C-136/82

In Case 136/82

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 Department, Jean M o n n e t Building, Kirchberg, defendant,

JUDGMENT OF 11. 5. 1983 — CASE 136/82

A P P L I C A T I O N for a declaration that the individual decision a d o p t e d by the Commission on 24 M a r c h 1982, fixing the p r o d u c t i o n quotas imposed on the applicant for the second q u a r t e r of 1982 is void wholly or in part,

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

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decision further provided that, where the reconstituted from the production quotas production or delivery restrictions im- awarded to undertakings under Decision posed by it or by its implementing 2794/80 during the fourth quarter of measures entailed exceptional difficulties 1980 and the first quarter of 1981. for an undertaking, it might refer the matter to the Commission which, having examined the case without delay in the The possibility of individual adjustment light of the objectives of the decision, which the previous decision had allowed would adapt the provisions to the in favour of undertakings whose rate of specific circumstances. utilization of productive capacity was more than 10 °/o below the Community average (Article 4 (3)) was abolished, and the general equity clause in Article On the expiry of that system, in view of 14, permitting quotas to be adjusted in the persistence of the manifest crisis, the cases of "exceptional difficulties" was re- Commission adopted the new general stricted in the sense that it became Decision 1831/81/ECSC of 24 June applicable only to small-scale under- 1981 (Official Journal L 180, p. 1), takings. whereby the quota system was extended, with some amendments.

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Advocate General the Court decided to III — Submissions and argu- open the oral procedure without any m e n t s of t h e p a r t i e s preparatory inquiry. By an order of 13 October 1982, the Court decided to In support of its action the applicant puts assign the case to the Fourth Chamber. forward five submissions, directed both against Decision 1831/81 and against the individual decision of 24 March 1982. The arguments relate to: II — C o n c l u s i o n s of t h e p a r t i e s (a) breach of the principle of minimum utilization of undertakings' pro- The applicant claims that the Court ductive capacity; should: (b) infringement of an essential pro- cedural requirement, namely absence 1. Declare the defendant's decision of of a statement of the reasons on 24 March 1982 null and void; which Decision 1831/81 was based;

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That derives period. from a general principle existing in the legal systems of all Member States, and On the basis of those suppositions, the is also in keeping with considerations of applicant calculates the quotas which logic, since it is clearly more perilous for should have been awarded to it if it had an undertaking cutting back production been granted a utilization-rate on a par to reduce a utilization rate from 50% to with the Community average, and 45% than to reduce it from 100% to concludes that for the second quarter of 90%. 1982 its quotas should have amounted to 317 922 tonnes for products in Category The individual decision under dispute I a and 358 665 tonnes for those in

1980. The productive potential of the another objection: the Commission — it mill was therefore exploited at a rate of maintains — has misapplied the no more than 28.4%, whereas the provisions of Article 4 (3) of Decision average amongst Community under- 2794/80, and the mistake has reper- takings reached approximately 52%. cussions on the setting of quotas under Decision 1831/81 pursuant to Article 6 The applicant takes the view that the (1) (b) thereof.

Should those reports not be considered adequate, Klöckner offers to supply The Commission objects of the outset further evidence. The applicant takes the that the submission is inadmissible, as view that for the purposes of fixing regards both the principal claim and the production quotas there is no reason to claim in the alternative. take account of previous notifications concerning productive capacity, supplied As far as the principal claim is by the undertaking for statistical concerned, the Commission notes that purposes on Questionnaire No 2 / 6 1 ; it is the action does not specify whether the

submission is directed at general De- Moreover, as regards an alternative cision 1831/81 as a whole or only a claim to another, so-called "principal" certain provisions thereof; the submission claim, the Court, before giving its is therefore inadmissible for a lack of judgment on the alternative claim, must precision. first have rejected the principal claim. However, the Court cannot reject the main claim except by holding that the submissions used in challenging the As far as the claim in the alternative is general decision are unfounded, and that concerned, the Commission submits that the. quota system under Decision the applicant is demanding the fixing of 1831/81 is indeed valid.

In Case 311/81 (pursuing an analogous aim fact no provision of that kind is with reference to the quotas for the contained in the Treaty, nor can it be fourth quarter of 1981), that the claim deduced from a general principle seeks, not the conferring of an advantage supposed to exist in the law of all but the partial annulment of a disad- Member States. In those circumstances, vantage, namely the prohibition of any argument from the applicant seeking producing higher quantities than those to demonstrate that the Bremen No II granted, with the result that the problem wide-strip mill has a higher output of an action alleging failure to act cannot capacity than that adopted by the

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1831/81. That being so, if the objection taking has never been subject to output relates to a supposed misinterpretation of restrictions. If, on the other hand, the the provisions of Article 6 (1) of Court were to conclude that the Decision 1831/81, it is quite unfounded. production to which the applicant is entitled is, although not unlimited, none the less higher than that granted, there Finally, the defendant relies on the would arise between the alternative and judgment of the Court of 3 March 1982 the principal claim a minimum and (Alpha Steel v Commission, Case 14/81, maximum relationship: one part of the [1982] ECR 749), according to which it applicant's claims would be acceded to cannot reasonably be denied that the and, at the same time, the contested Commission's choice of a criterion based decision would be kept in force. on undertakings' actual production (as opposed to that of their productive As to the substance of the claim, the capacity) may constitute an "equitable applicant reaffirms its argument con- basis" within the meaning of Article 58 cerning the existence of a prohibition of (2) of the ECSC Treaty. any uniform reduction in reference production figures, and of a duty to protect undertakings having a particu- In its reply the applicant claims that the larly low utilization rate, and the objection of inadmissibility in respect of applicant specifies that those principles its alternative claim (a) is unfounded and derive not only from Article 58 of the recalls, first, the argument on the subject ECSC Treaty but also from Article 14 b, already set forth in Case 30/82 (relating inserted into Decision 1831/81 by to the production quotas fixed for the Commission Decision 533/82 of 3 first quarter of 1982), namely that the March 1982 (Official Journal L 65, p. 6) claim seeks a declaration that a burden as regards reinforcing rods. imposed on the applicant is partially void, not an advantage which the Turning to the productive capacity of its defendant is refusing to grant and in Bremen No II mill, the applicant restates respect of which the applicant would be its argument in great detail, referring to forced to bring an action for failure to the expert reports appended to the file

It

does, however, emphasize that when As a preliminary matter, the Commission such a premise — namely the possibility disputes the admissibility of the of using undertakings' actual output as submission, alleging that insufficient an equitable criterion — leads to under- grounds are stated in support thereof. utilization of capacity, it is appropriate, by way of exception, to raise the rate to the level of the Community average. As to the substantive issue, the defendant The question is therefore whether the contests the basis of the claim, Commission is entitled to grant to some contending that the quota system undertakings quotas so low that it provided for by Decision 1831/81 did condemns them to wither away, and not entail a general deterioration in the whether it is observing the limits of its position of undertakings as compared discretion when, owing to the quotas with the system laid down by Decision granted, it destroys certain undertakings 2794/80. At all events, it observes that whilst sparing others. the adjustments made to that system by Decision 1831/81 were explained in the recitals in the preamble to the decision, so that the duty to state reasons has been In its rejoinder, the Commission insists complied with. on its contention concerning the inadmissibility of the alternative claim The applicant replies that Decision (a), being one which has no independent 1831/81 seriously aggravated its situ- meaning. On the substantive issues, it ation as regards products in Categories refers to the judgment of the Court of 7 I a and I b, owing to the fact that only July 1982, Case 119/81, given in respect half of the production quota as of an application from Klöckner itself calculated on the basis of the previous seeking a declaration that the decision decision — pursuant to Article 4 thereof, fixing the production quotas for the in particular — has now been taken into second quarter of 1981 was void, account. No reasons for that deterio- whereby, in conformity with the Alpha ration were stated in the recitals to Steel judgment mentioned above, the Decision 1831/81. decision resolving the problem went against the applicant. The Commission replies that, since De- cision 1831/81 is general in its scope, it was required merely to set forth the reasons for amending the system for B •—• Second submission the calculation of reference production figures, and that was precisely what was done in the fourth recital to the decision. The applicant observes that the Com- mission did not supply reasons for putting the undertaking, by virtue of C — Third submission Decision 1831/81, on a worse footing than under the previous decision, The applicant argues that the distribution 2794/80. This amounts to an in- of quotas amongst Community under- fringement of an essential procedural takings, in pursuance of the general requirement, namely an infringement of decision in dispute, is not drawn up on the first paragraph of Article 15 of the an equitable basis inasmuch as the ECSC Treaty whereby decisions must Commission made no allowance for the state the reasons on which they are effects of subsidies granted to the steel based. industry in certain Member States,

contrary to Article 4 (c) of tlie ECSC (mentioned above), in which the Court Treaty. It takes the view that the stated that the Commission was not defendant should have taken those illegal obliged, in connection with the measures subsidies into account, either by granting provided for by Article 58 of the ECSC a higher quota to unsubsidized under- Treaty, to take account of the distortions takings or by lowering the quota on the steel market created by the grant awarded to undertakings which benefited of aids which might be inconsistent with from such aids. the Treaty; the Commission adds that the judgment, which relates to general Decision 2794/80, might equally apply As a preliminary, the Commission again to Decision 1831/81. In any event, it puts forward an objection that the denies the relevance of the document submission is inadmissible inasmuch as produced by the applicant, contending insufficient grounds are stated in support inter alia that the concept of subsidy thereof. under American customs law does not correspond to that contained in Article 4 (c) of the ECSC Treaty. On the substantive issues, the Com- mission refers to the Alpha Steel judgment mentioned above, in which the Court rejected the argument in question, D — Fourth submission holding that Article 58 of the ECSC Treaty does not aim to rectify distortions in competition due to State subsidies, in respect of which the Commission has According to the applicant, the general other means at its disposal. The decision at issue was not the subject of defendant furthermore points to the the Council's assent, as laid down by arguments set forth in Case 244/81. Article 58 (1) of the ECSC Treaty. The Commission, although asked on several occasions to produce the Council's On the subject of admissibility, the decision giving its assent, confined itself applicant observes that the submission is to producing a press bulletin from the aimed at the decision under challenge General Secretariat of the Council — a and — indirectly ·— at general Decision document having no relevance at all. 1831/81, inasmuch as the latter omitted Indeed, it was only by examining the to draw the necessary legal inferences documents submitted by the Commission from the prohibition of subsidies. to the Council for the purposes of the meeting at which the assent was due to be given, together with the minutes and As regards the substance, it refers to its the tape-recording of that meeting, that pleadings in Case 119/81. It none the it was possible to establish whether an less produces a new document (the "assent" really was forthcoming and American "Federal Register", Part II, whether it had the content required by "Department of Commerce", 17 June the ECSC Treaty. There is therefore, in 1982, pp. 26300 to 26348) which the first place, a lack of evidence. indirectly discloses the amount of aid granted by a number of Member States to steel undertakings. In any case, the applicant, referring to the arguments set forth in other In its rejoinder the Commission relies on analogous cases (Cases 119 and 244/81), the judgment of the Court of 7 July 1982 maintains that the Council's assent is

necessary in respect of all the constituent as the requests for production of fresh parts of the quota system, not merely in documents, which it regards as relation to certain supposedly essential unnecessary. As may be seen not only aspects thereof — factors which are, from the preamble to Decision 1831/81 moreover, unidentifiable except by but also from many documents produced means of an objective criterion which the in Case 244/81 (proposal of the Commission has been unable to specify. Commission, Doc. COM(81) 277 Final, That being so, the Council's "assent" of 22 May 1981; press releases of the would not, even if it was given in this Council Nos 7330/81 and 7630/81; item case, have the content laid down by the published in Official Journal C 196 of

A comparison of unnecessary for the Commission to that text, which the applicant wishes to transmit to the Council a proposal for a have produced, in this case as well, if quota system which is formulated in appropriate, with the definitive text of Decision 2794/80 would disclose the every detail and submitted in the form of existence of many important differences. a draft decision. On the other hand, There are comparable divergencies be- Article 58 institutes a decision-making tween the text of the Commission's procedure in three phases.

more instruments. It is only in the second phase that the Council is involved in the procedure. In order to establish a quota system, the Commission must obtain the Council's assent but is not required to do so as far as its arrangement and its embodiment in legal instruments are concerned. Since those principles were observed in this case, the procedure whereby Decision 1831/81 was adopted was consistent with the requirements of Article 58 of the ECSC Treaty, whereas the subsistence of differences between Both at law and in fact the Commission the draft forwarded by the Commission contests the applicant's arguments as well

to the Council and the measure adopted of the quarterly production quotas which by the Commission, following the may be delivered within the common Council's assent, setting up the quota market, and the share which may be system, is of no importance; such exported. The quota therefore does not differences are the result of the decision- confine itself to limiting production, but making process which culminates in the also limits the volume which the Council's decision to give its assent; the applicant may deliver during the quarter Commission might indeed, following the concerned. However, delivery quotas for discussion in the Council, consider that it the domestic market are necessary in had to amend its initial conception of the order to prevent products not disposed quota system. It is even possible for the of outside the Community from being Council to make its assent subject to the offered on the common market, and to adoption of certain rules of the system. It that end it would have been sufficient is otherwise quite unnecessary to lay when fixing production quotas, to down an objective criterion making it disregard proven exports; yet the possible to distinguish those portions of a Commission fixed production quotas not decision which do, and those which do only for the common market but also in not, require assent, as the latter relates respect of exports to non-member solely to the principle of establishing the · countries, whereas such a provision quota system, whilst the task of giving cannot be based on Article 58 of the specific expression to the principle falls ECSC Treaty. It may be considered within the powers of the Commission. lawful by virtue of the first paragraph of Article 95 of the Treaty, provided that the conditions for applying the article are The applicant replies that the Com- satisfied, which is not the case here. mission's contention exposes every undertaking to very serious risk of irre- parable damage, and at the same time cuts down the powers of review of the It was on the basis of that submission Court of Justice. that the applicant put forward its alter- native claims (b) and (c). Here again, the Commission invokes in its rejoinder the judgment of 7 July 1982, mentioned above, in which it is The Commission, as a preliminary, replies regarded as undeniable that, in Decision that the submission — or the part thereof 2794/80, the Commission consulted the which relates to the supposed setting of Council in accordance with Article 58 of quota limits on exports — is, together the ECSC Treaty and that the Council with the alternative claim (b), in- did indeed approve the measures admissible on the ground that the envisaged. The Commission takes the decision under challenge makes no view that the same conclusion must be provision for limiting exports to non- arrived at in the context of Decision member countries, so that that part of 1831/81, adopted as it was in entirely the submission and the alternative claim analogous circumstances. are without purpose.

no way envisages the fixing of "delivery" powers over their export systems. In that quotas. Deliveries by undertakings connection the applicant cites Article 59, comprise two elements, namely products the first paragraphs of Articles 61, 71 manufactured under the quarterly quota and 73 respectively, and Article 74 of and stocks deriving from earlier the Treaty, together with Article 19 of production; Decision 1831/81 lays down the Convention on the Transitional no limit on the disposal of stocks, Provisions. whereas the matter would have had to be dealt with if it had been desired to introduce a system of delivery quotas. The provisions contained in Articles 5 and 8 of the general decision are In that context, again, the Commission's designed to prevent products not rejoinder refers to the aforementioned disposed of outside the common market judgment of 7 July 1982, in which the from being offered within the Court stated that the restrictive effect Community whenever exports are which the fixing of quotas may have on reduced. It was for that reason that it export possibilities is inherent in the was forbidden to exceed the ratio, as machinery set up by Article 58 of the fixed for the reference period, between ECSC Treaty, and observed that the Community deliveries and total output. concept of "delivery quotas" played no The objection that the provisions are part in the determination of the illegal is thus unfounded. production quotas allocated to the applicant under Decision 2794/80. The defendant considers that the case-law in question applies equally to Decision 1831/81, since the situation is in no way The applicant is wrong in complaining different. that it can export no more than a portion of its products. In the first place, products drawn from stock may be delivered without any restrictions, either within the common market or to non- member countries. In the second place, IV — Oral p r o c e d u r e Decision 1831/81 contains no provision limiting the share of production which may be exported, as the Community is concerned that undertakings should export their products, precisely for the At the sitting on 15 December 1982, purpose of relieving the domestic market. Klöckner- Werke AG, represented by Professor Bodo Borner, and the Commission, represented by Norbert Koch, a member of its Legal Depart- ment, presented oral argument. In the The applicant asserts in reply that, under course of the sitting, the Commission's Article 5 of Decision 1831/81, it may representative laid two documents before export only that part of its production the Court. quota which it does not dispose of within the common market, which constitutes a quantitative restriction on exports and hence both a delivery quota and an imposition of quotas on exports. The The Advocate General delivered his ECSC Treaty is thereby infringed, opinion at the sitting on 23 February inasmuch as it left to Member States full 1983.

3. Failure on the part of the Commission to take account, when fixing the production quotas, of the effects of illegal subsidies granted by certain Member States to their steel undertakings;

4. Substitution by the Commission of "delivery quotas" within the common market for the production quotas envisaged by Article 58, and fixing of quotas on exports.

3 In the alternative, the applicant claims that the Court should :

(a) declare void the production quotas fixed by the contested decision to the extent to which they fall below certain tonnages for Categories I a and lb;

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(b) declare the production quotas void in so far as production is intended for non-member countries:

7 According to the applicant, the Commission should have referred to the Council, not some more or less specific proposals, but a fully elaborated draft text. Consequently, the Commission is required to demonstrate, if challenged, that the decision which it has taken is in keeping with the text which it has submitted to the Council and which has received the latter's approval. Failing such evidence, the decision cannot be regarded as

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consistent with the provisions of Community law and is therefore likely to encounter resistance from the Member States. In order to review the consistency of the procedure followed with the requirements of Article 58, the applicant seeks production of the Council's minutes and of the sound- recording of its discussions.

8 That attitude on the part of the applicant is founded on a failure to appreciate either the distribution of powers intended by Article 58 or the principles underlying the legislative system set up by the ECSC Treaty.

9 Under the first subparagraph of Article 58 (1), it is for the Commission to establish the existence of a manifest crisis. Should such a crisis become apparent and should the means of action provided for in Article 57 be insufficient to deal with it, Article 58 places the Commission under a duty to establish a system of production quotas. The power to take appropriate measures lies, under Article 58, with the Commission, subject to the condition that it may not act except with the "assent" of the Council.

10 In laying down that form of consultation between the Commission and the Council, Article 58 did not determine its detailed arrangements. In those circumstances, it is a matter for the two institutions to provide, by common consent and in accordance with their respective powers, for the form which their cooperation shall take. The requirements of Article 58 are thus satisfied if such cooperation culminates in the Council's asssenting to the "quota system" which the Commission proposes to set up, without its being necessary to require the two institutions to examine a detailed draft decision.

H In this casé the applicant has, in substance, reiterated the arguments which it has already set forth in Case 119/81. It asserts,; that the quest by the Commission for an "equitable basis" implies a duty to ensure that under- takings maintain a minimum level of employment, by fixing the quotas in such a way that every undertaking is guaranteed a utilization of its productive capacity which corresponds to the Community average. In that connection, it considers that Decision 1831/81 has caused its position to deteriorate still further as compared with the position under Decision 2794/80, owing to the fact that the new decision no longer allows for the possibility of increasing reference production in favour of those undertakings which are experiencing a utilization rate of their plant which is below the Community average, as was provided by Article 4 (3) of the previous decision, since the advantage in question was only half maintained by the effect of Article 6 (1) (b) of the new decision.

is The applicant states that the deterioration in its position following that reduction in its quotas endangers its very existence and puts it in an "emergency situation". It takes the view that the object of Article 58 can be achieved only by a system organized in such a way as to guarantee to under- takings an appropriate utilization of their current productive capacity and not by reference to their actual production during previous periods.

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i9 In the first place, Article 6 (1) (a) 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,

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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

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output and is therefore not capable of furnishing a useful criterion for the purpose of adapting that output to the decline in demand.

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 exceeded 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.

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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 the preamble to the decision, which restricts itself, on the disputed point, to affirming that the Commission has taken account "of the experience gained in managing the stystem set up by" Decision 2794/80. According to the applicant, the new decision is therefore void for infringement of an essential procedural requirement.

32 According to the case-law of the Court (see, most recently, the judgment of 28 October 1982, Lion and Loiret & Haentjens 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 power 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

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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 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 dismissed.

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

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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 or on export markets. The ESCS 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 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 to be taken into account, for the calculation of production quotas, those quantities proven to have been exported to non- member countries.

4 0 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 dismissed.

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.

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Bosco Koopmans Bahlmann

Delivered in open court in Luxembourg on 11 May 1983.

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

OPINION OF MR ADVOCATE GENERAL REISCHL

(see Joined Cases 311/81 and 30/82, p. 1575)