C-275/80

KRUPP ν COMMISSION

In Joined Cases 275/80 and 24/81

KRUPP STAHL AG, whose registered office is at 165 Alleestraße, Bochum 4630, represented by A. Gödde and F. Stemmer, members of its Board of Directors, assisted by K. Pfeiffer, H. Biedenkopf, P. Ossenbach, Advocates, with an address for service in Luxembourg at the Chambers of J.-C. Wolter, Advocate, 2 Rue Goethe,

v

COMMISSION OF THE EUROPEAN COMMUNITIES, represented by H. Matthies, Legal Adviser, assisted by E. Grabitz, Professor at the Free University of Berlin, with an address for service in Luxembourg at the office of O. Montako, a member of the Legal Department, Jean Monnet Building, Kirchberg,

APPLICATION for a declaration that certain provisions of the notifications of the Commission of 1 November 1980 and 19 December 1980 determining, pursuant to the general Commission Decision of 31 October 1980 (Official Journal L 291, p. 1), the production quotas for the applicant for the last quarter of 1980 and the first quarter of 1981 are void,

Facts and Issues

The facts of the case, the course of the the same month during the period procedure, the conclusions, submissions from July 1977 to June 1980 during and arguments of the parties may be which the total production of the summarized as follows: four groups of rolled products was the highest. The three months thus chosen, which will not necessarily be consecutive, shall constitute the I — Facts and p r o c e d u r e reference period.

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— Where this undertaking has 2. Course of the procedure achieved for the year ending in 1979 a profit which is shown in its annual report or reported to the national By application received at the Court official agency responsible for the Registry on 11 December 1980 the filing of the annual accounts of applicant brought an action for a companies." declaration that the Commission's notification of 1 November 1980 was in part void. In that case the reference production figures have to be increased "so as to By a second application received at the reach the total equivalent to the Court Registry on 9 February 1981 the production of the corresponding quota applicant brought an action for a of 1974". declaration that the Commission's notification of 19 December 1980 was in part void. After the Commission had, by Article 7 (2) of Commission Decision letter dated 9 February 1980, informed 2794/80/ECSC also imposes restrictions the applicant of its decision to amend the with regard to the delivery of products notification of 19 December 1980, the subject to the quota system. Under­ applicant pursued its action in modified takings "may not exceed, by group form by lodging a supplementary of products, for deliveries within application at the Court Registry on the Common Market, the ratio of 10 March 1981. Community deliveries to total deliveries in the twelve months of the period from July 1977 to June 1980 in which the total By order of 8 April 1981 the Court production of the four groups of rolled ordered the cases to be joined for the products was the highest". purpose of the oral procedure.

1. Declare that the actions in Cases 1. Infringement of essential procedural 275/80 and 24/81 are unfounded; requirements and defective statement of reasons. 2. Order the applicant to pay the costs. The applicant maintains that in so far as the contested notifications are individual decisions addressed to it they have to be Ill — Submissions and argu­ in the form provided for by Decision m e n t s of t h e p a r t i e s 22/60 of the High Authority of 7 September 1960 on the Implementation of Article 15 of the ECSC Treaty A — Admissibility (Official Journal, English Special Edition, Second Series VIII, p. 13). According to that decision, decisions In its application in Case 275/80 the relating to the ECSC must be described applicant devotes lengthy argument to as such in their titles; show the date on the question of the admissibility of its which the High Authority, now the action. It argues that although the Commission, adopted them, be signed by contested measure is described as a the President, Vice-President or a notification it is in fact an individual member of the High Authority (now the decision within the meaning of Article 14 Commission), be preceded by a reference of the ECSC Treaty capable according to the provisions of the Treaty or the to the second paragraph of Article 33 decisions which form their legal basis thereof of being the subject of an action and contain a statement of reasons and before the Court of Justice. be set out in articles. Notification may be by "registered post with receipted delivery". None of these formal According to the Commission the requirements was observed by the notifications in question in conjunction contested notifications. The applicant with the application therein of the points out that the notifications are not provisions or the General Decision described as decisions in their title and 2794/80 constitute individual decisions addressed to the applicant. Consequently do not appear to have been signed by a the Commission does not challenge the member of the Commission since there is admissibility of the actions for a only a mention of the name of a declaration that the notifications are Commissioner. Nor do the notifications void. show the date of the Commission's decision, which indicates, in the applicant's view, that contrary to the In its application in Case 24/71 Krupp rules of the ECSC Treaty the Stahl AG refers to the Commission's notification is not based upon a decision

In the Commission's view the notifications must be considered in conjunction with Decision 2794/80 Apart from infringement of the essential which states the general criteria which procedural requirements provided for by the individual decisions sent in the form Decision 22/60 of the High Authority, of notifications to the undertakings Decision 2794/80 of the Commission simply apply. That state of affairs was also infringes the requirement to state recognized by the Court in its order of the reasons upon which it is based and 16 December 1980 (Case 258/80 R that requirement, as the Court of Justice Rumi v Commission). Since the noti­ has frequently stated, does not derive fication is confined to applying math­ from formal considerations but is ematically the criteria contained in the intended to enable the parties to defend general Decision 2794/80 to the their rights, the Court to exercise its production figures supplied by the review of legality and the Member States applicant itself it was not necessary to and any national concerned to know the state the reasons on which those circumstances in which the Commission notifications were leased, each time has applied the Treaty. The applicant repeating a large part of Decision recognizes that the reasons may even be 2794/80. Moreover the applicant is stated summarily provided that they are wrong in claiming that it was prevented clear and relevant; the requirements from checking the notification from the regarding the statement of reasons may point of view of law and of fact since it vary according to the circumstances and does not challenge the calculations as in certain conditions reference to the such and its only complaint is that the statement of reasons in a basic general Commission did not apply Article 4, decision may be sufficient (judgment of 4 points 4 and 5, of Decision 2794/80

cumulatively: their non-application is not "Subject to the principle of collegiate denied. At the most the Commission responsibility being respected in full the admits that it might have added to the Commission may empower its members words "adapted pursuant to Article 4" in to take, in its name and subject to its the notifications in question the number control, clearly defined measures of of the paragraph applied in each management or administration." particular case but that is not a fundamental condition. The applicant itself moreover easily found which paragraph of Article 4 had been applied and the Commission gave all the necessary explanation to the under- It is on that basis that the Commission takings which asked for them. empowered one of its members, Viscount Davignon, to ensure implementation of Decision 1794/80 by working out quotas for each undertaking according to an arithmetical process leaving no discretion to the Commission. In those circum- As to the question of the infringement of stances, since the determination of the essential procedural requirements quotas is simply an administrative provided for in Decision 22/60 of the measure, the principle of collegiate High Authority the Commission observes responsibility of the Commission was first of all that in its view these formal respected in full. provisions are not mandatory. Only the Treaty contains such provisions and in so far as Decision 22/60 is not simply repeating those provisions it contains rules relating to an administrative practice of the Commission from which it may deviate where as in the present 2. Infringement of Article 4 of Decision case it is justified by particular circum- 2794/80 stances. Moreover the majority of the rules of Decision 22/60, which the applicant alleges to be infringed, do not constitute essential procedural require- ments. That is so as regards the description "decision", the written In Case 275/80 the applicant complains signature, the date and the division into that the Commission gave it only the articles. As regards the applicant's benefit of Article 4, point 5, of Decision objection that the notifications are not 2794/80. In its view the Commission based on a decision taken by the ought also, pursuant to Article 4, point Commission as a collegiate body, the 4, of that decision, to have adapted the Commission states that the notification is applicant's reference production figures based on a decision taken by the since it had activated new plant after Commission following the procedure laid 1 July 1980, so bringing the production down for such cases as the present by the possibilities to a level exceeding by more first paragraph of Article 27 of the pro- than 15% the total production visional Rules of Procedure of the possibilities existing for 1979. In its Commission of 6 July 1967 (Journal application in Case 24/81, as amended Officiel 147, p. 1, 179, p. 1) as amended after the Commission's decision granting on ,23 July 1975 (Official Journal L 199, it the benefit of Article 4, point 4, the p. 43) which provide as follows: applicant challenges the Commission's

On the one hand it is determinant that (a) Conditions for applying Article 4, Article 4, point 4, simply speaks of an point 4 increase in "production possibilities" without referring to a specific calendar year. If that were not so it would be necessary in the applicant's view to According to the terms of this provision apply, for the first two quarters of 1981, adaptation of the reference production is criteria which could not be definitely possible where new plant is activated in assessed until the end of the year, that is, so far as "the new production possibility six months after the expiry of the system thus established brings the total brought into force by Decision 2794/80. production possibilities for the four Before then there would be only groups of products to a level exceeding estimated figures which might prove to by at least 1 5 % the total production be inaccurate. possibilities existing for 1979". The Commission, relying on the Ques­ tionnaire 2-61 on investments which was supplied by the applicant for 1980, On the other hand if the increase in maintains that the production capacity of production were assessed taking into Krupp Stahl AG increased by · only account the possible production for the 9.35% between 1979 and 1980. The whole of 1980, that, in the applicant's applicant recognizes that the changes in view, would lead undertakings which, capacity give rise to a maximum possible activating new plant, could close down increase in production of 9.35% for the outdated plant, to postpone such whole of 1980. On the other hand if the reduction in their production, otherwise total production possibilities when the desirable because of the situation of new plant is activated (the term excess production, for unless they did so

A further condition is that the increase In addition for yet another reason the in capacity must be significant. The Commission's interpretation is incompat- Commission in that respect stresses that ible both with the wording and the aim the applicant is the only integrated of the rules adopted. To assess the undertaking in respect of which, at least production increase in terms of the for 1981, application of Article 4, point maximum possible production increase 4, comes into question. As regards calcu- for 1980 in relation to that of 1979 lation of the growth in production would amount to requiring a more or capacity the Commission considers that less large increase in those possibilities it had to use for that purpose the infor- according to whether the activation of mation taken from the annual inquiry the new plant takes place earlier or later into investments made by means of in the course of the year. The wording Questionnaire 2-61 in which the concept of Article 4, point 4, does not justify of "maximum possible production" is such a result. Nor is there any reasonable that which the Commission has always ground which does so. used. It has nothing in common with the concept of a technical production capacity used by the applicant: such an abstract and technical concept is of no use to those wishing to obtain as realistic In the Commission's view Article 4, point as possible a view of the market. 4, must be interpreted in the general context of the system of production quotas. The object of the provision in question is to take into account, in the quota system, new production capacities That the application of these criteria created after the expiry of the reference results in not taking the new plant into period. But this is subject to certain account immediately, but only for 1981, preconditions and is not to take place is the result intended by the provision, immediately and not to the full extent. which is aimed at a gradual introduction of the new production possibilities. The new production possibilities are moreover never fully taken into account. Thus the Commission must not have given an unfavourable opinion on the investment programme in question. In the applicant's case the Commission On the basis of those explanations the states that although the surplus capacity Commission considers that it was not in the hot wide-strip sector does not necessary to state expressly in Article 4, prevent modernization of the existing point 4, of Decision 2794/80 that plant, it does mean that new investments the increase in production possibilities

referred to a whole year since it is clear (b) The simultaneous application of that such increase must be compared Article 4, points 4 ana 5 with the total production possibilities existing for 1979 and that it is not possible, as the applicant would like to compare data based on different concepts. The applicant admits that the wording of Article 4 is not felicitous and that it may be concluded from the reference both at point 4 and point 5 of Article 4 to an increase in the reference production that the two systems allow only one increase The applicant is also mistaken in in the reference production and that only thinking that the Commission's view the provision most favourable to the would lead to worthless results since the undertaking concerned applies to it. Such production capacity for 1981 cannot be an interpretation however would in its assessed. The questionnaire which under­ view conflict with the purpose and takings had to send to the Commission general scheme of Decision 2794/80. in the spring of 1980 contains figures for 1979, 1980 and 1981 which are the only ones which could conceivably be taken into account in a uniform manner. In that respect it observes first of all that the term "production" is not always used in the same sense in Decision 2794/80. For example, whereas in Article 4, points 1 and 2, the reference production is As regards the impact of Article 4, point the volume of production calculated 4, on the possibilities for undetakings, according to Article 4, points 1 and 2, in which have undertaken new investment, Article 5, points 1, the same term to shut down plant, the Commission obviously refers to the production observes that the absence of an unfavour­ resulting from the application of the able opinion on an investment shows that adaptation rules in Article 4, points 3 to after consideration there is no cause in 5, that is, to the production as already the Commission's view to shut down increased. The fact that the term certain old plant. In those circumstances "reference production" is to be found in the undertaking has no ground for Article 4, point 4, does not therefore shutting down the plant on its own mean that that provision cannot be initiative. The Commission also observes applied to the reference production as that although, under Article 4, points 1 and 2, closure is irrelevant in a case of already increased pursuant to Article 4, normal reference production, that is point 5. because there it is not a question of considering capacity but of production actually achieved. Finally the Commission admits that in requiring a Further the aim of the provisions of production increase of 15 % for the Article 4 with the exception of point 4 is whole of 1980 it is imposing a condition to ensure that past circumstances are which will not be fulfilled save in very taken into account in calculating the rare cases, but that is fully justified by reference production figures. Point 4 is the objective pursued which is to take intended to deal with the effects of account of large, new plant only bringing into operation new capacity. It gradually and to a limited extent. follows that to take account or point 4

The Commission also rejects the In both cases, even if it does not consider applicant's argument to the effect that the question to be decisive in Case Article 4, points 3 and 5, refer to the 275/80, the Commission denies that it is past whereas point 4 refers to the period possible to apply points 4 and 5 of subsequent to June 1980. In the Article 4 of Decision 2794/80 simul- Commission's view the decisive factor is taneously. the reference period taken into account. That is 1974 in point 5 and the period 1977-80 in point 4. It is therefore wrong In the first place, in the Commission's to take as basis the higher production of 1974 (applying point 5) and to apply to view, the applicant is wrong in thinking it a further upwards correction provided that the concept of reference production only for the period 1977-80. A double is not used in the same sense in Articles 4 increase of that kind could, in the and 5 on the ground that, unlike Article Commission's view, lead to unreal 4, Article 5, point 1, obviously refers to reference production figures, depriving production as already increased. The the rate of abatement of any practical applicant is not in fact taking account of effect. the first sentence of Article 4 stating "the quarterly reference production figures for each undertaking shall be calculated as follows:" The Commission also observes that cumulative application of points 4 and 5 could involve discrimination between The calculation is made in two stages: undertakings in the same position

KRUPP ν COMMISSION

That is why for the first quarter of 1981 The Commission illustrates its argument it amended by letter dated 9 February with the following example: 1981 the applicant's reference production figures for Group I by applying Article 4, point 4, and maintained the reference production figures for Groups II to "Before July 1977 (beginning of the IV calculated on the basis of Article 4, reference period) two undertakings, " A " point 5. and " B " , both reduced their production, which as 100 in 1974 to 80. Subsequently " B " activated new plant of a capacity The applicant rejects the Commission's of 30. analysis. In its view Article 4 provides three systems of increase of the reference production without stating that there can " A " is given a reference production of be only one increase and there is no 100 (point 5) and " B " 110, whether the general principle of interpretation of new plant is activated before or after Community law according to which 1 July 1980, for if the production of the several provisions granting different new plant takes place during a reference benefits in different circumstances are

JUDGMENT OF 28. 10. 1981 — JOINED CASES 275/80 AND 24/81

More fundamentally however the applicant criticizes the Commission for not having compared two undertakings only one of which had effected the re- structuring measures taken into account The applicant also challenges the pursuant to Article 4, point 5, whereas example put forward by the Commission. both have new plant in operation after In this respect it first of all points out 1 July 1980. Such a comparison would, what it considers to be errors of law and in the applicant's view, give the following fact in the example. Thus in its view it is result: wrong to assume that " B " is granted a reference production of 110 whether the new plant was activated before or after 1 July 1980. T o take new plant activated before 1 July 1980 into account in calcu- lating the reference production pursuant to Article 4, point 1, is possible only "— Undertaking A reduced its 1974 subject to strictly limited conditions and production of 100 to 80 before July quite impossible in certain circumstances. 1977 and after 1 July 1980 activated

KRUPP ν COMMISSION

As regards the discrimination which, " — Undertaking C, like undertaking A, according to the Commission, would reduced its 1974 production of 100 ensue from a cumulative application of to 80 before July 1977 but did not points 4 and 5, the Commission remarks subsequently instai new plant. that, in its view, the applicant has not Application of Article 4, point 5, denied the possibility of such discrimi­ leads in this case to a reference nation. It has simply maintained that production of 100." discrimination could come about

JUDGMENT OF 28. 10. 1981 — JOINED CASES 275/80 AND 24/81

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on the investment programme the reference production. The condition laid Commission in fact gave to the unfavour­ down in Article 4, point 4, is thus only able opinion within the meaning of the the expression of the general objectives fourth paragraph of Article 54, which by which the Commission pursues in its its very nature is not binding, as is clear decision and cannot therefore be relied from the fourth paragraph of Article 14 upon to support an objection of of the Treaty, legal effects which that illegality. opinion could not have.

JUDGMENT OF 28. 10. 1981 — JOINED CASES 275/80 AND 24/81

delivery quotas. The doctrine of implied imposed import quotas. In that respect, powers cannot justify the establishment however, Article 74 of the ECSC Treaty of a system of delivery quotas. That allows the Commission only to make doctrine, which moreover is rejected by recommendations to the governments of the great majority of the governments of the Member States. Since the doctrine of the Member States, is also rejected by implied powers is thus not applicable in legal writers having regard to specific relation to imports, the same rules must articles of the Treaties (Article 95 of the also apply to delivery quotas. ECSC Treaty, Article 235 of the EEC Treaty and Article 203 of the EAEC Treaty) providing detailed rules for the case where the powers given by the Treaties are not sufficient to achieve Legal writers consider the introduction

It allows a whole ECR 292 at p. 299) the application to series of interpretations and thus makes Community law of a rule of interpret- it impossible for the undertakings ation "generally accepted in both inter- concerned to calculate their delivery national and national law, according to quotas. It might even lead to a certain which the rules laid down by an inter- discrimination between manufacturers. national treaty or a law presupposes the More particularly, the applicant states rules without which that treaty or law that it is not clear whether the duty would have no meaning or could not be which Article 7 imposes on undertakings reasonably and usefully applied." not to exceed, as regards deliveries of products subject to the quota system in the common market, the ratio between

KRUPP ν COMMISSION

of Decision 2794/80 seems however to Thirdly, the reference period prescribed indicate that Article 7 applies only to the by Article 7 (2) of Decision 2794/80 is deliveries of products manufactured by quite inappropriate. The reference period the undertaking during the period of in question is one of twelve months validity of the quota system. In that case whereas the system of delivery quotas, as however there would be discrimination may be inferred from the first paragraph in favour of undertakings which are able of Article 9, is related to the production to compensate for the restriction on their quotas determined on a quarterly basis. possibilities of delivery in the common Therefore in the applicant's view it market by deliveries from stock or other would have been more appropriate to sources. Such discrimination would establish reference periods on a quarterly favour the least competitive undertakings basis rather than a reference period of if they possessed extensive stocks and a whole year. The reference period would not be justified by the purpose of adopted makes it objectively impossible the quota system. The applicant adds for undertakings to determine their that the system introduced by Article quotas. Moreover the applicant fails to 7 (2) of Decision 2794/80 also discrimi­ see why delivery quotas had to be nates against undertakings which during determined on the basis of a reference the reference period fixed by that period in which "the total production of provision reduced their stocks by exports the four groups of rolled products was to markets outside the Community. That the highest". In contrast to the amount means that undertakings affected by the of deliveries the volume of production is delivery quota system could, while it irrelevant in this context, all the more so applies, sell only part of their current since there is classification according to production on the Community market the type of product. although during that reference period they have delivered the whole or their production in the common market.

As in Case 275/80 the Commission takes non-member countries from affecting the the view that the objective illegality is supplies in the common market. That inadmissible. There is no connection provision remains within the limits of the between Articles 4 and 7 of Decision powers which the Commission has under 2794/80. Article 7 is intended to prevent, Article 58 of the Treaty according to the in the event of exports declining, case-law of the Court cited by the products which have not been sold applicant, without there being any outside the Community from being necessity of establishing whether the offered on the Community market. For Community has general implied powers. that purpose it is provided that the ratio Without these rules the purpose of the of Community deliveries to total grant of powers which is to re-establish a deliveries as existing in the reference balance between supply and demand, period should not be exceeded. The ratio could not be achieved or could be is not identical with the total of the achieved only by means of rules production quotas but is a statistical ratio restricting to a far greater extent the for each undertaking and is defined freedom of decision of undertakings. independently of the production quotas for the undertakings.

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Decision

1 By applications registered at the Court Registry on 11 December 1980 and 9 February 1981 Krupp Stahl AG brought pursuant to the second paragraph of Article 33 of the ECSC Treaty two actions for a declaration that the notifications of 1 November (Case 275/80) and 19 December 1980, the latter as amended by letter dated 9 February 1981 (Case 24/81), are void in so far as they determine production quotas for crude steel and for hot-rolled wide and narrow strip under Group I of Article 2 of Decision 2794/80/ECSC of 31 October 1980 establishing a system of steel production quotas for under­ takings in the iron and steel industry (Official Journal L 291, p. 1).

2 Article 3 of Decision 2794/80 provides that the Commission is to fix quarterly production quotas for each undertaking " o n the basis of the reference production figures as referred to in Article 4 of that undertaking" and "by application of abatement rates to those reference production figures as referred to in Article 5". Article 4, points 1 and 2, determines the method for calculating the reference production. Article 4, points 3 to 5, defines three exceptional situations justifying an increase in the reference production figures calculated pursuant to points 1 and 2.

3 Article 4, points 4 and 5, read as follows:

"(4) Where, further to an investment programme duly reported and not the subject of an unfavourable opinion, the undertaking activates a new plant after 1 July 1980, the Commission shall adapt appropriately the reference production of this undertaking, provided it finds that the new production possibility thus established brings the total production possibilities for the four groups of products to a level exceeding by at least 15 % the total production possibilities existing for 1979.

4 By notification of 1 November 1980 the Commission determined the production quotas for the applicant for the fourth quarter of 1980. In doing so it applied Article 4, point 5, of Decision 2794/80. The applicant however took the view that it satisfied not only the conditions of Article 4, point 5, but also of Article 4, point 4. It therefore sought the benefit of the cumu- lative application of these two provisions. It made the same request in regard to the production quotas which the Commission had determined by notification of 19 December 1980 for the first quarter of 1981.

7 The form of decisions recommendations and opinions of the High Authority is determined in detail by Decision 22/60. Thus it is provided that the measure is to be expressely described in its title, that it must show the date of its adoption, the form of signature, contain reference to relevant legislation and to opinions obtained, be furnished with a statement of the reasons on which it is based and be set out in the form of articles. In addition it pre­ scribes the procedure for notifying measures of the High Authority.

8 It is not denied that the notifications sent to the applicants do not comply with these formal requirements. The Commission however denies that they are essential requirements non-compliance with which makes the contested notifications void.

9 Decision 22/60 prescribes in such a detailed manner the formal presentation of measures of the High Authority in order clearly to distinguish the nature of measures by using standard forms. Failure to comply with that requirement nevertheless does not entail the nullity of measures when they are unquestionably individual decisions taken on the implementation of a scheme previously established by means of a general decision adopted in accordance with the formal requirements prescribed by Decision 22/60. That is precisely the case with the contested notifications which constitute no more than the application of Article 3 of Decision 2794/80 under which the

JUDGMENT OF 28. 10. 1981 — JOINED CASES 275/80 AND 24/81

Commission fixes quarterly production quotas for each undertaking and notifies them of it. The submission that the contested notifications did not comply with the formal requirements laid down by Decision 22/60 must therefore be rejected.

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itself, of the rules laid down by Decision 2794/80 or to prevent the Court from exercising its task of review and therefore cannot adversely affect the validity of the notification of 1 November 1980.

T h e c o n d i t i o n s for applying Article 4, p o i n t 4, of Decision 2794/80

14 Article 4, point 4, provides for adaptation of the reference production when the new production capacities bring "the total production possibilities for the four groups of products to a level exceeding by at least 15 % the total production possibilities existing for 1979". It is not denied that the applicant activated on 1 July 1980 an additional pre-heating oven, the construction of which was not the subject of an unfavourable opinion on the part of the Commission. In the applicant's view the effect of that new plant was immediately to increase the production capacity of its undertaking by at least 15 % for the four groups of rolled products covered by the quota system and it concludes from this that it is entitled to the increase in the reference quota provided for by Article 4, point 4. The Commission denies that the conditions for applying that provision are satisfied. In its view the total production possibilities for the four groups of products in question was increased, as a result of the investment in question, by only 9.5 % in relation to the total production possibilities existing for 1979.

15 That discrepancy arises from a difference of interpretation of Article 4, point 4. The applicant maintains that it suffices that the new plant should, on the day on which it is activated, increase the production capacity by 15 % in relation to that for 1979. It bases that argument essentially on the wording of the provision which does not specify the annual nature of the increase in production possibilities and the fact that the interpretation proposed by the Commission would make taking into consideration new production capacities depend on the date on which they became operative.

19 The interpretation proposed by the Commission finds support neither in the wording nor in the objectives of the provisions in question. They provide for a comparison between the total production possibilities existing for 1979 and the new production capacity arising from the activation of new plant. The difference between the two production capacities must be at least 15%. In thus comparing the production capacity existing for 1979 with that existing when new capacity is brought into operation the benefit of Article 4, point 4, is granted to every undertaking which increased its production capacity by more than 15% at any time during the second half of 1980. On the other hand in comparing, as does the Commission, the annual production capacities for 1979 and 1980 the increase in the quota is made to depend on an increase in production capacities which must be proportionately larger according to how late in the second half of 1980 new plant is activated and the result is to favour or place at a disadvantage undertakings on the basis of a factor alien to the system.

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20 It follows that the interpretation and application by the Commission of Article 4, point 4, in its notification to the applicant of 1 November 1980 are not well-founded and that accordingly the notification must be declared to be void.

T h e c u m u l a t i v e a p p l i c a t i o n of A r t i c l e 4, p o i n t s 4 a n d 5, of Decision 2794/80

21 The restructuring policy of Krupp Stahl AG obliged it to reduce its production until July 1980. At that time it activated new plant which sub­ stantially increased its production possibilities. It follows that the applicant satisfies the conditions of both points 4 and 5 of Article 4. It therefore asks that it be granted the cumulative benefit of the increases in the reference production provided for by both provisions. The Commission considers that in a situation such as that of the applicant there is no ground for cumu­ latively applying Article 4, points 4 and 5, and that only the provision which is most advantageous to the undertaking in question should be applied.

25 The applicant finds justification for the cumulative application to which it considers itself entitled in the fact that points 4 and 5 of the provision at issue are concerned with different cases and have different objectives. Point 4 takes account of a growth in capacity in respect of which the Commission has not given an unfavourable opinion whereas point 5 takes account of previous restructuring efforts which have led to the elimination of non- competitive capacities. Every undertaking which, like the applicant, has undertaken both forms of restructuring is entitled to the two increases cumu- latively, each taking account of a particular kind of restructuring.

26 It is clear, as the Commission stresses, that extensive application of the exceptions to the reference production system provided for in Article 4, points 3 to 5, of Decision 2794/80 would imperil the fundamental objective of the decision, namely to re-establish a balance between supply and demand in the steel market. It follows that a restrictive interpretation is consistent with the general objective of the decision. That is therefore the interpretation which must be adopted unless it prevents certain special objectives of the provisions at issue of Decision 2794/80 from being taken into account.

27 As regards the specific objectives of Article 4, points 4 and 5, it is true, as the applicant points out, that they take account of two different kinds of re- structuring. It does not however follow that the two provisions must therefore be applied cumulatively.

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32 With regard to those two objections it should be pointed out that although in an action for a declaration that an individual decision is void the applicant may allege that certain provisions of the general decisions which the

JUDGMENT OF 28. 10. 1981 — JOINED CASES 275/80 AND 24/81

contested decision implements are illegal, the applicant may do so only if the individual decision is based on the rules alleged to be illegal.

33 In this case the contested notifications do not apply the consequences attached to an unfavourable opinion since no such opinion was given in respect of the applicant's new investments. Nor do they fix delivery quotas and are not therefore based on Article 7 of Decision 2794/80. Accordingly the objections of illegality raised by the applicant are inadmissible.

Costs

34 The Commission has failed in its submissions in Case 275/80 and the applicant in Case 24/81.

2. For the rest, dismisses the application;

3. Orders the parties to bear their own costs.

Menens de Wilmars Touffait Due

Mackenzie Stuart O'Keeffe Koopmans Everling

Delivered in open court in Luxembourg on 28 October 1981.

For the Registrar