C-20/59

High Authority of the European Coal and Steel Community , represented by its Legal Adviser, Mario Berri, acting as Agent, assisted by Professor Arturo Carlo Jemolo, Advocate at the Italian Corte di Cassazione, with an address for ser­ vice at its offices, 2 place de Metz, Luxembourg,

defendant,

Application for the annulment of Decision No 18/59 of 18 February 1959 pu­ blished in the Journal Officiel of 7 March 1959 (p. 287 et seq.) on the publication or notification to the High Authority of the scales, rates and all other tariff rules of every kind applied to the carriage by road of coal and steel within the Commu­ nity for hire or reward,

THE COURT

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

ITALY v HIGH AUTHORITY

I — Facts ditions meeting the requirements of the functioning of the Common Market. In this The facts may be summarized as follows: letter the High Authority stated in particu­ On 21 February 1956 the Committee of Ex­ lar: perts on Transport, set up under Article 10 of the Convention on the Transitional Pro­ 3. The High Authority leaves it to the gov­ visions, submitted its report relating inter ernment ... to determine the appropri­ alia to the publication of road transport rates ate means for achieving the abovemen- and conditions. tioned objectives. There are three ways in which this can be done: On 12 June 1956 Messrs Rene Mayer, Etzel and Giacchero, the President, Vice-Presi­ (a) The competent authority may publish a dent and a member of the High Authority transport tariff and ensure that trans­ respectively, and Messrs Cortese, Italian port undertakings comply with it. Minister for Industry and Trade, and Ange­ lini, Italian Minister of Transport, met in (b) The competent authority may require Rome for an exchange of views on the pu­ carriers to publish in a satisfactory form blication in Italy of road transport rates and or to communicate to the High Author­ conditions for products subject to the com­ ity the transport tariffs which they have mon market for coal and steel. themselves laid down and which they apply in carrying on their business. The report of the Committee of Experts on Transport was transmitted on 12 July 1956 (c) In the absence of such tariffs or when by the High Authority to the Governments they include minimum and maximum of the Member States. On the basis of this rates, the transport rates and conditions report negotiations took place within the may be notified to the High Authority special Council of Ministers with a view to immediately after the conclusion of implementing measures to be considered each contract of carriage. together for the application of the provi­ sions of the Treaty in the sphere of carriage In this event the necessary steps must be by road within the Community for hire or taken to send to the High Authority imme­ reward. These negotiations did not lead to diately after the conclusion of each contract any agreement. of carriage:

These documents must contain the follow­ poses to submit under the second sentence ing minimum information: of the first paragraph of Article 88 of the Treaty'. place and date of execution of the docu­ ment; After requesting in its letter No 1502 of 29 November 1958 an extension until 10 Jan­ name and address of the consignor, uary 1959 of the period which had been giv­ en it to submit its observations on the con­ name and address of the carrier, tent of the letter of 12 August 1958, the Ital­ ian Government expressed the opinion in place of acceptance of delivery and place of its letter No 000038 of 8 January 1959 that delivery of the goods, the current regulations in the road transport sector in the national territory already met name and address of the consignee, the obligations laid down in the Treaty. It added that in accordance with the spirit of description of the goods, collaboration which Article 70 of the Treaty postulated it was prepared to anticipate any gross weight of the goods or quantity ex­ initiative on the part of the High Authority pressed in other terms, by instructing the various Italian Chambers of Commerce to draw up the schedules of transport rate and other charges, road transport rates on main traffic routes in relation to journeys of more than 200 km distance travelled in kilometres, and of loads of more than 5 metric tons; these schedules could be notified each where appropriate: frontier crossing points.' month to the High Authority via the Italian Embassy in Luxembourg.

ITALY v HIGH AUTHORITY

2, 3, 4, 5, 15, 60, 70, 81, 86 and 88 of the 18/59 of the High Authority of 18 February Treaty. 1959 on road transport should be annulled and that the High Authority should be In the statement of reasons for the decision ordered to bear the costs. the High Authority considers the attitude adopted by the Netherlands Government The defendant contends that the action and the French Government with regard to should be dismissed and the Italian Gov the recommendation in paragraph (c) but ernment be ordered to bear the costs. mentions nothing of the statements suppli ed on this subject by the Italian Govern III — Submissions and arguments ment in its letter No 000038 of 8 January of the parties 1959 (twelfth recital). The submissions and arguments of the par The High Authority reaches the general ties may be summarized as follows: conclusion that none of the Governments 'has adopted or declared itself prepared to A — Infringement of the Treaty adopt in their entirety the measures neces sary to implement one or other of the 1. Infringement of the last paragraph of Ar courses of action suggested by the High ticle 70 of the Treaty

The applicant infers from the last paragraph and to enable purchasers to obtain informa of Article 70 that with regard to transport tion; these objectives can be attained only if the national regulations are the rule and the there are rules on transport rates similar to Community regulations the exception. those laid down for the prices of coal and steel. Disagreement between the Governments of the Member States who alone had power to 2. Infringement of the third paragraph of take measures in this matter does not in any Article 70 of the Treaty way constitute a valid legal basis for the in tervention of the High Authority which The applicant states that in contrast to the cannot substitute itself for these Govern second and last paragraphs of Article 70, the ments. third paragraph refers to 'the scales, rates and all other tariff rules of every kind appli Moreover, Article 5 of the contested deci ed to the carriage of coal and steel .

sions. These measures do not become un possible with such a system to prevent dis lawful because they have some repercus crimination and to ensure that the objec sion on the economic policy of the various tives of the Treaty are achieved. States. The legislative freedom of each of the Member States cannot extend to The conclusions which the applicant draws amending or annulling the provisions of from a too literal interpretation of Article 70 Article 70 and the other provisions of the are not well founded. In particular the com

ly. It states that the court declared in Case 'rate applied' whether known or not. 1/54 that publication was provided for by the Treaty to prevent prohibited practices The High Authority refers to the judgment

of the court in Case 1/54 in which wording Further, according to the applicant, there is similar to that in Article 60 (2) (b) has no provision in Article 88 providing a already been interpreted. 'power of substitution' enabling the High Authority under cover ofa complex decision From the systematic point of view and ac to impose on a State 'particular obligations cording to a logical interpretation, it is not of a legislative nature'. possible not to take account of the first para graph of Article 70 which anticipates that The defendant on the contrary takes the consumers must have particulars of the ta view that, where the Treaty provides that riffs to enable them to make comparisons of the High Authority shall record in a rea

Decision this judgment is arbitrary, since the matters No 18/59 contains no more than two possi dealt with are quite different. bilities of fulfilling the alleged obligation contained in Article 17, whereas the letter 3. Infringement of Article 5 of the Treaty of 12 August 1958 which was the subject of observations by the States contained three; The applicant states that the High Author the possibility contained in paragraph (c) is ity has infringed Article 5 of the Treaty, not included in Decision No 18/59. which provides that the Community shall carry out its task in accordance with the In answer the defendant says first of all that Treaty with a limited measure of interven this argument is belated; it then maintains tion, and that the contested decision 'open that the answers by the Governments to the ly infringes' it by both its content and its letter of 12 August 1958 showed that the

4. Infringement of Article 88 of the Treaty notified to the High Authority, will be The applicant states that following the reply made available to producers, purchasers by the Italian Government to the letter and consumers in the Common Market. from the High Authority of 12 August Under the second paragraph of Article 47 of 1958, which letter and reply came within the Treaty the High Authority must not the procedure provided for by the first disclose information of the kind covered by paragraph of Article 88, all that the High the obligation of professional secrecy, in Authority could do was to take a purely particular 'information about undertakings, 'declaratory' decision. their business relations or their cost compo-

6. Infringement of the provisions of the The applicant maintains that the contested Treaty in relation to the prices of coal decision impedes the maintenance of nor­ and steel and in particular Articles 3,4, mal competitive conditions which already 5 and 60 exist on the Italian transport market by rea­ son of the fact that some 60000 motor trans­ (a) Infringement of Article 3 (c) port undertakings are involved in the mar­ ket. This large number of undertakings of The applicant observes that Article 3 (c) re­ generally very small size operating without quires that institutions should ensure the restriction ensures for each particular trans­ establishment of the lowest prices in an action rates and conditions in accordance economically healthy system. Tariffs lead­ with the technical and economic character­ ing to fixing maximum or average rates pre­ istics of the transactions and the commer­ vent producers from benefiting from lower cial situation of the market. As a result, the rates of carriage which they might obtain in contested decision infringes Article 5 of the a system of free negotiation and such tariffs Treaty which inter alia gives the Communi­ necessarily influence the price of the pro­ ty the task of ensuring the establishment, duct carried. maintenance and observance of normal competitive conditions. The defendant in answer says that such 'ab­ stract considerations of economic policy' In answer the defendant says that normal would make it impossible to apply Article competitive conditions do not imply secre­ 70 of the Treaty and to take measures cy about rates and that there has never been against discrimination. any question of applying fixed rates to road transport. (b) Infringement of Article 4 (b) (d) Infringement of Article 60 The applicant states that obligatory tariffs would prevent road transport rates being The applicant considers that the publication freely negotiated, for by means of average in advance of road transport rates gives only

4. Prior publication of road transport rates The applicant, as explained in the oral is not necessary, for consignors are in a procedure, includes in this submission the position to know the rates ruling on the facts which the Court should take into ac­ routes which concern them; count having regard to the fact that the ac­ tion under Article 88 is one in which the 5. A tariff in respect of carriage for hire or Court has unlimited jurisdiction. reward provides only a very indirect ac­ counting factor in the transport costs of The applicant stresses that the majority of a consignor using his own vehicles. the 60000 road transport undertakings in Italy are small undertakings, that they en­ The applicant concludes that Article 60 of joy a completely free system of competition the Treaty is infringed in so far as publica­ and are not subject to any special condition tion in advance (or prior notification to the in the way in which they are run, for there High Authority) of road transport rates does is no obligation in Italy that each consign­ not constitute a necessary and sufficient ment should be accompanied by a consign­ condition allowing producers of coal and ment note.

steel to determine correctly either their scale rates or their sale prices in different lo­ The applicant states that: calities on the basis of the reference places determining their scales or finally their pos­ consumers have never complained of the sibilities for alignment. system in force;

The defendant in answer says: the contested decision would introduce into the road transport sector a bureaucratic fac­ the applicant is making unsubstantiated tor alien to the policy pursued by the Italian assertions; Government;

and would involve the application of aver­ imposes obligations on the Italian govern­ age rates, if not maximum rates; ment in a sphere 'which is within the Gov­ ernment's own jurisdiction'. the new rules would not be in line with the traditional Italian rules in relation to prices; The defendant dismisses this submission with the same arguments as those used Decision No 18/59 imposes onerous obliga­ against the first submission of infringement tions on road transport undertakings and on of the Treaty. the authorities which will be required to check them; 2. The applicant maintains that the facts cited in the submission that Article 88 of finally, this decision could lead to the estab­ the Treaty has been infringed likewise con­ lishment of artificial rates (cf. the Kapteyn stitute a misuse of powers. In claiming to Report of November 1957 to the common rely on Article 88 the High Authority is at­ Assembly). tempting to attain an unlawful objective by interfering in a sphere of powers which ob­ The defendant in answer says that Decision viously come exclusively within the inter­ No 18/59 involves no 'disturbance' in the nal jurisdiction of the State concerned. 'position of equality' existing between the Italian road carriers and 'other carriers'. The defendant answers this submission with the same arguments as those used Consignments of less than 5 metric tons, against the fourth submission of infringe­ which are small-scale business consign­ ment of the Treaty. ments, would not be subject to the new rules. 3. The applicant considers, and again takes up the submission that Article 60 of the Moreover, reference should be made to the Treaty is infringed, that the fact of consid­ decision itself which leaves great freedom ering advance publication of road transport of action both to road carriers and to the rates as a necessary condition of correctly Governments of Member States. applying Article 60 of the Treaty constitutes a misuse of powers in so far as this article is Finally, the inevitable burdens which relied on to attain an objective — the ad­ would result from the decision will contri­ vance publication of road transport rates — bute to the welfare of all. which is not one which the Treaty ascribes to it. The applicant in its reply refers to the ambi­ guity of speaking of 'other carriers' without The statement of defence shows, according stating who those carriers are. to the applicant, that the problem has not been considered as a whole and this 'consti­ It insists that the Court should consider the tutes clear proof of a serious misuse of question whether there is any disparity in powers'. treatment between carriers and should dis­ miss the above considerations which the The defendant adheres to the arguments al­ High authority has advanced. ready used by it in opposing the correspond­ ing submission of infringement of the Trea­ C — Misuse of powers ty.

II. Stripped, however, of ancillary submissions made variously by the parties, the central question raised by the action for annulment of Decision No 18/59 is: (A) with regard to substance, what are the legislative powers which the High Author­ ity can claim on the basis of the third paragraph of Article 70 with regard to trans­ port; (B) with regard to form, whether Article 88 chosen by the High Authority for the excercise of such powers may be legally used for such purposes and (C) if appropriate, whether this article has been applied according to the rules laid down.

A. Although the Treaty establishing the European Coal and Steel Community contains rules capable, like rules laid down by the national legislature, of being di­ rectly implemented in the Member States such implementation taking place ipso iure as a result of their acceptance into the law of the Member States by the rati­ fication of the Treaty, other provisions of the Treaty on the other hand require implementing measures before they are applied.

This is the case with regard to the third paragraph of Article 70 of the Treaty which, although it establishes a concrete rule with regard to transport valid both for the Member States and for the High Authority, requires implementing mea­ sures for it to be applied to the subjects of the European Coal and Steel Commu­ nity.

With regard to such implementing measures it is necessary to inquire whether the Treaty gives the High Authority power to make regulations either (1) expressly or (2) by implication.

JUDGMENT OF 15.7.1960 - CASE 20/59

Writers and case-law agree in recognizing that the rules established by a treaty im­ ply the principles without which these rules cannot effectively or reasonably be applied.

(a) In the present case the High Authority maintains first that since the provi­ sions of Article 60 (2) (a) require the publication of the price-lists and condi­ tions of sale of products coming within the European Coal and Steel Commu­ nity, they require by implication the publication of the scales, rates and other tariff rules applied to the carriage of the same products.

According to the High Authority if the latter are not published the publication of the prices would lose their purpose and be of no use to those concerned.

ITALY v HIGH AUTHORITY

In order for those concerned to be able to align their prices and maintain healthy competition they cannot remain ignorant of the important factor constituted by the transport rates in the formation of their quotations on the Common Market.

According to this argument, the corollary of the obligation to publish prices is the publication of transport tariffs and this obligation follows by implication from the concepts of 'price-lists' and 'conditions of sale' referred to in Article 60.

It did not, however, do so.

Although it is true that in the 'Communications' which it sent out after certain of the abovementioned decisions on the publication of prices the High Authority refers to transport costs, it does so however only to align the steel prices on the delivery price of another undertaking and even in this case it takes into account the price actually paid which does not require any previous publication but is subject only to checking afterwards.

(b) From another point of view it is not possible to infer a structural and functional correlation between the obligation to publish the prices of products and the ob­ ligation to publish transport costs from the basic principle of the Treaty which

JUDGMENT OF 15.7.1960 - CASE 20/59

although guaranteeing economic freedom in the sphere of competition is ne­ vertheless aimed at restraining abuse by prohibiting any discrimination, the checking of which is for the High Authority.

Although it is true that by virtue of the general principle, applied to transport by Article 70, checking discrimination and taking action against it is for the High Authority, it is not however possible to infer from this principle a power for the High Authority to take decisions concerned with prior control by laying down the publication of scales or rates, since such a power is exceptional and subject to renunciation by the Member States which in the present case the Treaty does not provide for either expressly or by implication.

This obligation must arise either from an imperative provision or a decision or recommendation prior to the application of this article.

The 'reasoned decision' referred to in the first paragraph of Article 88 may simply record a failure and may not have a legislative content.

ITALY v HIGH AUTHORITY

To maintain the contrary would amount to recognizing that the High Author­ ity has an excessive legislative power as against Member States arising from the general law.

The reasons required by the first paragraph of Article 88 must justify the re­ cording of the failure and the time-limit referred to therein defines the period in which a pre-existing obligation must be fulfilled and not one created by the decision taken under this article.

If it were possible to equate the 'decision' referred to in Article 88 with a de­ cision within the meaning of Article 14 by which the High Authority carries out the tasks assigned to it, it would be difficult to explain why a rule laid down under Article 88 would be subject to an action in which the court has un­ limited jurisdiction allowing any submission to be made based not only on legality but on any reasons justifying failure to act, whereas decisions taken in the form provided for by Article 14 are subject to the rules and time-limits for bringing actions under Article 33.

(c) The High Authority cannot, moreover, claim that the contested decision only records a failure on the part of the Italian State under Article 88, since the ob-

JUDGMENT OF 15.7.1960 -CASE 20/59

ligations which the contested decision maintains have not been fulfilled are already specified in the letter of 12 August 1958 addressed to that State.

The title of the contested decision contradicts this assertion and clearly establishes that its objective is the issue of a regulation for which the third paragraph of Article 70 provides no basis.

A comparison between Article 1 and the following articles of the contested de­ cision likewise show that the present case could not be only the recording of a failure to fulfil an obligation.

The contested decision could not regard the obligations formulated in the let­ ter of 12 August 1958 as disregarded since they are not the same as those con­ tained in the decision itself.

ITALY v HIGH AUTHORITY

Since the High Authority's letter of 12 August 1958 contained an admonitory ref­ erence to the first paragraph of Article 88 of the Treaty and the High Authority did not consider that the letter of 8 January 1959 satisfied the requirements of the third paragraph of Article 70 of the Treaty, it reacted to the observations made by the Italian Government in respect of the recommendation by taking Decision No 18/59 of 18 February 1959 'on the publication or notification to the High Authority of the scales, rates and all other tariff rules of every kind applied to the carriage by road of coal and steel within the Community for hire or reward' on the basis of the first paragraph of Article 88.

In the decision it records that all the Member States are failing to fulfil their ob­ ligations towards the Community by not unconditionally accepting one of the three 'possibilities' which it had allowed.

(a) For the form of this recording to be valid the High Authority ought as a pre­ liminary step to have given the Italian Government an opportunity to submit its 'comments' in accordance with the first paragraph of Article 88.

It considers that it has satisfied this condition by treating the letter from the Italian Government of 8 January 1959 as representing such 'comments' on the ground that the recommendation of 12 August 1958 contained a reference at the end to the second sentence of the first paragraph of Article 88 of the Treaty.

The Court cannot, however, regard this exchange of letters as constituting the final comments prior to the serious measure of recording a failure to fulfil agreed obligations on the part of a State, especially since the position adopted by the Italian Government did not constitute a peremptory refusal to attain the objective laid down in Article 70 referred to by the High Authority.

(b) The contested decision further infringes the Treaty by its erroneous applica­ tion in law of Article 88.

The recording of the failure on the part of the applicant State to fulfil an ob­ ligation could relate only to its obligation to pursue the objective referred to in the third paragraph of Article 70.

The decision however infers the alleged failure from the finding that the mea­ sures taken by the Italian Government were not capable of achieving the ob­ jective of the third paragraph of Article 70 on the sole ground that they did not unconditionally adopt one of the three 'possibilities' regarded as alone be­ ing suitable by the High Authority.

In doing this the High Authority only recorded the failure to employ the means which it suggested whereas legally it should have recorded whether in the circumstances there was a failure to attain the proposed objective.

Thus it infringed both Article 88 and Article 70 of the Treaty.

III. In these circumstances and without its being necessary to consider the other arguments presented by the applicant it is right to annul Decision No 18/59 of the High Authority.

Orders the High Authority of the European Coal and Steel Community to bear the costs.

Donner Delvaux Rossi Riese Hammes

Delivered in open court in Luxembourg on 15 July 1960.

A. Van Houtte A. M. Donner

Registrar President

OPINION OF MR ADVOCATE-GENERAL ROEMER DELIVERED ON 20 JUNE I960 1

II. Observation of the procedural provisions of Article 88 .... 346 1. Meaning and objective of Article 88 346

2. The various phases of the procedure in the present case . . 347 3. Has the Italian Government declared itself prepared to im­

plement one of the three possibilities put to it by the High Authority? 348 4. Infringement of the right to be heard 348 III. Insufficient statement of reasons 349 C. General conclusion 350

1 — Translated from the German.