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

ECSC - PRODUCTION - STEEL PRODUCTION QUOTA SYSTEM - EXCEEDING OF QUOTAS - FIXING OF A FINE - ADMINISTRATIVE PROCEDURE - REGULARITY - TOLERANCE IN EXCESS - CONDITIONS OF APPLICATION
( ECSC TREATY , ARTS 36 AND 58 ; GENERAL DECISION NO 1831/81 , ART . 11 )

IN CASE 46/85
MANCHESTER STEEL LIMITED , REPRESENTED BY T . R . OTTERVANGER , OF THE ROTTERDAM BAR , WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT THE CHAMBERS OF E . ARENDT , 34 RUE PHILIPPE-II ,
APPLICANT ,
V
COMMISSION OF THE EUROPEAN COMMUNITIES , REPRESENTED BY FRANK BENYON , A MEMBER OF ITS LEGAL DEPARTMENT , ACTING AS AGENT , WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT THE OFFICE OF G . KREMLIS , JEAN MONNET BUILDING , KIRCHBERG ,
DEFENDANT ,

APPLICATION FOR A DECLARATION THAT THE COMMISSION ' S DECISION OF 19 DECEMBER 1984 IMPOSING A FINE ON THE APPLICANT FOR HAVING EXCEEDED STEEL PRODUCTION QUOTAS IS VOID ,

1 BY AN APPLICATION LODGED AT THE COURT ON 18 FEBRUARY 1985 , MANCHESTER STEEL LIMITED ( HEREINAFTER REFERRED TO AS ' MANCHESTER STEEL ' ), WHOSE REGISTERED OFFICE IS IN MANCHESTER ( UNITED KINGDOM ), BROUGHT AN ACTION PURSUANT TO THE SECOND PARAGRAPH OF ARTICLE 33 OF THE ECSC TREATY FOR A DECLARATION THAT THE COMMISSION ' S DECISION OF 19 DECEMBER 1984 IMPOSING ON MANCHESTER STEEL A FINE OF 172 987 ECU FOR HAVING EXCEEDED ITS PRODUCTION QUOTAS FOR THE FIRST , SECOND AND THIRD QUARTERS OF 1982 IS VOID .

2 IT APPEARS FROM THE DOCUMENTS BEFORE THE COURT THAT BY A LETTER OF 15 NOVEMBER 1983 THE COMMISSION ACCUSED MANCHESTER STEEL OF HAVING EXCEEDED THE PRODUCTION QUOTAS FOR THE QUARTERS IN QUESTION AND FOR THE FOURTH QUARTER OF 1981 . MANCHESTER STEEL WAS INVITED TO SUBMIT ITS COMMENTS AND BY A LETTER DATED 23 NOVEMBER 1984 IT EXPRESSED RESERVATIONS AS TO THE ACCURACY OF THE FIGURES RELIED ON BY THE COMMISSION .

3 IN THE COURSE OF A HEARING WHICH TOOK PLACE ON 18 MAY 1984 AND WHICH WAS INTENDED TO SETTLE THE POINTS OF CONTENTION EXISTING BETWEEN MANCHESTER STEEL AND THE COMMISSION , IT WAS DECIDED THAT THE COMMISSION WOULD CARRY OUT AN INSPECTION AT THE COMPANY ' S PREMISES .

4 THE RESULTS OF THAT INSPECTION LED THE COMMISSION TO DISCONTINUE THE PROCEDURE FOR INFRINGEMENT IN RESPECT OF THE FOURTH QUARTER OF 1981 AND TO ASSESS THE EXCESS PRODUCTION FOR THE QUARTERS IN QUESTION IN THESE PROCEEDINGS AT 2 237 TONNES RATHER THAN THE 2 329 TONNES PREVIOUSLY CALCULATED .

5 HOWEVER , IN THE COURSE OF A HEARING HELD ON 4 DECEMBER 1984 CONCERNING ANOTHER PROCEDURE FOR INFRINGEMENT , IT WAS DECIDED THAT THE EXPERTS OF BOTH PARTIES SHOULD MEET ON THAT SAME DAY AND REACH AGREEMENT ON A JOINT DOCUMENT SETTING OUT THE FIGURES RELATING TO THE THREE QUARTERS IN QUESTION . THE COMMISSION NEVERTHELESS RESERVED THE RIGHT , IN THE ABSENCE OF AGREEMENT , TO BASE ITS DECISION ON THE FIGURES RESULTING FROM THE INSPECTION CARRIED OUT AT THE UNDERTAKING ' S PREMISES .

6 SINCE NO AGREEMENT WAS REACHED THE COMMISSION ADOPTED THE CONTESTED DECISION , IN WHICH IT FOUND THAT MANCHESTER STEEL HAD EXCEEDED : ( A ) ITS PRODUCTION QUOTA FOR CATEGORY IV PRODUCTS BY 751 TONNES IN THE FIRST QUARTER OF 1982 AND BY 695 TONNES IN THE SECOND QUARTER OF 1982 IN BREACH OF COMMISSION DECISION NO 1831/81/ECSC OF 24 JUNE 1981 ( OFFICIAL JOURNAL 1981 , L 180 , P . 1 ); ( B ) ITS PRODUCTION QUOTA FOR CATEGORY V PRODUCTS BY 791 TONNES IN THE THIRD QUARTER OF 1982 IN BREACH OF COMMISSION DECISION NO 1696/82/ECSC OF 30 JUNE 1982 ( OFFICIAL JOURNAL 1982 , L 191 , P . 1 ).

7 BY THE SAME DECISION THE COMMISSION IMPOSED ON MANCHESTER STEEL A FINE OF 172 987 ECU .
8 MANCHESTER STEEL BROUGHT THIS ACTION AGAINST THAT DECISION .

9 IN ITS APPLICATION MANCHESTER STEEL PUT FORWARD FIVE SUBMISSIONS IN SUPPORT OF ITS ACTION . IN ITS REPLY , HOWEVER , IT DECLARED THAT IT WISHED TO WITHDRAW THE FIRST AND FIFTH SUBMISSIONS . IN ADDITION , BY A LETTER OF 15 JULY 1985 , MANCHESTER STEEL STATED THAT IT ALSO WISHED TO WITHDRAW ITS FOURTH SUBMISSION .

10 IT IS THEREFORE NECESSARY TO CONSIDER ONLY THE SECOND AND THIRD SUBMISSIONS .

THE SECOND SUBMISSION CONCERNING THE BREACH OF THE PRINCIPLE OF PROPER ADMINISTRATION
11 ALTHOUGH IT STATES THAT IT RAISES NO OBJECTION TO THE FIGURES FINALLY RELIED UPON BY THE COMMISSION IN THE CONTESTED DECISION , MANCHESTER STEEL CLAIMS THAT IN THE COURSE OF THE PROCEDURE LEADING TO THE ADOPTION OF THAT DECISION THE COMMISSION COMMITTED A BREACH OF THE GENERAL PRINCIPLE OF PROPER ADMINISTRATION WHICH , IN ITS VIEW , RENDERS THE DECISION IN QUESTION VOID .

12 MANCHESTER STEEL REFERS IN THAT RESPECT TO THE HEARING OF 4 DECEMBER 1984 , AT WHICH , AS IS CLEAR FROM THE TELEX MESSAGE OF 26 NOVEMBER 1984 , IT WAS INTENDED , INTER ALIA , TO HOLD FURTHER DISCUSSIONS ABOUT THE EXCESS PRODUCTION FOR THE FIRST , SECOND AND THIRD QUARTERS OF 1982 . AT THAT HEARING IT WAS AGREED THAT THE COMMISSION AND MANCHESTER STEEL WOULD CONSIDER TOGETHER AT A ' PARALLEL ' MEETING TO BE HELD THE SAME DAY THE FIGURES FOR THE THREE QUARTERS IN QUESTION SO AS TO REMOVE ANY REMAINING DISAGREEMENT IN THAT RESPECT . HOWEVER , ACCORDING TO MANCHESTER STEEL , WHILE THE JOINT EVALUATION OF THOSE FIGURES WAS STILL IN PROGRESS , THE COMMISSION ADOPTED THE CONTESTED DECISION .

13 THE COMMISSION RECALLS , FIRST OF ALL , THAT IT GAVE MANCHESTER STEEL SEVERAL OPPORTUNITIES TO SUBMIT ITS COMMENTS REGARDING THE PROCEDURE FOR INFRINGEMENT IN QUESTION .

14 AS FOR THE RESERVATIONS EXPRESSED BY MANCHESTER STEEL REGARDING THE WAY IN WHICH THAT PROCEDURE WAS TERMINATED , THE COMMISSION OBSERVES THAT , ALTHOUGH IT IS TRUE THAT IN THE COURSE OF THE MEETING HELD ON 4 DECEMBER 1984 THE CHAIRMAN OF THAT MEETING SUGGESTED , BY WAY OF A LAST GESTURE ON THE PART OF THE COMMISSION , A MEETING BETWEEN EXPERTS TO REACH AGREEMENT ON THE FIGURES TO BE ADOPTED FOR THE PURPOSES OF THE PROCEDURE IN QUESTION , IT HAD BEEN EXPRESSLY STATED THAT THAT NEW MEETING WAS INTENDED TO PRODUCE A WRITTEN AGREEMENT ON THE SAME DAY , FAILING WHICH THE COMMISSION RESERVED THE RIGHT TO BASE ITS DECISION ON THE FIGURES RESULTING FROM THE INSPECTION CARRIED OUT AT THE UNDERTAKING ' S PREMISES .

15 IT SHOULD BE OBSERVED , IN THE FIRST PLACE , THAT , ACCORDING TO ARTICLE 36 OF THE ECSC TREATY , BEFORE IMPOSING A PECUNIARY SANCTION OR ORDERING A PERIODIC PENALTY PAYMENT AS PROVIDED FOR IN THE TREATY , THE COMMISSION MUST GIVE THE PARTY CONCERNED AN OPPORTUNITY TO SUBMIT ITS COMMENTS . IT IS NOT DISPUTED THAT MANCHESTER STEEL WAS GIVEN SEVERAL SUCH OPPORTUNITIES .

16 CONSEQUENTLY , THE COMMISSION CANNOT BE ACCUSED OF ANY INFRINGEMENT OF ARTICLE 36 .
17 AS REGARDS THE MEETING OF EXPERTS REFERRED TO ABOVE , IT SHOULD BE NOTED THAT , SINCE MANCHESTER STEEL DECLARES THAT IT ACCEPTS THE FIGURES RELIED UPON BY THE COMMISSION IN THE CONTESTED DECISION , IT WOULD HAVE GAINED NOTHING FROM THE CONTINUATION OF THAT MEETING BEYOND THE TIME-LIMIT FIXED FOR REACHING AN AGREEMENT .

18 ACCORDINGLY THAT SUBMISSION MUST BE REJECTED .

THE THIRD SUBMISSION CONCERNING THE INFRINGEMENT OF ARTICLE 11 ( 2 ) OF DECISION NO 1831/81
19 MANCHESTER STEEL CLAIMS THAT THE COMMISSION WRONGFULLY REFUSED TO APPLY TO IT THE TOLERANCE OF 3% PROVIDED FOR IN ARTICLE 11 ( 2 ) OF DECISION NO 1831/81/ECSC .
20 ARTICLE 11 PROVIDES INTER ALIA THAT :
' 1 . A TOLERANCE OF 3% IN EXCESS SHALL BE ALLOWED ON EACH PRODUCTION QUOTA FOR CATEGORIES IA , IB , IC AND ID , IT BEING UNDERSTOOD THAT PRODUCTION OF THESE CATEGORIES AS A WHOLE MAY NOT EXCEED THE SUM OF THE QUOTAS ASSIGNED TO EACH OF THESE CATEGORIES OF PRODUCTS .

2 . IN THE CASE OF UNDERTAKINGS WHICH PRODUCE ONLY ONE CATEGORY , A TOLERANCE OF 3% IN EXCESS OF THE PART OF THEIR PRODUCTION QUOTA WHICH MAY BE DELIVERED ON THE COMMON MARKET SHALL BE ALLOWED WITHIN THE LIMIT OF THE PRODUCTION QUOTA .

3 . ANY UNDERTAKING WHICH HAS NOT COME TO THE END OF ITS PRODUCTION QUOTAS OR OF THE PART OF ITS QUOTAS WHICH MAY BE DELIVERED ON THE COMMON MARKET MAY CARRY FORWARD INTO THE ENSUING QUARTER UP TO 5% OF , AS THE CASE MAY BE , THEIR QUOTAS OR PART OF QUOTAS FOR THE SAME CATEGORY OF PRODUCT .

4 . UNDERTAKINGS MAY , HAVING MADE A PRIOR DECLARATION TO THE COMMISSION , ENTER INTO ARRANGEMENTS WITH OTHER UNDERTAKINGS DURING THE FIRST TWO MONTHS OF ANY QUARTER FOR THE EXCHANGE OR SALE OF QUOTAS OR PROPORTIONS OF QUOTA PERTAINING TO THE CURRENT QUARTER . '
21 MANCHESTER STEEL STATES THAT IN THE FIRST AND SECOND QUARTERS OF 1982 IT PRODUCED ONLY ONE OF THE CATEGORIES OF PRODUCTS COVERED BY THE MEASURES ADOPTED UNDER ARTICLE 58 OF THE ECSC TREATY AND THAT , CONSEQUENTLY , IT CAME WITHIN THE SCOPE OF ARTICLE 11 ( 2 ) CITED ABOVE .

22 HOWEVER , BECAUSE DURING THE PERIOD IN QUESTION MANCHESTER STEEL ' S DELIVERY QUOTAS EXCEEDED ITS PRODUCTION QUOTAS , THE COMMISSION REFUSED TO APPLY TO IT THE 3% TOLERANCE PROVIDED FOR IN THAT PROVISION .

23 MANCHESTER STEEL CONSIDERS , IN THE FIRST PLACE , THAT IN ITS CASE THE COMMISSION SHOULD HAVE APPLIED THE 3% TOLERANCE TO ITS PRODUCTION QUOTAS . OTHERWISE MANCHESTER STEEL COULD NOT HAVE THE SAME OR SIMILAR FLEXIBILITY AS THE UNDERTAKINGS WHICH ARE COVERED BY ARTICLE 11 ( 2 ) BUT WHOSE DELIVERY QUOTA IS LOWER THAN THEIR PRODUCTION QUOTA , NOR THAT WHICH UNDERTAKINGS PRODUCING PRODUCTS FALLING UNDER SEVERAL OF THOSE CATEGORIES HAVE BY VIRTUE OF ARTICLE 11 ( 1 ) OF DECISION NO 1831/81/ECSC .
24 IN THE EVENT OF THE COMMISSION ' S INTERPRETATION OF ARTICLE 11 ( 2 ) BEING FOLLOWED BY THE COURT , MANCHESTER STEEL CLAIMS , SECONDLY , THAT THAT ARTICLE IS CONTRARY TO THE PRINCIPLE OF EQUAL TREATMENT AND IS THEREFORE UNLAWFUL .

25 THE COMMISSION CONSIDERS ON THE OTHER HAND THAT ITS INTERPRETATION OF ARTICLE 11 ( 2 ) IS DICTATED BY THE VERY WORDING OF THAT PROVISION . IT NOTES IN ADDITION , IN THAT RESPECT , THAT , SIMILARLY , ARTICLE 11 ( 1 ) ALLOWS A TOLERANCE IN EXCESS FOR UNDERTAKINGS WHICH PRODUCE PRODUCTS FROM SEVERAL CATEGORIES ONLY IF THE SUM OF THE QUOTAS ASSIGNED TO EACH OF THOSE CATEGORIES OF PRODUCTS IS NOT EXCEEDED .

26 AS REGARDS THE ALLEGED BREACH OF THE PRINCIPLE OF EQUAL TREATMENT , THE COMMISSION NOTES THAT UNDERTAKINGS SUCH AS MANCHESTER STEEL MAY TAKE ADVANTAGE OF ARTICLE 11 ( 4 ). THAT ARTICLE AUTHORIZES THE SALES OF DELIVERY QUOTAS TO THIRD PARTIES , WHERE THE DELIVERY QUOTA OF SUCH UNDERTAKINGS EXCEEDS THEIR PRODUCTION QUOTA . AS IS CLEAR FROM THE CORRESPONDENCE BETWEEN THE COMMISSION AND MANCHESTER STEEL , THE LATTER MADE CONSIDERABLE USE OF THAT POSSIBILITY .

27 IT SHOULD BE NOTED THAT , AS IS CLEAR FROM THE WORDING OF ARTICLE 11 ( 2 ) OF DECISION NO 1831/81 , UNDERTAKINGS WHICH , LIKE MANCHESTER STEEL , PRODUCE ONLY ONE CATEGORY OF PRODUCTS SUBJECT TO THE QUOTA SCHEME , QUALIFY FOR A 3% TOLERANCE IN EXCESS ONLY IN RESPECT OF THAT PART OF THEIR PRODUCTION QUOTA WHICH MAY BE DELIVERED ON THE COMMON MARKET ' WITHIN THE LIMIT OF THE PRODUCTION QUOTA ' .

28 MANCHESTER STEEL ' S CLAIM THAT THE TOLERANCE IN QUESTION SHOULD HAVE BEEN APPLIED TO ITS PRODUCTION QUOTAS THEREFORE CONFLICTS WITH THE VERY WORDING OF ARTICLE 11 ( 2 ).

29 MOREOVER , THE FACT THAT THE PARTICULAR CIRCUMSTANCES OF MANCHESTER STEEL PREVENTED IT FROM TAKING ADVANTAGE OF THE TOLERANCE PROVIDED FOR IN THAT PROVISION DOES NOT PROVE THAT THE PROVISION BREACHES THE PRINCIPLE OF EQUAL TREATMENT AS BETWEEN STEEL PRODUCING UNDERTAKINGS .

30 IN FACT , NO UNDERTAKING WHICH PRODUCES ONLY ONE CATEGORY OF PRODUCTS IS AUTHORIZED UNDER ARTICLE 11 ( 2 ) TO EXCEED ITS PRODUCTION QUOTA .

31 IN ADDITION , EVEN IF THE POSITION OF UNDERTAKINGS WHICH PRODUCE PRODUCTS FROM SEVERAL CATEGORIES WERE COMPARABLE TO THAT OF UNDERTAKINGS WHICH PRODUCE PRODUCTS FROM ONLY ONE CATEGORY , IT SHOULD BE NOTED THAT THE TOLERANCE PROVIDED FOR IN ARTICLE 11 ( 1 ) FOR UNDERTAKINGS OF THE FIRST TYPE IS ALLOWED ONLY ON THE CONDITION THAT THE PRODUCTION OF ALL THE CATEGORIES IA , IB , IC AND ID DOES NOT EXCEED THE SUM OF THE QUOTAS ASSIGNED TO EACH OF THOSE CATEGORIES .

32 IT FOLLOWS THAT THAT SUBMISSION CANNOT BE ACCEPTED EITHER .

33 ACCORDINGLY , MANCHESTER STEEL ' S ACTION MUST BE DISMISSED IN ITS ENTIRETY .

COSTS
34 ARTICLE 69 ( 2 ) OF THE RULES OF PROCEDURE PROVIDES THAT 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 ( FIRST CHAMBER )
HEREBY :
( 1 ) DISMISSES THE APPLICATION ;

( 2 ) ORDERS THE APPLICANT TO PAY THE COSTS .