C-13/63

JUDGMENT OF 17. 7. 1963 — CASE 13/63

such efforts are presupposed by and not only according to the under­

Article 226 which is intended to takings of the Common Market, permit the sector in difficulty to assuming that there are reasonable adjust itself to the Common Market. grounds for such a distinction.

This is so when it is possible to find,

4. As the Commission is obliged by within a given country, a price level Article 226 of the EEC Treaty to which isclearly different from the

give priority to such measures as will price level in the other countries.

Government of the Italian Republic , represented by Professor Riccardo

Monaco, head of the Legal Department of the Ministry of Foreign Affairs, acting as Agent, assisted by Pietro Peronaci, deputy Avvocato Generale dello Stato, with an address for service in Luxembourg at the Embassy of the Italian Republic,

applicant,

v

Commission of the European Economic Community, represented by Alberto Sciolla-Lagrange, Legal Adviser of the European Executives, acting as

Agent, with an address for service in Luxembourg at the office of Henri Manzanarès, Secretary of the Legal Service of the European Executives, 2 Place de Metz,

(Presi­ composed of: A. M. Dormer, President, L. Delvaux and R. Lecourt dents of Chambers), Ch. L. Hammes, R. Rossi, A. Trabucchi and W. Strauß

(Rapporteur), Judges,

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

gives the following

JUDGMENT

Issues of fact and of law

cordance with Article 226 of the EEC 'dismiss the application for annulment Treaty. by the applicant...; order the applicant 2. By the disputed Decision of 17 to pay the costs.'

January 1963 (Official Journal of 13 February 1963, pp. 268 et seq.), the III — Submissions and argu­

Commission granted the application and ments of the parties authorized the French Republic to

impose a special tax on the importation The submissions and arguments of the from Italy of domestic electric refrigera­ parties may be summarized as folows:

tors, as well as of hermetically sealed

compressor units for domestic electric 1. Infringement of essential procedural refrigerators and other accessories, requirements

after the French Government's appli­ The arguments by the Com­ advanced

cation was lodged, it sent a teleprinter mission to justify the unilateral duty message to the office of the Italian imposed on imports from Italy are Permanent Representative in Brussels inadequate. fur­ fact first inviting the Italian Government to The that, during the six

nish it with certain information. But months of 1962, 136 000 Italian re­

there was never any reply. frigerators were imported into France The applicant does not dispute those and that these imports from Italy were facts, but points out that: much greater than those from other

countries is not sufficient to justify the — the teleprinter message summarized a assertion that the alleged disturbances complex problem in five lines; economy were due French ex­ to the the questions which were put ought clusively to imports from Italy. On —

the to have been addressed to other per­ dis­ contrary, the sole cause of such sons who were in a better position .

not conducive to such an atmos­ amined whether there is also a cor­

phere; responding difference between the sale

— the public holidays of Christinas and prices to the consumer, as competition is

New Year intervened between the operative only at that stage; in fact no such difference exists. As for the differ­ sending of the teleprinter message

and possible date for the ence at the wholesale stage, this is due any to the fact that the Italian manufactur­

reply; ers have allowed their distributors a Italian Government had to for­ — the larger margin of profit. The defendant ward the teleprinter message to the should have examined whether or not Italian circles concerned in order such a margin was justified by the that they might make their observa­

that application. can be clearly seen from the preamble.

ITALY v COMMISSION

The data shown there make it clear Italian and French manufacturers and

that imports from Italy were the only those of third countries, and should

ones to have increased in a spectacular then have determined whether different manner. wholesalers were subject to the same

The sale prices to the consumer do obligations. If it had done this, it would not represent a valid criterion as they have reached a different result.

the adoption of the Decision. cant's arguments are based on the er­

The defendant denies that distributors roneous idea that Article 226 does not

of Italian products have to bear heavier allow measures to be taken which affect

charges (for a fuller discussion see 3 E one Member State in particular (see 3 below). D below).

The (b) The applicant complains that the (b) applicant complains that the

Decision compares the data on French Decision did not have as its object the

cluded in the preamble must not be portation into France of Italian refrigera­ but vertically; in tors difficult, if not impossible, and read horizontally the affects importers the more in­ table the figures for 1961 are compared severely with those for 1962. Read in this way, asmuch as they have made arduous but successful efforts to gain a the figures speak for themselves. relatively The foothold in the French market. (c) applicant considers that the

observation on the alleged difference of The defendant denies having had the

between Italian above-mentioned object and points out 30% the prices of

refrigerators free-at-frontier and the that the products imported from Italy wholesale price of French appliances is remain competitive, as in the past.

not clear and is based on inaccurate hypotheses (for a fuller discussion see 3. Infringement of the Treaty 3 E below). A — Concept of 'sector of the economy'

The Commission should have indicated the average prices fixed in practice by The applicant disputes that the pro-

as part of a wider field does not divest dispose of their entire production. In it of its character as a 'sector of the respect of the five factories which, ac­

economy'. Furthermore, in 1961 the cording to the disputed Decision, had to French refrigerator industry employed suspend production, a protective meas­

more than 11 000 people and had a ure in force for only six months cannot, turnover of roughly 500 million NFrs. by itself, bring about the resumption

of their production. After all, it is recognized that there it was a question B — Imposition of duty on compressor of simple reconversion operations. units The applicant draws particular atten­

The applicant points out that in this tion to figures in support of its argu­

field French exports to Italy are far in ment:

assembly plants cannot be set up in a tion within France for 1962, the appli­

short space of time. cant maintains that out of French the production for that year, there were at

most 8 000 appliances left unsold. C — Application to this case of the difficulties' It must however be noted that at the concept of 'serious hearing the applicant admitted the The applicant disputes generally that the accuracy of figures somewhat different difficulties suffered by the French re­ from those on which this calculation 'serious' frigerator industry were within was based. the meaning of Article 226. If French (c) On 10 January, that is to one say production has declined in comparison week before the adoption of the Decis­ with 1961, that is only the inevitable ion, the French press announced that consequence of the liberalization of the French manufacturers had decided trade. To apply Article 226 to cases of to reduce sale prices by between 10 and such importance is to 'deny the slight 25%; the French products were thus principle of the Common Market'. competitive.

ITALY v COMMISSION

The defendant refers to the following As for the price reductions, these ap­

data reproduced in the preamble to the plied only to refrigerators of 100 and

seven months of both 1961 and

1962); D — Discrimination between Italian — increase of imports from Italy from products and those from other 22 000 to 136 000 and of imports countries from other countries from 19 000 to

60 000 (covering the first six months The applicant points out generally that, of both 1961 and. 1962); according to the very allegations made — continuation or this situation in spite by the defendant, imports originating in of increased consumption in 1962; other countries had also increased ap­

— suspension or production by five or preciably, so that the difficulties at issue the fifteen manufacturers whose pro­ do not derive solely from imports from duction represents 95 % of the total; Italy. — reduction or the labour force em­ (a) In respect of other Member States, ployed by these fifteen producers as Article 7 prohibits any discrimination well as by two others producing 'on grounds of nationality'. The defend­ semi-finished products, from 10 590 ant should consequently have extended (1961) to 7 370 (1962). the special tax to imports originating The defendant expresses the view that in these other States unless such States the above data as well as the aggregate had themselves the right to seek pro­

figures subsequently obtained for 1962 tection under Article 226, which is not do not permit of any doubt as to the the case here. 'serious' nature of the situation. (b) In respect of third states, the prin­

The applicant contradicts itself when it ciple of giving preferential treatment to

requirements is of little importance. The originating in third countries. decisive factor is that the imports The defendant replies that: represented a serious threat to French (a) Under Article 7 the principle of

production. non-discrimination is only valid 'without

JUDGMENT OF 17. 7. 1963 — CASE 13/63

hood of increasing. Their average provisions'

prejudice to any special of prices

the Treaty. Among these exceptions is per litre, free-at-frontier in France, have included that of Article 226, which remained appreciably higher than the allows derogations from the rules of the Italian price with tax included (England Treaty, that is to say, from all its 2 996 FFrs; USA 4 585 FFrs; Switzer­ rules. land 3 019 FFrs). This Article moreover obliges the Com­ If the defendant did not make use of

be infringing the above principles if it a bound tariff could have provoked third extended the protective measures beyond states into taking similar measures and

such imports. But it would also be thus have prejudiced the functioning of violating the principle of non-discrimin­ the Common Market. ation which is based not only on pro­

cedural criteria but also on criteria of E — Material error in calculating the substance. Thus discrimination could difference between French prices also be caused if different situations and Italian prices were treated in the same manner.

In this case the defendant has observed The applicant denies the accuracy of the these rules. The Italian refrigerators figure of '30% of the Italian price'

were the only ones whose average price, which, reduced by the customs rate of

free-at-frontier in France, differed ap­ 7.5%, indicates, according to the argu­

As in the past, Italian refrigerators are compares this latter discount with the their total free-at- margin of profit which Italian manufac­ competitive, price, frontier in France, being now 2 682 turers allow their import-concessionaires FFrs and thus still lower than the price in France­ —­ 40% on average with a from Bel­ of appliances Germany and maximum of 50% one finds that the —­

gium or Luxembourg. real difference is appreciably less than (b) The considerations pointed out un­ the figure quoted by the defendant. der (a) remain valid as regards the fact In practice, the difference was however that products originating in third coun­ even less. The cost of advertising and

tries are not subject to the duty. after-sales service falls on the retailer

These imports were only of rather of Italian refrigerators, whereas his minor importance and showed no likeli­ French counterpart does not incur any

ITALYgv COMMISSION

of these charges and the French whole­ have greater expenses. With regard to

ators and not with other domestic The procedure followed the normal electric appliances as well. The did lodge course. applicant not a

The expense thus falling on the retailer reply. Having heard the report of the

must be assessed at at least 12% of the Judge-Rapporteur the Court decided to

turnover; this moreover can be seen proceed without any preparatory inquiry. from the balance-sheet of two large im­ It did however decide to put to the port firms from which the applicant ob­ parties a series of questions to which

tained information. they replied at the oral procedure. This In short, the importer makes a took place on 16 May 1963. only profit of between 5% and 10% at the At the hearing the parties produced a de­ most, which is justified moreover by series of statistical tables and the

the greater risks entailed in the open­ fendant in addition lodged with the

NFrs, whereas the price of Italian pro­ At the hearing on 28 May 1963 the

ducts free-at-frontier came to 2 413 Advocate-General presented his opinion

NFrs. to the effect that the application should

The defendant denies that the importers be dismissed as unfounded.

Grounds of judgment

I — On the infringement of essential procedural

conversations with the Office of the Italian Permanent Representative in Brussels informing the Office of the French Government's request, the defen­ dant addressed to the said Representative various questions in writing relating to the request, to which there was no reply. Because of the applicant's silence, which lasted a month, the defendant cannot be reproached for having adopted the disputed Decision without further ado.

This complaint must therefore be dismissed.

2. On the complaint of insufficient reasoning

The applicant has raised a series of complaints to the effect that the statement of reasons on which the disputed Decision is based does not satisfy the con­

ditions required by Article 190 of the Treaty and claims that the reasons given for the Decision are insufficient to make it possible to single out imports from

Italy as the origin of the difficulties in question.

because the difficulties have to be assessed in respect of the producers; it was

necessary to take into consideration the prices charged to the whole­ therefore

salers. There was no point in examining whether the margin of profit allowed to the wholesalers by the French producers was reasonable or not, since it was a matter of judging the price difference between the French product and the Italian product on its arrival on French territory, that is to say, at the moment when these two products are in the same market and at the same commercial

stage.

According to the applicant, the preamble should have taken into account the question whether the greater margin allowed by the Italian producers to their

distributors in France was justified by the heavier charges which fell upon the

Consequently the reference desired by the applicant was superfluous.

The applicant is wrong in claiming that the Decision compares French pro­

duction calculated over ten months with exports and imports calculated over seven and six months respectively; whereas the table included in the Decision compared data from corresponding periods.

Finally, the applicant makes the point that the recital dealing with the

difference between French and Italian prices is not clear and is based upon

inaccurate facts. From the point of view of reasoning, the wording in question does not lack clarity, since it shows in a clear form the data which the

JUDGMENT OF 17. 7. 1963 — CASE 13/63

III — On infringement of the Treaty

1. On the concept of 'sector of the economy'

The applicant disputes that the French refrigerator industry is a 'sector of the

meaning of Article 226. The production of a commodity economy'

within the

3. On the application of the concept of 'difficulties which are serious and persist' liable to

Under Article 226 (1) of the Treaty, protective measures may be authorized in case of difficulties which are serious and liable to persist in any sector of the economy.

(a) Taken by themselves, the figures put forward by the defendant, marking the decrease in French production from 1961 to 1962 as well as the increase in imports into France during the same period—figures not disputed by the

ap licant—, allow the inference that such difficulties did exist. However, it should be examined whether the arguments advanced by the applicant are such

as to rebut this presumption.

(b) The applicant states that French production for 1962, to the extent of 265 000 appliances, was not enough to satisfy the needs of the domestic market. This allegation is irrelevant. In fact, this circumstance does not

ducts sold in 1962 came exclusively from that same year's production, which has not been shown.

(d) Finally, the parties disagree on the question whether the price reduction carried out by the French producers immediately prior to the disputed Decision applied to the whole or the greater part of the products, as the appli­

cant considers, or only a small quantity of them. The applicant's statement,

supposing it to be accurate, reveals rather the existence of 'serious difficulties', since it it obvious that a considerable reduction, spontaneously decided upon

by producers, may be a symptom of keen competition. Furthermore, although Article 226 is intended to permit the sector in difficulty to adjust itself to the Common Market, it assumes that those involved are in a position to support the Commission's measures by their own efforts. The fact that such efforts are made does not therefore preclude the existence of 'serious difficulties'.

(e) It is thus not established that the defendant has wrongly applied the con­

matically to the conclusion that there is discrimination. An appearance of

JUDGMENT OF 17. 7. 1963 — CASE 13/63

discrimination in form may therefore correspond in fact to an absence of

discrimination in substance. Discrimination in substance would consist in treat­ ing either similar situations differently or different situations identically.

(b) Further, as the Commission is required to limit its interventions to what is 'strictly necessary', it must be permissible for it to intervene only in respect of those phenomena which constitute the cause of the difficulties in question.

Besides, it is obliged to give 'priority ... to such measures as will least disturb

The defendant saw the origin of the French difficulties in 'the huge increase in imports originating in the Italian Republic', and consequently it limited the protective measures to Italian products. In order to justify its judgment and the

choice of this measure, the Commission took as its principal basis the finding that, on the one hand, the volume of imports from third countries 'has not degree' increased to an abnormal and is therefore 'not liable to hinder the

reorganization of the French sector in question'

and, on the other hand, that the price of products imported from other Member States 'does not differ

appreciably from the price of similar French products and that the increase in the volume of imports, whilst higher, is not considered as abnormal'. It does not appear from the evidence brought to the notice of the Court that this

assessment by the Commission is clearly erroneous. It is not disputed that im­ ports from third countries are inconsiderable. It has not been shown that the Commission was mistaken in stating that the price of products originating in other Member States did not differ appreciably from the price of similar

5. On the complaint relating to material error in the calculation of the price differences

In the words of the Decision, the difference 'between the average price per litre of Italian refrigerators free-at-frontier and the average price per litre of the same French appliances at the wholesale stage', that is to say, the ex-factory

price, as the defendant explained during the proceedings, 'amounted to 30% of the Italian price free-at-frontier in France whilst the existing customs pro­

tection is no higher than 7.5%'. The applicant considers that the Commission should also have taken account of other factors which would have considerably reduced this difference.

(a) The applicant does not dispute the figures put forward by the defendant relating to the French price invoiced to the wholesalers (2 946 FFrs) as well as the Italian price free-at-frontier (2 245 FFrs), figures from which an arith­

metical difference amounting to as much as 31.2% appears. It restricts itself to comparing the method of calculation chosen by the defendant with another

However, these figures have no probative value. First, they were calculated on the basis of the turnover of the companies in question, and thus on a basis which it is difficult to compare with the prices in practice paid by the whole­

salers, which is the only issue here. Secondly, the said figures leave entirely open the question whether the balance-sheets of the distributors of French

JUDGMENT OF 17. 7. 1963 — CASE 13/63

products contain comparable entries. Finally, a considerable proportion of the balance-sheet entries relied on consists of 'extra commercial expenses', a

formula too general to allow any conclusions to be drawn from it.

For the foregoing reasons this complaint must be dismissed.

Having regard to the Protocol on the Statute of the Court of Justice of the European Economic Community;

Having regard to the Rules of Procedure of the Court of Justice, especially Article 69 (2);

THE COURT

her by:

1. Dismisses the application as unfounded;

2. Orders the applicant to pay the costs.