C-6/54

The term 'manifest' presupposes that a certain degree is reached in the failure to ob­ serve the legal provisions so that the failure to observe the Treaty appears to derive from an obvious error in the evaluation, having regard to the provisions of the Treaty, of the situation in respect of which the decision was taken. In the case of subparagraph (a) of the first paragraph ofArticle 61 the manifest failure to observe the Treaty can only result from the finding by the Court of the existence of an economic situation which, prima facie, reveals no necessity for the contested measure in the pursuit of the objec­ tives set out in Article 3 of the Treaty, in particular paragraph (c). (Treaty, second sentence of the first paragraph of Article 33).

6. Misuse of powers — Proof

Proof ofthe motives for the contested decision such as to establish misuse ofpowers may be evident either from the preparations, including the deliberations of the Consultative Committee and ofthe Council ofMinisters, or else from the incompatibility of the con­ tested decision with the avowed and evident aims of the decision (Treaty, first paragraph of Article 33).

In the Case:

GOVERNMENT OF THE KINGDOM OF THE NETHERLANDS with an address for service at the Netherlands Legation in Luxembourg, represented by J. H. M. Verzijl, Professor at the State University in Utrecht, G. M. Verrijn Stuart, Professor at the University of the City of Amsterdam, acting as Agents,

applicant,

THE COURT,

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

Advocate General: K. Roemer, Registrar: A. Van Houtte,

gives the following

JUDGMENT

The procedure and the conclu­ the Common Market by undertakings in sions of the parties the Ruhr coalfield and the Nord and Pas- de-Calais coalfield, No 19/54 concerning The course of the procedure was as fol­ the establishment of price lists for under­ lows: takings in the Ruhr coalfield and No 20/54 concerning the establishment of price lists for undertakings in the Nord and Pas-de- 1. By application lodged at the Court Re­ Calais coalfield'. gistry on 7 May 1954 at the suit of its En­ voy Extraordinary and Minister Plenipot­ Pursuant to two authorizations signed by entiary in Luxembourg, the Government the Ministers for Foreign Affairs and for of the Kingdom of the Netherlands, with Economic Affairs and lodged at the Regis­ an address for service at the seat of its Leg­ try on 23 August 1954, the Government of ation in Luxembourg, seeks the annulment the Netherlands appointed as its Agents of three decisions of the High Authority Professor Dr J. H. W. Verzijl of The Hague dated 20 March 1954 and published in the and Professor Dr G. M. Verrijn Stuart of Journal Officiel de la Communauté (pp. Amsterdam. 267 et seq.) under Nos 18/54, 19/54 and 20/54 claiming that the Court should: 2. The High Authority with an address for service at its offices, 2 Place de Metz, Lux­ 'Annul the decisions ofthe High Authority embourg, in accordance with an order giv­ dated 20 March 1954, No 18/54 concern­ en at its request extending the time-limit ing the principles governing the fixing of for lodging its pleadings, lodged its defence maximum prices for sales of coal within on 30 June 1954 within the prescribed pe-

4. The rejoinder was lodged on 15 Octo­ 9. In accordance with Article 45 (2) of the ber 1954, within the time-limit laid down Rules of Procedure of the Court the file for the defendant by order of the judge act­ was passed to the Advocate General and ing as President of 31 August 1954 and the subsequently to the President of the Court defendant reaffirmed its prior contentions. who fixed the date for the oral proceedings as the hearing of the Court on 1 February 5. The case having been placed on the roll 1955. ofthe Second Chamber the preliminary re­ port provided for in the second paragraph All the written pleadings and the support­ of Article 34 of the Rules of Procedure of ing documents were lodged and registered the Court was lodged on 7 November 1954 at the Court Registry. by Judge Hammes, the Rapporteur ap­ pointed by the President of the Court by They were notified to interested parties by letter of 15 October 1954. the Registrar.

6. The report recommended an inquiry to The course of the oral procedure was as obtain the production of documents and follows: the verification of the facts alleged by the parties and the fixing ofa date for the com­ (1) The public hearings were held on 1, 2 mencement of such measures. and 4 February 1955.

7. By order ofthe Chamber of 1 December (2) At the commencement of the hearings 1954, after it had heard the Advocate Gen­ the Judge-Rapporteur, in conformity with eral and reserved the possibility of other Article 21 of the Protocol on the Statute of preparatory measures, the parties were re­ the Court of Justice, read his report. quired to supply before 13 December in­ formation and all the relevant documents Represented by their agents and counsel

the parties submitted their pleadings, the (a) certain categories of coal from a parti­ reply and rejoinder. cular coalfield; (b) certain grades from a particular coal­ In the course of the hearing the President field; asked the parties the questions set out in (c) average prices for grades in each cate­ the minutes of the hearing 'without preju­ gory. dice to any question of admissibility or substance'. The grounds for the differentiation are set out in paragraphs 3 and 4 of the preamble In accordance with Articles 11 and 21 of to the decision. the Protocol on the Statute of the Court of Justice the Advocate General delivered his In application ofthose principles by its De­ opinion to the effect that the application cisions Nos 7/53 to 24/53 of 6 March 1953 should be dismissed. the High Authority laid down the limits for prices in respect of each coalfield on the (3) The hearings were declared closed by basis of its list specifically for the Ruhr the President in accordance with Article coalfield by Decision No 9/53 and for the 50 (2) of the Rules of Procedure of the Nord and Pas-de-Calais coalfield by Deci­ Court and the Court commenced its delib­ sion No 13/53. erations upon the case. 4. As those rules expired on 31 May 1954 they were replaced by new provisions dat­ ed 20 March 1954 Nos 18/54, 19/54 and Facts 20/54 which entered into force on 1 April 1954 and expired on 31 March 1955. The following facts have given rise to the action by the applicant government: It is those decisions which are contested by the application. 1. The Common Market for coal, ore and scrap was opened on 10 February 1953. The amendments made to the earlier rules are as follows: 2. With particular regard to coal the deci­ sions taken by the High Authority on 12 as to the undertakings affected, Decision February 1953, Nos 3/53 and 4/53 regu­ No 6/53 on the one hand is henceforth lated the methods of price quotation, the solely applicable to the Ruhr and the Nord conditions for publicizing the lists and the and Pas-de-Calais coalfields; on the other conditions of sale. its validity has been extended to 31 March 1955; Those decisions are still in force ; they were amplified by Decision No 30/53 of 2 May as to its scope, the aforementioned deci­ 1953, amended by Decision No 1/54 of 7 sion was amended by the removal of the li­ January 1954 whereby the vendor is mits for average prices of grades in each bound by his price lists and conditions of category but at the same time maintained sale save in the case of individual transac­ the maximum prices for different catego­ tions or if identical differences apply to all ries and specific grades of coal. comparable transactions. 5. The new decision laying down a prin­ 3. Apart from those measures the High ciple is based on Article 61 and Article 63 Authority by Decision No 6/53 of 5 March (2) of the Treaty. 1953 fixed the maximum prices for coal in a general recommendation which was to The following are given as the grounds for expire on 31 March 1954. it:

the Common Market no longer necessi and the Houillères du Nord et du Pas-de- tates the maintenance ofthe fixing of maxi Calais. mum prices for undertakings in all the Finally the decision did not state the rea coalfields of the Community; sons on which it was based or at least did not do so sufficiently. (b) nevertheless in view of the present The defendant contends that the applica structure of the Common Market the sell tion should be dismissed as being without ing agency in the Ruhr coalfield and of the foundation and that the applicant should Houillères du Nord et du Pas-de-Calais bear the costs. would in fact determine coal prices if the It maintains that in adopting the contested High Authority were to abolish all maxi decisions it acted well within the powers mum prices; conferred on it by the first paragraph ofAr furthermore, in view of the nature and the ticle 61; it made use ofthose powers within volume of production those organizations the spirit and within the system of the exert a decisive influence throughout the Treaty and had also complied with the Common Market. procedural requirements set out in the

indicated the consequences which the free Submissions of the parties ing of prices would in fact have entailed and the aims which would not have been The submissions of the parties may be achieved in the absence ofthe rules. In par summarized as follows: ticular it should have stated that one or more of those objectives would not in fact The applicant attacks Decision No 18/54 be achieved if maximum prices were not and the implementing Decisions Nos fixed. Without such indications it would 19/54 and 20/54 for infringement of the indeed be possible for the High Authority Treaty, manifest failure to observe its pro to intervene continually in infringement of visions, misuse ofpowers and infringement Article 5 of the Treaty. of essential procedural requirements. It As no price increase was to be feared the claims that in the given circumstances the laying down of maximum prices constitut prices should have been freed completely ed a manifest failure to observe the provi because maximum prices were inadmissi

NETHERLANDS v HIGH AUTHORITY

The absence of such measures cannot Finally, the applicant states that having re justify the exercise of a power given for gard to the market situation the fixing of other purposes and provided for a market maximum prices was in fact harmful be situation which is not vitiated by the exis cause in practice they became fixed prices. tence of prohibited agreements. In reply to these arguments the defendant In reply to this the defendant states that the states: fixing of maximum prices does not depend On the basis of its studies of the situation solely on the market situation.

In the ities of the High Authority must in essence opinion of the defendant the existence of be of a preventive nature. agreements and concentrations was not In the present instance the discussions with unlawful at the time when the decisions producers of the Ruhr coalfield had shown were taken. So long as the High Authority with a probability bordering on certainty had not decided to refuse the authoriza that the reduction in prices as sought by tion, the prohibition in principle set out in Article 3 (c) would not take place without Article 65 of the Treaty has no effect in re intervention and in any case a substantial spect of existing organizations which have decrease would not have occurred.

Therefore it had been neces the applicant argues that at the same time sary to fix the lowest possible prices as the High Authority had been guilty of mis maximum prices. use of powers: in reality it had adopted the There is no proofat all for the allegation of contested decision in order to combat the the applicant that prices would in any case activity of certain organizations which it have fallen because of the market situa should have done by applying not Article tion; even if that was the case the fall 61 but the methods provided by Article would not have occurred immediately and 65; furthermore, it was under an obliga-

tion to apply those methods in order to dis pothesis, however, only the fixing of mini solve those organizations without delay. mum prices would be required and there In this respect the defendant states that it fore from this aspect as well the decision will certainly not fail to take steps against constitutes a misuse of powers. the organizations and dominant undertak In this respect the defendant has stated re ings on the market and that, on the con peatedly that it had not and could not have trary, it has already initiated the necessary counted on an immediate reduction in steps which, however, must only be taken prices and consequently the argument of with caution. the applicant is not valid as the decision Moreover it had immediately done all that was only directly aimed at effects on prices. was possible to combat by a temporary measure the most dangerous effects of that 3. Infringement of essential procedural re

the reasons for that decision. (b) The proof that the fixing of the maxi The applicant takes the view that the rea mum price was carried out for a purpose sons put forward by the High Authority for other than to obtain the lowest possible the first time in its defence submissions prices in accordance with Article 3 (c) is, in cannot be taken into consideration. the opinion of the applicant, derived from The defendant believes that the reasons the fact that the new maximum prices fixed stated in the decision are sufficient both as are not appreciably lower than the list to the form and as to the substance as they prices which were applied previously by contain all the essential points.

price. 4. The Court's right of investigation

B — The scope of the action

It should be emphasized that the action only relates to Decisions ofthe High Au­ thority Nos 19/54 and 20/54 in so far as they constitute the implementation of the principle laid down in Decision No 18/54.

C — Infringement of essential procedural requirements

(a) The applicant first alleges that Decision No 18/54 fails to state sufficiently the reasons on which it is based because the High Authority has merely justified its measures by stating in a purely hypothetical form that the structure of the Common Market could compromise the achievement ofthe objectives ofArticle 3 of the Treaty. Under Article 61 it should have found and stated that the necessity existed and should have specified the objective or objectives compromised if the maximum prices were to be abolished altogether. The general provisions of Articles 5 and 15 of the Treaty oblige the High Au­ thority to state reasons for its decisions and to make those reasons public. However, no details are given as to the form or extent of that obligation. Reasonably understood those requirements oblige the High Authority to men­ tion in the reasons for its decision the essential elements of the findings of fact on which the legal justification for the measure depends. The Treaty does not require that it should state, and still less that it should re­ fute, the opinions expressed in this regard by consultative bodies or by certain of their members. The measures referred to in Article 61 (a) ofthe Treaty can be applied ifthe High Authority 'finds that such a decision is necessary to attain the objectives set out in Article 3, and particularly in paragraph (c) thereof.

(2) after consulting the Consultative Committee;

and

(3) after consulting the Council of Ministers.

It appears from the evidence submitted that the studies required by Article 61 have been carried out. The text of the decision affirms that the consultations with the Consultative Committee and the Council were held. That affirmation can not relieve the Court of the duty to carry out an examin­ ation with regard to the application of the above-mentioned requirements. In the present instance the consultations referred to in the first paragraph of Ar­ ticle 61 related both to the appropriateness of the measures in question and to the level of prices. Consequently in this respect no procedural requirement for the validity of the decision has been infringed.

NETHERLANDS v HIGH AUTHORITY

D — Infringement of the Treaty

(b) In support of the argument based on the breach of the Treaty the applicant claims that the contested decision refers to a market structure ofan illegal nature. It states that the defendant is acting in infringement of the Treaty in stating as the reasons for its decision the existence of agreements and concentrations of un­ dertakings which are expressly prohibited by Articles 65 and 66 of the Treaty. That argument would only be valid if, by virtue of the Treaty, agreements and concentrations which conflict with those articles were deprived of all legal effect. On the one hand in application of the second paragraph ofArticle 12 ofthe Con­ vention on the Transitional Provisions the existence of agreements was provi­ sionally authorized subject to certain conditions by Decision No 37/53 of the High Authority of 11 July 1953 with the reservation that such agreements might subsequently be prohibited. In this respect Article 12 of the aforementioned Convention provides no time-limit for the intervention of the High Authority and the latter therefore possesses a discretionary power in this respect within the limits of the transitional period. On the other hand the applicant finds that a structure contrary to the Treaty is constituted by the fact that the Nord and Pas-de-Calais coalfield exercises a dom­ inant influence on the French market and argues that that situation falls exclu­ sively within the provisions of Article 66 (7). The existence ofa situation which might justify the application of the provisions of Article 66 (7) does not in itself constitute an obstacle to the exercise by the High Authority of the powers assigned to it by subparagraph (a) of the first paragraph of Article 61. Consequently there is nothing to prevent the effects of such agreements and con­ centrations in so far as they affect the level of prices on the Common Market and the achievement of objectives set out in Article 3 from being opposed by the de­ fendant with the aid of powers conferred on it by Article 61 of the Treaty.

(d) The applicant alleges that the contested decision is based on reasons which are wrong in substance. The fixing of maximum prices was not necessary as, in view of the development of the market, prices already showed a downward trend and in any case maxi­ mum prices could not bring about a fall in prices but solely a price freeze. On the other hand the developments in production and employment could only be threatened by a fall and if it were sought to counteract that danger minimum prices should have been introduced. Having regard to those arguments a distinction should be made between the find­ ing of facts and economic circumstances on which the decision was based and the conclusions drawn by the High Authority in its subsequent evaluation of the situation. In the present instance the decision in fact states that in spite of the trends ex­ isting on the market and because of the market structure coal prices were deter­ mined by the selling agency of the Ruhr coalfield and by the Houillères du Nord et du Pas-de-Calais.

misused its powers or to have manifestly failed to observe provisions of the Treaty. A study of the market taking account of factors relating to the market structure and economic trends would constitute such an examination. It is therefore necessary to examine with regard to their general scope and their presence in this instance the two conditions which alone allow of an examina­ tion of the proper economic foundation of a decision, that is to say manifest failure to observe the provisions of the Treaty and misuse of powers.

E — Manifest failure to observe provisions of the Treaty

It should be emphasized that the objection of the manifest failure to observe the provisions of the Treaty was not raised by the applicant as a separate ground for annulment but solely with a view to having the examination by the Court extend to an assessment of the situation arising from the economic facts and circum­ stances in the present instance. In this respect Article 33 does not require that the objection raised be supported by full proofin advance; this moreover would immediately entail the annulment of the decision for infringement of the Treaty. On the other hand the mere assertion of a manifest failure to observe the Treaty is not sufficient to open the way to examination by the Court of the economic evaluation as otherwise a submission of this kind could become a mere formal­ ity. It is necessary and it is sufficient that the objection is supported by appropriate evidence.

It is further appropriate to examine whether the manifest lack of necessity for the measure results from the amounts of the prices fixed. It is clear from the table drawn up by the parties together that the new figures are not identical with the old figures and that according to the defendant's con­ tention, not contested by the applicant, the prices which were freed have shown a .tendency to increase. These findings do not therefore reveal manifest lack of necessity. Having regard to the objectives of Article 3 of the Treaty the lack of necessity of the measure is not evident immediately from the rate of the prices fixed. That article ofthe Treaty obliges the High Authority to ensure the establishment of certain economic conditions and this might justify preventive intervention even if certain reassuring declarations have been made which contain no com­ mitment as to the extent of their validity. In this context paragraph (c) more specifically envisages the establishment of the lowest prices but does not require an attempt to reach the absolute minimum but merely a price which, while being the lowest within the meaning of Article 3 (c), takes account of the other objectives imposed by this article on the actions of the High Authority. In this respect as well a failure to observe the Treaty is not manifestly evident from the decision.

F — Misuse of powers

This submission seeks a ruling that in determining maximum prices on the basis of Article 61 the High Authority was not so much pursuing its declared objec­ tives, in particular the lowering of prices, but in reality was seeking to combat agreements and concentrations of undertakings. Consequently it had made use ofthe powers assigned to it by Article 61 for a pur­ pose other than that for which they were conferred upon it. Proof of the motives for the contested decision may be evident either from the preparations, including the deliberations of the Consultative Committee and of the Council of Ministers, or else from the fact that in view of their level relative to the prices in the lists applicable before 1 April 1954 the new prices are incom­ patible with the avowed and evident aims of the decision. However, the documents submitted by the parties do not reveal any covert in­ tent.

Under Article 60 of the Rules of Procedure of the Court the unsuccessful party shall be ordered to pay the costs.

The applicant government should therefore be ordered to bear the costs.

Upon reading the pleadings; Upon hearing the parties; Upon hearing the opinion of the Advocate General which accorded with the view of the Court; Having regard to Articles 3, 5, 33, 35, 61, 65, 66 and 84 of the Treaty and Article 12 of the Convention on the Transitional Provisions; Having regard to the Protocol on the Statute of the Court of Justice; Having regard to the Rules of Procedure of the Court and the rules of the Court on costs,

THE COURT

hereby:

Dismisses the application for the annulment of Decisions Nos 18/54, 19/54 and 20/54 of the High Authority dated 20 March 1954;

Registrar