C-67/69

Commission of the European Communities, represented by its Legal Adviser, Antonino Abate, acting as Agent, with an address for service in Luxembourg at the office of Émile Reuter, 4 boulevard Royal, defendant, Application for

— the annulment of the individual decision of the Commission of the European Communities of 9 October 1969, requiring the Simet under­ taking to pay the sums due under the provisions concerning the equaliza­ tion scheme for imported ferrous scrap and scrap treated as such;

— compensation for damage caused by a wrongful act or omission of the defendant.

THE COURT

composed of: R. Lecourt, President, A. M. Donner (Rapporteur) and A. Trabucchi, Presidents of Chambers, R. Monaco, J. Mertens de Wilmars, P. Pescatore and H. Kutscher, Judges,

SIMET v COMMISSION

1 — Facts of final statements of account relating to the equalization of imported ferrous The facts on which the proceedings are scrap and scrap treated as such, provides based may be summarized as follows: for the final fixing on the one hand of the By Decision No 7/63 of 3 April 1963 rates of equalization contributions and on (OJ No 54 of 6.4.1963) concerning the other hand of the rates in respect of the drawing up of statements of ac­ interest charges (Articles 4 and 2) and count relating to ferrous scrap and furthermore lays down in particular: scrap treated as such, the High Author­ — that the capital balance of each under­ ity of the ECSC provided for a regroup­ taking (constituted by its credits and ing of movements of funds in re­ its payments on the one hand and spect of the Brussels Fund (CPFI) and contributions due on the other hand) the Luxembourg Fund, and the pro­ was to bear interest at 5% from 31 visional closure on 31 May 1963 of the May 1963 until the date on which accounts of each undertaking subject to payment is made and in no case later the equalization scheme. than 31 December 1965 (Article On 11 February 1965 the High Author­ 5(1)); ity took two individual decisions in re­ — that a complete statement or account spect of Simet, one concerning an as­ drawn up as at 31 December 1965. sessment made by the institution on its taking into consideration in respect of own authority of the tonnage of bought each accounting period all debits and ferrous scrap consumed by that under­ credits of principal and of interest taking during the period from 1 June was to be sent to all undertakings 1956 to 30 November 1958 (37 668 concerned (Article 6); metric tons), and the other fixing the — that as from 1 January 1966, the contributions due from Simet at credit or debit balance in accordance Lit. 252 974 228 on 31 May 1968 (the with this statement of account was to total resulting from the application of bear interest at 5% p.a. which was the provisions of Decision No 7/63 to to be converted into capital (Article the tonnage adopted by the first decision). 5(3)); On an application by the addressee these — that after 31 December 1965 receipts decisions were annulled by the judgment from actions for recovery of wrong­ of the Court of 2 March 1967, because fully charged equalization amounts the High Authority provided no justifica­ and bad debts were to be divided tion for the fact that it resorted to among all the undertakings affiliated an exceptional assessment procedure. to the equalization scheme in propor­ (Joined Cases 25 and 26/65, [1967] tion to the basis of the assessment to ECR 33 et seq.) contribution. General Decision No 19/65 of the High In execution of the judgment of the Authority of 15 December 1965 (OJ No Court quoted above and pursuant to 224 of 30. 12. 1965), on the drawing up Decision No 19/65, the Commission of

the EC, on 9 October 1969, adopted an graph, to the extent of 15% of the individual decision by which the basis of total sales of steel during the period assessment of contribution of the Simet when the equalization scheme was in company for scrap purchased from 1 force or failing that, ask an expert to January 1956 to 30 November 1958 was be appointed, to establish the exact fixed at 17 737 metric tons and the amount; amount of the contributions due from it 6. Hold the defendant responsible for by way of equalization was fixed at the secret conclusion of an "agree­ Lit. 140 594 449. The present applica­ ment" with the Council of Ministers tion, directed against that individual of the Community, by which it under­ decision, was lodged at the Court Registry took to commit a serious breach of the on 14 November 1969. duty of supervision which is imposed upon it by the Treaty and in conse­ II — Conclusions of the quence of the normal diligence which parties any public administration should show, thus making easy the practice The applicant claims that the Court of large-scale frauds within the frame­ should: work of the compulsory ferrous scrap '1. Order the defendant in accordance equalization scheme. with Article 23 of the Protocol to produce to the Court all documents The applicant states that it would be relative to the question at issue in fully in agreement with an ... extra­ the application and in particular re­ judicial solution of the determination ports of checks made by its heads of of the amount of the damage; mission at the applicant's premises; 7. Order the defendant to pay the 2. Declare Decisions Nos 7/63 and 19/­ costs.' 65 on which is based the individual The defendant contends that the Court Decision of 9 October 1969 to be should: illegal (Article 36, last paragraph); 'Reject all the requests made by the 3. Consequently annul the contested in- Società Industriale Metallurgica di individual decision for the reasons set Napoli (Simet) in its Application No out in the application (first paragraph 67/69 of 14 November 1969 and order Article 33); the applicant to pay the costs.' 4. Hold the defendant liable for the In its rejoinder the defendant further wrongful act (Article 40) constituted contends that the Court should: by the fact that it notified Simet "validly for the first time on 18 'Join the present case to Case 70/69, October 1969 only" of the amount of brought by the Company "Acciaieria equalization contributions for the e Ferriera di Roma" (Feram).' period from 1 April 1954 to 30 November 1958 (with an average III — Submissions and argu­ delay of more than thirteen years) and ments of the parties for having compelled it, thereby causing it damage, to publish its own The submissions and arguments of the price list without knowing the amount, even approximately, of the parties may be summarized as follows: equalization rates which in the mean­ A — The application for annulment while had undergone very large increases; 1. Illegality of the individual decision of 9 October 1969 5. Calculate the damage suffered by the applicant, by reason of the complaints The applicant states that the individual put forward in the previous para- decision of 9 October 1969 is illegal in

that, on the one hand it is vitiated by documents, facts likely, according to it, lack of a statement of reasons and that to invalidate the argument of the appli on the other hand without justification it cant, that is to say: imposes the payment of (capitalized) — the Simet undertaking itself declared interest on overdue payments. stocks of scrap on 1 January 1957 (a) Lack of grounds amounting to 1 625 metric tons which clearly implies scrap purchase in The applicant states that the contested 1956; decision wrongly fixed the basis of its — the installation in February 1956 of assessment of contribution to the equal an electric furnace with a capacity of ization scheme at 17 737 metric tons, 4 to 5 metric tons;

1956; scrap made in 1956 which the under taking produced on the occasion of the —the balance sheet and the profit and checks made from 21 to 25 March 1960 loss account of Simet as at 31 December 1956. by inspectors of the Société Anonyme Fiduciaire Suisse (SAFS). Furthermore The defendant again points out that that is what the statement of the reasons these facts have already been mentioned for the decision clearly showed. by the Comimssion in Case 26/65 with The applicant replies by denying the out their being disputed by Simet. existence of these invoices relating to the As to the qualifications of the SAFS

JUDGMENT OF 16. 3. 1971 — CASE 67/69

system of interest less burden tion. In fact it was only by the contested some than that provided for by decision itself that the applicant was Decision No 7/61, accords with informed of the exact amount of its the principles to which the contribution due to the equalization equalization scheme is subject, scheme and was given formal notification particularly that of a balance be of it for the first time. tween the amounts repaid and The defendant replies that the applicant the contributions claimed; had certainly been kept informed regu — as regards the interest charges in the larly and in a detailed manner of its present case, position as a debtor in relation to the — that in the system established by equalization scheme, particularly by Decision No 19/65 the basis of equalization accounts of 8 April 1963 the obligation to pay interest and and 23 December 1965 and by an the date as from which it is cal extract of an account of 12 January culated are fixed by that very

subject of formal notification. 2. Illegality of General Decisions Nos In its rejoinder the defendant alleges in 7/63 and 19/63 particular: — as concerns compound interest, The applicant again alleged the in — that the amount demanded under validity of the decision of 9 October this head amounts to lit. 877 402 1969 by pleading the illegality of gen and not to lit. 12 753 152, as the eral Decisions Nos 7/63 and 19/65 applicant states; on which the contested decision is — that tne charging or compound based. interest is permissible, albeit on In this respect it states: certain conditions, by Italian, (a) that these regulations produce dis French and German national law; crimination by excluding from scrap — that more precisely within the equalization scrap from steel alloys framework of scrap equalization, and scrap intended for integrated the rules of Decision No 19/65 foundries;

(b) that the High Authority (Commis tion of steel during the years 1954 sion) disregarded the recommenda to 1958; tions which the Council made when (c) that in fixing the average weighted giving its assent to Decision No price of imported scrap, the High 14/55, including particularly: Authority based itself on the con tracts of purchase laid down by the 3. To avoid increasing the cost Joint Bureau of Ferrous Scrap Con prices in the whole of the Com sumers and that as concerns internal munity and in particular increas recovered scrap, the Court in Case ing the net burden borne in the 30/65 [1966] ECR 35 rejected the working of the fund by certain complaints made in that respect; regions of the Community, the (d) that within the limits imposed upon equalization levies must not be it by Article 47 of the Treaty the increased without a very serious High Authority has given a full reason. statement of the reasons for the

In fact the delay with which the sion) has always failed to justify final detailed account was communica the management of the Equaliza ted to the applicant is only the in tion Fund by a detailed account of escapable consequence of a system the factors to be taken into account; necessarily implying a posteriori cal The defendant replied to these com culations and consequently cannot plaints: amount to a wrongful act or omission. (a) that this argument has already been If the applicant at the time of the rejected by the Court in Case 18/62 fixing of sales prices for the period [1963] ECR 259; 1954 to 1958 was not able to take (b) that even supposing that the recom account of the exact cost of equaliza

JUDGMENT OF 16. 3. 1971 — CASE 67/69

of Article 22 of the Protocol on the 9/56, Rec. 1958, p. 42); Statute of the Court and Article 38(1) — that consequently a wrongful act or of the Rules of Procedure are not satis omission can originate only in the fied and because on the other hand the management of the scheme, which action is premature, since the amount of devolved on the High Authority; the possible damage flowing from the — that in respect of the supervision of said frauds depends essentially on the activities governed by private law result of actions for recovery currently by public authorities, Community

to order. The defendant denies the existence of a The written procedure followed the wrongful act or omission on its part, normal course. alleging in particular: Because of the connexion between the — that the 'Brussels organizations' (the present case and Case 70/69, the Court Joint Bureau of Ferrous Scrap Con by order of 8 July 1970 decided to sumers and the Imported Ferrous join them for the purposes of the oral Scrap Equalization Fund), which procedure.

Grounds of judgment

1 By an application of 12 November 1969 lodged at the Court Registry on 14 November 1969 the Simet undertaking of Naples brought before the Court

(a) an application for the annulment under Article 33 of the Treaty establish­ ing the European Coal and Steel Community, of the decision of the Commission of the European Communities of 9 October 1969, taken in implementation of the provisions concerning the equalization of imported ferrous scrap and scrap treated as such and fixing in the applicant's case the tonnage of bought scrap assessable and the sums due by way of equalization contributions; and

(b) an action for damages under Article 40 of the same Treaty.

The application for annulment

2 The applicant disputes the contested decision on the grounds of infringement of essential procedural requirements, particularly for an insufficient statement of reasons, and for infringement of the Treaty or of rules of law relating to its application and raises further an objection of illegality against General Decisions Nos 7/63 and 19/65 of the High Authority on which the contested decision is based.

5 The witness Lucchini stated that from 21 to 25 March 1960 at the office of the company he made a check of the consumption of electric current by the undertaking during the year 1956. In the course of his work, according to his evidence, he discovered by chance a bundle of invoices relating to the pur­ chase of scrap for the year 1956 which were at his request handed to him by the employee whom the undertaking had put at his disposal to produce for him the documents which he needed. These were invoices in good order showing the supplier, the date of delivery, the type of scrap, its weight and the prices paid.

6 The witness stated that he added up on a machine the weights and the amounts of the invoices for each month of 1956. The paper roll from the adding machine was deposited at the Court Registry. The content of that evidence was not disputed by the applicant which confined itself, by invoking Article 86 of the Treaty, to casting doubt upon the qualifications of the em­ ployees of the S.A. Fiduciaire Suisse to make checks within the meaning of the Treaty and consequently the right of the Commission to utilize as evidence the results of these checks.

SIMET v COMMISSION

7 In this respect Article 47, which governs the matter in question, empowers the High Authority to have checks made. The instructions which it gave for the carrying out of the check constituted the actual exercise of its own powers and not a delegation of them. The forms and the publicity required for a delegation of powers were thus not applicable in the present case. Further, the expression 'have ... made' shows clearly that the High Authority was not required to carry out the checks mentioned exclusively by means of its own servants, but that it could have them carried out by any person whom it con­ sidered competent for this work.

12 The interest prescribed by the decision in question is in accordance with the provisions of General Decision No 19/65, which replaced numerous previous

JUDGMENT OF 16. 3. 1971 — CASE 67/69

decisions which had already instituted and laid down details with regard to the obligation to pay legal interest on the amounts due by way of equalization contributions. The submission raised therefore amounts in substance to an objection of illegality directed against General Decision No 19/65.

13 That decision provides in Article 5 that as from 31 May 1963 the credit or debit balances of undertakings subject to the scheme shall bear interest at 5% per annum until the date on which payment is made. Under the same pro­ vision, as from 1 January 1966, interest accrued over the year is to be con­ verted into capital every thirty-first of December.

14 The decisions relating to the working of the equalization scheme have properly provided that credits and debits resulting from its application shall carry interest. In particular, the undertakings which, having purchased im­ ported ferrous scrap or scrap treated as such, had a right to the benefit of equalization, were justfied in asking to be indemnified for dalays in the pay­ ment of what was due to them. Consequently the necessary balance in the management of the scheme, equality of treatment and the interdependence of payments required that this supplementary charge should be set off by the application of the same rate of interest on the sums owing by undertakings liable to contribute to the scheme.

15 A rate of interest of 5% per annum does not appear to be of an excessive nature. Further, contrary to the allegations of the applicant, it does not appear that the legal systems of the Member States include in general a fundamental principle opposed to the charging of compound interest. In order to facilitate the winding-up of the scheme, the decisions mentioned above were thus able to introduce compound interest which furthermore applies equally to the credit balances of the undertakings.

The objection of illegality raised against General Decisions Nos 7/63 and 19/65

19 The applicant challenges General Decisions Nos 7/63 and 19/65 as applied by the contested decision, on the basis of several objections of illegality.

20 A — These decisions are said to be discriminatory to the extent to which they exclude from the obligation to pay contributions and from the right to receive equalization payments, the tonnages of purchased alloy steel scrap and, in the case of undertakings having a steel foundry, the proportion of bought scrap consumed corresponding to the proportion of production of crude steel for castings.

21 The defendant has argued that the exemption of alloy steel scrap is justified by the difference between the alloy scrap market and that of ordinary scrap, the price of alloy scrap depending rather on the proportion of noble metals found in it than on that of ferrous scrap. The inclusion of alloy scrap in the equalization scheme had, according to the defendant, an undoubted influence on the market in non-ferrous metals which do not fall within the ECSC Treaty. The defendant has given as a reason for the exclusion of scrap in­ tended for integrated foundries, the necessity not to change the normal con­ ditions of competition between them and the independent foundries.

22 These explanations, which are not disputed by the applicant, in substance appear acceptable. The High Authority, by adopting General Decisions Nos 7/63 and 19/65, which furthermore only re-enacted previous provisions, was entitled to take the view that a proper application of the principles of the Treaty required the exclusion of the said scrap from the equalization scheme and there is nothing to show that in doing this it distorted the scheme and made it discriminatory.

27 The complaint must therefore be rejected.

28 C — The applicant goes on to allege that the data used as the basis of the average weighted equalization prices fixed by Decisions Nos 7/63 and 19/65 are incorrect. It says that the average weighted costs of internal recovered scrap were excessively reduced whilst the average costs of imported scrap were increased so that the equalization rate was raised to an unnecessarily high level. According to the experience of the applicant itself the prices of internal recovered scrap were consistently higher than the average prices adopted by Decisions Nos 7/63 and 19/65.

29 The defendant replies that the basic data for fixing average prices of imported scrap were taken direcdy from contracts of purchase made by the Joint Bureau of Ferrous Scrap Consumers, the only body competent to make pur­ chases of scrap on the international market on behalf of undertakings which

SIMET v COMMISSION

requested it to do so and that this fixing of prices consequently cannot attract any criticism. As regards the average prices of scrap bought within the market, the necessary data were derived from the monthly declarations of the undertakings containing information concerning the prices paid. These de­ clarations were strictly supervised by the checking of purchase invoices. The defendant further states that it is in the nature of the scrap market to cause, particularly on the basis of the location of consuming undertakings, price differences which are in themselves compatible with the unity of the market.

30 The applicant has submitted nothing capable of constituting even the begin­ nings of proof of its allegations. In particular it has failed to prove that the price differences in the market were changed through the functioning of the equalization scheme or that the functioning of the scheme aggravated the dis­ advantages which it suffered in comparison with better situated undertakings.

JUDGMENT OF 16. 3. 1971 — CASE 67/69

The application for damages

37 In its originating application the applicant asks the Court to hold the defen­ dant liable for wrongful acts or omissions within the meaning of Article 40 of the Treaty. A first unlawful act or omission is said to be constituted by the fact that on the one hand the Commission validly notified it for the first time on 18 October 1969 of the amount of its equalization contributions whilst on the other hand the applicant was obliged to publish its price lists for the period subject to equalization (April 1954 to November 1958) without know­ ing the amount of those contributions. The damage suffered by the applicant under this head amounts to 15% of its total sales of steel during the con­ tribution period.

38 A second wrongful act or omission is said to be constituted by the fact that because of its commitments to the Council, the High Authority was seriously in breach of the duty of supervision which is imposed upon it by the Treaty and grossly failed to exercise the normal diligence which any public admini­ stration must show, thus facilitating the perpetration of large-scale frauds within the framework of the equalization scheme. In its conclusions the applicant stated lastly that it would accept any solution capable of fixing the amount of damage which it had suffered.

39 As concerns the first head of the claim, the very nature of any equalization scheme which could legally have been established by the general decisions of the High Authority necessarily implied a posteriori calculations. In fact the equalization rate could be fixed only following consideration of a series of factors such, in particular, as the prices and the respective total quantities of imported scrap and of scrap purchased within the market.

43 Since neither the existence of a wrongful act or omission nor of damage special to the applicant has been established, the first head of the action for damages must be dismissed.

44 As regards the second head of the action it appears from the originating application that by the commitments which it mentions the applicant has in mind the recommendation of the Council, formulated at the time of the assent to Decision No 14/55 mentioned above, that the High Authority should limit very strictly the action taken by it in respect of and supervision exercised over the measures adopted by the Brussels organizations and their national offices. Acting in accordance with that recommendation the High Authority is stated to have failed in its duty to ensure the achievement of the objectives both of the Treaty and of the financial arrangement.

45 The possible existence of the alleged commitments is in any event irrelevant in the present case, since the responsibility of the Community authorities must be considered in the light of the established rules and the valid prin­ ciples applying to the matter. The High Authority, furthermore, has never sought to exonerate itself by relying on such recommendations of the Council, nor could it do so.

46 The applicant based its complaints of lack of supervision and of care on nothing more than the fact that very serious frauds took place in the manage­ ment of the equalization scheme.

47 The defendant considers the claim to be inadmissible on the ground that it is not possible to see exactly which facts the applicant intends to rely upon, as the basis of its right to compensation.

50 Under Article 67(2) of the Rules of Procedure the unsuccessful party shall be ordered to pay the costs.

The applicant has failed in its submissions.

On those grounds,

Upon reading the pleadings; Upon hearing the report of the Judge-Rapporteur; Upon hearmg the parties; Upon hearing the opinion of the Advocate-General; Having regard 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,

THE COURT

hereby: