C-276/80

THE COURT,

composed of: J. Mertens de Wilmars, President, G. Bosco, A. Touffait and O. Due (Presidents of Chambers), P. Pescatore, Lord Mackenzie Stuart, A. O'Keeffe, T. Koopmans, U. Everling, A. Chloros and F. Grévisse, Judges,

Advocate General: G. Reischl Registrar: A. Van Houtte

gives the following

JUDGMENT OF 16. 2. 1982 — CASE 276/80

JUDGMENT

The facts of the case, the course of the Group IV for the fourth quarter of 1980 procedure and the submissions and were to be fixed by application of an arguments of the parties may be abatement rate of 17.39 % on the basis summarized as follows: of the reference production figures referred to in Article 4. By virtue of Article 5 (2) of the decision, the rate of abatement in the case of crude steel is to correspond I — Facts and p r o c e d u r e to the average abatement rates of the four groups of rolled products weighted A — The background to the dispute according to the reference production of each of those groups of products. 1. By Decision N o 2794/80/ECSC of 31 October 1980 (Official Journal 4. Article 4 provides that the quarterly 1980, L 291, p. 1), the Commission, reference production figures for each considering that by reason of the decline undertaking shall be calculated as in demand for steel the Community was follows : confronted with a period of manifest crisis within the meaning of Article 58 of the ECSC Treaty and that the means of " 1 . For each month of the relevant action provided for in Article 57 were quarter, reference shall be made to not sufficient to deal with that situation, the same month during the period established a system of production from July 1977 to June 1980 during quotas for crude steel (Article 1) and which the total production of the for four groups of rolled products four groups of rolled products was (Article 2). the highest. The three months thus chosen, which will not necessarily be consecutive, shall constitute the Group IV covers light sections, which include coiled wire rod, concrete reference period. reinforcing bars and other merchant bars, coming under lines 132, 133 2. The reference production figures and 134 respectively of the Eurostat shall be the same, for crude steel and questionnaire. for each of the other groups of rolled products, as the production of the corresponding items during the 2. Article 1 (4) of the decision provides reference period." fór the quota system to be managed by the Commission. It also provides that the Commission may obtain assistance from 5. Article 7 (2) of the decision independent agencies or from experts provides : and that the business secrecy of the undertakings must be maintained. "With regard to the delivery of products subject to the quota system, undertakings may not exceed, by group of products, 3. By virtue of Articles 3, 4 and 5 of for deliveries within the common market, that general decision, the quotas for the ratio of Community deliveries to

Rolled products 2 Group I 0-78 18-93 Group II 21- Group I I I 53 Group IV 8 000 8 600 5 500 22 100 17-39 18 257

Total I-IV 8 000 8 600 5 500 22 100 18 257

1 -3 S t e e l 7 9

9. On 10 November 1980 the applicant the applicant's quota for the fourth requested, on the basis of Article 4 (4) of quarter of 1980 was increased to 25 656 the general decision (new plant), an tonnes. However, during that quarter the increase in its basic quota. That request applicant produced only 22 827 tonnes, was granted by decision of the which nevertheless exceeds its original Commission of 18 December 1980 and quota. On account of the late notifi-

JUDGMENT OF 16. 2. 1982 — CASE 276/80

cation of the increase the Commission In the alternative agreed, at the request of the applicant, that the increase granted might be carried forward to the first quarter of Order the Commission to produce to the 1981. Court of Justice all the documentation relating to the studies carried out on the state of the concrete reinforcing bars industry and to the necessary opinion of B — The course of the procedure the Consultative Committee;

PADANA v COMMISSION

The arguments advanced by the 1. The adoption by the Commission of a Commission with regard to steel plan for the voluntary limitation of products as a whole are set out in the deliveries which entered into force on "request for the Council's assent" 1 January 1977 and which lasted, (Annex I to the defence). after an extension, until 31 December 1977. That plan formed part of the guide-lines on steel policy laid down The applicant does not put forward by the Commission on 1 March 1977 formal conclusions in its reply but and presented by it to the Council, submits that the Commission should be which approved them at its meeting in required to provide the following details Rome on 25 and 26 March. "There in order that the actual level of demand are four main objectives — preserving may be known: the unity and openness of the market, stabilization and modernization of production capacities, measures to The number of undertakings which redress the market situation, and requested an increase in their quotas; conversion and redeployment", (Eleventh General Report on the Activities of the European Communi- ties, p. 86). The extent to which unused quotas were transferred (prior authorization or merely notified after the event). 2. After the failure of that plan in certain sectors the Commission adopted Decision No 962/77/ECSC of 4 May In its rejoinder the Commission repeats 1977 (Official Journal 1977 L 114, the conclusions formulated in its p. 1) which imposed minimum prices statement of defence. under Article 61 of the ECSC Treaty. The imposition of minimum prices was extended until 31 December 1978 With regard to the new requests for by Commission Decision N o 3000/ information, the Commission considers 77/ECSC of 28 December 1977 that they are irrelevant. (Official Journal 1977 L 352, p. 1) on the ground, in particular, that "supply is still considerably in excess of demand" and that "the state of the market in concrete reinforcing bars is III — Submissions and argu- still jeopardizing the attainment of the m e n t s of t h e p a r t i e s objectives set out in Article 3 of the Treaty".

the Commission had failed to institute a undertakings and in general fulfilled system of production quotas at the same them. time as the system of minimum prices (paragraph 63 of the decision). (ii) With regard to prices, the Commission published guide prices for each product or group of In a communication dated 8 November products and requested the under- 1979 on the measures against the crisis in takings to quote these prices in their the Community steel industry in 1980 the lists, which was done in most cases. Commission gave reason to think that, at For certain products — such as least in the concrete reinforcing bars concrete reinforcing bars — for sector, the reintroduction of minimum which undertakings to limit prices might be expected during 1980. By production were not given to a the general decision, Decision N o 2794/ sufficient degree the Commission 80/ECSC, the Commission introduced a fixed binding minimum prices. It system of production quotas applicable is important to emphasize the in quarters. relationship between the measures taken concerning quantities and those taken with regard to prices: a curtailment of the supply of steel products has always been considered The Commission recalls in its statement a condition sine qua non for any of defence the evolution of the policy measures taken to support prices; pursued in recent years by the Community institutions in order to assist the steel industry in overcoming its (iii) The restriction of internal supplies serious structural crisis. The Commission of steel products required to be observes that the Court is entirely accompanied by measures concern- familiar with the policy pursued until ing imports from non-member 1978 since it was described in the countries. The Commission first of "concrete reinforcing bars" case. all fixed basic prices for the various products: imports at prices below those basic prices could be treated as dumping; an ad hoc procedure might lead to the introduction of an The Commisison's action involved three different aspects: anti-dumping duty on imports of the product in question from the country of origin. The Commission also concluded with many countries arrangements concerning both the (i) With regard to the quantities to be quantities to be imported and selling produced, the undertakings were prices on the Community market. requested to give an undertaking Finally, steps were taken to ensure not to exceed production quotas improved monitoring of imports. fixed by the Commission for each product or group of products on the basis of an allocation amongst them of total quantities arising from The combined effects of the initial results forward programmes for steel. The of the restructuring and the recovery of majority of companies accepted such the market made it possible at the end of

1979 to relax the measures by abolishing In view of the failure of the non- the binding minimum prices for two of compulsory means of action concerning the three products for which they had both production and prices the been imposed. Some months later the Commission could not envisage any minimum prices for hot-rolled wide strip solution other than intervention with were also abolished (Commission regard to production under Article 58 of Decision N o 2091/80/ECSC of 4 Au- the Treaty. The general decision, gust 1980, Official Journal L 203, p. 20). Decision No 2794/80/ECSC, which imposes production quotas, is based, like the whole of the policy against the crisis in the steel industry, on the fundamental principle of solidarity between the under- Unfortunately, after the first months of takings which is set out in the preamble 1980, the conditions on the market to the Treaty and given specific form in deteriorated appreciably. From the a number of provisions, namely Article month of May the production forecasts 49, the second paragraph of Article 53, in the principal steel-consuming sectors Article 56 and, above all, Article 3 (the showed a clear tendency to fall; orders priority of the common interest, which received by the undertakings were presupposes the duty of solidarity). falling; the production of crude steel, which in June 1980 was still higher than in June 1979, began to fall in July; the production forecasts of the undertakings for the fourth quarter of 1980 were The situation on the market in concrete 20 % lower than production in the reinforcing bars deteriorated early in fourth quarter of 1979; the rate of 1980 and a crisis threatened from the utilization of plant, which for the second month of May. From May to September quarter of 1980 was around 70 % , fell to the fall in orders amounted to 9.1 % for 58 % in September and the undertakings the Community as a whole, reaching forecast that it might fall below 55 % peaks of 59 % in the Netherlands, during the fourth quarter of the year. 57.3 % in Belgium and 35.6 % in the Between January and September 1980 United Kingdom. There was also a sharp steel prices fell by 13 % , whilst fall in prices (DM 100 in relation to the production costs increased by 5 %. The guide prices which had been adopted in Commission set out a full analysis of the great majority of lists). developments in 1980 in its document of 6 October 1980 entitled "Request for the Council's assent to the establishment of a system of production quotas for the steel industry" ( C O M / 8 0 / 5 8 6 final), a copy The rate of utilization of plant was also of which is annexed to its statement of very low. The applicant itself, with a defence. production capacity of 230 400 tonnes per annum, produced only 81 000 tonnes in the period from January ot October 1980. The Commission further claims that, confronted with the intensification of the crisis, the producers increasingly failed to comply with their delivery programmes and finally refused to give undertakings The Commission consequently con- for the last quarter of 1980 either on sidered that for that product too a quantities or prices. system of quotas was indispensable.

With regard to the decline in demand it disputes that concrete reinforcing bars It emphasizes, finally, the Community are affected. Even if — and the applicant nature of the crisis facing the steel challenges this — recourse may be had industry. to Article 58 (1) when there is a decline in demand limited to certain products and sectors, it is illogical when the sector in Second submission: infringement of question is a sector of semi-finished Article 58 (2) of the Treaty products (crude steel) to impose a reduction in demand in the subsequent stages of processing (such as the concrete The applicant complains that the reinforcing bars industry). reference productions were fixed on an unfair basis inasmuch as they unjustly favoured undertakings which, unlike the With regard to the condition that the applicant, did not participate in the "means of action provided for in Article 57 programme of voluntary reductions in are not sufficient" to deal with the deliveries and disregarded the rules manifest crisis, the applicant complains imposing minimum prices, thus main- that the Commission did not seek the taining their production at a higher level cooperation of the governments with a in the period which was then taken as a view to increasing consumption in the reference period. public sector and did not have recourse to the imposition of minimum prices, a system which had worked as the Court It also objects to the retroactive nature of stated in the "concrete reinforcing bars" the general decision which applied the judgment (paragraph 119). quotas as from the month of October and

so took into account the performance of pursued differ from those for which the orders already received with delivery dates Treaty conferred the powers in this field. which the undertakings were obliged to observe. In fact, in an industry affected by a fall in prices, the curtailment of production without a means of countering imports More generally it complains that the from non-member countries does not Commission failed to have regard to the constitute an appropriate remedy. principles laid down in Articles 2, 3 and 4 of the Treaty. Furthermore, the decision fails to take account of the profound difference in the situation which exists between The Commission replies that the integrated undertakings, that is to say applicant's demands — the penalization those which carry out the complete of companies which failed to comply production cycle from scrap or iron ore with their undertakings regarding to finished steel, and those which, like voluntary restraint — imply retroactive the applicant company, buy crude steel criminal legislation contrary to the for processing. general principles of law. Furthermore, with regard to the facts, the applicant did not always comply with the delivery It is impossible to see what benefit can programmes. accrue to producers of crude steel who must reduce their production and therefore their supplies, if at the same The inclusion of October's production time a parallel reduction is imposed on was necessary, according to the the demand from non-integrated rolling Commission, in order that the system to mills and vice versa. be established should be effective: Fur- thermore, since the applicant's produc- Furthermore, the general decision also tion in October was 10 000 tonnes the includes in the quotas production Commission maintains that the amended exported to non-member countries in quota permitted a monthly production of which competition exists to retain old almost 8 000 tonnes in November and markets which have been penetrated by December which corresponds to the new competitors and to seek new quantity which the applicant would have markets. The position of Community attained in any case by following its undertakings in that struggle will, production programme. according to the applicant, be seriously handicapped by the production quotas.

Returning to the specific circumstances of the case in question, the Commission In particular, it is impossible to apply the recalls that, pursuant to Article 58 (1), term "crisis" to the difficulties faced by a the system of production quotas may be part of a sector of production by reason accompanied "to the necessary extent" of the more modern nature of its by the measures provided for in Article technology or the better management of 74. A decision on the necessity of such its resources and, consequently, its better measures constitutes a choice of policy to productivity in relation to other under- be effected by assessing, on the one takings in the same sector. The effects of hand, the usefulness of measures the application of improved techniques concerning imports and, on the other, are of benefit to all (cf. Selter, the compatibility of such measures with Productivity and Technical Change, the Community's obligations towards London 1966). non-member countries, in particular within the framework of GATT, and the repercussions which the introduction of quantitative restrictions (which is in fact Where doubts persist as to the con- what they would be) might have on struction of the term "crisis" within the exports of Community products in meaning of the Treaty it is necessary to general and on steel products in apply the general principles which have particular. After appraising these various been applied in the Treaty itself. factors the Commission came to the view Consequently, the imposition of quotas that the existing system was, with certain may not lead to results contrary to the improvements, an adequate measure (cf. objectives of Articles 2, 3 and 4, and in Recommendation N o 2797/80/ECSC, particular it may not have the following Official Journal 1980 L 291, p. 34). effects :

To hinder the orderly expansion and On the authority of the judgment of the modernization of production and the Court in the "concrete reinforcing bars" improvement of quality; case (paragraph 49 of the decision) the applicant submits that the Italian producers of concrete reinforcing bars may not be subsequently made to bear the costs of the lack of foresight and errors Under certain conditions, to provide of others. In fact payment of the cost of protection against competing under- modernizing its own plant and sub- takings which is not justified by any sequent exclusion from the ensuing unlawful conduct on their part (" . . . benefits because other undertakings have when the High Authority is called upon failed to do likewise would constitute a to exercise a p o w e r . . . it must not lose sacrifice which may not be imposed in sight of any of the objectives of the the name of the principle of "solidarity" Treaty and, in seeking to attain the one enunciated in the preamble to the ECSC or the ones at which the provision to be Treaty. It is action that fosters solidarity, applied is more particularly directed, it not paralysis imposed upon the initiative must avoid sacrificing others, perhaps of others. Solidarity must be an active more important") (Opinion of Mr principle, not a brake on development. Advocate General Lagrange in Case 1/54 France v High Authority [1954 to 1956] ECR 27). The Commission replies by observing that the applicant's argument to the effect that the difficulties faced by a part of a sector of production as a result of In this context the applicant states that the advanced technology and higher there are large steel works equipped for productivity of other undertakings may a very wide range of products which are not be regarded as a "crisis" within the more complex and more highly finished meaning of the Treaty is clearly a than concrete reinforcing bars and which question of economic philosophy and the burden this kind of product with an opposite view may be taken, having entirely useless part of the general costs. regard to the fact that certain objectives laid down in Article 3 (a), (d) and (e) in fine may be compromised by excessive competition between undertakings. However, it is unnecessary to settle the question since the present crisis was Such undertakings continue to defend caused by the decline in demand and not what for them can only be a lost cause by competition between steel producers. and claim from the Commission In this connection it should be borne in protection which nullifies the smaller mind that the actual production of light undertakings' achievements with regard sections in the fourth quarter of 1980 — to productivity.

like the applicant's own production — is and price trends. Such studies were lower than the production quotas fixed supplemented in accordance with Article by the Commission. 58 by meetings held with the associations of undertakings (two meetings were held with the ISA, an association which Fifth submission : infringement of Article includes the "Bresciani"). Furthermore, 58 (1) and (2) of the ECSC Treaty on all the undertakings wishing to put the ground of failure to consult the forward their individual points of view Consultative Committee or to conduct were given a chance to do so. preliminary studies concerning concrete reinforcing bars. Supplement to the first, second and fifth submissions. The applicant complains of the fact that Decision N o 2794/80/ECSC does not state that the Consultative Committee In its application the applicant maintains was consulted as required by Article 58 that the breaches of Community law (1). That omission constitutes, according alleged by it amount to an irregular use to decisions of the Court of Justice of legislative measures and an of the European Coal and Steel infringement of the rules concerning Community, an infringement of an essential procedural requirements which essential procedural requirement within are intended to ensure that such the meaning of the first paragraph of measures are properly used. Con- Article 33 of the ECSC Treaty, which sequently those breaches of Community means that the decision must be declared law show that the general decision and void (cf. judgment of 11 February 1955 the individual decision were adopted in in Case 4/54 LSA v High Authority pursuit of objectives different from, and [1954 to 1956] ECR 9 1 ; judgment of 21 to a large extent contrary to, those for March 1955 in Case 6/54 Netherlands v which the Treaty conferred the powers High Authority [1954 to 1956] ECR in this field. It follows that the defects 103). vitiating the general decision and the individual decision are such as to constitute inter alia a misuse of powers to The applicant also disputes that the the detriment of the Italian producers of quotas were determined "on the basis of concrete reinforcing bars, and thus studies made jointly with undertakings undoubtedly to the detriment of the and associations of undertakings" as applicant. required by Article 58 (2). A "study" of the market in crude steel made in conjunction with the associations in that sector — if such a study was conducted C — Arguments set out in the reply and — is not the same as a study of the rejoinder market in concrete reinforcing bars.

statement that there exists "a relationship contested provision, which requires between the measures taken concerning sacrifices which are unnecessary and quantities and those taken with regard to inappropriate in relation to the stated prices: a curtailment of the supply of objectives. They demonstrate a breach of steel products has always been the principle of proportionality and considered a condition sine qua non for constitute one of the aspects of the any measures taken to support prices". misuse of powers which has already been In fact the Commission treated the complained of. measures concerning prices and those concerning quantities not as comp- lementary provisions but as steps in a process of escalation, in which a new and more drastic measure was adopted as soon as the previous measure was seen to have failed. That progression Another aspect (considered in the fourth consisted first of all in the voluntary submission of the application) is the fact reduction of deliveries, then the that the objective requirement of a imposition of minimum prices followed manifest crisis was not satisfied. Here by the quota system. The conduct of the again the Commission arrived at its Commission is thus entirely irrational. conclusions through a distortion of the facts, attributing to all products situations which exist, at most, only for some of them.

JUDGMENT OF 16. 2. 1982 — CASE 276/80

In order to justify that contradiction, the the applicant is considered. The existence of which is beyond dispute, the Commission refers to a possible ground Commission puts forward its theory of of inadmissibility of the application the "steel industry as a whole". because of the fact that the applicant's production was lower than the quota allotted to it so that it has no legal interest in challenging the provision. In order to meet its contractual under- That theory is not well founded either in takings entered into before October 1980 law or in logic. It is also entirely contrary the applicant had to submit to the to common sense. Commission a request for an increase in its quota under Article 14 of Decision N o 2794/80/ECSC. The Commission only decided on 18 December 1980 to With regard to law, Annex I to the accede to its request, so that the increase ECSC Treaty distinguishes under the could not be used before the end of the heading "Iron and Steel" five sectors, last quarter of 1980. The applicant had each containing individual products or to resort to special operations (purchases categories of products (20 in all). Each from other firms; purchases on the of these products has a market of its market in concrete reinforcing bars) in own, with its own developments, which order to meet the above-mentioned are not only not necessarily the same as undertakings. those on the market for other products but may indeed be opposite since certain of these sectors are in mutual competition: for example it is well known With regard to the second submission, the that the supply of housing is in applicant claims that Article 58 (2) of the competition with that of motor cars ECSC Treaty in fact gives priority to the because of the fact that families must requirement of fairness over the usually choose one or the other. That is principles laid down in Articles 2, 3 and why a strong demand for cars benefits 4 by requiring the High Authority to producers of flat, rolled products at the determine the quotas on an equitable expense of producers of concrete basis. reinforcing bars and vice versa.

voluntary restrictions and which were portionate to the restriction imposed and perhaps fined for infringements of the the damage caused, consists in the fact minimum prices is not an equitable that quotas are also granted to under- procedure. takings which no longer fulfil the technical and legal conditions for production. T o this is added the fact that those who are no longer able to use the In order to prove that it complied with quotas are able to transfer them. the voluntary reduction of deliveries the applicant sets out on page 14 of its reply a table compiled by reference to quarters. That constitutes another distortion which is of benefit to firms which acquire such quotas and thereby increase their own opportunities on the market, which gives The applicant then challenges the rise to an unjustified alteration in free Commission's statement that it is competition. impossible to make the lawfulness of legislation dependent on the existence or otherwise of measures of a completely different nature, prior or subsequent, or Finally, the applicant claims that the fifth even on factual circumstances completely submission in its application is to a large unconnected with the measures taken by extent confirmed by the facts set out by the Community. the Commission and in the request for the Council's assent.

JUDGMENT OF 16. 2. 1982 — CASE 276/80

PADANA v COMMISSION

With regard to the individual decision, considered in relation to the complaint of misuse of powers, the Commission admits that the decision to increase the The Commission then proceeds to quotas for the fourth quarter of 1980 consider the question of misuse of powers, was notified to the applicant on 18 first of all with regard to the general December 1980, that is to say too late decision. for the latter to take advantage of it. At

JUDGMENT OF 16. 2. 1982 — CASE 276/80

At the sitting on 15 September 1981 oral Finally, the Commission disputes the argument was presented by Giuseppe soundness of the applicant's argument to Celona, for the applicant, and Alberto the effect that the Commission has Prozzillo, for the Commission. "admitted" that, instead of carrying out the studies provided for in Article 58 (2), it confined itself to the continuous studies carried out under Articles 46 and 48 of the ECSC Treaty. In fact amongst The Commission produced a table the duties assigned to the Commission is showing the applicant's production in that of obtaining the information it relation to its quotas during the period requires to carry out its tasks. The results from October 1980 to June 1981 and the of that continuous activity constitute the Court laid down a time-limit for the background against which Community applicant to reply in writing on this policy is determined; that activity is matter. The applicant submitted its reply progressively supplemented by ad hoc on 28 September 1981. The Commission studies in accordance with the needs of sent its comments on 20 October 1981. the occasion and the requirements laid down in regulations. In this case such ad hoc studies necessitated meetings in which all the trade organizations The Advocate General delivered his concerned participated. Of those opinion at the sitting on 29 October meetings only those held with the ISA, 1981.

PADANA v COMMISSION

Decision

1 By an application lodged at the Court Registry on 12 December 1980 Ferriera Padana SpA, a manufacturer of concrete reinforcing bars, brought an action under the second paragraph of Article 33 of the ECSC Treaty for a declaration that the Commission's individual decision of 1 November 1980, as amended on 18 November 1980, fixing the applicant's production quotas for the fourth quarter of 1980 pursuant to Decision N o 2794/80/ECSC of the Commission of 31 October 1980 establishing a system of steel production quotas (Official Journal 1980 L 291, p. 1) is void.

5 Secondly, the Commission's obligation to carry out studies jointly with undertakings and associations of undertakings must receive a wider interpret- ation than that placed upon it by the applicant. In fact, the Commission obtains information on the general situation in the steel industry and its various sectors by conducting continuous studies. In this connection it should be recalled that, according to Article 46 of the ECSC Treaty, undertakings and their associations are entitled to present any suggestions or comments to the High Authority on questions affecting them. Furthermore, the applicant, like any other steel undertaking, is bound regularly to furnish the Commission with its production figures and prices. In addition the Commission carried out specific studies concerning the requirements of the quota system. These various factors constitute the studies within the meaning of Article 58 (2) of the ECSC Treaty which the Commission was able to take into account.

6 Although the Commission is obliged to consult undertakings and associations of undertakings in conducting such studies, that obligation does not imply that it must consult each undertaking individually or that it must obtain the agreement of the steel producers to the measures proposed under Article 58. In this case the Commission informed the steel producers of the measures which it intended to take and it held meetings with the associations of under- takings concerned, including the association of Italian producers of concrete reinforcing bars, allowing them to bring their proposals to the Commission's attention. Although the applicant is not a member of that association it could have put forward its point of view individually if it had so requested. The Commission thus discharged its duty to conduct studies jointly with under- takings and associations of undertakings.

8 With regard to the decline in demand, the applicant disputes that concrete reinforcing bars were affected. Referring to a document of July 1980 in which the Commission described the decline in demand from the United States and Iranian markets, the applicant contends that concrete reinforcing bars are not concerned with the first market by reason of the cost of transport, whilst the fall recorded on the second required a search for alter- native markets rather than a cut in production. The fall in the prices of concrete reinforcing bars mentioned by the Commission was caused by a reduction in the price of the raw material and an increase in competition. The Commission's argument that the price of ferrous scrap, the raw material for concrete reinforcing bars, is determined by the price of the finished product is not decisive since scrap constitutes the raw material for a whole range of finished or semi-finished products. Furthermore, in its request for the Council's assent, the Commission stated that production of long products (which include concrete reinforcing bars) was appreciably exceeding the voluntary delivery programmes. According to the applicant, it is clear that that was to meet an increase in demand or forecasts of demand.

9 Those submissions cannot be upheld. It is clear from the documents before the Court that when the quota system was introduced there was, owing to the flagging economy, a sharp decline in demand in all sectors using steel, including the construction sector which constitutes the outlet for the products in question. That decline in demand, coupled with the existence of considerable stocks built up through over-production in the past, led to a fall in production and in prices. That circumstance is confirmed by the fact that the applicant's production for the first ten months of 1980 amounted to 81 000 tonnes whilst its production capacity is 230 400 tonnes. Furthermore, the Commission is not bound by the terms of Article 58 to establish in its decision a finding that there was a manifest crisis in every sector of the steel industry if there is manifestly a general crisis, as there was in this case.

1 1 In the event of a manifest crisis Article 58 of the ECSC Treaty confers upon the Commission a wide power of appraisal which it exercised in adopting Decision N o 2794/80/ECSC. The Commission has set out the reasons for which it considered that the means of action provided for in Article 57 were not sufficient to deal with the crisis. It considered that it could not take steps to influence general consumption in the present economic situation. The steel undertakings, which had increasingly failed to fulfil their individual delivery commitments, refused to commit themselves for the last quarter of 1980. The Commission accordingly concluded that the indirect means of action at its disposal had proved insufficient and that it was necessary to intervene directly in order to restore the balance between supply and demand. In arriving at that conclusion the Commission did not exceed the limits to its power of appraisal and the submission must therefore be rejected.

I n f r i n g e m e n t of A r t i c l e 58 (2) of t h e E C S C T r e a t y

1 2 The applicant alleges that the Commission failed to determine the quotas on an equitable basis, taking account of the principles set out in Articles 2, 3 and 4 of the ECSC Treaty.

1 3 It claims in the first place, that undertakings which had complied with the voluntary restrictions on deliveries and observed the minimum prices were placed at a disadvantage.

1 4 But the applicant is amongst the undertakings which failed to observe their commitments regarding the limitation of deliveries. It cannot therefore complain of the excessively favourable treatment accorded such under- takings. In fact its quota for the period in dispute was calculated on the basis of two months, October 1978 and November 1979, situated in quarters when the applicant exceeded its voluntary delivery programme by 1 3 % and 3 7 % respectively, and on the basis of a third month, December 1977, situated in a quarter when the applicant's production was 7% below the voluntary delivery programme.

19 This complaint cannot be upheld. Although certain undertakings did not increase their production in October in anticipation of the introduction of quotas for the months to follow, that fact cannot entitle them to claim special treatment.

20 Furthermore, the Commission respected the legitimate expectations of the persons concerned by means of the communication of 11 October 1980 (Official Journal C 264, p. 2), whereby it gave notice of its intention to include the month of October in the system of quotas, and by means of the decision published on the same date (Official Journal L 268, p. 25) requiring the undertakings to supply information on their production for October

JUDGMENT OF 16. 2. 1982 — CASE 276/80

1980. Although in its communication of 11 October 1980 the Commission did not in fact indicate what the level of the quotas would be, which might have prevented the undertakings from establishing the precise consequences of the Commission's recommendation and ensuring that their production was not excessive in relation to the quotas which were to be allocated for the quarter as a whole, it nevertheless remains that the undertakings received notice of the Commission's intentions.

21 Thirdly, the applicant complains that the Commission failed to take account of the principles set out in Articles 2, 3 and 4 of the ECSC Treaty. That submission has not been argued with sufficient specification to enable the Court to give a ruling on it. Furthermore it should be recalled that the Court has already stated that it is not certain that all the objectives of the Treaty can be simultaneously pursued in their entirety and in all circumstances; it is the task of the Commission to effect a permanent compromise between those different objectives.

25 It is important to point out also that in its negotiations with non-member countries the Commission faces considerable difficulties as a result of the fact that the ECSC is a net exporter of steel; in such circumstances it is compelled to ensure the continuance of Community exports at the same time as it must attempt to limit imports into the Community, and it had reason to fear that by taking non-negotiated restrictive decisions with regard to non- member countries it might provoke retaliatory measures on their part which would be detrimental to the general interest.

26 The applicant further maintains that the producers of crude steel, who were obliged to reduce their production, derived no benefit from a simultaneous reduction in demand from non-integrated steel works. The Commission, which failed to take account of the different position of the latter under- takings, should not have accorded them the same treatment as integrated undertakings.

27 It must be pointed out that even though undertakings like the applicant have not all undergone a crisis on the same scale as integrated undertakings, they also have been obliged to reduce their production because of the fall in demand. Once the Commission had decided to establish a general system of quotas it could not distinguish between integrated and non-integrated under- takings if it wished to achieve its objective of reducing production.

28 The applicant also criticizes the fact that production destined for export to non-member countries was included in the quotas, which weakened the Community undertakings in the face of the fierce competition which prevails on such markets.

32 In this connection it must be recalled that in its judgment of 18 March 1980 in the "concrete reinforcing bars" case (Valsabbia) [1980] ECR 907, at paragraph 80) the Court held that:

". . . by providing for intervention by means of coercive action in certain defined circumstances the Treaty derogates from the normal rules governing the working of the common market, which are based on the principle of the market economy."

Such considerations apply equally in this case.

PADANA v COMMISSION

33 With regard to the possible duration of a manifest crisis within the meaning of Article 58, it may be said that, even though the steel sector has experienced obvious difficulties, the applicant's observations are irrelevant since it was only by its decision of 19 October 1980, not five years earlier, that the Commission established the existence of a manifest crisis.

34 Having regard to all the foregoing considerations the application must be dismissed.

1. Dismisses the application;

2. Orders the applicant to pay the costs.

Mertens de Wilmars Bosco Touffait Due Pescatore Mackenzie Stuart O'Keeffe Koopmans Everling Chloros Grévisse

Delivered in open court in Luxembourg on 16 February 1982.

P. Heim J. Mertens de Wilmars Registrar President