C-50/65

JUDGMENT OF THE COURT 16 JUNE 19661

Acciaierie e Ferriere di Solbiate SpA v High Authority of the ECSC2

Case 50/65

Summary

1. Common financial arrangements — Equalization of ferrous scrap — Own resources of scrap — Concept (ECSC Treaty, Article 53)

2. Common financial arrangements — Undertakings liable to pay contributions — Concept (ECSC Treaty, Articles 53, 80)

HIGH AUTHORITY OF THE EUROPEAN COAL AND STEEL COMMUNITY, represented by

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

JUDGMENT OF 16. 6. 1966 — CASE 50/65

its Legal Adviser, Italo Telchini, acting as Agent, with an address for service in Luxembourg at its office, 2 place de Metz,

defendant,

Application for the annulment of two individual decisions of the High Authority of 19 May 1965 fixing, first, the quantity of scrap assessable and, secondly, the amount of the equalization contribution payable by the applicant;

Issues of fact and of law

I — Facts Following certain investigations the High Authority reached the conclusion that the The facts may be summarized as follows: applicant had carried on its activities in the Acciaierie e Ferriere di Solbiate (hereinafter field of iron and steel even before February referred to as 'Solbiate') is a company in­ 1957. It estimated the consumption of corporated in 1955 by Emilio Bertone, who ferrous scrap at 2 434 metric tons for the is also the owner of the Metalsider under­ period June 1956 to January 1957 and at taking, and by his son, Guido, who owned 13 399 metric tons for the period February an interest in that undertaking. On the 1957 to November 1958. The defendant incorporation of Solbiate, Metalsider was states that the applicant did nothing to trading in general metal products and facilitate these investigations, with the ferrous scrap. result that, by decision of 18 December The applicant company states that its 1962, it was ordered to pay a fine of activities in the field of iron and steel began 2 494 087 lire which is at present subject to in February 1957. During that year, it sent enforcement proceedings. to Campsider of Milan its first declarations By letter of 17 December 1963 the High regarding its consumption of ferrous scrap. Authority sent a further statement of ac­ On Form 2/50 it declared its initial stocks of count to the applicant, showing a debit of ferrous scrap at 1 February 1957 to be 41 457 965 lire against Solbiate. 1300 metric tons and its consumption of In the light of the objections made by the ferrous scrap for the period February 1957 applicant and the expert appraisal agreed to November 1958 to be 7 866 metric tons. on by the parties, the High Authority On the basis of these declarations by letter amended its previous calculations. It es­ of 8 April 1963 the High Authority sent the timated consumption at 1 475 metric tons applicant a provisional statement of account for the period June 1956 to January 1957 concerning this period which showed a and at 9 102 metric tons for the period credit of 4 090 686 lire in favour of Solbiate. February 1957 to November 1958. By letter

of 26 March 1965, the High Authority III — Submissions and arguments notified the applicant of the result of the of the parties expert appraisal and the fresh statement of account which reduced the debt owed by The submissions and arguments of the Solbiate to 5 882 957 lire. parties may be summarized as follows: The applicant did not reply to this letter. On 19 May 1965 the High Authority Admissibility adopted two individual decisions of which one determines the total quantity of scrap The defendant observes, first, that the sub consumed by Solbiate whilst the other re- mission of misuse of powers raised by the quires that company to pay the above- applicant against the decision requiring it to mentioned debt to the Imported Ferrous pay the sums owed by way of equalization Scrap Equalization Fund. is inadmissible, since the factors put for On 24 June both decisions were notified to ward in its support concern a different sub the applicant which lodged its application mission, that of the infringement of an against them on 28 June 1965. essential procedural requirement regarding the statement of reasons for the decision.

measure considered to be irregular. ing the debit position of the applicant Thirdly, it maintains that the conclusions company; referring to the payment of damages are (b) On the substance of the application, inadmissible in that they are not supported annul the contested individual decisions by any argument establishing the existence and, as far as necessary, the basic of a wrongful act or omission on the part of Decisions Nos 2/57 and 7/63; the High Authority, or of any damage (c) In accordance with Article 34 of the caused to the applicant as a result thereof. Treaty, refer the matter back to the If the damage in question proved to be that High Authority for it to take the steps suffered by a creditor as a result of delay in necessitated by the annulment applied the payment of sums owed to him, the for, including the repayment of any system of credit interest established by sums overpaid, with the relevant Decision No 7/61 is already a sufficient

application, by which it requested the Court The defendant contends that the Court to give a ruling on two related individual should: decisions, referring in support to the 'Dismiss all the claims made by the SpA. infringement of certain rules of law relating Acciaierie e Ferriere di Solbiate in the appli to the application of the Treaty. cation of 27 July 1965 against the two In the rejoinder, the defendant, whilst main individual decisions of 19 May 1965 and taining these objections, concludes that in order the applicant to pay the costs.' the course of proceedings the applicant

1. Infringement of Articles 3, 4, 5 and 6 of Bringing the discussion into the field of national law and after emphasizing that the general Decision No 2/57 of 26 January 1957 and of other provisions concerning Court is not called upon to apply this law the concept of 'bought scrap' and that taking account of national legal systems may lead to discrimination which is The applicant maintains that, by treating as contrary to the very principle of equaliza bought scrap the stocks with which the tion, the defendant states that, according to Solbiate company began its activities, the the Italian Civil Code, contributions made High Authority failed to appreciate the in kind by members in constituting the fundamental principle of the ferrous scrap capital of a company must be shown in the equalization scheme, which is established document of association and their value by Articles 3 to 6 of general Decision No must be expressed therein.

This applies in particular to sum of 750 000 lire paid by Emilio Bertone such cases as the present in which the com is consideration for the quantities of ferrous pany formerly exercising ownership ceases scrap in dispute, since this sum is quite out to exist and a new undertaking, constituted of proportion to the commercial value of the by the same family group, succeeds it: in scrap which was, at that period, 26 million such a situation there is no transfer of lire. assets, but rather the substitution or suc

levies on which this scheme is based. In Milan Chamber of Commerce. order to define this concept correctly, it The applicant states that, in his position as must not be forgotten: owner of the Metalsider private under — that the Community legislature used the taking, Emilio Bertone carried on, with his terms 'bought scrap' or 'scrap purchased' son who had an interest therein, a trade in in the basic general decisions without general metal products and ferrous scrap. referring to the concept of purchase as In 1955 the two partners set up the Solbiate accepted by the law of contract, but company and thus ceased to deal in ferrous

scrap in order to begin activities in the field as a result of the exemption in dispute, the of iron and steel. This is the same Bertone Bertone family would have received more family group which, ceasing to be a dealer, favourable treatment than other producers became a consumer of ferrous scrap and, in of iron and steel: it is here that there arises this new capacity, at first used its own scrap, the problem of the rules to be applied to that is, those stocks which were available at stocks of ferrous scrap for the purposes of Metalsider before the incorporation of the assessment to the equalization levy. Solbiate undertaking.

stocks. In accordance with the usual practice sumption ofbought scrap during the account and a proper interpretation of the brief ing period. provisions in force, initial stocks were These provisions show that: regarded as exempt from equalization. — ferrous scrap drawn from stocks existing It is true that the statutes of the company do at the beginning of each accounting not show any formal contribution of ferrous period shall not be taken into con scrap, in accordance with Articles 2342 and sideration in assessing the contribution 2343 of the Italian Civil Code, but the relating to that period; defendant itself acknowledges that the — the stocks of ferrous scrap available at Court is not called upon to apply national the beginning of each period shall be law. taken into consideration in assessing the The Court must decide the case on the basis contribution relating to the preceding of Community law and in particular of the period, to the extent that such stocks are rules relating to equalization. In doing so, in excess of those existing at the begin however, it must not lose sight of the ning of that period; economic facts which show, in this instance, — the stocks of ferrous scrap available at that a certain stage the Bertone family used the beginning of the first accounting the ferrous scrap, which it had available, in period shall not be taken into considera its furnace, instead of selling it. tion in assessing the contribution This being so, it cannot be claimed that the payable. exemption of the ferrous scrap in dispute If, therefore, those undertakings existing on from the payment of the equalization levy the entry into force of the equalization infringed 'the principle of equality in the scheme were not bound to pay contribu payment of levies'. It would be unrealistic to tions on the consumption of ferrous scrap deny that, as regards competition, the drawn from stocks available at that period, family undertaking established by the it must also be admitted that undertakings Bertone family and the company formed by which began their activities after the entry the same group are not one single entity. into force of this scheme are not bound to From a practical point of view they are the pay contributions on those stocks which same persons who, from being formerly they had available when the furnaces were dealers and owners of stocks of ferrous first charged.

JUDGMENT OF 16. 6. 1966 — CASE 50/65

person. This being so, as a private under been checked by the High Authority by taking and a company limited by shares means of various methods of calculation, each have their own legal personality they such a claim is quite unjustified. The appli could not form one single undertaking cant's argument that the ferrous scrap sub within the meaning of the Treaty. The appli sequently used by Solbiate was already cant's contention that Metalsider continued owned by Metalsider on the entry into force in existence only for the trade in metal of the equalization scheme is quite un

On this point it em from the field of trade to that of production, phasizes that, with the exception of ferrous kept a capital in ferrous scrap amounting to scrap sold or transferred to third parties, approximately 26 million Italian lire tied up 'scrap purchased' is subject to equalization over a long period. as soon as it is received by the purchaser. As (c) Finally, on the question of possible dis in certain cases this scrap is not used crimination, the defendant states once more immediately but is put into stock, it is that this presupposes the existence of com important to avoid a second assessment parable situations and the application of being made when it is put into the furnace. different rules to the same subject. It is for this purpose that a distinction is In this instance, the position of those under

ACCIAIERIE SOLBIATE v HIGH AUTHORITY

This being so, the application of uniform final, the statement was illogical and treatment to all undertakings would in fact irregular since it was based on a provisional create a discriminatory situation detri­ measure of general application (Decision mental to those in the first category men­ No 7/63). tioned above. As the defendant has explained in its state­ Moreover, ferrous scrap purchased before ment of defence that the contested decisions the entry into force of this financial scheme contain an implied reservation as regards (1 April 1954) would not in this case be subsequent statements of account, the appli­ exempt from payment of the equalization cant stated in its reply that it no longer in­ contributions. There is no evidence for the sisted on this point and explained that in its statement to the contrary made by the view the first submission was alone sufficient applicant which is, in any case, contradicted to render the application admissible. by the fact that Solbiate only came into being in August 1955. IV — Procedure Finally, the defendant wishes to emphasize that the treatment applied in this instance to The written procedure followed the normal Solbiate was also applied to all other under­ course.

takings in an identical or comparable Upon hearing the report of the Judge- situation and that, therefore, it would be Rapporteur and the view of the Advocate- impossible to accept the applicant's argu­ General, the Court decided not to undertake ment without discriminating between these any preparatory inquiry and fixed 22 undertakings. February 1966 for the opening of the oral procedure. 2. Misuse of powers having regard to the The parties agreed at this hearing to waive illogicalities inherent in Decision No their right to make oral submissions in 7/63 order that the Court give judgment on the basis of the documents produced and the In its application, the applicant asked conclusions set out in the written state­ whether the statement of account sent to it ments.

The application is therefore admissible.

JUDGMENT OF 16. 6. 1966 — CASE 50/65

Substance

The applicant maintains that the High Authority, having regarded as bought scrap stocks of ferrous scrap used by the Solbiate company at the commencement of its activities, failed to appreciate the fundamental principle upon which the financial arrangement for the equalization of ferrous scrap is based, in particular Articles 3 to 6 of Decision No 2/57.

According to this principle, for the purposes of assessing bought scrap, the financial arrangement relates only to transfers of ownership in consideration of a price; this is particularly so in those cases in which the company formerly exer­ cising ownership ceases to exist and is succeeded by a new company formed from the same family group.

In this instance, it is claimed, as the applicant and the Metalsider undertaking, the former owner of the ferrous scrap in question, are both constituted by the same family group, it must be accepted that at the beginning the group utilized the stocks which it had available at Metalsider, with the result that no transfer of ferrous scrap within the meaning of this financial arrangement can be said to have taken place between the two undertakings.

The effect of this Article is not to exempt scrap purchased and consumed by users from payment of the equalization contributions.

Its purpose is merely to avoid a second assessment being made at the moment they are put in the furnace of those quantities of ferrous scrap which are not used from day to day but are added to stock.

In this instance, the ferrous scrap in dispute was purchased and consumed by the applicant.

Moreover, the applicant described this scrap as stocks as at the first day of the month, without providing any evidence for this description.

The applicant contends finally that the exemption granted to undertakings in existence on the entry into force of the financial scheme as regards the consumption of ferrous scrap drawn from stocks available at that date should also have been granted to undertakings which, like the applicant, commenced their activities after the entry into force of this scheme, as regards the consumption of stocks available the first time the furnace was charged; by subjecting the ferrous scrap in question to the equalization levy the High Authority infringed the principle of non-discrim­ ination, to the detriment of the applicant.

Undertakings in existence before the entry into force of the financial scheme purchased ferrous scrap at the market price, which was unaffected by equalization, whereas those undertakings which purchased the same product after that date benefited from the effect of this scheme upon market prices.

OPINION OF MR GAND — CASE 50/65

It must therefore be ordered to bear the costs.

On those gounds,

Upon reading the pleadings; Upon hearing the report of the Judge-Rapporteur; Upon hearing the parties; Upon hearing the opinion of the Advocate-General; Having regard to the Treaty establishing the European Coal and Steel Community, especially Articles 33, 47 and 53; Having regard to the Protocol on the Statute of the Court of Justice annexed to the Treaty establishing the European Coal and Steel Community; Having regard to the Rules of Procedure of the Court of Justice of the European Communities, especially Article 69 (2),

THE COURT

hereby:

Registrar President

OPINION OF MR ADVOCATE-GENERAL GAND DELIVERED ON 18 MAY 19661

Mr President, was trading in metal products and ferrous Members of the Court, scrap. Solbiate states that it began its activities in The company Acciaiere e Ferriere di Sol­ the field of iron and steel in February 1957. biate was incorporated in 1955 by Emilio At all events, its first ferrous scrap declara­ Bertone, the head of the Metalsider under­ tions were made during this year: it declared taking, and by his son Guido, who owned an its initial stocks at 1 February 1957 to be interest in this undertaking. On the in­ 1300 metric tons and its consumption for corporation of the company, Metalsider the period February 1957 to November 1958

1 — Translated from the French.