C-17/61

JUDGMENT OF 13. 7. 1962 —JOINED CASES 17 AND 20/61

to take account of every difference individual subsidiaries, for it must

which may exist in the organization be recognized in law that the activity of economic units subject to the of the group takes place between action of the High Authority for fear legal persons who in law are parties

of fettering that action and rendering to the economic exchanges.

it ineffective. 5. Purchase as a criterion for the levy 3. An undertaking is constituted by a within the framework of the equaliza­ single organization of personal, tion scheme for scrap must be inter­ tangible and intangible elements, preted in a broad sense. In fact united in an autonomous legal entity, purchase must be identified with pursuing a given long-term economic transfer takes which place aim. every when the undertaking consuming 4. The creation of every legal entity in the scrap receives it from an outside the field of economic organization source in return for the fixing of a involves the establishment of a separ­ price. The fact of this transfer cannot ate econ­ undertaking; a particular be by a clause retaining avoided omic activity cannot be considered as ownership for the purpose of scrap forming a single unit in law when to be subsequently recovered. the legal effects of that activity must be 6. For the High Authority to be accused separately attributed to several distinct legal entities. This principle of discrimination, it must be shown also applies in the case of a group of to have treated like cases differently, disadvan­ undertakings controlledby a parent thereby subjecting some to inte­ company and having a closely tages as opposed to others without

and 20/61

HOESCH AG, having its registered office at Dortmund, represented by its Board Directors, assisted by Bernhard Aubin, professor of law at the of

University of the Saarland, Saarbrücken, with an address for service at the Chambers of Werner von Simson, advocate of the Düsseldorf Bar, Bertrange-Luxembourg,

applicants,

KLÖCKNER v high AUTHORITY

v

rejecting applications for exemption for the equalization contribution,

THE COURT

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

Advocate-General: M. Lagrange Registrar: A. Van Houtte

gives the following

JUDGMENT

JUDGMENT OF 13. 7. 1962 —JOINED CASES 17 AND 20/61

2. In Case 20/61 became separate companies in law, the The applicant claims that the Court applicants retained a 100% interest in should: them. Subsequently, in 1959 under the —

annul the Decision of the High German Law of 12 November 1956, Authority of 5 July 1961, notified to each of the applicants incorporated these

the applicant on 25 July 1961; subsidiaries into a single legal person

—

order the defendant to pay the costs, under its own name. even in the event of the applications 3. In the meantime the applicants had being dismissed. interpreted the term 'own resources' as The defendant contends that, in so tar bought'

des consommateurs de ferraille (OCCF) a well-established view that the concept

of 'own to the legal resources'

was allied (The Joint Bureau of Ferrous Scrap 'ownership'. The Court Consumers) and the Caisse de péréqua­ concept of of

tion des ferrailes importées (The Justice dismissed this application as (CPFI) Imported Ferrous Equalization inadmissible because the letter objected Scrap to was not a decision within the meaning Fund) were responsible for managing it. Under this the undertakings of the Treaty. scheme, referred to in Article 80 of the ECSC 4. By letter of 15 April 1958 addressed Treaty were liable to pay the required to the Office commun des consommateurs

contributions, the amount whereof was de ferraille in Brussels the applicant

calculated pro rata on the tonnages of Klockner-Werke AG maintained the bought scrap consumed by each under­ argument that it constituted with the

were parent companies responsible for tribution.

managing the business of several factories By Decision of 14 June 1961, contested

in the nature of subsidiary companies. by Application 17/61, the High Authority Before the implementation of the decar­ refused this request.

telization measures introduced by the By letters of 17 March 1958 and 24

Allies, these factories constituted opera­ September 1959 addressed to the High tional divisions which were under the Authority, Hoesch-Werke AG main­

legal control of Klockner-Werke AG tained that scrap moving between its and Hoesch AG. After the factories subsidiary companies represented 'own

refused this request. of the applicant Klöckner-Werke AC

III — Submissions and arguments In support of this opinion, the applicant

of the parties in Case 17/61 maintains that at the

relevant time, as a parent company, it

The submissions and arguments of the constituted with its subsidiary com­

parties may be summarized as folows: panies a single undertaking for the

duction in the various factories was The applicant in Case 17/61 puts forward dependant solely on its instructions. submissions against the individual Deci­ The management of the parent com­

sion which it contests, of infringement of pany was responsible for investigation the rules of law relating to the implemen­ of all matters of importance and prin­

tation of the Treaty and of misuse of ciple purchase and sale, it raises a pre­ concerning powers; alternatively, advertising and legal and tax questions, liminary objection of illegality against the basic general Decisions on the ground etc.; the managements of the subsidiaries were linked by a close personal relation­ of infringement of the Treaty. with the management of the parent The applicant in Case 20/61 puts forward ship company. And, finally, the integration the submission of infringement of the of the subsidiaries into the parent Treaty or of a rule of law relating to its out­ company was clearly evidenced implementation; alternatively, it raises an objection of illegality against the wardly by a uniform trade mark and basic general Decisions on the grounds by the drawing up each year of a consolidated balance sheet and a con­

of infringement of an essential proced­

solidated profit and loss account as well ural requirement and lack of com­

petence. as a single report by the management of the company and all the sub­ parent

for the purposes of corporation tax, concept of an undertaking cannot be trade tax and turnover tax. identified with that of a natural or

This argument is further confirmed by legal person because a private company its articles of association of 3 December possessing more of these attributes is

1954, in particular in paragraph 2, just as much an undertaking. The subparagraph 1, setting out the objects definition of an undertaking must not

of the undertaking. therefore be limited to considering The High Authority itself always re­ matters of form; economic considerations Klöckner-Werke AG its be taken into account. More­ garded and must also

subsidiaries as a single undertaking, as over if the High Authority's argument

can be seen particularly in the fact that be that in­ accepted only subsidiaries

allocations were simply for made not only undertakings independent in 'Konzern'

accounting purposes and did not imply law but also the itself as an

any concept of agency on its part. The economic entity should be regarded as

applicant also refers to the letter addressed undertakings. Further, it stresses that the AG'

to it from the High Authority on 19 'Klöckner-Werke group has always December 1956 in which the latter been regarded both in Germany and

expressly referred to Decision No 27/55 abroad as a single undertaking in of 20 July 1955 on information to be quarters associated with it. supplied by 'undertakings concerning their investments'. Moreover in Case (b) As to the nature of the parent

theless be treated as such because the production methods, production pro­

High Authority cannot be allowed to go grammes, the supply of raw materials, back on its own action (venire contra distribution and utilization of profits, factum proprium) . whilst the subsidiary companies had

According to the applicant, the pnnciples no freedom to act independently even laid down by the Court in Joined Cases in the simple matter of production.

KLÖCKNERITY HIGH AUTHORITY

The continuity of conditions of produc­ undertaking in the letter of 17 March tion in relation to the situation before 1958 to the OCCF. It contests the

the different factories of the firm of defendant's assertion that its former Hoesch AG were split up into several subsidiaries had had 'considerable subsidiaries was by affiliation ensured autonomy' and on this point refers to

High Authority, from which it emerges a producer undertaking for the purposes that the latter had always regarded the of the Treaty, because these judgments 'undertaking' Hoesch company as an are concerned with group undertakings and maintains that, even though the stripped of those attributes which give

Court were unwilling to regard the to Hoesch the character of an under­

applicant as an undertaking for the taking. In fact neither Breda nor Hoog­ purposes of the Treaty, the contested ovens is under the complete authority Decision should equally be annulled as and control of a parent company with its

being incompatible with the previous own separate legal personality in the

attitude of the High Authority. This same way as these subsidiaries. SNUPAT

High Authority conduct on the part of the was admittedly a subsidiary of Renault, has deprived the applicant of the oppor­ but Renault's principal object is car

out by its subsidiaries. The applicant sumers. The Court has already decided that it has that by legally stresses moreover clearly scrap supplied one

enunciated its legal standpoint on the independent undertaking to another

nature of the parent company as an legally independent undertaking form­

JUDGMENT OF 13. 7. 1962 —JOINED CASES 17 AND 20/61

ing part of the same group is also tions on proposed investments did not

bought scrap and therefore liable to present a uniform picture, the High Authority having taken a purely prag­ equalization.

to the same principles, and certain to seek the authorization of the High types of activity are reserved exclusively Authority when they contemplate

In the defend­ More­ to the parent companies. acquiring an ECSC undertaking. ant's view it is common knowledge that over the fact that the High Authority in cases of this kind parent companies did not object to the applicants' appear­

generally restrict themselves to co­ ing in Case 23/58 was not due to any

ordinating the business of their sub­ alleged recognition of the different sidiaries by means of general directives. applicant parent companies in that

The concept of an undertaking put case as undertakings by the High forward by the applicants moreover Authority, but was rather to ascertain would raise insoluble problems, having their views on the problem of equaliza­

regard diversity to the enormous within tion of scrap. For its part the Court the Community in the nature of relation­ did not need to go further into this aspect, ships between undertakings. To find an as the application was already inadmiss­

T­ he administrative practice followed in The defendant quotes a fetter of 17 the pastby the High Authority permits January 1957 from Hoesch to the no conclusions being drawn to the High Authority in which that company contrary. declared that, as a mere holding As regards the equalization contribution company, it was not engaged in pro­

for scrap, although correspondence was duction in way and maintained any undertaken and payments were met by that consequently it did not fall within the parent company, this was clearly Article 80 of the ECSC Treaty. The done on behalf of the affiliated companies defendant refers in addition to directives The declara- which alone were charged. concerning the affiliation agreement of

KLÖCKNER v HIGH AUTHORITY

26 September 1952, especially Point IV, conformity with the purpose of the

from which it appears that the role of scheme, which was to keep the market

the parent company was restricted to price for at the lowest possible scrap problems beyond the scope of the level. individual undertakings and that the It, after the compulsory equalization affiliated companies themselves re­ scheme came into force, the High mained responsible for all decisions on Authority had wished to put a different day to day business. Finally, under interpretation on the concept of bought paragraph 6 of the affiliation contract, scrap, it should have said so expressly. the company for its part took parent The applicants in both cases consider

above refer solely to bought scrap with­ scrap re-used in the 'production cycle' out mention of the term 'own resources', of the same undertaking, thus involving the applicant asserts that, even after an increase in output. The simple

Decisions Nos 2/57 and 16/58, the criterion of 'group scrap' is too super­

fact that the levy was calculated on the ficial because it does not allow account

basis of bought scrap and not the to be taken of even very wide variations

consumption of scrap after reduction of in the functional structure of the groups. own resources, remains the decisive In the case of the Hoesch company, this factor in all the decisions. It is therefore economic structure has none of the

wrong to regard the exemption of own variable arbitrary features which and

the system, Decisions on the voluntary equalization cause production units which might not

scheme was to subject only scrap bought be profitable with just one steel-works

in the open market to the levy, in may yield a return at the processing

JUDGMENT OF 13. 7. 1962 —JOINED CASES 17 AND 20/61

stage thus by the statement in the 'Deuxième showing a profit on production as a whole. Rapport general sur l'activité de la Communauté' The applicant Klöckner maintains more­ (Second General Report over that, for the disputed scrap to be on the Activity of the Community) excluded from the category of bought (p. 104), in which it is stated that the scrap, it makes no difference whether or equalization charge also fell on 'a not there has been a change of owner­ certain proportion of ferrous scrap form­

ship, since German law, which alone is ing part of the consumers' own resources'. applicable on German territory for the Subsequently, when the Compulsory purpose of determining the effect of Compensation Fund was set up, there

simply served to calculate cost price be drawn that the applicant was fully and had nothing to do with market aware of the views of the Office commun.

prices. Moreover the fact that the great majority The defendant raises the objection that of undertakings in the Community from the outset the exemption of own considered, as was already clear by resources was regarded by all interested 1957, that group scrap was subject to the parties as an exception, as was indeed levy shows there was no doubt as to the the position in Annex II to the Treaty. legal position.

According to the judgment of the Court The applicant Klöckner states that, if the in Joined Cases 42 and 49/59, there is a Court does not accept its interpretation purchase for the purposes of equalization of the basic Decisions, its request for even when the steel-works send the exemption already made as an alterna­

supplier of the scrap a credit note for tive in its letter of 15 April 1958 should

the sole purpose of calculating the be acceded to because 'the spirit and

cost of production. purpose of the equalization system imply In opposition to the concept of bought that the High Authority should allow

KLÖCKNER v HIGH AUTHORITY

legal certainty. The applicant refers to system for scrap was in force, was purely German fiscal law which provides for fortuitous, this should not result in their exemptions on equitable grounds where being put in a worse position than

a strict application of the law goes comprising different branches, but with against material justice. of which is that of a single legal person

According to the applicant these comprising different brances, but with prin­

ciples are opposed to the application of just the same economic organization. strict legal criteria to determine whether On this point, the applicant Hoesch points the scrap in dispute is liable to the levy. out that according to the judgment of

The defendant's claim that the applicant the Court in Case 8/57, differences in is begging the question is unfounded, treatment can be justified only if there is

present dispute where a wholly different competitive position of the under­

question has to be decided. The same takings concerned, must in principle be applies as regards the reference to the deemed discriminatory and therefore

judgment in Joined Cases 14, 16, 17, 20, prohibited by the Treaty. 24,26 and 27/60 and 1/61. The defendant T he applicant Klöckner observes as to

moreover objects that the above­ this that for every metric ton scrapof

mentioned applicant is not only begging recovered and re-used in its factories it the question in stating that it has been had pay a levy of 35 DM on average to

injured without offering any proof what­ which could go up to as much as 60 DM; ever but is also in error in maintaining this gave rise to a distor­ undoubtedly that the High Authority has a duty to tion of competition between it and those grant an exemption in favour of under­ undertakings which, simply by reason takings particularly affected; this is of a difference in form which is insignifi­

threat to its economic existence, which and the effects of which could not be is not the case where the applicants are removed until 1959. concerned. The applicant Hoesch contests the defen­

dant's preliminary objection that the

(e) The complaint of discrimination complaint concerning discrimination is inadmissible. It maintains that, even if Both applicants maintain that, since their the parent company could not be legal structure, when the equalization regarded as an undertaking, it follows

JUDGMENT OF 13. 7. 1962 —JOINED CASES 17 AND 20/61

'by analogy from the facts of the case' that doubtless because they thought it pre­

the subsidiary consuming the ferrous ferable for good reasons, such as problems

the Court in Case 15/57, the applicant operating to their disadvantage. maintains that the Court imposes The defendant observes that the criterion additional restrictions on the High of the legal person, used to determine Authority's actions in the matter of the scrap assessable and by accepted

safeguarding the special interests of those the Court and by the High Authority under its authority. In this respect the alike, is clear and objective, so that in applicant refers to the judgment in law all undertakings consuming scrap Case 14/59 prohibiting the High are treated on the same footing.

Authority from adversely affecting to a Moreover, according to the defendant, substantial degree the competitive posi­ the principle of equality cannot be tion of those under its control. carried to extrem s; on the contrary it is The defendant first contests the admissibil­ quite proper, as the Court has already

ity of the complaint of discrimination, decided, to accept the inequality of the observing that it was the affiliated effects of a reasonable and objective

steel-producing companies which were criterion, because otherwise a prudent

subject to the contribution, not the and efficient management would not be applicant parent companies, and there­ practicable and that could not be fore only the position of the subsidiaries considered as infringing the principle of can be taken into account in determining equality (Rec. 1958, pp. 187-189; 1958-

keeping intact their group structure rather the defining of a vague and

following the deconcentration measures nebulous limitation based on the legal, implemented by the Allies. The appli­ administrative and financial structure

cants could have taken steps to re­ of industrial groups.

establish their legal entity when the The defendant considers that, when a

equalization scheme was still in force general measure taken by the High and if they did not do so this was Authority is at issue, the prohibition of

KLÖCKNER v HIGH AUTHORITY

of the applicant must have been effect­

cedural requirement and lack of ively worsened. This however does not competence appear to be so in the present case

because the in highly applicants are a Alternatively, if the Decision must be satisfactory financial position. regarded as conforming to the basic Decisions, the applicant in Case 20/61 2. Misuse of powers maintains that in that event the basic Decisions on the compulsory equalization In the event of the Court's considering scheme did not receive the unanimous

that the High Authority has applied Council assent of the as required by the general basic Decisions correctly as Article 53 (b), because the Council form and wording, the applicant only proceed on the basis that the regards could

in Case 17/61 complains that the High words 'undertaking'

and 'bought scrap'

basic Decisions cant has not adduced the slightest proof to support its claim. Alternatively, if the Court considers 5. Ownership of the scrap that the disputed Decision is compatible with the general basic Decisions, the T he applicant in Case 20/61 refers to a

Klöckner company raises an objection letter of 29 August 1953, according to of illegality against these Decisions in so which the ownership of scrap produced

far as they impose the levy on deliveries in the various subsidiaries remains vested ofscrap within the Klöckner-Werke in Westfalenhütte AG, that is to say, AG complex. the subsidiary company consuming the scrap. Consequently for this reason too In this event, these Decisions are in fact incompatible with Articles 3 (b) and no transfer of ownership of the scrap 4 (b) of the Treaty because they allow a within the Hoesch group is possible.

JUDGMENT OF 13. 7. 1962 —JOINED CASES 17 AND 20/61

The applicant observes that the disputed ownership to which the applicant refers, Decision has not involved the feasibility the conclusion can be drawn that under

or the legal effectiveness of the clause the cover of retention of ownership regarding retention of ownership accord­ continuous repurchase can be made defen­ ing to German law and thus the and paid for. The text reads as fol ws:

purposes cannot influence the actual scrap, as soon as the tonnages returnable legal status of the object under discussion. to us are ascertained'.

It asserts moreover that on the premise, The defendant maintains moreover that,

as appearing from the abovementioned since own resources are determined on

clause with regard to retention of the basis of the concept of ownership, it

ownership, that the owner of the princi­ does not necessarily follow that any kind pal thing was Westfalenhütte AG, then of reservation clause must likewise be under German civil law the scrap recognized; for the definition of 'own belongs to that company as soon as it is is a question of interpretation resources'

produced (§953 BGB). There can thus of the legal rule whilst examination of the

mills. There was thus no need for an immediately it was handed over. The agreement retaining the ownership of limitation of the retention of ownership the scrap because Westfalenhütte was to a still unascertained part of the

already its direct owner ex lege. raw material is not valid in German law The argument of the defendant that the under paragraph 93 BGB. applicant can by a retention of owner­ Finally it is contrary to the logic of any Decisions is ship evade the general basic scheme of equalization for scrap to allow irrelevant because, in view the fact of undertakings freely to class as own

decisions refer to the concept that these resources their entire group scrap, for of ownership in civil law by the criterion otherwise they would have a means of 'own resources', the consequences evading the general Decisions establish­ of

be of such a reference must also accepted.

ing that scheme. Therefore an agreement allowed under

civillaw concerning the ownership of 6. Costs scrap cannot be regarded as being in contradiction to the equalization scheme. The applicant in Case 20/61 states that the The defendant raises the objection that, High Authority has by its contradictory under the clause regarding retention of attitude caused the case to be brought and

ment.

The procedure followed the normal Upon hearing the report of the Judge-

course. Rapporteur and the opinion of the

By a statement lodged on 21 February Advocate-General, the Court decided 1962, the defendant asked that Cases to open the oral procedure without

17/61, 19/61 and 20/61 be joined. After any preparatory enquiry.

Grounds of judgment

'undertaking' 'purchase' 1. The concepts of and for the purposes of

the application of the equalization scheme for scrap

The applicants maintain that scrap moving between their respective

subsidiaries is own resources, within the meaning of the basic Decisions, of one and the same undertaking, constituted, as regards the applicant

Klöckner, by the group entity of the parent company and its subsidiaries and, as regards the applicant Hoesch, by the parent company which

engaged in production through the intermediary of its subsidiaries, these being stripped of the essential characteristics of an undertaking.

whereby the profits and losses on the activities of the subsidiaries were taken over in toto by the parent company. On this point the applicants invoke

certain passages, taken out of context from the judgments of the Court in Joined Cases 32 and 33/58 (Rec. 1958-1959, pp. 300 et seq.), Case 42/58 (Rec. 1958-1959, pp. 399 et seq.) and Joined Cases 42 and 49/59 (Rec.

1961, pp. 141 et seq) and maintain that the illegality of the exemption of

group scrap laid down by those judgments does not apply to them because 'Konzerne'

they referred to (concerns) which were not completely integrated.

It must first be observed that the High Authority, in working out and

These two principles must be so reconciled as to entail the minimum of

sacrifice by Community members as a whole.

By reason of the varied and changing nature of economic life, clear and objective criteria of general application and certain common presenting fundamental characteristics must be used in the establishment and function­

ing of the financial arrangements for safeguarding the stability of the Common Market. It is thus impossible to take account of every difference that may exist in the organization of economic units subject to the action of the High

Authority for fear of fettering that action and rendering it ineffective.

To define scrap subject to the equalization levy the High Authority, in its Decisions Nos 22/54 et seq., took as its criterion the purchase of the scrap

To define the scope of this criterion the concept of an undertaking must be studied more closely.

An undertaking is constituted by a single organization of personal, tangible

and intangible elements, attached to an autonomous legal entity and pursu­

ing a given long term economic aim.

According to this concept the creation of every legal entity in the field of economic organization involves the establishment of a separate undertaking; a particular economic activity cannot be regarded as forming a single

unit in law when the legal effects of that activity must be separately attributed

In this light it cannot be denied that the conditions for the existence of a

legally autonomous undertaking are also fulfilled in the case of a legal

person whose interests are closely bound up with those of other such persons whose purposes are determined by directives from outside.

It follows that even in the case of a group of undertakings controlled by a parent company and having a closely integrated production cycle in which the output of the group as a whole and not that of the individual subsidiaries is taken into account it must be recognized in law that the activity of the

group takes place between legal persons who in law are parties to economic exchanges.

In these circumstances, the allegations of the applicants which seek to of 'Konzerne' show that differences exist between their groups and other sorts

equalization, it is not the group as a whole which must be looked at but

each of the several legal persons individually constituting the undertakings.

This conclusion does not run counter to the fact that German fiscal law

has adopted different criteria.

The explanation for this difference is that the sole purpose of fiscal law is to

bring in revenue to the State budget by taxing the increased wealth presumed to arise from the movement of goods, whilst the equalization scheme is

The applicants go on to refer to the past attitude of the High Authority which led both of them to believe that the High Authority shared their idea of the concept of an undertaking. They observe moreover that the High Authority adopted the same attitude towards them and maintain

that, even if the Court were to be unable to accept their arguments, the High Authority cannot be allowed to go back on its own action ('venire contra factum proprium').

It must be stated at the outset that the attitude to which the applicants

refer related to matters such as declarations concerning investments or

the general levy none of which had anything to do with the functioning of the equalization scheme for scrap. Therefore, quite apart from the question

whether the attitude of the High Authority might have given grounds for

In these circumstances this plea of the applicants must be rejected.

3. On the question whether the disputed scrap can be considered as

'bought scrap'

The applicants maintain that the disputed scrap was not the subject of a

contract of sale or similar transaction within the of the judgment meaning 'purchase' in Joined Cases 42 and 49/59 and that there was therefore no

within the meaning of the basic Decisions and of the case law of the Court.

simply book figures for calculating cost prices, the very fact that sub­ each

sidiary fixes a book figure for its transfers of scrap to other subsidiaries

indicates that there is a transfer of ownership.

Further, there is no need to consider whether, under the relevant civil

law, movements of the disputed scrap between the subsidiaries of each of the applicants took place in pursuance of an actual contract of sale; in fact these transfers of scrap from one undertaking to another are subjected as

such to the levy.

by the applicants on this point must likewise be rejected.

Finally, as regards the clause dealing with the retention of ownership of the scrap, which is referred to by the applicant Hoesch, it must at once be observed that this clause is contained not in an agreement between the

parties concerned but in a unilateral deed of Westfalenhütte. Even if it

JUDGMENT OF 13. 7. 1962 —JOINED CASES 17 AND 20/61

were to be regarded as a clause in a contract it cannot be relevant in the

present case. In fact, it is implicit in the very clause, referred to by the

In any event the retention of ownership of a constituent part of a thing, a

part the quality and quantity of which are undetermined, is not permissible under paragraph 93 of the German Civil Code relating to the ownership of things situated in the Federal Republic. Moreover such a clause is incom­

patible with the fundamental principles finding expression in the concept

of accession which presupposes that special rights of ownership over a

constituent and indeterminate part of the same thing are exluded.

4. The complaint of discrimination

with the contribution.

It is to be observed however that the applicants succeeded to all the legal

relationships of their former subsidiaries.

Therefore, whilst the applicants have not expressly invoked the complaint of discrimination in respect of their former subsidiaries —

which would

have gone against their argument on the concept of an undertaking —

The applicants maintain that at the time when the equalization scheme

was in force they were in an identical situation, as regards their production,

to that of competing undertakings in the form of a single legal person com­

prising different branches.

However, even if this assertion is factually correct and if it be admitted that the difference in treatment claimed brought not inconsiderable disadvantages to the applicants in relation to those of their competitors

not subject to equalization charges, that of itself is not a sufficient ground

between the parent company and its subsidiaries, in particular by reason 'Organschaft' of (inter-group) contracts, with a view to demonstrating the similarities to companies the different branches of which were combined

in a single legal person, are of no significance in the present cases because

they can in no way eliminate the fundamental difference which has been declared to exist between a group of undertakings and an undertaking considered as a single entity.

The principle recognized by the Court in Joined Cases 32 and 33/58 (Rec.

1958-1959, p. 307) that any intervention by the High Authority which made the cost of production of steel dependent upon the legal, administrative or financial structure of industrial groups would be illegal, so far from supporting

JUDGMENT OF 13. 7. 1962 — JOINED CASES 17 AND 20/61

to them. However, in view of the infinite variations, actual and possible, in group relations and the difficulties which would arise in many cases in

making a hard and fast classification of groups in different categories, it

must be admitted that a system of this kind might have given rise in practice to serious uncertainties, would have hindered the smooth working of the

equalization scheme and would have provided a source of possible

discrimination.

Moreover, in establishing financial arrangements to safeguard the stability of the market, it rests with the High Authority to choose the system which it deems most likely to serve the common interests. It is open to the Court to

support of the submission that the Treaty was infringed.

KLÖCKNER v HIGH AUTHORITY

However, these arguments in no way prove that in taking the disputed decision the High Authority sought to do other than apply the basic

Decisions correctly in accordance with the Treaty.

Therefore the submission of misuse of powers invoked by the applicant must be dismissed.

Ill — Objections of illegality raised against the basic Decisions

The applicant Hoesch contends that the basic Decisions were taken without regard to the mandatory rules of form in Article 15 of the Treaty or the rules on competence on which the legality of the action of the High Authority

depends.

However, the applicant has not shown that its allegation is justified. It has in fact limited itself to asserting in general terms that the wishes of the Council of Ministers and the content of the basic Decisions were divergent.

Moreover the Court finds nothing to justify the argument of the applicant. This objection must therefore also be dismissed as unfounded.

IV — Costs

Under the terms of Article 69 (2) of the Rules of Procedure of the Court of Justice of the European Communities the unsuccessful party shall be ordered

sistent attitude.

In this connexion it is to be observed that this application was made after the Court in its judgment in Joined Cases 32 and 33/58, Case 42/58 and Joined Cases 42 and 49/59 had already answered the questions forming the funda­ mental points in dispute in the present cases. The applicant Hoesch is

therefore unjustified in its request.

The applicants must therefore bear 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;

1. Dismisses the applications in Joined Cases 17 and 20/61 as

unfounded;

2. Orders the applicants to pay the costs.

Donner Riese Delvaux

Hammes Trabucchi

Delivered in open court in Luxembourg on 13 July 1962.