C-36/59

JUDGMENT OF 15.7.1960 — JOINED CASES 36, 37, 38 AND 40/59

I — In Joined Cases

1. PRÄSIDENT RUHRKOHLEN-VERKAUFSGESELLSCHAFT mbH, having its registered offices at Essen (Case 36/59),

2. GEITLING RUHRKOHLEN-VERKAUFSGESELLSCHAFT mbH, having its registered offices at Essen (Case 37/59),

3. MAUSEGATT RUHRKOHLEN-VERKAUFSGESELLSCHAFT mbH, having its registered offices at Essen (Case 38/59),

represented respectively by their managers,

I. NOLD KG, a wholesale trader in coal and construction materials, Darmstadt, re- presented by its partner with personal liability, Erich Noldd, assisted by Georg Thomas, Advocate at the Frankfurt am Main Bar, and Josef Kübel, Advocate at the Bonn Bar, with an address for service in Luxembourg at the Chambers of Félicien Jansen, Huissier, 21 rue Aldringen,

v applicant,

GEITLING v HIGH AUTHORITY

High Authority of the European Coal and Steel COMMUNITY , represented by its Legal Adviser, Erich Zimmermann, acting as Agent, assisted by Professor Konrad Duden and Heinz Rowedder, both Advocates at the Mannheim Bar, with an address for service in Luxembourg at its offices, 2 place de Metz,

defendant,

Application for the annulment or, alternatively, for a declaration of the inapplica­ bility of Article 6 (1) and (2) of Decision No 36/59 of the High Authority of 17 June 1959;

I — As regards Cases 36, 37 and encies to wholesalers in coal: the trader 38/59 must have sold the following amounts on the common market during the pre­ A — Conclusions of the parties ceding coal year: at least 60000 metric tons of solid fuels from basins in the The applicants claim that the Court should: community and of gas coke. '(A) Annul Decision No 36/59 of the High Authority No 40 of 8.7.1959, p. 736) in 2. The High Authority has not authorized so far as that decision rejects the re- the following quantitative requirements quest by the applicants on 11 and 12 for direct supply to first-hand wholesale December 1958 for an extension for a traders: further year of the authorizations al­ ready granted by the High Authority (a) the sale, during the preceding coal concerning the commercial rules year, of 30000 metric tons of coal, coke, which the applicants have adopted: patent hard coal fuels, brown coal bri­ quettes, semi-coke derived from brown 1. The High Authority has not authorized coal or bituminous coal originating from the following requirement as a condition the producer basins of the Community for direct supply by the joint selling ag­ and gas coke in the sales area where the

JUDGMENT OF 15.7.1960 — JOINED CASES 36, 37, 38 AND 40/59

The facts may be summarized as follows: Finally Article 14 of Decision No 17/59 or­ ganizes the control by the High Authority By its Decisions Nos 5/56, 6/56, 7/56 and over the various organizations and mining 8/56, dated 15 February 1956, the High Au­ companies concerned, with a view to veri­ thority authorized the creation of various fying whether they keep within the bounds organizations for the joint sale of coal from of the authorizations granted, and in order the Ruhr. These authorizations, and the to examine whether a revocation or a mod­ agreements and resolutions of the compan­ ies concerned were limited to 31 March ification of the authorizations is necessary for the purpose of reorganizing the sale of 1959. The mining undertakings extended coal from the Ruhr. the length of the validity of their agree­ ments and resolutions until 31 March 1960 By letter dated 21 February 1959 the Pres­ and asked the High Authority to authorize this extension. ident of the High Authority forwarded a copy of Decision No 17/59 to the three ap­ plicant joint selling agencies. The letter The High Authority, considering that its draws the attention of the addresses to the authorizations had not led to the expected principles established by the decision and results and in particular that the three joint tells them that they will shortly be informed selling agencies had applied a uniform sales of the names of the officials whose duty it system contrary to the provisions of the will to be carry out the inspection provided Treaty, decided to put an end to the sales for by Article 14 of the decision. system applied up to the present, while making provision for a transitional period. On 15 March 1959 the three joint selling It thus granted the extension requested un­ agencies, Geitling, Mausegatt and President, til 31 March 1960, but amended and added and the mining companies of the Ruhr ba­ to its authorizations on several points. sin lodged with the Court an application for These matters are covered in decision No the annulment (Cases 16/59, 17/59 and 17/59 of 18 February 1959. 18/59) of certain provisions of Decision No

It should also be borne in mind that the C — Submissions of the parties three joint selling agencies lodged an appli­ cation for an interim measure (Case 19/59 1. On admissibility R), namely suspension of the operation of Articles 11 (application of the quantitative The defendant does not dispute the admis­ criteria fixed by the High Authority for au­ sibility of the application. thorizing wholesalers to make direct pur­ chasers from the joint selling agencies) and The applicants state that the contested deci­ the second sentence of Article 14(2) of De­ sion is individual in character and that it cision No 17/59 (dispatch of officials of the concerns them directly, so that they can High Authority with the duty of making in­ raise the grounds set out in the first para­ quiries concerning the reorganization of the graph of Article 33 of the Treaty. methods of sale of coal from the Ruhr) until such time as the Court had delivered judg­ 2. On substance ment in Cases 16/59, 17/59 and 18/59. (a) On the submission of infringement of an This request for a suspension of operation essential procedural requirement was dismissed by the Court (order of 12 May 1959). The applicants allege that the statement of the reasons for the decision does not carry On 12 February 1960, the Court delivered conviction and is inadequate in that it fails its judgment in Joined Cases 16, 17 and to mention the facts and considerations on 18/59. It noted the applicants' withdrawal which the decision was based. Thus review concerning point number 8 and declared by the Court under Article 65 of the Treaty that the other heads of their conclusions becomes impossible and Articles 5 and 15 were inadmissible. of the Treaty are infringed.

statement of reasons which complies with wholesalers retained by selling agencies the requirements of Articles 5 and 15 of the must also satisfy the requirements laid Treaty and with the case-law of the Court, down for their acceptance by the two other is open to review by the Court under Article joint selling agencies and that this situation 65. is contrary to the general principle of the in dependence of the three agencies. This er (b) On the submission of infringement of roneous assertion is not based on any reason the Treaty and manifest disregard for other than the fact that first-hand traders its provisions obtain their supplies principally from the coal from the Ruhr. This situation is due The applicants put forward a series of com exclusively to natural causes such as price plaints of infringement by the High Au competition and the transport situation and thority of Articles 5 and 65 of the Treaty. not to a restriction on competition within the meaning of Article 65 of the Treaty.

Its argu 3. The High Authority states that under ment is that those criteria have had the re the rules which it is authorizing, and taking sult that a certain number of wholesalers of into account the number of wholesalers ac average size have lost their status as first- cepted for direct supplies, neither the min hand traders. The said wholesalers had ob ing companies nor certain wholesalers will tained their supplies directly from the sales be able to control or limit the sales of a large organizations of the Ruhr basin before the percentage of fuels. Yet that assertion is creation of the Common Market. neither complemented nor supported, as it ought to be, by the finding that the previous Thus the High Authority takes the situa rules were capable of facilitating that con tion prior to the creation of the Common trol and limitation of sales over a sizeable Market as a yardstick for the present rules amount of fuel. and contravenes Article 65.

crimination. The traders already accepted 5. The only reason stated by the High are perfectly able to guarantee all the inter Authority for lowering criterion No 2 from ests of the applicants concerning sales and 30 000 to 20 000 metric tons is that but for it is therefore impossible to increase the that reduction certain wholesalers would be number of accepted traders. excluded who otherwise could have been accepted as first-hand traders because of the 2. The High Authority is wrong in saying scope of their activities. That line of reason that in practice most of the first-hand ing is incompatible with Article 65 (2).

general considerations and particular refu­ tations to the arguments raised by the appli­ The old criteria were discarded by the High cants. Authority because, first, they excluded a certain number of wholesalers of average Speaking generally, the defendant argues size which had received direct supplies for first that under the provisions of Article 65 a long time in the past, and, secondly, be­ it is for the applicants, who ask for a restric­ cause the aforesaid old criteria compro­ tive agreement to be authorized, to esta­ mised the independence of the three joint blish on sufficient evidence that they come selling agencies. Thus the High Authority within the requirements laid down by the has found that because of their level the old said article for obtaining the benefit of a der­ criteria had a restrictive effect which was ogation from the general principle whereby not necessary for the purpose of the joint- the agreements covered by Article 65(1) are selling arrangement that is to say, the im­ prohibited. For the High Authority's task is provement of distribution. It is natural, merely to note or to find that the prescribed contrary to what the applicants say, to take requirements are met and fulfilled in the into consideration the results of a practice particular case which is submitted to it. It ill in force for a fairly long period before the befits the applicants to complain that the establishment of the Common Market dur­ High Authority has not produced clear, ing which a limit of 6 000 metric tons was relevant and concrete facts, proving that its applied, in forming an opinion on how'res- decision is well founded, when they them­ trictive certain criteria are. selves have not produced sufficient factual evidence enabling the High Authority to The applicants complain that the High find or to note that the evidence in question Authority has not taken into consideration proves that the request for the authorization the fact that the bringing into force of the of a restrictive agreement is well founded. new criteria did not noticeably alter the number of traders accepted as first-hand Secondly, contrary to the applicants' asser­ wholesalers compared with the previous tion, the High Authority had the right and rules and therefore the reduction in the le-

Finally, the applicants allege that the High The High Authority alleges that in taking Authority infringed Article 5 of the Treaty into consideration the experience of the in refusing to authorize their agreement, years preceding the establishment of the common market in coal and steel when set­ thus exercising a direct action on the mar­ ket which was not required by the circum­ ting the authorized criteria it did not neces­ stances. This complaint cannot be accepted sarily contravene Article 65(2)(b) and (c). because it is the joint selling agencies and This is first because from that experience not the High Authority that exercise a the High Authority only drew one of the direct action on the market, and moreover, numerous factors which it thought fit to the second paragraph of Article 5 expressly take into account together with many confers upon the High Authority the task of others. A further reason why the said article ensuring the establishment, maintenance is not necessarily contravened is that there and observance of normal competitive con­ would not appear to be any provision pro­ ditions, and this is why it has refused to ap­ hibiting the High Authority from making prove the proposed agreement, as it is in­ such an investigation in order to help it de­ cide whether or not the criteria fixed in the compatible with the requirements of Article 65(2) of the Treaty. contested decision, or those proposed by the applicants, meet the legal requirement The defendant asserts that the applicants that they must not be more restrictive than wrongly attack the case-law of the Court in is necessary for improvement in distribu­ Case 2/56. It is a fact that 'the High Author­ tion. ity is not required to alter the contents of an agreement which is submitted to it in order The High Authority argues that the appli­ for it to qualify for authorization’ (Rec. cants are mistaken in asserting that the test 1957, p. 43). of being 'not more restrictive than is neces­ sary' does not apply to interrelated agree­ Thus the High Authority could have purely ments constituting a cartel which are not and simply refused the authorization re- intended to bring about an appreciable im­ quested since the applicants have not pro­ provement in distribution.. For such an in­ duced evidence that their agreement fulfils terpretation is based on the German version the conditions set out in Article 65 (2) of the of Article 65(2)(b), the wording of which Treaty. Nevertheless the High Authority does not give full force to the thinking set

In the alternative, the applicant alleges that The defendant claims that the Court the High Authority has misused its powers should: in refusing to authorize the quantitative cri­ teria used prior to the contested decision. 'Dismiss the application as unfounded and The High Authority has used the powers of order the applicant to bear the costs.' authorization conferred upon it in order to attempt to impose a new set of commercial rules which are absolutely different from The facts the old rules. It has thus used its powers for an illicit purpose. The said refusal of author­ The facts may be summarized as follows: ization is attributable to an illegal purpose, namely the introduction of a policy of aid By Decisions Nos 5/56, 6/56, 7/56 and 8/56, for the middle classes, which is contrary to the High Authority has authorized the coal­ Article 65, for that article cannot constitute mining undertakings of the Ruhr basin to a basis for an economic or social policy. sell their products jointly through three sell­ ing agencies and through certain common The defendant denies these allegations. It institutions. argues that in lowering the level of the quantitative criteria it has only pursued one By Decisions Nos 16/57, 17/57 and 18/57, it purpose, namely observance of Article 65 of had reduced the quantitative criteria orig­ the Treaty. The High Authority is not inally authorized for the acceptance of who­ called upon and is not in any way attempt­ lesalers as direct purchasers of coal from ing to introduce a policy of aid for the mid­ those joint selling agencies. dle classes. However, the High Authority is bound to resist the proposition that power­ Since all the abovementioned decisions ful cartels on the market may limit direct were due to expire on 31 March 1959, the access by traders to their sources of supply High Authority on 18 February 1959 adop­ to a greater extent than is justified by the ted Decision No 17/59 whereby it prolonged facts, with the result that a certain number the validity of the rules authorized by the of traders of average size are prevented from aforesaid decisions but further the quantita­ obtaining direct supplies. tive critera laid down for the acceptance of first-hand purchasers from the three joint As regards Case 40/59 selling agencies.

After the judgment delivered on 20 March (aa) Infringement of an essential proced­ 1959 by the Court of Justice of the Euro­ ural requirement pean Communities in Case 18/57 between the same parties, annulling Article 1. The applicant argues that the reasons put 2(1)(2)(3) of Decisions Nos 16/57, 17/57 and forward for the contested decision enable 18/57 of the High Authority, the latter neither the Court nor the interested parties adopted Decision No 36/59 and annulled to ascertain whether the rules: Articles 5 to 11 of Decision No 17/59, re- placing them by similar provisions, while (a) contribute to an appreciable improve­ altering the paragraphs of the preamble ref­ ment in distribution; erable to those articles. (b) impose restrictions which go beyond C — Submissions of the parties what is necessary for achieving their purpose; 1. Admissibility (c) render it possible for the producers or In its statement of defence, the defendant traders to control or restrict the market­ does not oppose the admissibility of the ap­ ing of a substantial proportion of fuels; plication. However in its rejoinder, the de­ fendant alleges that the appplicant, in its (d) contravene the prohibition on discri­ reply (paragraph 2), has totally reversed the mination. order of its conclusions. Although the de­ fendant declares that it has no objection to The applicant argues that in order to prove make against this alteration, it points out that the authorized rules meet the require­ that the change materially alters the pur­ ments set out at points (a) and (b), the High pose of the claim originally submitted in the Authority ought to have based its reasons alternative that an exception be made to the set out in the preamble on numerical data. quantitative criteria of 20 000 metric tons In view of the fact that an improvement in and 6 000 metric tons in favour of the appli­ distribution can only become apparent cant because of its status as a former first- through an increase in sales or through a re- hand trader. duction in selling costs or through both at the same time, compared with the situation For this reason, the defendant is opposed to as it stood before the contested rules came the admissibility of this claim, arguing that in, the High Authority ought to have pro­ it is certainly inadmissible in so far as it calls duced evidence of these matters by means

of figures in the reasons for the said deci titative criteria established by Decision No sion, instead of contenting itself with giving 36/59 is liable to contribute to a significant reasons of a general order. Similarly, in or improvement in distribution (cf. Part II, 6th der to show that the authorized rules do not recital). It has also explained why those cri provide for restrictions which are more se teria are not too restrictive. It has in fact vere than is justified by their purpose, the stated the reasons that determined the High Authority ought to have justified the choice of the chosen criteria: the necessity correctness of its action on the basis of for the sales of coal of a first-hand trader numerical data which alone make it possi reaching a given quantity; the line to be ble accurately to calculate the effects of the drawn between first-hand wholesalers com new rules and to explain why the quantita pared with trade at lower levels; the finding tive criteria chosen by the High Authority, that before the establishment of the com (20 000 metric tons and 6 000 metric tons) mon market a limit of 6 000 metric tons was must be considered as fair and why it was applied in extensive areas of German terri impossible to set still lower levels. tory (cf.

Nor, in erical fact appearing in the preamble con omitting to put figures on the effects of the cerns the limit of 6 000 metric tons. It den rules and on the probable effects of the new ies, however, that the said amount was re rules, does the contested decision permit quired in all the sales areas because, on the the applicant to adduce pertinent reasons in contrary, the factual situation and the quan support of the other submissions that it titative criteria applied in the various sales might have an interest in submitting. areas had always been unequal. Starting from these premises, the applicant The defendant objects that it cannot include argues that: in its decision detailed predictions as to the effects of a set of rules because to do so (a) The High Authority has accepted the could render its work excessively cumber proposition that the previous decisions some and would, moreover, be impossible were based on an erroneous assessment in most cases, as in the present case.

Numerical data would have meant that any interested quantitative criteria. In any event, accord party could have checked them. A gen ing to the defendant, the reasons for the eral statement of reasons must not be contested decision are sufficient for review confused with the publication of mere by the Court to be possible, and the discus general considerations. It was not sion as to the quantitative effects can be re- enough to say that the old criteria had served to the proceedings before the Court. effects that were too restrictive; the nature and the extent of those restric The defendant states, furthermore, that it tions should also have been stated. has already indicated in its preamble the reasons why the maintenance of the quan (c) It should also have been proved that the

authorized restrictions led to a real and as second-hand traders. As regards second- significant improvement in distribution hand traders it is not possible to follow their because otherwise they would have sales because there are so many of them been incompatible with the Treaty. It is (about 500 in the Federal Republic). Nor do not even possible to examine what the the joint selling agencies have this informa High Authority means by improve tion because they only come into contact ment in distribution. If what is meant is with first-hand traders. an increase in turnover, evidence should have been forthcoming showing Finally, the defendant again asserts that why that increase could be the result of sufficient reasons stating why the new rules fewer and not (as the applicant thinks is contribute to an improvement in distribu the case) more first-hand traders. If tion have been given in the preamble.

Thus, under the According to the applicant, to bring about a guise of a set of general rules, a decision strict separation between first-hand whole has been taken which concerns the ap salers and second-hand wholesalers is not plicant alone. It complains that the what the joint selling agencies are trying to High Authority has failed in its duty to do. Their real purpose is to do away with the weigh the facts, because, in those cir dividing line between producers and first- cumstances, the contested rules cannot hand wholesalers by practically eliminating possibly bring about significant im wholesalers independent of the collieries. provements in the distribution of coal. That in turn means that in eliminating To these arguments the defendant objects the applicant the High Authority is at that at the time when it granted the author the same time creating a restriction ization in question, that is to say, before the which is more severe than is required by end of the coal-marketing year 1958-1959, it's purpose. it did not yet have figures available con cerning the turnover of first-hand whole Improvement in distribution is a condi salers for that period and that, therefore, it tion precedent for authorization.

At all events quirements for acceptance as first-hand the commercial organization necessary traders are willing to give up their activities for the sale of 4 000 or 5 000 metric tons

of coal suffices to class the trader as a wishes to be accepted, although each wholesale trader. joint selling agency has only certain products available. After mentioning the problem of the sale of brown coal, the applicant denies It sees a further contradiction in the the proposition that a trader may be re reasons given in Decision No 36/59 for quired to sell brown coal as well in order the limit of 20 000 metric tons, in that to be accepted as a first-hand trader. the High Authority makes special ref erence to past usage in justification of (c) It asserts that the quantitative criteria in the criterion of 6 000 metric tons, say force in the sales area of the Oberrhei ing that such was the criterion used in nische Kohlenunion before the esta the Ruhr before the establishment of blishment of the Common Market the common market. Yet that very past could be achieved much more easily be usage speaks out against the new limit cause at that time no direct supply to of 20 000 metric tons which did not ex large-scale users took place, and the lat ist at that time. ter therefore had to go through first- hand traders.

There was justified before the entry into force fore, the criterion of 20 000 metric tons of the Common Market, is justified required for acceptance by a selling ag now. Moreover the fact that a certain ency is in reality a means, in practice, of number of traders have gone under making it necessary to purchase from may aggravate the crisis, for it may be the other joint selling agencies of the that their former customers stop using Ruhr. Accordingly, the existence of ge coal and go over to oil. nuine competition between those three joint selling agencies would appear at It argues that the authorized commer least to be doubtful. cial rules not only involve a restriction more severe than is necessary for their With a view to refuting the arguments of purpose, at least as regards the limit of the applicant, the defendant, after having 20 000 metric tons, but also involve dis stressed the position of the applicant and crimination against the applicant which the reasons for which it is excluded from is eliminated without justification. being a first-hand trader, bases itself in the main on the considerations relating to the It seems a contradiction between the applicant's special situation. justification of the criterion of 20000 metric tons given in the contested de It stresses in particular that: cision (p. 738), according to which that limit ensures that first-hand wholesal (a) The applicant fails to understand the ers shall have a large range of categories purposes of the double limit.

JUDGMENT OF 15.7.1960 — JOINED CASES 36, 37, 38 AND 40/59

The considerations of German territory. There can be no giving rise to the criterion of 20 000 possible justification for the applicant's metric tons is a distinction in functions attacking the limit of 6 000 metric tons to be made between the different stages merely because its turnover has now of commerce. There exist quite a few fallen. second-hand traders who manage to sell as much as and more than 20 000 (c) The fall in the volume of the applicant's business is not to be explained by the metric tons, as is proved by the fact that commercial rules organized by the High there have been thirty-nine new accept

That argu (d) The coal crisis and competition from oil ment was correct as regards the tonnage cannot explain the fall in the applicant's of 60 000 metric tons and it has in effect turnover. Moreover the general reduc been used by the High Authority (De tion in the consumption of coal is not cision No 36/59, II 9th recital), but it is comparable with the contraction of the not correct as regards the limit of 20 000 applicant's business. The very purpose metric tons. The reason for this is that, of the new rules was to favour direct ac although it is true that in Germany it is cess by independent traders. In fact, mainly coal from the Ruhr that is sold, since the new rules came into force sales of brown coal, coke and coal from thirty-nine new traders have been ac other basins may make up a sizeable cepted for direct trading. That number part of the limit of 20 000 metric tons.

the Ruhr. These facts suffice to refute the applicant's assertion that only trad In support of its alternative claim the appli ers connected with the collieries could cant argues that a distinction should be fulfil the necessary conditions. made between a new trader and an under-

taking that has long since had the status of the argument put forward on this point in a first-hand trader. To continue to make the procedure in Case 18/57 (Rejoinder, supplies available to the previous first-hand p. 8 et seq.). traders has no unfavourable or discrimina­ tory effects on anybody. First, wholesalers As regards the reference to German law, the at present accepted and continuing their ac­ defendant also denies that the applicant has tivities would not suffer any loss because a personal right to obtain supplies direct they would remain accepted and, secondly, from the joint selling agencies of the Ruhr because the conditions would not be the on the basis of the German legal system. In same as between wholesalers accepted up to fact German law does not impose any obli­ the present and any new candidate for ac­ gation to sell in the circumstances under ceptance as a first-hand trader by reason of discussion and therefore the applicant can­ the fact that the former have an acquired not have any right to make direct purchases situation which the latter do not. from the joint selling agencies. Further­ more, the exclusion of the applicant from In support of its right, in its capacity as a first-hand trading cannot in any way be as­ previous first-hand trader, to continue to similated to an expropriation. The High obtain supplies direct from the joint selling Authority states that at most one could agency, the applicant refers to German consider Article 26 of the Law prohibiting case-law and in particular to a judgment of restrictions on competition. According to the Bundessozialgericht. That judgment the defendant, that provision establishes says that Article 14 of the Basic Law of the the same principle as the one set out in Ar­ Federal Republic guaranteeing private pro­ ticle 65(2) of the Treaty, and thus it leaves perty also extends to rights protected under it open to sales organizations to make direct paragraph 823 (1) of the German Civil access by wholesalers subject to objective Code, and in particular to a 'commercial quantitative criteria. undertaking which is established and car­ ries on business'. Since it is a fundamental D — Measures of inquiry right which is involved, the applicant stresses the necessity of interpreting the By letter of 18 February 1960 the Court in­ provisions of the ECSC Treaty in such a vited the defendant to reply to six ques­ manner that they do not conflict with that tions. principle of national law.

The submissions put forward by these applicants, although drawn up for divergent aims, are strictly speaking analogous.

In order to avoid the possibility that two different judgments might lead to dis­ cordant interpretations, the Court deems it expedient to join the cases in question so as to deliver a single judgment.

II — Admissibility

The applications brought by the joint selling agencies of the Ruhr were lodged in compliance with the prescribed formalities. Their admissibility is not disputed and does not give rise to any objection by the Court of its own motion.

Therefore they are admissible.

The application submitted by the Nold undertaking is in due form and has been lodged within the prescribed period.

Moreover Community law, as it arises under the ECSC Treaty, does not contain any general principle, express or otherwise, guaranteeing the maintenance of vest­ ed rights.

In these circumstances, the alternative claim put forward by the Nold undertaking is not admissible, whereas the admissibility of the principal claim is not disputed by the defendant and does not give rise to any objections by the Court of its own motion.

HI — Substance

A — On the submission as to infringement of an essential procedural requirement

The joint selling agencies and Nold, each in respect of the elements of the con­ tested decision with which they are not content, put forward the submission of infringement of an essential procedural requirement, asserting that the necessary reasons are wanting or are faulty.

After prohibiting (Article 65(1)) cartels in a general way, the Treaty confers upon the High Authority (Article 65(2)) the power to authorize specialization agree­ ments or joint-buying or joint-selling agreements, but subjects the exercise of that power to a finding by the High Authority that the conditions set out in subpar­ agraphs (a), (b) and (c) of paragraph (2) are met.

It is evident that the combined effect of the criterion of 60 000 metric tons appear­ ing in each of the three agreements in question would in practice lead to a large extent to 'taking into account the Quantities bought from the other two joint sell­ ing agencies in each case' (Judgment in Case 2/56, Geitling v High Authority, Rec. 1957, p. 43). The said criterion therefore tends to prevent, restrict or distort compe­ tition between the joint selling agencies, and this renders it more restrictive than is necessary and permissible for the purpose of a scheme based on the neutral in­ dependence of the three agencies.

The agencies complain that the High Authority has omitted to state the reasons for which it did not even consider reducing this criterion.

Although it is true that the decision does not state explicit reasons on this point, it appears from the context of the decision that in the opinion of the High Author­ ity the other two criteria suffice to ensure an appreciable improvement in distrib­ ution, such that the point of balance between the favourable and unfavourable ef­ fects of the agreement is best obtained by abolishing the criterion of 60 000 metric tons and by maintaining, in principle, the other two criteria.

For these reasons the complaint is unfounded.

2. Maintenance in principle and the alteration of the amounts of the criteria of 30 000 (20 000) and 9 000 (6 000) metric tons

The Court considers that, in view of the interdependence of these two criteria, it is appropriate to examine the complaints concerning them together.

(b) Concerning the justification for reducing the amount of these criteria to 20 000 and 6 000 metric tons respectively:

generally speaking, and taking into account experience acquired during the course of the last few years, the amounts of the tonnages proposed by the agencies tend to give rise to commercial effects which are more restrictive than is necessary for an improvement in distribution (cf. third, fourth, sev­ enth, and'eighth recitals);

the effect of the amount of 30 000 metric tons is to exclude traders who, when the volume of their business is considered, may be regarded as first-hand wholesalers (cf. tenth recital);

the reduction of the amount of 9 000 metric tons is justified by the fact that prior to the establishment of the Common Market the selling organizations of the Ruhr allowed direct supply to any trader distributing 6 000 metric tons of coal from the Ruhr per annum (cf. eleventh recital);

therefore it was necessary to reduce the criteria proposed by the agencies be­ cause they were more restrictive than was necessary for the purpose of the agreements in question and because they made it possible for either the agen­ cies or the distributors to control or limit the outlets of an important part of the produce (cf. fourth, seventh and eighth recitals).

B — Although it cannot be denied that certain quantitative restrictions may 'make for a substantial improvement in distribution' in so far as they facilitate ef­ fective and rational sales, it remains to be seen whether the High Authority has shown first that the quantitative limits which it has authorized make for an im­ provement in distribution, secondly whether they are not more restrictive than is necessary for the purpose of the agreement authorized and, finally, whether con­ vincing reasons have been given for reducing the criteria from 30 000 to 20 000 metric tons and from 9 000 to 6 000 metric tons.

(e) Have sufficient reasons been given for the reduction of the 'agency coal' cri­ terion from 9 000 to 6 000 metric tons?

As to (a) The statement of reasons for the decision, after justifying the principle of quantitative criteria by asserting that they make effective and rational sales pos­ sible, explains the specific function of the 'Community coal' criterion using argu­ ments based on the extent of the traders' businesses, whereas in order to point out the value of the 'coal from the selling agencies' criterion, the High Authority does no more than state that the said criterion 'does not give rise to any objection of principle concerning the basis of furnishing supplies'.

From this it is to be concluded that in the opinion of the High Authority the spe­ cific purpose of the criterion of ‘agency coal’ is to reduce the distribution network, whereas the criterion of 'Community coal' serves a different interest, namely keeping certain distributors out of direct trading where they do not meet the con­ ditions required for being first-hand traders.

Turning to another matter, the High Authority, in its answer to the fifth question put to it by the Court on 18 February 1960, after stressing the fundamental dif­ ference, which indeed is not disputed, between wholesale and retail trade, asserts that 'as regards wholesale trade, that is to say, first-hand trading and second-hand trading, there is no difference as regards the customers'.

In that same document it is asserted that 'the reason for the distinction between those two categories is to promote the rationalization of distribution by limiting the number of first-hand traders with which the joint selling agencies deal directly'.

The independence of the three agencies is an essential prerequisite of the author­ izations for joint sales under discussion. Any restriction liable to jeopardize it must be prohibited.

The criterion of 20 000 metric tons, although less restrictive than the former cri­ terion, still has the advantage noted above although to a lesser degree.

In effect, the authorized agreements tend, through the mechanism of the 20 000 metric tons clause, to favour in general, or at least in fact, purchases of coal from the Ruhr, because if a trader does not purchase the 20 000 metric tons from one agency, while wishing to continue to purchase the minimum of 6 000 metric tons so as to. remain eligible for acceptance by that agency, he is forced, in most cases, to purchase the remainder of 14 000 metric tons from the other agencies.

Thus, through the combined effect of the three parallel agreements, the agencies mutually favour each other, and this is contrary to that competition which ought to exist between them and which is the very basis for the authorization granted.

Although it appears from information produced by the defendant in its answers to the questions put by the Court that a certain number of accepted traders have not been obliged to get themselves entered in the books of the three agencies in order to achieve the limit of 20 000 metric tons, it is to be noted that those par­ ticular traders not only sell coal but also brown coal and coke.

Since that possibility, or advantage, is not open to traders who only purchase coal, the latter are in most cases forced to purchase at least 20 000 metric tons from just one agency or to make purchases from the three agencies.

It results from the foregoing that the maintenance of the criterion of 30 000 (20 000) metric tons is not supported by sufficient reasons at law.

As to (d) As the Court has found above that insufficient reasons have been given for the authorization of the criterion of ‘Community coal’, the aforementioned in­ sufficient reasons do not render it any the more possible to assess the question whether the High Authority was justified and within its rights in reducing that criterion from 30 000 to 20 000 metric tons.

Therefore the complaint put forward by the agencies on this point must be accept­ ed and upheld.

As to (e) In support of the reduction of the criterion of 'agency coal' from 9 000 to 6 000 metric tons, the statement of reasons only says 'that this tonnage is est­ ablished taking into account the fact that prior to the establishment of the Com­ mon Market the agencies for the sale of coal from the Ruhr accepted for direct sup­ plies a wholesale trader distributing 6 000 metric tons of coal from the Ruhr per annum'.

This line of reasoning is irrelevant.

The mere reference to rules in force prior to the establishment of the Common Market is not conclusive because it is obvious that noticeably different situations are involved, and that without specific justification it would be wrong to treat as on the same footing:

B — The submissions as to infringement of the Treaty and misuse of powers

Taking into account the grounds set out above, it is not necessary to examine the other complaints made by the applicant parties with the exception of the com­ plaints made by the agencies concerning the criterion of 60 000 metric tons other than the complaint already rejected above, and the complaint of misuse of powers.

1. The complaint of infringement of the Treaty

The High Authority may only authorize specialization agreements or joint-buying or joint-selling agreements if it finds that the requirements laid down by Article 65(2) exist and are met.

The High Authority considered that it was its duty to abolish the criterion of 60 000 metric tons, having found that the said criterion tended to prevent, restrict or distort competition between the agencies, and that this not only meant that the authorized agreement was more restrictive than was necessary for its purpose but also that it did not meet the requirements of Article 65(2)(c).

The High Authority, having justified that abolition by a sufficient and appropriate statement of reasons, has not infringed the provisions of Article 65.

The allegation of the agencies cannot be entertained.

They do not produce proof that the new commercial rules have been imposed by the High Authority for a purpose other than that in respect of which powers of authorization have been conferred upon it by Article 65 of the Treaty.

Nothing proves, establishes or even suggests as against the High Authority that it pursued a policy of aid to the middle classes. No act is advanced in that regard by the agencies which gives a shadow of truth to their assertion. The fact itself that a rather small number of traders of average size can have access to the sources of production and are not excluded from direct supplies cannot of itself be evi­ dence of a policy of aid to the middle classes. Moreover, such a policy could only be presumed from a sufficiently specific set of conditions and circumstances which are lacking in the present case.

Therefore this submission is unfounded.

Costs

Article 69 of the Rules of Procedure provides that the unsuccessful party shall be ordered to pay the costs and that the Court may order that the parties shall bear their own costs in whole or in part where they fail respectively on one or several heads.

1. Declares that Applications Nos 36/59, 37/59 and 38/59 are admissible;

2. Declares that Application No 40/59 is admissible with the exception of its conclusions in the alternative;

3. Annuls Article 2 of Decision No 36/59 of the High Authority of 17 June 1959, in so far as it replaces Article 6 (1) and (2) and Article 9 of Decision No 17/59 of the High Authority of 18 February 1959;

4. Orders that in Cases 36/59, 37/59 and 38/59 the defendant shall bear its own costs and half of the costs of each of the applicants, the remainder to be borne by the latter;

5. Orders that the costs in Application No 40/59 shall be borne in the same proportions.

Donner Delvaux Rossi Riese Catalano

IV — The principal conclusions of the applications 450

1 — Translated from the French