C-1/54

v

HIGH AUTHORITY OF THE EUROPEAN COAL AND STEEL COMMUNITY, represented by its Legal Adviser Michel Gaudet, acting as Agent, assisted by Jean Coutard, Advocate at the Conseil d'État and the Cour de Cassation, Paris, with an address for service in Luxembourg at its offices, 2 Place de Metz,

defendant,

APPLICATION for the annulment of Decisions Nos 1/54, 2/54 and 3/54 of the High Authority of 7 January 1954,

THE COURT

composed of: M. Pilotti, President, P. J. S. Serrarens and Ch. L. Hammes (Presi­ dents of Chambers), O. Riese, L. Delvaux, J. Rueff and A. van Kleffens, Judges,

On 9 February 1954, the Government of Under this new system, a variation from the French Republic lodged at the Court published prices no longer amounts to a Registry an application for the annulment prohibited practice if the seller can show of Decisions Nos 1/54, 2/54 and 3/54 of that the transaction in question does not the High Authority of 7 January 1954, fall within the categories of transactions published as follows: No 1/54 in the Offi­ covered by his price-list, or that the prices cial Journal, English Special Edition or conditions have been departed from 1952-1958, p. 14; No 2/54 in the Official uniformly in all comparable transactions Journal, English Special Edition 1952— (Decision No 1/54);—moreover, in the 1958, p. 15; and No 3/54 in the Journal case of the steel market, and the steel mar­ Officiel de la Communauté Européenne du ket alone, an average margin of 2.5% was Charbon et de l'Acier, 13 January 1954, p. introduced, within which a variation from 219. the lists was allowed in the case of all trans­ The application was submitted within the actions concluded within the preceding required period, in accordance with the sixty days, without the need for prior third paragraph ofArticle 33 ofthe Treaty, publication of new lists (Decision No and with Articles 84 and 85 of the Rules of 2/54);—lastly, for purposes ofverification, Procedure of the Court, and the applicant undertakings must submit fortnightly re­ has duly appointed an Agent. ports on all variations made on the steel It appears from the documents produced market (Decision No 3/54). by the parties as well as from the decisions The aforementioned decisions and com­ at issue that the facts of the case are as fol­ munications relating thereto were publish­ lows : ed in the Journal Officiel 1953, pp. 109 to Under the terms of Article 60 of the Trea­ 112, and 1954, pp. 217 to 224; Decisions ty, the High Authority on 2 May 1953 Nos 30/53, 31/53, 1/54 and 2/54 were adopted Decisions Nos 30/53 and 31/53 subsequently published in the Official which define the practices prohibited by Journal, English Special Edition 1952— Article 60 (1), and contain rules for the 1958, pp. 9 to 12 and 14 to 16. steel market relating to the publication of By its application, the Government of the price-lists and conditions of sale; under the French Republic contested the aforemen­ terms of these decisions, undertakings tioned decisions and asked the Court to were under an obligation to publish their price-lists beforehand and keep strictly to 'Annul Decisions Nos 1/54, 2/54 and 3/54 the prices stated therein — any variation in of the High Authority of 7 January 1954', relation to the aforementioned lists consti­ tuting, according to these texts, a prohibit­ which, at the public hearing, was reduced ed discriminatory practice. to a claim for the annulment of Decisions On 7 January 1954, the High Authority re­ Nos 1/54 and 3/54 as well as Articles 1 and laxed these rules by adopting Decisions 2 of Decision No 2/54. Nos 1/54 and 2/54 against which the pre­ sent proceedings are now brought. The Government of the French Republic

bases its application upon the following (c) Misuse of powers: in adopting the de grounds: cisions which are now being contested, the High Authority's motive was its intention A. Infringement of the Treaty; to lower the general price-level and pre B. Misuse of powers. vent price agreements. However, the pow ers which have been vested in the High Au The grounds put forward are supported by thority under Article 60 were conferred on the following arguments which may be it only so as to prevent discriminatory summarized as follows: practices; if it wished to pursue other ob jects, it could only do so within the frame (a) Infringement ofthe Treaty by reason of work of Articles 61 and 65. Decision No 1/54:

practice. Furthermore, the new ruling (De by Article 31 (1) ofthe Rules of Procedure, cision No 1/54) no longer amounts to pro extended by order of the President of the hibiting discriminatory practices: on the Court dated 4 March 1954. contrary, it makes these possible, for it makes the criterion meaningless, by basing The High Authority's Agent and Counsel itself on the completely abstruse notion of were duly appointed. 'comparable transactions' and by allowing continual variations in prices; the result is By its defence the High Authority requests that only strictly simultaneous transac

The new ruling (Decision No iting discrimination and duty to publish, as 2/54) does not allow purchasers to ascer a breach of the latter does not in itself tain the validity of the prices charged. Fur necessarily amount to discrimination thermore it makes the use of the right of where published price-lists are departed alignment, laid down in Article 60, impos from in a uniform manner in all compar sible, since the prices actually charged are able transactions. Moreover the only abso

FRANCE v HIGH AUTHORITY

Such a sys tem would have such adverse conse (b) The allegation of infringement of the quences that it could only be asked for if Treaty by reason of Decisions Nos 2/54 the Treaty unequivocally laid it down, and 3/54 cannot be regarded as well which it does not. founded: in fact, the decisions contested also rely upon the principle of prior publi (c) The allegation that there has been a cation, although Article 60, which speaks misuse of powers cannot be regarded as of prices 'applied' rather than 'to be appli well founded: in fact, Article 60 — as can ed', does not make this mandatory. What be seen from the use of the words 'in par is decisive is that the provisions of the ticular' — requires the High Authority in Treaty give the High Authority power to regulating publication, not merely to seek fix equitably to what extent and in what to prevent any discrimination, but also to form publication shall take place. If prices seek to attain 'all' the objectives laid down were tending to come down, which was the in Articles 2 and 4 of the Treaty, so that it case at the time when the decisions were must campaign both against price agree adopted, purchasers could not be expected ments and in support of tendencies to low to exercise any effective supervision over er prices.

This is only possi tion, as laid down in Articles 61 and 65. ble under the new system; the High Au thority cannot be criticized for combining The main grounds on which the contested the duty of publication with the duty to decisions were based, are not those stated give information. by the Government of the French Repub As regards alignment, in a market which is lic. The High Authority merely found that as perfectly organized as the steel market, the price of steel had fallen as a result of the it is always possible to know a competitor's state of the market, but it did not bring it

In fact, the President of the Court of Justice of 20 the rigorous enforcement of a system of March 1954, and was served on the High prior publication and a constant revision Authority on 4 May 1954, in accordance of price-lists, following any variation of with Article 33 (2) of the Rules of Proce prices, however slight, would have pre dure. vented prices from finding their own level; The rejoinder was lodged at the Court Re this could only have been achieved by gistry within the period laid down in the agreements between producers which President of the Court of 4 May 1954, as

Law

The Court's judgment in the present case has taken the following points of the law into account:

1 — Admissibility

The parties raise no objection of inadmissibility. The Court is of opinion that there are no grounds for it to raise the point of its own motion. The Court agrees with the Advocate General's view that the three decisions may be contested in a single action; in these circumstances, it will examine the ar­ guments put forward inasmuch as, in the opinion the Court, they cover each of the three decisions.

2 — The Substance of the Case

The applicant contests Decisions Nos 1/54, 2/54 and 3/54 on the grounds of in­ fringement of the Treaty and misuse of powers.

The criticism that the absence of any precise definition of exceptional transac­ tions opens the door to discriminatory practices and facilitates them instead of countering them, and so makes the concept of a discriminatory practice mean­ ingless, is likewise unfounded. It is true that the old system of strict adherence to published prices seems to have been intended to prevent any kind of discri­ mination, save where an undertaking knowingly failed to fulfil its obligations; on the other hand, under the new system, it is theoretically possible for an un­ dertaking to discriminate in good faith through being mistakenly of the opinion that it is dealing with a non-comparable or exceptional transaction; in fact, the new system leaves it to the undertaking itself to decide whether a transaction is of an exceptional or non-comparable kind. However, Decision No 1 /54 places the burden of proof on the undertakings; if these cannot prove that the trans­ action is an exceptional or non-comparable one, they will be responsible for their mistake and liable to the penalties provided by Article 64. Finally, it must be admitted that the concept of an exceptional or non-comparable transaction does not lend itself to an abstract definition. Transactions entered into at one day's interval may, in fact, be non-comparable transactions, if, in the meantime, the market has completely changed; on the other hand two transactions may be comparable even though entered into within several weeks of each other, if the market has remained stable during this period. Comparability can therefore only be assessed in the light of the state of the market; moreover a transaction can only be held to be an exceptional one in the light of its particular circumstances. The two factors—comparability and exceptional nature— can be objectively as­ sessed by the undertakings and by the High Authority, so that the system which is contested does not in fact make the concept of discrimination meaningless ; on the contrary it helps to curb any discriminatory practice. It also follows from what has been said that there is nothing in the applicant's contention that the duty to charge identical prices and lay down identical conditions of sale would only apply to simultaneous transactions.

The Court therefore holds that Decision No 1/54 does not amount to infringe­ ment of the Treaty. The application to annul that decision, inasmuch as it is based on an allegation of infringement of the Treaty, must therefore be dismis­ sed.

II — Decision No 2/54

The Court holds that Article 1 of Decision No 2/54 is inconsistent with the Treaty in so far as it allows undertakings to make a mean variation upward or downward between actual market prices and published prices without prior pu­ blication of amendments to price-lists. The grounds for regarding this as amoun­ ting to an infringement of the Treaty are as follows:

(1) Before Article 60 (2) of the Treaty is interpreted in detail, it is proper to ex­ amine what the High Authority's objectives must be when it defines prohibited practices and regulates the publication of prices and conditions of sale.

FRANCE v HIGH AUTHORITY

Furthermore, the words 'in particular' (Article 60 (1)) show that Article 60 deals mainly with unfair competitive practices and discriminatory practices.

(b) With particular reference to the part which under the Treaty is to be played by the publication of price-lists, the Court accepts the Advocate General's view that compulsory publication is provided for in the Treaty in order to attain the three following objectives:

(1) As far as possible to prevent prohibited practices; (2) To enable purchasers to learn exactly what prices will be charged and be able themselves to check whether any discrimination has taken place; (3) To enable undertakings to have an accurate knowledge of the prices of their competitors so as to enable them to align their prices.

Whilst publication is intended to meet the above-mentioned objectives, the Treaty does not consider that this alone will suffice to ensure the attainment of these objectives; publication is but one of the means provided for by the Treaty.

The publication of price-lists is a matter of public law, since the results under private law have not been dealt with by the Treaty. However, this public law

JUDGMENT OF 21. 12. 1954 — CASE 1/54

(2) Article 60 (1) directly and categorically prohibits certain practices; the High Authority is authorized to define them but it may not derogate from the rule that they are prohibited. Article 60 (2) provides for the compulsory publication ofthe price-lists 'for these purposes'. These words clearly show the instrumental nature of the subsequent provisions as to the publication of prices. This is categorically provided for; it is regarded as an appropriate means of attaining the objectives set out in the pre­ vious paragraph. It is thus only a means, but a means categorically laid down by the Treaty and not a means which may be replaced by any other means which might possibly achieve the same results. The mandatory nature of the duty to publish the price-lists is also made clear by the words 'must be made public'. Thus the Court comes to the conclusion that the duty to make the price-lists and conditions of sale public must be in­ terpreted as a strict rule of law, which allows of no exception; the duty is an ab­ solute one and must be fulfilled in its entirety. The Court does not agree with the defendant's view that the expression 'être ren­ dus publics' ('be made public') is less strong than if the Treaty had said 'être pu­ blics'). In fact, in the last two paragraphs ofArticle 46, the Treaty uses these two terms (both rendered by the word 'publish' in the English version of the Treaty) as having the same meaning. In any case, publication must be effected in such a way that all those who operate on the market (possible future purchasers and competitors) may know the prices; only such publicity meets the objectives to attain which the rule was made.

precisely calculated, and that these price-lists must be published before being ap plied. Moreover, Article 30 (2) of the Convention on the Transitional Provisions states that the prices charged by undertakings for sales of steel on the Italian market may not be lower than the prices shown in the price-lists for comparable trans actions. This provision confirms that the price-list is only a list of the prices at which goods are offered for sale prior to any contract of sale. Moreover the Treaty is very precise in its wording when it refers to 'the price- lists' and not 'price-lists'. The price-lists in question are therefore not documents related to the Treaty alone and specially drawn up with a view to the Treaty's objectives, but documents ofa type which has been established by previous com mercial practice and which, according to such practice, always amount—albeit sometimes generally and sometimes provisionally—to an offer to do business on the basis of the price stated in them. Price-lists do not cease to be offers to do business even though the Treaty ascribes to them objectives of public interest which are recognized by its provisions. There can therefore be no doubt that the expression 'price-lists' retains its usual meaning in the Treaty and means the prices on the basis of which undertakings state their willingness to sell their products. This interpretation is moreover confirmed (and on this point the Court accepts the Advocate General's argument) by the fact that Article 60 (2) distinguishes between prices applied1 and prices charged, inasmuch as this latter expression which appears in Article 60 (2) (b) means the prices at which transactions are in fact concluded. Consequently, it would seem that the expression 'prix ap pliqués' (prices applied) means the prices at which goods are offered by vendors, although it would have been clearer had the Treaty used the term 'prices to be applied' for this purpose.

It would be really difficult to regard this as a concession if the price-lists merely reflected price movements on the market after they had occurred. Only ifthere is previous pub lication can this be regarded as a concession, for this is the only circumstance under which undertakings will have an interest in not having to wait several days 1 — Translator's Note: The English version speaks in Article 60 (2) (a) of 'price-lists . . . applied'.

(4) Now that it is established that the price-lists and conditions of sale be pub­ lished before they are applied on the Common Market, it remains to be decided whether the Treaty requires the publication of exact prices or whether it is enough to publish average or approximate prices. There is no doubt that the Treaty requires the publication of exact prices in the form of price-lists. This fol­ lows from the objectives to which the principle of price publication is intended to lead: the information acquired by purchasers is only of value to them if it in­ forms them of the exact prices at which they can buy. Likewise publication must make alignment possible and this must be based on a competitor's exact prices. Alignment is a right granted to undertakings by the Treaty, not a mere possibility to which effect could only be given if undertakings were in a position to gain in­ formation by other more or less fortuitous means as to prices charged by their competitors. If therefore, for the above-mentioned reasons, the Treaty categorically requires the prior publication of exact prices, it follows that the power accorded to the High Authority to lay down the extent and the manner of publication does not allow it to weaken the principle of the compulsory publication of exact prices. Since Article 60(2)(a) is a strict rule of law and in the absence of any provision to the contrary, the powers conferred on the High Authority by the words 'to the extent and in the manner prescribed by the High Authority', cannot be read as authorizing the High Authority not to publish price-lists. The words just quoted must be understood to mean that the High Authority is entitled to determine the content of the price-lists. But this content must fulfil a public need, so that the High Authority is confined to laying down the minimum information to be in­ cluded in the price-lists. In other words, the phrase 'to the extent and in the manner prescribed by the High Authority' entitles the High Authority to prescribe the extent, that is to say, the scope, of publications, in so far as it is a question of settling their details; the High Authority may, for instance, as it has already done, decide the period after which a new price-list shall come into force, lay down that certain discounts (such as discounts for seconds, and so on) must be mentioned in the price-lists, and decide whether packing costs should or should not be published. On the other hand, in accordance with the system created by the Treaty every price-list must contain all information required to show the exact price. The fact that the Treaty requires the publication of price-lists to be made with due regard to the purposes which it is to serve makes it impossible to accept the High Authority's

argument that it has power to lay down what shall and what shall not be pub­ lished, according to its own unfettered judgment. If this argument, which the Court rejects, were accepted there would be no limit to the information which might be exempted from the duty of publication. The High Authority would then be able to lay down far wider margins, and it is impossible to say where this would end; it might lay down mere publication in scales (for example 'price 80 to 120') or even the non-publication ofprices ofwhole categories ofproducts—in short, it might discard the principle of compulsory publication laid down in the Treaty. Lastly whilst it is true that the High Authority's powers are to regulate the mini­ mum requirements with which the price-lists must comply, its powers are also to regulate the scope of the publication itself. It is thus not enough to ensure that the price-lists are transmitted to the High Authority; if this were the case, the Treaty would merely have so provided. The price-lists must be made public and the High Authority's power to prescribe 'the extent and the manner' implies that it has a duty to see that the extent to which and manner in which the price-lists are published and made available to the public adequately meet the needs of the public interest. The text of Decision No 31/53 was drafted with extreme care; Article 1 states that undertakings in the steel industries must publish their price-lists and con­ ditions of sale, and any subsequent amendments must also be published in ac­ cordance with the provisions ofthe decision; Article 2 then states with great pre­ cision what information the price-lists must contain, putting a reasonable inter­ pretation on the words 'extent' and 'manner' which appear in the Treaty; Article 4 provides that price-lists are to apply not earlier than five clear days after they have been addressed to the High Authority and that the seller must communi­ cate them upon request to anyone interested. On the other hand, what is laid down in Article 1 of Decision No 2/54 is not the extent to which the price-lists must be made public by undertakings, but rather the extent to which the High Authority authorizes the non-observance of the published price-lists. This is contrary to Article 60(2) of the Treaty. It is to be added that the interpretation adopted by the Court is supported by the fact that the High Authority may determine the extent of publication after mere­ ly consulting the Consultative Committee whereas, before defining prohibited practices, it must also consult the Council of Ministers. This is understandable if the High Authority when determining the extent of publication must strictly adhere to the rule that the exact prices and conditions of sale must be published. Had the Treaty wished to give the High Authority greater freedom and the right to derogate from this rule, it would have been logical for such powers also to be subject to consultation with the Council.

(c) The state of the market, in particular the realization that there is a trend to lower prices, is likewise no ground for abolishing the rule that prices are to be published, since such publication is provided for by the Treaty. In the event of a crisis or disturbances on the market, the Treaty confers various powers on the High Authority— in particular under Article 60 (2) last line, Article 61, Article 63, Articles 58 and 59—but nowhere the power to dispense with the compulsory publication of price-lists. Moreover, the rule as to compulsory publication, laid down by the Treaty, is of a general nature and in no wise depends on current market trends.

(d) The Court has been particularly concerned that prices shall be allowed to find their own level; but this cannot justify its reaching another decision. The Treaty is based on the assumption that the freedom given to undertakings to fix their own prices and to publish new price-lists whenever they wish to amend them will ensure that prices find their own level. Ifcurrent market trends change producers will have to amend their price-lists accordingly, and in this way 'the market makes the price'. But, notwithstanding the basic assumption that prices are to be allowed to find their own level, it must not be forgotten that the Treaty forbids any kind of discrimination and that it provides for the right to align prices. This is why the Treaty has laid down the rule that there should be com-

FRANCE v HIGH AUTHORITY

pulsory and prior publication of price-lists and conditions of sale. It is not for the Court to express a view as to the desirability ofthis system; it can only record that this rule is laid down by the Treaty which (whether rightly or wrongly) does not contain any words which might permit a certain flexibility in the price-lists in the event of minor or temporary fluctuations.

Decision No 3/54 which is intended to introduce a method of collecting infor­ mation and enabling supervision to take place, is based on Article 47 of the Treaty. That article empowers the High Authority to obtain the information it requires in order to carry out its tasks; Decision No 3/54 is therefore consistent with the Treaty. The fact that the High Authority combined this method of col­ lecting information with the supervision of the' system of publication provided for in Article 60 does not make it in any way objectionable. Even though Decision No 3/54 is apparently intended to complete the system of variations introduced by Article 1 of Decision No 2/54 which has already been declared to be inconsistent with the Treaty, it is however not in itself con­ trary to the Treaty; there is therefore no reason to annul it, although it obviously becomes inoperative and pointless as a result of the annulment of Article 1 of Decision No 2/54.

JUDGMENT OF 21. 12. 1954 — CASE 1/54

B — The submission of misuse ofpowers

The Court shares the Advocate General's opinion that the allegation that by rea­ son of the contested decisions the defendant has misused its powers has not been made out.

(1) Under the terms ofArticle 60 of the Rules of Procedure of the Court, in any contentious matter the unsuccessful party shall be ordered to pay the costs. Nev­ ertheless the Court may, in accordance with paragraph (2) of that article, order that the parties bear their own costs wholly or in part, where each party succeeds on some and fails on other heads. In this case, the applicant has succeeded in part of the case and on an important point, namely the annulment ofArticle 1 of Decision No 2/54 which introduced the system of mean variations from the prices published in the price-lists. In these circumstances the Court considers that it would be right to order the de­ fendant to pay half the applicant's costs. However, since the applicant expressly stated that it did not seek repayment of any of its expenses and did not ask for costs in its pleading, the Court takes formal note of that declaration and decides that each party shall bear its own costs.

(2) Under Article 34 of the Treaty, if the Court declares a decision void, it shall refer the matter back to the High Authority, which must take the necessary steps to comply with the judgment.

Upon reading the pleadings; Upon hearing the parties; Upon hearing the opinion of the Advocate General;

FRANCE v HIGH AUTHORITY

Having regard to Articles 31, 33, 34 and 60 of the Treaty; Having regard to the Protocol on the Statute of the Court of Justice; Having regard to the Rules of Procedure of the Court including those regarding costs; Taking formal note of the declaration by the Agent of the Government of the French Republic stating that 'the French Government has not asked for costs in its pleading';

Pilotti Serrarens Hammes

Riese Delvaux Rueff Van Kleffens

Delivered in open court in Luxembourg on 21 December 1954.

M. Pilotti O. Riese President Judge-Rapporteur A. Van Houtte

Registrar

OPINION OF MR ADVOCATE GENERAL LAGRANGE