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

ECSC - PRODUCTION - STEEL PRODUCTION QUOTAS - DETERMINATION OF THE BASIS ON WHICH QUOTAS ARE FIXED - APPLICATION OF THE SYSTEM TO QUANTITIES INTENDED FOR EXPORT TO NON-MEMBER COUNTRIES - FINE FOR EXCEEDING QUOTAS - ECONOMIC DIFFICULTIES ENDANGERING THE VERY EXISTENCE OF THE UNDERTAKING IF THE FINE IS LEVIED - NO EFFECT
( ECSC TREATY , ART . 58 ; DECISION NO 2794/80 , ARTS 2 AND 9 )

IN CASE 10/83
METALGOI SPA , A STEEL UNDERTAKING WHOSE REGISTERED OFFICE IS AT BRESCIA , REPRESENTED BY GINO ALBERTO BERGMANN OF THE MILAN BAR , FABRIZIO MASSONI OF THE BRUSSELS BAR AND GEROLAMO PELLICANO OF THE MILAN BAR , WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT THE CHAMBERS OF ANDRE ELVINGER , 15 COTE D ' EICH ,
APPLICANT ,
V
COMMISSION OF THE EUROPEAN COMMUNITIES , REPRESENTED BY SERGIO FABRO , A MEMBER OF ITS LEGAL DEPARTMENT , WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT THE OFFICE OF ORESTE MONTALTO , ALSO A MEMBER OF ITS LEGAL DEPARTMENT , JEAN MONNET BUILDING , KIRCHBERG ,
DEFENDANT ,

APPLICATION REQUESTING THE COURT TO DECLARE VOID A COMMISSION DECISION OF 24 NOVEMBER 1982 , BY WHICH THE APPLICANT WAS FINED 101 850 EUROPEAN CURRENCY UNITS FOR EXCEEDING ITS PRODUCTION QUOTA FOR ROLLED PRODUCTS IN GROUP IV FOR THE SECOND QUARTER OF 1981 ,

1 BY AN APPLICATION LODGED AT THE COURT REGISTRY ON 18 JANUARY 1983 METALGOI SPA BROUGHT AN ACTION UNDER THE SECOND PARAGRAPOH OF ARTICLE 33 OF THE ECSC TREATY WHEREBY IT SOUGHT TO HAVE DECLARED VOID COMMISSION DECISION NO C ( 82 ) 1631/6 OF 24 NOVEMBER 1982 ( OFFICIAL JOURNAL 1982 , C 324 , P . 2 , POINT 2 ). THAT DECISION , WHICH IMPOSED A FINE ON THE APPLICANT FOR EXCEEDING ITS PRODUCTION QUOTA FOR GROUP IV PRODUCTS FOR THE SECOND QUARTER OF 1981 , WAS ADOPTED 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 ( OFICIAL JOURNAL 1980 , L 291 , P . 1 ). IN THE ALTERNATIVE , THE APPLICANT SEEKS A REDUCTION OF THE FINE .

2 ON THE BASIS OF DECLARATIONS MADE BY THE APPLICANT , THE COMMISSION , BY DECISION OF 6 APRIL 1981 , FIXED THE APPLICANT ' S REFERENCE PRODUCTION AND PRODUCTION QUOTA FOR GROUP IV PRODUCTS , WHICH INCLUDE MERCHANT BARS . THE QUOTA WAS SLIGHTLY INCREASED BY AN AMENDING DECISION OF 9 JUNE 1981 . THOSE DECISIONS WERE NOT CONTESTED BY THE APPLICANT .

3 HAVING FOUND THAT THE PRODUCTION QUOTA THUS FIXED HAD BEEN EXCEEDED , THE COMISSION GAVE THE APPLICANT AN OPPORTUNITY TO SUBMIT OVSERVATIONS BEFORE FINING IT 101 850 ECU OR LIT 136 533 999 IN THE DECISION AT ISSUE IN THESE PROCEEDINGS .

4 BY AN ORDER DATED 20 APRIL 1983 THE PRESIDENT OF THE COURT SUSPENDED THE OPERATION OF THE CONTESTED DECISION SUBJECT TO CERTAIN CONDITIONS .

5 THE APPLICANT ADVANCES VARIOUS SUBMISSIONS IN SUPPORT OF ITS APPLICATION . IT CONTENDS , FIRST , THAT THE COMMISSION DID NOT MAKE USE IN ITS CASE OF THE HARDSHIP CLAUSE IN ARTICLE 14 OF DECISION NO 2794/80 , THEREBY REFUSING TO TAKE ACCOUNT OF THE DIFFICULTIES WHICH IT HAD TO CONTEND WITH AS AN UNDERTAKING OF MODEST DIMENSIONS WHICH CONTENTRATES ON THE MANUFACTURE OF A SINGLE PRODUCT AND WHICH IS REQUIRED TO OPERATE AT A RATE APPROACHING ITS MAXIMUM CAPACIY IN ORDER TO REMAIN PROFITABLE ; SECONDLY , THE EXCESS PRODUCTION WAS MAINLY USED FOR THE MANUFACTURE OF PLASTIC-COVERED FENCING POSTS , WHICH DO NOT FALL WITHIN ANY OF THE CATEGORIES DEFINED IN DECISION NO 2794/80 ; THIRDLY , ALL THE EXCESS PRODUCTION WAS EXPORTED OUT OF THE COMMUNITY . IN THE ALTERNATIVE , IT CONTENDS THAT ENFORCEMENT OF THE PENALTY WOULD LEAD TO ITS CLOSURE AND LIQUIDATION AND REQUESTS A REDUCTION OF THE FINE .

6 THOSE ARGUMENTS CALL FOR A NUMBER OF PRELIMINARY OBSERVATIONS .

7 IN THE FIRST PLACE , THE ARGUMENT CONCERNING THE FAILURE TO APLY ARTICLE 14 OF DECISION NO 2794/80 IS DIRECTED NOT AGAINST THE DECISION IMPOSING THE FINE BUT AGAINST THE DECISION FIXING THE PRODUCTION QUOTA . SINCE THE LATTER DECISION IS NO LONGER OPEN TO CHALLENGE , THAT SUBMISSION IS INADMISSIBLE . IT IS THEREFORE UNNECESSARY TO CONSIDER THE DEFENCE ARGUMENTS PUT FORWARD BY THE COMMISSION IN THIS REGARD .

8 SECONDLY , THE MAIN SUBMISSIONS PUT FORWARD BY THE APPLICANT ARE PARTLY CONTRADICTORY . IT CLAIMS THAT NEARLY ALL THE EXCESS PRODUCTION WAS USED FOR THE MANUFACTURE OF PLASTIC-COVERED FENCING POSTS WHICH WERE SOLD , ACCORDING TO THE APPLICANT , PARTLY WITHIN THE COMMON MARKET AND PARTLY OUTSIDE IT . AT THE SAME TIME IT STATES THAT ITS EXCESS PRODUCTION WAS ' ' ENTIRELY FOR EXPORT ' ' . A COMPARISON OF THOSE TWO STATEMENTS SHOWS THAT THEY CANNOT BOTH RELATE TO THE SAME QUANTITIES OF STEEL .

9 IN SO FAR AS THOSE TWO SUBMISSIONS ARE CONSISTENT , THEY CALL FOR THE FOLLOWING OBSERVATIONS .

10 THE ARGUMENT THAT THE QUOTA SYSTEM DOES NOT APPLY TO THE EXCESS PRODUCTION BECAUSE IT WAS USED FOR THE MANUFACTURE OF PLASTIC-COVERED FENCING POSTS , WHICH , AS FINISHED PRODUCTS , DO NOT FALL WITHIN THE CATEGORIES DEFINED BY DECISION NO 2794/80 , FAILS TO TAKE ACCOUNT OF THE SCHEME OF THAT DECISION , UNDER WHICH PRODUCTION QUOTAS ARE FIXED NOT ON THE BASIS OF FINISHED PRODUCTS MADE FROM STEEL BUT ON THE BASIS OF THE INTERMEDIATE PRODUCTS DESCRIBED IN DETAIL IN ARTICLE 2 AND ANNEX 1 .
11 IT IS NOT DISPUTED THAT THE APPLICANT DECLARED PRODUCTION OF MERCHANT BARS FALLING WITHIN CATEGORY IV AND THAT ITS QUOTA WAS FIXED FOR THAT PRODUCT ON THE BASIS OF THAT DECLARATION . THE FACT THAT AN UNDERTAKING CARRIES OUT FURTHER PROCESSING ON A PRODUCT SUBJECT TO QUOTAS BEFORE DISPOSING OF IT TO THIRD PARTIES DOES NOT EXEMPT THE PRODUCT FROM THE PRODUCTION RESTRICTIONS PROVIDED FOR BY DECISION NO 2794/80 . THE SUBMISSION MUST THEREFORE BE DISMISSED .

12 AS REGARDS THE SUBMISSION THAT THE APPLICANT EXPORTED ITS PRODUCTION OUTSIDE THE COMMUNITY , IT NEED ONLY BE POINTED OUT , AS THE COURT HAS ALREADY HAD OCCASION TO DO , THAT THE PRODUCTION RESTRICTIONS PROVIDED FOR BY DECISION NO 2794/80 ARE NOT CONFINED TO STEEL DISPOSED OF WITHIN THE COMMON MARKET BUT ALSO APPLY TO QUANTITIES DESTINED FOR EXPORT , PARTLY BECAUSE OF THE NEED TO ENSURE THAT THE INTERNATIONAL AGREEMENTS ENTERED INTO BY THE COMMUNITY ARE COMPLIED WITH AND PARTLY BECAUSE OF THE DANGER THAT EXPORTED STEEL MIGHT FIND ITS WAY BACK ON TO THE COMMON MARKET ( FOR THE COURT ' S MOST RECENT JUDGMENT , SEE THAT OF 11 MAY 1983 IN CASE 24/81 , KLOCKNER , ( 1983 ) ECR 1451 , PARA . 4 ). THIS SUBMISSION MUST THEREFORE ALSO BE DISMISSED .

13 IN THE ALTERNATIVE , THE APPLICANT SUBMITS THAT THE LEVYING OF THE FINE COULD ENDANGER ITS VERY EXISTENCE , SINCE IT HAS NEITHER THE RESERVES NOR THE SIZE TO COPE WITH THE FINE IMPOSED . IT REQUESTS ITS REDUCTION ON THAT GROUND . IN ANSWER TO THAT SUBMISSION IT MAY BE POINTED OUT , AS THE COURT HAS REPEATEDLY HELD , MOST RECENTLY IN ITS JUDGMENT OF 14 DECEMBER 1983 IN CASE 263/82 ( KLOCKNER , ( 1983 ) ECR 4143 ), THAT AN UNDERTAKING MAY NOT RELY UPON THE ECONOMIC DIFFICULTIES WHICH IT MUST CONTEND WITH IN ORDER TO EXEMPT ITSELF FROM THE RESTRICTIONS IMPOSED ON ACCOUNT OF THE CRISIS AND EXCEED AT WILL THE PRODUCTION QUOTA ALLOCATED TO IT . SUCH CONDUCT WOULD CREATE INCREASED DIFFICULTIES FOR ALL THE OTHER UNDERTAKINGS AND WOULD EVENTUALLY BRING ABOUT THE COLLAPSE OF THE ENTIRE QUOTA SYSTEM . THE APPLICANT MUST THEREFORE BEAR THE CONSEQUENCES , WHICH IT WAS PERFECTLY ABLE TO FORESEE , OF ITS FAILURE TO SUBMIT TO A DISCIPLINE IMPOSED IN THE GENERAL INTEREST . THE ALTERNATIVE SUBMISSION MUST THEREFORE BE DISMISSED .

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

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

ON THOSE GROUNDS ,
THE COURT ( SECOND CHAMBER )
HEREBY :
1 . DISMISSES THE APPLICATION ;

2.ORDERS THE APPLICANT TO PAY THE COSTS , INCLUDING THE COSTS OF THE APPLICATION FOR INTERIM MEASURES .