C-30/59

supported by

The Government of the Federal Republic of Germany, represented by Profes­ sor Ludwig Erhard, Federal Minister for Economic Affairs, assisted by Konrad Zweigert, Resident Professor of the Faculty of Law of the University of Hamburg, with an address for service in Luxembourg at the Embassy of the Federal Republic of Germany at 3, boulevard Royal,

intervener,

Application for

(a) annulment of the decision adopted by the High Authority in its letter of 30 April 1959 rejecting the request submitted by the applicant in its letter of 9 March 1959 that the High Authority should record by a decision that, in financing the ‘Bergmannspramie’ out of public funds, the Federal Republic of Germany has failed to fulfil one of its obligations under the Treaty;

(b) a declaration by the High Authority that, in deciding so to finance it, the Federal Republic of Germany has failed to fulfil its obligations under the Treaty;

Issues of fact and of law

I — Facts of a State subsidy permitted under the Treaty and used for miners' old-age in­ The facts may be summarized as follows: surance. The High Authority does not Case 30/59 was preceded by Case 17/57. De consider that the situation thus created is Gezamenlijke Steenkolenmijnen had in fact such as to cause material damage to your already brought a double action for an­ association or the undertakings affiliated nulment against a decision of rejection by to it. In the circumstances your request is the High Authority and against its failure to really for a decision on a theoretical act; this double action arose from the ex­ question concerning the interpretation of istence in Germany of the ‘Bergmannsprä­ Article 4(c) of the Treaty and the High mie (miner's bonus) with the acquiescence Authority cannot consider this question of the High Authority. as constituting for your association suf­ On 4 February 1959 the Court of justice of ficient interest within the meaning of Ar­ the European Communities delivered its ticle 35. judgment in Case 17/57. The application of It is not, therefore, in a position to accede the applicant was declared inadmissible to your request. (Rec. 1958-1959, p. 9 et seq.). In any case it appears from fresh study, By letter of 9 March 1959 the applicant, in their entirety, of the questions relating pursuant to the provisions of Article 35 of to the German miners' bonus that the the Treaty, raised the matter with the High situation created by the Government of Authority and asked it to record by a the Federal Republic is not incompatible decision that, in financing the ‘Bergmanns­ with the Treaty so long as the actual con­ prämie’ from public funds, the Federal ditions laid down in the High Authority's Republic of Germany had failed to fulfil one letter dated 21 June 1957 are fulfilled, of its obligations under the Treaty. which is the situation at the moment. In

II — Conclusions of the Parties The applicant, while emphasizing that, in its view, Article 35, on which its action is based, 'in no way requires the existence The applicant claims that the Court should: of a legal interest' refers to the following annul the contested decision; four grounds as establishing an interest: declare that the High Authority shall The conditions of competition are in fact record by a decision that, by financing changed by the grant of a substantial out of public funds a tax-free bonus subsidy, financed out of public funds, granted to miners working underground, to the German undertakings. the Federal Republic of Germany has 'Sufficient interest' to act is not only a failed to fulfil its obligation under the 'direct financial or economic interest'; Treaty and that it must accordingly it can be other than material. annul this measure; The decision in this case will establish make any other order which the Court a precedent. considers necessary; The rejection contained in the contested order the High Authority to pay the costs. letter is an individual decision affecting The defendant contends that the Court the applicant. should:

note that the High Authority, in accor­ The defendant replies as follows: dance with Article 32 (2) of the Rules of The refusal against which the applicant is Procedure of the Court, has an address moving has no significance in itself. A rejec­ for service in Luxembourg at 2, place de tion of this kind can have meaning only in Metz; rule that the application of 3 June terms of the measure which it refuses. It is

The applicant is not directly affected by the The qualification 'direct and individual' is inaction of the High Authority because any included in the wording of the second loss which it suffers is merely the result of paragraph of Article 173 of the Treaty es­ 'general repercussions on the common tablishing the European Economic Com­ market'. Moreover, the compensatory levy munity only because, under its terms, it is imposed on the German coal industry does open to any natural or legal person to in­ not mean that the financing of the stitute proceedings. ‘Bergmannsprämie’ out of public funds In Joined Cases 7 and 9/54, the Court produces any reduction whatsoever in the placed a wide interpretation on the words production costs of German mines or 'concerning them'. Moreover, it is possible provokes an artificial distortion of the con­ in this case to establish an analogy with the ditions of competition. interpretation placed on the words 'affecting To recognize the claim that the applicant them' in the judgment in Cases 8/55 has a 'sufficient interest' would be to in­ whereby an individual decision concerns the troduce the actio popularis into the Com­ applicant not only when it is directly addres­ munity. sed to it but also when it is to its detriment.

refusal to take a decision because it has an The so-called attitude adopted by the High interest in the decision which the High Authority in Case 17/57 in no way alters the Authority was required to take. fact that the Treaty exhaustively lists the The nature of the decision which the defen­ circumstances and conditions in which dant refused to take matters little; the proceedings may be brought before the refusal which is the subject of the Court, which must consider whether the proceedings constitutes a decision concer­ provisions of the Treaty are being observed. ning the applicant. The decision which the The reference to the contention advanced by

JUDGMENT OF 23. 2. 1961 — CASE 30/59

(b) In the judgment in Case 18/57, J. Nold First submission: Infringement of the K.G. v High Authority of the ECSC, Treaty the Court did not place a 'wide' in­ terpretation on the words 'concerning them'. 1. Can a State subsidy be compensated for? (c) The applicant's attempt to place the The applicant contends that a prohibited same interpretation on the words subsidy cannot be compensated for. Any 'concerning them' as on the words 'af­ subsidy or aid granted by a State must be fecting them' is unconvincing. The considered on its own and its illegality can­ judgment in Case 8/55 places a rather not be removed by the withdrawal of other strict interpretation on the latter ex­ measures. pression. In the defendant ’s view, the real issue is (d) The Member States and the Council whether, having regard to the provisions of may, in appropriate cases, have a right Articles 2 and 4(c) of the Treaty, the High of action, hence the interpretation Authority had the right to conclude that, placed by the defendant on the words without any need to change the outward 'concerning them' and the requirement form of a subsidy, it sufficed to eliminate its that the applicant must have a 'direct harmful effect on the functioning of the and individual interest'. Common Market. This 'direct and individual interest' has not Article 4(c), a short and almost laconic’ been demonstrated; in fact: provision, must be interpreted with 'care'. (a) The prices for German coal have reper­ Up to the present, in none of the six cussions on the whole of the market in signatory countries of the Treaty has there which there is German competition, but emerged any clear and generally accepted there is no 'basing' of the Netherlands idea of 'subsidy' and still less in the law of prices on German prices. the Community, where the question is com-

plicated by subsidiary issues arising from cannot be justified by the elimination of or partial integration ratione personae et compensation for its effects. ratione materiae. The defendant replies that the prohibition There is, in fact, no real subsidy involved of subsidies is intended to prevent com here. As is clear from the statements of the petition in the Common Market from being Federal Government, the main reason why artificially distorted. the ‘Bergmannsprämie’, was established was In interpreting concepts in the Treaty such to confer a mark of special consideration on as 'prohibited discrimination' and 'special miners and, with a view to increasing coal charges', the Court has indicated that, in production, thereby to make a career in such cases, a system of interpretation which mining more attractive. Furthermore, for takes account of the context and the circum reasons of general policy on prices, there stances must be applied was no intention of letting the undertakings 2. Was not the Government's contribution bear the cost of this bonus from the State to miners' old-age insurance due to cease because this would mean the coal consumers in any event and does its withdrawal would have had to pay higher prices. offset the Bergmannsprämie? The form in which a particular set of The applicant contends that, in the present regulations appears is of only secondary im case, there can be no question of a counter portance in establishing whether they in balance, since the contribution to miners' volve a prohibited subsidy.

changed its mind. tribution cannot conceivably offset the The real object of the measure was an un ‘Bergmannsprämie’ or make it legal. avoidable increase in the pay of un The defendant replies that, within the limits derground workers, but the Government's imposed by Article 67 of the Treaty, the desire to maintain the price of coal at a Government's hands are free as regards the fairly low level induced the State to bear the cost of social services and their financing. cost of this increase in pay, and this dis Why, therefore, in a field where the torted the conditions of competition. Governments are left some freedom of ac A de facto situation cannot make a State tion, should counterbalancing be disal subsidy legal; Article 4 of the Treaty, which lowed? the defendant itself considers to be an

JUDGMENT OF 23. 2. 1961 — CASE 30/59

‘Bergmannsprämie’ and of the income tax 1958, the two measures of the Federal levied on the bonus of which the German Government were maintained Federal State has been deprived is equal to simultaneously and that, in consequence, the contribution previously granted by the the High Authority was seriously at fault in Federal Government to miners' old-age in­ allowing the continuation for such a long surance. The applicant believes that, in the period of a situation which, according to its form of the ‘Bergmannsprämie’, the subsidy own argument, was unlawful. is very much more substantial than the As evidence of its good faith the defendant State's contribution to the pension fund. refers to the correspondence exchanged with Even if, at a given moment, these amounts the Federal Government.

The defendant, in its reply to the question 2. Does the fact that, in yielding to certain put on this subject by the Court, corrects political pressures, the High Authority the figures previously supplied; after in­ wished to show favour to a Member dicating the sources of its information and the method of calculation used, it states that State of the Community constitute mis­ use of powers? the amount of the ‘Bergmannsprämie’ should be re-stated as DM 173 502 992. The applicant states that it does and emphasizes that, in so doing, the High 4. Has the High Authority allowed the two Authority ignored 'the interests and objec­ subsidies of the Federal Government of tives which it must protect'. In support of Germany, to continue, temporarily, this argument the applicant offers two facts; without lawful justification? first, the sudden change observed in the at­ The applicant emphasizes that, during the titude of the defendant in the course of period from 15 February 1956 to 31 March negotiations with the Federal Government,

STEENKOLENMIJNEN v HIGH AUTHORITY

it became involved with the compensatory out by the prohibition which the Treaty im­ levy. poses on the Member States, but not on the Finally, the time-limit of nine months agencies of the Community and, in par­ granted at the time to the Federal ticular, the High Authority, against in­ Government is consonant with the first terfering with the market by the grant of paragraph of Article 88. subsidies. On the basis of the second paragraph of Article 5 and subparagraph (a) 3. Did the alleged misuse of powers 'affect' of the first paragraph of Article 53 of the the applicant? Treaty together with Article 23 of the Convention on the Transitional Provisions, The applicant considers that it is the specific learned writers have interpreted the Treaty object or at least the victim of the misuse of as implying that a subsidy is one of the powers of which it complains, in view es­ methods which the High Authority is em­ pecially of its geographical position; it sug­ powered to adopt. gests that the Court should treat the phrases The object of Article 4(c) of the Treaty is to 'concerning them' and 'affecting them' as ensure that the market policy of the High synonymous because 'it is inconceivable that Authority, which must concern itself with the victim of a general decision involving a high-level Community interests, is not com­ misuse of powers should be able to protect plicated by measures, such as subsidies, himself whereas a party protecting himself adopted by the Member States and designed against an individual decision involving a to further the particular interests of the coal misuse of powers is subject to other con­ and steel industry of one of the Member ditions'. States. In reply, the defendant states that the After emphasizing, rightly, the effect of Ar­ question is of 'no relevance in the present ticle 4(c) of the Treaty in so far as it lays case, which is concerned with an individual down rules on the subject of jurisdiction, the decision'. applicant wrongly concludes that the provision removes all doubt on the question B Submissions and arguments of the parties whether a subsidy by one of the States is after the intervention. permissible. The opposite is true: it is precisely because of recognition that Article First submission: Infringement of the 4(c) in no way contains an absolute Treaty prohibition of subsidies but a set of rules (a) The intervener endeavours first to governing the respective powers of the demonstrate the complexity of the problem States and the Community that it becomes the existence of which the applicant tries to necessary to discover a reason for the shift

in these powers. In view of the fact that the depriving the common market concept of its European Coal and Steel Community real meaning. represents no more than a partial in The High Authority is obviously not seeking tegration, it is clear that the Member States to deny all possibility of derogation from the have retained the power to grant subsidies prohibitions contained in Article 4. There is to the extent to which integration does not express reference to it in several parts of the affect their sovereign rights.

. . Accordingly, the High Authority follows shall accordingly be abolished and and must, pursuant to Article 4, follow a prohibited . . . as provided in this policy of opposition to subsidies. The fact Treaty . . .’. The Court, with the general ap that the High Authority has the power to proval of learned writers, has interpreted grant a subsidy in certain specific cases does this clause as meaning that, in interpreting not conflict with this general principle. all the general prohibitions contained in Ar The applicant contends that the authors or ticle 4 of the Treaty, account must be taken the Treaty gave clear expression to their in of all the other provisions of the Treaty, to tentions in drafting Article 4. The object of which must be added the annexes, the the Treaty is to establish a common market protocols and the Convention on the Tran in coal and steel; the breaking down of the sitional Provisions. common market into individual markets as The defendant agrees that the word sub the result of action by the Member States is sidy' is not clearly defined but it is unable inconsistent with this objective.

STEENKOLENMIJNEN v HIGH AUTHORITY

The intervener quotes paragraph 1 of the Nor, moreover, does the question of a Law establishing the ‘Bergmannsprämie’ favourable or unfavourable effect on the dated 20 December 1956 (BGBI., I, p. 927): market make it possible to draw the line between an authorized subsidy and a sub­ 'Mine workers employed underground sidy which is prohibited within the meaning shall receive the miner's bonus subject to the conditions laid down in this Law'. of Article 4(c) or, generally, to grasp the meaning of subsidy. The intervener quotes a number of writers The defendant replies that the arguments who describe grants from the State as sub­ developed by the Federal Government on sidies only when the recipient possesses a the concept of subsidy translate abstract certain characteristic and acknowledge that ideas to justify terminology which the it is only a subsidy when the owner of an in­ author of those ideas considers to be better dustrial undertaking is the recipient. suited to its purpose. Those arguments are, The ‘Bergmannsprämie’ is not a subsidy in in any event, of only relative importance to the legal sense of the word because it is not the question involved in this case. granted to undertakings but to mine The real question is whether, even though workers. the ‘Bergmannsprämie’ is paid to the The Treaty establishing the European Coal workers, it does in fact benefit the mining

JUDGMENT OF 23.2. 1961 — CASE 30/59

undertakings. The intervener has realized The financing of the bonus out of public the difficulties of the over-strict criterion funds means that the Federal Government

is infringed by the grant of an advantage to The intervener contends that the re­ one or more undertakings. quirement in Article 4(c) is applicable only In introducing the ‘Bergmannsprämie’ the to grants from a State which constitute an Federal Government had a threefold objec­ tive: unacceptable interference with the con­ ditions of the market. to prevent miners from leaving and thus The Federal Government states that it con­

to increase production in the coal in­ curs with the explanations supplied on this dustry; subject by the High Authority and refers to to make it possible for the coal under­ the considerations set out in its letter of 22 takings not to raise salaries by more than October 1956 to the High Authority. 6% at a time when they were being asked The intervener finds in Article 92 of the

costs on the conditions of competition on increase to be reduced to 6%. the market in coal and steel. The figures and statistics produced by the It is, in fact, impossible to assert that the intervener are hardly convincing because bulk of wages paid by the mining under the Netherlands undertakings probably takings is reduced by an amount equal to based their prices on the prices of German the ‘Bergmannsprämie’ or that, in granting coal while themselves suffering from a loss of revenue which in the case of the German the bonus, the Federal Government has, even in part, financed wages out of public miners was offset by the ‘Bergmannsprä

underground workers. The ‘Bergmannsprä The applicant's arguments are somewhat similar to those of the defendant. It mie' has not, therefore, had the effect of reducing production costs in German mines, emphasizes that the Treaty establishing the nor was it ever intended that it should. European Coal and Steel Community, in Moreover, the introduction of the contrast to that establishing the European ‘Bergmannsprämie’ took place at the same Economic Community, prohibits subsidies time as a rise in wages of 6%, which shows regardless of whether thay have a tangible that the two measures are of a different effect on the common market.

‘Bergmannsprämie’, it must not be forgot costs and the need to base prices on those of ten that there is a reduction in the produc competitors receiving preferential treatment tion costs not only when the level of these distorted the conditions of competition from costs is reduced but also when counter the stand-point both of production costs and vailing measures prevent the level from the selling price. rising. 3. The industry concerned It the ‘Bergmannspramie’ had not been in troduced, the rise in wages would have been The intervener, relying on the judgment in in the region of 9%; the bonus enabled the Joined Cases 7 and 9/54 (Rec. 1955-1956,

granted to all underground miners (c) Additionally, the intervener generally employed in the territory of the Federal adopts the arguments, of the High Authority Republic of Germany; it is of little impor­ relating to the balance struck between the tance whether they work in undertakings introduction of the ‘Bergmannsprämie’ and within the meaning of the Treaty or in other the abolition of the subsidy paid out of mining undertakings. public funds to finance the ‘Knapp­ The defendant replies that: schaftliche Rentenversicherung'. the ‘Bergmannsprämie’ was, in the begin­ The applicant states that the intervener has ning, intended solely for coal-miners and finally shown itself in its true colours by was only later applied to other un­ thus supporting the conclusions of the defendant. derground miners; the concept of a special subsidy should be Second submission: Misuse of powers based on facts rather than a legal for­ mula; a subsidy measure is special not The arguments between the parties, after only where it is concerned solely with the the intervention, about the possibility of a coal industry but also when it secures ad­ misuse of powers adds nothing to what has vantages for that industry and for other already been said by the parties in the main action specific industries; Article 67 refers to measures of a very general character such as taxes, welfare benefits, rates of ex­ IV — Procedure change, etc.; in tact, 89% of the ‘Bergmannsprämie’ is The procedure in the main action and on paid to the collieries; it is inconceivable the intervention followed its normal course. that such a subsidy should be illegal in Nevertheless it has to be recorded that, on the Netherlands because that country has 24 March 1960, the Court made an Order no potash or mineral mines while enjoining the intervener to use the language remaining lawful in Germany because it of the case in setting forth its submissions in has them. writing and authorizing it to use the The applicant points out that the judgment German language for the oral procedure. of the Court in Joined Cases 7 and 9/54, By Order of the President of the Court

By letter dated 30 April 1959 but postmarked 8 May 1959, the High Authority in­ formed the applicant that it could not see its way to acceding to its request. The communication notifies the applicant of the High Authority's decision not to take the decision requested of it.

Application No 30/59 seeks the annulment of this decision of rejection, and, accor­ dingly, constitutes an action to have a decision declared void under Article 33 of the Treaty.

Since the application was entered at the Court Registry on 5 June 1959, the time- limit of one month contained in the last paragraph of Article 33 has been complied with when account is taken of the date of despatch of the High Authority's reply as shown by the postmark.

2. Applicant's right of action

The contested decision is that in which the High Authority refused to take the deci­ sion which, according to the applicant, it was under a duty to take under Article 88.

The decision of rejection is, as required under Article 33, of the same character as the positive decision refused by the High Authority would have had.

The applicant contends that:

'Netherlands prices for coal are usually based on German prices;

the artificial reduction of the German prices for coal by means of State subsidies places the Netherlands undertakings which do not receive such a subsidy in a difficult position;

there is fierce competition from German coal on the Netherlands market;

the Netherlands have to protect their coal exports to Germany;

the introduction of the miner's bonus in Germany caused labour from the neighbouring Netherlands undertakings to emigrate to Germany;

3. The conclusions of the applicant

The applicant not only claims that the Court should annul the contested decision but also requests it to:

'declare that the High Authority shall record by a decision that, by financing out of public funds a tax-free bonus granted to miners working underground, the Federal Republic of Germany has failed to fulfil its obligations under the Treaty and that it must accordingly annul this measure.'

Under Article 34 of the Treaty, 'If the Court declares a decision or recommendation void, it shall refer the matter back to the High Authority' and the latter 'shall take the necessary steps to comply with the judgment'.

If the Court entertains the application, it may not dictate to the High Authority the decisions which should be consequent upon the judgment annulling the decision but the Court must confine itself to referring the matter back to the High Authority. In the circumstances, the second and third heads of the applicant's conclusions are in­ admissible.

On the other hand, the first and fourth heads of the applicant's conclusions come within the ambit of proceedings for annulment and are therefore admissible.

However, in order not to prevent the Court from considering the argument set out in the application, the applicant waives the right to invoke Article 93(5) of the Rules of Procedure.

The question must, therefore, receive consideration by the Court.

Under Article 34 of the Protocol on the Statute of the Court of Justice, submissions made in an application to intervene shall be limited to supporting or requesting the rejection of the submissions of one of the parties.

In its intervention the Government of the Federal Republic of Germany supports the submissions of the defendant and maintains that, although the arguments which it advances differ from those of the defendant, they seek rejection of the ap­ plicant's submissions. The intervention procedure would be deprived of all meaning if the intervener were to be denied the use of any argument which had not been used by the party which it supported.

In the circumstances, the arguments submitted by the Government of the Federal Republic of Germany as intervener are admissible.

B — Substance

'The following are recognised as incompatible with the common market for coal and steel and shall accordingly be abolished and prohibited within the Community, as provided in this Treaty: ... (c) subsidies or aids granted by States, or special charges imposed by States, in any form whatsoever.'

The Treaty contains no express definition of the concept of subsidy or aid referred to under Article 4 (c). A subsidy is normally defined as a payment in cash or in kind made in support of an undertaking other than the payment by the purchaser or con­ sumer for the goods or services which it produces. An aid is a very similar concept, which, however, places emphasis on its purpose and seems especially devised for a particular objective which cannot normally be achieved without outside help. The concept of aid is nevertheless wider than that of a subsidy because it embraces not only positive benefits, such as subsidies themselves, but also interventions which, in various forms, mitigate the charges which are normally included in the budget of an undertaking and which, without, therefore, being subsidies in the strict meaning of the word, are similar in character and have the same effect.

Since these definitions are not contained in the Treaty, they are acceptable only if they are substantially borne out by the provisions of the Treaty or by the objects which it pursues.

Among the declared aims of the Community, in Article 2 of the Treaty, is that it 'shall progressively bring about conditions which will of themselves ensure the most rational distribution of production at the highest possible level of productivity, while safeguarding continuity of employment and taking care not to provoke fun­ damental and persistent disturbances in the economies of Member States'.

(b) Is Article 67 an implementing regulation of Article 4(c)?

In its statement as intervener, the Federal Government contends that the admis­ sibility of certain subsidies from the State may be inferred from Article 67 and that, in consequence, that article qualifies the prohibition contained in Article 4(c) of the Treaty.

Since this contention, being in general terms, covers the various subparagraphs of Article 4 it could, if accepted, lead to the conclusion that, in certain circumstances, the Treaty authorizes the restoration of import and export duties or charges having equivalent effect, and even quantitative restrictions on the movement of products. It must therefore be considered with particular care.

If the authors of the Treaty wished to make substantial inroads into the prohibitions laid down in Article 4, it would scarcely accord with the preciseness of the Treaty as a whole to refer to them under different descriptions both in the title of Chapter VII ('Interference with Conditions of Competition') and in the wording of Article 67. Although, however, it is true that the words 'special charges' appear both in Article 4(c) and in Article 67(3), in the latter article they refer to charges

STEENKOLENMIJNEN v HIGH AUTHORITY

which may be imposed on coal and steel undertakings compared with other in­ dustries in the same country, and this qualification draws a connexion between the said special charges and the general economic policy of the State concerned. It is hard to believe that the authors of the Treaty intended not only to weaken but, in certain circumstances, to annul the abolitions and prohibitions laid down with par­ ticular force in Article 4 without referring to the article whose effect they intended to limit.

This gives an unusually wide meaning to the prohibition which it describes. Without sufficient proof to the contrary, it is inconceivable that the authors of the Treaty declared in Article 4(c) that subsidies and aids granted by States in any form whatsoever should be abolished and prohibited and then declared in Article 67 that, without even having been authorized by the High Authority, they could be allowed subject to the measures recommended by the High Authority to mitigate or remedy the effects thereof.

Such an interpretation would be conceivable only if it were demonstrated that the interference with the conditions of competition within the meaning of Article 67 referred to the measures or practices set out in Article 4, especially Article 4(c).

JUDGMENT OF 23. 2. 1961 — CASE 30/59

Although Article 4 and Article 67 have basically the same objects, because they endeavour to 'ensure the establishment, maintenance and observance of normal competitive conditions', when their contents are analysed, as is done hereunder, it is clear that they make different fields subject to different procedures.

Article 4 refers to action taken 'within the Community', namely within the field covered by the Treaty which established it.

Under Article 1 of the Treaty the Community is founded upon a common market, common objectives and common institutions.

It contains no provision for the abolition or the direct prohibition of such action but provides only for it to be counterbalanced by an appropriate aid or for its harmful effects to be mitigated by the High Authority making the 'necessary recommen­ dations' to the State concerned (paragraph 3) or by such measures as that State 'may consider most compatible with its own economic equilibrium' (third sub­ paragraph of paragraph 2).

Clearly, action taken under such provisions cannot be what, in any form what­ soever, Article 4 declares to be incompatible with the common market for coal and steel and abolished and prohibited.

STEENKOLENMIJNEN v HIGH AUTHORITY

Under the Treaty, those sectors of the economy of the Member States which do not come within the province of the Community are not subject to the decisions of the High Authority.

For example, under the Treaty, the affairs of distributing undertakings, excluded under Article 80, and, more generally, all economic activity which the Treaty has not brought within the province of the Community have been left outside it.

Article 2 confirms this interpretation by stating that the Community 'shall have as its task' to carry out the responsibilities entrusted to it 'in harmony with the general economy of the Member States'.

Since the causes of this interference with competition did not come within the province of the High Authority it was essential, in order to safeguard the existence of the common market, for the High Authority to be placed in a position to correct or mitigate its effects. It is, in fact, this basic requirement which is fulfilled by Arti­ cle 67.

The difference between the fields in which, respectively, Articles 4 and 67 operate is illustrated and confirmed by the difference of the means made available to the High Authority for their application.

JUDGMENT OF 23. 2. 1961 — CASE 30/59

If Article 67 is treated as an implementing regulation for Article 4(c), it would be impossible to explain why, when action by a Member State 'is having harmful effects on the coal or steel undertakings within the jurisdiction of other Mem­ ber States', the High Authority is empowered only to make 'a recommendation to that State with a view to remedying these effects by such measures as that State may consider most compatible with its own economic equilibrium' and has no power to order the immediate abolition of aids or subsidies which conflict with the Treaty.

On the other hand, the restrictions imposed in the third paragraph of Article 67(2) and the similar one contained in Article 67(3) are easy to understand in the light of the interpretation placed above on the wording of Articles 4 and 67 and also on the structure of the Treaty.

Integration was only partly established by the Treaty and, owing to the power retained by the Member States, the coal and steel undertakings established in their respective territories remain subject to different legislation and regulations the provisions of which are liable to operate to the advantage or the disadvantage of the coal or steel industry of a Member State in comparison with the same industry com­ ing under the jurisdiction of the other Member States or with other industries in the same State.

Article 11 of the Convention on the Transitional Provisions provides as follows:

‘... Unless the High Authority agrees to the continuance of such aids, subsidies or special charges and to the terms on which they are to be continued, they shall be withdrawn, when and in the manner which the High Authority shall deter­ mine after consulting the Council, though it shall not be mandatory to withdraw them until the opening date of the transitional period for the products in question'.

Article 67, which confers a power of recommendation on the High Authority only in cases of serious disequilibrium provoked by substantially increasing differences in production costs is appreciably less strict than Article 11 of the Convention on the Transitional Provisions.

Had the authors of the Treaty intended Article 67 to serve as the definitive im­ plementing regulation for Article 4(c), the conclusion would be inescapable that they intended to treat subsidies and aids which were in existence when the Treaty entered into force with greater severity than those granted after its entry into force.

Such a conclusion would conflict not only with common sense but also with a logical application of the Treaty.

The foregoing analysis leads to the conclusion that Article 4(c) and Article 67 cover two different fields: the first article abolishes and prohibits certain actions by Member States in the field which, under the Treaty, comes within the jurisdiction of the Community, the second is intended to prevent the distortion of competition which exercise of the residual powers of the Member States inevitably entails.

'The High Authority has received an application from the Unternehmensverband Ruhrbergbau for coal prices to be increased by an average of DM 3. The ap­ plication is based on the fact that, as a result of negotiations between the Unternehmensverband Ruhrbergbau and the Industriegewerkschaft Bergbau, miners' wages are to be increased by, on average, 9% with effect from 15 February, in order to meet the threatened departures of mineworkers to other in­ dustries. The Unternehmensverband Ruhrbergbau has, in addition, stated that a further increase in price of about DM 3 per metric ton is required to wipe out a long-standing deficit.

I am afraid that such a change in the price of coal may have unfortunate effects on the price structure as a whole, especially in the Federal Republic, but also in other countries of the Community whose consumers depend on coal from the Ruhr. In the course of discussions in depth with those concerned, I have endeavoured to find ways of improving the profitability of the coal mines and, in particular, of reducing their overheads so that this increase in price can be kept within comparatively narrow limits.

The following measures are contemplated:

(1) Amendment of the pricing instructions (2) Reduction in the turnover tax (3) Retirement pensions under the miners' insurance fund

In addition, it must be borne in mind that the coal industry, where wages and salaries are equivalent to nearly 50% of turnover, is one of those industries where wages and salaries are proportionately the largest item of expenditure, with the result that outgoings on social security are a notable factor in increasing costs.

The last paragraph states that the shift bonus 'would not involve any direct finan­ cial concession for the undertakings' but this contradicts the first paragraph of the letters in which two increases are declared to be necessary: 'An increase of, on average, 9% in miners' wages with effect from 15 February, in order to meet the threatened departures of mineworkers to other industries, and an increase in price of about DM 3 per metric ton in order to wipe out a long-standing deficit'.

The Federal Government expresses the fear 'that such an increase in the price of coal may have unfortunate effects on the price structure as a whole, especially in the Federal Republic, but also in other countries of the Community whose con­ sumers depend on coal from the Ruhr'.

The above mentioned letter of 4 February 1956 makes it abundantly clear that the introduction of the shift bonus makes it possible to avoid an increase in the price of coal which would otherwise be inevitable. The same letter makes it clear that while

involving no 'financial concession for the undertakings', the shift bonus relieves them of an addition to their costs which the undertakings would otherwise have to bear and that, although it does not reduce the present costs, the miners' bonus reduces costs which they would inevitably incur.

JUDGMENT OF 23. 2. 1961 - CASE 30/59

Moreover, the letter of the Federal Minister for Economic Affairs to the High Authority dated 12 March 1956 (III D 2 70672/56, Doc. No 2426/56 f) states, inter alia, that:

The letter of the Federal Ministry for Economic Affairs to the High Authority of 22 October 1956 (Ref. Ill D 2 71933/56) states:

'... It was stated in that letter that the Federal Government has set itself the

aim of improving the profitability of the coalfields by reducing the special charges which, in contrast with other industries, this section of the economy has had to bear ...'

However, the letter quoted immediately above contains a paragraph in which it is added as follows:

'... As a purely precautionary measure, I must point out that, even if payment of the miners' bonus substantially widened differences in production costs, this would be quite lawful since it would be the outcome of a change in productivity. As the High Authority will be aware, the output of the German coal industry can be considerably enhanced without fresh investment if the number of un­ derground workers can be increased, because the reason why existing capacity cannot be fully used is the shortage of miners. It follows that an increase in the number working underground, referred to above in paragraph II, had un­ doubtedly led to greater productivity.'

STEENKOLENMIJNEN v HIGH AUTHORITY

'. .. Latterly, it has become more and more noticeable that this professional pride on the part of miners has vanished in face of the attraction offered by other trades where work is easier and the pay is higher'.

This general idea was expressed in greater detail at the hearing, when the represen­ tative of the Government of the Federal Republic stated that the shift bonus was a kind of tribute to a very demanding calling, that it had not perhaps taken the form of a medal, because it was necessary for the tribute always to be and remain tangi­ ble and concrete to prevent its attraction from losing its value, and that the law on the miner's bonus was not intended to grant a subsidy to the mining undertakings but rather to create a privilege for the miner, and more particularly for the un­ derground miner.

According to this explanation the shift bonus can, in the final analysis, only be regarded as supplementary pay.

Although such supplementary pay would, if paid by the coal industry, not be caught by the Treaty, it cannot fail to constitute a subsidy in circumstances where it represents a pay increase financed out of public funds by the Government of the Federal Republic.

JUDGMENT OF 23. 2. 1961 - CASE 30/59

Nevertheless it remains to be determined whether the subsidy or aid which the shift bonus appears to constitute satisfies some of the requirements laid down in Article 2 of the Treaty, namely, that it should safeguard continuity of employment and take care not to provoke fundamental and persistant disturbances in the economies of Member States.

For the foregoing reasons, viewed in itself, the miner's bonus, financed out of public funds, constitutes a subsidy or aid granted by the Government of the Federal Republic to the German coal-mining industry and there is no valid reason, based on the Treaty, which could invalidate this description. In consequence, it must, viewed in isolation, be held to be incompatible with the common market in coal and steel, and, as such, prohibited by the Treaty.

2. Does the countervailing effect of the abolition, with effect from 1 April 1958, of the assumption by the Federal Government of responsibility for a proportion of the employers' contribution to the miners' pension insurance take away from the shift bonus its character of a subsidy or aid prohibited under Article 4 (c) of the Treaty?

The Government of the Federal Republic revoked, with effect from 1 April 1958, its decision of February 1956 to assume responsibility for a proportion, amounting to 6 .5% of total pay, of the employers' contribution to miners' pension insurance.

STEENKOLENMIJNEN v HIGH AUTHORITY

In its statement of defence, the defendant declares that, although a payment con­ sidered in isolation may appear to be a prohibited subsidy because it 'reduces production costs and affects the natural conditions of competition', the elimination of these effects suffices 'for there to be no longer any breach of the Treaty'. In these circumstances 'there would really be no longer any question of a subsidy which is prohibited under the Treaty in the interests of fair competition'.

While maintaining that 'the grant of the miners' bonus does not conflict with Arti­ cle 4 (c) of the Treaty' the Government of the Federal Republic contends that there can no longer be any conflict because 'with effect from 1 April 1958, the Federal Republic stopped paying 6 .5% of the wage bill as part payment of the employers' contribution to miners' pension insurance, which it had made on behalf of the coal­ mining undertakings since 15 February 1956'.

JUDGMENT OF 23. 2. 1961 - CASE 30/59

Since the abolition and prohibition contained in Article 4 (c) are general and ab­ solute in character, they cannot in any case be annulled by application of a vague and ill-defined procedure for compensation. For these reasons, the abolition, with effect from 1 April 1958, of the assumption by the Federal Government of respon­ sibility for paying a contribution amounting to 6 .5% of the total wage bill to the miners' pension fund does not take away from the shift bonus its character of a sub­ sidy or aid prohibited under Article 4 (c) of the Treaty.

II — Misuse of Powers

In support of its application for annulment of the rejection of its request, the ap­ plicant relies on the submission of misuse of powers.

As the finding that the shift bonus is a subsidy prohibited under Article 4 (c) of the Treaty is sufficient to entail annulment of the contested decision, a decision is not necessary on this submission.

For all the other reasons set out above, the decision of rejection, set out in the letter from the High Authority to the applicant dated 30 April 1959, must be declared to be void.

STEENKOLENMIJNEN v HIGH AUTHORITY

Having regard to the Protocol on the Statute of the Court of Justice of the European Coal and Steel Community; Having regard to the Rules of Procedure of the Court of Justice of the European Communities, especially Article 69 (2),

THE COURT

hereby:

1. Declares that the first and fourth heads of the conclusions of the as­

sociation of undertakings De Gezamenlijke Steenkolenmijnen in Limburg for annulment of the contested decision and for an order that the High Authority shall pay the costs are admissible; that the second and third heads for a declaration that the High Authority shall record by a decision that, in financing out of public funds a tax­ free bonus granted to underground mineworkers, the Federal Republic of Germany has failed to carry out its obligations under the Treaty; for annulment of that measure; and for any further order which the Court may consider necessary are inadmissable;

A. Van Houtte A. M. Donner

Registrar President