C-303/81

In Joined Cases 303 and 3 1 2 / 8 1

K L Ö C K N E R - W E R K E A G , a steel u n d e r t a k i n g having its registered office in Duisburg, represented b y Professor B o d o Borner of C o l o g n e University, with an address for service in L u x e m b o u r g at the C h a m b e r s of Ernest A r e n d t , 34 B R u e Philippe-Il, applicant,

v

KLÖCKNER-WERKE v COMMISSION

COMMISSION OF THE EUROPEAN COMMUNITIES, represented by its Legal Adviser, N o r b e r t Koch, acting as Agent, asisted 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 k o , a m e m b e r of its Legal D e p a r t m e n t , Jean M o n n e t Building, Kirchberg,

defendant,

Facts and Issues

I — Facts a n d w r i t t e n p r o c e d u r e In accordance with Articles 2 to 4 of the general decision, the Commission fixes, in respect of every undertaking, quarterly production quotas for crude Faced with a manifest crisis in the steel steel and for each of the four groups of market within the meaning of Article 58 rolled products, the first of which relates of the ECSC Treaty, the Commission to the products at issue in these cases. adopted Decision 2794/80/ECSC of The quotas are calculated on the basis of 31 October 1980 (Official Journal L 291, the quarterly reference production fig- p. 1) establishing a system of steel ures of each undertaking. To that end production quotas for undertakings in reference is made, for each month of the the iron and steel industry. relevant quarter, to the same month

JUDGMENT OF 11. 5. 1983 — JOINED CASES 303 AND 312/81

The decision further provides (Article Klöckner had meanwhile during the first 14) that, where the production or quarter of 1981, exceeded by 28 682 delivery restrictions imposed by it or tonnes the production quota imposed on by its implementing measures entail it in respect of rolled products in Group exceptional difficulties for an under­ I. The Commission reproved Klöckner taking, it may refer the matter to the for that overproduction and in a letter of Commission, providing all appropriate 15 July 1981 asked it to submit its supporting documentation. The Com­ comments pursuant to Article 36 of the· mission is to examine the case without ECSC Treaty. Klöckner did so, in letters delay in the light of the objectives of the dated 27 July and 25 August 1981, which decision and, where appropriate, to were supplemented by statements of the adapt the provisions of the decision to undertaking's representative at the the specific circumstances. hearing held on 24 September 1981. The Commission did not accept the explan­ ations put forward by the undertaking, and, by a decision of 28 October 1981, fined it 2 151 150 European currency In pursuance of the above-mentioned units in pursuance of Article 9 of decision, the Commission, in a letter Decision 2794/80. dated 19 December 1980, notified the steel undertaking known as Klöckner- Werke AG of Duisburg of its reference production figures and production In pursuance of Article 33 of the ECSC quotas resulting from the application of Treaty, Klöckner brought ā first legal the abatement rates contained in Article action, which was lodged at the Court 5 of the decision, in respect of the first Registry on 30 November 1981, seeking quarter of 1981. Since the decision was a a declaration that the Commission's provisional one it was confirmed on decision of 19 October 1981 refusing to

increase its production and delivery Dismiss the application as unfounded; quotas for the first quarter of 1981 was void. Order the applicant to pay the costs. Under Articles 33 and 36 of the ECSC Treaty, Klockner brought a second action, lodged at the Court Registry on Ill — Submissions and argu- 15 December 1981, seeking a declaration m e n t s of the p a r t i e s that the Commission's individual de- cision of 28 October 1981 fining it for having exceeded the quota was void, and 1. Case 303/81 requesting, in the alternative, a reduction in the amount of the fine. In its first submission, the applicant By order of 5 May 1982, the Court, contests the lawfulness of the reasons having regard to the affinity between the cited by the Commission's decision of two cases, ordered that they be joined 28 October 1981, according to which for the purposes of the oral procedure the existence of exceptional difficulties and judgment. within the meaning of Article 14 of the general decision could not be conceded On hearing the report of the Judge- unless the undertaking's utilization rate Rapporteur and the views of the was more than 10% below the level Advocate General, the Court decided to of other manufacturers within the open the oral procedure without any Community. In that connection, the preparatory inquiry. By order of 13 applicant maintains that it is insufficient October 1982, it decided to assign the merely to adhere to an automatic two joined cases to the Fourth Chamber. criterion such as 10%. On the contrary, where the utilization of capacity is less than 10% below the level in question, II — C o n c l u s i o n s of t h e p a r t i e s the Commission is, according to the applicant, required to investigate all the circumstances of the case in order to In Case 303/81, the applicatif claims that ascertain whether they do not, after all, the Court should: afford evidence of an exceptional difficulty. Not having undertaken such Declare the defendant's decision of an investigation, the Commission, it is 19 October 1981 void. claimed, infringed the ECSC Treaty and has misused its powers. In Case 312/81, the applicant claims that the Court should: The applicant's second objection to the 1. Declare the defendant's decision of decision at issue lies in the fact that, in 28 October 1981 null and void; assessing the utilization rate of the wide- strip mill at 50.4% when granting the 2. Alternatively, reduce the fine imposed quota, the Commission proceeded on the by the contested decision to a sum basis of too high a figure. In fact, the which appears to the Court to be mill had been running at that time at no appropriate; and more than 39% of capacity, that is, 17% below the Community's average 3. Order the defendant to pay the costs. utilization rate of approximately 5 5 % . The difference between the utilization In both cases, the Commission contends rate adopted by the Commission, which that the Court should: is 5.4% lower than the average, and the

actual utilization rate, which is 17% point is unimportant. It considers that, lower than the average, is due to the for the purposes of applying Article 14 of defendant's having based its calculations Decision 2794/80, it is not earlier or on too low an assessment of the theoretical output capacity which should capacities of Klöckner's N o II hot-rolled be taken into account, but actual current wide-strip mill; the Commission had capacity; it maintains that the statistics in assessed that capacity at 355 000 tonnes question were supplied as a matter of per month whereas the actual capacity routine and that therefore it should be amounted to 459 000 tonnes per month. permitted to revise them in the light of the true data. The fact that the under- taking thereby supplied incorrect infor- mation to the Commission on the In pointing to the above figure, the aforementioned questionnaire might applicant relies on the Technical Audit cause the Commission to fine it but does Report of 1 May 1981. The first part of not warrant the imposition of too low a the report, drawn up jointly by the production quota. Belgian Centre de Recherches Métal- lurgiques [Centre for Metallurgical Research] and the Japanese Kawasaki Steel Corporation, specifies that Finally, the applicant argues that, when Kawasaki estimated the capacity of the assessing its output capacity, the No II hot-rolled wide-strip mill in defendant in any case failed to take Bremen at 487 000 tonnes per month, account of the capacity of the other mill whilst the Centre for Metallurgical in the Bremen works (the Bremen No I), Research put it at a lower figure merely the running of which had been because it did not take as its basis the temporarily halted in April 1974 for the actual productive capacity as sub- purpose of restructuring the works. sequently confirmed. That demonstrates that the figure of 459 000 tonnes per month established by Klöckner in its action is therefore too low rather than too high. In reply, the Commission contends, first, that Article 14 of Decision 2794/80 is a derogative provision and that the powers thereby conferred on it are subject to the precondition that the exceptional Should the Court consider that difficulties confronting the undertaking Kawasaki's expert report is insufficient derive from the enforcement of the to prove the true output capacity of the quota system. Bearing that premise in mill in question, the applicant asks that mind, the defendant has always accepted the latter be run at maximum capacity that an undertaking had to contend with for six weeks under expert supervision, exceptional difficulties whenever, fol- which would enable the problem to be lowing the enforcement of the quota settled once and for all. system, the utilization rate of that under- taking was at least 10% less than the average utilization rate amongst Community undertakings. That yardstick Whilst admitting that the Commission enables the Commission to exercise the based its estimate on information discretion conferred upon it by Article 14 supplied by itself by way of Ques- of the decision objectively and without tionnaire No 2 / 6 1 , the applicant under- the risk of discriminating between the taking none the less maintains that the undertakings concerned. The specific

Turning to the problem of the output capacity of the No II mill in Bremen, the As to the second objection, whereby the Commission refers to the statement applicant alleges that its utilization rate which it submitted in Case 119/81. It was 17% lower than the average wishes to stress, however, that its amongst Community undertakings, the estimates regarding the capacities of Commission confines itself in essence to undertakings were based on the annual summarizing the arguments which it put notification supplied in Questionnaire forward in Cases 119/81 and 244/81, in No 2/61. In that connection, the which that same problem was raised in Commission states that Klöckner, having relation to the second quarter of 1981. initially declared in the statistical ques- However, the Commission adds that, tionnaires a capacity of 3 770 000 tonnes even if it were correct that the applicant a year for 1979 and 1980, in 1980 — by possessed a No II wide-strip mill in contrast — entered a higher capacity in Bremen with a capacity of 459 000, and respect of the same two years, namely not 355 000, tonnes per month, that fact 4 260 000 tonnes a year. Following that could not have led to a raising of the new declaration, the Commission carried quota under Article 14 of the general out a check which led it to allow the decision. That was so because the higher capacity. Finally, from 1981

JUDGMENT OF 11. 5. 1983 — JOINED CASES 303 AND 312/81

Lastly, the Commission points out the The Commission contends that the contradictions existing between the economic situation of the undertaking arguments put forward in this case and cannot enter into the reckoning in those submitted in other, analogous, evaluating whether there are exceptional cases. difficulties, inasmuch as it cannot be regarded as a consequence of applying the production-quota system, since an The applicant disputes the Commission's undertaking's financial standing is arguments in support of the criterion determined not only by the volume of its employed to ascertain the existence of output but also by the price obtained. exceptional difficulties, observing that The poor financial situation of the the latter may manifest themselves not undertaking is, the Commission only at the technical level but also at the maintains, a pre-existing state of affairs economic level — in the matter of and not a consequence of the quota servicing debts, for example — and it system, which was set up precisely as a points to the margin of uncertainty in result of the fall in demand and the calculating the deviation between the collapse of steel prices. utilization rate of the undertaking in question and the Community average. It further disputes the relevance of the The Commission reasserts, moreover, considerations cited by the Commission, that, since the applicant failed to contest as to what would have happened if the the decision fixing the quotas for the first undertaking had raised the present quarter of 1981, that decision has problem at the time when Article 4 (3) of become immune to challenge. Hence the the general decision was being applied. applicant's claim that the capacity of its In its opinion, the Commission should, No II Bremen mill had already reached when applying Article 14, simply keep to 459 000 tonnes a month during the years

2. Case 312/81 (i) First, that the officers of the Commission would endeavour to ensure that the applicant was The applicant, in its second application properly treated in the negotiations; seeking a declaration by the Court that the individual decision of 28 October 1981 fining it for having exceeded the (ii) Secondly, that the Commission quota fixed for the first quarter of 1981 would "solve the problem" arising in respect of Group I products is void, from the fact that during the first puts forward the following submissions: quarter of 1981 the applicant was due to produce more than what was (1) The decision under challenge is allowed under the purely provisional unlawful because it runs counter to a quota which had been previously promise binding the Commission; allocated to it. The .adjustment was to be effected irrespective of the (2) The decision under challenge is success or failure of the Eurofer II unlawful because it is founded on negotiations. the defendant's unlawful decision of 19 October 1981, which was the subject of the previous action; The applicant adds that, at the very beginning of the conversation, it (3) The decision under challenge is informed the defendant that all the unlawful because it is based on forecasts indicated that it would have general Decision 2794/80, which is exceeded its production quota by likewise unlawful, especially Article 9 100 000 tonnes by the end of the first thereof. quarter of 1981.

A — First submission It was on the strength of those promises that Klöckner took part in the The applicant maintains that the disputed negotiations, which enabled an decision is unlawful in so far as it runs agreement to be reached in respect of

The applicant takes the view that the promise whereby the Commission waived According to the Commission, the any pecuniary sanction — implied by the alleged promise is furthermore totally promise to "solve the problem" •— is invalidated because it was not in writing; binding on the defendant inasmuch as it since the only legal means of attaining was made by the competent Member of the goal desired was to fix the quota the Commission, namely Mr Davignon, afresh at a higher level, that could have for whom Mr Defraigne acted merely as been done only by means of a fresh a messenger. The promise was, fur- decision, which would have had to be in thermore, clear and precise in its content writing by virtue of Article 1 of Decision as far as the Commission's waiver of a 22/60 of the Commission of 7 September fine was concerned, even if the means to 1960 on the implementation of Article 15 be adopted to attain that end (for of the Treaty (Official Journal, English example the raising of production quotas Special Edition, Second Series, VIII, under Article 14 of general Decision p. 13). 2794/80, or the amendment of the basis of calculation) were not yet specified. Lastly, the Commission takes the view that the alleged promise by Mr Defraigne cannot in any case commit the Moreover, in view of the fact that, defendant, for want of confirmation during the'hearing of the applicant at the or ratification by the competent headquarters of the Commission, the department. In legal terms however, such latter's representative stated that Mr ratification is impossible since the fine is Defraigne denied having made the mandatory whenever the quota is aforementioned promises, the applicant exceeded. It follows that any ratification offers to call witnesses to prove the would have given rise to an infringement point. of Community law.

In its rejoinder, the Commission stresses (ii) Failure to observe the implications the ambiguity of the statements attaching to the prohibition of attributed to Mr Defraigne and the subsidies laid down by Article 4 (c) impossibility in legal terms of of the ECSC Treaty, implementing the alleged promise. It again denies that Mr Davignon ever instructed Mr Defraigne to give the (iii) Absence of assent on the part of the promise in question on his behalf. As Council, regards the problem of reduction to writing, the Commission observes that a (iv) Unlawfulness of imposing quota promise relating to an administrative restrictions on exports. measure must in any case assume the same form as was laid down for the measure itself. From the unlawfulness of the general decision derives that of the contested individual decision, owing to the direct B — Second submission link which exists between the two.

unless there is a direct legal link between capacity amongst the steel undertakings that decision and the measure in dispute. of the Community. That is indicated That applies to Article 9 of Decision both by the inferences which may be 2794/80, since it lays down both the drawn from the provisions of the ECSC conditions for imposing fines and the Treaty and by a general principle to be quantum thereof. found in the legal systems of all Member States. Hence the Commission is prohibited from reducing reference production by a given and invariable In addition, the argument is inadmissible percentage, without taking account of because the applicant has not indicated the productive capacity in existence at which the specific provisions are against the outset; it should rather protect those which the submission is directed. undertakings which are potentially worst Moreover, it would likewise be affected by the cutback, namely those in inadmissible if the applicant were to raise which the utilization rate of productive it in order to assert the unlawfulness of capacity is particularly low at the outset. Articles 4 and 5 of the general decision, as no direct legal link exists between those provisions, which fix the bases for calculating the reference production In its defence, the Commission confines figures and the quotas, and the itself to reiterating its objection of individual decision under challenge. inadmissibility.

KLÖCKNER-WERKE v COMMISSION

unfounded even in substantive terms, According to Klöckncr, the Commission since Article 58 of the ECSC Treaty cannot confine itself to referring to the does not restrict the Commission's possibility of taking action against those freedom of choice as regards the basis infringements under Article 88 of the for the equitable determination of ECSC Treaty (never, incidentally, used quotas. It is therefore impossible by the defendant for that purpose), nor reasonably to deny that selecting the can it refer to Article 67 thereof, since criterion of undertakings' actual output the latter provision does not relate to may serve as an equitable basis for quota subsidies forbidden under Article 4 (c). fixing, since it is a criterion which represents an objective basis of as- sessment and enables total output to be reduced without altering the under- The Commission replies that the takings' respective positions on the argument is unfounded inasmuch as market. Article 58 of the ECSC Treaty is not intended to rectify distortions of competition due to State subsidies, in respect of which the Commission has Both parties also refer to the written other means of action available to it. pleadings submitted in Case 119/81.

On this point, too, the parties refer moreover to the memoranda submitted (c) Non-observance of the prohibition in Case 119/81. of State subsidies

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Both at law and in fact the Commission The applicant notes for the first time in contests the applicant's arguments, as its reply that under Decision 2794/80 the well as the requests for production of Commission has fixed a further quota, in fresh documents, which it regards as respect of the share of steel output which unnecessary. As may be seen from the is intended for export to non-member preamble to Decision 2794/80, the countries, and observes that it is illegal

KLÖCKNER-WERKE v COMMISSION

Decision

1 By an application lodged at the C o u r t Registry on 30 N o v e m b e r 1981, K l ö c k n e r - W e r k e A G , a steel undertaking having its registered office in Duisburg, Federal Republic of Germany, instituted proceedings under the second paragraph of Article 33 of the E C S C T r e a t y , seeking a declaration that the Commission's decision dated 19 O c t o b e r 1981 refusing it an increase in its production and delivery quotas for the first quarter of 1981 (Case 303/81) is void.

2 By an application lodged at the C o u r t Registry on 15 December 1981, Klöckner b r o u g h t a further action under the second paragraph of Article 33

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and the second and third paragraphs of Article 36 of the ECSC Treaty, seeking a declaration that the Commission's decision of 28 October 1981 fining it for exceeding the aforementioned quotas is void, or, in the alter- native, seeking to have the fine reduced (Case 312/81).

3 By an order of 5 May 1982, the Court, having regard to the relationship between the two cases, ordered that they be joined for the purposes of the oral procedure and judgment.

8 By a decision of 28 October 1981 pursuant to Article 9 of Decision 2794/80, the Commission rejected the explanations put forward by Klöckner and fined it 2 151 150 European currency units. In réponse to that decision Klöckner brought an action under Articles 33 and 36 of the ECSC Treaty, which was lodged at the Registry on 15 December 1981 and which sought either a declaration that the Commission's decision imposing on it the above- mentioned fine was void or, in the alternative, a reduction in its amount.

T h e a p p l i c a t i o n a g a i n s t t h e d e c i s i o n of 19 O c t o b e r 1981 r e f u s i n g to i n c r e a s e t h e q u o t a s u n d e r A r t i c l e 14 of g e n e r a l Decision 2794/80 (Case 303/81)

9 In support of this action, the applicant puts forward two submissions, the first of which concerns a disregard of the concept of "exceptional difficulties" contained in Article 14 of general Decision 2794/80, and the second the erroneous and unrealistically low assessment of the applicant's productive capacity and hence of the utilization rate of those capacities.

First submission, alleging a disregard of the concept of "exceptional difficulties" contained in Article 14 of Decision 2794/80

10 Article 14 of Decision 2794/80 is worded as follows:

"Where the production or delivery restrictions imposed by this decision or its implementing measures entail exceptional difficulties for an undertaking, it may refer the matter to the Commission, providing all appropriate supporting documentation.

1 4 It should be observed first of all that the equity clause in Article 14 does not apply unless an undertaking is experiencing exceptional difficulties which are caused by the enforcement of the system of production quotas. Whilst it is true — as the applicant states — that the equity clause is aimed at difficulties brought upon certain undertakings by the enforcement of general rules which do not take account of specific situations, the Commission cannot however be taken to task for fixing a threshold designed to confer the

KLÖCKNER-WERKE v COMMISSION

benefits of the clause on those undertakings whose utilization rates are relatively far removed from the Community average.

is Since the crisis was widespread and thus common to all steel undertakings, the Commission was entitled to take the view that the output restrictions imposed could not entail "exceptional" difficulties except for undertakings satisfying certain conditions relating to their utilization rates.

i6 Further, to set the threshold at a deviation of 10% from the average cannot be considered unlawful. The deviation required by the Commission should, on the one hand, enable the substantial integrity of the quota system to be maintained and, on the other hand, permit exceptional circumstances due to the enforcement of such a system to be taken into account. By setting the margin at 10%, therefore, the Commission has not exceeded the bounds of its discretion under Article 14.

20 As regards the first part of that argument, concerning the output capacity of the Bremen N o II mill, reference should be made to the reasons stated in the judgment of the Court of 7 July 1982 (Case 119/81, [1982] ECR 2627) on the subject of Klöckner's production quotas for the second quarter of 1981, in connection with which the same problem had previously been raised.

2i Once again, the applicant refers to the "Kawasaki expert opinion" of 1 May 1981, which is a report drawn up jointly by a group consisting of experts from the Belgian Centre de Recherches Métallurgiques [Centre for Metal- lurgical Research] and from the Japanese company, Kawasaki. The Court has held that opinion to be valueless owing, in particular, to the divergence of views which it discloses between the two groups of experts who drafted it, inasmuch as the Belgian institution gives a lower estimate of the capacity at issue than that adopted by the Commission, whereas the experts from the Japanese company postulate an appreciably higher capacity.

22 In these proceedings the applicant has failed to furnish any new factual information which might enable the above finding to be revised. By producing the Jeschar report, based on a mathematical simulation, the applicant is endeavouring to revise one aspect of the report by the Belgian institution and Kawasaki, which has been held by the Court to be in any case inconclusive. As to the Wollert-Elmendorf report relied on by the applicant, it is an accountancy document designed to evaluate the financial consequences of the fixing of the production quotas allocated to the under- taking for the third quarter of 1981, as compared with a hypothetical situation described by the applicant, consisting in the allocating of quotas

1. Illegality of general Decision 2794/80, which is the legal basis for the individual decision in dispute;

2. Illegality of the individual decision of 19 October 1981 refusing to increase the quotas under Article 14 of Decision 2794/80, which is the logical premise of the individual decision in dispute;

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3. Breach of a promise given to the undertaking by the Commission's rep- resentative, namely to waive any pecuniary sanction for exceeding the relevant quota limits;

4. Existence of an emergency situation justifying the over-production and precluding its penalization by way of a fine.

Submissions alleging that Decision 2794/80 and the individual decision of 19 October 1981 are illegal

Klöckner's executive board, during a telephone conversation on 19 March 1981, namely that if Klöckner undertook to participate in the negotiations, the Commission would "solve the problem" arising from the fact that by the end of the first quarter of 1981 the applicant was due to produce more than the provisional quota hitherto allocated to it; the adjustment was to be effected irrespective of the success or failure of the Eurofer II negotiations.

30 Klöckner takes the view that the promise in question is binding on the Commission because it was made by the responsible authority, for whom Mr Defraigne acted merely as a messenger. Klöckner claims that, regard being had to its context, the promise was clear and precise in content, its subject- matter being the Commission's waiver of a fine, even if the means to be employed in achieving that end were not specified.

3i The Commission disputes the basis of Klöckner's argument on both factual and legal grounds, contending that Mr Defraigne, in telephoning, did not use the words alleged by the applicant, nor had he given any promises "for and on behalf of Mr Davignon, as his messenger"; and that, in any event, there can be no question of a promise such as might commit the defendant, regard being had to the general nature of the utterances ascribed to Mr Defraigne.

32 The Commission further argues that the supposed promise was not such as to bind it, for lack of ratification by the competent department; that a hypothetical ratification would have been unlawful in any case, since the fine is mandatory whenever quotas are exceeded; and finally, that if the supposed promise were interpreted to mean that it envisaged an increase in the quotas sufficient to cover the margin of excess for the quarter at issue, it was invalid for lack of being evidenced in writing.

36 The applicant maintains that if it had observed the quotas allocated to it, the resultant losses would have been so serious that it could not have survived. That state of affairs is allegedly due, primarily, to the excessively low level of the quotas granted to it, which entailed a rate of utilization of output capacity far lower than the Community average, and hence inadequate revenue in relation to overhead costs. In the second place, the undertaking is encountering special difficulties at the economic and financial level, owing to the very high cost of restructuring the plant which it has brought into operation since 1973, in response to the suggestion and inducements of the Commission itself. Those expenses led to a lack of liquid funds which had repercussions on the indebtedness and the reserves of the business. The presence of precarious financial circumstances is proved by an expert report prepared by accountants and submitted by the applicant. Lastly, the under- taking refers to the crisis in the steel market.

37 The applicant was consequently confronted by the alternative of either contravening the quota system in order to achieve a revenue consistent with its economic situation or else abiding by the quotas and being thereby forced into insolvency. Klöckner therefore took action in an emergency situation, with the result that its conduct, although illegal in an objective sense, was justified, and that no sanction can be imposed upon it.

38 Klöckner maintains that, since an emergency situation is recognized in the legal systems of all Member States as justifying unlawful conduct, the same

41 The Commission contends in the first place that an emergency situation cannot be invoked in the specific context of the quota system for steel production, owing to its incompatibility with the objectives of Article 58 of the ECSC Treaty. That article aims to distribute equitably amongst all Community undertakings the sacrifices required as a result of the crisis in the steel sector, with a view to maintaining or restoring their profitability in the long term, whereas that goal would be unattainable if every undertaking

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were able to exempt itself from any sacrifice by pleading an emergency situation. Breaches of the quota limits would, if permissible on that score, necessarily entail lowering the quotas of other undertakings, with the result that the latter, in their turn, might claim to find themselves in an emergency situation and thereby justify exceeding their quotas.

42 At all events, the Commission denies that the conditions for an emergency situation are fulfilled in this instance. In its view, the applicant's future was not at risk when the over-production at issue occurred; moreover, the supposed risk was not a result of the establishment of the quota system but was due to mistakes made by the applicant in its investment policy in previous years. The accountancy report does not afford reliable evidence to sustain Klöckner's arguments, inasmuch as it relates to a single sector of the undertaking and is based on data which cannot be checked. Conflicting interests set the survival of one undertaking against that of the majority, if not the totality, of the others. Lastly, the applicant could have removed the supposed threat to its existence by legal means and was therefore in no way justified in taking the law into its own hands.

46 As far as concerns the manifest crisis which struck the steel market, it is appropriate to stress that the crisis affected steel undertakings in general and thus necessitated the establishment of the quota system provided for by Article 58 of the ECSC Treaty. That article provides that in the event of a decline in demand, if the Commission considers that the Community is confronted with a period of manifest crisis and that the other means of action provided for in the Treaty are not sufficient to deal with it, it is required, following the consultations stipulated therein, to establish a system of production quotas. The system was lawfully set up by the Commission by means of Decision 2793/80, compliance with which is required of every undertaking concerned. However, the system of production quotas would be gravely compromised — or indeed set at nought — if every undertaking were able, by pleading an emergency situation due to serious economic difficulties, to excuse itself from observance of the restrictions and to exceed at will the production quota allocated to it. The chain reaction thereby released would culminate in the collapse of the system, so that Article 58 of the Treaty would become a dead letter.

47 The above considerations indicate that, even supposing that the concept of an emergency situation were admitted in principle into Community law, the applicant's last submission alleging such a situation must be disallowed.

The alternative claim for a reduction in the amount of the fine

48 The applicant has not set forth any special arguments in support of its alter- native claim for a reduction in the amount of the fine. It must therefore be presumed that it is based on the same arguments as underlie the principal claim. In examining those arguments, the Court has found no reasons such as to justify a reduction of the fine.

1. Dismisses the applications;

2. Orders the applicant to pay the costs.

O'Keeffe Pescatore

Bosco Koopmans Bahlmann

Delivered in open court in L u x e m b o u r g on 11 M a y 1983.

P. H e i m A. O'Keeffe Registrar President of the Fourth Chamber