C-16/61

judgment of 12. 7. 1962 — case 16/61

4. The concept of comparability within the rules of the Treaty on the grounds the meaning of the ECSC Treaty is that other undertakings employ objective in nature and does not similar illegal devices or that it is in a permit purely subjective factors to be difficult situation when for the time

taken into consideration. The pro­ being there is an unfavourable

hibition of discrimination would economic state of affairs. The High otherwise lose its effect. Authority is justified in refusing to

find that these are mitigating 5. An undertaking cannot escape from circumstances.

the strict obligation to comply with

HIGH AUTHORITY OF THE EUROPEAN COAL AND STEEL COMMUNITY, represented by its Legal Adviser, Professor Giulio Pasetti, acting as Agent, with an address for service in Luxembourg at its offices at 2 Place de Metz,

defendant,

Application for annulment, or alternatively, variation of an individual Decision of the High Authority of 21 June 1961 imposing a pecuniary sanction on the applicant for infringements of Article 60 of the Treaty establishing the European Coal and Steel Community and of the Decisions of the High Authority implementing the said Article.

THE COURT

composed of: A. M. Donner, President, O. Riese (President of Chamber), L. Delvaux, Ch. L. Hammes (Rapporteur) and A. Trabucchi, Judges,

Advocate-General: K. Roemer Registrar: A. Van Houtte

30 September and 14 October 1959 on to banks, thereby granting unjustified reductions in the amount the company 'Acciaierie Ferriere e Modena' of 302 182 lire. Fonderie di (hereinafter called In the course of the proceedings 'Modena'), the High Authority found this charge was stated as meaning that the company had committed said that the bills issued by Modena certain infringements of Article 60 of the amounted to a smaller sum than that Treaty establishing the European Coal of the invoices and that the and Steel Community and of the reductions were made up of this Decisions of the High Authority Nos difference, from which bank 30/53, 31/53, 1/54 and 2/54 relating to discount charges must be deducted. practices prohibited by Article 60(1) of

(c) Modena made to its depositary the Treaty and to the conditions for Orsi an allowance amounting to publicizing price lists and conditions of 4 258 998 lire which was not sale applied by undertakings in the justified under the conditions of its steel industry. price list. The total extent of the 2. According to the contested Decision High under-quotations which the these infringements consist of the have Authority thus claims to fol wing: 8 163 829 established amounts to

(a) According to Modena 's accounts, lire. there were paid to it the amounts 3. By a registered letter dated 20 invoiced in February and March July 1960 the High Authority notified 1959 to its customer Sidercomit Modena, pursuant to Article 36 of the namely 6 338 036 lire, whereas in effect Sidercomit paid only 5 950 1 79 Treaty, of the abovementioned

company, pursuant to Article 64 of the between, on the one hand, the prices

Treaty, a fine of 8 000 000 lire payable invoiced and entered in the accounts and, within thirty days from the date of on the other hand, the total amount of notification of the Decision. The Decision the payments made by Sidercomit by was notified to Modena by registered means of a number of cheques made out

letter dated 30 June 1961 which was to the order of Modena. There is received on 2 July 1961. nothing which prohibits payments being b. On 2 August 1961 Modena lodged made in part only by cheque if the in the Registry of the Court an applica­ balance is paid in cash, as in the present tion for the annulment or variation of the case.

said Decision. Moreover, the fact that this balance was not paid directly by Sidercomit, but II — Conclusions of the parties paid in cash on its behalfby a third

party, in this by one of the share­ case

The applicant claims that the contested holders in Modena, does not render the Decision should be annulled or, altern­ transactions in question discriminatory atively, varied in so far as the Court does within the meaning of Community law. not consider that it should be annulled. In fact, although the holders of the

Article 80 and Decisions Nos 1/54, There can be no question in this case

2/54, 30/53 and 31/53, by incorrectly of preferential treatment being accorded the concept of illegal by Modena to Sidercomit. applying reductions. Ihere is no rule which prevents a legal

According to the applicant the person, even if he holds shares in a

commercial transactions between itself steel company, from personally coming and Sidercomit are perfectly in order: to the assistance of a customer of that

the sums shown in the accounts as company in certain circumstances by receipts correspond exactly with the granting that customer credit or a

invoice prices which, in turn, comply subsidy which does not affect the assets

is to be inferred from the conduct of that relationship in the books of account

company. cannot possibly be accepted as a lawful The general mazim nullim crimen sine practice. It is, on the contrary, a lege must therefore, to the deception aimed at preventing the according applicant, entail the annulment of the discovery of the illegal reduction. contested Decision. 2. The applicant submits as a subsidiary The defendant points out that the point that the contested Decision takes applicant does not dispute the facts. no account of the concept of 'non-

Sidercomit paid to Modena by cheque comparability'. Even allowing that the sums less than the prices invoiced for between certain share­ relationship four purchases made during the period holders in Modena and Sidercomit had investigated; nevertheless in its books a bearing on a commercial transaction the applicant entered as receipts cash framework within the of the ECSC, amounts equal to those invoiced, as if preferential treatment accorded to a Sidercomit had paid the price in full. buyer who cannot be compared with

It is contended, but has not been proved, those to whom the applicant usually by the applicant that the difference sells its products must nonetheless be between the prices due from Sidercomit regarded as lawful within the context of and the payments made by it, which the Treaty.

constitutes the reduction granted it was Sidercomit is not a buyer to be compared made to Modena by one of its principal with other consumers or customers, shareholders in his own name. private dealers since it is a commercial

tne irregularity ot the reductions normally buy steel products on the

and their concealment are thus private market, so that a commercial

established. transaction of this kind constitutes

What matters in the present case with beyond any question a departure from

to the prohibition of discrimina­ normal procedures. regard

tion is the price paid by Sidercomit and Furthermore, according to the applicant, not that which was received by Modena. it is established that in practice

customer simply because it is a State means of defence which that undertaking

agency is contrary to the fundamental could have used would mean reversing principle of equality before the law. the burden of proof and making it When engaging in competition in the impossible for the High Authority to

industrial field, the State is subject to act.

the same rules of law as every other The applicant's answer to this objection

undertaking. From the Community is that in any event it is not possible to

point of view all undertakings which are exclude an argument adduced before the

failing to take account of an essential alignment at the time the contract is feature of the present case. This essential concluded. The concept of alignment feature is that the prices paid directly by within the meaning of the Treaty Sidercomit are within the limits of is not one of form but of substance. authorized alignment on the most It is the effect of alignment, and that favourable prices quoted in the price alone, which must be taken into con­

lists of competing undertakings. They sideration. In any event the mere failure do not exceed the extent laid down in to declare a correct alignment, as in the Article 60(2) (b) of the Treaty 'enabling dis­ present case, and the granting of the quotation to be aligned on the price criminatory reductions ought not to be list, based on another point which penalized in the same way. secures the buyer the most advantageous The defendant replies that an undertaking delivered terms'. which has failed to comply with its In support of this argument the applicant price list by granting reductions cannot produces the comparative figures of the on alignments on its competitors'

rely were paid to it by prices in order justify its conduct once amounts which to Sidercomit and the minimum the reductions have been discovered. permissible invoice prices in respect of The applicant's argument mean would

the same deliveries based on the price failure that the by an undertaking to list of the company known as 'Acciaierie, with its price list by reason of comply Ferriere, Trafilerie Cravetto'. the grant of reductions would be legal or In this connexion the defendant first illegal in eventum, that is to say according raises the question whether the failure to whether or not the undertaking to factors take account of which were succeeds in discovering a hypothetical not adduced by the applicant at the competitor who has charged a price

less on the prices which they charge. the arguments which the applicant

On the other hand, the phrase 'enabling draws from the concept of alignment

be in the aligned'

the quotation to used amount to an admission and contradict

Treaty proves that alignment on the its first submission, since it thereby price list of a competitor cannot be acknowledges that it has charged prices effected after a contract of sale has been which did not comply with its price

concluded in order to justify a reduction list. Reductions which constitute a gift

necessarily be distinction is by any sale'

of and these must such required

known in advance in order that they standards prescribed by law or by any may be applied in the case in point. rule of accounting technique or practice. Thus, parity of basic prices is not Furthermore, there is no rule of Com­ sufficient to ensure equality of treatment munity law which specifies aggravating if the conditions of sale are different. circumstances such as those quoted by Following this line of thought the the High Authority defendant points out—and this applies The applicant is not guilty of any equally to the documents produced by infringement of Article 47 of the Treaty. the applicant in connexion with the other It did not knowingly furnish any false infringements—that the invoices sub­ information and accounting documents 'information' mitted to the Court by the applicant are not furnished to an

reveal a different parity from point of investigator, the only case referred to in that laid down by the price list on which Article 47. In the present case there is it purports to have been aligned. This no falsification of documents but at most implies buyer different is quite that the paid something 'unspecified', which transport charges from those shown in different. Thus it has never acted with the competitor's price list. There are an animus dissimulandi and no charge of

still further discrepancies and concealment may be made against

inaccuracies in the documents produced it.

Proceeding to a more detailed analysis escaped the surveillance of the organs

fact that two legal relationships which of the Community. should have remained separate were

together in the accounts. This (b) Other mitigating circumstances are merged

concealment could not have been dis­ subjective in nature. The applicant had

covered if the inspectors had not had the just come through a difficult period

to Sidercomit's during which it had reorganized its opportunity examine

consists of the entry in the accounts of justify the indirect assistance which the applicant received from one of its the whole of the invoiced amounts, as

shareholders at the cost of personal having been paid by Sidercomit when Sidercomit only paid part. sacrifice on his part. The fact that the

High Authority took account of only The contested Decision does not one factor, which it considered to be contravene the law as the applicant an aggravating one, and failed to take maintains. On the contrary, it correctly mitigating circumstances into considera­

applies the rules of the Treaty. tion constitutes a patent misuse of power 5. The applicant submits as a further on its part.

subsidiary point that the High Authority The defendant replies that the short-term was guilty of a misuse of power 'consisting economic difficulties referred to by the of a failure to give reasons for its Decision, applicant could not justify prohibited

of incomplete appreciation of the In an discriminatory practices. order to

(a) These circumstances are, first of needs and to the system of alignment.

all, objective in nature. The actions As regards tne objective factors, the

for which one of its shareholders is High Authority observes first that the

blamed were necessary in order to fact that not all the undertakings which enable Modena indirectly, upon con­ committed infringements of the Treaty cluding a certain number of contracts, were proceeded against cannot be to overcome the difficulties created at the regarded as a mitigating circumstance

time by the extremely serious short- and secondly that none of the under­

term economic situation then existing takings in competition with the applicant

infring­ draw bills before peting undertakings which were the invoicing pro­

ing the rules for publicizing prices and for cedures were complete. The amounts of

aligning quotations. Furthermore, a these bills were estimated amounts.

reduction of the prices in its list would Certain customers did not pay the

have caused it to suffer psychological balance, despite repeated requests. Since damage in relation to its customers, recovery by legal proceedings seemed particularly as this would have occurred to be too expensive and ineffective, the

in a critical period not only as regards its applicant was obliged to accept the

not as grounds of justification. In so scribed time.

doing it concedes by implication that the The defendant observes that the contested preconditions for legitimate self-pro­ Decision does not so much criticize

tection are absent in the present case. the applicant for not having done all it

Moreover, the defendant denies that the could to recover outstanding balances—

undertaking could be discredited by a submission which, moreover, it does list for adapting its price and reducing its not support with any real proof—as

prices and maintains that the opposite having systematically granted excessive is true. However that may be, the reasons periods of time for payment, even as much

lawful. The acceptance of payment by bills of exchange is both in accordance 2. The applicant submits as a further with commercial practice and is provided subsidiary point that the contested

for by the conditions contained in its Decision wrongly applies the concept

price list. The increased charges for of alignment on the list prices of

deferred payment stipulated in its competing undertakings. In this con­

price list were correctly invoiced. nexion it maintains that, even if one

In fact the applicant was obliged in only takes account of the amount

framework of the variations legally allowed in respect of alignment. 4. The applicant further maintains that, The applicant supports this supposing it were possible to show that contention

by producing as an example, in respect an infringement did exist, the High of one of the transactions in dispute, the Authority should at the very least have prices as they would have been invoiced taken account, by way of mitigating on the basis of the price list of 'Lavora- Vari' circumstances, both of the serious state zione Metalli of Brescia, which are the of the market, of which company lower than those actually paid by one and of the crisis of was a victim, of its own customers. organization in which it was involved. The defendant counters this by repeating The defendant rejects this argument for its argument based on the irregularity, in the reasons expounded connexion

so far as the Treaty is concerned, of with the first charge. a posteriori alignments. It seeks to prove

by means of detailed figures that in any C —

As to the third charge event there has not been any real

alignment in the case in point. (Exemption from transport costs)

exist, or invoice'

being terms which in reality that, in respect of 27 invoices relating cover one and the same illegality, namely to the period in question, the prices

discrimination which is not permitted which it actually applied are far in

by the Treaty, since it amounts to excess of those charged by various

subjecting comparable transactions to competing firms. dissimilar conditions. The defendant answers this plea with

Furthermore, according to the the argument that an a posteriori align-

failed to take account in its Decision, which the applicant has a special

even by way of mitigating circumstances, relationship.

of the situation which it had described. The dejendant, while pointing out that The defendant refers to the reply which it the applicant never raised this argument gave to this argument of the applicant during the administrative inquiry, con­

with regard to the first two charges. tends that the protests of bills produced

by the applicant do not constitute

D As to the fourth charge impossibility of —

T he firm Orsi is to some extent a buyer be taken of the mitigating factor should

not comparable to other customers of constituted by the alignment authorized the applicant, since it is connected with by Article 60 (2)(b) of the Treaty. the latter by special commercial relations It supports this argument with

(Modena and Orsi derived their origin documents which are intended to show

from a single undertaking as the result that the prices which it invoiced, net of of the distribution of an transport costs, are considerably higher estate).

The dejendant claims that it does not than those which could be invoiced on

understand the legal basis of the concept the basis of the price list of the Ilva 'non-comparability' of as conceived by company.

the firm Orsi. The latter firm was at the applicant's own situation, even by way time on the verge of bankruptcy. Legal of mitigating circumstances, especially proceedings for the recovery of the as its relations with Orsi were particularly

balances had no prospect of succeeding close.

and would only have precipitated a The dejendant denies that it failed to take

JUDGMENT OF 12. 7. 1962 — CASE 16/61

the mitigating circumstances into caused any appreciable disturbance of

consideration. the market.

imposed in other cases. limits which the Treaty placed on its

In fixing the amount of the fine the discretion and did so precisely because High have it took account of all aspects of the case. Authority should taken

account in particular of the fact that the applicant is a modest IV Procedure undertaking whose —

integrity and responsibility cannot be disputed. Besides, if there were an The procedure followed the normal

infringement, its actions could not have course.

Grounds of judgment

These infringements were set out in the contested Decision by charges under four separate heads relating to specific cases ascertained by the inspectors of the High Authority.

Before considering whether these charges are well founded, it should be noted that ever since the administrative proceedings during which the

applicant submitted its comments and which, pursuant to Article 36 of the

Treaty, preceded the contested Decision, the applicant has acknowledged the truth of the facts upon which these charges are based.

The minutes of the relevant discussion between the High Authority and the applicant were produced at the hearing and the Court is entitled to

draw from them such conclusions as it sees fit.

Sidercomit, was entered in Modena's accounts at its list price and that the accounts show that price as having been paid in full by Sidercomit, and that on the other hand this was not the truth of the matter, since part of the

price was paid, on behalf of Sidercomit, by a third party, a substantial

shareholder and managing director of Modena, allegedly by way of a

donation for the benefit of Sidercomit with the sole aim of enabling a contract

to be concluded with such an important customer.

According to the explanations furnished by the applicant it was Sidercomit which benefited from this generosity and tacitly accepted it.

'price the meaning of Article 60 of the Treaty. charged'

within

An agreed diminution in price as against the list price, granted by a seller to a buyer, constitutes a reduction.

A donation made by a person who is not a party to the contract of sale is independent of and extraneous to that agreement if, as in the present case, the alleged donor is in fact acting as an intermediary solely for the benefit of the seller.

In any case, the fact that the applicant had little faith in the legality of its conduct is amply demonstrated by its attempt to conceal the scheme by means of an accounting device designed to deceive the inspectors by making it appear that there was one payment only and that this was made by Sidercomit.

This submission is therefore unfounded.

This submission is therefore unfounded.

3. As a further subsidiary point Modena contends that in any event the

amount actually paid by Sidercomit falls within the limits of its list prices, when reduced to their equivalent at other points which secure the buyer the

most advantageous delivered terms; that in fact the amounts paid by Sidercomit alone are still above the minimum price which could have been

applied to it on the basis of the price list of the company known as 'Acciaierie, Cravetto'

Ferriere, Trafilerie which it quotes as an example; and by that

(b) However this submission is unfounded in law.

In the matter of prices the ECSC Treaty is in fact based on two essential principles: publicity and, arising out of this, non-discrimination. For this

reason Article 60(2) (a), in particular, provides that price lists and conditions of sale must be made public. The right to align quotations constitutes an

exception to the principle of list prices, but it must not divest that principle of all effect through the exclusion of publicity by means of alignments carried out a posteriori.

Article 60(2) (b) of the Treaty provides that it is the quotation made to the customer which must be aligned on a price list based on another point,

MODENA v HIGH AUTHORITY

4. Lastly, the applicant submits that the Decision of the High Authority did not fully evaluate the facts and constituted a patent injustice tantamount to a misuse of power in the form of an unreasonable act, in that the High

Authority did not take account in its Decision of the special circumstances of the case. These should have been taken into consideration either as

grounds of justification or as mitigating factors.

With regard to the objective features of the situation, the applicant quotes

the short-term economic difficulties on the Italian market and claims that

it could only have overcomeby contravening the provisions of the these

one time or another.

Accordingly it is not possible from the foregoing to find any grounds of justification.

JUDGMENT OF 12. 7. 1962 — CASE 16/61

II — The second charge

(Reductions allowed on payments by bills of exchange)

1. According to the Decision, the applicant accepted payments by bills Of exchange with varying maturity dates and correctly applied the increases

which were prepared after the issue of the bills. It proved to be impossible to recover the balances due to Modena, thus established ex post facto. The

customers adhered to the original sums shown on the bills, and it was

difficult to go back on these figures owing to the sensitivity of customer

reaction. Furthermore, the issue of supplementary bills might have damaged its credit with the bank. In any event in view of the refusal by customers to

pay the balances, the applicant would have had to incur legal expenses out of all proportion to the amounts to be recovered.

It was this difference, according to Modena, which was entered in its books

Lastly, the letter from an advocate stating that the legal expenses of recover­

ing small sums bear no relation to the interests concerned amounts to no

MODENA v HIGH AUTHORITY

more than a general assertion and gives no detail relevant to the present

case. Moreover, it would have been possible to record quite unambiguously, by books of account which corresponded with the facts, the precise reasons for remitting debts due from customers.

The applicant's argument is therefore unfounded.

III —

The third charge

(Exemption from transport costs)

1. The applicant does not in fact dispute that, contrary to the provisions of its price list, it took over the transport costs relating to the contracts

referred to in the contested Decision.

2. In this case too it relies a posteriori on a correct alignment on price lists of competing undertakings. On the basis of these lists its own prices were not below the minimum prices permitted by its alignments.

granted to its depositary Orsi did not contravene these provisions and could not constitute illegal reductions.

JUDGMENT OF 12. 7. 1962 — CASE 16/61

2. In the first place it contends that its transactions with Orsi were concerned with a buyer which was not comparable with its other customers because

of the personal connexions between the shareholders of the two firms which derived their origins from a single family business as the result of the

distribution of an estate.

This contention must be rejected. The concept of comparability referred to

bills drawn upon after establishing that Orsi was insolvent by protesting the it.

The notices of protest produced in the proceedings are sufficient proof that Orsi's credit was very precarious. Bills to the value of 8 131 580 lire, all

drawn by Modena, had been protested for non-payment. The publicity given to Orsi's indebtedness as a result of the notices is enough to dispel the

suspicion of connivance with the applicant. A balance of outstanding debts amounting to 4 258 998 lire, which may in the circumstances be regarded as irrecoverable, remained outstanding.

It is clear from these considerations that this is not a genuine case of Modena's

granting reductions but rather of a total waiver of Orsi's debit balance. This state of affairs constitutes a remission of debt and not a reduction, which presupposes an allowance granted on the occasion of and in respect of specific contracts.

Although it declared that, as regards the first charge, false information had knowingly been entered in the applicant's books of account, the High

Authority confined itself to describing this, quite rightly, as a device on the

part of Modena but did not infer, to the further detriment of the applicant, that any aggravating effects had thereby resulted.

2. Modena's criticism of the High Authority for refusing to admit the existence of mitigating circumstances cannot be accepted. Neither the

fact that other undertakings used similar devices to those noted in the

case of the applicant nor the difficult situation in which it claims to have found itself owing to the generally unfavourable short-term economic

charges laid against it in the contested Decision. However, in view of the

size of the amounts in dispute in each of the four charges, it is appropriate to apply Article 69(3) of the Rules of Procedure and to order the applicant

to bear three-fifths of the defendant's cost.

The applicant has put forward no conclusions to the effect that the other party be ordered to pay the costs. Accordingly there are no grounds for ordering the High Authority to pay part of the costs.

On those grounds,

Upon reading the pleadings; Upon hearing the report of the Judge-Rapporteur; Upon hearing the parties; Upon hearing the opinion of the Advocate-General;

against the applicant company and grants the application

as regards the fourth charge;

2. Reduces to 4 000 000 lire the amount of the fine imposed on the

applicant by the contested Decision;

3. Orders the applicant to pay three-fifths of the cost of the

defendant.

Legal Discussion .. . . . . . . . . . . . . 310

1 — Is the fine justified in principle? . . . . .. . . . . . . 310

1. First argument of the Applicant .. .. .. .. .. 310

2. Second argument of the Applicant . . . . . . . . . . 312

3. Third argument of the Applicant .. .. . . . . . . 314

4. Fourth argument of the Applicant .. .. .. .. .. 318