C-7/54

7. Common market — Incompatible practices — Special charges — Criteria for the spe­ cial nature thereof

In the first analysis, without its being possible to consider this criterion by itself as deci­ ve, a charge may be presumed to be special and therefore abolished and prohibited by the Treaty if, by affecting unequally the production costs of comparably placed pro­ ducers, it introduces into the distribution ofproduction distortions which do not result from changes in productivity (ECSC Treaty, Art. 4 (c)).

8. Common market — Incompatible practices — Discrimination

The persistence of differences in conditions of competition is a necessary and inevi­ table consequence of the partial nature of the integration brought about by the Treaty and does not involve discrimination prohibited by the Treaty (ECSC Treaty, Art. 4 (b)).

9. Prices — Maximum prices — General charges — Compatibility

The fixing of maximum prices does not prevent products from being subject to duties, taxes or any other general charge at the time ofconsumption or at any stage whatever of distribution (ECSC Treaty, Art. 61).

HIGH AUTHORITY OF THE EUROPEAN COAL AND STEEL COMMUNITY, represented by its Legal Adviser, Nicola Catalano, acting as Agent, assisted by Ernest Arendt, Advocate in Luxembourg, with an address for service in Luxembourg at its offices, 2, Place de Metz,

defendant,

GOVERNMENT OF THE GRAND DUCHY OF LUXEMBOURG, represented by Pierre Pescatore, Legal Adviser to the Ministry for Foreign Affairs, with an address for service in Luxembourg at the Ministry for Foreign Affairs, 5, Rue Notre-Dame,

intervener,

Application for, first, the annulment ofthe implied decision of refusal resulting, under Article 35 of the Treaty, from the silence of the High Authority with re­ gard to the letter of 14 July 1954 in which the applicant requested it to take a decision or make a recommendation concerning the activities ofthe Office Com­ mercial du Ravitaillement of the Grand Duchy of Luxembourg (Commercial Supply Office) and concerning the Caisse de Compensation (Equalization Fund) attached to that office by the Ministerial Order of 8 March 1954 (Case 7/54);

secondly, for the annulment 'in so far as is necessary' of the decision of refusal of the High Authority, following from its letter of 27 November 1954, of the re­ quest contained in the letter of 14 July 1954 (Case 9/54),

Facts

1 — Facts and procedure favour of Alex Bonn, Advocate in Luxem­ bourg; By application of 11 October 1954 (Appli­ a certificate attesting that Alex Bonn is a cation 7/54) the Groupement des Indus­ member of the Luxembourg Bar. tries Siderurgiques Luxembourgeoises (Group of Luxembourg Iron and Steel In­ The defendant informed the applicant by dustries, hereinafter referred to as 'the letter of 27 November 1954 that the Caisse Groupement') requested that de Compensation 'is not ofsuch a nature as to have any effects which are incompatible 'The Court should: with the Treaty and it cannot therefore be prohibited'. Declare that the present application is ad­ missible as to form and well founded; Following that letter, the applicant, 'so as Annul the implied decision of refusal of the to avoid a fruitless argument on questions High Authority taken after the Groupe­ of admissibility', lodged a second applica­ ment had sent its letter of 14 July 1954; tion (Application 9/54) on 23 December Declare, consequently, that the High Au­ 1954, the subject-matter of which was the thority must, by means ofa decision or rec­ same as that of the previous application ommendation, order: and which requested moreover that

INDUSTRIES SIDERURGIQUES LUXEMB0URGE01SES v HIGH AUTHORITY

4. Declare that there is no need to give I. Declare that the application containing judgment on the head ofthe application re­ two heads ofclaim, which are moreover re­ questing the annulment of the implied de­ lated, is formally admissible; cision of refusal of the request that the Caisse de Compensation for solid fuels n. A. Take note that the applicant, with­ should be closed and abolished, since this out prejudice to the statement of reasons application has become purposeless; upon which the decision adopted by the In any case dismiss the above-mentioned High Authority on 7 January 1955 con­ head of the application as unfounded; cerning the Office Commercial du Ravi­ taillement was based, considers that as a 5. Order the applicant to bear the costs, result of that decision its application has fees and expenses.' become purposeless within the limits

JUDGMENT OF 23. 4. 1956 -JOINED CASES 7 AND 9/54

tence of the monopoly of the Office Com­ an express decision, declare the applica­ mercial du Ravitaillement on imports and tion against that decision admissible'. that the abolition of the latter must of ne­ cessity involve the abolition of the Caisse By order of the President of 25 March de Compensation: 1955, Cases 7/54 and 9/54 were joined 'for Declare that the levy, which amounts to an all procedural purposes'. increase in the price of solid fuels for non- In the common rejoinder in Joined Cases 7 domestic use, is in breach of the decisions and 9/54, following the order for joinder, adopted by the High Authority on the basis the defendant contends that of Article 63 (2) (a) of the Treaty, that is, Decisions Nos 4/53 of 12 February 1953, 'The Court should: 6/53 of 13 March 1953,15/54 of 19 March 1954, 19/54 of 20 March 1954 and 20/54 Find that the conclusions previously put of 20 March 1954; forward are well founded.'

3. Declare in any case that the operation The following four events occurred be­ of the Caisse de Compensation established tween the lodging ofthe reply and the lodg­ by the Ministerial Order of 8 March 1954 ing of the rejoinder: infringes the most fundamental principles of the Common Market as established by 1. The issue of the Decree of the Grand the Treaty; Duke of2 April 1955 amending the system of import tax and turnover tax on solid Consequently: mineral fuels;

Declare that the High Authority must or­ 2. The issue of the Ministerial Order of 12 der, by means of a decision or recommen­ September 1955 repealing with effect from dation, that the Caisse de Compensation 2 April 1955 the Ministerial Order of 8 attached to the Office Commercial du Ra­ March 1954 concerning the operation, so vitaillement by the Ministerial Order of 8 far as solid fuels is concerned, of the Caisse March 1954 should be prohibited and ab­ de Compensation attached to the Office olished; Commercial du Ravitaillement;

'The Court should: hitherto declared that the new system is in­ compatible with the provisions of the Take note of the Luxembourg Govern­ Treaty because it considered it appropriate to await the decision of the Court in the ment's application to intervene; declare that application to intervene admissible proceedings pending before it. and well founded; moreover, take note The Groupement on the contrary bases an that the intervener supports the sub­ argument in favour of its reasoning on 'the missions of the High Authority requesting attitude adopted by the Luxembourg Gov­ ernment which abolished the Caisse de that the application lodged by the Groupe­ ment should be dismissed; Perequation (Equalization Fund)' since Order the applicant in the main action to this attitude 'seems to indicate that it felt, bear the costs of the application to inter­ to say the least, such serious doubts with vene.' regard to the previous system that it pre­ ferred to avoid a judgment of the Court'. The applicant in the main action contested The Groupement considers that it is possi­ that the application to intervene was well ble 'that a State of the Community can founded in the written observations which achieve, by virtue of powers which it has it submitted pursuant to Article 71 (3) of reserved to itself, certain economic results, the Rules of Procedure. The Court exam­ particularly for social purposes, by means ined the application in accordance with of a system which is compatible with the Article 71 (4) when the parties had pre­ Treaty, while another system leading to sented oral argument and the Advocate the same result would not be in accordance General had delivered his opinion at the with the provisions of that Treaty.' hearing on 19 November 1955. The Groupement refutes, moreover, the By order of 24 November 1955, the Lux­ arguments of the Luxembourg Govern­ embourg Government was 'granted leave ment based on to intervene', while 'the examination ofthe submissions and arguments put forward in the applicant's lack of capacity to institute the application to intervene and of their proceedings in view ofthe special nature of admissibility was reserved for the final the proceedings; judgment'. the interpretation ofArticle 4 ofthe Treaty At the hearing on the same date, the Court which, according to the intervener, cannot informed the parties that it would accept 'provide a sufficient basis for an applica­ until 7 December 1955 'preparatory notes tion nor a sufficient basis for a decision of on the future oral argument which the par­ the Court'; ties consider appropriate to submit to it as the fact that the applications have become a result ofthe hearing on the application to purposeless and that the Groupement has intervene'. no interest in proceeding with them.' The applicant made use of that option and submitted 'additional observation' on 6 After the rejoinder had been lodged on 30 December 1955. September 1955, the written procedure

was closed in accordance with Article 34 2 — Submissions and arguments (1) of the Rules of Procedure of the Court. of the parties In accordance with Article 34 (1) of the Rules of Procedure of the Court, the Presi­ The submissions and arguments of the par­ dent appointed Jacques Rueff as Judge- ties may be summarized as follows: Rapporteur on 30 September 1955. The preliminary report laid down in Arti­ 1. As regards the admissibility of Case cle 34 of the Rules of Procedure concluded 7/54, the defendant relies on the following that a preparatory inquiry was necessary. arguments: By order made at the hearing on 30 No­ vember 1955 the Second Chamber of the (a) May 'two distinct issues be raised' in Court requested the parties to provide cer­ the same application? tain written information before 14 Decem­ ber 1955. The defendant raises this question in its de­ The parties supplied the information re­ fence and then specifies in the rejoinder quested on 12 December. that the applicant provides no evidence to By order of 14 December 1955, the Second show that the two questions are related. It Chamber of the Court ordered the closure declares, however, that it 'has not raised of the preparatory inquiry and fixed the the formal inadmissibility of the applica­ time-limit laid down in Article 45 of the tion originating the proceedings' and that it Rules of Procedure for the lodging by the 'preferred to leave that point to the discre­ parties of their final written conclusions at tion of the Court'. 7 January 1956. The applicant replies in the affirmative I hose conclusions were lodged on 4 and 7 and observes, first, that January respectively. They confirm the previous conclusions. 'There is no provision prohibiting a party In accordance with Article 45 (2) of the from making its application relate to sever­ Rules of Procedure of the Court, the Presi­ al heads of claim; such a plea of inadmis­ dent of the Court fixed the date for the oral sibility cannot be inserted to supplement proceedings at 1 February 1956. the rules'; The hearings were held on 1, 2 7 and 8 February 1956. secondly, that During those hearings the parties pre­ sented oral argument. 'the two heads of claim contained in a At the hearing on 8 February 1956 the Ad­ single application are evidently closely re­ vocate General delivered the following lated whatever the attitude adopted by the opinion: High Authority towards the two applica­ tions'

missions', in other words a 'genuine rene tains in proceeding with its action at law wal of the procedure'. In its opinion it is consist?' impossible to permit 'the action to be con tinued on the basis of Article 35'. The applicant replied to these questions In its reply the applicant defends the ad that: missibility of the first application by main taining that 'the right to lodge an applica 'The new system established by the Lux tion against the implied decision of refusal embourg Government maintains the pre was acquired on the expiry of the period of vious special charge and the previous dis two months laid down in Article 35 of the

compatible with the provisions of the ted to the Court because 'although it has no Treaty, remains unanswered with regard practical significance for the purposes of to the past and must be decided by the the proceedings instituted by the appli Court, which has exclusive jurisdiction cant, it has an interest as a matter of prin over it. The measure of the interest of the ciple for the executive of the Community Groupement in the question is the amount which awaits guidance from the case-law of the equalization increases which are of the Court so as to be able to take account payable by the Luxembourg iron and steel thereof in its future actions'. industry for the period in question, from 1 March 1954 to 31 March 1955, in other

ization. The dispute brought before the tioned preparatory inquiry: Court by the applications lodged by the Groupement relates however exclusively 'Do the rules with which the Luxembourg to coal. The Luxembourg Government Government has replaced the system in considers that only a coal-producing un question seem to the applicant to give it dertaking or an association of such under what it would have obtained if the High takings has capacity to institute such pro Authority had not refused its request of 14 ceedings; on the other hand, an association

JUDGMENT OF 23.4.1956 -JOINED CASES 7 AND 9/54

organization representing consumers does sponding problem raised by the Caisse de not have such capacity'. Compensation. The arguments invoked by the parties with The Groupement rejects that argument by regard to the Caisse de Compensation at­ declaring that tached to the Office Commercial du Ravi­ taillement may be summarized as follows: 'the provisions of the Treaty relating to ap­ plications to the Court make no distinction I. The Caisse de Compensation is incom­ according to the product which is the sub­ patible with the decisions adopted by the ject-matter of them. It is impossible to High Authority on the basis of Article 63 speak of a 'steel', 'coal', 'mineral' or 'fer­ (2) on the system of prices for solid fuels in rous scrap' application. The proposed dis­ the Common Market. tinction is contrary to the wording of the Treaty and cannot be accepted'. The defendant replies by recalling that:

INDUSTRIES SIDERURGIQUES LUXEMBOURGEOISES V HIGH AUTHORITY

charge'. (b) So far as imported industrial coal is Whilst making all reservations as to the ad concerned, the applicant states that the missibility of that submission which does levy 'affects the operation of undertakings not appear in the applications, reserva in the industries which come within Arti tions based on Article 22 of the Statute of cle 80 of the Treaty, that is, industries the Court of Justice and Article 29 of the producing industrial coal which supply Rules of Procedure, the defendant replies this type of fuel to the industry of the in the rejoinder that Grand Duchy of Luxembourg'.

IV. The equalization system established cerned, the levy is not imposed on it alone by the Caisse de Compensation infringes since the levy is imposed on all the indus the provisions ofArticle 4 (c) ofthe Treaty. tries in Luxembourg which are coal con The applicant states in its letter of 14 July sumers. It concludes from this that the levy

'is incontestably in the nature of a general The defendant finally justifies its restric charge'; tive interpretation of the wording of Arti Because of its very limited amount the cle 4 (c) by means of two arguments based, levy is not capable 'of affecting the condi first, on Article 11 of the Convention on tions of competition in the Common Mar the Transitional Provisions and, secondly, ket'. on the 'power retained by the Member States, in particular in tax matters'. In the rejoinder, the defendant, whilst ad mitting that 'in view of the industrial struc The first argument, an argument reasoning ture of Luxembourg, charges imposed on to the converse, is based on the fact that non-domestic consumers are in fact essen 'the provision refers only to charges im tially imposed on the iron and steel indus posed on products of the Community tries to a doubtless considerable extent' re themselves'. fuses to conclude 'that the economic struc The second argument is based on the fact

has involved. . . the creation of discrimina tinction to be made between special tion between consumers of solid fuels for charges and general charges: 'In the first non-domestic use of the European Coal place, it is necessary for that subsidy, aid or and Steel Community and Luxembourg charge to be of a special nature, that is, for consumers of this type of fuel it to concern exclusively undertakings or The reply states that this discrimination products ofthe Community'. . . 'As soon as

INDUSTRIES SIDERURGIQUES LUXEMBOURGEOISES V HIGH AUTHORITY

. . consequently, the policy distorts competition in the market.' equalization levy is nothing other than a The interpretation ofthe defendant is com price increase'. pleted by the following reply to the ques The defence refutes the argument based on tions put during the preparatory inquiry: Article 4 (b) by assuming that the levy con stitutes a general charge permitted by Ar 'The principal intervention measures tak ticle 4 (c) and that the differences between en by the High Authority in fields which may reveal certain similariteis with the the general charges of the countries of the Community cannot constitute the discri subject-matter of the present proceedings mination referred to in Article 4 (b). have been the following: The defendant adds that 'the fact that a

posed on German coalmines, including those concerning price reductions for sup Article 26 of the Treaty gives the Council plies to domestic consumers. of Ministers the task of harmonization; This abolition was decided on in applica Article 67 of the Treaty enables the High tion of the provisions of Article 11 of the Authority to intervene 'in cases in which Convention on the Transitional Provisions national measures of economic policy and of Article 4 (c) of the Treaty because would have a repercussion in competition they were special charges imposed on un for coal and steel'. dertakings of the Community.

ceases to constitute prohibited discrimina matter of an application to the Court of tion when it is justified by a difference in Justice by the Belgian Government (Case the situations of the persons concerned'. 4/53), an application which was subse However, '. . . the governments, precisely quently withdrawn. Because of the inter because they are sovereign in the field of vention ofthe High Authority, certain sub general economic policy, may apply differ stantial amendments were made to the

French system so as to eliminate discrimi­ sions of the Treaty. As a result of an ex­ natory effects which were incompatible change of correspondence and after con­ with the provisions of the Treaty. culting the Council of Ministers under Ar­ ticle 2 (4) of the Convention on the Tran­ 3. By Decisions No 29/53 (Journal Offi­ sitional Provisions, the French Govern­ ciel of 21 May 1953, p. 129) and No 23/54 ment, deferring to the point of view of the (Journal Officiel of 31 March 1954, p. 293) High Authority, amended the above-men­ of 30 March 1953 and 29 March 1954, the tioned order so as to remove from the High Authority authorized the Nether­ equalization system which it had adopted lands Government, under the third para­ all elements which were incompatible with graph of Article 24 of the Convention on the provisions of the Treaty.' the Transitional Provisions, to retain until 31 March 1955 an equalization fund fi­ 3. So far as the submission alleging the in­ nanced by a levy on the Netherlands coal fringement of essential procedural require­ production. ments is concerned, the applicant claims A similar authorization was not necessary 'in the alternative... that the implied deci­ for the Luxembourg equalization fund be­ sion of refusal is vitiated by nullity for in­ cause it was not financed by a levy on na­ fringement of essential procedural require­ tional coal production and therefore did ments, inasmuch as it is not based on any not require any authorization from the express ground'. The express refusal of the High Authority under the above-men­ defendant occurred before the defendant tioned Article 24. had lodged its defence and the High Au­ thority did not therefore formally give its 4. The French Government had, in April views on that submission; it merely point­ 1954, issued an order for the purpose of ed out that the decision requested by the correcting the distortion resulting from the applicant was 'now express and states in difference between domestic inland water­ detail the reasons on which it is based, way freights and international inland wa­ since the High Authority clearly explained terway freights. The High Authority had in its letter of27 November 1954 ... the le­ indicated that the above-mentioned sys­ gal reasons why it was unable to accept the tem contained discriminatory elements point of view of the Groupement'. which were incompatible with the provi-

Part One

Application 7/54

A — The Admissibility of Application 7/54

I — The regularity of the procedure

The applicant has annexed to its application a copy of the letter which it had sent to the High Authority on 14 July 1954 and this date has not been contested by the defendant. That document may consequently be considered as 'documen­ tary evidence of the date on which the request was lodged' required under the second paragraph ofArticle 22 ofthe Statute ofthe Court ofJustice ofthe ECSC. The application, which was lodged less than a month after the expiry of the pe­ riod of two months laid down in Article 35 of the Treaty, was submitted within the prescribed period. In accordance with the opinion of the Advocate General the two heads of claim contained in the application are obviously related. The fact that they have been put forward in the same application cannot call in question the admissibility of that application. Moreover, the defendant does not raise the formal inadmissibility of the appli­ cation originating the proceedings and leaves the decision on this point to the discretion of the Court.

II-The capacity of the applicant to raise the matter with the High Authority in application ofArticle 35 of the Treaty

The Groupement des Industries Siderurgiques Luxembourgeoises, the appli­ cant, is certainly an association of undertakings, because it groups in a co-oper­ ative society undertakings carying out production activities in the steel sector within one of the territories referred to in the first paragraph of Article 79. The first paragraph of Article 35 gives the States, the Council or undertakings and associations the power to raise a matter with the High Authority only wher­ ever the High Authority is required by the Treaty or by rules laid down for the implementation thereof to take a decision or make a recommendation and fails to fulfil this obligation. The applicant alleges that Articles 86 and 88 of the Treaty placed the High Au­ thority under a duty to take a decision or make a recommendation concerning the Caisse de Compensation attached to the Office Commercial du Ravitaille­ ment.

Under Article 86 the Member States undertake to refrain from any measures in­ compatible with the Common Market referred to in Articles 1 and 4. Article 88 requires the High Authority, if it 'considers that a State has failed to fulfil an obligation under this Treaty', to record this failure in a reasoned deci­ sion. For that reason, the High Authority was certainly required by the Treaty to take a decision if it considered the Caisse de Compensation to be incompatible with the Common Market referred to in Articles 1 and 4. Therefore, it was certainly for the applicant to raise the matter with the High Au­ thority in application of the first paragraph of Article 35.

The proceedings instituted by the applicant under the third paragraph of Article 35 of the Treaty are therefore proceedings for annulment on the ground of in­ fringement of the Treaty and infringement of essential procedural requirements as provided in Article 33 ofthe Treaty and are therefore subject to the conditions thereof.

The applicant has not alleged that the implied decision of refusal was vitiated by misuse ofpowers affecting it and for that reason it could not institute proceed­ ings against that decision unless that decision was a decision concerning it which was individual in character. This requirement involves two distinct characteristics with regard to the deci­ sion : it must be individual in character and must concern the applicant.

JUDGMENT OF 23.4.1956 -JOINED CASES 7 AND 9/54

The Treaty, by requiring that decisions which are capable of being annulled by the institution ofproceedings by undertakings or associations must be individual in character when they do not involve a misuse of powers affecting such under­ takings or associations, debars individuals, whenever no misuse ofpowers affect­ ing them is alleged, from obtaining judgment on general decisions or recommen­ dations.

IV — The interest of the applicant in proceeding with its action at law after the repeal by Ministerial Order of 12 September 1955 with effect from 2 April 1955 of the Ministerial Order of 8 March 1954 concerning the operation of the Caisse de Compensation attached to the Office Commercial du Ravitaillement

In reply to the questions put during the preparatory inquiry, the applicant claimed that the Luxembourg Government maintained the Caisse de Compen­ sation for the period prior to 2 April 1955 and that therefore the question at is­ sue, which is whether the Caisse de Compensation is compatible with the pro-

INDUSTRIES SIDERURGIQUES LUXEMBOURGEOISES V HIGH AUTHORITY

visions of the Treaty, remains unanswered with regard to the past. In the rejoinder the defendant left the decision on that point to the discretion of the Court. The Court acknowledges that the applicant has an interest in proceeding with its action. For the above-mentioned reasons the application is admissible.

B — The substance of Application 7/54

I — The subject-matter of the application

JUDGMENT OF 23.4.1956 -JOINED CASES 7 AND 9/54

The letter indicating the reasons for the refusal of the High Authority does not affect the existence of that refusal which was finally established at the end of the period of two months laid down in the third paragraph of Article 35 of the Treaty. The implied decision of refusal which is to be inferred at the end of that period from the silence of the High Authority does not substantially change the situ­ ation resulting therefrom but only gives it positive expression so that the pro­ ceedings laid down in the third paragraph of Article 35 may be instited against it.

The letter of27 November 1954 stating the reasons upon which the decision was based has not altered that situation any further. In these circumstances, in the opinion of the Advocate General, that letter has not deprived the application of its subject-matter or prevented the applicant from proceeding with its action based on Article 35 of the Treaty.

II — The compatibility ofthe Caisse de Compensation with the provisions of the Treaty

The applicant contests the implied decision of refusal of the High Authority con­ cerning the Caisse de Compensation on the ground of infringement ofthe Treaty and in particular of Articles 4 (b) and 4 (c) thereof and, in the alternative, on the ground of infringement of essential procedural requirements inasmuch as it is not based on any express reason. It is necessary to examine the two submissions separately.

C — Submission concerning infringement of the Treaty

II — Is the levy imposed by the Caisse de Compensation a special charge pro­ hibited by Article 4 (c) of the Treaty?

Article 4 (c) prohibits special charges imposed by States, in any form whatsoever. It is necessary to seek the criteria for recognizing a special charge, which is ab­ olished and prohibited by Article 4 (c) in the circumstances referred to, in par­ ticular, in Article 67 (3). The Treaty does not specify the characteristics which establish the special nature of a charge but Article 67 (3) thereof gives an example of a charge described as special because it is imposed on the coal or steel undertakings within the juris­ diction of a State in comparison with the other industries in the same country. The special nature ofthat charge is evidently based on the fact that it only affects a proportion of the industries which, because they are subject to the jurisdiction of the same State, are comparably placed in relation to that State. However, the fact that they are comparably placed only supplies a relative and transitory criterion because it depends on the scope of its field of application. A charge which is general in relation to all the undertakings of a State may cease to be so and become special if all the undertakings of the Community are con­ sidered. In those circumstances it is necessary, where doubts exist, to reinforce the cri­ terion of comparability by comparing the result to which it leads with that in­ tended by the Treaty. Under Article 2 of the Treaty the objective of the Community is in particular progressively to bring about conditions which will ofthemselves ensure the most rational distribution of production at the highest possible level of productivity, while safeguarding continuity of employment and taking care not to provoke fundamental and persistent disturbances in the economies of Member States. Article 67 makes this requirement more precise by authorizing the High Au­ thority to compensate for the harmful effects of an action taken by Member States when such action is liable, by substantially increasing differences in pro­ duction costs otherwise than through changes in productivity, to provoke a se­ rious disequilibrium. It follows from this, by reasoning to the converse, that the

Treaty authorizes action taken by Member States when it does not substantially increase differences in production costs or increases them through changes in productivity. In the light of that provision, the most rational distribution of production in ac­ cordance with Article 2 is that which is based in particular upon the composition of production costs resulting from output, that is, from the physical and tech­ nical conditions particular to the various producers. In the first analysis, without its being possible to consider this criterion by itself as decisive, a charge may be presumed to be special and therefore abolished and prohibited by the Treaty if, by affecting unequally the production costs of com­ parably placed producers, it introduces into the distribution of production dis­ tortions which do not result from changes in productivity. It is necessary to inquire whether, having regard to the above-mentioned criteria and presumptions, the levy imposed by the Caisse de Compensation in appli­ cation of the Ministerial Order of 8 March 1954 is a special charge within the meaning of the Treaty. Under Article 1 of the above-mentioned Order, the Office Commercial du Ravitaillement is authorized to increase the prices ofsolid fuels for non-domestic use wherever they come from, whatever the quality and whoever the consumer. The charge imposed on solid fuels for non-domestic use might be special if it af­ fected only a part of the undertakings subject to the jurisdiction of the Govern­ ment of the Grand Duchy of Luxembourg and it would then be the charge which the parties have both agreed to call the charge imposed on the undertakings. It is possible to state that it would then indeed affect the composition of produc­ tion costs otherwise than through changes in productivity. However, the increase imposed by the Caisse de Compensation on solid fuels for non-domestic use regardless of the quality or the consumer af­ fects all consumers of solid fuels for non-domestic use equally and is obviously not a special charge according to this criterion. Since hard coke is affected in the same way as other types offuel it is not therefore subject to a special charge in spite of the situation whereby the iron and steel un­ dertakings are the principal if not the only consumers of that product. The charge imposed on solid fuels for non-domestic use in the Grand Duchy of Luxembourg might also be special if it affected only some of the solid fuels for non-domestic use consumed by Luxembourg industry and would therefore be the charge which the parties have called the charge imposed on products. The effect of such a charge would certainly be to vary the composition of pro­ duction costs resulting from output for Luxembourg consumers of non-domestic coal and thus to introduce distortions in the distribution oftheir purchases with­ in the Common Market. However, the increase in price imposed by the Caisse de Compensation is levied in Luxembourg on all solid fuels for non-domestic use regardless of their origin. As such it affects equally all producers of the Community who sell in Luxem­ bourg coal for non-domestic use, just as it would affect the producers of the

The Treaty abolishes and prohibits measures or practices which discriminate be­ tween producers, between purchasers or between consumers. The concept of discriminatron is specified in Article 60 of the Treaty which in­ dicates that practices involving, within the Common Market, the application of dissimilar conditions to comparable transactions, are discriminatory. A charge, even if it is not special, may directly or indirectly involve effects which discriminate between producers, between purchasers or between consumers. It is therefore necessary to inquire whether the levy imposed by the Caisse de Compensation must be considered as a measure or practice which discriminates and which is abolished and prohibited by the Treaty. The applicant rergards the levy imposed by the Caisse de Compensation as a measure which discriminates between consumers of hard coke and industrial coal who are established in Luxembourg, on the one hand, and those ofthe other Member States, on the other. It is true that normally the increase in prices of solid fuels for non-domestic use introduced by the Ministerial Order of 8 March 1958 affects only Luxembourg consumers of that fuel and not consumers of the other Member States. It therefore creates a difference between the respective production costs of the two groups of consumer. This difference could only be removed by the abolition of that increase in prices within the Grand Duchy of Luxembourg or the introduction of an analogous in­ crease in price in the other Member States. The abolition of and prohibition on special charges does not adversely affect the right of the Member States to impose general charges of their nationals. It is irrelevant whether the charge is in the form of a duty or tax or in the form of an equalization levy having the same economic results and the same financial impact. Several provisions of the Treaty, in particular Article 62 thereof, and Articles 24 and 25 of the Convention on the Transitional Provisions provide for the use for certain purposes of national equalization schemes or arrangements or of equalization levies.

It follows from Article 67 that not all action by a Member State which is liable to have appreciable repercussions on conditions ofcompetition in the coal or the steel industry coming within the jurisdiction ofthe Community is necessarily ab­ olished and prohibited by the Treaty or therefore necessarily constitutes a mea­ sure or practice which discriminates and is prohibited by Article 4 (b) of the Treaty, because it empowers the High Authority, by the grant ofan aid, to comp­ ensate for, in other words, to tolerate and in practice to authorize in certain cir­ cumstances, the harmful effects of this interference with competition. Moreover, Article 67 provides in detail for the intervention of the High Auth­ ority only with regard to actions taken by the Member States which have 'appreciable' repercussions on conditions of competition in the coal or the steel industry or are capable, by 'substantially' increasing the differences in pro­ duction costs otherwise than through changes in productivity, ofprovoking a 'se­ rious disequilibrium'. It follows from all these reasons that the Treaty has recognized that the abolition and prohibition of discriminatory measures and practices laid down by Article 4 (b) could not have the effect of creating absolute equality in the conditions of competition of the coal and steel industries coming within the Community nor of eliminating all interference with the conditions of competition resulting from actions taken by Member States substantially increasing differences in produc­ tion costs otherwise than through changes in productivity. The persistence of differences in conditions of competition is a necessary and inevitable consequence of the partial nature of the integration brought about by the Treaty and does not involve discrimination forbidden by the Treaty. Article 67 confirms this interpretation since it gives the High Authority power to compensate for and thus to cancel out the effects of interference with compe­ tition which the provisions ofthe Treaty have not eliminated and thus to prevent that interference with competition from jeopardizing, because it continues after the establishment of the Common Market, the task with which the Community was entrusted in Article 2 of the Treaty 'in harmony with the general economy of the Member States'. In the light of the above-mentioned principles it is necessary to inquire whether

the increase in the price of solid fuels for non-domestic use resulting from the Ministerial Order of 8 March 1954 constitutes a measure or practice which dis­ criminates between consumers and is abolished and prohibited by Article 4 (b) of the Treaty. The form of the charge imposed on consumers of solid fuels for non-domestic use makes it impossible to judge whether it is or is not a discriminatory measure or practice prohibited by Article 4 (b) of the Treaty. It is not important under these circumstances to know whether it constitutes a duty, a tax or an increase in price. Thus the Treaty does not prohibit the increase in price resulting from the Min­ isterial Order of 8 March 1954 and its effects are necessarily limited to the ter­ ritory of the Grand Duchy of Luxembourg. At the very most the High Authority could, if it had considered that the action of the Government of the Grand Duchy of Luxembourg involved harmful effects for the coal and steel undertakings coming within the jurisdiction of that gov­ ernment, have authorized it to grant an appropriate aid. The High Authority considered that the levy imposed by the Caisse de Compen­ sation 'is not capable of distorting competition either for the sale of coal or for the sale of steel products, because it has little effect on the cost price of steel pro­ duced by the Luxembourg iron and steel industry'. The applicant contests this statement and considers that the price of hard coke accounts for about 30% ofthe cost price of products of the iron and steel industry and that therefore the increase in its price distorts, by its very serious effect on the cost price of those products, the conditions of competition between the Lux­ embourg producers and those of the other countries of the Community. Since the applicant does not allege in these proceedings that the High Authority has been guilty of a misuse of powers or has manifestly failed to observe the pro­ visions ofthe Treaty or any rule of law relating to its application, the Court must therefore merely inquire whether, in law, the increase in price imposed on solid fuels for non-domestic use by the Ministerial Order of 8 March 1954 infringes the Treaty or any rule of law relating to its application. The above-mentioned considerations show that by imposing on solid fuels for non-domestic use the increase in price resulting from the Ministerial Order of 8 March 1954, the Government of the Grand Duchy of Luxembourg has adopt­ ed a measure coming within general economic policy for which, under Article 26 of the Treaty, it is still responsible and that that measure is not a discrimina­ tory practice prohibited and abolished by Article 4 (b) of the Treaty.

V — Does the levy imposed by the Caisse de Compensation infringe the decisions ofthe High Authority fixing, in application ofArticle 63 (2) (a) ofthe Treaty, maximum prices for hard coke and industrial coal from certain coalfields?

The applicant has alleged that the increase in price imposed by the Caisse de Compensation is contrary to Decisions Nos 15/54, 19/54 and 20/54 of the High Authority on the establishment ofprice lists applicable to coal from certain coal­ fields. The maximum prices are imposed on coal-producing undertakings and the fix­ ing of the maximum prices does not prevent the products from being subject to duties, taxes or any other general charge at the time of consumption or at any stage whatever of distribution. In those circumstances, the levy imposed by the Caisse de Compensation does not infringe the decisions of the High Authority fixing maximum prices.

VI — Is the Caisse de Compensation incompatible with the fundamental prin­ ciples of the Common Market?

The applicant regards the existence and the operation of the Caisse de Com­ pensation as an infringement of the fundamental principles of the Common Market.

In support of its opinion it sees the equalization levy as a system ofdouble prices which is unfavourable to Luxembourg consumers of solid fuel for non-domestic

INDUSTRIES SIDERURGIQUES LUXEMBOURGEOISES V HIGH AUTHORITY

D — The submissions concerning the infringement of essential procedural requirements

The applicant claims in the alternative that the implied decision of refusal is vi-

JUDGMENT OF 23.4.1956 -JOINED CASES 7 AND 9/54

tiated by nullity for infringement of essential procedural requirements inasmuch as the grounds for it are not stated. Article 88 of the Treaty provides that 'if the High Authority considers that a State has failed to fulfil an obligation under this Treaty, it shall record this failure in a reasoned decision'. Consequently, the duty to give a statement of the reasons upon which it is based applies to the decision which, in the applicant's view, the High Authority was required to take with regard to the Government of the Grand Duchy of Luxem­ bourg. There is nothing in the wording of Article 88 to justify the view that such a duty exists with regard to a refusal to take a decision under that article. Consequently, the lack of a statement of reasons upon which the implied deci­ sion of refusal was based does not constitute an infringement of the provisions of Article 88 of the Treaty.

E — Costs

INDUSTRIES SIDERURGIQUES LUXEMBOURGEOISES V HIGH AUTHORITY

Part Two

Application 9/54)

Application 9/54 was lodged only in as far as was necessary. It specifies that 'the right to institute proceedings has been acquired and therefore the written reply stating the reasons upon which the decision was based cannot remove or alter that right or, once the application has been lodged, place the ap­ plicants under a duty to lodge a fresh application'. 'Supposing, however, that an interested party should maintain the contrary, in other words, that the above-mentioned letter of 27 November 1954 constitutes an express decision of refusal which breaks the silence ofthe High Authority, the applicants have an interest, in order to avoid a fruitless argument on questions of admissibility, in lodging by this document, an application in so far as is nec­ essary against the refusal of the High Authority of their request'. The Court has held that Application 7/54 is admissible. For that reason, Application 9/54, which was lodged merely in so far as was nec­ essary, is purposeless. There is therefore no need to give judgment.

E — Costs

There is no need to give judgment on Application 9/54. However, the applicant was justified in considering it necessary to lodge that ap­ plication since the High Authority, without formally declaring that the letter of 27 November 1954 made Application 7/54 inadmissible by transforming the implied decision into an express decision, put forward and developed this opin­ ion in its defence. Consequently, all the parties have failed to recognize the admissibility of Appli­ cation 7/54 in the same way. For that reason, the parties, including the intervener, must be ordered to bear their own costs relating to Application 9/54.

(a) Declares that there is no need to proceed to judgment on the first head concerning the Office Commercial du Ravitaillement;

(b) Dismisses the application on the second head concerning the Caisse de Compensation attached to the Office Commercial du Ravitaille­ ment;

Orders the main parties to bear their own costs;

Orders the applicant to bear the costs of the intervener.

II. Declares that there is no need to proceed to judgment in Case 9/54;

Orders the parties, including the intervener, to bear their own costs.

A. Cases 7 and 9/54 205 I. Subject-matter of the applications, the course of the procedure and the most recent conclusions 205

1 — Translated from the German.