C-119/81

v

COMMISSION OF THE EUROPEAN COMMUNITIES, represented by its Legal Adviser, N o r b e r t K o c h , acting as Agent, assisted by Professor Eberhard Grabitz of the Free University of Berlin, with an address for service in Luxembourg at the office of Oreste M o n t a l t o , a member of its Legal Department, Jean M o n n e t Building, Kirchberg, defendant,

JUDGMENT OF 7 ? 1982 — CASE 119/81

APPLICATION for a declaration that the notification of 6 April 1981 by which the Commission fixed the applicant's reference production figures and production quota for rolled products in Group I (hot-rolled wide and narrow strip) for the second quarter of 1981 is void,

THE COURT,

composed of: J. Menens 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. Grėvisse, Judges,

KLÖCKNER-YERKE v COMMISSION

JUDGMENT OF 7 7. 1982 — CASE 119/81

Group I Hot-rolled wide and narrow strip 35.62%

Group II Reversing mill plate and wide flats 32.13%

Group III Heavy sections (sheet piling, wide flanged beams, other beams and other sections, permanent way material) 25.57% Group IV Ľghi sections (coiled wire rod, concrete reinforcing bars and other merchant bars) | 3C.43%

KLOCKNER-TERKE «• COMMISSION

Refermer production Quota Reduction 2nd Quarter April 1978 May 1978 June 1978 Toul

tonnet tonnei tonnes Į tonnes "/: tonnet

Rolled producís Group I 243 621 334 779 257 768 836 168 35.62 538 325 Group II 0 C 0 C 32.13 : Group III 9 630 12 414 14 451 36 495 25.57 27 163 Group rv* 95 589 104 213 89 485 289 287 30.43 201257

T o u l I io IV' 348 840 451406 361704 1161950 766 745

Crude steel 411652 522 795 399 026 ļ 1 333 473 ļ 34.01 Į 879 959

JUDGMENT OF 7. 7. 1982 — CASE 119/81

Commission failed to take account of the Community is 52% and in some under- principle contained in Article 58 of the takings it is even as high as 70%. ECSC Treaty that a "minimum level of employment" should be guaranteed and to insert a provision to that effect in that By adopting the contested individual decision. The Commission also decision the Commission infringed the misapplied Article 4 (3) of Decision No Treaty and misused its powers. 2794/80 because when it calculated the average rate of utilization of the applicant's hot-strip mill No 2 at Bremen the production capacity on which it The figure the Commission ought to based its calculation was too low. Both have taken as the maximum production errors came to be incorporated in the capacity is 459 0CC tonnes a month. As individual decision at issue. evidence the applicant offers the testimony of witnesses, submits experts' reports prepared by the undertaking Kawasaki and Prof. R. Jeschar and an opinion of the undertaking Stein- (a) It follows from the last sentence of Heuney and asks the Court to make an the first subparagraph and from the order for the mill to operate at its second subparagraph of Article 38 (2) of maximum capacity for six weeks. the ECSC Treaty that rules governing production must primarily enable employment to be maintained as far as possible. That aim, which is expressly (c) For the purposes of applying Article prescribed for the system based on a 4 (3) of Decision No 2794/80 it is not compensation fund, also applies to the the capacity which was once declared for system of production quotas. The lower statistical purposes which is relevant, but the utilization of capacity, the greater actual present capacity. This is the the risk to jobs. Therefore assistance determinant factor in the calculation of must be provided and in the case of a the minimum level of utilization in system of production quotas this must be accordance with the principle that done by raising the quotas to provide a continuity of employment should be minimum level of employment equal to safeguarded. Only the utilization of the Community average. present capacity is an indication of the extent to which jobs are in jeopardy.

353 000 tonnes a month; that correction, to choose the most favourable month however, is far from sufficient. from the three equivalent months of the reference period, namely the month during which the utilization of its capacity was at its lowest. This would have reduced the estimate of its (d) Another reason why the applicant's utilization of capacity. capacity should be fixed at a level above the Commission's estimate is that the Commission took no account at all of the capacity of mill No 1 at Bremen which ought to have been included in the Secondly, the Commission's choice of Commission's calculations. That mill was reference period for the calculation of to a large extent taken out of operation the average rate of utilization of other in 1974 in connection with the re- undertakings lowered that rate. The structuring measures promoted by the Commission shifted that period back by Commission. The capacity of the mill is six months, taking the period from 169 000 tonnes a month, increasing the January 1977 to December 1979 instead applicant's capacity by that amount and of the usual period of July 1977 to June thus lowering its utilization rate still 1980. The result of that was to lower the further. The production capacity of that utilization rate of undenakings because mill cannot be left out of account when the first six months of 1980 were better that of other undertakings, which have than the first six months of 1977. continued in full production, is at present taken into account in full in the calcu- lation of the quotas.

Production may be legitimately taken The Commission considers that the into account if it does not yet show complaints of the infringement of a considerable differences in the utilization "principle of a uniform minimum level of of each undertaking's capacity. In this employment" by the method prescribed case that condition is not met. in paragraphs (1) to (3) of .Article 4 of Decision No 2794/8C for the calculation of the reference production figures are T h e task which Article 58 gives to the unfounded. Commission is not to accept the situation on the market but to improve it. Undoubtedly total production in the (a) No "principle of uniform minimum European Ćoal and Steel Community level of employment", as understood by must be reduced as far as possible to the the applicant, can be inferred from the point at which, apart from exports, it ECSC Treaty, especially not from the no longer exceeds demand in the second sentence of the first subparagraph Community. For that purpose, however, and the second subparagraph of Article it would have been possible to fix the 58 (2). permissible production of each under­ taking by laying down a specific minimum percentage for utilization of The concepts of "equal rate of capacity. utilization of capacity" and "equal minimum employment" are not the same; for the same rate of utilization of By considering itself bound in principle capacity represents a different number of tó proceed on the basis of previously jobs, depending on the size of under­ established rates of utilization of takings. The system described in Article capacity, instead of exercising its powers 58 (2) of the ĖCSC Treaty assumes that in an effort to secure a minimum level of levels of activity of undertakings vary. utilization corresponding to average The only rule that may therefore be utilization in order to achieve the aim of inferred from that provision is that Article 58 of the ECSC Treaty, namely employment should be maintained as far the maintenance of employment, the as possible, even in the event of a critical Commission misused its powers and at decline in demand. It is not possible to the same time violated the prohibition of discern an obligation to guarantee the discrimination contained in Article 4 (b) same utilization of production capacity. of the ECSC Treaty.

among undertakings. Since the number Treaty must inevitably be related to of jobs depends not on capacity but on production; the extent to which production, an even distribution of the production must be reduced pursuant to burden, particularly where jobs are that provision can only be determined if concerned, would be best achieved by the quotas are fixed on the basis of fixing quotas according to actual actual production. Production capacity production. provides no measure of the degree of adjustment of production to the decline in demand and the level of activity is merely an arithmetical proportion showing the ratio of production to In the event of a critical decline in production capacity. However, the quota demand the Commission is not required system envisaged in Article 58 must be so to ensure that every undertaking utilizes arranged that the production quantities its capacity at the same rate. An under- are fixed in absolute figures. taking's utilization capacity is the result of its position on the market, which itself depends on a large number of factors that are independent of the policy pursued by the Commission. It would be a misapplication of the Commission's If actual production in the reference powers under Article 58 of the Treaty if period is used as the standard reference it were to try to undertake a general production for the calculation of the rectification, by means of the quota production quotas this enables the quota system it introduced, of the rate of system to be established "on an equitable utilization of undertakings which is the basis", as Article 58 of the ECSC Treaty result of changing market forces. Crisis requires. The possibility provided in management does not give it the power paragraphs (3) to (5) of Article 4 of to redistribute production but only the Decision No 2794/80 of increasing power to adjust production to the standard reference production by decline in demand as evenly as possible notional reference production is an for all the undertakings. exception to the rules; it is subject to strict conditions and intended to reward conduct which is particularly in line with the aim of the Community's steel policy. Furthermore, in not raising the reference production to the level of the average (c) Article 58 of the ECSC Treaty gives rate of utilization of the other under- the Commission a wide margin of takings the Commission kept within the discretion in elaborating the quota limits of its discretionary powers. system. It kept within that margin, especially as regards the contested bases used for the calculation of the reference production figures. The contested rules are appropriate, objective and in keeping with the principles enunciated in Articles 2, 3 and 4 of the Treaty. (d) The assertion that a lower rate of utilization of capacity poses a greater threat to jobs is too general. The threat to jobs posed by a lower rate of utilization is greater only if the number Anv system of production quotas of jobs have not been adjusted to the introduced under .Article 58 of the ECSC lower rate of utilization. A decline in

demand and a resultam decline in The applicant has benefited from that production must regrettably lead to a provision more than any other under- reduction in the number of persons taking. undertakings employ. Article 58 (2) of the ECSC Treaty is founded on that premise for it gives the Commission the task of maintaining employment in (g) As regards the application in the undertakings "as far as possible" and not Decision of 6 April 1981 of Article 4 (3) of maintaining every job. of Decision No 2794/80, the applicant's production capacity was correctly assessed: the capacity to be attributed to the hot strip mill No 2 at Bremen could not have been higher than 355 CCC The model calculations made by the tonnes a month or 4.26 million tonnes a applicant afford no support for its year. argument to the effect that there is a link between utilization of capacity and the degree to which jobs are threatened. The basis for the calculations of capacity was the figures provided by undertakings under Anicie 14 of Decision No 21/66 of the High Authority of the ECSC of 16 November 1966 on information to be (e) On the assumption that Anide 58 furnished by undenakings about their (2) of the ECSC Treaty requires investments (Official Journal, English employment to KÍ maintained uniformly, Special Edition 1965-1966, p. 280). The an intervention by the competent auth- term "capacity" means "maximum orities to raise to the Community possible production" which is in turn average a rate of utilization falling below dependent on the capacity of plant that average would be a breach of that preceding the production plant, on the very principle. Any quota system must production structure and the capacity of start out from a specific volume of following plant. When undenakings' demand; any increase in the quota of production capacity is taken into account one undertaking will therefore reduce under Anicie 4 (3) of Decision No the sale prospects of another undertaking 2794/80 the actual conditions in each and endanger jobs in the latter under- undenaking should be appraised. taking. A quota system which brought the capacity of each undertaking up to the Community average would not be an The term "production capacity" or "equitable basis". "maximum possible production" should not be confused with the theoretical concept of "technical capacity"; this bears no relation to the market but constitutes an abstract indication of the (f) To raise utilization of capacity is maximum production for which a plant permissible only in strictly limited cases is technically designed. and in special circumstances which justify a departure from the principle that production should be reduced Therefore production capacity must be uniformly on the basis of the actual calculated on the basis of "nominal production of undertakings in the past. capacity" because for the purposes of the Article 4 (3) of Decision No 2794/80 calculation of the average production makes provision for a special case of that capacity in the reference period from kind. July 1977 to June 1980 only the capacity

(h) The Commission must depend on the accuracy of the information provided B — The prohibition of subsidies by undertakings themselves. There is therefore no difference between capacity "declared for statistical purposes" and The applicant contends that the "actual" capacity. To verify the accuracy allocation of quotas under Decision No of the figures declared by undertakings 2794/8C was not concluded "on an would have entailed excessive equitable basis" within the meaning of administrative expense in the application Anicie 58 (2) of the ECSC Treaty of the system. because the Commission ought to have rectified the negative effects of subsidies granted in violation of the Treaty to the steel industry in some Member States, in particular, Belgium, France, Italy and the (i) The applicant declared a capacity of United Kingdom. 355 000 tonnes a month (4.3 million tonnes a year) instead of the previous figure of 314 000 tonnes a month (3.8 million tonnes a year) for the first time (a) According to the figures available, in its declaration of 1 January 1980 steel groups in those countries have without giving any explanation. After received from or have been promised by making a check the Commission, by their governments for the period from letter of 11 December 1980, amended its 1975 to 1983 subsidies totalling at least previous decision and adopted a capacity DM 60 000 million. It is clear from the of 4.26 million tonnes a year for the case-law of the Court, in particular its reference period from July 1977 to June judgments of 23 Februarv 1961 in Case 1980. In so doing it attributed to the 30/59, Steenkolenmijnen [\96\] ECR 1 applicant a production capacity greater and 6 July 1971 in Case 59/70 than that which it was required by law to Netherlands v Commission [1971] ECR accept. 639, as well as from Article 1 of Commission Decision No 257/80 of 1 February 1980 establishing Community rules for specific aids to the steel industry (Official Journal 1980, L 29, (j) The figures for hot-strip mill No 1 p. 5) that to a large extent those are unimportant because that mill was subsidies constitute prohibited aid. closed down in April 1974; it does not therefore represent production capacity for the purposes of Article 4 (3) of Decision No 2794/80 and could not be That infringement of the Treaty brought taken into account in the calculation of about increases in production which the average rate of utilization in the would not have occurred if the subsidies reference period. had not been available: hence the

At the more general level of Community policy excessive disharmony between the (b) When allocating production quotas various aims is unacceptable; therefore under Article 58 of the ECSC Treaty the the Community may not, in the sphere Commission ought to have awarded a of the EEC, prohibit a State subsidy but fidelity bonus in the form of increased in the sphere of the European Coal aitd quotas to undertakings which had not Steel Community declare another, higher infringed Article 4 (c) of the ECSC subsidy to be tolerable. Treaty or, better still, cut the production quotas of subsidized undertakings normally granted under the general The Commission considers that &e rules. In the result the equal treatment complaint of a breach of the prohibiten applied by the Commission as a matter of subsidies is unfounded. of principle constitutes an infringement of Article 58 of the ECSC Treaty because it is "no equitable basis" for the sharing out of production. (a) The applicant's figures on the amounts of subsidies granted to the stecrl industry in Belgium, France, Italy and the United Kingdom should be treated (c) Even if the argument were true that with caution: a study by a private in most cases the subsidies in question interest group may be accepted as an were not specific subsidies granted to the assertion only and not as appropriate steel industry but general measures as means of proof. provided for in Article 67 of the ECSC Treaty, nevertheless they are measures which seriously damage the steel under- In any case, the question of the amount takings of other countries and the of subsidies granted by Member States to applicant in particular. In spite of that the steel industry is immaterial in the the Commission has failed, in breach of present case. Article 8 of the Treaty to exercise its powers under Article 67.

C — The assent of the Council (d) In any case, special subsidies which are caught by the prohibition contained in Article 4 (c) of the ECSC Treaty cannot be taken into account in the The applicant argues that General context of a system of production quotas Decision No 2794/80 did not receive the introduced under Article 58. To enforce assent of the Council of Ministers the prohibition of subsidies contained in provided for in Article 58 (1) of the Article 4 (c) the Commission only has as ECSC Treaty. Although the Council did its disposal the procedure laid down in discuss the question of the introduction Article 88 of the ECSC Treaty by which of a quota system under Article 58 of the it is required, in the event of a breach of ECSC Treaty at its meeting on 30 the prohibition of subsidies, to institute October 1980, it did not give its assent proceedings against the Member State to Decision No 2794/80. At that meeting concerned for infringement of the it did not even have the first draft of that Treaty. decision and was therefore unaware of its terms.

(e) If undertakings which received a special subsidy had their quota reduced (a) Article 58 (1) of the ECSC Treaty under the system of production quotas lays down a two-stage procedure: in the

JUDGMENT OF 7 7. 1982 — CASE 119/81

KLÖCKNERVERKE v COMMISSION

(c) That view is wholly consistent with Commission infringed the Treaty and the roles the ECSC Treaty, particularly misused its powers. Articles 14, 26 and the first and second subparagraphs of Article 58 (1), assign to the Commission and the Council.

(a) Production and deliveries are not the same. Production is what an under- taking produces in a given period, (d) The purpose served by the whether it denvers u to other persons or Council's assent also shows that it need puts it into stock lor ¡is own purposes not cover the details of the quota system. during that period; deliveries are what an It is not intended to give the undenaking delivers to third pames in a Commission's decision democratic given period, whether u does so from its legitimacy which it already has in any current production or own stock, or case; it is pan of the Council's main task procures them from third pames. The under the ECSC Treaty, namely to first paragraph of Amele 9 of Decision harmonize the action of the Commission No 2794/8C imposes a fine not |ust and that of the governments which are where an undenaking has exceeded its responsible for the general economic production quota but also where it has policies of their countries. That view is delivered too much within the common confirmed by the decisions of the Court. market. However, Amele 58 (1) of the ECSC Treaty provides only for production quotas, as the Commission expressly acknowledges in the first paragraph of point ò of the preamble to Decision No 2794/8:. (e) The procedure by which Decision No 2794/80 was adopted was in conformity with the requirements of Article 58 of the ECSC Treaty.

(c) The fact that delivery quotas are illegal means that Article 7 (2) and the (e) Nor do delivery quotas need to be words "or that part of this quota which, introduced in order to ensure that the under Article 7 (2) and (3) may be system operates properly, in other words delivered within the common market" to prevent the quantities produced for contained in the first paragraph of export to non-member countries from Article 9 of Decision No 2794/80 are reaching the Community market. The inapplicable. Commission ought to have fixed the production quotas at the level of home demand only and allowed undertakings to deduct from production counting towards production quotas the quantities (d) By the contested decision the they proved to have exponed to non- Commission introduced delivery quotas member countries. Since no provision to not just for the common market but also that effect was inserted in Article 7 (1) of for all the markets of non-member Decision No 2794/80 the restriction of countries. Those export quotas stem exports is not permissible and the indirectly from the production quotas production quotas and deliver)· quotas inasmuch as the applicant can deliver in are illegal. non-member countries only the part of its production it does not sell on the home market; to non-member countries it may export only the amount remaining In the Commission's view the complaint of a quantity fixed by the Commission. that the prohibition against the fixing of deliver>' quotas was violated is inadmissible and in any event unfounded.

That aim is to deal with the critical decline in demand and to adjust supply to demand. In fixing production quotas the Community can fully achieve that aim only within the common market because it iś unable to reduce supply from non-member countries. If demand declines on the markets of non-member The aim of Article 7 (2) is to prevent countries as well there is the danger thai products not sold outside the the production fixed by quota which may Community from coming on to the no longer be sold to non-member common market in the event of a decline countries can come on to the common in exports and thus jeopardizing the pre­ market. Such surplus supply due to liminary aim of the production quota external factors could be eliminated by a system, which is to adapt production to further cut in production to match the the decline in demand within the decline in demand abroad or by the Community. Article 7 (2) prohibits the introduction of a mechanism putting ratio which deliveries within the common undertakings under pressure to adjust market bear to total production in a production themselves to the decline in reference period from being exceeded. demand in non-member countries. Since it is required by Article 58 read together with Article 3 (a) of the ECSC Treaty to ensure an orderly supply to the common market "taking into account the needs of third countries", the Commission, in inserting Article 7 (2) in Decision N o 2794/80, chose to keep constant the maximum home supply from production fixed by quota. That course has the advantage that production need not be (c) Decision No 2794/80 does not fix further reduced by action on the part of any "delivery quotas". Therefore the the appropriate authority and that under­ only question the Court must decide is takings are left to decide for themselves whether the rules contained in Article 7 whether to adjust their production if (2) of that decision are covered by the demand in non-member countries power to introduce a production quota declines. Article 7 (2) is therefore system conferred upon the Commission consistent with the requirements of the by Article 58 of the ECSC Treaty. The market and constitutes the best way of answer must be in the affirmative.

The decisions of the Court cited by the applicant concern only the question V — Oral procedure whether the Community possesses implied powers; that question is not relevant to the present case. At the sitting- on 24 March 1982 Klóckner-Werke AG, represented by Professor Borner, assisted by Herben (e) Decision No 2794/80 does not fix Gienow, Chairman of the Board of "delivery quotas" for exports; products Directors, and Ludwig von Bogdandy, from stock may be delivered without Director, and the Commission, restriction to non-member countries and represented by Professor Grabitz, within the common market irrespective presented oral argument and answered of quarterly production. questions put to them by the Coun.

Article 58 authorizes the Commission to The Advocate General delivered his introduce a system of production quotas opinion at the sitting on 26 May 1982.

KLOCKNER-STERKE v COMMISSION

Decision

1 By application lodged at the Court Registry on 15 May 1981 Klöckner- Werke AG, a steel undertaking having its registered office in Duisburg in the Federal Republic of Germany, brought an action under the second paragraph of Article 33 of the ECSC Treaty for a declaration that the notification of 6 April 1981 by which the Commission fixed the applicant's reference production figures and production quota for rolled products in Group 1 (hot- rolled wide and narrow strip) for the second quarter of 1981 pursuant to Commission Decision No 2794/80/ECSC of 31 October 1980 establishing a svstem of steel production quotas for undertakings in the iron and steel industry (Official Journal 1980, L 291, p. 1) is void.

JUDGMENT OF 7 7. 1982 — CASE II9/ÍI

(1) T h e s u b m i s s i o n that D e c i s i o n N o 2 7 9 4 / 8 0 did n o t r e c e i v e t h e a s s e n t of t h e C o u n c i l

3 The applicant contends that Decision No 2794/80 did not receive the assent of the Council as required by Anicie 58 (1) of the ECSC Treaty. It alleges that the Council gave only general consideration, at its meeting on 30 October 1980, to the question of introducing a quota system. It was not provided with a draft legal instrument disclosing the measures planned by the Commission and could not therefore give the assent required by the Treatv. With a view to proving its allegations the applicant asks the Court to call for the documents on the basis of which the Council reached its decision and the minutes of the meeting in question.

4 The Commission submits in this regard that the Treaty confers upon it the power to adopt the appropriate measures in the event of a manifest crisis. It argues that the requirement of assent laid down in Article 58 is therefore satisfied once the Council has approved in principle the introduction of a quota system with full knowledge of the material terms of the svstem planned. It is not necessary, however, for the Council to give its opinion on the details of the system. The consultation which took place in the present case satisfies those requirements and the obtaining of the Council's assent is duly confirmed in the preamble to Decision No 2494/80.

s Anicie 58 states that if the Commission considers that the Community is confronted with a period of manifest crisis and the means of action provided for in Anicie 57 are not sufficient to deal with this it must establish a system of production quotas "after consulting the Consultative Committee and with the assent of the Council".

i: The applicant considers that the Commission ought to have acted in accordance with the principles underlying the Treaty and Article 58 in particular and so arranged the system of production quotas that every under- taking would be certain of obtaining a production quota sufficient to guarantee a minimum level of activity and employment proportionate to their capacity. Because the Commission did not take proper account of that factor in Decision No 2794/80 the quota fixed for the applicant did not enable production to be maintained at the level needed to guarantee a minimum level of employment in its undertaking.

n To support that view the applicant points out that under the second paragraph of Article 2 of the ECSC Treaty one of the Community's tasks is to safeguard "continuity of employment" whilst, according to Article 3, the institutions of the Community must "promote improved working conditions and an improved standard of living for workers"; Article 58 expresses the same idea inasmuch as paragraph (2) thereof provides for the introduction of a system of levies to maintain employment in undertakings whose rate of production has fallen below a given level of reference. The applicant considers that the last-mentioned provision reflects the basic principle on which Anicie 58 rests and to which the Commission wrongly failed to give effect in the svstem of production quotas elaborated in Decision No 2794/80.

JUDGMENT OF 7 7. 1982 — CASE 119/11

i2 The line of argument advanced by the applicant fails to take account of the true purpose of Article 58 within the system of the Treaty as a whole. The provision is intended to enable the Community to deal with a crisis caused by a decline in demand. It provides for the introduction of a system of production quotas which is intended to spread equitably throughout the iron and steel industry of the Community the unavoidable consequences of the adjustment of production to the reduced number of possibilities of disposal.

KLÖCKNER-WERKEv COMMISSION

(3) T h e s u b m i s s i o n t h a t no account was taken of illegal s u b s i d i e s a n d t h e i r effect

i6 The applicant points out that in breach of an express prohibition contained in the ECSC Treaty subsidies have been paid to undertakings in several Member States, particularly in Belgium, France, Italy and the United Kingdom where for many years the steel industry has been supported by considerable State subsidies. It contends that the Commission never took any action against those subsidies, which had the effect of putting undertakings which had not received such advantages in a position worse than that of those which had. The Commission ought at least to have taken account of this distortion of competition when elaborating the system of production quotas and granted compensation to undertakings which had not received subsidies.

i9 Nevertheless there are no grounds for assuming that when adopting the measures provided for in Article 58 the Commission was under the obligation to take account of distortions on the steel market caused by the grant of aids which might be incompatible with the Treaty. The purpose of Article 58 is to enable the Community to deal with serious crises caused bv the decline in demand. Its application demands prompt action which must inevitablv be based on relatively simple criteria. It is incompatible with such action to take into account factors, such as the grant of State aids, the appraisal of which involves particularly complex investigations. Although it cannot be denied that when working out the rules on production quotas the Commission mav take account of situations which are contrar)· to Article 4 (c) of the ECSĆ Treaty and to the rules laid down by its decisions in the field and which are duly proven to exist in the course of the relevant procedures, as it alreadv does when monitoring investment, it is however not possible to go so far as to demand, as the applicant does, that the anti-crisis measures envisaged bv Article 58 should be used to counteract the effect of illegal aids granted by Member States.

20 Therefore this submission must also be rejected.

(4) T h e s u b m i s s i o n that " d e l i v e r y q u o t a s " were imposed i n s t e a d of p r o d u c t i o n q u o t a s a n d t h e c o m p l a i n t of unlawful r e s t r i c t i o n of e x p o r t o p p o r t u n i t i e s

2i The applicant's complaints under this head apparently refer to the notion "delivery of products subject to the quota system" appearing in Anicie 7 of Decision No 2794/80 and taken up again in Anicie 9. The applicant argues that by linking the obligation to observe the production quotas and the possible imposition of penalties to the "delivery" of products the Commission exceeded the limits of its powers under Anicie 58 inasmuch as that provision provides for the fixing of "production quotas" and not "delivery quotas".

jš Furthermore it must be observed that neither Article 57 nor Anicie 58 of the Treaty fail to take account of the relation which exists between action to influence production and the Community's external trade. For example, one of the indirect means of action to influence production mentioned by Anicie 57 is intervention in regard to commercial policy, whilst Anicie 58 (1) refers to Anicie 74, which concerns the regulation of certain aspects of external trade. However, as the Court has already emphasized in other judgments, the extent to which external trade must be taken into consideration in connection with measures to be adopted under Article 58 is for the Commission to decide and in arriving at that decision it must take account of the Community steel industry's own needs and the Community's interests in its relations with non-member countries. Therefore it is not possible to infer from Anicie 58 any obligation requiring the Commission to exempt from the quota system the production which cenain undenakings might prefer to channel towards expon markets.

26 For those reasons the complaints put forward in relation to this submission must also be rejected.

JUDGMENT OF 7. 7. 1982 — CASE 119/81

(5) T h e s u b m i s s i o n t h a t t h e C o m m i s s i o n r e f u s e d to t a k e i n t o c o n s i d e r a t i o n the undertaking's actual production capacity

27 This submission questions both the validity of Decision No 2794/80 and the Commission's estimation of the applicant's production capacity for the purposes of the application of the criteria laid down in Anicie 4 (3) of that decision.

KLOCKNER WERKE v COMMISSION

J: According to the information which the parties have provided during the proceedings, the production capacity declared by the applicant for 1977, 1978 and 1979 was 3 800 000 tonnes a year. Since on 1 January 1980 the applicant declared a higher production capacity, namely 4 260 COG tonnes a year, in May 1980 the Commission carried out an inspection at the under- taking's premises on the basis of which it estimated its production capacity to be 4 230 000 tonnes a year. In view of the outcome of thai investigation the Commission accepted the figure declared on 1 January I9SC, namely 4 260 000 tonnes a year, as representing the applicant's production capacity in the period referred to in Anicie 4 (3) ot Decision No 2794/SC. The Commission accordingly took that figure as the basis for adiusting and in- creasing the reference production figures pursuant to Article 4 (3) in its decisions fixing the production quotas for the fourth quarter of 198C, the first quarter of 1981 and the second quarter of 1981, that ¡ast decision, dated 6 April 1981, being the only one in dispute in this case.

JUDGMENT OF 7. 7. 1982 — CASE 119/81

possible to increase that figure to a point which the experts from CRM were not able to define because they did not have the opportunity- to check the information supplied by Klöckner. For their part the experts from Kawasaki add that according to Klöckner's information and Japanese standards output might be raised to 5 844 000 tonnes a year on certain conditions which, according to the information provided, are not, however, fulfilled by Klöckner's present production programme. The applicant itself rejects the experts' first conclusion, considering it inadequate, and bases its argument solely on the separate conclusion of the Kawasaki representatives.

33 In this regard it must be pointed out that the increase in reference production figures which the Commission granted to the applicant pursuant to Article 4 (3) of Decision N o 2794/80 was determined on the basis of information provided by the applicant itself pursuant to Decision N o 22-66 of the High Authority (Official Journal, English Special Edition 1965-1966, p. 280) and on forms used by every steel undertaking in the Community. The applicant was under a duty to complete those forms accurately and honestly.

34 A review of the history of the dispute shows that at first the Commission proceeded on the basis of information provided by the applicant, which remained uncontested for several years, and then, after an investigation carried out on the applicant's premises agreed to revise the estimate of production capacity in accordance with a new declaration submitted by the applicant. It is unreasonable for the applicant to call in question for a second time, on the ground of new errors of assessment on its part and on the basis of an inconclusive experts' report, the results of calculations based on its own previous declarations which have been duly checked by the Commission.

39 As the applicant has failed in its submissions it must be ordered to pay the costs.

On those grounds,

T H E COURT

hereby:

1. Dismisses the application;

2. Orders the applicant to pay the costs.