C-31/82

JUDGMENT OF 15. 12. 1983 — JOINED CASES 31, 138 AND 204/82

is not to resolve problems which may strictions because it has concentrated result from differences in the structure its activities on products particularly or development of undertakings, but affected by the crisis, in comparison to spread in an equitable manner with undertakings whose production among all undertakings in the is more varied or biased towards Community the inevitable sacrifices products which are not as seriously entailed by the steel crisis, regardless affected, cannot be regarded as of their geographical location and discrimination on the part of the individual state of development. Community.

v

COMMISSION OF THE EUROPEAN COMMUNITIES, r e p r e s e n t e d by F r a n k S. B e n y o n , Georges D . Kremlis and Xenophon Y a t a g a n a s , members of its Legal

METAIXURGIKI HALYPS v COMMISSION

Department, acting as Agents, with an address for service in Luxembourg at the office of Oreste Montako, a member of its Legal Department, Jean Monnet Building, Kirchberg, defendant,

APPLICATIONS requesting the Court to declare void the decisions by which the Commission fixed the applicant's reference production and reference quantities, together with its production quotas and the part of such quotas that might be delivered within the common market, as regards rolled products in Categoiy V (concrete reinforcing bars) for the fourth quarter of 1981 and the first quarter of 1982 (Case 31/82) and for the second quarter of 1982 (Case 138/82) and as regards products in Categories IV (wire rod) and V for the third quarter of 1982 (Case 204/82),

T H E C O U R T (Second Chamber)

JUDGMENT OF 15. 12. 1983 — JOINED CASES 31, 138 AND 204/82

Decision 2794/80/ECSC of 31 October and information concerning economic 1980 (Official Journal 1980, L 291, p. 1) trends pointed on the contrary to a it established a system of steel pro- possible deterioration, the Commission duction quotas for undertakings in the considered it necessary to include con- Community's steel industry applicable crete reinforcing bars and merchant bars until 30 June 1981. in the compulsory system of production quotas.

As regards wire rod, criteria for Consequently, the rules for determining establishing a voluntary system of the reference production for those two reducing production were adopted by a categories were set out in Article 7a, number of producers who accounted for which was inserted into Decision a sufficiently high proportion of the 1831/81 by Decision 1832/81. relevant production. On the other hand, no basis could be evolved for the establishment of a voluntary system Having established that there had been covering concrete reinforcing bars and a sudden severe deterioration in the merchant bars. situation on the market in concrete reinforcing bars, while the merchant bars market had remained unaffected, the Since there was no improvement in Commission considered that the diverg- market conditions and the level of orders ing trends on those two markets made

METALLURGHI HALYPS v COMMISSION

it necessary to fix different rates of Article 9(2) of Decision 1831/81 abatement and separate quotas. provides that the Commission must notify to each undertaking its reference production and reference quantities as well as its production quotas and the Consequently, by Decision 2804/81/ part of those quotas which may be ECSC of 23 September 1981 amending delivered on the common market. for the second time Decision 1831/81/ ECSC (Official Journal 1981, L 278, p. 1) it amended and supplemented Article 7a of that decision, and laid down new Article 12 of Decision 1831/81 fixes the rules for calculating the reference fine to be imposed on any undertaking production for Category V to provide a exceeding its production quotas or the basis for fixing quotas with effect from part of such quotas which may be the fourth quarter of 1981. delivered within the common market.

Decision 2804/81 inserted after Article Article 9 (1) of Decision 1831/81 14 of Decision 1831/81, as amended by provides that the Commission is to fix Decision 1832/81, a new Article 14a each quarter the abatement rates for which provides that, where the establishing the production quotas and Commission finds, following receipt of a the part of those quotas which may be request from an undertaking whose delivered within the common market. plants are located in Greece, that the production quota system is causing the undertaking concerned exceptional diffi- culties likely to prevent it from adapting In particular, the abatement rate for to the structural developments in that products in Category V (concrete country's economy, it shall make an reinforcing bars), which had been fixed appropriate adjustment to the reference for the third quarter of 1981 by production figures for the undertaking Commission Decision 1833/81/ECSC of and products in question. 3 July 1981 (Official Journal 1982, L 184, p. 6) together with and at the same level as the rate for Category VI (merchant bars), was fixed separately In accordance with Articles 5 and 9 (2) for the fourth quarter of 1981 by of Decision 1831/81, the Commission, in Commission Decision 2979/81 of 15 a letter of 11 December 1981, notified to October 1981 (Official Journal 1981, the undertaking Metallurgiki Halyps AE, L 298, p. 11). a company incorporated under the laws

JUDGMENT OF 15. 12. 1983 — JOINED CASES 31, 138 AND 204/82

On 14 December 1981, the Commission In that decision the Commission stated notified to Metallurgiki Halyps its that, in the case of concrete reinforcing reference production and reference bars, the fall in demand during the quantities and its production quotas and previous quarters and the high level of quotas for delivery on the common stocks had required very high abatement market for the first quarter of 1982. rates to be imposed; the reduction in Pursuant to Article 14a of Decision demand had been reflected by a slump 1831/81, that decision was also amended in market prices. Moreover, the system by the Commission's letter dated 5 of quotas would create exceptional January 1982, which increased the difficulties for small and medium-sized production quota for Category V from undertakings whose production de- 45 231 to 61 123 tonnes and the part of pended almost exclusively on products in that quota which could be delivered on Categories IV, V and VI and to a the common market from 18 780 to considerable extent on the production 26 450 tonnes. of concrete reinforcing bars; the Com- mission therefore considered it necessary to establish less stringent quotas for The Commission's decisions of 11 and those undertakings by means of a 14 December 1981, as amended by the reduction in the abatement rates for the decisions of 5 January 1982, were once establishment of quotas. again amended by the Commission on 4 February 1982 as a result of sup- plementary information submitted to it Decision 533/82 inserted in Decision by the undertaking. On the basis of 1831/81 after Article 14a an Article 14b, Article 14a of Decision 1831/81 and in which provided that, for producers order to enable the undertaking to earn whose total production did not exceed the profits needed to pay for its recent 700 000 tonnes in 1981 and whose

production of Categories IV, V and VI situation on the market for wire rod had accounted for at least 90% of their total deteriorated considerably in the second production, the abatement rates in quarter of 1982, as a result of a respect of Category V for the purpose of slackening in demand and the consider- establishing production quotas and the able fall in prices, particularly in the case proportion of the production quotas of the lower qualities, and since the which could be delivered within the imbalance on the wire rod market was common market for the second quarter disturbing the market for reinforcing of 1982 were to be reduced by five bars and merchant bars, the Commission percentage points if production of found it necessary to include wire rod Categoiy V represented at least 30% of within the system of production quotas production of Categories IV, V and VI once again. in 1981. The abatement rates for the third quarter On 24 March 1982 the Commission of 1982 were fixed by Commission notified to Metallurgiki Halyps its Decision 1697/82/ECSC of 30 June reference productions and reference 1982 (Official Journal 1982, L 191, quantities and its production quotas and p. 42). the part of those quotas which could be delivered within the common market for On account of the worsening of the products in Category V for the second situation concerning reinforcing bars, quarter of 1982. That decision was Commission Decision 1698/82 of 30 amended by a decision of the Com- June 1982 adjusting the abatement rates mission of 4 June 1982 which increased for Categoiy V products for the third the production quota from 40 952 to quarter of 1982 in respect of certain 71 808 and the part of that quota which undertakings (Official Journal 1982, L could be delivered within the common 191, p. 43) renewed, for certain small market from 16 928 to 29 570 tonnes in and medium-sized undertakings which respect of products in Categoiy V for depended almost exclusively on the the second quarter of 1982. production of products in Categories IV, V and VI and to a considerable extent Considering that the Community steel on the production of reinforcing bars, industry was still in a state of manifest the reduction in abatement rates crisis and that the attainment of the aims introduced by Decision 533/82. set out in Article 3 of the ECSC Treaty would be seriously jeopardized if the By a decision of 6 July 1982 the system of production quotas were not Commission notified to the undertaking continued, the Commission adopted its reference productions and reference Decision 1696/82/ECSC of 30 June quantities and its production quotas and 1982 (Official Journal 1982, L 191, p. 1) the part of those quotas which might be extending by one year the system of delivered within the common market, in monitoring and production quotas respect of products in Categories IV and created by Decision 1831/81, which in V for the third quarter of 1982. its view had proved successful.

11 and 14 December 1982, as amended applications on the submissions and by decisions of 5 January 1982, arguments which were not examined or concerning the fourth quarter of 1981 appraised in that judgment; in addition, and the first quarter of 1982 respectively, is stated the grounds for annulment were void. That application was which it intended to pursue at the registered as Case 31/82. hearing and those which it was withdrawing. On 30 April 1982 the undertaking brought an action for a declaration that the Commission's decision of 24 March I I I — C o n c l u s i o n s of t h e p a r t i e s 1982 concerning the second quarter of 1982 was void. That application was registered as Case 138/82. The applicant claims in each of the cases that the Court should : On 11 August 1982 the undertaking brought an action for a declaration that (a) Admit the application as lawful and the Commission's decision of 6 July 1982 well-founded; concerning the third quarter of 1982 was void. That application was registered as (b) Declare void the contested individual Case 204/82. decisions adopted pursuant to Decision 1831/81 and Decision The written procedure in the three cases 1696/82 respectively; and followed the normal course. (c) Order the Commission to pay the costs. Upon hearing the report of the Judge- Rapporteur and the views of the Advocate General, the Court decided to The Commission contends in each of the open the oral procedure without any cases that the Court should : preparatory inquiry. (a) Dismiss the application as un- By order of 20 April 1983 the Court founded; and decided to join Cases 31/82, 138/82 and 204/82 for the purpose of the procedure (b) Order the applicant to pay the costs. and the judgment.

which the contested individual decisions of Greece during which the rate of were adopted: the applicant alleges that utilization of production capacity by the general decisions are in breach of Greek steel undertakings (35 to 40%) Article 58 (2) and Articles 1 to 5, in was considerably lower than that of particular Article 4 (b), of the ECSC undertakings in the European Coal and Treaty. Steel Community (approximately 65%); the applicant's particularly low rate is due to the fact that its plant is recent and that after July 1980 it sustained serious In support of its applications in Cases 31 damage as a result of earthquakes. and 138/82, the applicant further claims that the contested individual decisions infringe Article 14a of Decision 1831/81. During the reference period 1978 to 1980, prior to accession, the Community steel undertakings had built up sufficient The Commission considers that all of the reserves, whereas the less developed applicant's submissions and arguments Greek undertakings did not meet even are unfounded. 50% of the needs of the domestic market. The reserves held by steel under- takings in the other Member States put them in a much better position and lead to discrimination against Greek under- A — Infringement of Articles 58 and 1 to takings. 5 of the ECSC Treaty

JUDGMENT OF 15. 12. 19S3 — JOINED CASES 31, 138 AND 204/82

METALLURGIKI HALYPS v COMMISSION

whether they produce those categories indirectly but none the less clearly, the alone or also produce other categories of unequal treatment of a number of small products not subject to the quota system, and medium-sized undertakings which clearly makes undertakings subject to depend mainly on the production of unequal treatment. Thus, for an under- concrete reinforcing bars and for which taking manufacturing exclusively pro- the reduction of the abatement rate by ducts in Categories IV and V, the five percentage points by no means reduction of the whole of its production results in treatment comparable to that fluctuates around a rate of 40 or 50%; accorded to the large steel concerns. on the other hand, an undertaking producing the six categories of products is only compelled to reduce its production as a whole by a much lower proportion. The general decisions at (g) According to Article 5 of the ECSC issue thus directly infringe the provisions Treaty, the Community must ensure the of Articles 58 and 4 of the ECSC Treaty establishment of normal competitive and the principle of equality which is laid conditions. However, by imposing down therein, in so far as they introduce quotas on Greek undertakings' pro- "manifest discrimination between pro- duction, the contested decisions make ducers". the operations of those undertakings clearly uneconomic and deny them normal competitive conditions.

The contested individual decisions introduced such discrimination at the expense of the applicant, which manu- factures solely products in Categories IV The Commission considers that Decisions and V. 1831/81 and 1696/82 do not infringe any provision of the ECSC Treaty or any general principle of law governing its application.

medium-sized undertakings faced with (c) The applicant relies on an exceptional difficulties; Decision erroneous interpretation of Article 2 of 2804/81 makes it possible to grant the ECSC Treaty inasmuch as it has adjustments to Greek undertakings if the recourse to purely national criteria and quota system causes them exceptional thereby restricts that provision to Greece, difficulties likely to prevent their adap- which is quite contrary to the spirit of tation to the structural developments in the ECSC Treaty. Moreover, in view of Greece's economy. the state of manifest crisis in the Community steel industry, Decisions 1831/81 and 1696/82 are not in- compatible with the second paragraph of The rate at which Greek undertakings Article 2 of the Treaty: they are intended use their quotas shows that the quota to avoid very serious economic and system does not place them in an unfair social problems which might occur as a situation or discriminate against them. result of a disturbance of the balance between supply and demand.

METALLURGISI HALYPS v COMMISSION

interest, use its power of decision The reduction in the abatement rates for according to the requirements of the small and medium-sized undertakings circumstances, even to the detriment of which comply with certain criteria is not certain individual interests. at all arbitrary and does not constitute an acknowledgement on the part of the Commission that those undertakings are subject to unequal treatment. Treatment (e) The claims relating to the is unequal only where undertakings in infringement of Article 4 (b) of the the same situation are treated differently; ECSC Treaty and of the prohibition of in this case, undertakings which produce discrimination, to the detriment of Greek several categories of products are by undertakings and the applicant in their nature in a different position from particular, are proved to be unfounded undertakings producing a single product, by the quantitative information available which are consequently treated concerning their production and deliv- differently. There would be genuine eries in the common market: in recent discrimination between producers if quarters they remained well within the different situations were treated in the quotas allocated to them. Those figures same way. show that there is no discriminatory treatment in this case, nor even the slightest damage. Equal treatment involves the sharing of cuts in production necessitated by the crisis in accordance with criteria chosen (f) The applicant's conception of equal for all producers on the basis of objective treatment is wholly mistaken and data and in pursuit of the same common fallacious. objective.

cisión 1831/81, as amended by Decisions exempt Greek undertakings from the 1832/81 and 2804/81. application of Article 58 of the ECSC Treaty. In particular, the insertion by Decision 2804/81 of Article 14a into Decision 1831/81 does not amount to Article 14a of Decision 1831/81 provides the performance of an obligation which for an appropriate adjustment to be has its source in the Act of Accession: made to the reference production figures Article 14a does not grant general for products manufactured by an under- exemption from the quota system to the taking whose plant is located in Greece, Greek steel industry as a whole; it where the Commission finds that the merely permits an adjustment of the quota system is causing it exceptional quotas for a particular undertaking and difficulties likely to prevent it from particular products. adapting to the structural developments in that country's economy. The part of the preamble to Decision 2804/81 relating to that provision confirms the Furthermore, it should be noted that the inappropriateness of applying any quota rate of • utilization of the production system to Greece during the transitional capacity of steel undertakings is not period, since it would jeopardize the among the criteria adopted by Decision industrial development of Greece and its 1831/81 for the fixing of quotas; nor adjustment to the level of development does Article 14a require such a criterion of the other Member States. to be taken into account when quotas are adjusted. The criterion based on the rate of utilization of production potential is linked to the criterion of production At the very least, Article 14a of Decision capacity. Previous judgments of the 1831/82 requires the Commission to fix, Court have acknowledged that the by individual decisions adopted in each criterion based on the actual production case in relation to the steel undertakings of undertakings, chosen by the Com- operating in Greece, quotas which enable mission, constitutes an equitable basis those undertakings to have a production within the meaning of Article 58 of the which is no less than Community steel ECSC Treaty. undertakings' rate of utilization of their production capacities; that interpretation is borne out by Article 2 of the ECSC Treaty, which requires compliance with the principle that undertakings in the V — Oral procedure Community should be treated equally.

1 By three applications lodged at the Court Registry on 18 January, 30 April and 11 August 1982, Metallurgiki Halyps AE, a company incorporated under the laws of Greece, with its registered office in Athens, brought actions to have declared void the individual decisions by which the Commission fixed the applicant's reference production, reference quantities, production quotas and the part of those quotas which could be delivered within the common market as regards, respectively, rolled products in Category V (concrete reinforcing bars) for the fourth quarter of 1981 and the first quarter of 1982 (Case 31/82) and for the quarter of 1982 (Case 138/82) and as regards products in Categories IV (wire rod) and V for the third quarter of 1982 (Case 204/82). The general decisions on which those individual decisions were based were Commission Decision 1831/81/ECSC of 24 June 1981 (Official Journal 1981, L 180, p. 1), as amended in particular by Commission Decision 2804/81/ECSC of 23 September 1981 (Official Journal 1981, L 278, p. 1) and, in relation to the last application, Commission Decision 1696/82/ECSC of 30 June 1982 (Official Journal 1982, L 191, p. 1).

2 In support of its applications, the applicant pleaded a series of submissions alleging failure to observe the transitional provisions of the Act of Accession, contravention of Article 58 and of the principles of the ECSC Treaty, manifest misuse of power, inadequate statement of reasons and infringement of Article 14a of Decision 1831/81, as amended by Decision 2804/81.

JUDGMENT OF 15. 12. 1983 — JOINED CASES 31, 138 AND 204/82

METALLURGHI HALYPS v COMMISSION

7 Without repeating the statements contained in those judgments, the Court takes the view that, m the light of the arguments set out by the applicant in this case, it must draw attention more particularly to the following points.

s Whilst considerations of economic policy such as those referred to by the applicant may be taken into account by the political authorities of the Community in the exercise of the powers conferred upon them by Article 58 of the Treaty, with a view to resolving certain special problems in the Greek steel industry, such considerations do not permit the legal validity of the provisions adopted by the Commission with regard to the applicant, pursuant to the general decisions in force, to be called in question.

9 Article 14a, which the Commission inserted into Decision 1831/81 recognized that special difficulties may arise for undertakings whose plant is situated in Greece. However, it should be stressed that that provision can apply only to individual undertakings by virtue of their particular situation.

io The applicant's statement that the application of the quota system to Greek undertakings has the effect of discriminating against them in relation to steel undertakings in the rest of the Community arises out of a failure on its part to appreciate the true implications of the measures adopted under Article 58.

n As the Court has repeatedly stressed, the purpose of the introduction of the production-quota system is to spread in an equitable manner among all undertakings in the Community the inevitable sacrifices entailed by the steel crisis, which is characterized by a reduction in demand and a fall in the level of prices. The consequences of that crisis affect all undertakings, whatever their geographical location and their individual state of development. The prob ems referred to by the applicant in connection with structure, level of development and rate of utilization of production capacity are not peculiar to it or to Greek undertakings but also arise for many other undertakings throughout the Community.

is The fact that the applicant is subject to relatively more severe restrictions because it has concentrated its activities on products particularly affected by the crisis, in comparison with undertakings whose production is more varied or biased towards products which are not as seriously affected, cannot be regarded as discrimination on the part of the Community.

i6 The second part of the submission must therefore also be dismissed.

METALLURGIKI HALYPS v COMMISSION

I n f r i n g e m e n t of A r t i c l e 14a of D e c i s i o n 1 8 3 1 / 8 1

i7 The meaning of the applicant's submission based on the infringement of Article 14a of Decision 1831/81 is not clear. It is apparent from the contested decisions that the applicant did in fact enjoy the benefits reserved by that provision to Greek undertakings. It does not complain that Article 14a was not correctly applied to it but criticizes the fact that the Commission did not attribute to it a wider meaning, so as to guarantee to all Greek undertakings a rate of utilization of their production capacity equal to the average rate of utilization of the other steel undertakings in the Community. It claims that that rate was 6 3 % at the material time, whilst the contested decisions permitted the applicant a maximum rate of utilization of its production capacity of only 54%.

is The answer to that argument must be that nothing in the scheme of Article 58 or the Act of Accession requires the Commission to adopt a general provision in favour of Greek undertakings such as that desired by the applicant. The introduction and adjustment of the special relief clause in favour of Greek undertakings falls within the Commission's discretion on matters of policy and the applicant has not put forward any grounds to warrant the view that the Commission exercised that discretion illegally.

23 Under Article 69 (2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs.

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

On those grounds,

T H E C O U R T (Second Chamber)

hereby:

1. Dismisses the application;