Inquiries (Section 42)
PREFORMED FIBREGLASS PIPE INSULATION WITH A VAPOUR
BARRIER, ORIGINATING IN OR EXPORTED FROM THE UNITED STATES OF
Inquiry No.: NQ-93-002
TABLE OF CONTENTS
Ottawa, Friday, November 19, 1993
Inquiry No.: NQ-93-002
IN THE MATTER OF an inquiry under section 42 of the Special
Import Measures Act respecting:
PREFORMED FIBREGLASS PIPE INSULATION WITH A VAPOUR BARRIER,
ORIGINATING IN OR EXPORTED FROM THE UNITED STATES OF
The Canadian International Trade Tribunal, under the provisions
of section 42 of the Special Import Measures Act, has
conducted an inquiry following the issuance by the Deputy Minister
of National Revenue for Customs and Excise of a preliminary
determination of dumping dated July 22, 1993, and of a final
determination of dumping dated October 20, 1993, respecting the
importation into Canada of preformed fibreglass pipe insulation
with a vapour barrier, originating in or exported from the United
States of America.
Pursuant to subsection 43(1) of the Special Import Measures
Act, the Canadian International Trade Tribunal hereby finds
that the dumping in Canada of the aforementioned goods, originating
in or exported from the United States of America, has caused, is
causing and is likely to cause material injury to the production in
Canada of like goods.
The Canadian International Trade Tribunal also finds that the
dumping in Canada of the aforementioned goods, originating in or
exported from the United States of America, did not contravene
paragraph 42(1)(b) of the Special Import Measures
Robert C. Coates, Q.C.
Robert C. Coates, Q.C.
Sidney A. Fraleigh
Sidney A. Fraleigh
Michel P. Granger
Michel P. Granger
The statement of reasons will be issued within 15 days.
Ottawa, Monday, December 6, 1993
Inquiry No.: NQ-93-002
PREFORMED FIBREGLASS PIPE INSULATION WITH A VAPOUR BARRIER,
ORIGINATING IN OR EXPORTED FROM THE UNITED STATES OF
Special Import Measures Act - Whether the dumping of the
above-mentioned goods has caused, is causing or is likely to cause
material injury to the production in Canada of like goods.
DECISION: The Canadian International Trade Tribunal has
found that the dumping in Canada of preformed fibreglass pipe
insulation with a vapour barrier, originating in or exported from
the United States of America, has caused, is causing and is likely
to cause material injury to the production in Canada of like goods.
The Tribunal has also found that the dumping in Canada of the
aforementioned goods , originating in or exported from the United
States of America, did not contravene paragraph 42(1)(b) of
the Special Import Measures Act.
Place of Hearing: Ottawa, Ontario
Dates of Hearing: October 25 to 29, 1993
Date of Finding: November 19, 1993
Date of Reasons: December 6, 1993
Tribunal Members: Robert C. Coates, Q.C., Presiding Member
Sidney A. Fraleigh, Member
Desmond Hallissey, Member
Director of Research: Peter Welsh
Research Manager: Don Shires
Research Officer: Paule Couët
Economist: Simon Glance
Counsel for the Tribunal: John L. Syme
Statistical Officer: Nynon Burroughs
Registration and Distribution
Officer: Pierrette Hébert
Participants: G.P. (Patt) MacPherson
Brian J. Barr
Suzette C. Cousineau
for Manson Insulation Inc.
for Owens-Corning Fiberglas Canada Inc.
Owens-Corning Fiberglas Corporation
C.J. Michael Flavell, Q.C.
Geoffrey C. Kubrick
Paul M. Lalonde
for Manville Canada, Inc.
Schuller International, Inc.
Allan H. Turnbull
Paul D. Burns
for Knauf Fiber Glass GmbH
W. Jack Millar
James H. Warnock
for Glass-Cell Fabricators Ltd.
for Director of Investigation and Research,
Competition Act Bureau of Competition Policy
D. William Mutch, Q.C.
for Master Insulators' Association
of Ontario Inc.
Richard G. Dearden
Randall J. Hofley
for Thermal Insulation Association
Ross D. Lewis
Plastic & Allied Building Products Ltd.
Keith F. Eaman
William M. Fluhmann, P.Eng.
Manson Insulation Inc.
Manson Insulation Inc.
William G. Edwards
Manson Insulation Inc.
General Sales Manager
Sales & Marketing
Georges Nadeau Inc.
Multi-Glass Insulation Ltd.
Michael R. Harrison
Vice-President & General Manager
Schuller International, Inc.
David C. Skelly
Schuller International, Inc.
E.W (Wes) van der Lee
Mechanical Insulations Division
Manville Canada, Inc.
An Affiliate of Schuller International, Inc.
William Black III
Sales & Marketing
Knauf Fiber Glass GmbH
Systems Supply Northern Limited
Isolation Dispro Inc.
Alan D. Booth
Owens-Corning World Headquarters
David C. Mader
Business Unit Manager
Mechanical & Wall
Owens-Corning Fiberglas Canada Inc.
Derek J. Holden
President & C.E.O.
Owens-Corning Fiberglas Canada Inc.
Sales & Marketing Manager
G.W. (Bill) Strickland
Steels Industrial Products
Maritime Insulation Ltd.
George W. (William) Gilley
Glass-Cell Fabricators Ltd.
Roman K. Przybycien
Address all communications to:
Canadian International Trade Tribunal
Standard Life Centre
333 Laurier Avenue West
The Canadian International Trade Tribunal (the Tribunal), under
the provisions of section 42 of the Special Import Measures
Act  (SIMA),
has conducted an inquiry following the issuance by the Deputy
Minister of National Revenue for Customs and Excise (the Deputy
Minister) of a preliminary determination of dumping dated July 22,
1993, and of a final determination of dumping dated October 20,
1993, respecting the importation into Canada of preformed
fibreglass pipe insulation with a vapour barrier, originating in or
exported from the United States of America.
The notices of preliminary and final determinations of dumping
were published in Part I of the August 7 and November 13, 1993,
editions of the Canada Gazette, respectively. The Tribunal's
notice of commencement of inquiry issued on July 30, 1993, was
published in Part I of the August 7, 1993, edition of the Canada
As part of the inquiry, the Tribunal sent detailed
questionnaires to Canadian manufacturers and importers of the
subject goods, requesting production, financial, import and market
information, as well as other information, covering the period from
January 1, 1990, to June 30, 1993. From the replies to the
questionnaires and other sources, the Tribunal research staff
prepared public and protected pre-hearing staff reports covering
The record of this inquiry consists of all Tribunal exhibits,
including the public and protected replies to questionnaires, all
exhibits filed by the parties at the hearing, as well as the
transcript of all proceedings. All public exhibits were made
available to the parties. Protected exhibits were made available
only to independent counsel who had given undertakings. On October
7, 1993, the Tribunal denied a request by the Director of
Investigation and Research, Competition Act, Bureau of
Competition Policy (the Director), for access for himself and his
staff to the protected exhibits.
Public and in camera hearings were held in Ottawa,
Ontario, from October 25 to 29, 1993. The complainant, Manson
Insulation Inc. (Manson), was represented by counsel, submitted
evidence and made arguments in support of a finding of injury.
Counsel for Owens-Corning Fiberglas Canada Inc. (Fiberglas), an
importer; Owens-Corning Fiberglas Corporation (Owens-Corning), an
exporter; Manville Canada, Inc. (Manville), an importer; Schuller
International, Inc. (Schuller), an exporter; Knauf Fiber Glass GmbH
(Knauf), an exporter; and Glass-Cell Fabricators Ltd. (Glass-Cell),
a distributor, all submitted evidence and made arguments in support
of a finding of no injury. The Director was represented by counsel
and made arguments in support of a finding of no injury. Plastic
& Allied Building Products Ltd., a distributor, made a
submission, but did not give evidence in support of that
On August 27, 1993, the Director informed the Tribunal of his
intention to make public interest representations pursuant to
section 45 of SIMA. Subsequently, the Director, the Master
Insulators' Association of Ontario Inc. and the Thermal Insulation
Association of Canada informed the Tribunal of their intention to
make public interest submissions. On September 29, 1993, the
Tribunal informed counsel and parties that it would give parties
this opportunity if there were a finding of injury. It indicated
that it would inform parties accordingly of the procedure to be
followed. On November 24, 1993, the Tribunal informed parties of
The product that is the subject of this inquiry is described by
the Deputy Minister in the preliminary determination of dumping as
preformed fibreglass pipe insulation with a vapour barrier,
originating in or exported from the United States of America.
Preformed pipe insulation is produced both with and without a
vapour barrier. However, only pipe insulation with a vapour barrier
was the subject of this inquiry.
Preformed pipe insulation is made of fine glass fibre insulating
wool which is formed into a tubular shape of predetermined inside
diameter and wall thickness. There are two production processes
used to produce fibreglass: the flame attenuated process and the
rotary process. The domestic industry uses the flame attenuated
process of manufacturing glass fibre wool. This process involves
melting glass marbles and blowing the resulting molten glass wire
into fibres which are gathered on a wire mesh conveyor belt to form
a batt or sheet to which a thermo-setting resin is applied. The
fibreglass sheet is wound into a cylindrical form on mandrels. The
semi-finished product is conveyed through an oven where the
thermo-setting resin gives it permanent rigidity. The preformed
material is then covered with a vapour barrier (jacket) which is
typically made of a metallized polyester film which is reinforced
with fibreglass yarn and kraft paper.
In the rotary process, the molten glass is held in a bowl which
is spinning, and this action forces the glass through holes in the
side of the bowl (spinner) where it is cooled by forced air and
blown into fibre form.
In the domestic market, the subject goods range in size from 0.5
to 24.0 in. inside diameter (the pipe size that it is to cover) and
have a wall thickness which starts at 0.5 in. and increases by
0.5-in. increments to 4.0 in.
Preformed fibreglass pipe insulation is used to insulate piping
systems in both commercial and institutional construction projects
requiring insulation for process control, energy conservation or
personal protection. The vapour barrier provides protection against
moisture gaining access to the insulation and piping materials.
Pipe insulation with a vapour barrier accounts for 80 percent of
all pipe insulation applications in commercial and institutional
Manson is the sole manufacturer of the subject goods in Canada.
It is a wholly owned subsidiary of The Manson Group Ltd. (Manson
Manson has produced the subject goods at its plant in Brossard,
Quebec, since 1986. Manville produced the subject goods in Brossard
from 1972 to February 1986, when the Manson Group purchased
Manville's inventory and manufacturing assets. At the same time,
Manson assumed the supply role for former Manville
The terms of sale of Manville's assets prohibited Manville and
its U.S. parent company from selling certain insulation products,
including the subject goods, in Canada for a period of five years
and prohibited Manson from exporting the same goods to the United
States for the same period ending January 31, 1991. The terms of
sale also included an agreement whereby Schuller supplies Manson
with the glass marbles which are the key raw material in the flame
attenuated process used at the Brossard facility. That supply
agreement is currently in force.
Fiberglas manufactured preformed fibreglass pipe insulation in
Sarnia, Ontario, until April 1990, when production of the subject
goods was terminated and moved to the Owens-Corning production
facility in the United States.
In 1989-90, Manson and Fiberglas proposed to form a joint
venture, known as Manoc, to produce and distribute insulation
products, including the subject goods, for the North American
market. In 1990, the parties decided not to proceed with the
proposal after review and concern expressed by the Director.
Manson recently entered into a joint venture with CertainTeed
Corp. (CertainTeed), a U.S. manufacturer of insulation products,
including the subject goods. The venture involved the establishment
of CertainTeed Manson (CTM). Since April 1993, CTM has been
responsible for marketing the Manson- and CertainTeed-produced
subject goods in Canada and the United States.
During his investigation, the Deputy Minister identified four
exporters of the subject goods from the United States. They are
Schuller, Owens-Corning, Knauf and CertainTeed.
The Deputy Minister also identified 14 importers during his
investigation, all importing from the United States. There are two
categories of importers active in the Canadian market: Fiberglas, a
wholly owned subsidiary of Owens-Corning, and Manville, a wholly
owned subsidiary of Schuller, import the subject goods and then
sell them to their respective exclusive distributors, while the
Knauf- and CertainTeed-produced subject goods are imported directly
by their Canadian distributors. Some Canadian contractors and
distributors also imported the subject goods from U.S. distributors
prior to, and in the early parts of, the period of inquiry.
The subject goods are essentially a commodity product. There is
a high level of interchangeability in end use between the
domestically manufactured and imported products. Particular
manufacturers' products have been specified on projects, usually in
response to installers' preference for a particular type of vapour
The domestic and imported subject goods are distributed in
Canada through regional distributors that source the products from
either the domestic manufacturer, an exporter or an importer.
Canadian distributors usually deal with only one pipe insulation
supplier, whereas U.S. distributors carry a number of suppliers'
pipe insulation products. Canadian distributors market the product
to insulation contractors and other users. Distributors generally
carry a wide range of insulation products and accessories.
Testimony indicates that sales of the subject pipe insulation may
account for approximately 5 to 15 percent of distributors' total
The distribution network for the subject goods in Canada has
undergone a number of changes since 1986, as certain distributors
chose to align themselves with a new supplier or moved to a new
supplier as a result of mergers and acquisitions. Changes occurred
after Manville's departure from the Canadian market in 1986 and the
resulting acquisition of Manville's former distribution network by
Manson. More changes ensued following Manville's reentry into the
Canadian market in 1991, as distributors elected to join, or rejoin
in some cases, Manville's distribution network. The loss of a
distributor usually entails a corresponding loss of market share
for its supplier, that will typically take steps to recover the
lost market share.
In Western Canada, there were numerous distributor movements.
Manson inherited a distributor from Manville, Crossroads
Distributors Inc. (Crossroads), and a contractor/distributor,
Fuller Austin. The Manson Group acquired Crossroads in 1987 and, in
the same period, Manson ceased to deal directly with Fuller Austin.
The latter was unsuccessful in establishing a direct source for the
subject goods until 1991, when Manville returned to the market and
designated Fuller Bartells Distribution (Bartells), an associate of
Fuller Austin, as its distributor for Western Canada. Manson also
inherited Wallace Construction Specialties Ltd. (Wallace) from
Manville. Manson terminated Wallace's distributorship in 1989.
Wallace began importing from CertainTeed in 1992. In August 1992,
C&I Commercial and Industrial Insulation Specialists Inc.
(C&I), a Knauf distributor, merged with Crossroads. Knauf
replaced C&I with a new distributor, Nu-West Construction
In Ontario, the main change in the distribution network was the
departure of Glass-Cell from Manson to Manville as soon as the
no-competition agreement ended on February 1, 1991. Manson acquired
A.C. Wild Inc. (Wild) in the first quarter of 1991. Insul-Coustic
Inc. (Insul-Coustic) was a distributor for Manson in the Ottawa
area from 1986 to early 1992, when it became a distributor for
Manville for the province of Quebec and the Ottawa area. In July
1993, the Manson Group acquired Multi-Glass Insulation Ltd.
(Multi-Glass), Fiberglas' primary distributor in Ontario.
Multi-Glass, Wild and Chemical Valley Insulation Services (1987)
Limited (Chemical Valley), another Manson distributor, were merged
to form a new distributor operating under the name of Multi-Glass
In Quebec, Manson inherited Georges Nadeau Inc. (Nadeau) from
Manville in 1986. In 1991, Nadeau declined Manville's request to
represent Manville products in Quebec. Manville chose Isofab Inc.
(Isofab) as its Quebec distributor. In 1991, Fiberglas lost its
long-standing Quebec distributor, Val-Royal, when it stopped
carrying the subject goods. Fiberglas replaced Val-Royal with
Isofab in early 1992, after which Manville took on Insul-Coustic as
its distributor in Quebec.
In the Atlantic provinces, Manson's distributor, Scotia
Insulations Limited, acquired MGI Eastern Ltd. in 1993, which had
been a Knauf distributor since 1988. Maritime Insulation Ltd., a
Manville distributor inherited by Manson in 1986, returned to
Manville when it reentered the Canadian market. United Insulation
Ltd. became a Manville distributor in 1991.
Ontario is the largest regional market for the subject goods,
followed by the Prairies and Quebec. The evidence indicates that
Manson's largest regional market was Ontario, with the Prairies and
Quebec ranking second and third. Manville's sales were concentrated
in Ontario, while Fiberglas' largest regional market was Ontario,
followed by the Prairies and the Atlantic provinces which account
for similar shares of total sales. Prior to 1993, British Columbia
was Knauf's largest market, followed closely by the Prairies and
Ontario. In 1993, Ontario was Knauf's largest regional market.
CertainTeed's sales are centred in British Columbia, followed by
Suppliers' selling prices to distributors for both domestic and
imported pipe insulation are expressed as discounts from a
generally common list price. The size of the discount varies
depending on market conditions. It is an industry standard practice
that prices are always freight prepaid, delivered to destination in
rail or truckload quantities.
There are two categories of business in the market for the
subject goods: day-to-day (replacement) work and contract (major
installation) work. Prices for day-to-day work are generally
established using a pre-set and known discount range. Contract work
is subject to a competitive bidding process. In either case,
distributors receive a discount off the list price from their
supplier (domestic manufacturer, exporter or importer) which is the
basis for setting their own discount level to contractors.
The contract bidding process tends to involve a number of
stages. Initially, insulation contractors, in the process of
preparing their bids to secure an installation contract, request
bids from distributors to supply the subject pipe coverings and
other insulation products required. It is generally agreed in the
industry that a distributor must be competitive in its pricing of
the subject goods in order to secure the contract to supply all of
the insulation products required for a project.
Distributors generally provide price quotations to a number of
competing contractors. After one of the contractors is awarded the
installation contract, that contractor requests a second price
quotation from distributors. A third request for price quotations
is often made. Some distributors, having reduced their own margins
during the first two rounds, request special discounts, price
concessions or special terms from their suppliers to enable them to
submit a competitive price. In this third and final phase, the
evidence confirms that suppliers regularly provide assistance to
their distributors in the form of special price quotations on
specific projects. In this way, suppliers ultimately determine what
the price will be in a competitive bidding situation.
On July 16, 1993, the Deputy Minister terminated price
undertakings which had been accepted from Schuller, Owens-Corning
and Knauf on June 18, 1993. On July 22, 1993, the Deputy Minister
made a preliminary determination of dumping respecting the subject
preformed fibreglass pipe insulation originating in or exported
from the United States. On October 20, 1993, the Deputy Minister
made a final determination of dumping respecting the subject goods.
The period of investigation covered imports of the subject pipe
insulation which entered Canada from October 1, 1991, to December
31, 1992. The Deputy Minister calculated margins of dumping for
three periods: October 1 to November 30, 1991; April 1 to May 31,
1992; and November 1 to December 31, 1992.
The Deputy Minister found that 99 percent of the subject goods
reviewed had been dumped at a weighted average margin of dumping of
38 percent, with a range from 1 to 99 percent. The results of the
investigation, for all exports, are shown in the following
MARGINS OF DUMPING
Weighted Average Margin of Dumping
October 1 to November 30, 1991
April 1 to May 31, 1992
November 1 to December 31, 1992
Total for the periods reviewed
1. As a percentage of imports reviewed.
Source: Department of National Revenue, Customs and Excise,
Final Determination of Dumping, Statement of Reasons,
October 20, 1993.
Manson took the position that it had been, was being and was
likely to be materially injured by the dumping of the subject goods
and that the dumping was causing retardation.
Counsel for Manson argued that material injury to their client
manifested itself in the form of lost domestic sales, loss of
market share, price erosion and reduced sales revenue.
Counsel submitted that there was a narrow price range within
which the domestic manufacturer competes with importers for
business at the contractor level and that any supplier offering
prices outside this range is not competitive. Counsel argued that,
if it were not for the large margins of dumping, the importers
would not have been competitive.
Counsel dismissed the alleged monopolistic conduct of Manson,
its allegedly poor treatment of distributors, the emotional impact
brought forth by the acquisition of distributors, the impact of the
recession and the assertion that Manson led prices down. On the
question of losing contracts to higher-priced imports, counsel
suggested that the only way that the importers could compete, even
at a premium price, was because of the large margins of
Counsel submitted that the dumping caused Manson to postpone the
addition of a third production line at its Brossard facility.
Consequently, counsel requested that the Tribunal make a finding of
Finally, although not requested by Manson, counsel submitted
that the increase in imports, in the first half of 1993, was
sufficient to warrant a finding of massive dumping.
Counsel for Owens-Corning and Fiberglas submitted that exports
by Owens-Corning had not caused, were not causing and were not
likely to cause injury to the production in Canada of like goods.
Counsel submitted that Owens-Corning's rationalization of its
production of the subject and non-subject goods in North America
was an important net benefit to Canada, that it did not lead prices
down and that it is being hampered by the loss of its principal
distributor in Ontario to Manson.
Counsel argued that pressure on prices was not due to import
competition, but due to the perception by the distributors that the
market was in a recession and to the internal competition among
distributors through reducing their own margins in the bidding
process. They also suggested that Manville's return to the Canadian
market and the potential price consequences of this reentry were to
be expected. Counsel submitted that there is evidence pointing to
aggressive pricing by Manson.
Counsel also submitted that the joint venture with CertainTeed
transforms Manson's status from local manufacturer to a participant
within a global world-class company with access to world-class
technology and resources. The creation of CTM is a new and
important development in the industry, and it cannot be assumed
that Manson's situation will be the same in the future. Counsel
focused on a similar situation faced by the Canadian Import
Tribunal in its decision in Carbon Steel Seamless Pipe,
 where the facts on
the new venture were limited and did not permit a thorough analysis
on the implications for production in Canada.
Regarding the issue of massive dumping, counsel argued that
there is ample evidence that distributors, expecting a price
undertaking, purchased and imported product to meet existing
contracts and that that accounted for the increase in imports.
Counsel submitted that there could not be injury due to retardation
of the establishment of production, as production of the subject
goods in Canada is already established.
Counsel for Owens-Corning and Fiberglas argued that, in the
event of a finding of injury, the Tribunal should grant their
clients exclusions, as they had proved, on the balance of
probabilities, that they had not caused injury to the
Counsel for Manville and Schuller argued that the problems
suffered by Manson resulted, in large part, from its own actions.
The systematic purchase of distributors by Manson and the
associated removal of other distributors, in addition to the Manoc
proposal, were perceived as an attempt by Manson to dominate the
market and raised concerns in the marketplace. In addition, the
anti-dumping proceedings initiated by Manson hurt the venture
between Manson and CertainTeed, as the latter can no longer export
to Canada and rationalization cannot take place. Also, the slow
reaction of Manson in raising prices following the undertakings
contributed to its problems. On the question of injury due to
massive dumping, counsel argued that distributors increased their
imports in order to meet previous contractual obligations to their
customers at pre-set prices.
Counsel referred to the Tribunal's decision in Carpeting
 to state that
dumping in and of itself has to be shown to be the cause of
material injury and that there has to be something better than
anecdotal arguments about lost sales and lost accounts. Counsel
submitted that no argument was presented by the complainant
regarding the alleged loss of distributors. In any case, counsel
submitted that any loss of distributors was due to reasons other
than pricing. Counsel also submitted that the evidence concerning
accounts lost to Manville was not convincing and that any accounts
which may have been lost were not due to lower pricing, as
Manville's prices were higher than, or similar to, those offered by
the complainant. In fact, counsel suggested that there was no
evidence that Manville had, at any given time, reduced prices in a
manner to hurt Manson and that price pressures occurring in the
market after Manville's return were not driven by Manville, but by
Manson fighting Manville's incursion into the market and reacting
to the loss of Glass-Cell. Counsel asserted that there is no injury
when, irrespective of margins of dumping, any lost business or
contracts are not due to pricing.
Counsel argued that, based on injury factors such as employment,
capacity and capacity utilization, there is no basis for past and
present injury. Counsel submitted that any future injury would be
due to a finding of injury which would inhibit Manson's ability to
rationalize its production.
Counsel for Manville and Schuller argued that, in the event of a
finding of injury, the Tribunal should grant their clients
exclusions, as they had proved, on the balance of probabilities,
that they had not caused injury to the complainant.
Counsel for Knauf argued that imports by their client had not
caused, were not causing and were not likely to cause material
injury to Manson. They also submitted that any injury which may
exist had been caused by factors unrelated to dumping, including
the recession, the instability in the market created by the
acquisition of distributors by the complainant, the loss of volume
and market share due to distributor changes, and Manville's reentry
into the Canadian market and the resulting effects on market
On the question of lost accounts, counsel argued that they were
lost not because of lower prices but because of factors other than
price, especially when the exporters matched Manson's price. By
contrast, counsel submitted that their client lost projects to the
complainant on the basis of price. Counsel suggested that price
pressure was applied by Manson in order to increase volume and
On the question of investment retardation, counsel submitted
that there was no evidence to conclude that there had been any
injury due to the absence of evidence of detailed plans.
Counsel for Glass-Cell argued that a finding of injury would
have a significant impact on distributors. Regarding allegations of
injury, counsel submitted that the departure of Glass-Cell was not
due to dumping or to any other price consideration. A number of
other factors, including concerns raised by the acquisition of
distributors, the Manoc proposal and the intrusion of Manson into
Glass-Cell territory, were sources of disenchantment for
Glass-Cell, resulting in its decision to move to Manville. With
respect to lost distributors and lost projects, counsel suggested
that the loss was caused by Manson's own actions. Counsel submitted
that no case could be made regarding injury due to massive
The Director appeared pursuant to section 125 of the
Competition Act.  He limited his submissions and examination to the
issue of material injury. Counsel submitted that the Director
opposes a finding of injury.
Counsel suggested that CTM could use duty-paid CertainTeed
imports and, subsequently, set a blended price which would be lower
than that of any other imported product. He also added that there
was no evidence of such a plan, but that it was possible and, as
such, that it should be considered by the Tribunal in its
deliberations respecting future injury. Counsel submitted that
events which took place before the period of inquiry, such as the
fall in prices which occurred before any evidence of dumping had
been found and the reasons for such a fall, should be considered by
the Tribunal in its deliberations. He also submitted that the
impact of Manville's reentry is unrelated to dumping and that
Manson's acquisitions and alliances with distributors and the
resulting sense of alienation felt by distributors, in fact,
facilitated Manville's reentry and, as such, are not related to
The market for preformed fibreglass pipe insulation with a
vapour barrier was basically flat from 1990 into the first half of
1993. The market had been at much higher levels in the late 1980s.
Market levels shown in the Tribunal staff report are indicative of
actual market activity in 1991 and 1992. Because some importers did
not report their import sales in 1990, the Tribunal has concluded
that the total market sales reported underestimated the level of
activity in that year. Consequently, the Tribunal is of the view
that there was little or no change in the market between 1990 and
Domestic Sales Volume2 (% change)
Domestic Sales Plus CTM Sales from Imports (% change)
Sales from Imports3 (000 lin. ft.)
Sales from Imports (% change)
Average Prices to Distributors:
Average Domestic Prices4 (% change)
Average Import Prices (% change)
Average Import Prices ($/lin. ft.)
Domestic Production5 (% change)
Direct Employment (% change)
Capacity Utilization Rate (%)
1. Percentage change figures in this column relate to the period
from January to June 1992.
2. Sales from domestic production, including Manson sales, CTM
sales in the second quarter of 1993 and Fiberglas sales from
inventory after April 1990.
3. Excludes CTM sales from imports.
4. Average prices for Manson and CTM sales from domestic
5. Manson's production only. Fiberglas stopped producing in
Canada in April 1990.
Source: Tribunal Staff Report.
In contrast, the Tribunal data show the market increasing in
1993. However, witnesses testified that this had not occurred and
provided data on non-residential building permits to support that
view. The Tribunal is of the view that the market did not improve.
During 1991 and 1992, sales to distributors reflected the actual
level of use of fibreglass pipe insulation. However, in the spring
of 1993, this was not the case. Distributors increased their
imports of pipe insulation in anticipation of the Deputy Minister
accepting price undertakings, that were expected in June 1993, from
the major U.S. exporters. Exporters confirmed that they had made
advance sales to meet distributors' price commitments to
contractors. At the beginning of July 1993, inventories in the
distribution system were higher than would be warranted by the
underlying level of construction activity suggested by building
The domestic industry's sales declined sharply between 1990 and
1991, levelled in 1992 and then declined again in the first half of
1993. In April 1990, Fiberglas ceased production of fibreglass pipe
insulation in Canada. This cessation explains a significant part of
the decline in domestic industry sales in 1991. In the first
quarter of 1993, Manson's sales in Canada consisted entirely of
production from its Brossard plant. However, in the second quarter
of 1993, some of Manson's sales from domestic production were
replaced by CTM imports from CertainTeed in the United States.
Thus, some of the decline in sales from domestic production in the
first half of 1993 was offset by imports from CertainTeed by
Sales from imports more than doubled from 1990 to 1991, levelled
in 1992 and increased sharply in the first half of 1993. As already
noted, the Tribunal considers that its data, as reported,
understate the level of imports in 1990. However, Manville's
reentry and the completion by Fiberglas of its switch from domestic
production to imports accounted for a large part of the increase in
imports in 1991. All of the major exporters increased their sales
sharply in the first half of 1993.
There were significant changes in market shares between 1990 and
the first half of 1993. Manson's share declined sharply from 1990
to 1991, levelled in 1992 and fell further in the first half of
1993. Fiberglas' share of the market declined from 1990 to 1991 and
remained flat for the balance of the period of inquiry. Although
Knauf's share of the market fluctuated, it increased during the
period of inquiry. Upon its reentry in 1991, Manville immediately
secured a significant share of the market and increased its share
during the period of inquiry.
The Tribunal compiled extensive data on prices for fibreglass
pipe insulation. Average prices by domestic manufacturers and
exporters and importers are on a delivered-to-distributor basis,
that is, prices include freight, which is high for pipe insulation.
Prices declined during the period of inquiry through to the end of
1992. The decline in prices was particularly sharp in 1992. It was
less steep in the first half of 1993. By then, prices were at much
lower levels than in 1990. From 1991 onwards, the data show that
average prices for import sales were consistently lower than those
for domestic sales.
The Tribunal also examined prices paid by distributors for nine
popular sizes of fibreglass pipe insulation from the first quarter
of 1991 to the second quarter of 1993. In 1992, distributors'
purchases of those sizes accounted for about 40 percent of the
total market. These data parallel, for the most part, the basic
trends shown by the average price data. They also show sharp
quarterly price declines for each of the nine sizes and by the four
major suppliers from the first quarter of 1991 through to the
second half of 1992. Prices tend to flatten from then through to
the first half of 1993. These data also show that, for most of the
selected sizes, import prices for every individual exporter were
lower than domestic prices.
Manson's production increased strongly from 1990 onwards,
peaking in 1992. It declined in the first half of 1993 over the
corresponding period of 1992. However, an analysis of Manson's
sales data for domestic consumption and export, adjusted for
inventory, shows that exports were responsible for the increase in
total production and that production for domestic sales in fact
declined during the period of inquiry.
Manson's domestic sales revenues declined during the period of
inquiry, falling by 35 percent, 24 percent and 30 percent in fiscal
1992  and 1993 and
the first four months of fiscal 1994, respectively. Reduced unit
costs, and particularly reduced cost of goods sold, from fiscal
1993 onwards gave Manson a strong net profit margin on domestic
sales. Even with these cost reductions, there was a halving of its
net profit margin in the first four months of fiscal 1994, compared
with the corresponding period of the previous fiscal year.
After the no-competition agreement with Manville expired, Manson
started exporting to the United States on a large scale. Export
sales increased significantly in fiscal 1993 before falling off in
the first half of fiscal 1994. Exports amounting to close to the
volume of sales in the domestic market appear to have made a
significant contribution in reducing unit costs and were thus a
factor in maintaining Manson's profitability on domestic sales.
Manson's financial statements for domestic and export sales for
the first four months of fiscal 1994 are not likely to be
comparable with those of earlier periods. It was then that CTM
started selling Manson's production. Sales revenue could be
understated or overstated because of the pricing arrangements
between Manson and CTM. These can lead to financial transfers
between the two firms to offset the difference between the price
obtained by CTM and the initial transfer price to CTM.
Section 42 of SIMA requires the Tribunal to determine whether
the dumping of the subject goods, as found by the Deputy Minister,
has caused, is causing or is likely to cause material injury to the
production in Canada of like goods. The Tribunal must be satisfied
that the domestic industry, which forms the subject of this
inquiry, constitutes at least a major proportion of the total
domestic production of preformed fibreglass pipe insulation with a
vapour barrier. The Tribunal must also determine which goods are
like goods to the imported subject goods. The Tribunal must then
determine whether the domestic industry has suffered from, or is
threatened with, material injury and whether there is a causal link
between the material injury suffered and the dumping of the subject
Pursuant to paragraph 42(3)(a) of SIMA, the Tribunal must
take fully into account paragraph 1 of Article 4 of the GATT
Anti-Dumping Code (the Code),  which sets out the definition of domestic
industry. Paragraph 1 of Article 4 of the Code provides that:
In determining injury the term "domestic industry" shall be
interpreted as referring to the domestic producers as a whole of
the like products or to those of them whose collective output of
the products constitutes a major proportion of the total domestic
production of those products.
The Tribunal finds that this requirement is met in this case
because the complainant is the sole domestic manufacturer of
preformed fibreglass pipe insulation with a vapour barrier.
For the purposes of determining injury to the domestic industry,
the Tribunal has to ascertain what constitutes like goods to the
imported subject goods. Subsection 2(1) of SIMA defines like goods,
in relation to the imported subject goods, as:
(a) goods that are identical in all respects to the other
(b) in the absence of any goods described in paragraph (a),
goods the uses and other characteristics of which closely resemble
those of the other goods.
The evidence is clear that the pipe insulation with a vapour
barrier produced by the complainant competes with, has the same end
uses as and can be substituted for the imported subject goods.
Therefore, the Tribunal finds that the complainant's preformed
fibreglass pipe insulation with a vapour barrier constitutes like
goods to the imported subject goods.
There was some discussion during the hearing concerning products
which could be used as substitutes for the subject goods. The
evidence indicates that calcium silicate insulation, which is used
for high-temperature industrial applications, is not a substitute
for the subject goods. There was also some discussion about the
possibility of substituting mineral wool insulation for the subject
goods. The evidence indicates that mineral wool is a product
normally considered to be an industrial insulation to be used in
applications where a vapour barrier is not required. There was no
evidence of any instance where mineral wool with a vapour barrier
had competed with the subject goods. The Tribunal is satisfied that
mineral wool and calcium silicate are not like goods to the
preformed fibreglass pipe insulation with a vapour barrier.
It is clear that Manson has suffered material injury in the form
of price suppression, decreased market share, lost projects and
declines in revenue. What is in dispute is whether there is a
causal link between the material injury suffered and the dumping as
found by the Deputy Minister. If it is to make a finding of injury
in this case, the Tribunal must be satisfied that such a link
The Tribunal is of the view that, with respect to causation,
there are three principal questions of fact which must be answered.
First, to what extent, if at all, did dumping contribute to the
sharp decline in prices for preformed pipe insulation which
occurred during the period of inquiry? Second, to what extent, if
at all, did the dumped subject goods contribute to Manson's loss of
market share? And third, to what extent did lower prices and
reduced market share contribute to the decline in Manson's
The Tribunal has examined a number of factors to determine the
cause of the decline in prices for the subject goods and of
Manson's loss of market share. Factors other than dumped imports
may cause injury. In inquiring into the connection between material
injury and dumping, the Tribunal must be careful to ensure that any
injury, which may have been caused by other factors, is not
attributed to dumping.
Manson attributed its injury to imports, or offers of imports,
at dumped prices. Counsel for Manson argued that sales of imports
at increasing margins of dumping during the period of inquiry
forced Manson to reduce prices in an attempt to maintain its market
share. In addition, counsel contended that Manson's largest
distributor joined Manville in 1991 because of Manville's lower
prices, which, by the fourth quarter of 1991, were at a 23-percent
margin of dumping and which were shown to be at increasing margins
of dumping through 1992.
Counsel for the exporters and importers argued that demand for
the subject preformed fibreglass pipe insulation declined after
1989 in response to recessionary factors, in particular, a decline
in new non-residential construction. In these circumstances, market
prices for pipe insulation declined. Also, in 1989 and 1990, lower
prices in the northeastern United States encouraged Canadian
traders, distributors and contractors to take advantage of the
Canada/United States price differential that existed at that time
and to import the subject goods directly from U.S. distributors. In
February 1991, Manville reentered the Canadian market. Counsel
contended that Manson's largest distributor moved to Manville for
reasons unrelated to price. Manson reacted to the addition of a
fourth major supplier to the market by cutting prices. Counsel
argued that Manson led prices down from 1991 to the first half of
1993. Exporters and importers were forced to reduce prices in order
to remain competitive. Counsel also argued that Manson's
restructuring of its distribution network and acquisition of a
number of its distributors since 1986 established a feeling of
mistrust among its independent distributors that contributed to
decisions by a number of them to move to Manville in 1991. Finally,
counsel argued that Manson was designating increasing volumes of
production to the export market, which would account for any loss
of domestic production for domestic consumption.
Clearly, Manville's departure from the market in 1986 and,
particularly, its return in 1991 were crucial milestones in the
evolution of the market for the subject goods in Canada. However,
there were other factors which had an impact on the market and,
especially, on prices.
In the late 1980s, selling prices in the northeastern United
States were substantially lower than Canadian prices for the
subject goods. Evidence and testimony confirm that, in 1989 and
into 1990, some independent importers acquired the subject goods
from U.S. distributors at prices that were lower than those
available to supplier-aligned distributors in Canada. Unlike
Canadian distributors, U.S. distributors generally carry the
products of all U.S. suppliers of the subject goods, and these low
prices were available for pipe insulation manufactured by all of
the major U.S. manufacturers.
Evidence adduced at the hearing by Glass-Cell established that,
in 1990, insulation contractors were pressuring distributors and,
through them, all of the major suppliers to lower prices in Canada.
Manson's largest distributor at the time, Glass-Cell, requested
price concessions. Initially, Manson refused, but agreed to a
reduction after Glass-Cell made an importation of Manville products
from a U.S. distributor and convinced Manson that low-priced U.S.
product was readily available to Canadian distributors. The
availability of lower-priced U.S. imports increased price
competition in the Canadian market in 1990. Testimony confirms
that, during this late 1980s and very early 1990 period, there was
downward pressure on Canadian prices for pipe insulation caused by
lower-priced imports from U.S. distributors. The Tribunal is
satisfied that suppliers in Canada were forced to meet those
This external pressure on prices coincided with a major
weakening of the market as a result of the recession. The evidence
and testimony of all parties confirm that the market demand in 1990
was significantly lower than it was in the late 1980s. As a
consequence of lower demand, price competition increased and prices
were lower in 1990 than they had been in the late 1980s. However,
there was disagreement among the parties on whether the recession
continued to have an impact on demand after 1990 and, if so, on the
effect that it had on prices. Exporters argued that the recession
continued to suppress demand and, in fact, was a cause of the
decline in prices. On the other hand, Manson witnesses testified
that growth in demand in the institutional sector, asbestos
abatement and removal projects, and insulation upgrade projects
substantially offset the apparent decline in demand based on the
declining trend in the total value of commercial building permits.
In the Tribunal's view, the main effect of the recession was
observed in 1990. The confidential market data show that demand did
not decline after 1990, but remained flat from 1991 through to the
first half of 1993, taking into account the advance purchases by
importers in the spring of 1993. The Tribunal finds that the data
on building permits could be interpreted to show that there was a
steady decline in the market for the subject goods. However, the
Tribunal considers the data on building permits to be inconclusive,
in light of the testimony that it heard and the data filed
For the Tribunal, competition from imports from U.S.
distributors and the recession led to a decline in prices in the
late 1980s and in early 1990. However, in the Tribunal's view, the
effect of these factors on prices was played out by the end of
Other factors, including tariff reductions under the
Canada-United States Free Trade Agreement  (the FTA) and exchange rate
fluctuations, may have had some effect on prices in the Canadian
market. However, the Tribunal notes that neither the industry nor
the exporters attributed any importance to exchange rate
fluctuations or the FTA's influence on prices for pipe
In February 1991, Manville reentered the Canadian market after a
five-year absence and began importing from Schuller in the United
States. As the Tribunal has already noted, Manville's reentry was a
crucial event, with the number of major suppliers increasing from
three to four overnight. Much of the testimony focused on the
impact of Manville's reentry. The Tribunal has carefully examined
the effects of Manville's reentry on prices for the subject
fibreglass pipe insulation, on Manson's market share and on the
role of prices in the distributors' decisions to move to Manville.
The Tribunal notes that Manville had been planning its reentry into
the Canadian market from about 1989. In 1990, Manville conducted an
analysis of Canadian prices. Manville testified that it considered
servicing the Canadian market by exporting through its U.S.
distributors, but concluded that prices in Canada would be driven
down by such a strategy. Accordingly, Manville decided, in 1990, to
reenter the Canadian market by establishing its own Canadian
Manville engaged in considerable preparatory discussions with
distributors. The evidence indicates that discussions were
initiated by both Manville and a number of former Manville
distributors that approached Manville about becoming distributors.
As a result, Manville was able to reenter the market with
distributors established in the three major regional markets of
Western Canada, Ontario and Quebec. These included: Glass-Cell,
that switched from Manson; Bartells, an affiliate of Fuller Austin
that was a former Manville distributor; and Isofab, a new
distributor in Quebec. Manville was clearly confident that its
reentry would be successful and anticipated securing a significant
share of the market in 1991 and increasing that share by 1993.
Manville witnesses testified that their strategy was to reenter
the Canadian market with minimal disruption to the distribution
structure and prices. They said that Manville's pricing strategy
was to be competitive with Manson, but not below the domestic
Manson suffered a severe loss of market share when Glass-Cell,
its largest distributor, moved to Manville in February 1991. In
1991, Glass-Cell purchased over two million linear feet of the
subject pipe insulation from Manville. Given the magnitude of this
loss of business, it became important for the Tribunal to determine
if Glass-Cell left Manson because of Manville's lower prices.
Witnesses for Glass-Cell and Manville testified that Glass-Cell
had held discussions with Manville in 1989 and 1990 about becoming
a Manville distributor. In fact, Glass-Cell and Manville had an
agreement in principle before Manville returned. The witness for
Glass-Cell testified that price was not central to these advance
discussions. The Tribunal notes that Glass-Cell also testified that
joining Manville would significantly increase its potential market
to include virtually all of Ontario. By comparison, if Glass-Cell
had remained with Manson, it would have had limited potential for
increasing sales in the Ontario market.
Counsel for the exporters and importers contended that
distributors left Manson because of its behaviour in the market.
They argued that Manson's poor relationship with its distributors,
stemming from its acquisitions of independent distributors and the
restructuring of its network in Western Canada, encouraged its
distributors to switch to Manville as soon as the opportunity
arose. Glass-Cell testified that the acquisition of C&I by
Crossroads in 1992 was disturbing, but that it was not concerned
about Manson attempting to acquire it. Glass-Cell testified that it
was concerned about potential incursions into its Toronto market by
Chemical Valley, a Manson-owned distributor in Ontario. This
concern grew out of having observed Manson's purchase of Crossroads
in 1987 and the subsequent extension of that distributor's offices
into areas already supplied by existing Manson distributors.
The Tribunal acknowledges that there were many factors involved,
in particular, distributors' decisions to join Manville. For
example, the Tribunal also heard testimony that, in 1991, Manville
was approached by Insul-Coustic, Manson's distributor in eastern
Ontario, requesting that it be named Manville's Quebec distributor.
Clearly, Insul-Coustic was attempting to obtain direct access to a
supply of the subject goods for distribution in the Quebec market.
Manson had refused Insul-Coustic the right to sell the Manson
subject goods in Quebec some five years earlier. However, it is
clear from the evidence and testimony that it is a major business
decision for a distributor to change its supplier, and the prices
offered by its new supplier are crucial to that decision. Given the
extremely narrow price range in which all participants in the
market for the subject goods must compete, the Tribunal is of the
view that no distributor would move to a new supplier unless it
were confident that the supplier would offer the price support
necessary to keep it competitive. Clearly, Glass-Cell would not
change its source of supply without having firm assurances that it
would be able to compete on price. Manville had every reason to
ensure that all its distributors were competitive if its reentry
into the market was to be successful. A Schuller witness testified
that Manville would support its distributors "through thick and
thin." In the Tribunal's view, Manville's commitment to keeping its
distributors price competitive was the cornerstone of its appeal to
potential distributors and contributed greatly to Manville's
ability to quickly establish a national distribution network.
With these assurances, Glass-Cell was prepared to move to
Manville. The evidence confirms that Manville fulfilled its
commitment, as its average prices were lower than Manson's prices
in 1991. In the Tribunal's view, Glass-Cell left Manson due to
price, and this loss of distribution caused a severe reduction in
Manson's market share.
From the first quarter of 1991 through to the second quarter of
1993, the market for the subject goods was characterized by price
erosion. Manson's prices declined by over 30 percent during this
period. The Tribunal needed to determine the cause of that erosion.
The Tribunal agrees with counsel for Manson that Manville failed to
achieve its objective of minimal disruption. By February 1991, when
Manville reentered the Canadian market, prices were already lower,
and the market was significantly more price competitive than was
indicated by Manville's 1990 price analysis. Manville's presence
exacerbated these circumstances. The three existing major suppliers
all reduced prices in a bid to minimize their losses of market
The testimony of export suppliers confirms that they had fully
expected Manville to reenter the Canadian market at the conclusion
of the five-year, no-competition agreement with Manson. All
anticipated some loss of business and acknowledged that a response
to Manville's challenge was inevitable. However, the testimony of
exporters shows that Manville's penetration of the market
immediately upon reentering was greater than expected. Faced with
the prospect of further losses of market share, competing exporters
reduced their prices sharply during 1991. Average import prices
declined in 1991 by approximately 20 percent. Average domestic
industry selling prices held in 1991. However, in 1992, Manson had
to reduce prices sharply to remain competitive, as import prices
continued to decline, falling about 16 percent. In the first half
of 1993, average import prices and domestic prices continued to
decline, although less severely than in the previous period.
Once the exporters reduced their prices, severe price
competition ensued, and they were unable to halt the downward
spiral of prices. The Tribunal notes the evidence showing that,
from 1991 into 1993, attempts by exporters and importers and the
domestic manufacturer to sustain price increases failed due to the
refusal of competing suppliers to support price increase
Counsel for Manville argued that Manson was unprepared for
Manville's reentry and resorted to price cutting to defend its
market share. However, the evidence does not support the argument
that Manson led prices down. Prices started to decline rapidly with
Manville's reentry in the first quarter of 1991. The evidence
reveals that, during the period of inquiry, average import prices
fell by over 44 percent, while Manson's prices fell by over 30
percent. The Tribunal notes that the increasing margins of dumping
closely track the declining import prices for the subject goods.
The evidence also reveals that, during the entire period of
inquiry, average import prices were lower than Manson's average
prices. In the Tribunal's view, it is clear that Manson was caught
in a decreasing price spiral which was driven by exporters that
relentlessly lowered their prices and increased their margins of
dumping. The notion that Manson led prices downward is rebutted by
the facts that average import prices were consistently lower than
those of Manson and that the exporters' price reductions during the
period of inquiry were significantly greater than those of
The analysis of prices of nine popular sizes of fibreglass pipe
insulation shows sharp quarterly declines in 1991 and 1992, with
prices flattening in the first half of 1993. All suppliers' prices
for the nine sizes remained within a narrow range. For most of the
nine sizes, import prices were consistently lower than the domestic
industry's price during the period.
The parties did not dispute that there was a major decline in
prices between the first quarter of 1991 and the second quarter of
1993. According to data on average selling prices for the subject
pipe insulation and purchases of the nine popular sizes, the
decline in prices over that period exceeded 30 percent. The
Tribunal is convinced that the decline in prices was caused by
dumped imports. The margins of dumping, as calculated by the Deputy
Minister, increased from 28 percent in the third quarter of 1991 to
45 percent in the fourth quarter of 1992. The increase in margins
of dumping tracks closely the rate of decline in prices in the
market. The key conclusion for the Tribunal is that export prices
could only fall to the low levels at which they did because of
increasingly large margins of dumping. In order to hold its share
of the market, the domestic industry had to reduce its prices well
below those that would have prevailed in the absence of dumped
In this inquiry, there was voluminous evidence and testimony on
the bidding for installation contracts. Manson submitted over 20
allegations of business that it lost to three named exporters
during the period of inquiry. The exporters and importers responded
in submissions and testimony to these allegations. The Tribunal
notes that the evidence on lost projects illustrates that preformed
fibreglass pipe insulation has the characteristics of a commodity
product in that, within each size, the product of different
suppliers is fully interchangeable. The Tribunal notes the highly
price-sensitive nature of the market for the subject goods. The
evidence indicates that, to be competitive, bids on projects had to
fall within a narrow price spread of two to five percentage points.
Bids outside of that range would not be considered.
The evidence demonstrates not only that Manson lost business to
imports but also that project bid prices were a major influence on
the downward trend in average prices. As project bids declined,
Manson was forced to reduce its prices in order to stay within the
narrow competitive price spread. The attempt was not always
successful. Manson lost 18 projects to dumped imports over the
1991-93 period. Evidence and testimony respecting 13 of the
projects confirm that, in 12 cases, the importer's bid price was
lower than Manson's price. One allegation of a lost contract to a
lower import price was not contested by any party. In the remaining
5 cases, Manson lost the contract when its bid was matched by an
imported product distributor, and the contractor awarded the
project to that distributor. Of the contracts lost to lower-priced
imports or matched prices, 9 were allegedly lost to Fiberglas, 7 to
Knauf and 2 to Manville distributors. In fiscal year 1993 (March
1992 to February 1993), Manson's sales revenue would have been more
than 25 percent higher in the absence of contracts lost to import
It appears from the evidence that importers' bid prices on
specific projects contributed to a downward pressure on prices. In
1991 and 1992, the successful bid prices on each project in effect
lowered the perceived upper limit of the competitive price spread
on the next projects to be tendered. In response, players lowered
their bids on subsequent projects, which no doubt contributed to
the decline in prices during the period of inquiry.
The exporters alleged that Manson, through its distributors, was
price aggressive and had taken some projects away from distributors
of imported products. The Tribunal has already concluded that
Manson did not lead prices down, and the evidence on alleged lost
accounts by exporters does not alter this conclusion. These
allegations indicate that about half of the contracts (13 out of
27) lost to Manson were on the basis of price. Clearly, Manson was
faced with competition from dumped imports. Essentially, it had the
choice of meeting or pricing below import prices or losing the
The evidence on lost projects demonstrates that Manson lost
business to imports at lower prices and that bidding on successive
large contracts was a major factor in pushing prices down during
the period of inquiry. Exporters were able to compete for these
projects at the low prices at which they did only because their
imports were dumped at increasingly high margins from 1991 into
In what was essentially a flat market, Manson lost 22 percent
 of its market
share in 1991. Manson could not recover that lost market share
during the period of inquiry due to competition from low-priced
dumped imports. The Tribunal found that preformed fibreglass pipe
insulation with a vapour barrier is essentially a commodity
product. As such, competition for sales is based almost exclusively
on price. Given the significance of price in determining sales, the
Tribunal is drawn inescapably to the view that lower-priced dumped
imports contributed significantly to Manson's loss of market
There is evidence, in this case, of injury to Manson in the form
of price suppression, decreased market share, lost projects and
Regarding price suppression, the evidence discloses that prices
for the subject goods decreased significantly during the period of
inquiry. Specifically, average import prices to distributors fell
by 20 percent in 1991, 16 percent in 1992 and 8 percent in 1993.
Over the same period, Manson's average prices for the subject goods
fell by over 30 percent. The Tribunal notes that average import
prices were lower than Manson's average prices throughout the
period of inquiry. The evidence establishes that import prices for
the subject goods declined to levels that were only possible
because those goods were being dumped. As a result of the low
prices of these dumped goods, Manson had to reduce its prices well
below the levels that would have existed in the absence of dumping.
In the Tribunal's view, had Manson not reduced its prices, it would
have lost greater market share than it did.
With respect to market share, the evidence indicates that
Manson's share of the market decreased by 22 percent in 1991.
Manson has not yet recovered that lost market share. Manson lost a
significant portion of that market share when Glass-Cell moved to
Manville from Manson when Manville reentered the Canadian market in
1991. The Tribunal is of the view that one of the major reasons for
Glass-Cell leaving Manson and joining Manville was its knowledge
that Manville would provide it with competitive pricing for the
Manson's reduced market share was, in part, the result of
unsuccessful bids for contract work. The evidence indicates that
Manson lost 18 projects to dumped imports over the 1991-93
Not surprisingly, the fact that Manson lost market share and was
forced to lower prices in order to compete with dumped imports
resulted in substantial annual declines in Manson's domestic sales
revenues. Manson's revenues from domestic sales declined by 15
percent in 1991, 24 percent in 1992 and 9 percent in the first half
The Tribunal finds that Manson has been and is being materially
injured as a result of price suppression, decreased market share,
lost projects and declining revenues.
Counsel for exporters argued that Manson was not injured because
its total production increased between 1990 and 1992. For the
Tribunal, this increase was largely attributable to increased
export business, and in fact, as noted above, production for
domestic sales declined during the period of inquiry. In the
Tribunal's view, had Manson not increased its exports, imports at
dumped prices would have caused even greater injury.
With respect to injury in the future, the Tribunal notes that,
while prices appear to have stabilized in the first half of 1993,
they still remain low. There is ample evidence of failed attempts
to raise prices. There is nothing to suggest that the players in
the market will succeed in subsequent attempts to increase prices.
The Tribunal is, therefore, of the view that it is likely that, in
the absence of a finding of injury, dumped imports will continue to
enter Canada and keep prices at suppressed levels.
In June 1993, Manson acquired Multi-Glass, a large former
Fiberglas distributor. The Tribunal agrees that this acquisition
will assist Manson in recovering its competitive presence in the
Ontario market which was lost when Glass-Cell moved to Manville.
However, the Tribunal does not believe that Manson's improved
presence in the market will protect it from injury from dumped
imports in the near future. Based on its observation of the
operation of the market for the subject goods in the 1990-93
period, the Tribunal is of the view that exporters are likely to
take future price action in response to Manson's strengthened
position in Ontario. The Tribunal is of the view that this price
action could further contribute to price instability in the market.
These two basic considerations lead the Tribunal to conclude that,
in the absence of a finding of injury, injurious dumping will
continue in the future to the detriment of the domestic
In argument, counsel for the complainant addressed the issue of
massive dumping, as contemplated under section 5 and paragraph
42(1)(b) of SIMA. Counsel drew the Tribunal's attention to
the fact that imports of the subject goods had increased from 6.0
million linear feet in the first half of 1992 to 8.9 million linear
feet in the first half of 1993. However, counsel indicated that
they made "no formal recommendation" to the Tribunal with respect
to this issue.
Counsel for Schuller, Manville, Owens-Corning and Glass-Cell all
argued against a finding of massive dumping. Counsel referred the
Tribunal to the testimony of various distributors. They testified
that they had purchased greater quantities of the subject goods in
the first half of 1993 in order to allow them to fulfil price
commitments to their customers under existing contracts. Counsel
also pointed out that, before section 5 of SIMA can be invoked, it
must appear "necessary to the Tribunal that duty be assessed on the
imported goods" in order to prevent the recurrence of the injury
that was occasioned by the massive dumping.
The Tribunal is not persuaded that the evidence in this case
supports a finding of massive dumping. There are a number of
elements that must exist before such a finding can be made. The
Tribunal does not intend to enumerate them here or make findings
with respect to each element. The Tribunal agrees with the
submissions of counsel for the exporters, insofar as those
submissions relate to the prevention of a recurrence of injury. In
light of the distributors' explanation for the increased levels of
imports in the first half of 1993, the Tribunal is of the view that
it is not necessary for duty to be imposed retroactively in order
to prevent a recurrence of injury.
Counsel for the complainant argued that there was "an element"
of retardation in this case. In support of this position, they
referred the Tribunal to certain portions of Mr. Keith Eaman's
evidence, much of which was given in camera. Counsel for
Owens-Corning submitted that subsection 2(1) of SIMA defines
retardation as the retardation of the establishment of the
production in Canada of like goods. They argued that, as there is
currently production of like goods in Canada, there can be no
retardation. Counsel for Knauf argued that the complainant's
retardation claim should be dismissed. They submitted that the
complainant had failed to adduce any detailed plans which indicated
that it had made a decision to move forward with additional capital
The Tribunal is of the view that, in order to succeed in a claim
of retardation, a complainant must establish that:
- there has been retardation in relation to the establishment of
an industry; and
- it has made a substantial commitment to establish such an
The Tribunal is not satisfied that the complainant has
established either of these two elements. With respect to the first
element, the Tribunal notes that the complainant currently owns and
operates a manufacturing plant in Canada which produces like goods.
On the basis of that fact, the Tribunal is of the view that there
is, in Canada, a domestic industry which produces like goods. On
that ground alone, the complainant's claim of retardation must
fail. With respect to the second element, the Tribunal is not
persuaded that the complainant has made a substantial commitment to
establish an industry or to expand its capacity within the extant
Counsel for Schuller, Manville and Owens-Corning requested that
the Tribunal, in the event of a finding of injury, provide their
respective clients with exclusions. In this regard, the Tribunal
notes that it is within its discretion to grant such exclusions.
 The onus is on the
person requesting the exclusion to establish that it is warranted.
Counsel for Schuller and Manville argued that the Tribunal
should grant their clients exclusions, as they had proved, on the
balance of probabilities, that they had not caused injury to the
complainant. In requesting an exclusion for Owens-Corning, its
counsel adopted the argument advanced by counsel for Schuller and
The Tribunal has decided against granting exclusions to
Schuller, Manville and Owens-Corning. In reaching this decision,
the Tribunal considered that:
- the companies all export significant quantities of the subject
goods to Canada;
- the margins of dumping and the percentage of the subject goods
dumped by each of the companies are high; and
- the companies' collective actions, together with the actions
of Knauf, resulted in declines in domestic prices for the subject
goods and generally caused material injury to Manson.
For the reasons stated above, the Tribunal concludes that the
dumping in Canada of preformed fibreglass pipe insulation with a
vapour barrier, originating in or exported from the United states
of America, has caused, is causing and is likely to cause material
injury to the production in Canada of like goods.
The Tribunal also concludes that the dumping in Canada of the
aforementioned goods, originating in or exported from the United
States of America, did not contravene paragraph 42(1)(b) of
1. R.S.C. 1985, c.
2. Subsidized Carbon
Steel Seamless Pipe Originating in or Exported From Brazil ,
Inquiry No. CIT-8-86, March 12, 1987.
3. Machine Tufted
Carpeting Originating in or Exported From the United States of
America , Inquiry No. NQ-91-006, April 21, 1992.
4. R.S.C. 1985, c.
5. Manson's fiscal
year is from March 1 to February 28.
6. Agreement on
Implementation of Article VI of the General Agreement on Tariffs
and Trade , signed in Geneva on April 12, 1979.
7. Canada Treaty
Series , 1989, No. 3 (C.T.S.), signed on January 2, 1988.
8. The Tribunal
concluded previously that, based on all of the evidence before it,
the market was flat in 1990 and 1991. Therefore, using the 1991
market volume figure for the 1990 market, Manson's market share in
1990 would be lower than that indicated in the Tribunal's market
table. On this basis, there was a 22-percent decline in Manson's
market share in 1991.
9. See, e.g. Hitachi
Limited v. The Anti-dumping Tribunal ,  1 S.C.R. 93; Sacilor
Aciéries v. The Anti-dumping Tribunal (1985), 9 C.E.R. 210 (Federal
Court of Appeal, File No. A-1806-83, June 27, 1985); and Article
1904 Binational Panel, Certain Dumped Integral Horsepower Induction
Motors, One Horsepower (1 HP) to Two Hundred Horsepower (200 HP)
Inclusive, with Exceptions, Originating in or Exported from the
United States of America , 4 T.C.T. 7065, September 11, 1991.
Hot-Rolled Carbon Steel Plate and High-Strength Low-Alloy Plate,
Heat-Treated or Not, Originating in or Exported From Belgium,
Brazil, the Czech Republic, Denmark, the Federal Republic of
Germany, Romania, the United Kingdom, the United States of America
and the Former Yugoslav Republic of Macedonia , Canadian
International Trade Tribunal, Inquiry No. NQ-92-007, Statement of
Reasons , May 21, 1993.
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Initial publication: July 10, 1997