C-27/58

HAUTS FOURNEAUX DE GIVORS v HIGH AUTHORITY

In Joined Cases 27 to 29/58

COMPAGNIE DES HAUT FOURNEAUX ET FONDERIES DE GIVORS, Établissements Prenat, a limited company having its registered office at Givors (Rhône), repres­ ented by the Chairman of its Board of Directors, Joseph Roederer, (Case 27/58),

SOCIÉTÉ D'EXPLOITATION MINIÈRE DES PYR ÉN RS, a limited company having its registered office at Ollette (Pyrenees-Orientales), represented by the Chairman of its Board of Directors, Edmond Verny, (Case 28/58),

COMPAGNIE DES ATELIERS ET FORGES DE LA LOIRE, a limited company having its registered office at Saint-Étienne, represented by the Chairman of its Board of Directors, Henry Malcor, (Case 29/58), assisted by Jean Rault, Professor of Law, Advocate at the Cour d'Appel, Paris, with an address for service in Luxembourg at the Chambers of Mr Margue, 6, Rue Alphonse-Munchen,

applicants,

In Case 29/58:

for the annulment of the decision of the High Authority of 9 February 1958 ad­ dressed by letter of 12 February 1958 to the Government of the French Republic concerning special rates and conditions applicable to the transport by rail of min­ eral fuels intended for the iron and steel industry and published in the Official Journal of the ECSC on 3 March 1958;

JUDGMENT OF 10. 5. 1960 — JOINED CASES 27 TO 29/58

THE COURT

composed of: A. M. Dormer, President, L. Delvaux and R. Rossi (Rapporteur), Presidents of Chambers, 0. Riese and Ch. L. Hammes, Judges

Advocate-General: K. Roemer

HAUTS FOURNEAUX DE GIVORS v HIGH AUTHORITY

of 9 February 1958 as reproduced in the let­ the Convention on the Transitional Provi­ ter addressed on 12 February 1958 by the sions, adopted on 9 February 1958 the deci­ High Authority to the Government of the sion ordering: French Republic and in particular the pro­ visions contained in Paragraphs 2 and 3 (a) The abolition before 1 January 1959 of concerning Tariff No 7, Chapter 3, Para­ the rates and conditions laid down in graph IV and Chapter 11, Paragraph I; Chapter 3, Paragraph I and Chapter 103, Paragraph I, as regards consignments Order the High Authority to bear the costs.' from the western mines;

2. The defendant contends that the Court (b) The progressive abolition, between 1 should: July 1958 and 1 July 1965, of the rates and conditions laid down in Chapter 3, 'Dismiss the application in Joined Paragraph I, as regards consignments Cases 27/58, 28/58 and 29/58 with all from the mines in the Pyrenees, and, the legal consequences, in particular before 1 July 1961, of the rates and con­ with regard to the payment of the fees, ditions laid down in Chapter 12, Para­ costs and any other expenses.' graph I.

II — The facts That decision, which was notified to the Government of the French Republic by let­ The facts which form the basis of this case ter of 12 February 1958 and published in the may be summarized as follows: Official Journal on 3 March 1958, is the sub­ ject-matter of Applications 27/58 and (1) Cases 27/58 and 28/58 28/58.

JUDGMENT OF 10. 5. 1960 — JOINED CASES 27 TO 29/58

tion. ties may be summarized as follows: The defendant replies that the argument in The substance of the case quesion is based on rules of French private law and that therefore it cannot be applied The submission concerning the lack of compe to the present case, which concerns rela tence of the High Authority for the purposes of tionships created by an administrative deci Articles 1 and 10 of the Convention on the sion and governed by public law. With re Transitional Provisions gard to the rules applicable to those rela tionships it recalls that in all the countries of First, the applicants stress that the powers of the Community the contents of and in par the High Authority under Articles 1 and 10 ticular the date contained in administrative of the Convention on the Transitional Pro

Treaty. The only restriction which is laid ed 9 February 1958 since the date on which down by the seventh paragraph of Article it was notified to the Government .of the 10 of the Convention concerns the manner French Republic was 12 February 1958 and in which that power and that duty are to be that the date on which the person con exercised, in that it expressly places the cerned is informed of the measure consti High Authority under a duty to allow dur tutes that on which it is complete and legal ing the transitional period such time for the ly valid. abolition of protective rates which are incompatible with the Treaty as may be The defendant replies that it is necessary to necessary to avoid any serious economic make a clear distinction between the valid

10 of the Convention the High Authority rect application of those provisions. Since had to consult the Committee of Experts the measure was adopted on 9 February provided for in the first paragraph of that ar 1958 in accordance with the rules which ticle. In fact, under that provision, an had to be observed, it exists in law as from amendment of the rates and conditions in that date and is completely valid. force when the High Authority was set up

requires prior examination of the costs and Since the concept of comparability is satis conditions of transport applicable to ore. fied in the case of these consumers, it is per Since neither the decision dated 9 February missible to state that the rates and condi 1958 nor the letter of 12 February 1958 tions in question satisfy the requirement mentions that that formality was carried laid down in the first paragraph of Article out, it follows that the decision is invalid 70. because of infringement of essential pro cedural requirements. The defendant replies by criticizing the con cept of discrimination which the applicants The defendant replies that consultation with put forward. It explains that since the appli

Midi area. tails that duty, it follows that the High Au thority did not in this case have to obtain Moreover, the High Authority points out the opinion of that Committee or, a fortiori, that special internal rates and conditions mention that opinion. constitute by definition a preferential tariff allowed to certain undertakings in contrast The alternative submission relating to the in to most consumers. Those rates and condi fringement and misapplication at Article 4 (b) tions are, therefore, discriminatory mea and the fourth paragraph of Article 70 of the sures which are prohibited in principle by Treaty and the seventh paragraph of Article the Treaty and can only be authorized, in 10 of the Convention on the Transitional accordance with the fourth paragraph of Ar

ings'. served by the same railway network in which the rates and conditions in question They recall first that those rates and condi were in force. There is no doubt that all the tions are very old and date from the period undertakings established in that region are when the railway network was created and, in a comparable situation. The common contrary to appearances, were laid down features of their situation are, first, their dis principally in the interests of the carrier and tance from the iron and coal mines, and sec not of the coal- and steel-producing under ond, the impossibility for them, in practice, takings. of using any means of transport other than

JUDGMENT OF 10. 5. 1960 — JOINED CASES 27 TO 29/58

nomic Community. Treaty, under a duty to give a decision on the special internal rates and conditions The defendant points out first, in opposition which were notified to it by the French gov to the argument that the rates and condi ernment it could not refrain from request tions in question are applied in the interests ing that government to amend those rates of the carrier, that the French Government and conditions which were not compatible itself, in application of the seventh para with the Treaty. graph of Article 10 of the Convention, not ified the High Authority of those rates and Then the defendant contests that the aboli conditions as being 'special internal rates tion of those rates and conditions might je and conditions' referred to in the fourth par opardize efforts 'progressively [to] bring about conditions which will of themselves agraph of Article 70 of the Treaty. ensure the most rational distribution of pro Secondly, with regard to the problem of the duction at the highest possible level of pro protection of regional economies, the de ductivity' since, in its opinion, that objec fendant emphasizes that the High Authori tive, which is laid down in the second par ty must in principle inquire whether a pro agraph of Article 2 of the Treaty, must on tective tariff is justified in circumstances the one hand be attained by the free play of which are particular to the undertakings market forces ('conditions which will of benefitting from it because the protection of themselves ensure .

Treaty. The applicants in Cases 27/58 and 29/58 claim furthermore that there has been ity must ensure that such redundancies are not sudden and substancial and do not jeo a breach of Article 3 (b) of the Treaty. pardize the possibilities of re-employment and appropriate readaptation. Having criticized the very principle of the intervention by the High Authority in this Finally, with regard to the argument that case, the applicants also criticize the sub the High Authority did not take care not 'to stance of that intervention which in their

The defendant replies first that it does not The applicants maintain in Cases 27/58 and

HAUTS FOURNEAUX DE GIVORS v HIGH AUTHORITY

29/58 that the increase in rates which was cially distorts the natural and normal condi­ ordered would prevent them from obtain­ tions of competition, while the Treaty pur­ ing access to sources of production in con­ sues the objective laid down in that article ditions comparable to those for similar in­ only on the basis of those conditions and by dustries (principle of non-discrimination). compliance with them.

1. The applicants maintain that the powers of the High Authority under the Con­ vention on the Transitional Provisions with regard to the examination of the rates and conditions referred to in the fourth paragraph of Article 70 of the Treaty which were in force when the High Authority was set up could be exercised only during the transitional period which ended at midnight on 9 February 1958. They allege that the contested decision, which conveys a refusal to approve those rates and conditions, was adopted on 12 February 1958, that is, the date on which it was not­ ified to the Government of the French Republic, since the date of the notification of a measure is at the same time that on which it becomes valid.

Therefore, the applicants claim that the contested decision is illegal because of the lack of competence of the High Authority at the date on which it was notified, that is, 12 February 1958.

JUDGMENT OF 10. 5. 1960 — JOINED CASES 27 TO 29/58

This argument is not well founded.

It appears from the oral arguments and from the explanations furnished at the hearing that the contested decision was taken on the evening of 9 February 1958 and that on that date it was laid down in every detail, as is proved by the produc­ tion of the drafts discussed at the meeting and by the minutes thereof.

In order to enter into force that decision had to be notified to the Government of the French Republic and, in accordance with the rules of good administration, notified as quickly as possible—which was done. Nevertheless, that does not in any way alter the fact that in this case the decision was validly adopted on 9 Feb­ ruary 1958, that is, during the transitional period.

The applicants maintain that the seventh paragraph of Article 10 of the Conven­ tion places the High Authority under a duty to consult the Committee of Experts provided for by the first paragraph of that article.

Under the first paragraph of Article 15 of the Treaty it was necessary to mention in the decision that that formality had been carried out. Because that mention was omitted, the decision is invalidated because of an infringement of an essential pro­ cedural requirement.

HAUTS FOURNEAUX DE GIVORS v HIGH AUTHORITY

That argument cannot be acepted.

It is important above all to know whether in this case the High Authority had to obtain the opinion of the Committee of Experts.

In this connexion the applicants state that the provisions of the first to sixth, eighth and ninth paragraphs of Article 10 of the Convention, which lay down the tasks of the Committee of Experts, must be interpreted as applying also to the seventh paragraph, particularly in view of its position within the context of that article.

JUDGMENT OF 10. 5. 1960 — JOINED CASES 27 TO 29/58

Therefore the High Authority was not bound in this case either to consult the Committee of Experts beforehand ox afortiori to mention the opinion of that Com­ mittee. The submission concerning the infringement of essential procedural re­ quirements is therefore unfounded.

The alternative submission concerning the infringement of Article 4 (b) and the fourth paragraph of Article 70 of the Treaty and the seventh paragraph of Article 10 of the Convention on the Transitional Provisions

1. The applicants maintain that the High Authority has contravened the fourth paragraph of Article 70 and Article 4 (b) of the Treaty and the seventh paragraph of Article 10 of the Convention by taking a decision to abolish Chapter 3, Para­ graph IV and Chapter 11, Paragraph I of Tariff No 7 of the Societe Nationale des Chemins de Fer Français and Chapter 3, Paragraph I, within the context of its ap­ plication to transport from the mines in the Pyrenees, and Chapter 12, Paragraph I, of Tariff No 13 of the Societe Nationale des Chemins de Fer Français, as being special internal rates and onditions applied in the interest of one or more coal- or steel-producing undertakings.

It is necessary to examine whether the special internal rates and conditions re­ ferred to in the fourth paragraph of Article 70 of the Treaty come within the ap­ plication of the provisions of Article 4(b) and the extent to which those provisions are applicable to them.

Article 4 (b) prohibits measures 'which discriminate between... consumers, especially in ... transport rates and conditions'. As that prohibition is an essential condition for the establishment and the functioning of the common market, it cannot be subject to any exception or give rise to derogations save as otherwise provided in the Treaty.

The comparability of the situation of consumers must, within the context of the abovementioned article, be appraised solely on the basis of the means of transport in question.

It is necessary to reject the argument of the applicants that a comparison between coal- and steel-producing undertakings must not be restricted to their situation solely from the point of view of transport but that this comparison must take into account all the circumstances in which they are placed, in particular the place of production, the profitability of the deposits worked and the fact of being in an economically less favoured region.

Even if it were applied with caution, the result of that argument would be that every undertaking would be comparable only to itself and thus the concept 'com­ parably placed' and therefore that of'discrimination' would be rendered meaning­ less.

3. It appears from Article 4 of the Treaty that in Article 70 the intention of the authors of the Treaty was to eliminate distortions in the common market by the harmonization of transport rates and conditions and thus to ensure that the com­ mon market would function in accordance with the principles laid down by the Treaty.

In giving expression to that intention they cannot have been unaware that the transport industry is a branch of industry which is independent of that of the pro­ duction of coal and steel and that it has its own problems, needs and procedures. Nor can they have failed to understand that so long as that industry has not been integrated into the common market its distinct nature must be respected and that it must merely be prevented from jeopardizing the objectives of the Treaty by its actions.

4. Under the fourth paragraph of Article 70 of the Treaty special internal rates and conditions are those which are applied in the interest of one or more coal- and steel-producing undertakings.

The rates and conditions in question, which allow price reductions to certain con­ sumers but which are not justified by the transport conditions of the consumers who benefit from them, afford different price conditions to consumers who are or who might be comparably placed with regard to transport. They therefore con­ stitute rates and conditions prohibited by Article 4 (b) and the first paragraph of Article 70.

Moreover, the common market is based on the principle that conditions of compe­ tition between coal- and steel-producing undertakings must result from their nat­ ural and undistorted production conditions. All special internal rates and condi­ tions involving an element of aid or subsidy contravene that principle in that their effect is artificially to alter the production conditions which are characteristic of the undertakings which benefit from them. They are also prohibited by Article 4 (c) of the Treaty.

The applicants allege that the prohibition laid down in Article 4 (c) should have been applied in the circumstances laid down in Article 67, according to which if an action by a Member State which is liable to have appreciable repercussions on conditions of competition in the common market is having harmful effects on the coal or steel undertakings within the jurisdiction of that State, the High Authority may authorize it to grant aid to these undertakings.

That distribution is based in particular upon the composition of production costs from output, that is, from the physical and technical conditions under which the various producers operate and their individual efforts.

Thus the agreement referred to in the fourth paragraph of Article 70 can only be given if the protective rates authorized enable the undertakings in whose favour they are made to overcome exceptional temporary difficulties resulting from un­ foreseeable circumstances which are likely to result in a situation in which the composition of production costs no longer corresponds to their natural conditions.

The applicants maintain that such agreement could also be given if account were taken of the requirements of regional policy. They invoke the principles laid down in Article 80 (2) of the EEC Treaty in support of their statement.

This argument cannot be accepted. Since the integration aimed at by the Treaty establishing the European Coal and Steel Community is only partial, the High Authority is not in a position to appraise all the factors upon which regional policy depends and is not authorized to adapt its action to the requirements of such a policy.

6. The tariffs in question afford reductions in price as compared with the rates and conditions of general application which are laid down in Chapter 1 of Tariffs Nos 7 and 13 of the Societe Nationale des Chemins de Fer Français and they therefore constitute special internal rates and conditions. They were introduced in order to counteract the structural difficulties experienced by the applicants with regard to their production conditions in comparison with competing undertakings.

7. The rates and conditions in question were in force when the High Authority was set up and therefore they come within the application of the seventh para­ graph of Article 10 of the Convention. That article does not introduce any der­ ogation from the rules laid down in Article 4 (b) and in the first and fourth para­ graphs of Article 70 but merely places the High Authority under a duty, during the transitional period, to allow such time for the modification of protective rates and conditions in force at that date as may be necessary to avoid any serious economic disturbance.

The applicants maintain that the period laid down is not sufficient to obviate such disturbances.

That complaint must be rejected in limine because it was raised for the first time and without any further comment in the reply. Moreover the applicants have not brought sufficient evidence of their allegation to enable the Court to appraise that situation.

The alternative submission concerning the infringement of the general objectives laid down in Articles 2 and 3 of the Treaty

1. The applicants allege that the contested decision contravened the second para­ graph of Article 2 and Article 3 (c), (d) and (g) of the Treaty. In cases 27/58 and 29/58, they also allege that there has been an infringement of Article 3 (b).

It is necessary to state that the objectives laid down in Articles 2 and 3 cannot all be attained at the same time and to the highest degree. To ensure the legality of the decision taken by the High Authority in this field, it is sufficient for those ob­ jectives to have been reasonably observed according to the special features and the possibilities of the case in question and to have been pursued for the purposes of the common interest referred to in the first paragraph of Article 3. That interest is not limited to the sum of the individual interests of the undertakings in the Community. It goes beyond the range of those individual interests as is defined

It expressely provides, in Article 23 in particular for measures of readaptation which can even take the form of the setting up of new undertakings not subject to the Treaty, and for assistance both to undertakings and to workers.

The fact that the contested decisions might result in a temporary reduction in em­ ployment and in the closure of some undertakings cannot render those decisions illegal on grounds of infringement of Articles 2 and 3. It could be argued that, on the contrary, such measures are necessary in order to enable the common market to achieve its stated objectives, since the disappearance of undertakings which could only subsist with the help of constant and massive subsidies would streng­ then its resistance to crisis.

However the figures and calculations submitted to the Court do not provide suf­ ficient evidence at law for the proposition that full employment and the produc­ tivity of the undertakings are seriously threatened by the contested decisions. Moreover, it is necessary to remind the applicants that nothing in those decisions stands in the way of a further request based this time directly on the fourth para-

JUDGMENT OF 10. 5. 1960 — JOINED CASES 27 TO 29/58

graph of Article 70 if, before the expiry of the period laid down, circumstances seem to justify a new special rate.

It would in any case be contrary to the meaning of the Treaty to authorize existing special rates on the sole ground that it would be difficult or impossible for the un­ dertakings concerned to adapt themselves to the common market.

The rates and conditions in question have the result of distorting by means of aid or subsidies the composition of the production costs of the applicant undertaking and artificially equate the production conditions in which that undertaking finds itself with those of similar industries which are not entitled to reduced rates.

4. In the three cases the applicants maintain that the contested decision, by abol­ ishing the rates and condition in question, thereby entailing a rise in production

HAUTS FOURNEAUX DE GIVORS v HIGH AUTHORITY

costs, jeopardizes the establishment of the lowest prices under the conditions laid down in Article 3 (c).

This argument must be rejected. In fact, in view of the second paragraph of Article 2, the establishment of the lowest price must comply with the fundamental princ­ iple of competition which is at the basis of the common market and the lowest price must result from the natural production conditions to which the producers are subject. The rates and conditions in question have precisely the effect of dis­ torting those conditions so that the price which can be established by means of them is not the lowest which competition would allow.

Moreover, although Article 62 of the Treaty provides that the High Authority may, by derogation from the principle prohibiting all aid, authorize equalization payments to prevent coal from being priced at the level of the production costs of the mines which have the highest costs, that derogation is however only al­ lowed in so far as it is recognized that those mines should be temporarily main­ tained in service in order that the tasks laid down in Article 3 may be performed.

Under Article 60 (1) of the Rules of Procedure of the Court of Justice of the ECSC, the unsuccessful party shall be ordered to pay the costs.

OPINION OF MR ROEMER — JOINED CASES 27 TO 29/58

In the present case, the applicants have failed in all heads of their applications.

They must therefore be ordered to pay the costs of the proceedings.

On those grounds,

Upon reading the pleadings; Upon hearing the report of the Judge-Rapporteur; Upon hearing the parties; Upon hearing the opinion of the Advocate-General; Having regard to Articles 2, 3, 4, 5, 15, 31, 33, 37, 53, 54, 62, 67, 70 and 80 of the ECSC Treaty and Articles 10 and 23 of the Convention on the Transitional Provisions; Having regard to the Protocol on the Statute of the Court of Justice of the ECSC; Having regard to the Rules of Procedure of the Court of Justice of the ECSC, especially Article 29 (3) and Article 60 (1),

A. Van Houte A. M. Donner

Registrar President

OPINION OF MR ADVOCATE-GENERAL ROEMER DELIVERED ON 11 FEBRUARY 19601

Summary

I — Introduction 262

1.Subject matter of the proceedings 262 2. Admissibility of the applications 262