C-30/65

JUDGMENT OF THE COURT 22 MARCH 19661

Macchiorlati Dalmas e Figli SAS v High Authority of the European Coal and Steel Community2

Case 30/65

Summary

1. Information — Checking — Checks carried out by private inspectors — Selection of inspectors — Method of selection — Free discretion of High Authority — Judicial review limited to the results of the checking (ECSC Treaty, Article 47)

2. Common financial arrangements — Statements of Account — Provisional nature (ECSC Treaty, Article 53)

In Case 30/65

MACCHIORLATI DALMAS E FIGLI SAS, a limited partnership, having its registered office in Turin, represented by its managing partner, Giuseppe Macchiorlati

1 — Language of the Case: Italian. 2 — CMLR.

JUDGMENT OF 22. 3. 1966 — CASE 30/65

Dalmas, assisted by Antonio Astolfi, Advocate of the Padua Bar and at the Corte di Cassazione of Italy, with an address for service in Luxembourg at the chambers of Ernest Arendt, 6 rue Willy-Goergen,

applicant, v

Registrar: A. Van Houtte

gives the following

JUDGMENT

Issues of fact and of law

I — Facts furnace with a capacity of 8 to 10 metric tons, and at another plant in Corio Cana­ The facts may be summarized as follows: vese. According to the applicant the under­ A — On 30 October 1958 the former com­ taking procedures almost exclusively dog- pany Macchiorlati Dalmas e Figli was con­ spikes and special steel plates for railways. verted into a limited partnership having the The plates are produced at Borgaro and the same name. dog-spikes at Corio Caravese. The main As the Turin plant is no longer in use, the use of the furnace is for the melting of crude firm carries out its operations in Borgaro, steel for use in later production, but, from where there is a cold-charge electric arc time to time, the company has sold ingots

MACCHIORLATI DALMAS v HIGH AUTHORITY

tries. Further, the production operations its judgment of 31 March 1965 (Rec. 1964, create waste, making it possible for a con pp. 244 to 249). siderable amount of the undertaking's own scrap to be used for melting down later. C — Following repeated requests from the During the equalization period the com High Authority the applicant wrote to it on pany had on several occasions to acquire 19 May 1960 and stated that the scrap scrap, which proved to be useless for pro bought and consumed, for the period 1 duction, because the percentage of earth April 1954 to 3 November 1958, amounted and other materials in it was too high and to 22 330 metric tons. the claims by purchasers forced it to charge By a decision of 23 February 1962 the High the furnace with a considerable amount of Authority called upon the applicant to its own waste. produce the invoices for relating to its con The applicant maintains that it has never sumption of electricity for the said period. been in any way connected with Campsider On 8 August 1962 the High Authority sent and was not therefore bound by decisions the applicant a statement of the tonnage taken by this organization, of which in any which it had declared, revised in accordance case it had never been notified. So far as the with the results of the investigations and decisions of the High Authority are con checks carried out, that is to say, a state cerned they do not compel undertakings to ment that the assessable tonnage amounted supply information and the applicant there to 58 480 metric tons. After publication of

ber 1958. The application in Case 1/59 the departments of the High Authority. against this decision was dismissed by the As it proved impossible to reach an agree Court's Judgment of 17 December 1959 ment, on 7 April 1965 the High Authority (Rec. 1958-1959, pp. 424 to 429). took the two decisions which are the subject 2. As the High Authority discovered as a matter of this application. The first fixes result of checks carried out that the appli the assessable tonnage at 58 480 metric cant had failed to declare its production, it tons and the second requires the applicant made a decision requiring it to pay the levy to pay 395 858 600 lire by way of contribu and surcharges for delay. The application tions for the entire period of equalization. in Case 22/59 directed against this decision was discontinued by the applicant on 20 II — Conclusions of the parties

JUDGMENT OF 22. 3. 1966 — CASE 30/65

'— declare that this application is admissi­ would the production of steel in this ble; way cost compared with the production — annul the individual decisions taken by of steel exclusively from scrap? the High Authority on 7 April 1965; — order the latter to pay the costs.' Oral evidence by witnesses

B — In its statement of defence, the de­ — Is it not true that, during the discussions fendant contends that the Court should: at the Marketing Division of the Direc­ torate-General for Steel in Luxembourg, '— dismiss all the claims of the undertaking when Mr Astolfi complained of the Macchiorlati, Dalmas e Figli, a limited absurd fixing of the equalization price partnership, submitted in its application at a level far lower than the price paid of 24 May 1965 and order it to pay the by the applicant, he was told that this costs of the action.' price had been fixed on the basis of the average of the data for the whole Com­ C — In its reply the applicant asks the munity and that the data for Italy had Court to order the following measures of been supplied by Campsider? inquiry: — Is it not true that on this occasion Mr

MACCHIORLATI DALMAS v HIGH AUTHORITY

1. The submissions relating to the in dividual decisions: 1. Submissions relating to the individual (a) Infringement of Article 15 of the Treaty decision fixing the tonnage of scrap on the ground that the statements of the liable to equalization reasons upon which the decisions are based are inadequate, incorrect and (a) Inadequate statement of the reasons inconsistent; upon which the decision is based (b) Infringement of Article 4 (2) of Deci sion No 2/57 and of Article 4 (2) of The applicant is of the opinion that the Decision No 16/58; criteria upon which the reasons for the (c) Infringement of Article 81 read together decision are based infringe Article 15 of the with Article 80 of the Treaty; Treaty, because they are inadequate, in (d) Infringement of the first paragraph of correct and inconsistent. Article 47 of the Treaty;

For the Article 1 (1) of Decision No 22/64 and statement of reasons to be valid on this Article 15 of the Treaty and on the point, it should have mentioned which pur ground of misuse of powers; chase invoices were taken into account, so (c) Illegality of Decision No 7/63, so far as to make it possible to prove errors in as the determination of the total calculation. amounts of imported scrap and scrap 2. The applicant has produced purchase treated as such are concerned on the invoices for the period February 1957 to ground that it infringes Article 15 of November 1958 which are consistent with the Treaty by failing to state the reasons the tonnages it declared. The defendant did upon which the alterations appearing not take them into account and made its in the Annexes are based, and infringe own assessment based on the invoices for ment of Decisions Nos 18/60 and 20/60; the sale of ingots and rolled products which (d) Illegality of Decision No 26/55 and its had been checked in November 1961.

JUDGMENT OF 22. 3. 1966 — CASE 30/65

month by month and product by product sumed and one metric ton of steel sold can by the applicant for the period from be determined at 1:1.08 for ingots and February 1957 to November 1958. 1:1.12 for rolled products' and page 6 of the As to 3. The defendant replies that the same decision which states on the other applicant's objection is caused by its own hand that 'the ratio between the specific technical mistake. In fact 1120 kg of scrap charge of bought scrap and one metric ton are required for one ton of the finished of crude steel produced can be determined product, but 1015 kg for one ton of crude at 1:1.015 when the steel is processed into steel which is then processed into the rolled steel and at 1:1.08 when the ingots finished product. It produces in Schedule 5 are sold directly as such.' to its statement of defence a table setting According to the applicant this contra out the corresponding figures. diction, which is not an error of substance, As to 4. The defendant replies that in its shows that the reasons upon which the decisions the Court has accepted that the decision is based are carelessly worded. calculation of production based on the

5. According to the applicant the failure to factors in order to dispute the accuracy of mention specifically the amounts assessed the method adopted. It points out that the for the different periods of equalization, to applicant's arguments based on its use of which the different rates of equalization own arisings and of pig-iron are neither correspond, proves the inadequacy of the substantiated nor plausible. With regard to statement of the reasons upon which the the alleged use of pig-iron in the furnace at contested decision is based. Borgaro, this has not been proved and, The defendant's replies to the arguments even if it had been, it would only be relevant concerning the inadequacy of the statement if it were new pig-iron, and not scrap of the reasons are as follows: derived from pig-iron, which is also subject As to 1. The defendant produces, in Sched to equalization, which was used. ule 2 to its statement of defence, a state As to 5. The defendant replies that the ment of the purchase invoices totalling contested decision in fact carries out an 31 318.090 metric tons. It also produces a analysis, on the basis of invoices, of the statement extracted from the invoices con total production into the different periods taining for the period from April to June of equalization. 1954 an analysis of the purchases according In addition the complaint should be sup to the different types of products and sup ported by production of documents capable pliers (Schedule 3 to the statement of of refuting the evidential value of the defence). Further it offers to produce, if the invoices checked by the High Authority, Court wishes, a similar analysis of purchases which remain in the possession of the for the whole of the period from April 1954 applicant. to January 1957.

MACCHIORLATI DALMAS v HIGH AUTHORITY

January 1957. But it will only produce this The applicant states that it no longer has additional information if the Court so these invoices. orders, because it is of the opinion that It points out, in addition, with regard to the these further particulars are not necessary invoices already produced: to enable the Court to rule that the applica — that the invoices relating to the trans tion is unfounded. portation of scrap are not evidence of With regard to those invoices headed its purchase; 'Waggon Department' the applicant argues — that the list of sales includes large that they are evidence only of the transpor quantities of fish-plates which cannot be tation of scrap and not of the supply of regarded as products subject to the scrap. The defendant replies that the checks Common Market; carried out established that large quantities — that the system of calculation adopted of scrap were supplied by the Waggon by the High Authority, which consists of Department of the state railways and that assessing the consumption of scrap on it is incumbent on the applicant to produce the basis of purchase invoices (from documentary evidence to the contrary.

sold at the beginning of 1957. the data obtained from the purchase and Finally, the applicant points out that it is sales invoices. It quotes the Court's Judg only from the date of entry into force of ment in the Barge Case of 16 December Decision No 14/55 that it has been possible 1963 (Rec. 1963, pp. 562 to 564 and p. 565) for scrap used on contract work to be in in order to prove that it is admissible to cluded in equalization; therefore the inclu produce as evidence the amount of elec sion for the period before Decision No

16/58 (Article 4 (2)) ity does not have any of these invoices in its possession and could not therefore According to the applicant the High Author-

ity has infringed the two decisions by of scrap subject to contribution. failing to take into account, in determining The defendant's reply to this complaint is the consumption of bought scrap, the as follows: deductions to be made in respect of own 1. Previous proceedings before the Court total resources and of the decrease in of Justice disclose either specific estoppels stocks. by record so far as this complaint is con The defendant replies that with regard to cerned or admissions of facts by which the the deductions to be made for the decrease parties must be bound. in stocks, the applicant's representatives In fact the applicant in its application in told the High Authority's inspectors that Case No 21/64 contested the High Author the undertaking had never kept any more ity's Decision of 8 April 1964 concerning stocks of scrap than were required for a few surcharges for delay in paying the levy. days' production.

The grounds p. 534, para. 7). relied on in support of this obligation did not dispute the fundamental obligation to (c) Infringement of Article 81 of the pay contributions. The applicant dis Treaty in conjunction with Article 80 continued this application on 20 April 1960 and then paid its contributions relating to According to the applicant the inclusion of the levy, although with certain reservations. its special products in the products subject 2. The defendant then invokes the Judg to the common market in coal and steel ment delivered by the Court on 17 Decem infringes Articles 80 and 81 of the Treaty. ber 1959 in the Case Pont-a-Mousson v Article 80 only regards as being subject to High Authority (Rec. 1958-1959, pp. 469 to the Treaty those undertakings which are 471) to the effect that the production of engaged in production in the coal or the goods intended for the market is not the steel industry, as defined, in accordance only activity which amounts to production. with Article 81, in Annex I to the Treaty. The result is, the defendant argues, that, However, although the applicant under even if the final product is outside the taking produces steel ingots from time to Treaty, the actual production of steel is time, it nevertheless manufactures almost subject to it. And the applicant does not exclusively special plates and dog-spikes deny that it produces the steel which then

finished. It follows, according to the tons out of a total of 26 000 metric tons. applicant, that the scrap which it used for The defendant goes on to say that the the production of special plates and dog- applicant's case is provided for by the first spikes has to be deducted from the tonnage paragraph of note 3 to Annex I to the

tons of fish-plates and 18 metric tons of The defendant replies that according to the dog-spikes, a total of altogether 9 461 Judgment delivered by the Court of 16 metric tons of products not subject to the December 1963, in the Case of Mrs Amelia Common Market. Therefore the total Barge v High Authority (Rec. 1963, p. 534, amount of finished products sold must, it paras. 5, 6 and 7 of the summary) there are submits, be reduced from 26 368 metric no formal or substantive conditions limiting tons to 16 907 metric tons and the total the extent of the High Authority's powers amount of assessable scrap reduced accord­ to 'have checks made'. It follows from this ingly. that the undertaking subjected to the check This shows, it goes on to say, that the should challenge, not the manner in which checks carried out are not sufficient to the persons instructed to carry out the determine the relevant factors upon which checks were chosen, but the results of the the applicant undertaking's obligation to checks by producing evidence proving that pay contributions could be based. the results of the investigation were wrong. The defendant observes that the applicant is The defendant goes on to say that even if wrong when it assumes that, in order to Fidital is not technically a subsidiary of the decide whether steel is subject to the SAFS (see Schedule 9 to the application) Common Market, it is only necessary to it is at least closely connected with it know whether the end product does or does because some of the directors are on the not appear under the headings in Annex I boards of both companies. to the Treaty; on the contrary, in the case The applicant replies that, if the presence of of an undertaking such as the applicant an employee of the SAFS, entrusted with producing different types of products, the the task of carrying out the checks, could end products may fall outside the Treaty. give a gloss of legality to the checks carried The question to be resolved is whether the out in 1958, the same cannot be said of the steel used by the undertaking for the checks carried out in 1961 exclusively by manufacture of its products is produced by employees of Fidital. In fact, the applicant the undertaking itself or by another under­ argues, the effect of the Judgment of the taking. Therefore, the defendant submits, Court delivered on 16 December 1963 the applicant's argument that it should not quoted by the defendant is that, even if the be liable to pay contributions on the scrap High Authority was entitled to authorize used to produce special mechanical parts is the SAFS to carry out the checks, the latter not conclusive. This reasoning of the appli­ was not entitled to delegate this authority cant would only be justified if it did not in turn to Fidital. itself produce the steel which it uses, which The defendant replies that the High Author­ is not the case. Therefore it is the actual ity was well aware that the SAFS had production of steel and the prior con­ delegated its authority to its subsidiary

powers. It quotes on this point from the case-law of the Court the Judgments of 16 (a) Illegality of Decision No 19/60 December 1963 in the Barge Case (Rec. 1963, pp. 559 to 561) and of 14 April 1960 According to the applicant, by establishing in the Brescia Case (Rec. 1960, pp. 172 and for the application of Decision No 22/54 1973). an accounting period of 12 months and for the application of Decision No 14/55 an

15 December 1965 of the new general periods on a monthly basis. Decision No 19/65 relating to the drawing The misuse of powers arises out of the fact up of final statements of account for the that the High Authority, on the pretext of equalization of imported ferrous scrap and the need to apportion the charges more scrap treated as such, which lays down new fairly concealed its intention to simplify the criteria for establishing the amounts of the accounts and to close them. Article 4(b)

other general decisions. It therefore states culations introduced by the Fund, this did that the legal arguments which it puts not cover the fixing of percentages but the forward relating to the general decisions, payments by undertakings. The reason for referred to and repeated by Decision No having the two successive accounting 7/63, refer also to Decision No 7/63. periods fixed by the Fund as regards The defendant replies that in its opinion no Decision No 14/55 is to bring about useful purpose would be served if it replied uniformity with the practice adopted for to the applicant's general history of the Decision No 22/54, so that the accounting

periods for each of these decisions corres applicant is said to have purchased pond to the period during which the latter 24 249.088 metric tons of scrap during the decision remains in force. period from April 1955 to January 1957. The submission put forward by the appli How, it asks, could it have raised specific cant can only be substantiated if it proves objections based on facts which it did not that it has suffered damage in person as a know and which it disputes? result of the contested individual decision Since, it says, it has been shown that the because of the criteria in Article 1 of method of calculation by reference to

competition. With regard to the alleged to its rejoinder. The table shows that, if misuse of powers, this has not been proved quarterly reference periods for calculation at all. On this point the defendant also from 1 April 1954 to 31 January 1957 had invokes the case-law of the Court, which been laid down in the contested decision, lays down that, as a uniform rate of equal which is what the applicant requests, the ization has been held to be compatible with equalization charge payable would have the provisions of the Treaty, the contested been 5 022 000 lire more than the charge decisions remain lawful, even if it were fixed by the contested individual decisions. proved that this uniformity was dictated by Relying on the Judgment of the Court in a concern to avoid administrative com

periods. With regard to the misuse of powers which The applicant replies that the method of according to the applicant arises out of the calculation used for lengthy periods leads fact that the High Authority was guided to an assessment which only has a statistical mainly by administrative objectives, the and accounting significance and does not defendant submits that misuse of powers is take account of the actual situation of precluded by the fact that no discrimination undertakings. in the field of competition arose out of the The applicant submits that it has a legal methods by which the High Authority interest in pleading the illegality of Article exercised its power with the intention of 1 of Decision No 19/60, because the method avoiding shortages in the market for scrap. of calculation adopted by this decision led, during the period when Decision No 14/55 (b) Illegality of Decisions Nos 18/60 and was in force, to the fixing of equalization 20/60 in conjunction with Decision contributions at 286 369.16 units of ac

JUDGMENT OF 22. 3. 1966 — CASE 30/65

Article 2. Decisions Nos 18/60, 20/60 and As to 2. The defendant calls attention to 7/63 which make scrap treated as imported the fact that Decision No 23/58 places the scrap subject to equalization from the entry acceptance for equalization of scrap origi in force of Decision No 22/54 therefore nating mainly from ship-breaking and the infringed Article 1 of this Decision. salvage of wrecks under the direct super

There way. fore, it argues, the applicant's complaint 3. The scrap which the High Authority fails if the calculations are not final calcula itself admits was unlawfully included in the tions. It then refers to the decisions of the equalization as a result of frauds discovered Court, which dismissed as unfounded the during the operation of the scheme was complaints raised against the High Author included in the total amount of scrap made ity by reason of the frauds which had been subject to equalization by Decisions Nos established, whether from the point of view 18/60, 20/60 and 7/63. of mistakes in the calculation of contribu For this reason these decisions have in tions (Judgment of 17 December 1959 in the fringed Decision Nos 22/54 (Articles 2 and Feram Case, Rec. 1958-1959, pp. 501 et 3), Decision No 14/55 (Articles 2 and 5(a)), seq.) or from that of liability for a wrongful Decision No 2/57 (Articles 2 and 11) and act or omission (Judgment in the Feram Decision No 16/58 (Articles 2 and 11(a)). Case above; Judgment of 14 December They are in addition defective on the 1962 in the Chasse Case, [1962] E.C_R_, 381 ground of misuse of powers, because the et seq.; Judgment of 14 December 1962 in High Authority, which knew that the scrap the Meroni Case, [1962] E.C_R_, 411 et seq. fraudulently declared could not be accepted and Judgment of 2 June 1965 in the Feram for equalization, nevertheless included it Case, Rec. 1965, p. 402 et seq.). in the tonnage admitted to equalization in The applicant replies in the first place that order to avoid taking any responsibility with regard to scrap treated as imported the for it. absence of any clear definition of it by the The defendant replies to begin with that the High Authority prevents the Court from definition of scrap treated as imported, carrying out a judicial review of the scrap which is criticized, is the rule setting limits treated as imported which is included in the to the High Authority's powers when it calculations made for the purpose of equal exercises a discretionary power.

MACCHIORLATI DALMAS v HIGH AUTHORITY

ment of the Court of 21 January 1965 in the siderable advantages for others. The appli Merlini Case ([1965] E.C_R_, para. 4, sum cant maintains that in these circumstances mary). With regard to the frauds the High only scrap from the breaking up of ships or Authority intends to recover the sums from similar operations can properly be illegally collected by deducting them from regarded as scrap to be treated as imported, the equalization charges when the accounts and to treat any other kind of scrap on the are finally closed. same footing is ultra vires and renders the contested decisions illegal. (c) Illegality of Decision No 7/63 So far as the inclusion of scrap accepted for equalization as the result of fraud is con The applicant submits that a comparison of cerned, the applicant states that the the tables annexed to Decisions Nos 18/60 defendant's argument regarding the pro and 20/60 and these annexed to Decision visional nature of the calculations is in No 7/63 discloses different amounts of im

The from the aggregate account of scrap subject figures given by each successive decision to equalization. Decision No 7/63 does not show what stage the investigations and therefore disclose the real state of the checks checks have reached and it is to be expected and corrections made, because two years that the amounts will be different. later it still failed to deduct the scrap admitted to equalization as a result of (d) Illegality of Decision No 26/55 fraud. This means according to the appli cant that the High Authority has acted The applicant argues that the scheme ultra vires and that the contested decision designed to ensure a saving of scrap iron by is therefore illegal. the increased use of pig-iron, introduced by With reference to scrap treated as imported Decision No 14/55, extended by Decisions and expensive scrap the defendant replies Nos 26/55 and 3/56 and confirmed by that, if its price is higher than the price of Decisions Nos 2/57 and 16/58, is illegal for scrap recovered within the Community, it two reasons.

criminates against undertakings, which, ity, the limits and conditions in which they like the applicant undertaking, achieved are exercised being technically the province economies in the use of scrap by consuming of the High Authority. much more pig-iron but through the adop With regard to the complaint of discrimina tion of other production processes and are tion it should be pleaded as discrimination not therefore able to reap the benefit of the in favour of certain undertakings and not bonus for the scrap saved. The applicant against particular undertakings.

2. The before-mentioned decisions infringe High Authority (Rec, 1958-1959 pp. 471 Article 15 of the Treaty because the state et seq.) gave its view on the application of ments of the reasons upon which they are the concept of discrimination to circum based are defective, as solid-charge furnaces stances similar to the facts of the present can also effect economies in scrap by case in its Judgment of 17 December 1959 making greater use of pig-iron. in the Case Fonderies de Pont-à-Mousson v

General rules must to partial compensation for the expenses be based on technical conditions which are incurred directly, by the increased use of certain and do not change. It is not only pig-iron and liquid Thomas steel or in necessary to have an accurate knowledge of directly by technical research. the constant factors in the operation of the The applicant answers this argument by production systems under review but also producing a further opinion of Mr Maioc to know whether such factors enable the co, engineer, annexed to its reply, which relationship between the various materials states that economies in the use of scrap employed for the production of steel to be were established during trials carried out at established a priori.

experience. mined so that they can be included in the With regard to the reference by the defen provisions of general application. This dant to the Judgment of 17 December 1959, complaint should be put forward as a this is not conclusive, because in the present misuse of powers since it comes within the case the situations under examination can discretionary powers of the High Author easily be compared with each other.

It concludes that the technical expert's that the method of determining the equaliza further report on which it relies, contains tion price, carried out in accordance with proof of the inadequacy of the reasons upon criteria varying according to the equalization which the decision is based and of the period, but invariably with the object of misuse of powers by the High Authority by establishing weighted average prices for only granting the bonus for economies in specific periods of time, does not take into the use of scrap in respect of the two pro account the prices actually paid by under duction processes and not in respect of the takings in the Common Market.

iron. As the technical features of the appli tribution. According to the applicant the cant's furnace make it quite unnecessary for High Authority should have adopted it to use the most costly method, the different methods of calculation, dispensing applicant cannot therefore submit that it with the fixing of averages and working on has suffered damage compared with the the actual prices payable by the consumers. production methods laid down in Decisions The applicant mentions as an example of Nos 26/55 and 3/56. this that, although according to Annex III The defendant adds that the absence of any to Decision No 7/63 the equalization price proof by the applicant to the contrary for the period from February to April 1957 shows that the applicant, which is able to is 46.57 units of account or 28106 lire, it in produce steel from scrap, did not in fact fact paid during this period according to adopt another more costly production the two certificates from its suppliers, which process. it produces, the price of 33 300 lire (Sche dules 39 and 40 to the application). (c) Illegality of Decisions Nos 7/63, 18/60 According to the applicant the prices of and 20/60 fixing the equalization scrap were in general much higher in Italy prices and of the decisions upon than in the other Community countries. which they are based Therefore the fixing of contributions on the basis of an average equalization price According to the applicant, Decisions Nos resulted in serious discrimination between 7/63, 18/60 and 20/60, which fixed the the Italian undertakings and the under equalization prices of imported scrap and takings in the areas where the price was scrap treated as such, and Decisions Nos either lower than or equal to the average. 9/56, 34/56, 19/58, 15/59 and 39/59 upon In particular, undertakings in the areas which they are based, infringed in the first where the price of scrap was below the instance Article 3(b) and (c) of the Treaty average price benefited first by paying a because they were in flagrant contravention lower price and secondly by being liable to of the objectives of the Treaty.

1. The infringement of Articles 3(b) and made known by adequate publication the (c) and 4(b) of the Treaty consists in the fact entire data used to determine the equaliza-

tion price and, in particular, the average uniform prices on the internal market must prices determined during the different be safeguarded by the creation of a common periods in the different areas of the Com market based on free competition. munity and the quantities included in the As to 2. The defendant replies that Deci calculation of the weighted averages. sions Nos 18/60, 19/60, 20/60, the tables The defendant replies as follows: annexed to them, and Decision No 7/63, As to 1. In contrast to the figures put for are all accompanied by detailed statements ward by the applicant the equalization price of the reasons upon which they are based. for Italy, according to Article 6(2) of Further the High Authority cannot be Decision No 18/60, is 30 381 lire for the criticized for ever having failed to supply

It states that the purchase ule I to the statement of defence) the prices of scrap given by its suppliers (Sched relevant data showing the changes which ules 39 and 40 to the application) are had taken place in the price of scrap. correct and it criticizes the data relating to The defendant then states that under the the changes in the price of scrap produced first paragraph of Article 33 of the Treaty by the defendant in Schedule 1 to its state the Court may not examine the evaluation ment of defence. of the situation, resulting from economic It then submits that a comparison of the facts or circumstances, in the light of which statement of the prices which it paid for the High Authority took the contested domestic scrap with the equalization prices decisions, save where the High Authority is shows that such an unjustified increase in alleged to have misused its powers or to its production costs has occurred a posteriori have manifestly failed to observe the pro and indeed after several years, so that it is visions of the Treaty or any rule of law impossible for the applicant undertaking relating to its application. to carry on its business. However in the present case the High It adds that the economic objectives which Authority chose to calculate equalization the defendant claims that the equalization on the basis of the weighted averages and scheme is intended to achieve expressly not on an equalization between the areas contravene the fundamental aims of the inside the Community. The complaint that Treaty. Articles 3 and 4 of the Treaty have been With regard to the complaints of infringe infringed is certainly not a complaint that ment of the second paragraph of Article 47 there has been a manifest infringement of of the Treaty, the applicant comments that the Treaty within the meaning of the first the High Authority is not in a position to paragraph of Article 33 referred to above. explain on the basis of what factors it fixed The applicant has not pleaded misuse of the equalization price or how it determined powers either, not could it do so. For, as them.

MACCHIORLATI DALMAS v HIGH AUTHORITY

moreover which is prohibited by the information which the producers asked Treaty, the Italian consumers of scrap them to supply either directly or through would have had to pay a higher charge their regional offices, namely in the case of than the consumers in other countries. Italy through Campsider. The defendant also states that if the scarcity of scrap had not been counteracted by the IV — Procedure equalization scheme, there would have been an increase in its price which would have The pleadings of the parties were lodged given rise to an intolerable burden, in within the prescribed time and the pro­ particular on small undertakings. cedure followed the normal course. The defendant argues that the data relating During the hearing on 18 January 1966, to the price of scrap in the Common Market upon reading the preliminary report of the were based on monthly declarations by Judge-Rapporteur and upon hearing the undertakings of the prices paid, checked by Advocate-General, the Court decided to reference to the purchase invoices. open the oral procedure without pre­ The defendant states that the applicant's scribing any measures of inquiry but never­ request to the High Authority to produce theless called upon the High Authority, the copies of the purchase invoices is inadmis­ defendant, to produce a summary of the sible. It argues that the applicant must applicant's purchases of scrap for the period produce in support of its conclusions all from July 1954 to January 1957 classifying the purchase invoices in its sole possession. individual products and suppliers separate­ With regard to the complaint of infringe­ ly, as a supplement to the list of purchases ment of the second paragraph of Article 47 which it had produced in Schedule 3 to its of the Treaty on the ground that the High statement of defence. The defendant lodged Authority has not published periodically this document on 28 January 1966. the data upon which the equalization price The parties presented oral argument at the is based, the defendant replies that the hearing on 8 February 1966. OCCF (the Joint Bureau of Ferrous Scrap Mr Advocate-General Roemer delivered Consumers) and CPFI provided all the his opinion at the hearing on 22 April 1966.

B — The substance of the case

1. Submissions relating to the individual decision fixing the tonnage of scrap subject to equalization

(a) Inadequate statement of the reasons upon which the decision is based

The applicant's complaints relating to the formal statement of the reasons upon which the contested decision is based cannot be upheld, since the decision mentions in summary form the essential considerations of fact and of law upon which it is based and in particular the apportionment of the chargeable amounts of bought scrap between the different accounting periods.

Further, the defendant has given a complete answer to the applicant's allegation that there was an inconsistency in the statement of reasons with reference to the ratio between the input of scrap to the furnace and the production of steel, namely that this input had been calculated first with reference to crude steel and then to finished products.

(b) Inaccuracy of the statement of the reasons upon which the decision is based

It is not disputed that the applicant itself produces the steel required for the manufacture of its finished products. Therefore it is the scrap used as the raw material for the production of steel which has quite properly been made subject to equalization. It was therefore permissible to calculate the consumption of scrap required for the production of crude steel on the basis of the volume of the pro­ duction of finished products.

The applicant also submits that, in calculating the consumption of scrap on the basis of the sales of finished products, it is probable that certain amounts of scrap, which were bought at the end of the period ending in January 1957 were processed into finished products at the beginning of the period commencing in February 1957 and were therefore twice made the subject of equalization contributions.

As the High Authority only took into account sales of finished products effected up to the end of November 1958, any such double charge would in any event be offset by the fact that scrap bought and consumed before this date for the manufacture of finished products at a later date was not taken into consideration in calculating the basis of assessment.

(cc) The applicant finally criticizes the checking of the consumption of scrap on the basis of the consumption of electricity. Whatever criticisms may be levelled against this method of calculation it was only used in this case to corroborate by means of a cross-check results obtained by another method. The applicant adduces no evidence to support its allegations or in particular to prove the use of large quantities of new pig-iron instead of cast-iron scrap which under the equalization rules is subject to the payment of contributions.

With regard to the deductions for the applicant's own arisings, the High Authority made and applied its own estimate, because the applicant failed to supply it with particulars of its own production and because the applicant failed to supply evidence that, owing to special circumstances, the amount of the arisings had been higher than the tonnage taken into account.

For these reasons this complaint is unfounded.

(d) Infringement of Articles 80 and 81 of the Treaty

The applicant submits that the defendant exceeded its powers by including in the basis of assessment to contribution scrap consumed for the production of fish­ plates, dog-spikes and plates as these products are outside the scope of the ECSC Treaty.

As became apparent during the examination of the first submission it is not disputed that the applicant itself produced the steel required for the manufacture of the abovementioned finished products and that it was therefore the scrap used as the raw material for the production of steel which was quite properly made subject to equalization.

It follows that this submission is unfounded.

MACCHIORLATI DALMAS v HIGH AUTHORITY

2. Submission relating to the individual decision fixing the amount of the equalization contributions

During the oral procedure the applicant alleged that the contested individual decision had no legal basis, because the High Authority adopted on 15 December 1965 general Decision No 19/65 relating to the establishment of final accounts for the equalization of imported ferrous scrap and scrap treated as such, which lays down new criteria for fixing the amount of the contributions payable.

In these proceedings the legal situation to be taken into account is that existing when the contested decision was taken. Moreover, since this latter decision was only provisional, the defendant will have to take into consideration the new factors introduced by Decision No 19/65 in order to rectify, if necessary, the amount of the equalization debt which the applicant is liable to pay.

Therefore this submission is unfounded.

3. Submissions relating to the general decisions upon which the contested individual decisions are based

JUDGMENT OF 22. 3. 1966 — CASE 30/65

Article 2 of Decision No 22/54 expressly states that 'undertakings … shall pay the contributions required to finance the equalization operations in respect of scrap imported from third countries or scrap treated as such …'. The argument that neither the heading of Decision No 22/54 nor Article 1 thereof mentions scrap treated as imported cannot be upheld, because a decision like any other legislative provision must be interpreted as a whole.

(2) The applicant submits that the expressions 'expensive scrap' and 'scrap treated as imported' cannot be accurately defined, so that the administration is entitled to decide which kinds of scrap other than imported scrap shall be subject to equalization and that the reasons for this enlargement of the equalization scheme have not been given.

The applicant has not proved that the general decisions which it criticizes un­ equivocally permit the inclusion in the equalization scheme of amounts of scrap which could not on any reasonable basis be so included.

(bb) The applicant submits that the equalization calculations are inaccurate, because they include amounts of scrap accepted for equalization as a result of frauds.

The statements of account relating to the equalization of scrap are only provisional. It will not be possible until the investigations in progress are completed to ascertain finally the amount of equalization payments obtained by fraud or to determine the amount which may eventually be recovered. Therefore the applicant cannot at present put forward any reason for disputing in this respect the provisional equalization calculations.

MACCHIORLATI DALMAS v HIGH AUTHORITY

(d) Economies in the use of scrap by the increased use of pig-iron

The applicant submits that the grant of a bonus under Decision No 26/55 for using pig-iron in Siemens and Martin furnaces and the grant of a bonus under Decision No 3/56 for using Thomas steel in electric furnaces amounts to discrimination and distorts the conditions of competition to the prejudice of undertakings which, like the applicant undertaking, use solid-charge furnaces.

The bonus granted to undertakings under the conditions laid down in Decisions Nos 26/55 and 3/56 only amounted to compensation payable to them for the increase in their running costs caused by an increased input of pig-iron. Therefore these undertakings did not derive a financial advantage from the bonus. It follows that the general decisions criticized by the applicant were incapable of either discriminating against it or of distorting the conditions of competition to its detriment.

This submission is therefore unfounded.

(e) The fixing of the equalization prices

(cc) Finally the applicant pleads infringement of Article 47 of the Treaty on the

JUDGMENT OF 22. 3. 1966 — CASE 30/65

ground that all the factors necessary to determine the various equalization data have not been published or notified to the undertakings.

The rate of contribution and the equalization price, factors which are necessary to enable undertakings subject to equalization to fix their sale prices, were always communicated to them in due time, first by the authorities in Brussels or by their regional offices and later by the High Authority itself. The High Authority is not obliged under Article 47 of the Treaty to make known to the undertakings the other factors relating to equalization calculations.

(dd) For these reasons this last submission must be dismissed as unfounded.

4. The request by the applicant for measures of inquiry

hereby:

1. Dismisses Application 30/65 as unfounded;

2. Orders the applicant to bear the costs.

Hammes Delvaux Dormer Lecourt Monaco

MACCHIORLATI DALMAS v HIGH AUTHORITY

Delivered in open court in Luxembourg on 15 March 1966.

I — Submissions relating directly to the contested individual decisions 61

1. Infringement of Articles 80 and 81 of the Treaty ... 61 2. Infringement of Article 47 of the Treaty 62

3. Infringement of Article 15 of the Treaty and Article 4 of Decisions Nos 2/57 and 16/58 63 (a) Inadequacy of the statements of reasons upon which the decisions are based 63

(b) Is the content of findings relating to the consumption of scrap by the applicant correct? 64

(aa) The period from August 1954 to January 1957 64

(bb) The period from February 1957 to November 1958 65

(c) On taking account of equalization bonuses illegally obtained 68

3. Taking account of savings in the use of scrap effected by using pig-iron 69

1 — Translated from the German.