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

ECSC - PRODUCTION - STEEL PRODUCTION QUOTA SYSTEM - EXCLUSION OF CERTAIN UNDERTAKINGS FROM THE GRANT OF ADDITIONAL QUOTAS BY REASON OF THE NATURE OF THE AID RECEIVED - DISCRIMINATION - ABSENCE - COMPATIBILITY WITH THE RULES ON AID
( ECSC TREATY , ART . 4 ( B ); DECISIONS NOS 2320/81 , 2177/83 , ART . 18 , AND 2748/83 )

FOR THE COMMISSION TO BE ACCUSED OF DISCRIMINATION , IT MUST BE SHOWN TO HAVE TREATED LIKE CASES DIFFERENTLY , THEREBY SUBJECTING SOME TO DISADVANTAGES AS OPPOSED TO OTHERS , WITHOUT SUCH DIFFERENTIATION BEING JUSTIFIED BY THE EXISTENCE OF SUBSTANTIAL OBJECTIVE DIFFERENCES .

THAT IS NOT SO WHERE , UNDER THE STEEL PRODUCTION QUOTA SYSTEM THE COMMISSION , BY MEANS OF DECISION NO 2748/83 , ADOPTED ON THE BASIS OF ARTICLE 18 OF DECISION NO 2177/83 , WHICH ALLOWS IT TO MAKE ADJUSTMENTS THERETO MADE NECESSARY BY UNFORESEEN CIRCUMSTANCES , EXTENDS THE CATEGORY OF UNDERTAKINGS ABLE TO RECEIVE ADDITIONAL QUOTAS WHILE EXCLUDING ONLY UNDERTAKINGS WHICH HAVE RECEIVED NATIONAL AID INTENDED TO COVER OPERATING LOSSES , SINCE SUCH AID , CONTRARY TO OTHER FORMS OF AID , IS LIKELY TO DELAY REORGANIZATION AND A RETURN TO COMPETIVITY OF THE IRON AND STEEL INDUSTRY , WHICH THE COMMISSION HAS LEGITIMATELY SET AS ITS OBJECTIVES .

SUCH CONSIDERATION , UNDER THE PRODUCTION QUOTA SYSTEM , OF THE NATURE OF THE AID RECEIVED BY UNDERTAKINGS CANNOT BE REGARDED AS IN CONFLICT WITH THE SYSTEM OF AID ESTABLISHED BY DECISION NO 2320/81 .

IN CASE 250/83
FINSIDER ( SOCIETA FINANZIARIA SIDERURGICA PER AZIONI ), ROME , REPRESENTED BY SERGIO M . CARBONE OF THE GENOA BAR AND ROBERTO BARABINO , WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT THE CHAMBERS OF NICO SCHAEFFER , 12 AVENUE DE LA PORTE-NEUVE ,
APPLICANT ,
V
COMMISSION OF THE EUROPEAN COMMUNITIES , REPRESENTED BY ORESTE MONTALTO , A MEMBER OF ITS LEGAL DEPARTMENT , ACTING AS AGENT , WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT THE OFFICE OF MANFRED BESCHEL , ALSO A MEMBER OF ITS LEGAL DEPARTMENT , JEAN MONNET BUILDING , KIRCHBERG ,
DEFENDANT ,

APPLICATION FOR THE ANNULMENT OF A GENERAL DECISION OF THE COMMISSION , DECISION NO 2748/83 OF 30 SEPTEMBER 1983 AMENDING FOR THE SECOND TIME DECISION NO 2177/83/ECSC ON THE EXTENSION OF THE SYSTEM OF MONITORING AND PRODUCTION QUOTAS FOR CERTAIN PRODUCTS OF UNDERTAKINGS IN THE STEEL INDUSTRY ( OFFICIAL JOURNAL L 269 OF 1 OCTOBER 1983 , P . 55 ),

1 BY AN APPLICATION RECEIVED AT THE COURT REGISTRY ON 10 NOVEMBER 1983 THE SOCIETA FINANZIARIA SIDERURGICA PER AZIONI ( FINSIDER ), OF ROME , BROUGHT AN ACTION UNDER THE SECOND PARAGRAPH OF ARTICLE 33 OF THE ECSC TREATY FOR A DECLARATION THAT A GENERAL DECISION OF THE COMMISSION , DECISION NO 2748/83 OF 30 SEPTEMBER 1983 AMENDING FOR THE SECOND TIME DECISION NO 2177/83/ECSC ON THE EXTENSION OF THE SYSTEM OF MONITORING AND PRODUCTION QUOTAS FOR CERTAIN PRODUCTS OF UNDERTAKINGS IN THE STEEL INDUSTRY , IS VOID ( OFFICIAL JOURNAL L 269 , P . 55 ).

2 DURING THE PROCEEDINGS THE APPLICANT DEFINED THE PURPOSE OF THE ACTION . IT SEEKS A DECLARATION THAT THE CONTESTED DECISION IS VOID IN SO FAR AS IT PREVENTS AN UNDERTAKING IN RESPECT OF WHICH THE QUOTA SYSTEM CAUSED EXCEPTIONAL DIFFICULTIES FROM BENEFITING FROM AN ADJUSTMENT OF ITS QUOTAS PURSUANT TO ARTICLE 14 OF THE AFORESAID DECISION NO 2177/83 WHEN WITHIN THE TWELVE MONTHS PRIOR TO THE QUARTER IN QUESTION IT RECEIVED NATIONAL AID AUTHORIZED BY THE COMMISSION TO COVER ITS OPERATING LOSSES . THAT AMENDMENT OF ARTICLE 14 EXCLUDES THE GRANT OF ADDITIONAL QUOTAS EVEN IF THE LOSSES RESULT FROM THE FACT THAT THE UNDERTAKING WAS ENDEAVOURING TO FOLLOW THE COMMISSION ' S INDUSTRIAL POLICY .

3 THE APPLICANT PUTS FORWARD A NUMBER OF SUBMISSIONS IN SUPPORT OF ITS ACTION . IN SUBSTANCE IT MAINTAINS THAT DECISION NO 2748/83 IS UNLAWFUL BY REASON OF :
MISUSE OF POWERS WITH REGARD TO THE APPLICANT IN THAT THE DECISION DISCRIMINATES BETWEEN UNDERTAKINGS IN THE SAME MARKET SECTOR OF THE STEEL INDUSTRY , WHICH IS ALSO CONTRARY TO ARTICLE 4 ( B ) OF THE ECSC TREATY .

INFRINGEMENT OF ARTICLE 18 OF DECISION NO 2177/83 , ON WHICH THE COMMISSION BASED THE CONTESTED DECISION .

MISUSE OF POWERS WITH REGARD TO THE APPLICANT IN THAT THE TRUE AIM OF THE CONTESTED DECISION IS TO AMEND DECISION NO 2320/81 ON AID TO THE STEEL INDUSTRY .

BREACH OF ESSENTIAL PROCEDURAL REQUIREMENTS , ESPECIALLY THE OBLIGATION TO STATE REASONS PROVIDED FOR IN ARTICLE 15 OF THE ECSC TREATY .

4 WITH REGARD TO THOSE SUBMISSIONS IT MUST BE BORNE IN MIND , FIRST , THAT THE ACTION HAS BEEN BROUGHT AGAINST A GENERAL DECISION UNDER THE SECOND PARAGRAPH OF ARTICLE 33 OF THE ECSC TREATY , ACCORDING TO WHICH UNDERTAKINGS MAY INSTITUTE PROCEEDINGS AGAINST GENERAL DECISIONS WHICH THEY CONSIDER INVOLVE A MISUSE OF POWERS AFFECTING THEM . IN CONSEQUENCE THE SUBMISSION OF BREACH OF ESSENTIAL PROCEDURAL REQUIREMENTS MAY BE DISMISSED STRAIGHTAWAY SINCE SUCH A SUBMISSION IS OBVIOUSLY ALIEN TO THE CONCEPT OF MISUSE OF POWERS . AS FOR THE OTHER SUBMISSIONS , THEIR SUBSTANCE MUST BE CONSIDERED BEFORE IT MAY BE DETERMINED WHETHER OR NOT THEY CONCERN THE CONCEPT OF MISUSE OF POWERS .

THE ALLEGED DISCRIMINATION WITH REGARD TO THE APPLICANT
5 THE APPLICANT STATES THAT ARTICLE 14 OF DECISION NO 2177/83 IN ITS ORIGINAL VERSION ESTABLISHED AN OBJECTIVE CRITERION FOR ENTITLEMENT TO ADDITIONAL QUOTAS , NAMELY ITS RESTRICTION TO UNDERTAKINGS WHICH HAD NOT ALREADY RECEIVED NATIONAL AID OTHER THAN AID FOR CLOSURE AND THAT CRITERION DID NOT CAUSE UNREASONABLE DISCRIMINATION BETWEEN THE UNDERTAKINGS . BY MAKING IT POSSIBLE FOR UNDERTAKINGS WHICH HAD RECEIVED OTHER FORMS OF NATIONAL AID WITH THE EXCEPTION OF THAT INTENDED TO COVER OPERATING LOSSES TO OBTAIN ADDITIONAL QUOTAS , DECISION NO 2748/83 INTRODUCED DISCRIMINATION AGAINST UNDERTAKINGS WHICH RECEIVED THE LATTER KIND OF AID AND THUS RESTRICTED THEIR ABILITY AND PRODUCTIVE CAPACITY IN RELATION TO ALL OTHER COMPETING UNDERTAKINGS . SUCH DISCRIMINATION IS SAID TO BE BASED ON AN ARBITRARY , FORMAL AND NOMINAL CRITERION WHICH EXCLUDES IN ADVANCE ANY ANALYSIS OF THE TRUE REASONS FOR THE GRANT OF THE AID IN QUESTION .

6 MOREOVER , DECISION NO 2748/83 TENDS TO EXCLUDE THE POSSIBILITY OF ADDITIONAL QUOTAS FOR UNDERTAKINGS WHICH HAVE THE WORST OPERATING RESULTS AND WHOSE NEEDS ARE THUS THE MOST URGENT . THE EFFECT OF THE DECISION WOULD THUS BE ENTIRELY THE OPPOSITE OF THE OBJECTIVE SOUGHT IN GIVING THE COMMISSION POWER TO DRAW UP A SCHEME OF ADDITIONAL QUOTAS FOR UNDERTAKINGS FOR WHICH THE SYSTEM OF QUOTAS HAD CREATED EXCEPTIONAL DIFFICULTIES . IN THOSE CIRCUMSTANCES THE APPLICANT CONCLUDES THAT THE DISCRIMINATION IS NOT ONLY CONTRARY TO ARTICLE 4 ( B ) OF THE TREATY BUT ALSO REPRESENTS A MISUSE OF POWERS IN ITS CASE .

7 THE COMMISSION CONTENDS THAT WHEN THE STEEL MARKET CRISIS BECAME WORSE , AND IN PARTICULAR WHEN UNFORESEEN DIFFICULTIES IN THE APPLICATION OF DECISION NO 2177/83 AROSE , IT BECAME NECESSARY PURSUANT TO ARTICLE 18 OF DECISION NO 2177/83 TO AMEND ARTICLE 14 THEREOF TO MAKE IT POSSIBLE TO GRANT ADDITIONAL QUOTAS TO UNDERTAKINGS WHICH HAD RECEIVED AID OTHER THAN THAT INTENDED FOR CLOSURE WHILE STILL EXCLUDING UNDERTAKINGS WHICH HAD RECEIVED AID TO COVER OPERATING LOSSES . THE LATTER KIND OF AID PRODUCED THE MOST DAMAGING EFFECT ON COMPETITION AND IS THE FARTHEST FROM THE TRUE OBJECTIVE PURSUED BY THE COMMISSION , NAMELY TO RESTRUCTURE UNDERTAKINGS . IN INTRODUCING A NEW CRITERION WHICH WAS OBJECTIVE AND GENERAL AND THUS NOT DISCRIMINATORY VIS-A-VIS THE APPLICANT , THE COMMISSION WAS MERELY EXERCISING ITS DISCRETION FOR THE PURPOSE OF AN EQUITABLE MANAGEMENT OF THE QUOTA SYSTEM .

8 AS THE COURT HAS SAID , INTER ALIA IN ITS JUDGMENT OF 13 JULY 1962 IN JOINED CASES 17 AND 20/61 KLOCKNER-WERKE V HIGH AUTHORITY (( 1962 ) ECR 325 ), FOR THE COMMISSION TO BE ACCUSED OF DISCRIMINATION , IT MUST BE SHOWN TO HAVE TREATED LIKE CASES DIFFERENTLY , THEREBY SUBJECTING SOME TO DISADVANTAGES AS OPPOSED TO OTHERS , WITHOUT SUCH DIFFERENTIATION BEING JUSTIFIED BY THE EXISTENCE OF SUBSTANTIAL OBJECTIVE DIFFERENCES . IN ORDER TO DETERMINE WHETHER THE DIFFERENT TREATMENT OF WHICH THE APPLICANT ACCUSES THE COMMISSION MAY CONSTITUTE A MISUSE OF POWERS IN ITS CASE , IT IS THEREFORE NECESSARY IN THE FIRST PLACE TO CONSIDER WHETHER THE TREATMENT IS BASED ON THE EXISTENCE OF OBJECTIVE AND SUBSTANTIAL DIFFERENCES HAVING REGARD TO THE AIMS WHICH THE COMMISSION MAY LAWFULLY PURSUE AS PART OF ITS INDUSTRIAL POLICY IN THE EUROPEAN STEEL INDUSTRY .

9 IT APPEARS FROM THE PREAMBLES TO BOTH COMMISSION DECISION NO 2320/81 OF 7 AUGUST 1981 ESTABLISHING COMMUNITY RULES FOR AIDS TO THE STEEL INDUSTRY ( OFFICIAL JOURNAL L 228 , P . 14 ) AND THE AFORESAID DECISION NO 2177/83 EXTENDING THE QUOTA SYSTEM THAT THE RULES PURSUE A COMMON AIM , NAMELY TO PROMOTE THE RESTRUCTURING NEEDED TO ADAPT PRODUCTION AND CAPACITY TO FORESEEABLE DEMAND AND TO RE-ESTABLISH THE COMPETIVITY OF THE EUROPEAN STEEL INDUSTRY . IT IS CONSISTENT WITH THAT AIM THAT UNDERTAKINGS WHICH HAVE RECEIVED A FORM OF AID LIKELY TO DELAY THE DESIRED RESTRUCTURING , NAMELY AID INTENDED TO COVER OPERATING LOSSES , SHOULD BE EXCLUDED FROM THE BENEFIT OF THE ADDITIONAL QUOTAS , THE GRANT OF WHICH MAY LIKEWISE REDUCE THEIR WILLINGNESS TO RESTRUCTURE . MOREOVER , THE COMMISSION CANNOT BE REPROACHED FOR IMPOSING A PRECISE AND OBJECTIVE CRITERION LEAVING NO ROOM FOR CONSIDERATION OF THE SPECIAL CIRCUMSTANCES WHICH HAVE LED IN EACH CASE TO THE OPERATING LOSSES COVERED BY THE NATIONAL AID IN QUESTION .

10 ON THE CONTRARY , TO HAVE ENABLED UNDERTAKINGS WHICH DURING THE PREVIOUS TWELVE MONTHS HAVE RECEIVED OTHER KINDS OF NATIONAL AID AUTHORIZED BY THE COMMISSION TO OBTAIN ADDITIONAL QUOTAS DOES NOT CONSTITUTE A MISUSE OF POWER WITH REGARD TO THE APPLICANT . THOSE OTHER KINDS OF AID ( INVESTMENT AID , AID FOR CLOSURE OR RESEARCH AND DEVELOPMENT ) ARE IN FACT LIKELY TO ENCOURAGE RESTRUCTURING AND IMPROVEMENT OF COMPETITIVITY . THE DISTINCTION MADE BY THE CONTESTED DECISION BETWEEN SUCH AID AND AID INTENDED TO COVER OPERATING LOSSES IS THUS BASED ON AN OBJECTIVE AND SUBSTANTIAL CRITERION WITH REGARD TO THE AIMS WHICH THE COMMISSION MAY LAWFULLY PURSUE AS PART OF ITS INDUSTRIAL POLICY .

11 IT FOLLOWS THAT THE FIRST SUBMISSION MUST BE REJECTED .

ALLEGED INFRINGEMENT OF ARTICLE 18 OF DECISION NO 2177/83
12 THE APPLICANT STATES THAT DECISION NO 2748/83 IS BASED ON ARTICLE 18 OF DECISION NO 2177/83 WHICH AUTHORIZES THE COMMISSION , IF THE APPLICATION OF DECISION NO 2177/83 ENCOUNTERS ANY UNFORESEEN DIFFICULTIES , TO CARRY OUT THE NECESSARY ADJUSTMENTS BY GENERAL DECISION . THE COMMISSION HAD BEEN MAKING INDIVIDUAL DECISIONS IN RELATION TO AID BY THE MEMBER STATES TO THEIR RESPECTIVE STEEL UNDERTAKINGS AS EARLY AS 29 JANUARY 1983 . BEFORE ADOPTING DECISION NO 2177/83 IT THUS HAD FULL KNOWLEDGE OF THE VARIOUS KINDS OF AID WHICH THE STATES INTENDED TO GRANT AND THUS WAS IN A POSITION TO FORESEE THE NUMBER OF UNDERTAKINGS WHICH COULD NOT BENEFIT FROM THE ADJUSTMENTS PROVIDED FOR IN ARTICLE 14 AS ORIGINALLY DRAFTED . CONSEQUENTLY , THE DIFFICULTIES CITED BY THE COMMISSION TO JUSTIFY THE ADOPTION OF DECISION NO 2748/83 WERE NOT UNFORESEEN AND THE DECISION WAS ACCORDINGLY ILLEGAL FOR INFRINGEMENT OF ARTICLE 18 OF DECISION NO 2177/83 .
13 THE COMMISSION , ON THE OTHER HAND , MAINTAINS THAT AS SOON AS DECISION NO 2177/83 WAS ADOPTED NUMEROUS APPLICATIONS FOR AN ADJUSTMENT OF QUOTAS WERE MADE TO IT BY SMALL AND MEDIUM-SIZE UNDERTAKINGS WHICH ALLEGED THAT THEY HAD EXCEPTIONAL FINANCIAL DIFFICULTIES AS A RESULT OF THE QUOTA SYSTEM AND THE INTENSIFICATION OF THE CRISIS . ON CONSIDERING THE SITUATION OF THOSE UNDERTAKINGS THE COMMISSION FOUND THAT SINCE THEY HAD RECEIVED AID , OFTEN MODEST AND FOR PURPOSES OTHER THAN TO COVER OPERATING LOSSES , THEY COULD NO LONGER OBTAIN AN ADJUSTMENT OF THEIR QUOTAS . IT WAS ONLY THEN THAT THE COMMISSION BECAME AWARE THAT THE EFFECT OF ARTICLE 14 OF DECISION NO 2177/83 WAS TO EXCLUDE FROM THE BENEFIT OF ADJUSTMENT SOME UNDERTAKINGS WHICH DESERVED IT . IN THE CIRCUMSTANCES THE COMMISSION CONCLUDED THAT THE APPLICATION OF THE SAID PROVISION HAD IN FACT ENCOUNTERED UNFORESEEN DIFFICULTIES AND THAT IT WAS PERFECTLY ENTITLED TO REMEDY THE SITUATION BY ADOPTING DECISION NO 2748/83 PURSUANT TO ARTICLE 18 OF DECISION NO 2177/83 .
14 FOR THE PURPOSE OF RESOLVING THIS PROBLEM IT MUST FIRST OF ALL BE EMPHASIZED THAT THE PURPOSE OF THE AMENDMENT TO ARTICLE 14 OF DECISION NO 2177/83 IS WITHIN THE LIMITS OF THE ADJUSTMENTS AUTHORIZED BY ARTICLE 18 THEREOF . THE SUBMISSION MADE BY THE APPLICANTS CONCERNS ONLY THE ACTUAL CIRCUMSTANCE WHICH JUSTIFIES THE AUTHORIZATION , NAMELY THAT THE DIFFICULTIES ENCOUNTERED WERE IN FACT UNFORESEEN . EVEN IF THE COMMISSION OUGHT TO HAVE FORESEEN THE DIFFICULTIES IN QUESTION WHEN ADOPTING DECISION NO 2177/83 , ITS FAILURE TO DO SO CANNOT AMOUNT TO A MISUSE OF POWERS . IT FOLLOWS THAT THE SUBMISSION MUST BE DISMISSED .

ALLEGED INFRINGEMENT OF DECISION NO 2320/81
15 THE APPLICANT MAINTAINS THAT ALTHOUGH THE AIM OF DECISION NO 2748/83 IS APPARENTLY TO REGULATE PRODUCTION QUOTAS , IN FACT IT SEEKS TO ESTABLISH A HIERARCHY BETWEEN THE VARIOUS KINDS OF AID WHICH WAS CERTAINLY NOT CONTEMPLATED BY DECISION NO 2320/81 . THE REAL AIM OF DECISION NO 2748/83 IS THUS TO AMEND THE RULES ON AID AND THAT AMOUNTS TO A MISUSE OF POWERS VIS-A-VIS THE APPLICANT .

16 THAT ARGUMENT IS OBVIOUSLY UNFOUNDED . IN THE FIRST PARAGRAPH OF SECTION II OF THE PREAMBLE TO DECISION NO 2320/81 THE COMMISSION STATED THAT IT WAS APPROPRIATE TO DIFFERENTIATE BETWEEN VARIOUS FORMS OF AID , WITH A VIEW TO PLACING STRICTER TIME CONSTRAINTS ON THOSE WHICH WERE LIKELY TO HAVE MORE DAMAGING EFFECTS ON COMPETITION AND TO BE LESS EFFECTIVE IN PROMOTING RESTRUCTURING . IN APPLICATION OF THAT PRINCIPLE ARTICLE 5 OF THE DECISION SUBJECTS THE AUTHORIZATION OF AID FOR CONTINUED OPERATION TO PARTICULARLY STRICT CONDITIONS BY COMPARISON WITH THOSE PROVIDED FOR OTHER FORMS OF AID , APART FROM EMERGENCY AID WHICH COULD NOT BE AUTHORIZED AFTER 31 DECEMBER 1981 . IT IS QUITE CONSISTENT WITH THE ASSESSMENT BY THE COMMISSION OF THE VARIOUS FORMS OF AID THAT BY MEANS OF THE CONTESTED DECISION IT INTRODUCED INTO THE QUOTA SYSTEM A DISTINCTION BETWEEN AID INTENDED TO COVER OPERATING LOSSES AND OTHER FORMS OF AID AUTHORIZED BY IT .

17 IN THE CIRCUMSTANCES IT MUST BE HELD THAT THE APPLICANT HAS NOT SUCCEEDED IN SHOWING THAT DECISION NO 2748/83 IS VITIATED BY MISUSE OF POWERS VIS-A-VIS THE APPLICANT . CONSEQUENTLY THE ACTION MUST BE DISMISSED IN ITS ENTIRETY .

COSTS
18 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 ( FIFTH CHAMBER )
HEREBY :
1 . DISMISSES THE APPLICATION .

2 . ORDERS THE APPLICANT TO PAY THE COSTS .