C-311/81

In Joined Cases 3 1 1 / 8 1 and 3 0 / 8 2

KLÖCKNER-WERKE A G , a steel undertaking having its registered office in Duisburg, represented by Professor Bodo Borner of Cologne University, with an address for service in Luxembourg at the Chambers of Ernest Arendt, 34 B R u e Philippe-Il, applicant, v

COMMISSION OF THE EUROPEAN COMMUNITIES, represented by its Legal Adviser, N o r b e r t Koch, 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 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,

JUDGMENT OF 11. 5. 1983 — JOINED CASES 311/81 AND 30/82

A P P L I C A T I O N for a declaration that the individual decisions a d o p t e d by the Commission on 26 O c t o b e r 1981 and 4 D e c e m b e r 1981, fixing the p r o d u c t i o n quotas imposed o n the applicant for the fourth q u a r t e r of 1981 and the first quarter of 1982 respectively are void wholly or in part,

T H E C O U R T (Fourth C h a m b e r )

KLÖCKNER-WERKE v COMMISSION

each of those products during the consisting of the mean of the output reference period. recorded over an extended reference period and the reference production used in fixing the quotas under the system created by Decision 2794/80. The first However, in the contingencies envisaged component of this mean is represented by Article 4 (3) to (5) of the decision, the by production (a) in the year 1974; (b) in Commission might, within certain limits the 12 most favourable months of the increase the reference production figures period between July 1977 and June 1980; and consequently the quotas allocated and (c) in the period between July 1979 to the undertakings concerned. The and June 1980. The second component is decision further provided that, where the made up of the annual production, as production or delivery restrictions reconstituted from the production quotas imposed by it or by its implementing awarded to undertakings under Decision measures entailed exceptional difficulties 2794/80 during the fourth quarter of for an undertaking, it might refer the 1980 and the first quarter of 1981. matter to the Commission which, having examined the case without delay in the light of the objectives of the decision, would adapt the provisions to the The possibility of individual adjustment specific circumstances. which the previous decision had allowed in favour of undertakings whose rate of utilization of productive capacity was more than 10% below the Community average (Article 4 (3)) was abolished, On the expiry of that system in view of and the general equity clause in Article the persistence of the manifest crisis, the 14, permitting quotas to be adjusted in Commission adopted the new general cases of "exceptional difficulties" was Decision 1831/81/ECSC of 24 June restricted in the sense that it became 1981 (Official Journal 1981, L 180, p. 1), applicable only to small-scale under- whereby the quota system was extended, takings. with some amendments.

178 611 and 191931 tonnes. Both (b) Declare the production quotas decisions further fixed, for products of void to the extent to which all categories, those parts of the quotas the production is demonstrably which might be delivered on the intended for non-member Community market. countries; Pursuant to Article 33 of the ECSC (c) Declare the decision void, to the Treaty, Klöckner-Werke brought an extent to which it prescribes a action to have the Commission's decision part of the production quotas of 26 October 1981 declared void (in which may be delivered on the whole, or, in the alternative, in part). Community market; The application was lodged at the Court Registry on 8 December 1981. 3. Declare the defendant's decision of 4 December 1981 null and void; The same undertaking then brought a further action, by an application lodged 4. Alternatively: at the Court Registry on 15 January 1982, to have the Commission's decision (a) Declare void the production of 4 December 1981 declared void (in quotas contained in the said whole, or, in the alternative, in part). By decision to the extent to which an order of 5 May 1982 the Court, in they fall below the following view of the close relationship between figures : the two cases, ordered that they be dealt Products of Category l a — with jointly for the purposes of the 302 500 tonnes per quarter; procedure and judgment. Products of Category ' l b — Upon hearing the report of the Judge- 325 000 tonnes per quarter; Rapporteur and the Advocate General the Court decided to open the oral (b) Declare the production quotas procedure without any preparatory void to the extent to which inquiry. By an order of 13 October 1982, the production is demonstrably the Court decided to assign the joined intended for non-member cases to the Fourth Chamber. countries : (c) Declare the decision void to the extent to which it prescribes a II — C o n c l u s i o n s of t h e p a r t i e s part of the production quotas which may be delivered on the The applicant claims that the Court Community market; should: 5. Order the defendant to pay the costs. 1. Declare the defendant's decision of 26 October 1981 null and void; The Commission contends that the Court 2. Alternatively: should:

both against Decision 1831/81 and forbids the Commission to cut back against the individual decisions of 26 reference production by a given, uniform October and 4 December 1981. The percentage without taking account of the arguments relate to: rate of utilization of capacity prevailing at the outset; on the other hand, the Treaty does call for the protection of the (a) breach of the principle of minimum potentially worst-affected undertakings, utilization of undertakings' pro- running the greatest risks as a result of ductive capacity; the reduction, namely those undertakings whose capacity-utilization rate is parti- (b) infringement of an essential pro- cularly low at the outset. That derives cedural requirement, namely absence from a general principle existing in the of a statement of the reasons on legal systems of all Member States, and which Decision 1831/81 was based; is also in keeping with considerations of logic, since it is clearly more perilous for an undertaking cutting back production, (c) failure to take account of the effects to reduce a utilization rate from 50% to of infringements of the prohibition 45% than to reduce it from 100% to of State subsidies for the steel 90%. industry; The individual decisions under dispute (d) the unlawfulness of fixing "delivery" do not meet those requirements. The quotas for the common market and output of the No II hot-rolled wide-strip of setting quotas on exports; mill in the applicant's Bremen works was recorded by the Commission as having a production potential of 355 000 tonnes (e) the absence, or in any case the per month, whereas in fact its potential absence of proof, of the Council's amounted to 459 000 tonnes per month assent. for the period from July 1977 to June 1980. The productive potential of the mill was therefore exploited at a rate of no more than 30.8% (individual decision A — First submission of 26 October 1981) and 28.4% (individual decision of 4 December The applicant objects that the 1981), whereas the average amongst aforementioned general decision and Community undertakings reached ap- individual decisions contravene the proximately 51.4% for the fourth quarter principle of minimum utilization laid of 1981 and 48.2% for the first quarter down in the second subparagraph of of 1982. Article 58 (2) of the ECSC Treaty. It appears from that article that the The applicant takes the view that the production quota fixed for an under- figure which should be adopted as taking may not reduce the utilization showing maximum productive capacity, rate of the latter's productive capacity and which should have been accepted by below a certain limit. That lower limit the Commission, was 459 000 tonnes per corresponds to the average rate of month, as was demonstrated beyond any utilization amongst Community under- doubt by several output trials and by the takings resulting from the reference expert reports prepared by the Kawasaki production figures as reduced pursuant Steel Corporation, the Institut de to Decision 1831/81, regard being had Recherche de la Sidérurgie Française and to the lower limit. The Treaty therefore Professor Jeschar of the Technical

University of Clausthal-Zellerfeld. is possible to infer from Article 58 — or Should those reports not be considered any other provision — of the ECSC adequate, Klöckner offers to supply Treaty either the alleged prohibition of further evidence. The applicant takes the any uniform reduction of reference view that for the purposes of fixing production figures without taking the production quotas there is no reason to initial capacity-utilization rate into take account of previous notifications account, or indeed the alleged duty to concerning productive capacity, supplied protect undertakings whose initial by the undertaking for statistical utilization rates are particularly low.

In those Category I b, and, for the following circumstances, it maintains that an action quarter, to 302 500 and 325 000 tonnes for failure to act would be meaningless. respectively. That is the calculation Besides, an administrative decision giving underlying the alternative claims that the cause for complaint is, according to the decision under dispute be declared ECSC Treaty, open only to an action for partially void to the extent to which they a declaration that it is void, not to an fix quotas lower than the amounts action for failure to act.

instance. Turning to the productive capacity of its Bremen No II mill, the applicant, As to the substance of the case, the producing an additional expert report, Commission argues that the applicant notes that both it and the 'other has not really explained to what extent it documents attached to the file disclose a

further ground for complaint, namely state the reasons on which they are that the Commission had misapplied the based. provisions of Article 4 (3) of Decision 2794/80, and that that error had reper- cussions on the fixing of quotas under The Commission contests the basis of the Decision 1831/81, by virtue of Article 6 claim, contending that the quota system (1) (b) thereof. For the purposes of provided for by Decision 1831/81 did fixing the quota, it was the capacity in not entail a general deterioration in the 1977, 1978 and 1979 which was decisive, position of undertakings as compared and for those years capacity already with the system laid down by Decision stood at 459 000 tonnes per month, with 2794/80. At all events, it observes that the result that the quotas should have the adjustments made to that system by been higher at the very commencement Decision 1831/81 were explained in the of the system. recitals in the preamble to the decision, so that the duty to state reasons has been complied with. In its rejoinder the Commission contends that, by inserting a new article into the text of Decision 1831/81, it had merely The applicant replies that Decision taken account of the fact that the quota 1831/81 seriously aggravated its situ- system might cause some undertakings ation as regards products in Categories exceptional difficulties, owing to the I a and I b, owing to the fact that only modest size of their plant and to their half of the production quota as dependence on a limited range of calculated on the basis of the previous products. The Commission had therefore decision — pursuant to Article 4 thereof, confined itself to basing a finding of in particular — has now been taken into exceptional difficulties on different account. No reasons for that deterio- criteria, but without in any way ration were stated in the recitals in the recognizing an obligation to allow a preamble to Decision 1831/81. minimum utilization of capacity. The existence of such an obligation had, indeed, been repudiated by the Court in The Commission replies that Klöckner's its judgment of 3 March 1982, Alpha argument here ignores the method of Steel v Commission, Case 14/81 (ECR calculating the reference production [1982] 749). prescribed by Article 6 (1) of the decision at issue. In that calculation, account is taken, for obtaining the first amount of the last year before the crisis, B — Second submission of the crisis-years 1977 to 1980 and of a year falling shortly before the com- mencement of the quota system; for obtaining the second amount, account is The applicant observes that the Com- taken of adjustments effected under mission did not supply reasons for Decision 2794/80, which are brought putting the undertaking, by virtue of into the calculation of the reference Decision 1831/81, on a worse footing production figures in their undiminished than it had under the previous decision, form — not, therefore, to the extent of 2794/80. This amounts to an one half only. The reference production infringement of an essential procedural figure is defined by the arithmetical requirement, namely an infringement of mean between the two amounts; the the first paragraph of Article 15 of the divergences resulting from individual ECSC Treaty whereby decisions must adjustments pursuant to Decision

C •— Third submission Subsidies paid to steel undertakings by Member States do not fall within the ambit of the prohibition laid down by Article 4 (c) of the ECSC Treaty; that The applicant argues that the distribution prohibition applies only to subsidies or of quotas amongst Community under- aids specially granted to the coal and takings, in pursuance of the general steel industries, whereas the aids which decision in dispute, is not drawn up on those industries receive as part of the an equitable basis inasmuch as the general exercise by Member States of Commission made no allowance for the their residual powers in the fields of effects of subsidies granted to the steel economic, industrial, regional, fiscal and industry in certain Member States, social policy should be appraised in the contrary to Article 4 (c) of the ECSC light of Article 67. That article does not Treaty. It takes the view that the forbid general aids, but limits itself to defendant should have taken those illegal establishing a procedure for eliminating subsidies into account, either by granting the effects — whether positive or a higher quota to unsubsidized under- negative — of State intervention in coal takings or by lowering the quota or steel undertakings. awarded to undertakings which benefited from such aids. Indeed, the above- mentioned infringement of the Treaty entailed increases in output for the The applicant is right in saying that undertakings enjoying the benefits, and Article 67 of the ECSC Treaty does not such increases would not have occurred derogate from the prohibition of without subsidies as those undertakings subsidies laid down by Article 4 (c), but had been able to carry out larger that does not mean that the Commission investment programmes than the others. is not able to avail itself of Article 67,

since the two provisions are designed to those of Articles 4 (c) and 88 is not apply to different forms of subsidy permissible. inasmuch as Article 67 relates to general aids whereas Article 4 (c) is concerned with specific aids, namely those paid The replacement of the sanction under exclusively to the steel industry. Article 88 of the Treaty, in cases where there is a breach of the prohibition of subsidies, by another sanction, to be introduced as part of the quota system, Furthermore, specific aids in favour of would conflict with a general principle of the steel industry are not, according to public law according to which a public the Commission, contrary to the authority is not entitled to use its powers prohibition laid down by Article 4 (c) of to achieve ends for which some other the Treaty provided that they remain form of action is made mandatory. within the limits of the Community rules defined in Commission Decisions 257/80 of 1 February 1980 (Official Journal L 29, p. 5) and 2320/81 of 7 August D — Fourth submission 1981 (Official Journal L 228, p. 14) establishing Community rules for aids to the steel industry. The applicant asserts that the decisions under dispute unlawfully fix the share of the quarterly production quotas which may be delivered within the common market, and the share which may be In any case, since specific subsidies fall exported. The quota therefore does not within the prohibition under Article 4 (c) confine itself to limiting production, but of the ECSC Treaty, they cannot be also limits the volume which the taken into consideration in connection applicant may deliver during the two with a system of production quotas quarters concerned. However, delivery established pursuant to Article 58; in quotas for the domestic market are order to enforce the prohibition of necessary in order to prevent products subsidies under Article 4 (c) the not disposed of outside the Community Commission may employ only the from being offered on the common procedure laid down by Article 88 of the market, and to that end it would have ECSC Treaty, which requires it, should been sufficient when fixing production there be a breach of the prohibition, to quotas to disregard proven exports; yet take action against the Member State in the Commission fixed production quotas question, following the procedure not only for the common market but also provided for in cases of infringement of in respect of exports to non-member the Treaty. countries, whereas such a provision cannot be based on Article 58 of the ECSC Treaty. It may be considered lawful by virtue of the first paragraph of To apply, in the context of the Article 95 of the Treaty, provided that production-quota system, a "malus" to the conditions for applying the article are the quotas of undertakings receiving satisfied, which is not the case here. special subsidies would not strike at the forbidden subsidy and would thus allow the infringement of the Treaty to The Commission has thus infringed the continue; an amalgamation of the Treaty. Moreover, having failed to give a objectives of Article 58 of the Treaty and statement of its reasons for including

exports in delivery quotas, it has also export only that part of its production disregarded an essential procedural quota which it does not dispose of within requirement. the common market, which constitutes a quantitative restriction on exports and hence both a delivery quota and an In reply, the Commission objects that the imposition of quotas on exports. The applicant has misinterpreted Article 5 of ECSC Treaty is thereby infringed, Decision 1831/81, since that provision in inasmuch as it left to Member States full no way envisages the fixing of "delivery" powers over their export systems. In that quotas. Deliveries by undertakings connection the applicant cites Articles comprise two elements, namely products 59, the first paragraphs of Articles 61,71 manufactured under the quarterly quota and 73 respectively, and Article 74 of the and stocks deriving from earlier Treaty, together with Article 19 of the production; Decision 1831/81 lays down Convention on the transitional pro- no limit on the disposal of stocks, visions. whereas the matter would have had to be dealt with if it had been desired to introduce a system of delivery quotas. In reply the Commission contends that The provisions contained in Articles 5 the applicant's argument overlooks the and 8 of the general decision are possibility — which is always available designed to prevent products not — of disposing of products in stock. It disposed of outside the common market adds that it is at all events necessary to from being offered within the take into account the fact that the Community whenever exports are demand for steel is declining on the reduced. It was for that reason that it markets of non-member countries as was forbidden to exceed the ratio, as well, so that a decline in exports leads to fixed for the reference period, between an increase in supply on the Community Community deliveries and total output. market; in those circumstances the The objection that the provisions are objective pursued by Article 58 of the illegal is thus unfounded. ECSC Treaty may be attained precisely by the establishment of machinery which obliges undertakings to adjust their The applicant is wrong in complaining output to the fall in the demand from that it can export no more than a portion non-member countries; none of this of its products. In the first place, entails an enlargement of the powers products drawn from stock may be conferred on the Commission by Article delivered without any restrictions, either 58. within the common market or to non- member countries. In the second place, Decision 1831/81 contains no provision limiting the share of production which ' E — Fifth submission may be exported, as the Community is concerned that undertakings should export their products, precisely for the According to the applicant, the general purpose of relieving the domestic market. decision at issue was not the subject of The applicant's objection in this matter is the Council's assent, as laid down by therefore devoid of purpose. Article 58 (1) of the ECSC Treaty. The Commission, although asked on several occasions to produce the Council's The applicant asserts in reply that, under decision giving its assent, confined itself Article 5 of Decision 1831/81, it may to producing a press bulletin from the

Both at law and in fact the Commission contests the applicant's arguments as well as the requests for production of fresh documents, which it regards as unnecessary. As may be seen not only In any case, the applicant, referring to from the preamble to Decision 1831/81 the arguments set forth in other but also from many documents produced analogous cases (Cases 119 and 244/81), in Case 244/81 (proposal of the maintains that the Council's assent is Commission, Doc. COM(81) 277 Final, necessary in respect of all the constituent of 22 May 1981; press releases of the parts of the quota system, not merely in Council Nos 7330/81 and 7630/81; item relation to certain supposedly essential published in Official Journal C 196 of 4 aspects thereof — factors which are, August 1981, p. 6), the Council did moreover, unidentifiable except by indeed give its assent. The Commission means of an objective criterion which the adds that the first subparagraph of Commission had been unable to specify. Article 56 (1) of the ECSC Treaty does That being so, the Council's "assent" not specify what is to be understood by would not, even if it was given in this "assent"; the scheme and the purpose of case, have the content laid down by the the text, however, show that it is Treaty. In fact in Case 119/81 ·—• in unnecessary for the Commission to which an identical question was raised transmit to the Council a proposal for a concerning general Decision 2794/80 — quota system which is formulated in the Commission produced the text of its every detail and submitted in the form of proposals to the Council for the a draft decision. On the other hand, adoption of the system of production Article 58 institutes a decision-making quotas (document of 6 October 1980, procedure in three phases. In accordance COM(80) 586 Final). A comparison of with the first subparagraph of Article 58 that text, which the applicant wishes to (1), the Commission notes, as the first have produced, in this case as well, if phase, that the Community is confronted appropriate, with the definitive text of with a period of manifest crisis and that Decision 2794/80 would disclose the the means of action provided for in existence of many important differences. Article 57 are not sufficient to deal with There are comparable divergencies it; as the second phase, the Commission between the text of the Commission's takes the decision to establish a system of original proposals to the Council and the production quotas. Article 58 (2), as a definitive text of Decision 1831/81. In third phase, authorizes the Commission those circumstances it is impossible to to arrange the system in detail and to discover, from the documents on the file, make it mandatory by means of one or

Decision

1 By applications lodged at the C o u r t Registry o n 8 D e c e m b e r 1981 and 15 J a n u a r y 1982, 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, Federal Republic of G e r m a n y b r o u g h t t w o identical actions u n d e r the second p a r a g r a p h of Article 33 of the E C S C T r e a t y , seeking a declaration of the nullity of the Commission's communications of 26 O c t o b e r and 4 D e c e m b e r 1981, in which the Commission fixed, p u r s u a n t to general Decision 1 8 3 1 / 8 1 / E C S C of 24 J u n e 1981 establishing for u n d e r - takings in the iron a n d steel industry a m o n i t o r i n g system a n d a n e w system

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of production quotas in respect of certain products (Official Journal L 180, p. 1), in relation to the applicant undertaking, reference production figures and reference quantities, together with production and delivery quotas for derived products in Category I for the fourth quarter of 1981 and the first quarter of 1982. In view of the close relationship between the two cases, they were joined by order of the Court of 5 May 1982.

2 In support of its action the applicant puts forward a series of submissions which may be summarized as follows:

1. Absence of proper assent by the Council to Decision 1831/81 ;

(c) declare void the contested decisions in so far as they prescribe a part of the production quotas which may be delivered on the common market.

JUDGMENT OF 11. 5. 1983 — JOINED CASES 311/81 AND 30/82

4 In relation to the alternative heads of claim it may be observed that the claim in subparagraph (a) above is covered by the second submission, and the claims in subparagraphs (b) and (c) by the fourth submission set out above. Those claims will therefore be considered jointly with the main conclusions to which they relate.

5 It should also be noted, at the outset, that the applicant's line of argument in connection with these actions largely coincides with the submissions made in support of the action in Case 119/81, between the same parties, which gave rise to the judgment of 7 July 1982 ([1982] ECR 2627). In the context of these cases, however, it is appropriate to bear in mind that, in the meantime, Decision 2794/80 of 31 October 1980 (Official Journal L 291, p. 1), which formed the basis of the decision contested in Case 119/81, has been replaced by the aforementioned Decision 1831/81, and furthermore that the applicant has formulated some fresh arguments in support of its action. It will therefore be appropriate to take account simultaneously of the points of law and fact already settled by the previous judgment and the new questions raised by these proceedings.

1. S u b m i s s i o n a l l e g i n g t h e a b s e n c e of a s s e n t from t h e C o u n c i l

6 The applicant does not dispute the fact that the Council gave its assent in connection with Decision 1831/81. The dispute relates to the question whether the assent was given in circumstances consistent with the requirements of Article 58 of the ECSC Treaty.

1 1 As the Court has already pointed out in its judgment of 7 July 1982, the decision of the Commission, the preamble to which recites the Council's assent, must be presumed to have been lawfully taken. The applicant has limited itself to putting hypothetical questions concerning possible irregu- larities which may occur in dealings between the Commission and the Council but it has failed to adduce the slightest evidence that the Council's assent was obtained otherwise than in circumstances consistent with the requirements of Article 58. There are therefore no grounds for ordering an inquiry in that respect.

12 Lastly, as far as the requirements arising under Community law are concerned, it should be observed that the system of legal remedies laid down by the ECSC Treaty affords appropriate guarantees in this respect. Both the Council and the Member States are entitled, by virtue of Article 33 of the ECSC Treaty, to refer a decision of the Commission for review by the Court

JUDGMENT OF 11. 5. 1983 — JOINED CASES 311/81 AND 30/82

if they consider that the Council's assent was not forthcoming in proper circumstances. It is sufficient to record that, in this case, Decision 1831/81 was not the subject of such a challenge within the period prescribed by the Treaty.

n The submission must therefore be rejected.

2. S u b m i s s i o n a l l e g i n g f a i l u r e to fulfil t h e d u t y t o g u a r a n t e e a m i n i m u m u t i l i z a t i o n of p r o d u c t i v e c a p a c i t y

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a definitive ruling on the point, and it therefore re-asserts the inferences which it draws from the so-called "Kawasaki Report" of 1 May 1981. In these proceedings it has further referred to an expert report drawn up on 12 January 1982 by Professor Jeschar with the assistance of the firm Stein- Heurty, concerning the capacity of a walking-beam furnace built by the latter and forming part of the Bremen rolling-mill. In the applicant's opinion, the conclusion drawn by that report justifies a more favourable appraisal of the productive capacity of the plant in question. The applicant has further submitted an accountancy report by Wollert-Elmendorf KG concerning the amount of the additional losses to be incurred by the undertaking should the output of its rolling-mill be restricted.

i7 Finally, the applicant argues that the provisions of Decision 1831/81 which brought about a deterioration in its position as compared with that under Decision 2794/80 lacks any statement of the reasons on which it was based, and that Decision 1831/81 is, for that reason, void on the ground of infringement of an essential procedural requirement.

is It appears from an analysis of Decision 1831/81 that the Commission has thereby amended the basis for the determination of reference production figures as previously fixed by Decision 2794/80.

i9 In the first place, Article 6 (1) of the new decision diversified the periods taken into consideration for the assessment of the reference production figure. That provision maintains the principle of the taking into account of the most favourable month of production of undertakings during the period from 1977 to 1980, but it introduces two new reference periods, namely the year 1974 and the period immediately preceding the entry into force of Decision 2794/80. In the second place, the new decision omitted the possibility of adapting reference-production figures in favour of undertakings whose utilization rate lay below the average for Community undertakings. However, the advantages granted to the undertakings involved under the system laid down by Decision 2794/80, by virtue of Article 4 (3) thereof, were retained, as to one half, by the effect of Article 6(1) (b) of Decision 1831/81.

22 The Commission considers that, by re-defining the detailed rules governing the calculation of production quotas, it has moved closer to establishing an "equitable basis" for all Community undertakings. In that connection it emphasizes, whilst recalling the reasoning set out in Case 119/81, that a system of production quotas set up by virtue of Article 58 must necessarily be based on undertakings' actual production and not on their productive capacity. An examination of capacity affords no indication as to actual output and is therefore not capable of furnishing a useful criterion for the purpose of adapting that output to the decline in demand.

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23 As the Court has observed in its judgment of 7 July 1982, it cannot reasonably be denied that the Commission's choice of the criterion of actual production accords with Article 58 (2) of the Treaty, which requires that quotas shall be determined on an "equitable basis". The judgment stressed that, unlike the criterion of productive capacity, the appraisal of which is by its nature uncertain, reference to undertakings' actual production has the double advantage of affording an objective basis of appraisal and of enabling total production to be reduced without, however, altering the various positions of undertakings on the market.

24 By reducing the advantage accruing to certain undertakings, to the detriment of others, from taking into consideration an operating rate below the Community average, and in endeavouring thereby to distribute more appro- priately the burdens arising from the crisis amongst the undertakings of the Community as a whole, the Commission has not exeeded the limits of the discretion conferred on it by Article 58 when it provides that production quotas must be determined "on an equitable basis".

28 In these proceedings, the applicant has failed to supply any fresh evidence enabling that appraisal to be reconsidered. By the production of the Jeschar expert report, based on a mathematical simulation, the applicant is endeav- ouring to rectify one aspect of the report made by the Centre de Recherches Métallurgiques and the Kawasaki Steel Corporation, which the Court has, in any event, held to be devoid of probative value. As to the Wollert-Elmendorf opinion, it is an accountancy report whose object is to evaluate the financial consequences of fixing the production quotas allocated to the undertaking for the third quarter of 1981 as opposed to a hypothetical case advanced by the applicant consisting of allocating quotas based on a hypothetical output corresponding to the average utilization of capacity by Community under- takings. That accountancy report, whose object is to evaluate what is financially at stake in the litigation between the applicant and the Commission, is based on an assessment of productive capacity (459 000 tonnes per month = 5 508 000 tonnes per annum) which the Court has already expressly rejected in its judgment of 7 July 1982. The report therefore contributes no fresh evidence in relation to the question raised by the applicant on the subject of its productive capacity.

29 That issue must therefore be regarded as having been definitively settled by the judgment of 7 July 1982.

30 Lastly, as far as concerns the objection alleging a defective statement of the reasons on which Decision 1831/81 is based, the applicant takes the view that the reasons of the Commission did not find appropriate expression in

32 According to the case-law of the Court (see, most recently, the judgment of 28 October 1982, Lion and Loiret & Haen tjen s and Others v FIRS, Joined Cases 292 and 293/81, [1982] ECR 3887), the statement of the reasons on which Community measures are based must be appropriate to the nature of the measure in question: it must show clearly and unequivocally the reasoning of the Community authority which issued the measure, so as to allow those concerned to take cognizance of the justification for the measure adopted and to enable the Court to exercise its powers of review. In the case of a measure in the nature of a regulation, such as the general decision in dispute, the statement of reasons cannot be required to specify the often very numerous and complex matters of law or of fact constituting the subject- matter of such instruments, as long as those matters fall within the framework of the whole of which they form part.

33 Such is undeniably the case with the provisions at issue, the scope of which might have been ascertained without difficulty by the applicant by a comparison of the provisions of the two successive decisions. It would therefore be wrong to go so far as to demand that the Commission should devote a specific explanation to a detail of the arrangements, which may be

JUDGMENT OF 11. 5. 1983 — JOINED CASES 311/81 AND 30/82

regarded as the attenuated transfer to a new decision of a corrective factor, the basis and justification for which may be found in Decision 2794/80.

34 It follows from the foregoing that the submission must be rejected.

38 The applicant takes the view that the question of "delivery quotas" which was previously the subject of the action in Case 119/81, was not resolved by the judgment of 7 July 1982 inasmuch as the Court held therein that no such concept played any part in the determination of the production quotas for the second quarter of 1981. It therefore requests that that complex of questions be reconsidered and it argues, in substance, that Article 58 empowered the Commission to take action with regard only to the production of steel and not to its marketing, whether in the common market

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or on export markets. The ECSC Treaty as a whole does not support the inference of "implied powers" enabling the Commission to take action with regard to the delivery of goods.

39 As to the distribution of deliveries between the domestic market and non- member countries, the applicant takes the view that Article 58 does not empower the Commission to regulate external trade or, in particular, to curtail exports. Its view is that, under the scheme of the ECSC Treaty, commercial policy falls within the competence of the Member States. The applicant explains that the Commission was empowered to fix production quotas only at the level of domestic demand, and to permit undertakings to deduct from the output to be taken into account, for the calculation of production quotas, those quantities proven to have been exported to non- member countries.

40 As the questions raised are the subject, in Decision 1831/81, of more explicit rules than those in the previous decision, it is appropriate to consider once more the applicant's arguments in the light of the new provisions.

44 The judgment of 7 July 1982 also emphasized that it lies within the discretion of the Commission to take trade with non-member countries into account in the context of the measures to be adopted in pursuance of Article 58. In that respect it is, in fact, for the Commission to take account both of the needs of the common market itself and of the interests of the Community in its relations with non-member countries. Whilst it is true that Article 58 empowers the Commission, in periods of manifest crisis, to take action with regard to production without regard to trade with non-member countries, the provision cannot be interpreted as meaning that it permits no more than the allocation to every undertaking of a comprehensive production quota which may be disposed of either on the domestic market or on the market of non-member countries.

45 It follows that the Commission did not exceed the powers which it derives from Article 58 when, in the contested decision, it fixed separate quarterly reference production figures and reference quantities for the application of the abatement rates governing the determination of the production quota and of that part of production which might be delivered on the common market.

46 That submission must therefore also be rejected.

Costs

47 Under Article 69 (2) of the Rules of Procedure the unsuccessful party is to be ordered to pay the costs. As the applicant has failed in its submissions it must be ordered to pay the costs.

KLÖCKNER-WERKE v COMMISSION

Bosco Koopmans Bahlmann

Delivered in open court in Luxembourg on 11 May 1983.

P. Heim A. O'Keeffe Registrar President of the Fourth Chamber

O P I N I O N OF MR ADVOCATE GENERAL REISCHL DELIVERED O N 23 FEBRUARY 1983 »

Mr President, respect of the fourth quarter of 1981 and Members of the Court, the first two quarters of 1982. During the period in which Decision 1831/81 of 24 June 1981 (Official There are three notices at issue, the first Journal L 180 of 1 July 1981, p. 1 et dated 26 October 1981 and based — as seq.), Klöckner-Werke AG, which has far as the abatement rates applicable to contested the notification of quotas for the fourth quarter of 1981 are concerned the third quarter of 1981 in Case — on Decision 2979/81 (Official Journal 244/81, 2 received similar notifications in L 298 of 17 October 1981, p. 11), the 1 — Translated from ihc German. second dated 4 December 1981 and 2 — Case 244/81 — Klòchier-Werke AG v Commission of based on Decision 3328/81, which the European Communities. governed the first quarter of 1982