C-13/57

(Cf. paragraph 7, summary in Case 8/57 of 21 June 1958)

II. Financial charge imposed upon undertakings — Financial arrangement — Such arrange­ ments not to be restrictive (Cf. paragraph 8, summary in Case 12/57 of 26 June 1958)

In Case 13/57

1. WIRTSCHAFTSVEREINIGUNG EIESEN- UND STAHLINDUSTRIE, a trade association governed by German law, having its head office in Düsseldorf, represented by its President, Hans-Günther Sohl;

2. GUSSTAHLWERK CARL BÖNNHOFF, a partnership with limited liability governed by German law with its head office in Wetter (Ruhr), represented by Waldemar Bönnhoff and Horst Pegau;

3. GUSSTAHLWERK WITTEN, a limited company governed by German law, having its registered office in Witten, represented by Rudolf Kögl, Chairman, and Adolf Richter, Director;

defendant,

Application for the annulment of Articles 3(1) (b), 4, 5, 6, 7, 8, 9, 11 (1) (0 and (g), 16 (1) and 17 of Decision No 2/57 of the High Authority of 26 January 1957 published in the Journal Officiel No 4 of 28 January 1957, and all other provisions in so far as they relate to the supplementary contributions imposed upon the excess consumption of ferrous scrap,

THE COURT

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

Advocate-General: M. Lagrange Registrar: A. Van Houtte

gives the following

system and even to increase their stocks so the supplementary rate will be imposed in that the uneven trends on the market have full and the increased consumption will not now altered to provide a continuous in be profitable because of the excessive cost crease. There is no reason to intervene in or price. In fact, taking the supplementary rate der to ensure regular supplies of ferrous at US $10 and, since a charge of 1 033 kg of scrap, as is provided in Decision No 2/57. ferrous scrap is needed to produce a metric Even if it were conceded, which it is not, ton of pig-iron, the supplementary charge that economies in ferrrous scrap were nec amount to DM 43.40 per metric ton of pig- essary, the methods adopted by the defend

plant. There is no place for such protection a capacity of 80 metric tons which can only in a free market economy; it is not justified begin operations after 31 January 1958 and by the Treaty. This scheme is incompre will therefore have no reference consump hensible in economic terms; the defendant tion. Because of the supplementary rates is failing to observe its general objectives; to and the inclusion of increases in stocks in meet steel requirements in 1965 and above the consumption subject to tax, each metric all in 1975 it is necessary considerably to ex ton produced in the new furnace between pand productive capacity. The defendant's the date when it is put into operation and measures render such future planning fu the date when the decision expires will be tile: the defendant contradicts its own ob subject to a supplementary contribution of

Because the steel gung Eisen- und Stahlindustrie is open to works has an insignificant reference con all iron and steel undertakings in the Fed sumption it is subject to a very high supple eral Republic. Its objective is to defend the mentary rate. The taxable consumption of collective interests of its members. ferrous scrap is 842 kg per metric ton pro duced. Taking the supplementary rate at (2) The Gußstahlwerk Carl Bönnhoff un

EISEN- UND STAHLINDUSTRIE v HIGH AUTHORITY

throughout 1958. They then disregard the cation and promoting amongst undertak consumption of scrap from alloy steel, ings behaviour which would ultimately which is exempt from the contribution, and limit the consumption of scrap, whilst al the fact that it is possible to reduce the input lowing the undertakings to retain a certain of scrap. freedom of action. Undertakings which, in The High Authority also disputes the fig the present state of the market in ferrous ures put forward by the second applicant.

Such excep tion in the undertaking which entitles the tions would have reduced the implementa new furnace to the reference rate of the ex tion of the decision to a cipher. With regard isting furnace (first subparagraph of Article to producers of special steel, who experi 6 (2)); ence the greatest difficulty in reducing their that the extremely high input of ferrous consumption of ferrous scrap, the High Au scrap (1 033 kg) could be reduced (Article 9 thority took into consideration the fact that of the decision). the selling prices of their products are dis tinctly higher than those of ordinary steel This also applies to the figures submitted by and that the supplementary contribution is the fifth applicant with regard to the effect relatively lighter for them. In short, the of the supplementary contribution on the High Authority attempts to counter all in price per metric ton of ingots of Martin crease in the pressure caused by undertak

iron. They can even effect economies in fer rous scrap through processes already in The applicants claim that the Court should: operation in Salzgitter. annul Articles 3(1) (b), 4,5,6, 7,8,9,11 (1) With regard to the reduction of the specific (0 and (g), 16 (1) and 17 of Decision No 2/57 input reference in ferrous scrap in elec of the High Authority of 26 January 1957 trometallurgy, it is also possible to effect together with all other provisions in so far as economies in ferrous scrap through the pro they relate to the supplementary contribu-

tion imposed upon excess-consumption; or which put new plant, within the mean der the High Authority to bear the costs. ing of the said Article 6, into operation The defendant contends that the Court of between 1 February 1957 and 31 Jan Justice should: dismiss the application sub uary 1958; mitted on 12 March 1957 by the applicants in that part thereof is inadmissible and the (b) that the supplementary rate is in the na remainder is unfounded; order the appli ture of a penalty; cants to bear the costs. (c) that Article 13 of the decision requires

Conse entity cannot be broken down in terms of quently Decision No 2/57 must be con the various ways in which it is implemented sidered as a series of individual decisions to maintain that it is individual or general. thereby permitting the undertakings to The Court has delivered a judgment to this make submissions concerning infringe effect in Case 8/55 (Rec. 1955-1956, p. 224). ment of the Treaty and not only concerning It may not be inferred that the decision is misuse of powers. individual in character because, as it is alleged, Article 8 is in the nature of a pen

The var islative principle: it imposes abstract condi ious difficulties upon which each one relies tions and sets out the legal consequences prove that the undertakings cannot have thereof. The decision is general in character been harmed by all the provisions which and it follows that the applicants' com form the subject-matter of a joint applica plaints are inadmissible in so far as they are tion. The High Authority relies upon the based on an alleged infringement of the Court to settle whether this accumulation Treaty. of individual applications is admissible. The applicants reply that proof of the indi The applicants reply that the High Author vidual character of the contested provisions ity is trying to introduce into Community is provided by three points: law a prohibition on joint applications.

EISEN- UND STAHLINDUSTRIE v HIGH AUTHORITY

3. Whether an application by an associa to encourage economies in ferrous scrap. tion of undertakings is admissible if the individual interests of the undertakings which are members of the association The applicants do not seek the annulment of the abovementioned Article 1. Thus they differ do not in any way challenge the lawfulness of the task entrusted to the CPFI. Since the The defendant states that the application submitted by an association must be based applicants have failed to contest the basic upon a misuse of powers affecting the col objectives of Decision No 2/57 their com lective interest of the undertakings which it plaints regarding misuse of powers are in

plication of associations by maintaining that this right does not exist where there are The High Authority accordingly maintains differences in the interests within the asso that the applicants' complaints provide no ciation. There is no basis for this limitation basis for concluding that it pursued, by either in the case-law of the Court of Justice means of the contested provisions in Deci or in legal writing. Even if the existence of sion No 2/57, an objective other than that a joint interest were to be required, the ap which it was permitted to pursue by means plication of the first-applicant would be ad of the financial arrangement in Article 53. missible because the association and its The applicants reply that misuse of powers members have a joint interest that Article obtains since the real objectives of the con 53 of the Treaty should not be interpreted as tested provisions, as is clear from a purely a provision permitting, without checks, in objective analysis, are contrary to the objec tervention by the authorities, which would tives prescribed for the High Authority by

JUDGMENT OF 21. 6. 1958 — CASE 13/57

The fact the allocation and the influencing of invest that the applicants describe such effects as ments and production merely as a neces allocation does not permit them to dispense sary and indirect effect of measures in either with proving the objective existence tended to ensure orderly supplies of ferrous of an actual allocation or with explaining scrap. The High Authority foresaw the the reasons why the High Authority wished inevitable consequences of the decision and to effect an allocation. The complaint is the objective which it pursued accordingly thus unfounded. also embraces the inevitable consequences which must be regarded as amounting to a Second complaint: Misuse of powers with deliberate intention. The only important regard to Article 54 and 57 of the Treaty. point is whether the consequences come within the framework of an objective which The applicants state that influencing invest is itself lawful. If the defendant were not to ments, far from constituting the inevitable be held responsible for the fact that the nor consequence of a measure intended to en mal consequences of a decision are in sure orderly supplies of ferrous scrap, was cluded within the aim pursued, review of clearly the principal objective of the mea the objectives of the High Authority, as laid sures particularly contested.

It is the Treaty. correct that the objectives of Article 3 can only be pursued by means of the powers The applicants state that the system of pri conferred upon the High Authority. But it orities and of double prices constitutes a is incorrect to infer from this that Article 54 scheme of allocations. No allocation may be is the only rule which permits the High Au effected by a procedure other than that de thority to adopt measures which affect the scribed in Article 59 under the guarantees operations of undertakings with regard to laid down in Annex II even in the context investments. Article 53 permits the High of the indirect means of action referred to in Authority, in pursuing one or more of the Article 57. objectives in Article 3, to adopt measures The defendant replies that, in order to estab having such affects. lish a misuse of procedure, the applicants It may not be maintained that the effects of must allege and prove that the High Au a financial arrangement on investments are thority intended to bring about, through the unlawful because Article 53 does not ex application of Article 53 (b), the same ef pressly mention investments.

EISEN- UND STAHLINDUSTRIE v HIGH AUTHORITY

the Treaty, especially in Articles 55 (2) and ures are legally enforceable and infringe­ 61, of necessity affects investments al­ ments will be punished. The contested pro­ though those articles likewise do not men­ visions do not contain anything compar­ tion this. The measures which Article 53 able. Although they influence certain un­ does not govern are those for which express dertakings consuming ferrous scrap with provision is made in Article 54: the con­ regard to their production plans this is a tested decisions did not adopt any of those typical effect of an indirect measure. measures, either as to form or as to sub­ The system established by the High Au­ stance. thority under Article 53, which provides an It is not prohibited to affect investments incentive to effect economies in the con­ through indirect measures. If a financial ar­ sumption of ferrous scrap, differs funda­ rangement provided for in Article 53 is in mentally from the equalization scheme un­ specific circumstances the appropriate der Article 58 (2), which taxes undertak­ means for attaining specific objectives laid ings' surpluses when there is a crisis in down in Article 3 there is no wrongful act sales. if the effects resulting therefrom also influ­ In brief the High Authority disputes both ence the investment plans of undertakings. that there was an influence on production The complaint of misuse of powers is thus and that it intended to exercise such influ­ unjustified. ence when it adopted Decision No 2/57.

Third complaint: Misuse of powers with re­ Fourth compaint: Misuse of powers with gard to Articles 58 and 59 of the Treaty. regard to Articles 3 and 53 (1) (b) of the Treaty.

JUDGMENT OF 21. 6. 1958 — CASE 13/57

objectives. If such a sacrifice was necessary, production potential. that is to say, if pursuit of one objective had The allegation that refusal of a reference been incompatible with pursuit of another consumption prevented the installation of the High Authority should then have re new plant with a large consumption of fer frained from using the powers in Article 53 rous scrap may be justified in the case of and could only have had recourse to the certain undertakings but it does not hold special power which it possesses under good for undertakings consuming ferrous other provisions of the Treaty. The High scrap as a whole.

powers. tial and the orderly expansion and modern It is impossible to uphold the argument that ization of production). In the present case the objectives of Article 3 (d) and (g) can there were no urgent circumstances requir only be sacrificed within the framework of ing a compromise between the objectives of the exercise of the special powers provided Article 3 and justifying such failure. On the in Articles 54,58 and 59. The High Author contrary, the real aims pursued by the High ity does not understand why in a period of Authority were contrary to the objectives of crisis it is possible to suspend certain objec Article 3 (d) and (g) in that they excluded tives which, moreover, must be accorded the installation of new plant with a large express priority when the conditions of the consumption of ferrous scrap and, through market do not yet amount to a real crisis but the supplementary charge on excess con which nevertheless require indirect meas sumption, prevented production from in ures in order in the long term to avoid se creasing beyond a reference tonnage. rious difficulties in undertakings' produc At the same time the real objectives of the tion conditions. contested measures are contrary to the Concerning the complaint of misuse of objectives of Articles 3 (b), 4 (b) and 59 (4), powers with regard to Articles 3 (b), 4 (b), as those measures place a group of under and 59 (4) the defendant observes that this takings at a general disadvantage in relation constitutes a complaint of infringement of to others (Article 3 (1) (b) and 6 (3) of the the Treaty. If the High Authority in one of

EISEN- UND STAHLINDUSTRIE v HIGH AUTHORITY

OCCF. The fact that the High Authority serve the provisions of Article 65 (2) (b) un did not concur in the OCCF's draft amend der which the agreement authorized must ments in no way establishes that Decision not be 'more restrictive than is necessary for No 2/57 is incomprehensible, contradictory that purpose'. The refusal to grant a refer and impracticable. ence consumption for plant to which Arti cle 6 (3) of the contested decision applies 4.

served. However, an additional statement ming from private measures of undertak was lodged by the applicants on 11 October ings. This arises first and foremost from the 1957 after the expiry of the period pre very nature of things and further from the scribed for lodging the reply. fact that there is a reference in Article 53 (a) The fourth applicant, Ruhrstahl Hattingen, to Article 65, which is lacking in Article 53 withdrew from the proceedings at the hear (b). ing in open court on 20 February 1958.

Treaty. The applicants refer to their state Decision No 2/57 than other German un ments relating to misuse of powers to show dertakings operating a mixed works and ac extent to which the High Authority has in cordingly it has no further interest in a spe fringed the Treaty in fact and in law. cific application. This is a simple withdra Furthermore, they consider that the con wal. The concurrence of the defendant is tested provisions violate the general princ scarcely necessary since the proceedings are iples of law because they are illogical, con for annulment (Rules of the Court, Article tradictory and consequently cannot be 81 (2)).

According to the statutes of the first applicant (Wirtschaftsvereinigung Eisen- und Stahlindustrie) it is a private association governed by German law having as its object the furtherance and defence of the general interests of its members who are producers of iron and steel. It is common ground that the contested provisions of general Decision No 2/57 are capable of affecting certain, even though perhaps divergent, interests, entrusted to the applicant. The applicant thus has capacity to institute proceedings in accordance with the provisions of Articles 33, 48 and 80 of the Treaty. According to the statutes of the second, third, fourth and fifth applicants they are private undertakings governed by German law; they have as their object the pro­ duction of steel within the territories referred to in the first paragraph of Article 79 of the Treaty. Pursuant to the provisions of Articles 33 and 80 of the Treaty they accordingly have capacity to institute proceedings against decisions and rec­ ommendations of the High Authority before the Court of Justice. Pursuant to the provisions of the second paragraph of Article 33 of the Treaty the undertakings referred to in Article 80 may institute proceedings for the annulment of general decisions of the High Authority which they consider to involve a mis­ use of powers affecting them. The second, third, fourth and fifth applicants maintain that they are adversely af­ fected by the contested provisions because they have great difficulty in effecting economies in ferrous scrap and consequently they must pay the supplementary charge if they increase their consumption of purchased scrap. Decision No 2/57 refers to the undertakings listed in Article 80 of the Treaty as a whole in so far as they use ferrous scrap, both undertakings presently in exis­ tence and those which were established during the period when the decision was in force. It is a general decision; it establishes a legislative principle, impose ab­ stract conditions for its implementation and sets out the legal consequences en­ tailed thereby. It is impossible to uphold the allegation of the second, third, fourth and fifth applicants that such a general decision also constitutes an individual de­ cision or a group of individual decisions affecting them. The first applicant formally alleges that on one or more occasions a misuse of pow­ ers affecting its members has been committed. The second, third, fourth and fifth applicants formally allege that on one or more occasions a misuse of powers af­ fecting them has been committed and all the applicants produce a relevant state­ ment of reasons leading them to believe that there has been a misuse of powers on one or more occasions. The purpose of the arguments upon which they rely is to obtain a declaration that, when the High Authority adopted the contested provisions, it exercised the powers conferred upon it by the Treaty for purposes other than those for which they ware conferred, both through serious disregard for certain of the objectives referred to in Article 3 and through the clear intention

The High Authority has selected Article 53 as the legal basis of the scheme for the equalization of ferrous scrap which it has established. That article permits it to intervene in connexion with the tasks assigned to it under the Treaty, in particular under Article 3 thereof. Article 53 appears in Chapter II, entitled 'Financial Provisions', the other articles of which relate to the use of funds which the High Authority obtains through lev­ ies on production or by loans. It may accordingly be considered that the financial arrangements referred to in Article 53 are arrangements based on the transfer of resources, in particular arrangements in the nature of equalization or compensa­ tion. This interpretation is confirmed by the last paragraph of Article 62 which provides that certain equalization payments 'may ... be instituted as provided in Article 53'. The equalization arrangements do not directly affect prices but rather the factors contributing to the formation of prices. In this way those factors, without prevent­ ing prices from being freely fixed, modify the level at which they are fixed. The financial arrangements provided for in Article 53 affect by such alterations in the level of prices the other characteristic features of the state of the market and, in particular, the supply of and demand for the relevant products. These arrange­ ments thus constitute powerful and effective intervention produres at the diposal of the High Authority but are nevertheless 'indirect' within the meaning of Article 57 of the Treaty. In this respect they are distinct from the direct means of action through establishment of production quotas (Article 58) or the allocation of re­ sources (Article 59). The High Authority, by using the financial arrangements provided for in Article 53, is in a position to exercise a broad influence on the market in coal and steel whilst it must be borne in mind that Article 53 restricts the application of such arrangements to the procedures 'necessary for the performance of the tasks set out in Article 3 and compatible with this Treaty, and in particular with Article 65'.

1. The submission of misuse of powers with regard to Article 53 (b) and Articles 2, 3, 4 and 5 of the Treaty, that is to say, that the objectives pursued by the High Au­ thority by means of financial arrangements under Article 53 are contrary to the ob­ jectives defined by Articles 3 and 4 of the Treaty

(a) Pursuant to Article 53 (b) of the Treaty the High Authority may, with the unanimous assent of the Council, itself make any financial arrangements which it recognizes to be necessary for the performance of the tasks set out in Article 3. The exercise of the powers thus conferred upon the High Authority is subject to the conditions set out in Articles 2 to 5 concerning the establishment, adminis­ tration and guidance of the Common Market. Pursuant to Article 2 of the Treaty the Community has as its task to contribute to economic expansion, growth of employment and a rising standard of living in the Member States. The means prescribed for the attainment of those objectives consists in the establishment of a Common Market on the conditions laid down

EISEN- UND STAHLINDUSTRIE v HIGH AUTHORITY

require'. In pursuing the objectives laid down in Article 3 of the Treaty the High Authority must permanently reconcile any conflicts between those objectives considered in dividually and, when such reconciliation proves unattainable, must grant such temporary priority to one or other of them as appears necessary having regard to the economic facts or circumstances in the light of which, in carrying out the tasks entrusted to it under Article 8 of the Treaty, it adopts its decisions. Pursuant to the provisions of Article 57 of the Treaty in the sphere of production, the High Authority is required to give preference to the indirect means of action at its disposal, in particular to intervention in regard to prices.

In particular these powers would be used for an objective other than their legal purpose if it ap peared that the High Authority had applied them with the exclusive, or at any rate the decisive, purpose of evading a procedure especially prescribed by the Treaty in order to deal with the circumstances with which it is required to cope. At the time when the contested decisions were adopted the market in ferrous scrap was widely recognized as being characterized by a severe shortage of Com munity supplies, by mounting difficulties in imports and by large-scale and rapid

(b) The purpose of the provisions contested in the present application was to make the contribution for the equalization of the prices of imported ferrous scrap progressively selective by increasing the rate applicable to the consumption of bought scrap above a given reference level and by graduating the charges thereby imposed in terms of a specific input coefficient for ferrous scrap in the installations and the manufacturing processes requiring scrap. Furthermore, the said provi­ sions contain a set of transitional measures intended to permit undertakings to adapt themselves progressively to the conditions thereby created for them, in par­ ticular, the choice by each undertaking of its own reference period, the period of six months during which payment of the contribution at the supplementary rate is suspended, the graduated nature of the rate, the allocation of a reference con­ sumption and a specific input reference for plant which began operations during the year following the entry into force of the decision, together with the allocation of a specific input reference without a time-limit for all plant beginning operations after the expiry of this latter period. Through those measures the High Authority provided the scheme for the equalization of the prices of imported ferrous scrap, which it had previously established, with conditions intended to prevent a fall in the price of ferrous scrap resulting from equalization from encouraging producers in the Common Market to increase their consumption of scrap. Thus defined the decisive aim of the contested provisions constitutes lawful in­ direct action, within the meaning of Article 57, applied to the market in ferrous scrap in order to ensure, bearing in mind the facts and circumstances then ob­ served, regular supplies to the Common Market. The said aims are thus in accor­ dance with the provisions of Article 3 (a) and the latter part of (d), the second par­ agraph of Article 2 and the third subparagraph of the second paragraph of Article 5 of the Treaty.

quired, within the limits of their respective powers, to ensure in the common in­ terest that all comparably-placed consumers in the Common Market have equal access to the sources of production; this provision constitutes a necessary objec­ tive for the action of the High Authority in the exercise of the powers conferred upon it by the Treaty. Failure to observe the principle of the equality of treatment of consumers in the matter of economic rules, as that principle has been described above, may constitute misuse of powers affecting the persons or classes of persons deliberately sacrificed. Pursuant to a principle generally accepted in the legal systems of the Member States, equality of treatment in the matter of economic rules does not prevent dif­ ferent prices being fixed in accordance with the particular situation of consumers or of categories of consumers provided that the differences in treatment corre­ spond to a difference in the situations of such persons. If there is no objectively- established basis distinctions in treatment are arbitrary, discriminatory and illegal. It cannot be alleged that economic rules are unfair, on the pretext that they involve different consequences or disparate disadvantages for the persons concerned when this is clearly the result of their different operating conditions. The supplementary rate established under Article 3 (1) (b) of the contested deci­ sion applies generally and entirely to any consumption of bought scrap in excess of that relating to a reference period. The discretion conferred upon the undertak­ ings subject to the scheme themselves to select, within specially prescribed tem­ poral limits, the period most favourable to them does not, however, mean that the criterion used for distinguishing between them thus loses its objective nature, without which it would appear arbitrary. Indeed the factual differences which this situation entails for undertakings stem from their dissimilar operating conditions and not from any legal inequality inherent in the decision. The graduation of the contested supplementary rate laid down by the provisions of Article 8 is based exclusively on the successive periods for the application of Decision No 2/57. The graduation is thus general and absolute, objectively based upon the wish progressively to provide encouragement, by influencing prices, to steel undertakings consuming ferrous scrap to economize in using it so as to avoid its unconsidered exhaustion. The refunds of the proportion of the equalization contribution calculated at the supplementary rate, which were established pursuant to Article 9 of the disputed decision, are granted on a purely objective basis, the reduction of the specific input coefficient of ferrous scrap for each type of plant and manufacturing process using that material. The varying effects which the application of that article produces on the persons concerned, by reason of varying operating conditions and technical problems which, for certain categories of plant, may reduce or even exclude en­ titlement to refunds cannot render the rule inequitable in law — which is excluded by the nature of the criterion adopted.

(e) Furthermore, the objectives laid down in Article 3 of the Treaty must be ap­ praised as a whole and pursued exclusively in the common interest. The concept of the common interest referred to in Article 3, far from being restricted to the sum of the individual interests of coal and steel undertakings subject to the jurisdiction of the Community, considerably exceeds the scope of such interests and is defined in relation to the general aims clearly laid down in Article 2. Consequently pursuit of the objectives prescribed in Article 3 does not rule out selective measures based in particular upon the nature of the means of production to be developed or created if it appears that economic circumstances and the reasonably foreseeable trend of market conditions call for such measures. This is certainly so when there are dan­ gers of a serious shortage of one of the basic raw materials for the steel industry or if it appears necessary to adopt a policy of using resources rationally in order to avoid their unconsidered exhaustion. The distinctions which may consequently prove necessary to maintain conditions which will encourage undertakings to ex­ pand and improve their production potential and to promote its regular develop­ ment nevertheless must be based upon purely objective criteria in accordance with the principle of equality laid down in the Treaty. The provisions of Article 6 of the contested decision are by their nature transitional and are intended progressively to encourage steel undertakings to use scrap as rationally as possible. To attain this the provisions alter the cost of financing the equalization of the prices of imported ferrous scrap both in terms of the nature of the plant and manufacturing processes

(0 The 'indirect means of action' in relation to production prescribed in Article 57 are to be distinguished from the 'direct influence' referred to in the third sub­ paragraph of the second paragraph of Article 5 not by the aims pursued but by the methods appropriate to attain them. Indirect means of action, by affecting, espe­ cially as a result of the financial arrangements under Article 53, certain of the fac­ tors which play a part in forming prices, create conditions which encourage un­ dertakings freely and willingly to choose the behaviour desired by the High Au­ thority for the accomplishment of the tasks with which it is charged under the Treaty. On the other hand direct influence, such as the allocation of resources for which provision is made in Article 59, is not concerned with how producers would be­ have if they acted freely but directly prescribes, on pain of fines, as is stated in Ar­ ticle 59 (7), the behaviour which the High Authority considers necessary with re­ gard to the situation with which the Treaty requires it to cope. The two procedures, indirect and direct, are intended to modify the structures to which, unless modified by intervention, individual behaviour would give rise. The procedures thus both constitute procedures for economic intervention. However, the former create the right conditions to encourage producers freely to adopt the behaviour which the common interest, referred to in Article 3, requires of them, whilst the latter impose upon undertakings in the same common interest behav­ iour other than that which they would be promted to adopt by the actual circum­ stances.

to which Article 57 prescribes indirect means of action. The provisions in parti­ cular with regard to 'reference consumption of bought scrap', 'specific input ref­ erences', the period of exemption from contributions at the supplementary rate and the graduated nature of that rate are steps in accordance with the wish to re­ spect that preference. With regard to 'new plant' it is true that, subject to the refunds for which it may qualify inasmuch as Article 6, at the end, grants a 'notional specific input refer­ ence', the price of ferrous scrap with which they are charged will in principle be higher. The same is true of 'solid-charged electric furnaces in respect of which it can scarcely be anticipated that technical developments will bring about a notable re­ duction in their specific input of ferrous scrap. Nevertheless those findings do not affect the lawfulness of the system. In fact the lack of supplies and the increase in the price of ferrous scrap required the High Authority at one and the same time to encourage undertakings to reduce their consumption of ferrous scrap and to prevent the price of Community scrap from being fixed at the level of that of imported scrap. It was thus necessary to provide the equalization scheme with a supplementary contribution to counter the incen­ tive to increased consumption of ferrous scrap which might have resulted from the fall in the price brought about by equalization. Although the High Authority wished at the same time to 'promote a policy of us­ ing natural resources rationally and of avoiding their unconsidered exhaustion', an objective laid down in Article 3 (d) of the Treaty, it also had to take into account the conditions appropriate to various categories of consumers and thus modify the application of the supplementary contribution imposed on the latter in accordance with the variations in their consumption of ferrous scrap. This modification en­ tailed the gradual elimination of the effects of equalization, or even in certain cases their abolition.

ticle 59 and in Annex II. In certain economic circumstances and subject to certain procedures, those measures authorize the allocation in tonnages of raw material resources to the various categories of possible consumers. The procedures thus provided for consist exclusively in establishing consumption priorities and allocat ing resources. Such activities are directly and solely of a quantitative nature and are thereby distinct from all indirect action on production by means of price with out restriction of the volume of purchases. Article 58 itself, upon which the ap

to a system of allocation. They rather constitute means of intervention inherent in the financial arrangement itself which necessarily, by its very nature, affects the field of competition and production. None of the arguments put forward consti tutes sufficient proof in law that in this respect the system may be treated as equiv alent to the allocation for which provision is made in Article 59 and Annex II. In the contested measures the High Authority was concerned to deal with a situation marked by extreme scarcity of ferrous scrap; in applying for this purpose the powers conferred upon it under Article 53 (b) of the Treaty it was acting in accordance with the provisions of Article 59 which provide that recourse shall only be had to the special procedure of quantitative allocation, even if a case of serious shortage has been duly found, if the means of action provided for in Article 57, amongst which the financial arrangements referred to in Article 53 must be clas

JUDGMENT OF 21. 6. 1958 — CASE 13/57

expedient of a financial arrangement and contrary to the stated objective of effect­ ing economies in ferrous scrap and ensuring a regular supply of scrap to the mar­ ket, or else, to prove that the High Authority had been motivated by a wish to evade Article 59 or that, through a serious misconception it had failed to recognize that the contested arrangement amounted to an arrangement under Article 59. This has not been sufficiently proved in law.

3. The complaint of misuse of powers with regard to Articles 53 (b), 54 and 57 of the Treaty, namely that the High Authority cannot have recourse to financial arrange­ ments under Articles 53, whilst disregarding the provisions of Article 54

4. The complaint of misuse of powers with regard to Article 65 of the Treaty, namely that by refusing to grant a reference consumption for plant and manufacturing pro­ cesses put into operation after 31 January 1958 and imposing a supplementary charge on excess consumption, the High Authority adopted measures which were more restrictive than was necessary for that purpose

It has been previously established that the economic circumstances observed at the time of the intervention of the High Authority on the market in ferrous scrap justified the adoption of the contested measures concerning the financial burden of equalization and that, in particular, those circumstances might properly entail

EISEN- UND STAHLINDUSTRIE v HIGH AUTHORITY

the establishment of a graduated rate and the allocation of the financial charge in terms of tonnages consumed, of the periods of consumption and of the nature of the plant. Accordingly those measures are not more restrictive than is necessary for the purpose of the financial arrangement so that, even if Article 65 (2) (b) were applicable to them, the conditions which it requires would be fulfilled. The complaint based on disregard for Article 65 is thus irrelevant.

5. The complaint based on the infringement of Articles 2, 3, 4, 5, 53, 54, 58, 59 and 65 of the Treaty and Annex II thereto

Since Decision No 2/57 is a general decision it may only be contested by submit­ ting a complaint of misuse of powers. The complaints based upon infringement of the Treaty must be dismissed.

THE COURT

hereby:

Declares that the application is admissible but unfounded: consequently dismisses the application for the annulment for the provisions contained in Articles 3 (1) (b), 4, 5, 6, 7, 8, 9, 11 (1) (f) and (g), 16 (1) and 17 of Decision No 2/57 of the High Authority dated 26 January 1957;

Orders the applicants jointly and severally to bear nine-tenths of the costs of the proceedings and the defendant to bear one-tenth thereof;

Takes official note of the withdrawal of the applicant, Ruhrstahl AG of Hat­ tingen, and orders it jointly and severally with the four other applicants to bear one-half of the costs borne by one of the latter.

Pilotti van Kleffens Delvaux

Contents

I — Background 289

II — Analysis of Decision No 2/57 of 26 January 1957 295 III — Conclusions and submissions 298

IV — The powers conferred upon the High Authority under Article 53(b) 299 (a) The 'financial arrangements' 299

(b) The conditions for the exercise of the powers provided for in Article 53 (b) 300

1 — Translated from the French.