Court of Justice of the European Communities (including Court of First Instance Decisions)

1 . MEASURES ADOPTED BY THE INSTITUTIONS - ELABORATION PROCEDURE - ECSC SYSTEM OF PRODUCTION QUOTAS - ASSENT OF THE COUNCIL - ESSENTIAL PROCEDURAL REQUIREMENT
( ECSC TREATY , ART . 58 )
2 . ECSC - PRODUCTION - SYSTEM OF QUOTAS - PURPOSE - GUARANTEE OF A MINIMUM LEVEL OF EMPLOYMENT IN THE VARIOUS UNDERTAKINGS - EXCLUDED
( ECSC TREATY , ART . 58 )
3 . ECSC - AIMS - CONSTANT RECONCILIATION
( ECSC TREATY , ARTS 2 , 3 AND 4 )
4 . ECSC - PRODUCTION - SYSTEM OF QUOTAS - PURPOSE - DISTORTIONS OF COMPETITION DUE TO STATE AIDS - TAKING INTO CONSIDERATION - CONDITIONS - CORRECTION - EXCLUDED
( ECSC TREATY , ARTS 4 ( C ) AND 58 )
5 . ECSC - PRODUCTION - SYSTEM OF QUOTAS - TAKING INTO CONSIDERATION OF EXTERNAL TRADE - DISCRETION OF THE COMMISSION - CONDITIONS FOR EXERCISE - PRODUCTION INTENDED FOR EXPORT TO NON-MEMBER COUNTRIES - COMPULSORY EXEMPTION FROM THE SYSTEM OF QUOTAS - NONE
( ECSC TREATY , ART . 58 )
6 . ECSC - PRODUCTION - SYSTEM OF STEEL PRODUCTION QUOTAS - DETERMINATION ON AN EQUITABLE BASIS - TAKING INTO CONSIDERATION OF UNDERTAKINGS ' PRODUCTION - WHETHER PERMISSIBLE
( ECSC TREATY , ART . 58 ( 2 ); DECISION NO 2794/80 , ART . 4 )
7 . ECSC - PRODUCTION - SYSTEM OF STEEL PRODUCTION QUOTAS - DETERMINATION ON AN EQUITABLE BASIS - TAKING INTO CONSIDERATION OF UNDERTAKINGS ' REFERENCE PRODUCTION FIGURES - ADJUSTMENT - CRITERIA - ACTUAL PRODUCTION CAPACITY DURING THE REFERENCE PERIOD
( DECISION NO 2794/80 , ART . 4 )

1 . THE OBTAINING OF THE ASSENT OF THE COUNCIL BY THE COMMISSION FOR THE PURPOSE OF INTRODUCING A SYSTEM OF PRODUCTION QUOTAS UNDER ARTICLE 58 OF THE ECSC TREATY IS ONE OF THE ESSENTIAL PROCEDURAL REQUIREMENTS LAID DOWN BY THE TREATY , NON-OBSERVANCE OF WHICH LEADS TO NULLITY .

2 . THE GOAL OF A SYSTEM OF PRODUCTION QUOTAS INTRODUCED UNDER ARTICLE 58 OF THE ECSC TREATY IS TO IMPROVE CONDITIONS ON THE MARKET IN STEEL SO AS TO ENABLE THE PROFITABILITY OF UNDERTAKINGS TO BE MAINTAINED OR RESTORED IN THE LONG TERM AND THEREBY ENABLE THE JOBS WHICH DEPEND ON IT TO BE PRESERVED AS FAR AS POSSIBLE . HOWEVER , ARTICLE 58 DOES NOT IN ANY WAY REQUIRE THE COMMISSION TO GUARANTEE EACH INDIVIDUAL UNDERTAKING A MINIMUM LEVEL OF PRODUCTION DETERMINED IN ACCORDANCE WITH THE UNDERTAKING ' S OWN CRITERIA OF PROFITABILITY AND DEVELOPMENT . THE AIM OF ARTICLE 58 IS TO SPREAD IN THE MOST EQUITABLE MANNER POSSIBLE AMONGST ALL UNDERTAKINGS THE REDUCTIONS REQUIRED BY THE ECONOMIC SITUATION AND NOT TO GUARANTEE UNDERTAKINGS A MINIMUM LEVEL OF EMPLOYMENT PROPORTIONATE TO THEIR CAPACITY .

3 . THE GENERAL AIMS SET OUT IN ARTICLES 2 , 3 AND 4 OF THE ECSC TREATY MUST CONSTANTLY BE RECONCILED WITH ONE ANOTHER DEPENDING ON THE ECONOMIC CIRCUMSTANCES AND THEREFORE PRIORITY MAY NOT BE GIVEN TO ONE OF THOSE AIMS TO THE DETRIMENT OF THE OTHERS .

4 . THERE ARE NO GROUNDS FOR ASSUMING THAT WHEN ADOPTING THE MEASURES PROVIDED FOR IN ARTICLE 58 THE COMMISSION IS UNDER THE OBLIGATION TO TAKE ACCOUNT OF DISTORTIONS ON THE STEEL MARKET CAUSED BY THE GRANT OF AIDS WHICH MIGHT BE INCOMPATIBLE WITH THE TREATY . THE PURPOSE OF ARTICLE 58 IS TO ENABLE THE COMMUNITY TO DEAL WITH SERIOUS CRISES CAUSED BY THE DECLINE IN DEMAND . ITS APPLICATION DEMANDS PROMPT ACTION WHICH MUST INEVITABLY BE BASED ON RELATIVELY SIMPLE CRITERIA . IT IS INCOMPATIBLE WITH SUCH ACTION TO TAKE INTO ACCOUNT FACTORS , SUCH AS THE GRANT OF STATE AIDS , THE APPRAISAL OF WHICH INVOLVES PARTICULARLY COMPLEX INVESTIGATIONS . ALTHOUGH IT CANNOT BE DENIED THAT WHEN WORKING OUT THE RULES ON PRODUCTION QUOTAS THE COMMISSION MAY TAKE ACCOUNT OF SITUATIONS WHICH ARE CONTRARY TO ARTICLE 4 ( C ) OF THE ECSC TREATY AND TO THE RULES LAID DOWN BY ITS DECISIONS IN THE FIELD AND WHICH ARE DULY PROVEN TO EXIST IN THE COURSE OF THE RELEVANT PROCEDURES , AS IT ALREADY DOES WHEN MONITORING INVESTMENT , IT IS HOWEVER NOT POSSIBLE TO GO SO FAR AS TO DEMAND THAT THE ANTI-CRISIS MEASURES ENVISAGED BY ARTICLE 58 SHOULD BE USED TO COUNTERACT THE EFFECT OF ILLEGAL AIDS GRANTED BY MEMBER STATES .

5 . THE EXTENT TO WHICH EXTERNAL TRADE MUST BE TAKEN INTO CONSIDERATION IN CONNECTION WITH MEASURES TO BE ADOPTED UNDER ARTICLE 58 OF THE ECSC TREATY IS FOR THE COMMISSION TO DECIDE AND IN ARRIVING AT THAT DECISION IT MUST TAKE ACCOUNT OF THE COMMUNITY STEEL INDUSTRY ' S OWN NEEDS AND THE COMMUNITY ' S INTERESTS IN ITS RELATIONS WITH NON-MEMBER COUNTRIES . THEREFORE IT IS NOT POSSIBLE TO INFER FROM ARTICLE 58 ANY OBLIGATION REQUIRING THE COMMISSION TO EXEMPT FROM THE QUOTA SYSTEM THE PRODUCTION WHICH CERTAIN UNDERTAKINGS MIGHT PREFER TO CHANNEL TOWARDS EXPORT MARKETS .


6 . THERE ARE NO REASONABLE GROUNDS FOR DENYING THAT THE COMMISSION ' S CHOICE OF THE CRITERION BASED ON UNDERTAKINGS ' ACTUAL PRODUCTION FOR THE PURPOSE OF DEFINING THE ' ' EQUITABLE BASIS ' ' FOR THE DETERMINATION OF PRODUCTION QUOTAS WITHIN THE MEANING OF ARTICLE 58 ( 2 ) OF THE ECSC TREATY ACCORDS WITH THAT PROVISION . INDEED , THAT CRITERION , AS ADJUSTED BY ARTICLE 4 OF DECISION NO 2794/80 , CONSTITUTES , IN THE FIRST PLACE , AN OBJECTIVE BASIS OF ASSESSMENT WHICH AVOIDS THE UNCERTAINTIES INHERENT IN DETERMINING A FACTOR WHICH IS PARTLY CONJECTURAL , SUCH AS PRODUCTION CAPACITY ; SECONDLY , IT ENABLES TOTAL PRODUCTION TO BE REDUCED WITHOUT ALTERING THE POSITIONS OF THE UNDERTAKINGS ON THE MARKET AS BETWEEN EACH OTHER .


7 . SINCE DECISION NO 2794/80 FIXES A DEFINITE REFERENCE PERIOD FOR DETERMINING STEEL UNDERTAKINGS ' REFERENCE PRODUCTION FIGURES , ONLY PRODUCTION CAPACITY WHICH ACTUALLY EXISTED IN THAT PERIOD MAY BE TAKEN INTO ACCOUNT .

IN CASE 119/81
KLOCKNER-WERKE AG , A STEEL UNDERTAKING HAVING ITS REGISTERED OFFICE IN DUISBURG , REPRESENTED BY PROFESSOR BODO BORNER OF THE UNIVERSITY OF COLOGNE , WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT THE CHAMBERS OF ERNEST ARENDT , 34 B RUE PHILIPPE-II ,
APPLICANT ,
V
COMMISSION OF THE EUROPEAN COMMUNITIES , REPRESENTED BY ITS LEGAL ADVISER , NORBERT KOCH , ACTING AS AGENT , ASSISTED BY PROFESSOR EBERHARD GRABITZ OF THE FREE UNIVERSITY OF BERLIN , WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT THE OFFICE OF ORESTE MONTALTO , A MEMBER OF ITS LEGAL DEPARTMENT , JEAN MONNET BUILDING , KIRCHBERG ,
DEFENDANT ,

APPLICATION FOR A DECLARATION THAT THE NOTIFICATION OF 6 APRIL 1981 BY WHICH THE COMMISSION FIXED THE APPLICANT ' S REFERENCE PRODUCTION FIGURES AND PRODUCTION QUOTA FOR ROLLED PRODUCTS IN GROUP I ( HOT-ROLLED WIDE AND NARROW STRIP ) FOR THE SECOND QUARTER OF 1981 IS VOID ,

1 BY APPLICATION LODGED AT THE COURT REGISTRY ON 15 MAY 1981 KLOCKNER-WERKE AG , A STEEL UNDERTAKING HAVING ITS REGISTERED OFFICE IN DUISBURG IN THE FEDERAL REPUBLIC OF GERMANY , BROUGHT AN ACTION UNDER THE SECOND PARAGRAPH OF ARTICLE 33 OF THE ECSC TREATY FOR A DECLARATION THAT THE NOTIFICATION OF 6 APRIL 1981 BY WHICH THE COMMISSION FIXED THE APPLICANT ' S REFERENCE PRODUCTION FIGURES AND PRODUCTION QUOTA FOR ROLLED PRODUCTS IN GROUP I ( HOT-ROLLED WIDE AND NARROW STRIP ) FOR THE SECOND QUARTER OF 1981 PURSUANT TO COMMISSION DECISION NO 2794/80/ECSC OF 31 OCTOBER 1980 ESTABLISHING A SYSTEM OF STEEL PRODUCTION QUOTAS FOR UNDERTAKINGS IN THE IRON AND STEEL INDUSTRY ( OFFICIAL JOURNAL 1980 , L 291 , P . 1 ) IS VOID .

2 IN SUPPORT OF ITS APPLICATION THE APPLICANT PUTS FORWARD A NUMBER OF SUBMISSIONS WHICH MAY BE SUMMARIZED AS FOLLOWS :
( 1 ) DECISION NO 2794/80 DID NOT RECEIVE , IN DUE FORM , THE ASSENT OF THE COUNCIL ;

( 2)THE COMMISSION DISREGARDED ITS OBLIGATIONS TO GUARANTEE A ' ' MINIMUM LEVEL OF EMPLOYMENT ' ' IN FIXING THE PRODUCTION QUOTAS ;

( 3)IN FIXING THE PRODUCTION QUOTAS THE COMMISSION FAILED TO TAKE ACCOUNT OF THE EFFECT OF ILLEGAL SUBSIDIES GRANTED BY SOME MEMBER STATES TO STEEL UNDERTAKINGS ;

( 4)INSTEAD OF FIXING PRODUCTION QUOTAS AS ENVISAGED BY ARTICLE 58 THE COMMISSION FIXED ' ' DELIVERY QUOTAS ' ' AND THESE UNLAWFULLY RESTRICTED EXPORT OPPORTUNITIES ;

( 5)THE UNDERTAKINGS ' ACTUAL PRODUCTION CAPACITY , PARTICULARLY THE APPLICANT ' S , WAS NOT PROPERLY TAKEN INTO ACCOUNT WHEN THE PRODUCTION QUOTAS WERE FIXED .

( 1 ) THE SUBMISSION THAT DECISION NO 2794/80 DID NOT RECEIVE THE ASSENT OF THE COUNCIL
3 THE APPLICANT CONTENDS THAT DECISION NO 2794/80 DID NOT RECEIVE THE ASSENT OF THE COUNCIL AS REQUIRED BY ARTICLE 58 ( 1 ) OF THE ECSC TREATY . IT ALLEGES THAT THE COUNCIL GAVE ONLY GENERAL CONSIDERATION , AT ITS MEETING ON 30 OCTOBER 1980 , TO THE QUESTION OF INTRODUCING A QUOTA SYSTEM . IT WAS NOT PROVIDED WITH A DRAFT LEGAL INSTRUMENT DISCLOSING THE MEASURES PLANNED BY THE COMMISSION AND COULD NOT THEREFORE GIVE THE ASSENT REQUIRED BY THE TREATY . WITH A VIEW TO PROVING ITS ALLEGATIONS THE APPLICANT ASKS THE COURT TO CALL FOR THE DOCUMENTS ON THE BASIS OF WHICH THE COUNCIL REACHED ITS DECISION AND THE MINUTES OF THE MEETING IN QUESTION .

4 THE COMMISSION SUBMITS IN THIS REGARD THAT THE TREATY CONFERS UPON IT THE POWER TO ADOPT THE APPROPRIATE MEASURES IN THE EVENT OF A MANIFEST CRISIS . IT ARGUES THAT THE REQUIREMENT OF ASSENT LAID DOWN IN ARTICLE 58 IS THEREFORE SATISFIED ONCE THE COUNCIL HAS APPROVED IN PRINCIPLE THE INTRODUCTION OF A QUOTA SYSTEM WITH FULL KNOWLEDGE OF THE MATERIAL TERMS OF THE SYSTEM PLANNED . IT IS NOT NECESSARY , HOWEVER , FOR THE COUNCIL TO GIVE ITS OPINION ON THE DETAILS OF THE SYSTEM . THE CONSULTATION WHICH TOOK PLACE IN THE PRESENT CASE SATISFIES THOSE REQUIREMENTS AND THE OBTAINING OF THE COUNCIL ' S ASSENT IS DULY CONFIRMED IN THE PREAMBLE TO DECISION NO 2494/80 .
5 ARTICLE 58 STATES THAT IF THE COMMISSION CONSIDERS THAT THE COMMUNITY IS CONFRONTED WITH A PERIOD OF MANIFEST CRISIS AND THE MEANS OF ACTION PROVIDED FOR IN ARTICLE 57 ARE NOT SUFFICIENT TO DEAL WITH THIS IT MUST ESTABLISH A SYSTEM OF PRODUCTION QUOTAS ' ' AFTER CONSULTING THE CONSULTATIVE COMMITTEE AND WITH THE ASSENT OF THE COUNCIL ' ' .

6 THE OBTAINING OF THE ASSENT OF THE COUNCIL IS ONE OF THE ESSENTIAL PROCEDURAL REQUIREMENTS LAID DOWN BY THE TREATY NON-OBSERVANCE OF WHICH LEADS TO NULLITY .

7 IT IS NOT DISPUTED IN THE PRESENT CASE THAT THE COUNCIL ' S ASSENT WAS SOUGHT BY THE COMMISSION IN ACCORDANCE WITH ARTICLE 58 OF THE ECSC TREATY AND THAT THE COUNCIL DID IN FACT APPROVE THE DRAFT MEASURES ABOUT WHICH IT HAD BEEN INFORMED BY THE COMMISSION . THE EXISTENCE OF THAT ASSENT IS RECITED IN THE PREAMBLE TO DECISION NO 2794/80 PUBLISHED IN THE OFFICIAL JOURNAL OF THE COMMUNITY .

8 IN SUPPORT OF ITS SUBMISSION THE APPLICANT HAS MERELY PUT FORWARD A NUMBER OF VALUE ALLEGATIONS . IT HAS NOT BEEN ABLE TO ADDUCE ANY EVIDENCE WHICH MIGHT GIVE REASON TO DOUBT THAT THE COUNCIL WAS GIVEN THE INFORMATION IT REQUIRED AND THAT IT EXPRESSED ITS ASSENT , AS THE PREAMBLE TO THE CONTESTED DECISION ATTESTS . THEREFORE THE APPLICANT ' S REQUEST THAT THE COURT SHOULD ORDER AN INQUIRY INTO THE CIRCUMSTANCES IN WHICH THE ASSENT OF THE COUNCIL WAS SOUGHT AND OBTAINED MUST BE REFUSED .

9 THIS SUBMISSION MUST THEREFORE BE REJECTED .

( 2 ) THE SUBMISSION THAT THE OBLIGATION TO GUARANTEE A ' ' MINIMUM LEVEL OF EMPLOYMENT ' ' WAS DISREGARDED
10 THE APPLICANT CONSIDERS THAT THE COMMISSION OUGHT TO HAVE ACTED IN ACCORDANCE WITH THE PRINCIPLES UNDERLYING THE TREATY AND ARTICLE 58 IN PARTICULAR AND SO ARRANGED THE SYSTEM OF PRODUCTION QUOTAS THAT EVERY UNDERTAKING WOULD BE CERTAIN OF OBTAINING A PRODUCTION QUOTA SUFFICIENT TO GUARANTEE A MINIMUM LEVEL OF ACTIVITY AND EMPLOYMENT PROPORTIONATE TO THEIR CAPACITY . BECAUSE THE COMMISSION DID NOT TAKE PROPER ACCOUNT OF THAT FACTOR IN DECISION NO 2794/80 THE QUOTA FIXED FOR THE APPLICANT DID NOT ENABLE PRODUCTION TO BE MAINTAINED AT THE LEVEL NEEDED TO GUARANTEE A MINIMUM LEVEL OF EMPLOYMENT IN ITS UNDERTAKING .

11 TO SUPPORT THAT VIEW THE APPLICANT POINTS OUT THAT UNDER THE SECOND PARAGRAPH OF ARTICLE 2 OF THE ECSC TREATY ONE OF THE COMMUNITY ' S TASKS IS TO SAFEGUARD ' ' CONTINUITY OF EMPLOYMENT ' ' WHILST , ACCORDING TO ARTICLE 3 , THE INSTITUTIONS OF THE COMMUNITY MUST ' ' PROMOTE IMPROVED WORKING CONDITIONS AND AN IMPROVED STANDARD OF LIVING FOR WORKERS ' ' ; ARTICLE 58 EXPRESSES THE SAME IDEA INASMUCH AS PARAGRAPH ( 2 ) THEREOF PROVIDES FOR THE INTRODUCTION OF A SYSTEM OF LEVIES TO MAINTAIN EMPLOYMENT IN UNDERTAKINGS WHOSE RATE OF PRODUCTION HAS FALLEN BELOW A GIVEN LEVEL OF REFERENCE . THE APPLICANT CONSIDERS THAT THE LAST-MENTIONED PROVISION REFLECTS THE BASIC PRINCIPLE ON WHICH ARTICLE 58 RESTS AND TO WHICH THE COMMISSION WRONGLY FAILED TO GIVE EFFECT IN THE SYSTEM OF PRODUCTION QUOTAS ELABORATED IN DECISION NO 2794/80 .
12 THE LINE OF ARGUMENT ADVANCED BY THE APPLICANT FAILS TO TAKE ACCOUNT OF THE TRUE PURPOSE OF ARTICLE 58 WITHIN THE SYSTEM OF THE TREATY AS A WHOLE . THE PROVISION IS INTENDED TO ENABLE THE COMMUNITY TO DEAL WITH A CRISIS CAUSED BY A DECLINE IN DEMAND . IT PROVIDES FOR THE INTRODUCTION OF A SYSTEM OF PRODUCTION QUOTAS WHICH IS INTENDED TO SPREAD EQUITABLY THROUGHOUT THE IRON AND STEEL INDUSTRY OF THE COMMUNITY THE UNAVOIDABLE CONSEQUENCES OF THE ADJUSTMENT OF PRODUCTION TO THE REDUCED NUMBER OF POSSIBILITIES OF DISPOSAL .

13 THE GOAL OF THOSE RESTRICTIVE MEASURES IS TO IMPROVE MARKET CONDITIONS SO AS TO ENABLE THE PROFITABILITY OF UNDERTAKINGS TO BE MAINTAINED OR RESTORED IN THE LONG TERM AND THEREBY ENABLE THE JOBS WHICH DEPEND ON IT TO BE PRESERVED AS FAR AS POSSIBLE . HOWEVER , CONTRARY TO THE APPLICANT ' S CONTENTION , ARTICLE 58 DOES NOT IN ANY WAY REQUIRE THE COMMISSION TO GUARANTEE EACH INDIVIDUAL UNDERTAKING A MINIMUM LEVEL OF PRODUCTION DETERMINED IN ACCORDANCE WITH THE UNDERTAKING ' S OWN CRITERIA OF PROFITABILITY AND DEVELOPMENT . THE AIM OF ARTICLE 58 IS TO SPREAD IN THE MOST EQUITABLE MANNER POSSIBLE AMONGST ALL UNDERTAKINGS THE REDUCTIONS REQUIRED BY THE ECONOMIC SITUATION AND NOT TO GUARANTEE UNDERTAKINGS A MINIMUM LEVEL OF EMPLOYMENT PROPORTIONATE TO THEIR CAPACITY .

14 AS REGARDS ARTICLES 2 , 3 AND 4 , MENTIONED IN PARAGRAPH ( 2 ) OF ARTICLE 58 AND RELIED UPON BY THE APPLICANT , IT SHOULD BE OBSERVED THAT THE GENERAL AIMS SET OUT IN THOSE ARTICLES MUST CONSTANTLY BE RECONCILED WITH ONE ANOTHER DEPENDING ON THE ECONOMIC CIRCUMSTANCES AND THEREFORE PRIORITY MAY NOT BE GIVEN TO ONE OF THOSE AIMS TO THE DETRIMENT OF THE OTHERS . AS FAR AS THE REFERENCE IN ARTICLE 58 ( 2 ) TO THE MAINTENANCE OF EMPLOYMENT IS CONCERNED , IT IS MADE IN RELATION TO A REGULATORY MECHANISM TO WHICH THE COMMISSION HAS NOT RESORTED . IT SHOULD BE ADDED THAT IN ESTABLISHING THE QUOTA SYSTEM THE COMMISSION DID NOT DISREGARD THE NEED TO MAINTAIN EMPLOYMENT AS FAR AS POSSIBLE BECAUSE IT TOOK ACCOUNT , IN ARTICLE 4 ( 3 ) OF DECISION NO 2794/80 , OF THE LEVEL OF UTILIZATION OF CAPACITY .

15 THIS SUBMISSION MUST THEREFORE BE REJECTED .

( 3 ) THE SUBMISSION THAT NO ACCOUNT WAS TAKEN OF ILLEGAL SUBSIDIES AND THEIR EFFECT
16 THE APPLICANT POINTS OUT THAT IN BREACH OF AN EXPRESS PROHIBITION CONTAINED IN THE ECSC TREATY SUBSIDIES HAVE BEEN PAID TO UNDERTAKINGS IN SEVERAL MEMBER STATES , PARTICULARLY IN BELGIUM , FRANCE , ITALY AND THE UNITED KINGDOM WHERE FOR MANY YEARS THE STEEL INDUSTRY HAS BEEN SUPPORTED BY CONSIDERABLE STATE SUBSIDIES . IT CONTENDS THAT THE COMMISSION NEVER TOOK ANY ACTION AGAINST THOSE SUBSIDIES , WHICH HAD THE EFFECT OF PUTTING UNDERTAKINGS WHICH HAD NOT RECEIVED SUCH ADVANTAGES IN A POSITION WORSE THAN THAT OF THOSE WHICH HAD . THE COMMISSION OUGHT AT LEAST TO HAVE TAKEN ACCOUNT OF THIS DISTORTION OF COMPETITION WHEN ELABORATING THE SYSTEM OF PRODUCTION QUOTAS AND GRANTED COMPENSATION TO UNDERTAKINGS WHICH HAD NOT RECEIVED SUBSIDIES .

17 THE COMMISSION BELIEVES THAT THE MEASURES PROVIDED FOR IN ARTICLE 58 ARE NOT AN APPROPRIATE FRAMEWORK FOR TAKING ACCOUNT OF THE PROBLEM OF SUBSIDIES GRANTED IN SOME MEMBER STATES TO THE STEEL INDUSTRY . IT ARGUES THAT UNDER THE SCHEME OF THE ECSC TREATY THE PROBLEM OF AIDS CAN BE DEALT WITH ONLY ON THE BASIS OF ARTICLE 4 ( C ), THE APPLICATION OF WHICH MIGHT LEAD TO THE ADOPTION OF DECISIONS UNDER ARTICLE 88 , OR WITHIN THE FRAMEWORK OF ARTICLE 67 , WHICH CONCERNS INTERFERENCE WITH THE CONDITIONS OF COMPETITION . THE COMMISSION ALSO POINTS TO THE LINK BETWEEN THE QUESTION OF SUBSIDIES AND THE GENERAL RULES GOVERNING AIDS . ON THE QUESTION OF SPECIFIC AIDS TO THE STEEL INDUSTRY , IT POINTS OUT THAT IT HAS CREATED THE GENERAL FRAMEWORK FOR THEIR REGULATION IN DECISION NO 257/80 OF 1 FEBRUARY 1980 AND NO 2320/81 OF 7 AUGUST 1981 ESTABLISHING COMMUNITY RULES FOR AIDS TO THE STEEL INDUSTRY ( OFFICIAL JOURNAL 1981 , L 228 , P . 14 ).

18 IT CANNOT BE DENIED THAT THE COMPLAINTS PUT FORWARD BY THE APPLICANT IN RELATION TO THIS SUBMISSION REVEAL A LEGITIMATE CONCERN . IN FACT IT MUST BE STATED THAT THE COMMISSION WAS SLOW TO TAKE ACTION IN THIS FIELD , AS IS SHOWN BY THE DATE OF THE DECISIONS WHICH IT HAS MENTIONED . MOREOVER , THE COMMISSION CANNOT REFUTE THE APPLICANT ' S SUBMISSION MERELY BY REFERRING TO ITS POWERS UNDER ARTICLE 88 AS IT SEEMS THAT IT HAS NOT MADE USE OF THOSE POWERS .

19 NEVERTHELESS THERE ARE NO GROUNDS FOR ASSUMING THAT WHEN ADOPTING THE MEASURES PROVIDED FOR IN ARTICLE 58 THE COMMISSION WAS UNDER THE OBLIGATION TO TAKE ACCOUNT OF DISTORTIONS ON THE STEEL MARKET CAUSED BY THE GRANT OF AIDS WHICH MIGHT BE INCOMPATIBLE WITH THE TREATY . THE PURPOSE OF ARTICLE 58 IS TO ENABLE THE COMMUNITY TO DEAL WITH SERIOUS CRISES CAUSED BY THE DECLINE IN DEMAND . ITS APPLICATION DEMANDS PROMPT ACTION WHICH MUST INEVITABLY BE BASED ON RELATIVELY SIMPLE CRITERIA . IT IS INCOMPATIBLE WITH SUCH ACTION TO TAKE INTO ACCOUNT FACTORS , SUCH AS THE GRANT OF STATE AIDS , THE APPRAISAL OF WHICH INVOLVES PARTICULARLY COMPLEX INVESTIGATIONS . ALTHOUGH IT CANNOT BE DENIED THAT WHEN WORKING OUT THE RULES ON PRODUCTION QUOTAS THE COMMISSION MAY TAKE ACCOUNT OF SITUATIONS WHICH ARE CONTRARY TO ARTICLE 4 ( C ) OF THE ECSC TREATY AND TO THE RULES LAID DOWN BY ITS DECISIONS IN THE FIELD AND WHICH ARE DULY PROVEN TO EXIST IN THE COURSE OF THE RELEVANT PROCEDURES , AS IT ALREADY DOES WHEN MONITORING INVESTMENT , IT IS HOWEVER NOT POSSIBLE TO GO SO FAR AS TO DEMAND , AS THE APPLICANT DOES , THAT THE ANTI-CRISIS MEASURES ENVISAGED BY ARTICLE 58 SHOULD BE USED TO COUNTERACT THE EFFECT OF ILLEGAL AIDS GRANTED BY MEMBER STATES .

20 THEREFORE THIS SUBMISSION MUST ALSO BE REJECTED .

( 4 ) THE SUBMISSION THAT ' ' DELIVERY QUOTAS ' ' WERE IMPOSED INSTEAD OF PRODUCTION QUOTAS AND THE COMPLAINT OF UNLAWFUL RESTRICTION OF EXPORT OPPORTUNITIES
21 THE APPLICANT ' S COMPLAINTS UNDER THIS HEAD APPARENTLY REFER TO THE NOTION ' ' DELIVERY OF PRODUCTS SUBJECT TO THE QUOTA SYSTEM ' ' APPEARING IN ARTICLE 7 OF DECISION NO 2794/80 AND TAKEN UP AGAIN IN ARTICLE 9 . THE APPLICANT ARGUES THAT BY LINKING THE OBLIGATION TO OBSERVE THE PRODUCTION QUOTAS AND THE POSSIBLE IMPOSITION OF PENALTIES TO THE ' ' DELIVERY ' ' OF PRODUCTS THE COMMISSION EXCEEDED THE LIMITS OF ITS POWERS UNDER ARTICLE 58 INASMUCH AS THAT PROVISION PROVIDES FOR THE FIXING OF ' ' PRODUCTION QUOTAS ' ' AND NOT ' ' DELIVERY QUOTAS ' ' .

22 THE APPLICANT ALSO COMPLAINS THAT BY INTRODUCING QUOTAS OF THAT KIND THE COMMISSION UNLAWFULLY RESTRICTED UNDERTAKINGS ' OPPORTUNITIES OF EXPORTING TO NON-MEMBER COUNTRIES .

23 ON THE QUESTION OF ' ' DELIVERY QUOTAS ' ' IT NEED ONLY BE OBSERVED THAT WHATEVER MEANING THE APPLICANT ATTACHES TO THAT CONCEPT IT PLAYED AS LITTLE A PART AS ARTICLES 7 AND 9 , FROM WHICH IT IS DERIVED , IN THE DETERMINATION OF THE PRODUCTION QUOTA ALLOCATED TO THE APPLICANT PURSUANT TO DECISION NO 2794/80 . THEREFORE THIS ISSUE NEED NOT BE EXAMINED FOR THE PURPOSE OF THE DECISION TO BE GIVEN IN THIS CASE .

24 AS TO THE QUESTION OF THE RESTRICTIVE EFFECT WHICH THE FIXING OF PRODUCTION QUOTAS MAY HAVE ON EXPORT OPPORTUNITIES , IT MUST BE POINTED OUT THAT THIS IS AN INEVITABLE CONSEQUENCE OF THE APPLICATION OF THE MACHINERY ESTABLISHED BY ARTICLE 58 OF THE TREATY . ANY RESTRICTION OF PRODUCTION HAS AN IMPACT BOTH ON OPPORTUNITIES OF SELLING ON THE COMMUNITY MARKET AND ON EXPORT OPPORTUNITIES . THEREFORE THE APPLICANT ' S COMPLAINT IS IN REALITY DIRECTED AGAINST THE SYSTEM OF PRODUCTION QUOTAS AS FORMULATED BY THE TREATY AND NOT AGAINST THE COMMISSION ' S DECISION WHICH MERELY APPLIED ARTICLE 58 .
25 FURTHERMORE IT MUST BE OBSERVED THAT NEITHER ARTICLE 57 NOR ARTICLE 58 OF THE TREATY FAIL TO TAKE ACCOUNT OF THE RELATION WHICH EXISTS BETWEEN ACTION TO INFLUENCE PRODUCTION AND THE COMMUNITY ' S EXTERNAL TRADE . FOR EXAMPLE , ONE OF THE INDIRECT MEANS OF ACTION TO INFLUENCE PRODUCTION MENTIONED BY ARTICLE 57 IS INTERVENTION IN REGARD TO COMMERCIAL POLICY , WHILST ARTICLE 58 ( 1 ) REFERS TO ARTICLE 74 , WHICH CONCERNS THE REGULATION OF CERTAIN ASPECTS OF EXTERNAL TRADE . HOWEVER , AS THE COURT HAS ALREADY EMPHASIZED IN OTHER JUDGMENTS , THE EXTENT TO WHICH EXTERNAL TRADE MUST BE TAKEN INTO CONSIDERATION IN CONNECTION WITH MEASURES TO BE ADOPTED UNDER ARTICLE 58 IS FOR THE COMMISSION TO DECIDE AND IN ARRIVING AT THAT DECISION IT MUST TAKE ACCOUNT OF THE COMMUNITY STEEL INDUSTRY ' S OWN NEEDS AND THE COMMUNITY ' S INTERESTS IN ITS RELATIONS WITH NON-MEMBER COUNTRIES . THEREFORE IT IS NOT POSSIBLE TO INFER FROM ARTICLE 58 ANY OBLIGATION REQUIRING THE COMMISSION TO EXEMPT FROM THE QUOTA SYSTEM THE PRODUCTION WHICH CERTAIN UNDERTAKINGS MIGHT PREFER TO CHANNEL TOWARDS EXPORT MARKETS .

26 FOR THOSE REASONS THE COMPLAINTS PUT FORWARD IN RELATION TO THIS SUBMISSION MUST ALSO BE REJECTED .

( 5 ) THE SUBMISSION THAT THE COMMISSION REFUSED TO TAKE INTO CONSIDERATION THE UNDERTAKING ' S ACTUAL PRODUCTION CAPACITY
27 THIS SUBMISSION QUESTIONS BOTH THE VALIDITY OF DECISION NO 2794/80 AND THE COMMISSION ' S ESTIMATION OF THE APPLICANT ' S PRODUCTION CAPACITY FOR THE PURPOSES OF THE APPLICATION OF THE CRITERIA LAID DOWN IN ARTICLE 4 ( 3 ) OF THAT DECISION .

28 IN SO FAR AS THIS SUBMISSION SEEKS TO QUESTION THE VALIDITY OF DECISION NO 2794/80 THE APPLICANT CONTENDS THAT THE COMMISSION OUGHT TO HAVE BASED ITS SYSTEM OF QUOTAS ON UNDERTAKINGS ' PRODUCTION CAPACITY AS WELL AS ON THEIR ACTUAL PRODUCTION . AS TO THIS POINT IT IS SUFFICIENT TO RECALL WHAT THE COURT HELD IN ITS JUDGMENT OF 3 MARCH 1982 IN CASE 14/81 ALPHA STEEL ( 1982 ) ECR 749 ON THE MATTER OF THE CRITERIA APPLIED BY THE COMMISSION TO DEFINE THE ' ' EQUITABLE BASIS ' ' FOR THE DETERMINATION OF PRODUCTION QUOTAS WITHIN THE MEANING OF ARTICLE 58 ( 2 ). IT IS STATED IN THAT JUDGMENT THAT THERE ARE NO REASONABLE GROUNDS FOR DENYING THAT THE COMMISSION ' S CHOICE OF THE CRITERION BASED ON UNDERTAKINGS ' ACTUAL PRODUCTION ACCORDS WITH THAT PROVISION . INDEED , THAT CRITERION , AS ADJUSTED BY ARTICLE 4 OF DECISION NO 2794/80 , CONSTITUTES , IN THE FIRST PLACE , AN OBJECTIVE BASIS OF ASSESSMENT WHICH AVOIDS THE UNCERTAINTIES INHERENT IN DETERMINING A FACTOR WHICH IS PARTLY CONJECTURAL , SUCH AS PRODUCTION CAPACITY ; SECONDLY , IT ENABLES TOTAL PRODUCTION TO BE REDUCED WITHOUT ALTERING THE POSITIONS OF THE UNDERTAKINGS ON THE MARKET AS BETWEEN EACH OTHER .

29 THE APPLICANT FURTHER CONTENDS THAT WHEN DETERMINING ITS REFERENCE PRODUCTION FIGURES AND ASCERTAINING THE ADJUSTMENT WHICH ARTICLE 4 ( 3 ) OF DECISION NO 2794/80 GRANTS TO UNDERTAKINGS WHOSE RATE OF UTILIZATION IS BELOW THE AVERAGE RATE OF UTILIZATION OF COMPARABLE PLANT OF OTHER UNDERTAKINGS IN THE COMMUNITY THE COMMISSION UNDERESTIMATED ITS PRODUCTION CAPACITY . THE EFFECT OF THIS WAS AGGRAVATED BY THE COMMISSION ' S FAILURE TO TAKE ANY ACCOUNT OF THE FACT THAT , IN 1974 , SOME TIME BEFORE THE START OF THE REFERENCE PERIOD , THE APPLICANT HAD SHUT DOWN AN OLD ROLLING MILL ( BREMEN NO 1 ) AND REPLACED IT BY THE PLANT NOW IN OPERATION ( BREMEN NO 2 ).

30 ACCORDING TO THE INFORMATION WHICH THE PARTIES HAVE PROVIDED DURING THE PROCEEDINGS , THE PRODUCTION CAPACITY DECLARED BY THE APPLICANT FOR 1977 , 1978 AND 1979 WAS 3 800 000 TONNES A YEAR . SINCE ON 1 JANUARY 1980 THE APPLICANT DECLARED A HIGHER PRODUCTION CAPACITY , NAMELY 4 260 000 TONNES A YEAR , IN MAY 1980 THE COMMISSION CARRIED OUT AN INSPECTION AT THE UNDERTAKING ' S PREMISES ON THE BASIS OF WHICH IT ESTIMATED ITS PRODUCTION CAPACITY TO BE 4 230 000 TONNES A YEAR . IN VIEW OF THE OUTCOME OF THAT INVESTIGATION THE COMMISSION ACCEPTED THE FIGURE DECLARED ON 1 JANUARY 1980 , NAMELY 4 260 000 TONNES A YEAR , AS REPRESENTING THE APPLICANT ' S PRODUCTION CAPACITY IN THE PERIOD REFERRED TO IN ARTICLE 4 ( 3 ) OF DECISION NO 2794/80 . THE COMMISSION ACCORDINGLY TOOK THAT FIGURE AS THE BASIS FOR ADJUSTING AND INCREASING THE REFERENCE PRODUCTION FIGURES PURSUANT TO ARTICLE 4 ( 3 ) IN ITS DECISIONS FIXING THE PRODUCTION QUOTAS FOR THE FOURTH QUARTER OF 1980 , THE FIRST QUARTER OF 1981 AND THE SECOND QUARTER OF 1981 , THAT LAST DECISION , DATED 6 APRIL 1981 , BEING THE ONLY ONE IN DISPUTE IN THIS CASE .

31 ON 1 JANUARY 1981 THE APPLICANT SUBMITTED A NEW DECLARATION TO THE COMMISSION IN WHICH IT DECLARED A PRODUCTION CAPACITY OF 5 508 000 TONNES A YEAR . IN ITS APPLICATION IT CONTENDS THAT IT IS THAT PRODUCTION CAPACITY FIGURE , REPRESENTING THE RECTIFIED RESULT OF A PRODUCTION TEST WHICH IT CARRIED OUT ITSELF , WHICH OUGHT TO HAVE BEEN TAKEN INTO CONSIDERATION IN THE CONTESTED DECISION . TO SUPPORT THIS CLAIM IT HAS SUBMITTED AS AN ANNEX TO ITS APPLICATION AN EXPERT ' S REPORT DATED 1 MAY 1981 WHICH WAS LATER SUPPLEMENTED BY AN EXPERT ' S REPORT DATED 12 JANUARY 1982 . THOSE DOCUMENTS , ACCORDING TO THE INTERPRETATION PLACED ON THEM BY THE APPLICANT , REVEAL A PRODUCTION CAPACITY STILL HIGHER THAN THE CAPACITY DECLARED ON THE PREVIOUS OCCASION ; THIS , IT BELIEVES , IS PROOF THAT THE ESTIMATE GIVEN IN ITS APPLICATION IS ' ' MODERATE AND CAREFUL ' ' . AS REGARDS ITS PREVIOUS DECLARATIONS THE APPLICANT OBSERVES THAT AT THE TIME THEY WERE REGARDED AS A ' ' ROUTINE MATTER ' ' TO WHICH IT DID NOT ATTACH ANY PARTICULAR IMPORTANCE ; IF IT COULD HAVE FORESEEN THE CONSEQUENCES WHICH MIGHT FLOW FROM THEM IT WOULD HAVE CERTAINLY PREPARED THEM WITH MORE CARE .

32 THE EXPERT ' S REPORT OF 1 MAY 1981 WAS DRAWN UP FOR THE APPLICANT BY A GROUP COMPRISING REPRESENTATIVES OF THE BELGIAN CENTRE DES RECHERCHES METALLURGIQUES ( CENTRE FOR METAL RESEARCH ), HEREINAFTER REFERRED TO AS THE CRM , AND OF THE UNDERTAKING KAWASAKI . THE EXPERTS ' JOINT CONCLUSION WAS THAT GIVEN ITS PRESENT PRODUCTION PROGRAMME THE UNDERTAKING ' S CAPACITY WAS 4 050 000 TONNES A YEAR . IN THEIR CONCLUSIONS THE EXPERTS STATE THAT IT MIGHT BE POSSIBLE TO INCREASE THAT FIGURE TO A POINT WHICH THE EXPERTS FROM CRM WERE NOT ABLE TO DEFINE BECAUSE THEY DID NOT HAVE THE OPPORTUNITY TO CHECK THE INFORMATION SUPPLIED BY KLOCKNER . FOR THEIR PART THE EXPERTS FROM KAWASAKI ADD THAT ACCORDING TO KLOCKNER ' S INFORMATION AND JAPANESE STANDARDS OUTPUT MIGHT BE RAISED TO 5 844 000 TONNES A YEAR ON CERTAIN CONDITIONS WHICH , ACCORDING TO THE INFORMATION PROVIDED , ARE NOT , HOWEVER , FULFILLED BY KLOCKNER ' S PRESENT PRODUCTION PROGRAMME . THE APPLICANT ITSELF REJECTS THE EXPERTS ' FIRST CONCLUSION , CONSIDERING IT INADEQUATE , AND BASES ITS ARGUMENT SOLELY ON THE SEPARATE CONCLUSION OF THE KAWASAKI REPRESENTATIVES .

33 IN THIS REGARD IT MUST BE POINTED OUT THAT THE INCREASE IN REFERENCE PRODUCTION FIGURES WHICH THE COMMISSION GRANTED TO THE APPLICANT PURSUANT TO ARTICLE 4 ( 3 ) OF DECISION NO 2794/80 WAS DETERMINED ON THE BASIS OF INFORMATION PROVIDED BY THE APPLICANT ITSELF PURSUANT TO DECISION NO 22-66 OF THE HIGH AUTHORITY ( OFFICIAL JOURNAL , ENGLISH SPECIAL EDITION 1965-1966 , P . 280 ) AND ON FORMS USED BY EVERY STEEL UNDERTAKING IN THE COMMUNITY . THE APPLICANT WAS UNDER A DUTY TO COMPLETE THOSE FORMS ACCURATELY AND HONESTLY .

34 A REVIEW OF THE HISTORY OF THE DISPUTE SHOWS THAT AT FIRST THE COMMISSION PROCEEDED ON THE BASIS OF INFORMATION PROVIDED BY THE APPLICANT , WHICH REMAINED UNCONTESTED FOR SEVERAL YEARS , AND THEN , AFTER AN INVESTIGATION CARRIED OUT ON THE APPLICANT ' S PREMISES AGREED TO REVISE THE ESTIMATE OF PRODUCTION CAPACITY IN ACCORDANCE WITH A NEW DECLARATION SUBMITTED BY THE APPLICANT . IT IS UNREASONABLE FOR THE APPLICANT TO CALL IN QUESTION FOR A SECOND TIME , ON THE GROUND OF NEW ERRORS OF ASSESSMENT ON ITS PART AND ON THE BASIS OF AN INCONCLUSIVE EXPERTS ' REPORT , THE RESULTS OF CALCULATIONS BASED ON ITS OWN PREVIOUS DECLARATIONS WHICH HAVE BEEN DULY CHECKED BY THE COMMISSION .

35 ON THE QUESTION WHETHER FOR THE PURPOSES OF DETERMINING PRODUCTION CAPACITY A ROLLING MILL THAT THE APPLICANT SHUT DOWN IN 1974 SHOULD BE TAKEN INTO CONSIDERATION IT NEED ONLY BE OBSERVED THAT SINCE DECISION NO 2794/80 FIXES A DEFINITE REFERENCE PERIOD ONLY PRODUCTION CAPACITY WHICH ACTUALLY EXISTED IN THAT PERIOD MAY BE TAKEN INTO ACCOUNT .

36 THEREFORE THIS SUBMISSION MUST BE REJECTED .

37 SINCE NONE OF THE SUBMISSIONS PUT FORWARD BY THE APPLICANTS IS WELL-FOUNDED , THE APPLICATION MUST BE DISMISSED .

COSTS
38 UNDER ARTICLE 69 ( 2 ) OF THE RULES OF PROCEDURE THE UNSUCCESSFUL PARTY IS TO BE ORDERED TO PAY THE COSTS .

39 AS THE APPLICANT HAS FAILED IN ITS SUBMISSIONS IT MUST BE ORDERED TO PAY THE COSTS .

ON THOSE GROUNDS ,
THE COURT
HEREBY :
1 . DISMISSES THE APPLICATION ;

2.ORDERS THE APPLICANT TO PAY THE COSTS .