in 
the following order of importance: completed unit or subassembly, unit 
type, calculated volume, number of compartments, refrigerator door/
drawer configuration, other external door/drawer configurations, 
icemaker and water dispenser feature, door finish, type of compressor, 
number of evaporators, type of user interface, existence of a through-
the-door feature, existence of an interior temperature-controlled sub-
compartment, and existence of thin-wall insulation panels.

Export Price/Constructed Export Price

    For certain U.S. sales made by LGEMM and Samsung, we used EP 
methodology, in accordance with section 772(a) of the Act, because the 
subject merchandise was sold directly to the first unaffiliated 
purchaser in the United States before the date of importation by the 
producer or exporter of the subject merchandise outside the United 
States, and CEP methodology was not otherwise warranted based on the 
facts of record.
    For all U.S. sales made by Electrolux and Mabe and certain U.S. 
sales made by LGEMM and Samsung, we calculated CEP in accordance with 
section 772(b) of the Act because the subject merchandise was first 
sold (or agreed to be sold) in the United States after the date of 
importation by or for the account of the producer or exporter, or by a 
seller affiliated with the producer or exporter, to a purchaser not 
affiliated with the producer or exporter.

[[Page 67694]]

A. Electrolux

    We based CEP on the packed prices to unaffiliated purchasers in the 
United States. We used the earlier of shipment or invoice date as the 
date of sale for Electrolux's CEP sales, in accordance with our 
practice. See, e.g., Certain Frozen Warmwater Shrimp from Thailand: 
Final Results and Final Partial Rescission of Antidumping Duty 
Administrative Review, 72 FR 52065 (September 12, 2007), and 
accompanying Issues and Decision Memorandum at Comment 11.
    We adjusted the starting price by the amount of billing adjustments 
reported by Electrolux. We made deductions for rebates and discounts, 
as appropriate. We made deductions for movement expenses, in accordance 
with section 772(c)(2)(A) of the Act; these included, where 
appropriate, foreign inland freight, foreign customs fees, foreign and 
U.S. inland insurance, U.S. inland freight expenses (i.e., freight from 
factory to warehouse and freight from warehouse to the customer), and 
pre-sale warehousing expenses. In accordance with section 772(d)(1) of 
the Act and 19 CFR 351.402(b), we deducted those selling expenses 
associated with economic activities occurring in the United States, 
including direct selling expenses (i.e., imputed credit expenses, 
service fees paid to financing agents, advertising expenses, and 
warranty expenses), and indirect selling expenses (including inventory 
carrying costs).
    Pursuant to section 772(d)(3) of the Act, we further reduced the 
starting price by an amount for profit to arrive at CEP. In accordance 
with section 772(f) of the Act, we calculated the CEP profit rate using 
the expenses incurred by Electrolux on its sales of the subject 
merchandise in the United States and the profit associated with those 
sales. See the Electrolux Calculation Memo.

B. LGEMM

    We based EP on the packed prices to unaffiliated purchasers in the 
United States. We increased the starting price by the amount of billing 
adjustments reported by LGEMM. We made deductions for discounts and 
rebates, as appropriate. We made deductions for movement expenses in 
accordance with section 772(c)(2)(A) of the Act; these expenses 
included, where appropriate, foreign inland freight, foreign brokerage 
and handling, and international freight.
    We based CEP on the packed, ex-warehouse or delivered prices to 
unaffiliated purchasers in the United States. We increased the starting 
price by the amount of billing adjustments reported by LGEMM. We made 
deductions for discounts and rebates, as appropriate.
    We made deductions for movement expenses, in accordance with 
section 772(c)(2)(A) of the Act; these included, where appropriate, 
foreign inland freight, foreign brokerage and handling, international 
freight, U.S. brokerage and handling, U.S. warehousing, and U.S. inland 
freight expenses. In accordance with section 772(d)(1) of the Act and 
19 CFR 351.402(b), we deducted those selling expenses associated with 
economic activities occurring in the United States, including direct 
selling expenses (i.e., imputed credit expenses, bank charges, 
advertising expenses, and warranty expenses), and indirect selling 
expenses (including inventory carrying costs).
    Pursuant to section 772(d)(3) of the Act, we further reduced the 
starting price by an amount for profit to arrive at CEP. In accordance 
with section 772(f) of the Act, we calculated the CEP profit rate using 
the expenses incurred by LGEMM and its U.S. affiliate on sales of the 
subject merchandise in the United States and the profit associated with 
those sales. See LGEMM Calculation Memo.

C. Mabe

    Mabe sold bottom mount refrigerators to unaffiliated U.S. customers 
during the POI through its affiliated U.S. reseller, General Electric 
Company (GE).\5\ Therefore, we used CEP methodology to calculate Mabe's 
antidumping margin, comparing Mabe's home market sales to unaffiliated 
customers to GE's sales to unaffiliated customers in the United States. 
We based CEP on the packed prices to unaffiliated purchasers in the 
United States. We increased the starting price by the amount of billing 
adjustments. We made deductions for discounts and rebates, as 
appropriate. We reclassified one of Mabe's rebates as a discount, in 
accordance with the description of this expense in its September 26, 
2011, supplemental questionnaire response (SQR).
---------------------------------------------------------------------------

    \5\ See the Memorandum entitled, ``Investigation of Bottom Mount 
Combination Refrigerator-Freezers from Mexico: Finding of 
Affiliation Between Controladora Mabe S.A. de C.V., Mabe S.A. de 
C.V., and Leiser S. de R. (collectively ``Mabe'') and General 
Electric Company (``GE''), dated September 2, 2011.
---------------------------------------------------------------------------

    In a supplemental questionnaire dated August 19, 2011, we 
instructed Mabe to report its rebates on a customer-specific basis, but 
Mabe did not do so arguing that its reporting methodology was 
reasonable. Based on information reported in Mabe's questionnaire 
responses, we believe that it is possible for Mabe to report its 
rebates, at a minimum, on a customer-specific basis and possibly on a 
product-specific and time period-specific basis. See, e.g., pages 8-9 
of the SQR which describes the various rebate programs. Therefore, 
pursuant to section 776(a)(2)(B) of the Act, we find that Mabe failed 
to provide information in the form and manner requested by the 
Department and that it is appropriate to resort to facts otherwise 
available to account for the unreported information. Moreover, we find 
that an adverse inference is appropriate because: (1) Mabe had the 
necessary information within its control and did not report this 
information; and (2) it failed to put forth the maximum effort to 
provide the requested information. Therefore, for this preliminary 
determination, pursuant to section 776(b) of the Act, we find that it 
is appropriate to apply adverse facts available (AFA) with respect to 
these rebates. Specifically, as AFA, we based the rebates reported for 
all of Mabe's U.S. rebate programs on the highest percentage reported 
for any of the programs. We intend to request additional information 
concerning Mabe's rebate programs, as well as its rebate reporting 
methodology, prior to verification for consideration in the final 
determination.
    We made deductions for movement expenses, in accordance with 
section 772(c)(2)(A) of the Act; these included, where appropriate, 
foreign inland freight, U.S. brokerage and handling, U.S. inland 
freight expenses (i.e., freight from port to warehouse and freight from 
warehouse to the customer), and U.S. warehousing expenses. In 
accordance with section 772(d)(1) of the Act and 19 CFR 351.402(b), we 
deducted those selling expenses associated with economic activities 
occurring in the United States, including direct selling expenses 
(i.e., imputed credit expenses, advertising expenses, and warranty 
expenses), and indirect selling expenses (including inventory carrying 
costs and other indirect selling expenses). We recalculated credit 
expenses by subtracting early payment discounts from gross unit price. 
See discussion below with respect to the calculation of indirect 
selling expenses and advertising expenses. With respect to the foreign 
inland freight expense from plant/warehouse to the port of export and 
inventory carrying costs incurred by Mabe for its U.S. sales to GE, we 
calculated an average expense. See Memorandum entitled ``Preliminary 
Margin Calculation for Controladora Mabe S.A. de C.V., Mabe S.A. de 
C.V.,

[[Page 67695]]

and Leiser S. de R.L.,'' dated October 26, 2011 (Mabe Calculation Memo) 
for further discussion.
    In its initial questionnaire response dated July 25, 2011, GE 
reported indirect selling and advertising expense ratios that were 
derived from a product-line management report. In its SQR, GE revised 
those ratios by substituting them with ratios that were derived from 
data in GE's Appliance Division accounts. As explanation, GE stated 
that the management report data used for the original ratios cannot be 
tied into its financial records. Moreover, the appliances-level records 
are the only available source of data from which GE can produce 
verifiable indirect selling and advertising ratios.
    We have several outstanding questions regarding GE's claims with 
respect to both the original and the revised data, including how data 
was compiled and how expenses were allocated to product lines in the 
management report, and whether the appliance-level data include 
expenses that may be otherwise unaccounted for in Mabe's and GE's 
questionnaire responses. Moreover, GE has not explained why it has 
relied on the management report for other purposes besides the 
reporting of indirect selling and advertising expenses, such as in its 
sales reconciliation and the calculation of rebates. See Exhibit 2 of 
the SQR and Exhibit 2 of the July 25, 2011, questionnaire response, 
respectively. Therefore, for the preliminary determination we have used 
GE's originally-reported indirect selling and advertising expense 
ratios in the margin calculation for Mabe, as we prefer adjustments to 
be as product-specific as possible. We intend to ask for additional 
information concerning these expenses through a supplemental 
questionnaire to GE, which will be subject to verification, and will 
reconsider this issue for the final determination. See Mabe Calculation 
Memo.
    Pursuant to section 772(d)(3) of the Act, we further reduced the 
starting price by an amount for profit to arrive at CEP. In accordance 
with section 772(f) of the Act, we calculated the CEP profit rate using 
the expenses incurred by both Mabe and GE on sales of the subject 
merchandise in the United States and the profit associated with those 
sales.

D. Samsung

    We based EP on the packed prices to unaffiliated purchasers in the 
United States. We made deductions for movement expenses in accordance 
with section 772(c)(2)(A) of the Act; these included, where 
appropriate, foreign inland freight, foreign inland insurance, foreign 
brokerage and handling expenses, and U.S. customs duties (including 
merchandise processing fees and customs broker fees incurred in 
Mexico).
    We based CEP on the packed prices to unaffiliated purchasers in the 
United States. We increased the starting price by the amount of billing 
adjustments reported by Samsung. We made deductions for discounts and 
rebates, as appropriate. We reclassified Samsung's early payment rebate 
as a discount, in accordance with the description of this expense in 
the October 5, 2011, supplemental questionnaire response.
    In a supplemental questionnaire dated September 27, 2011, we 
instructed Samsung to report its rebates on as customer-specific, 
product-specific and time period-specific basis as possible. However, 
Samsung declined to report its U.S. rebates as instructed. While 
Samsung reported its U.S. rebates on a customer-specific basis, based 
on information reported in Samsung's supplemental questionnaire 
responses, we believe that it is possible for Samsung to report certain 
rebates (i.e., REBATE3U and REBATE4U) on a product-specific and 
possibly a time period-specific basis, as well.\6\ Therefore, pursuant 
to section 776(a)(2)(B) of the Act, we find that Samsung failed to 
provide information in the form and manner requested by the Department 
and that it is appropriate to resort to facts otherwise available to 
account for the unreported information. Moreover, we find that an 
adverse inference is appropriate because: (1) Samsung had the necessary 
information within its control and did not report this information; and 
(2) it failed to put forth the maximum effort to provide the requested 
information. Therefore, for this preliminary determination, pursuant to 
section 776(b) of the Act, we find that it is appropriate to apply 
adverse facts available (AFA) with respect to these rebates. 
Specifically, as AFA, we recalculated both of these rebates by 
assigning the highest customer-specific rebate percentage reported for 
each rebate program to all POI U.S. sales that were eligible for a 
rebate under that particular rebate program. We intend to request 
additional information concerning Samsung's rebate programs, as well as 
its rebate reporting methodologies, prior to verification for 
consideration in the final determination.
---------------------------------------------------------------------------

    \6\ See, e.g., Exhibit SC-4 of Samsung's September 21, 2011, 
supplemental questionnaire response and Exhibit 1 of its October 5, 
2011, supplemental questionnaire response.
---------------------------------------------------------------------------

    We made deductions for movement expenses, in accordance with 
section 772(c)(2)(A) of the Act; these included, where appropriate, 
foreign inland freight, foreign warehousing expenses, foreign inland 
insurance, foreign brokerage and handling expenses, ocean freight, U.S. 
customs duties (including merchandise processing fees and customs 
broker fees incurred in Mexico), U.S. inland insurance, U.S. inland 
freight expenses (i.e., freight from port to warehouse and freight from 
warehouse to the customer), and post-sale warehousing expenses. In 
accordance with section 772(d)(1) of the Act and 19 CFR 351.402(b), we 
deducted those selling expenses associated with economic activities 
occurring in the United States, including direct selling expenses 
(i.e., imputed credit expenses, advertising expenses, and warranty 
expenses), and indirect selling expenses (including inventory carrying 
costs and other indirect selling expenses). We recalculated credit 
expenses by subtracting early payment discounts from gross unit price. 
We recalculated U.S. inventory carrying costs by using the Mexican peso 
short-term interest rate, consistent with our practice to match the 
currency of the interest rate to the currency of the cost being 
imputed. See Certain Orange Juice from Brazil: Final Results of 
Antidumping Duty Administrative Review, Determination Not to Revoke 
Antidumping Duty Order in Part, and Final No shipment Determination, 76 
FR 50176 (August 12, 2011), and accompanying Issues and Decision 
Memorandum at Comment 5.
    Pursuant to section 772(d)(3) of the Act, we further reduced the 
starting price by an amount for profit to arrive at CEP. In accordance 
with section 772(f) of the Act, we calculated the CEP profit rate using 
the expenses incurred by Samsung and its U.S. affiliate on their sales 
of the subject merchandise in the United States and the profit 
associated with those sales. See Samsung Calculation Memo.

Normal Value

A. Home Market Viability

    In order to determine whether there is a sufficient volume of sales 
in the home market to serve as a viable basis for calculating NV (i.e., 
the aggregate volume of home market sales of the foreign like product 
is equal to or greater than five percent of the aggregate volume of 
U.S. sales), we compared each respondent's volume of home

[[Page 67696]]

market sales of the foreign like product to the volume of U.S. sales of 
the subject merchandise, in accordance with sections 773(a)(1)(A) and 
(B) of the Act.
    In this investigation, we determined that Mabe's aggregate volume 
of home market sales of the foreign like product was greater than five 
percent of the aggregate volume of U.S. sales of the subject 
merchandise. Therefore, we used home market sales as the basis for NV 
in accordance with section 773(a)(1)(B) of the Act.
    In this investigation, we determined that neither Electrolux's nor 
LGEMM's aggregate volume of home market sales of the foreign like 
product was sufficient to permit a proper comparison with U.S. sales of 
the subject merchandise. Therefore, where appropriate, we used sales to 
the respondent's largest third country market, comprised of merchandise 
that is similar to the subject merchandise exported to the United 
States, as the basis for comparison market sales in accordance with 
section 773(a)(1)(C) of the Act and 19 CFR 351.404. We used Canada as 
the third country market for Electrolux. Although Canada is LGEMM's 
largest third country market (comprised of merchandise that is similar 
to the subject merchandise exported to the United States) we performed 
the analysis discussed above under the ``MNC Provision'' section of 
this notice to determine the appropriate comparison market for LGEMM. 
As a result of our analysis, we determined Korea to be the appropriate 
comparison market for LGEMM. Furthermore, we determined that Samsung's 
aggregate volume of home and third country market sales of the foreign 
like product were insufficient to permit a proper comparison with U.S. 
sales of the subject merchandise.\7\ Therefore, we used CV as the basis 
for calculating NV, in accordance with section 773(a)(4) of the Act.
---------------------------------------------------------------------------

    \7\ On July 8, 2011, the petitioner disputed Samsung's claim 
that it did not have a viable third country market during the POI 
and requested that Samsung report its third country sales. Based on 
our review of the record, we found no basis to require Samsung to 
report this data for consideration in the preliminary determination. 
However, we intend to verify Samsung's claims for purposes of the 
final determination.
---------------------------------------------------------------------------

B. Affiliated Party Transactions and Arm's-Length Test

    During the POI, Mabe sold foreign like product to affiliated 
customers. To test whether these sales were made at arm's-length 
prices, we compared on a product-specific basis, the starting prices of 
sales to affiliated and unaffiliated customers, net of all applicable 
billing adjustments, discounts and rebates, movements charges, direct 
selling expenses, and packing expenses. Where the price to the 
affiliated party was, on average, within a range of 98 to 102 percent 
of the price of the same or comparable merchandise sold to unaffiliated 
parties, we determined that sales made to the affiliated party were at 
arm's-length. See 19 CFR 351.403(c); see also e.g., Stainless Steel 
Sheet and Strip in Coils From Japan: Preliminary Results of Antidumping 
Duty Administrative Review, 74 FR 39615 (August 7, 2009), unchanged in 
Stainless Steel Sheet and Strip in Coils form Japan: Final Results of 
Antidumping Duty Administrative Review, 75 FR 6631 (February 10, 2010). 
Sales to affiliated customers that were not made at arm's-length prices 
were excluded from our analysis because we considered them to be 
outside the ordinary course of trade. See section 771(15) of the Act 
and 19 CFR 351.102(b)(35).

C. Level of Trade

    Section 773(a)(1)(B)(i) of the Act states that, to the extent 
practicable, the Department will calculate NV based on sales at the 
same LOT as the EP or CEP. Sales are made at different LOTs if they are 
made at different marketing stages (or their equivalent). See 19 CFR 
351.412(c)(2). Substantial differences in selling activities are a 
necessary, but not sufficient, condition for determining that there is 
a difference in the stages of marketing. Id; see also Certain Orange 
Juice From Brazil: Final Results of Antidumping Duty Administrative 
Review and Notice of Intent Not To Revoke Antidumping Duty Order in 
Part, 75 FR 50999, 51001 (August 18, 2010), and accompanying Issues and 
Decision Memorandum at Comment 7 (OJ from Brazil). In order to 
determine whether the comparison market sales were at different stages 
in the marketing process than the U.S. sales, we reviewed the 
distribution system in each market (i.e., the chain of distribution), 
including selling functions, class of customer (customer category), and 
the level of selling expenses for each type of sale.
    Pursuant to section 773(a)(1)(B)(i) of the Act, in identifying LOTs 
for EP and comparison market sales (i.e., NV based on either home 
market or third country prices),\8\ we consider the starting prices 
before any adjustments. For CEP sales, we consider only the selling 
activities reflected in the price after the deduction of expenses and 
profit under section 772(d) of the Act. See Micron Tech., Inc. v. 
United States, 243 F.3d 1301, 1314-16 (Fed. Cir. 2001).
---------------------------------------------------------------------------

    \8\ Where NV is based on CV, we determine the NV LOT based on 
the LOT of the sales from which we derive selling expenses, G&A 
expenses, and profit for CV, where possible.
---------------------------------------------------------------------------

    When the Department is unable to match U.S. sales of the foreign 
like product in the comparison market at the same LOT as the EP or CEP, 
the Department may compare the U.S. sale to sales at a different LOT in 
the comparison market. In comparing EP or CEP sales at a different LOT 
in the comparison market, where available data make it possible, we 
make an LOT adjustment under section 773(a)(7)(A) of the Act. Finally, 
for CEP sales only, if the NV LOT is at a more advanced stage of 
distribution than the LOT of the CEP and there is no basis for 
determining whether the difference in LOTs between NV and CEP affects 
price comparability (i.e., no LOT adjustment was possible), the 
Department shall grant a CEP offset, as provided in section 
773(a)(7)(B) of the Act. See, e.g., OJ from Brazil, 75 FR at 51001.
    In this investigation, we obtained information from all four 
respondents regarding the marketing stages involved in making the 
reported comparison market and U.S. sales, including a description of 
the selling activities performed by each respondent for each channel of 
distribution. Company-specific LOT findings are summarized below.
1. Electrolux
    Electrolux sold bottom mount refrigerators only to retailers and 
builders/wholesalers in both the Canadian and U.S. markets. Electrolux 
reported that it made CEP sales in the U.S. market through the 
following four channels of distribution: (1) The customer picks up the 
merchandise from its El Paso warehouse; (2) its U.S. affiliate (i.e., 
Electrolux Major Appliances North America (UWA)) delivers the 
merchandise from the El Paso warehouse to the customer; (3) the 
customer picks up the merchandise from a UWA regional distribution 
center (RDC); and (4) UWA delivers the merchandise from the RDC to the 
customer. For purposes of examining the different selling activities 
reported by Electrolux for sales made through each U.S. channel of 
distribution, we grouped the selling activities into four selling 
function categories for analysis: (1) Sales and marketing; (2) freight 
and delivery services; (3) inventory maintenance and warehousing; and 
(4) warranty and technical support.
    We compared the selling activities Electrolux performed in each 
channel, exclusive of the selling activities

[[Page 67697]]

performed by its U.S. affiliate, and found that either there is no 
difference in the selling functions performed by Electrolux between the 
channels (i.e., freight and delivery services) or Electrolux did not 
perform the selling function at all (i.e., sales and marketing, 
inventory maintenance and warehousing, and warranty and technical 
support) for each channel. As a result, we found that Electrolux 
performed the same selling functions for all four U.S. distribution 
channels. Accordingly, we determined that all CEP sales constitute one 
LOT. With respect to the Canadian market, Electrolux reported the 
following three channels of distribution: (1) Its Canadian affiliate 
(i.e., Electrolux Canada Corp. (CDW)) delivers the merchandise from the 
El Paso warehouse to the customer; (2) the customer picks up the 
merchandise from CDW's RDC; and (3) CDW delivers the merchandise from 
the RDC to the customer. In determining whether separate LOTs exist in 
the Canadian market, we compared the selling functions performed by 
Electrolux and its affiliates CDW and UWA on behalf of the Canadian 
sales. For purposes of examining the different selling activities 
reported by Electrolux and its affiliates for sales made through each 
Canadian channel of distribution, we grouped the selling activities 
into four selling function categories for analysis: (1) Sales and 
marketing; (2) freight and delivery services; (3) inventory maintenance 
and warehousing; and (4) warranty and technical support.
    We compared the selling activities Electrolux and its affiliates 
collectively performed in each channel, and found that there is no 
difference in the selling functions performed between the channels. As 
a result, we found that Electrolux performed the same selling functions 
for all three Canadian market distribution channels. Accordingly, we 
determined that all Canadian sales constitute one LOT.
    Finally, we compared the CEP LOT to the Canadian market LOT and 
found that the selling functions performed for Canadian market sales 
are either not performed for CEP sales or are performed at a 
significantly higher degree of intensity compared to the selling 
functions performed for U.S. sales. Specifically, we found that three 
of the four selling functions (i.e., sales and marketing, inventory 
maintenance and warehousing, and warranty and technical support) are 
performed by Electrolux in the Canadian market but not in the U.S. 
market, and the rem