C-31/59

ACCIAIERIA E TUBIFICIO DI BRESCIA , a joint stock company, having its registered office at Brescia, represented by its Chairman, Dandolo Francesco Rebua, assisted by Cesare Grassetti, Professor at the Faculty of Law of the University of Milan, Advocate of the Milan Bar and the Corte di Cassazione, Rome, with an address for service in Luxembourg at the office of Guido Rietti, 15 boulevard Roosevelt,

applicant,

v

High Authority of the European Coal and Steel Community , represented by its Agent, Dr Mario Berri, Legal Adviser to the High Authority, assisted by An­ tonio Sorrentino, Advocate at the Corte di Cassazione, Rome, with an address for service in Luxembourg at its offices, 2 place de Metz,

defendant,

Application for the annulment of the decision of the High Authority of 15 April 1959 concerning the carrying out of an inspection at Acciaieria e Tubificio di Brescia, S.p.A., Via Zara 12, Brescia,

Issues of fact and of law

I — Facts might need in order to perform their du­ ties'. The facts may be summarized as follows: In a letter dated 12 February 1959 the appli­ The Acciaieria e Tubificio di Brescia com­ cant again refused to produce the docu­ pany is an undertaking whose production is ments concerning its engineering opera­ mixed. tions.

In its 'Sider' works it produces iron and On 15 April 1959 the High Authority adopt­ steel, whilst in its'Tubificio' works it manu­ ed the contested decision which was notifi­ factures engineering equipment (principally ed to the applicant by letter dated 30 April penstocks for hydroelectric installations). and delivered on 5 May.

JUDGMENT OF 14. 4. I960 -CASE 31/59

The High Authority contends that the lawfully effected by the undertaking or the Court should dismiss the application and volume of its business. order the applicant to bear the costs. It considers, however, that the contested III — Submissions and arguments decision shows clearly the information in­ of the parties volved in this instance.

out inspections conferred on the High Au thority by the ECSC Treaty (in particular, More generally, the defendant considers by Articles 47 and 86) which includes and that the contested decision does not lack deals with the fairly specific submissions subject-matter since it is intended to record put forward by the applicant, the sub the applicant's refusal to enable the officials missions and arguments of the parties may of the High Authority to perform their du be summarized as follows: ties, to point out this obligation formally and, in the case of a persistent refusal, to en A — Infringement of the Treaty able the sanctions provided for in the third paragraph of Article 47 of the Treaty to be (1) The part of the decision concerning in

The first paragraph of Article 47 of the Trea The defendant replies, first, that the recitals ty confers on the High Authority a general in the preamble to the contested decision power of investigation which is subject to indicate inter alia that the purpose of the in no limitations or conditions regarding the spection is: manner of its exercise and which corre sponds to a duty imposed on the undertak to draw up the total of sales effected in dis ings by law. regard of the provisions of Chapter V of the Treaty, or decisions taken thereunder with The third paragraph of Article 47 provides in the meaning of Article 64 of the Treaty; for a decision to be taken by the High Au thority only where a failure to fulfil this ob to establish, where appropriate, the annual ligation forces it to apply penalties. turnover of the undertaking in accordance with Articles 47 and 82 of the Treaty. In this instance the duty to provide infor mation at the request of the High Authority The High Authority points out that as it stems directly from the Treaty without any does not have 'the gift of prophecy' it could need for such request to be set out in an ad not indicate a priori the sales lawfully or un

ACCIAIERIA DI BRESCIA v HIGH AUTHORITY

The applicant interprets the provisions of Finally, a precise definition of the subject- the Treaty in an entirely different way. matter of the information is inconsistent with the power given in the fourth para­ It interprets the third paragraph of Article graph of Article 86 of the Treaty for officials 47 to mean that the High Authority must of the High Authority to act in the same adopt a reasoned decision setting out the way as national revenue officials, that is, grounds on which the request for informa­ with the widest power of investigation. tion is necessary and specifying the infor­ mation which the undertaking must pro­ (2) The part of the decision concerning the vide and that this decision is to be adopted checks before any investigation is made and, there­ fore, before any sanction is applied. The applicant considers that, in so far as it requests it to make available 'all the books Under the Treaty the decisions of the High and accounts of the company, in particular Authority are not in the nature of penalties invoices, records of bank transactions and but rather of rules. The High Authority the constituent elements of the profit and must therefore first lay down the rules to be loss account, such as the sales account and observed; only subsequently may it apply the charges account', the contested deci­ sanctions where they are appropriate. sion infringes the Treaty.

The obligations on undertakings in fact Article 47 of the Treaty regards the infor­ stem directly from that Treaty. mation as the primary source of knowledge and one which is subject to a single limita­ The Treaty confers on the High Authority tion: it must be necessary in order for the a supervisory power, which includes an un­ High Authority to carry out its tasks. The restricted power to make investigations, checks, on the other hand, are a secondary and does not oblige it to adopt a previous source of knowledge. As their purpose is to reasoned decision specifying the need for verify the information they are subject to the investigations and their content and two limitations: first, they must be neces­ scope. sary to enable the High Authority to carry

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The inspection is thus pressly includes investigations as a means a means of carrying out checks. It cannot of performing the duties imposed upon un constitute a means of obtaining informa dertakings. The defendant maintains that tion and does not give the High Authority this action comes within the sphere of sanc any direct power of inquiry. tions, that is, a sphere which is akin to that of the criminal law in which the power of in Thus, no provision of the Treaty grants the quiry is a constituent of the power to deter High Authority a direct right of inspection mine what is unlawful. For this reason Ar

(3) The decision considered as a whole It considers that the subdivision of the pow The applicant maintains that it is a company ers of inquiry of the High Authority under whose production is mixed and that al Article 47 of the Treaty into power to obtain though its iron and steel production is with information and the power to have checks in the province of the Community, its made does not create a hierarchy or an order engineering production falls outside. of precedence. The two sentences in the first paragraph of Article 47 have equal The contested decision orders it to provide weight and one is not subordinate to the all the necessary information and to pro other. duce all the books and accounts of the com pany, which inevitably includes those

out its tasks. When using its discretionary power in its choice of method, the High Au The High Authority is thus attempting, by thority may employ one or the other and means of the contested decision, to extend may use them alternatively, together, or its powers beyond those provided for in the successively. Treaty.

The defendant freely admits that the books ment of reasons made it necessary for the and accounts which may be used by its in High Authority to adopt a formal decision spectors in their inquiries are only those so as to confirm its to the applicant to ac which concern the iron and steel industry. knowledge its power of inspection and not to prevent checks being made by its inspec However, it considers that its inspectors are tors. entitled, first, to examine all joint books in order to extract from them any factors con All of the foregoing follows clearly from the cerning the iron and steel production of the contested decision. undertaking and, secondly, to check whether books concerning its production of The applicant questions whether the pur iron and steel have not been included inten pose of the contested decision could have tionally or in error in the books which the been that which the High Authority seeks undertaking maintains concern only its to attribute to it, since a request for informa engineering production.

necessary. The mere reference to the 'infor the origin of that obligation satisfied the mation necessary to enable them to perform provisions of the Treaty. their duties' (that is, the duties of the in spectors), which is simply a repetition of the (2) The part of the decision concerning the terms of the first paragraph of Article 47 of checks the Treaty, does not fulfil the duty to state the reasons for decisions, as imposed on the As regards the checks the applicant puts for High Authority by Articles 5 and 15 of the ward the arguments based on the infringe Treaty and as defined by the Court. ment of an essential procedural require ment with regard to the information. The defendant considers, on the other hand, that sufficient reasons are given for the con It maintains that the High Authority

Authority. Thus, its duty to give a state existence of an obligation on the undertak-

ing. Its reference to the checks which are sertion (prius) on the part of the undertaking necessary in relation to the rules governing which is binding on the High Authority. competition and prices constitutes a suffi­ cient statement of the reasons for the deci­ The applicant argues from the fact that in its sion. statement of defence the High Authority does not formally dispute that the data are divisible in order to show that this is itself (3) The decision considered as a whole evidence of the inaccuracy and, thus, of the The applicant maintains again that the con­ inadequacy of the statement of reasons, tested decision infringes an essential pro­ since the contrary was stated in the recitals cedural requirement, as the reasons given of the preamble to the contested decision. for it are vitiated on the grounds of error and inappropriateness. The defendant considers that if its interpre­ tation of the scheme laid down by Article 47 Contrary to the statements made in the reci­ of the Treaty is accepted the complaint that tals of the preamble thereto, the accounts of insufficient reasons were given for the deci­ an undertaking whose production is mixed sion is automatically refuted. are separable. It is incorrect to claim that if C — Misuse of powers the High Authority does not have a power of inspection covering all the accounts and The applicant maintains that the High Au­ books of the company it is not in a position thority attempts to use the contested deci­ to carry out the tasks entrusted to it by the sion to turn an inspection, which may Treaty. sometimes be expedient or even necessary, into a procedure which is inquisitorial in na­ Although its accounts are consolidated in ture. the form of a single balance sheet, an under­ taking whose production is mixed is none It is therefore acting in order to achieve an the less able to arrange and divide up its ac­ aim which is outside the scope of the Trea­ counts in such a way as to provide clearly ty. By using its powers for a purpose other and faithfully, in respect of each sector of its than that for which they have been con­ production, all the necessary information, ferred on it the High Authority is misusing in particular as regards receipts and produc­ its powers. tion costs, and the examination and inspec­ The defendant disputes the claim that it has tion of one sector does not necessarily in­ exceeded its powers or used them for a pur­ volve the examination and inspection of all pose which is outside the scope of the Trea­ the others. This is also true as regards all the ty. documents on which the accounts are based (for example, correspondence and IV — Procedure statements of account). The procedure, which includes an applica­ The defendant considers that the checking tion by the applicant for the adoption of an of accounts which are entirely independent interim measure to suspend the operation and separate for each branch of production of the decision, which application was dis­ can only be a consequence (posterius) of an missed by an order of the President of the inspection carried out by the High Author­ Court dated 26 June 1959, followed the nor­ ity and not an a priori and unverifiable as­ mal course.

1. The applicant claims, first, that the decision is 'absolutely imprecise and with­ out definite subject-matter', in that neither the recitals in the preamble thereto nor the operative part indicate the information it is asked to provide or explain why it is necessary in this particular case and that this constitutes an infringement of the Treaty.

The ground of complaint refers in this case to the fact that the decision orders the undertaking to provide information but does not set out precisely its specific sub­ ject-matter and content or, in addition, why such information is necessary. The applicant seeks to draw a distinction between these elements and the objective pursued which, it maintains, is insufficiently clearly stated in the decision and thus cannot constitute the necessary legal basis for it.

2. Secondly, more generally, the applicant puts forward the same ground of com­ plaint in order to deduce from the failure to satisfy the conditions to which any measure of investigation is subject under the first paragraph of Article 47 of the Treaty, that is, a preliminary decision setting out the reasons why a request for in­ formation is necessary and specifying and defining the information required, that there has been an infringement of the Treaty. Such information, it claims, may only subsequently be checked and, if necessary, the penalties referred to under the third paragraph of the same article may be imposed if it is refused or inaccurate.

3. The second of these grounds of complaint must be examined first.

By providing in a single section the two propositions that 'The High Authority may obtain the information it requires to carry out its tasks. It may have any ne­ cessary checks made', the first paragraph of Article 47 establishes, first the duties of undertaking to provide information and, secondly, the extent of the inquiries, which may be made at the same time. Nothing in the wording of this provision allows one to infer from it the implied provision that a preliminary decision is to be adopted before any check is made.

It follows from the foregoing considerations that there is nothing in the letter, spir­ it or aim of the first paragraph of Article 47 to prohibit information being obtained and a check being made at the same time.

There has thus been no infringement of Article 47 and the applicant cannot succeed in his claim that the information must be obtained and the check made in two distinct and successive stages according to an order of priority which is not laid down in the text, provided of course that it is necessary for the checks to be made.

4. After this definition of the legal basis for the decision in question it is appro­ priate to examine the first ground of complaint, in which the applicant claims that the decision is imprecise and lacks definite subject-matter since the first paragraph of Article 47 requires the High Authority to give a prior and precise indication of the facts to which the checks apply and not only of the purpose for which they are intended.

The High Authority must of course give reasons for its decision and in the absence of any legal grounds for it, the terms of the Treaty are infringed. However, as the Court has just held, checks carried out by the High Authority when obtaining in-

ACCIAIERIA DI BRESCIA v HIGH AUTHORITY

formation may guide its inquiries and the subject-matter of such inquiries could not be defined in detail in the statement of reasons.

On the other hand, the High Authority must assure itself that such a division in fact exists and that it has not been falsified intentionally or as the result of an error. For this purpose it may claim a right to inspect the whole administration of the undertaking.

Furthermore, even if the division proves to be correct, the High Authority must be able to complete its inquiries by also inspecting that part of the administration which is concerned with the production which is not subject to the Treaty, in order to investigate whether there is any discrepancy between the accounts of the two sections which might disclose a violation of the Treaty.

Although the High Authority may have been too positive in the fourth recital to its decision, when it stated that the accounts of an undertaking are indivisible, this cannot invalidate the decision adopted in this instance which, as is shown by the

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earlier correspondence between the parties, seeks to check whether factors con­ cerning the production of iron and steel are not to be found in the part of the ac­ counts which deals with the undertaking's engineering production.

Furthermore, it is not necessary to restrict the power of the High Authority to ex­ amine all the accounts of an undertaking whose production is mixed on the ground that it may divulge information which is harmful to such undertakings since, in the light of the duty of professional secrecy imposed on the inspectors of the High Authority, no vital interest of the undertakings is likely to be adversely affected by such a general examination.

C — Misuse of powers

The applicant wrongly maintains that the High Authority sought, by means of the contested decision, to transform the right to obtain information and, in particular, to have checks made, into a procedure which was inquisitorial in nature, in order to extend its powers beyond those laid down by the Treaty and that in this way it pursued an aim which it was not entitled to pursue under the Treaty.

This argument is not pertinent, since it fails to make clear what objectives outside

ACCIAIERIA DI BRESCIA v HIGH AUTHORITY

the scope of the Treaty the High Authority is allegedly trying to attain. Further­ more, it is not supported by any evidence and no evidence has been offered.

It must therefore be rejected.

THE COURT

hereby:

1. Dimisses the application as unfounded;

2. Orders the applicant to pay the costs of the action, including those of the application for the adoption of interim measures.

Donner Delvaux Riese Hammes Catalano

Delivered in open court in Luxembourg on 4 April 1960.