C-32/58

Application for annulment and an action for failure to act and objections of il­ legality in respect of certain letters of the Caisse de Péréquation des Ferrailles Im­ portées (Imported Ferrous Scrap Equalization Fund) and the Office Commun des Consommateurs de Ferraille (Joint Bureau of Ferrous Scrap Consumers) addressed to the applicant, in connexion with the implied decision of refusal resulting from the absence of a reply from the administration to requests for exemption submitted by the applicant and in connexion with the letters of the High Authority of 18 December 1957 and 17 April 1958 (JO of 1. 2. 1958, p. 45 et seq. and of 13. 5. 1958, p. 30 et seq.),

THE COURT

composed of: A. M. Donner, President, O. Riese (Rapporteur) and J. Reuff, Presi­ dents of Chambers, L. Delvaux, Ch. L. Hammes. R. Rossi and N. Catalano, Judges,

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

gives the following

JUDGMENT OF 17. 7. 1959 — JOINED CASES 32 AND 33/58

I — Conclusions of the parties refusal resulting from the absence of a reply from the High Authority in respect 1.In Case 32/58 of the letter from SNUPAT of 31 March The applicant claims that the Court should: 1958, rule that the High Authority was 'declare the following contested decisions not required to grant the exemption re­ void and of no legal effect in that they are il­ quested and did not commit a misuse of legal and unjustified as to substance: powers in not granting that exemption, 1. The implied decision of refusal resulting and accordingly dismiss the application; from the absence of a reply for more 3. Dismiss the application brought against than two months to the request for ex­ the letters of 12 May and 2 June 1958 as emption submitted to the Caisse de Péré­ inadmissible, since they do not constitute quation des Ferrailles Importées (CPFI) decisions against which an application (Imported Ferrous Scrap Equalization may be brought; Fund) and to the Office Commun des 4. In addition, reject the objections of il­ Consommateurs de Ferraille (OCCF) legality raised against the letter of 18 December 1957 and the claim for annul­ (Joint Bureau of Ferrous Scrap Con­ sumers) by letters of 31 March 1958. ment, in so far as necessary, of the letter 2. The decision of the CPFI of 12 May of 17 April 1958; with all consequences 1958 fixing the amount of the levy, in at law, in particular as regards payment application of the provisions of the letter of fees, costs and all other expenses'. of 18 December 1957, at US 2. In Case 33/58 $228 430-75. 3. In so far as necessary, the decision to The applicant claims that the Court should: postpone taking a decision resulting from 'declare that the contested decision con­ the letter of 2 June 1958 addressed to the stituted by the letter of 17 April 1958 applicant undertaking by the OCCF. addressed by the High Authority to the 4. On the ground that it is illegal, the OCCF on the definition of the concept of general decision constituted by the letter "ferrous scrap from own resources" for the of 18 December 1957 addressed by the purposes of Decisions Nos 22/54, 14/55 and High Authority to the OCCF on the 2/57 is void and of no legal effect in that it definition of the concept of "ferrous is vitiated by misuse of powers. scrap from own resources" for the pur­ Award costs and fees against the High poses of Decisions Nos 22/54, 14/55 and Authority.' 2/57. The defendant claims that the Court 5. In so far as necessary, the general deci­ should: sion constituted by the letter of 17 April . . . ; 1958 addressed by the High Authority to the OCCF on the definition of the con­ dismiss the application made against the letter of the High Authority of 17 April cept of "ferrous scrap from own 1958, in that it is not vitiated by misuse of resources" for the purposes of Decisions Nos 22/54, 14/55 and 2/57. powers as regards the applicant, with all consequences at law in particular as Award costs and fees against the High Authority'. regards payment of fees, costs and all other expenses.' The defendant contends that the Court should: 11 — Facts '1. ...

1. In its steelworks at Saint-Michel-de- company name and that 'it is only ferrous Maurienne (Savoy) the applicant manufac scrap recovered by itself in its own establish tures fine steel. Well over half the ferrous ments, bearing the same company name, scrap used comes from the Régie Nationale that can be considered as 'own resources'. des Usines Renault (National Renault Fac On the basis of this definition, the CPFI tories (Administration) (hereinafter referred found that the applicant had not properly to as 'Régie Renault') at Billancourt (Seine), declared its ferrous scrap and that a tonnage which is also the principal user of the steel of 23 357 metric tons remained assessable produced by the applicant. to the levy. By letter from the CPFI of 12

Koninklijke Nederlandse Hoogovens en cant undertaking and Régie Renault are un Staalfabrieken NV of IJmuiden (the ited by close links as regards management Netherlands), hereinafter referred to as and technical personnel and from the 'Breda' and 'Hoogovens'. In a letter economic and financial point of view. addressed to the OCCF on 17 April 1958 3. The applicant, considering that the and published in the Journal Officiel of 13 ferrous scrap received from the workshops May 1958, p. 30 et seq., it explained that of Régie Renault was not 'bought' from a those exemptions had been granted because third party, but constituted 'own resources', the works of the undertakings concerned did not declare it to the CPFI. The latter 'are integrated locally with . . . works not was informed thereof by its inspectors in belonging to them, in which the ferrous 1956 as regards the declarations for the scrap is recovered. That local integration

JUDGMENT OF 17. 7. 1959 — JOINED CASES 32 AND 33/58

situation analogous to that of Breda and point out the binding nature of general deci­ Hoogovens. sions of the High Authority, in particular By letter of 2 June 1958, the OCCF replied the letter of 18 December 1957, and invites that it considered it preferable to await the the applicant to comply with those deci­ judgment of the Court of Justice of the sions. It cannot, therefore, have created an ECSC in the various cases against the High obligation for the applicant. Authority before it. Meanwhile it invited the (b) As the letter of 2 June, its significance applicant 'kindly to rectify' its declarations consists simply in the fact that the OCCF in accordance 'with the rules at present in thought that it should wait for the judg­ force'. ments of the Court before taking a decision on the requests for an exemption, and that in the meantime it was asking the applicant III — Submissions and arguments to rectify its declarations in accordance with of the parties the rules in force. It is impossible to find any element of compulsion in this. The submissions and arguments of the par­ The applicant opposes this way of looking at ties may be summarized as follows: the matter.

(a) The letter of 12 May does indeed con­ 1. Admissibility (Case 32/58) stitute a decision. It is an 'imperative order' stating in precise terms the amount to be A — Was the application against the letter of paid. the CPFI of 12 May 1958 lodged within (b) The letter of 2 June also contains a deci­ due time? sion: it suspends the granting of an exemp­ As the application was lodged on 30 June tion until the decisions of the Court are 1958, the defendant raises the defence of in­ known, and it invites the applicant to rectify admissibility, on the ground that the time- its declarations. Were the applicant not to limit laid down in the third paragraph of do so, a decision ordering compliance could Article 33 of the ECSC Treaty and in Arti­ have been sent to it. cle 85 of the Rules of Procedure of the Court of Justice of the ECSC was not 2. The substance of Cases 32/58 and 33/58 observed.

cant has not been subjected to any special name in its letter of 18 December 1957 is treatment. Moreover, until such time as the contrary to the aims of the Treaty which High Authority adopts a decision ordering refers primarily to economic market con the applicant to comply, the witholding of a cepts and does not intend to hamper in decision on the request for exemption can dustrial groups. Furthermore, the defendant not prejudice the applicant. realized this, for in its letter of 17 April In this connexion, the applicant refers to its 1958, it abandoned the company name explanations concerning the High criterion in favour of the criterion of 'local Authority's letters of 18 December 1957 and integration'. That decision does not involve

That in terpretation arises from the fact that the un B — Case 32/58: The applications for an dertakings to which the exemptions were nulment and the objections of illegality granted, Breda and Hoogovens, form The applicant maintains that in its letters of economic entities with the undertakings 18 December 1957 and 17 April 1958 the with which, in addition, they are locally in defendant has established a definition of tegrated. Such a difference in treatment, 'own resources' which is too narrow. In fact, which excludes integrations so clear-cut as in order to distinguish 'bought ferrous the one which exists between the applicant scrap' from 'own resources', the criterion of and Régie Renault, is arbitrary and dis the company name is too limited, and the criminatory. It gives an added advantage to exceptions admitted by the defendant ought certain undertakings which, since they do not to have stopped at the criterion of 'local not have to bear the transport costs of the integration', but ought to have included scrap which they use, are already in a economic groups such as that formed by the privileged position and, on the other hand, applicant and Régie Renault. it worsens the situation of the applicant. The applicant raises the submissions of in Thus, instead of establishing competitive fringement of the Treaty and misuse of balance, the defendant has accentuated the powers against the contested measures. existing imbalance. (a) The application of the concept of The criterion of local integration is 'bought ferrous scrap' to the tonnages calculated to favour activities by undertak delivered by Régie Renault is erroneous. ings which are not entirely scrupulous and The truth is that there is no purchase and to encourage the practices prohibited by Ar sale, but rather an exchange.

relationships between the two undertakings, It also seems that in adopting the contested the purchase and sale prices 'are merely criteria the defendant was influenced by the prices fixed for convenience. They can even desire to facilitate and to reduce its inspec­ be fixed arbitrarily and on a flat-rate basis tions, a purpose which is not in the public at a given rate in no way connected with the interest. real market rate'. (c) The defendant has not taken the appli­ (b) The restrictive interpretation which the cant's particular position into account. Hav­ defendant gives to the concept of company ing established itself in the Alps in order to

JUDGMENT OH 17. 7. 1959 — JOINED CASES 32 AND 33/58

It is not entirely true to say equalization levy can only make matters that the applicant only receives ferrous worse. The applicant might have to close scrap from Régie Renault and does not sell down and dismiss 700 workers. Yet the pur its products exclusively to the latter. poses of the European Treaties are directed However, exchange, like sale, is a contract to preventing the phenomenon of under involving an obligation. In fiscal law, an ex developed regions. change is treated at one and the same time For all these reasons, the contested decisions as a purchase and a sale. create discrimination between undertakings The criteria suggested by the applicant, in similar positions and infringe the princi namely the 'economic and industrial group' ple of free competition laid down by the se and 'group ferrous scrap' are much too cond paragraph of Article 2 and Articles vague. Furthermore they are in contradic 3(b) and 5 of the Treaty. In addition they tion to Article 2 of the decisions instituting constitute a misuse of powers because the the financial arrangements.

What would then to maintain normal conditions of competi happen to the equalization scheme? tion between undertakings. The interpreta Finally, the applicant's proposition would tion of the concept of 'own resources' should result in placing undertakings which do not have regard to that purpose in order that form part of a group in unequal competitive each undertaking shall bear a fair share of positions. the levy imposed. The definition chosen is For all these reasons, the letter of 18 beyond criticism. For in legal language 'own' December 1957 is justified. things are decribed as those which belong to (b) The same is true of the letter of 17 April the 'owner'. It follows that an undertaking 1958. The applicant is wrong in interpreting can only consider as own resources ferrous it as a 'rectification' which substitutes for or scrap recovered in its own establishments, adds to the criterion of the company name carrying the same company name.

SNUPAT v HIGH AUTHORITY

The applicant does not prove that the equalization levy would force it to dismiss (b) Discussion as to substance its 700 workers. In effect, the dispute turns on three ques­ tions:

C — Special features of Case 33/58 1. Do the exemptions granted to Breda and Hoogovens proceed from an idea which In this case, the applicant directly and ex­ would also apply to the applicant's case? clusively contests the letter of the High 2. Are the said exemptions themselves Authority of 17 April 1958, which it con­ justified? siders to be vitiated by misuse of powers 3. Does the granting of those exemptions affecting it. involve repercussions on competition in (a) Discussion of the subject-matter of respect of the applicant such that there the dispute can be seen therein the first elements of The applicant, although formally only con­ proof of a misuse of powers affecting the testing the letter of 17 April 1958, submits applicant? an application practically identical to that The answers which the parties give to these lodged in Case 32/58. Thus it also discusses questions are more or less similar to the the validity of the letter of 18 December arguments set out in Case 32/58. The defen­ 1957, and the way in which these two letters dant is of the opinion that, from the appli­ have been applied to it. cant's point of view, the possible repercus-

JUDGMENT OF 17. 7. 1959 — JOINED CASES 32 AND 33/58

sions on competition must be examined ex­ states that it is hard to see how those two ex­ clusively in relation to the exemptions emptions could adversely affect the com­ granted to Breda and to Hoogovens, and petitive position of the applicant.

The registered office of the applicant is at Billancourt (Seine), that is, in Metropolitan France. Therefore, under the third paragraph of Article 33 of the ECSC Treaty and Article 85 (1) and (2) of the Rules of Procedure of the Court of Justice of the ECSC, the period within which the applicant had to contest the said letter expired one month and three days from the day following notification thereof.

Accordingly, the application, which was lodged at the Court Registry on 30 June 1958, was only lodged within the prescribed period if the letter of 12 May 1958 only reached the applicant on 26 May at the earliest, 29 June 1958 being a Sunday so that the expiry of a period ending on that day is to be carried forward to Monday 30 June.

The explanations given by the parties have not enabled the date on which the appli­ cant received notification of the said letter to be established, so that the point at which time began to run is uncertain.

It is unlikely that a letter posted in Brussels and dated 12 May did not arrive at Saint-Michel-de-Maurienne (Savoy) before 26 May, but it is not absolutely impos­ sible, as the date on which the letter was sent is not certain.

There must be taken into account the fact that the reasons why the day on which time started to run is uncertain are that the CPFI, whose conduct is attributable to the defendant, omitted to send the letter of 12 May by registered post and that the defendant has not been able to provide any indication as to the day on which the letter was posted by the CPFI. Therefore the applicant must be accorded the benefit of the doubt.

3. Where a payment is not made before expiry of the time-limit, the Fund shall call upon the High Authority to act, and the latter may adopt an enforceable deci­ sion.'

1. The letter of 12 May 1958 invites the applicant to pay a sum by way of equaliza­ tion levy on ferrous scrap and to draw up its returns in accordance with the letter of the High Authority of 18 December 1957.

The letter thus constitutes 'notification' for the purposes of the abovementioned decisions, creating the obligation to pay the sums indicated.

Under the scheme set up by Decision No 2/57, such 'notifications' in fact con­ stituted the last word of the administration, the High Authority confining itself to making them enforceable, where necessary, without claiming to re-examine them. They gave rise to an obligation on the part of the undertakings to which they were addressed. They therefore contained all the elements of an administrative decision as such.

In these circumstances, it would be wrong to say that there is only a decision when the High Authority issues an enforceable decision, particularly since that only happens when an undertaking has failed to fulfil its obligations.

2. Article 33 of the ECSC Treaty only provides for actions against decisions of the High Authority. It is therefore necessary to examine whether decisions adopted by the CPFI are equivalent to decisions of the High Authority.

2. The action for failure to act

The applicant's letters of 31 March 1958, addressed to the Brussels agencies, can be considered as claims lodged with the High Authority and setting in motion the procedure under Article 35 of the ECSC Treaty. This, moreover, is not denied by the defendant.

The defendant does not raise any objections as to the admissibility of the action for failure to act, in that it admits that no decision was adopted within the period of two months laid down in the third paragraph of Article 35 of the ECSC Treaty. That question, however, must be examined by the Court of its own motion.

It appears from declarations made by the defendant and from the documents produced by it that the letters of 31 March 1958, by which the applicant lodged requests for exemption with the OCCF and the CPFI respectively, reached those agencies on 1 April 1958. According to a generally accepted rule, time-limits are calculated ex­ clusive of the day of the measure which sets times running, save where provided otherwise. Thus the abovementioned period of two months began to run on 2 April and expired on 1 June 1958.

The letter from the OCCF of 2 June, which was in answer to the abovementioned request for exemption, thus came into existence after the expiry of the time-limit in­ volved. Accordingly, quite apart from the question whether or not that letter con­ stitutes a decision, it is established that the administration did not take any decision before the expiry of the said time-limit.

Therefore, under the third paragraph of Article 35 of the ECSC Treaty, the High

In these circumstances, there is no need to rule on the admissibility or the substance of the application against the letter of 2 June 1959.

Substance

1. Can the applicant raise an objection of illegality against the letters of the High Authority of 18 December 1957 and 17 April 1958?

According to the established case-law of the Court, an undertaking which contests an individual decision is entitled to raise the objection of illegality against the general decisions on which they are based.

The parties are in agreement about the fact that the letter from the CPFI of 12 May 1958 and the implied decision of refusal of 1 June 1958 are based on the principles set out in the abovementioned letters of the High Authority; and such indeed is manifestly the case. The question therefore arises whether those letters constitute decisions.

(a) Does the letter of 18 December 1957 constitute a decision?

It follows that the High Authority did not intend to take a decision, as it had been formally invited to do, but simply to reaffirm the principle which, rightly or wrong­ ly, it considered to emerge logically from the basic Decision No 2/57.

This finding is confirmed by the fact that by Aricle 53 (b) of the Treaty an amend­ ment to Decision No 2/57 would have required the prior unanimous assent of the Council of Ministers, and that condition was not fulfilled in this case. Moreover, there is nothing to suggest that the High Authority knowingly disregarded that binding requirement.

These considerations are not invalidated by the fact that, in answer to a formal question from the Deutsche Schrottverbrauchergemeinschaft to the High Authority on 6 February 1958, the Market Division replied by letter of 19 February 1958 that the letter of 18 December 1957 was indeed a 'decision'.

In fact, that answer from the Market Division expresses, as it itself says, the opinion of an official of the High Authority and does not necessarily of itself reflect the intentions of the High Authority in the matter.

However, the various subjective elements set out above cannot of themselves be decisive in determining the nature of the said letter of 18 December 1957, for the nature of a measure depends primarily on its subject-matter and content.

The said letter appears as being an internal instruction addressed by an immediate superior to the department under his charge and intended to orientate the activities of that department.

More particularly, its purpose is only to explain to the OCCF the reasons why the High Authority, in its letter of 18 December, approved the exemptions granted to two specific undertakings, saying that the works of those undertakings were 'locally integrated with one or several works not belonging to them, in which ferrous scrap is recovered'.

Thus the letter does not set out a new principle, but merely expressly states a princi­ ple which the administration has already applied by implication in implementing Decision No 2/57.

Therefore the letter of 17 April 1958 does not constitute a decision within the meaning of the Treaty.

2. May the Court examine the legality of the principles set out in the letters of 18 December 1957 and 17 April 1958?

From the moment when the principles set out in the abovementioned letters were applied by the administration, they formed part of the interpretation and applica­ tion of Decision No 2/57.

The High Authority's interpretation has affected the applicant's rights from the moment when the agencies to which the letters of 18 December 1957 and 17 April 1958 were addressed applied that interpretation in respect of it.

The deliveries of ferrous scrap to the applicant by Régie Renault constitute purchases, because there is an agreement for the passing of property against a price.

By reason of that fact, according to the wording of Decision No 2/57 such scrap is subject to equalization. The applicant requests exemption, taking the view that group scrap should be assimilated to own resources. It is therefore necessary to ex­ amine whether such assimilation is justified.

(b) As appears from a reading of the letter of 18 December 1957, the High Authority interprets the concept of 'own resources' as meaning that it is only scrap recovered by an undertaking in its own establishments bearing the same company name that is considered as 'own resources', whereas scrap supplied by a works run under another company name is considered as bought scrap, even in the case where close financial or administrative links exist between the supplier and the user.

(c) However, it is necessary to examine whether the assessing of group scrap to the levy — and the exemption for own arisings—is compatible with the purposes of the financial arrangement constituted by the equalization system.

(i) According to the applicant, there is no valid reason for subjecting group scrap to the equalization system, because the operations between the various affiliated un­ dertakings take place outside the market in ferrous scrap and do not, by reason of that fact, exercise any influence on the evolution of prices.

According to the applicant, the purpose of equalization is to maintain the prices of ferrous scrap at a reasonable level, so that any transfer of scrap not liable to have repercussions on the level of prices must be exempted from equalization.

It is therefore necessary to examine whether the exoneration of own resources is legal.

That exception primarily concerns own arisings from the production of steel by the undertakings subject to the jurisdiction of the Community.

If those arisings were subject to equalizations contributions, there would be a probability of charging the same quantity of ferrous scrap twice over, which would be manifestly unjust.

(d) The reasoning set out above is confirmed by the concept of discrimination as it appears in particular from the second paragraph of Article 2 and Articles 3 (b), 60 and 67 of the Treaty.

(i) On the basis of the abovementioned provisions there may be considered as dis­ criminatory in principle and, accordingly, prohibited by the Treaty, inter alia, measures or interventions, even those emanating from the High Authority, which are calculated, by substantially increasing differences in production costs otherwise than through changes in productivity, to give rise to an appreciable disequilibrium in the competitive position of the undertakings concerned.

In other words, any intervention attempting to distort or actually distorting com­ petition artificially and significantly must be regarded as discriminatory and incom­ patible with the Treaty, whilst measures which take into account the internal organization of an undertaking and the use by it of its own resources cannot be regarded as discriminatory.

It follows from everything that has been said above that the exemption of own resources is not discriminatory and is therefore legitimate.

(ii) To assimilate group scrap to own arisings would be to go beyond the meaning of and the reason for the exemption and would constitute a discriminatory advantage as regards other undertakings.

The lowering of production costs consequent upon an exoneration for group scrap would, in the words of Article 67 of the Treaty, be liable substantially to increase differences in production costs as between those undertakings and those which also produce steel from ferrous scrap but which are not integrated with an undertaking producing that raw material.

That increase in the differences in production costs would not result from changes in productivity, but would be the effect of contingent, geographical, administrative or financial ties, which are at the basis of the concept of a 'group'. It must be observed from the scheme of the Treaty and from its fundamental principles that the word 'productivity' refers exclusively to the results of the efforts made by an un­ dertaking. In particular, it must be understood as against any improvement in the competitive position of an undertaking which is due either to interventions of public authorities or to the creation of a cartel or a concentration, because all these opera­ tions, even where authorized or capable of being authorized, artificially alter the normal effect of competition.

(e) It would be manifestly contrary to the requirements of the Treaty if, as a result of an intervention on the part of the High Authority, the production costs of steel manufactured in whole or in part from ferrous scrap were to depend on the legal, administrative or financial structure of industrial groups.

Therefore the application for annulment of the letter of 12 May 1958 from the CPFI is unfounded.

4. Is the action for failure to act well founded?

The applicant has also alleged that the High Authority has exonerated certain un­ dertakings in so far as they consume ferrous scrap from works which, without bear­ ing the same company name as the consumer works, are 'locally integrated' with the latter.

However, the applicant has not raised the question whether such exonerations are compatible with the purpose and the scheme of the equalization system.

Moreover that question cannot be decided in the context of the present dispute.

The fact that the High Authority or its departments may, in certain cases, have given too wide an interpretation of the concept of 'own arisings' cannot justify the grant of an exemption from the levy in other more or less comparable cases, since such grant is contrary to the very principles of the equalization system.

For the reasons explained above, the letter of 17 April 1958 does not constitute a decision within the meaning of the Treaty.

Therefore the application against that letter is inadmissible.

Costs

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

In the present case, the applicant has failed in all its submissions.

It must therefore be ordered to bear the costs.

months by the defendant to the request for exemption addressed to the Office Commun des Consommateurs de Ferraille (Joint Bureau of Ferrous Scrap Consumers) and to the Caisse de Péréquation des Ferrailles Importées (Ferrous Scrap Equalization Fund) by the applicant's letters of 31 March 1958 as unfounded;

2. Dismisses the application directed against the letter of 12 May 1958 from the Caisse de Péréquation des Ferrailles Importées (Imported Ferrous Scrap Equalization Fund) as unfounded;

3. Orders the applicant to bear the costs.

2. In Case 33/58:

1. Dismisses the application as inadmissible;

2. Orders the applicant to bear the costs.

Summary

Page I — Procedure and admissibility 148

A — Application No 32/58 148 1. The conclusions directed against the 'decision' of the CPFI of 12 May 1958 149 2. The conclusions directed 'in so far as necessary' against the 'decision to postpone adopting a decision' resulting from the letter of 2 June 1958 149 3. The conclusions directed against the 'implied decision of refusal resulting from the absence of a reply for more than two months to the request for exemption addressed to the CPFI and the OCCF by letters of 31 March 1958' 150

1 — Translated from the French.