C-179/82

COMMISSION OF THE EUROPEAN COMMUNITIES, 200 Rue de la Loi, Brussels, represented by Sergio Fabro, a member of its Legal Department, acting as Agent, with an address for service in Luxembourg at the office of Oreste Montako, a member of its Legal Department, Jean Monnet Building, Kirchberg, defendant,

APPLICATION for a declaration that the individual decision of the Commission of 11 June 1982 relating to a fine underArticle 58 of the ECSC Treaty is void,

THE COURT (Fifth Chamber)

composed of: Y. Galmot, President of Chamber, Lord Mackenzie Stuart, O. Due, U. Everling and C. Kakouris, Judges,

- Advocate General: G. Reischl Registrar: H . A. Rühi, Principal Administrator

gives the following

I — Facts and written procedure By telex message of 7 April 1981 the applicant informed the Commission that it had produced a surplus, the reason for 1. Confronted with a situation of which lay basically in the bringing into manifest crisis in the market for steel operation of a modified rolling mill at within the meaning of Article 58 of the Casto which during the commissioning ECSC Treaty the Commission by stage had achieved an unexpected and Decision No 2974/80 of 31 October technically unforeseeable output. In 1980 (Official Journal, L 291, p. 1) order to compensate for the excess it established a system of steel production suggested to the Commission that it quotas for undertakings in the iron and should reduce its production quota as steel industry. By Articles 2 to 4 of the from April. decision the Commission fixed for undertakings subject to the system quarterly production quotas for crude steel and four groups of rolled products. By letter dated 19 January 1982 the The calculation of those quotas is based Commission informed the applicant that on quarterly reference production figures it had exceeded its quota for the first for each undertaking adjusted by certain quarter of 1981 by 5 488 tonnes and that rates of abatement. The reference pro­ the amount of the fine for which it duction figures and the production was liable therefore had been fixed at quotas resulting from applying the rates 5 488 ECU x 75 = 411 600 ECU. The of abatement are notified by the Com­ Commission also invited the applicant to mission to each undertaking. submit its written observations and if necessary to seek a hearing. The first paragraph of Article 9 of the decision provides that firms exceeding their production quotas "shall be fined. By letter dated 1 February 1982 and then This fine shall generally be 75 ECU at the hearing on 18 March 1982 the [European currency units] per tonne of applicant explained to the Commission in excess for ordinary steels and 150 ECU detail the facts which in its view were the per tonne of excess for special steels". cause of its exceeding its production quota. It expressed the opinion that the reason for the excess was that the 2. In application of the above- modified mill at Casto had achieved an mentioned rules the Commission by unexpected and technically unforeseeable

Primarily: annul the individual decision The decision states that the applicant has of 11 June 1982 imposing on the exceeded its production quota for Group applicant undertaking a fine of 411 600 IV for the first quarter of 1981 by 5 488 ECU ; tonnes in breach of Decision No 2794/80 and impose on it a fine of 411 600 ECU, namely LIT 544 699 092. In the alternative, and in the event of the In the statement of the reasons on which first head of claim being dismissed: the decision is based it is stated that the reduce the fine to a purely symbolical infringement committed by Lucchini amount, or at least a much smaller makes it liable to a fine under Article 58 amount; of the ECSC Treaty, the amount of which may be equal to the value of the unauthorized production and that Article 9 of Decision No 2794/80 provides in In any event, order the Commission of the event of such excess for a penalty of the European Communities to pay the generally 75 ECU per tonne of excess costs; for ordinary steels and that in view of the tonnage in excess of the production quota it was appropriate to impose a By way of inquiry and in the event of the fine of 411 600 ECU, namely LIT arguments in the pleadings being 544 699 092. challenged: allow technical consultation with regard to the factual technical anomaly alleged in the pleadings which caused the production to be exceeded 3. The present action which is directed and with regard to the type of products against the above-mentioned decision produced by the new plant. was lodged at the Court Registry on 16 July 1982. The Commission contends that the Court should: Upon hearing the report of the Judge- Rapporteur and the views of the Advocate General the Court on 9 March Dismiss the action; 1983 decided to assign the case to the Fifth Chamber pursuant to Article 95 of the Rules of Procedure and to open the Order the applicant to pay the costs.

Article 58 (4) of the ECSC Treaty allows the imposition of fines not exceeding the In those circumstances the Commission value of the tonnage produced in is of the opinion that the recitals to disregard thereof. It thus gives the the general decision contain sufficient Commission a discretion which it must arguments to show the use which it exercise in determining the amount of intends to make of its powers in applying the fine. the decision. An additional statement of reasons in the individual decision imposing the fine are no longer The Commission's discretion is not necessary since that decision is only a restricted by Article 9 of Decision No measure implementing the general 2794/80 for on the one hand that decision. provision is only a general rule and on the other hand it is not a rule of equivalent rank to the provisions of the The Commission adds that Article 9 of Treaty. Decision No 2794/80 keeps within the limits fixed by Article 58 (4) of the Treaty since the amount of 75 ECU pel­ It follows that the contested decision is tonne is less than the value of a tonne of vitiated because the Commission has steel.

JUDGMENT OF 19. 10. 1983 — CASE 179/82

The Commission adds that a production increase in a trial mill is not an abnormal More specifically the applicant alleges in technical event but on the contrary a this connection that the excess pro­ perfectly foreseeable one. The applicant duction achieved in the first quarter of thus took the risk of an excess 1981 was the result of an abnormal and production's occurring. The argument unforeseeable technical fact, namely the that it could not stop production for commissioning in March 1981 of a technical and legal reasons is irrelevant modified rolling mill in Casto which since what is at issue is the consequences during the commissioning stage achieved of its previous negligence which it must an unexpected output. It was not possible face itself. to stop production since on the one hand the commissioning of new plant requires the full use of its capacity in order to allow the necessary adjustments and tests In any event, even assuming that the and on the other hand the undertaking excess production caused by the was bound by contracts entered into with commissioning of the new mill in Casto the trade unions and the suppliers of the was unforeseeable, it may be inquired plant. why the applicant did not reduce or suspend production in its two other establishments where the plant was functioning normally. It would have been As regards production subsequent to the perfectly possible to make a pro­ first quarter of 1981 Lucchini states that portionate reduction in the production in it programmed voluntary reductions in the two other mills (production figures: its production in relation to the quarters 32 732 and 16 508 tonnes). allocated for the second to fourth quarters of 1981 so as to keep within the limits allocated for the year. Such conduct ought to be regarded as As regards the applicant's reduction of correcting the irregularity committed or its production for the second to fourth at least ought to have been taken into quarters of 1981 the Commission points account so as to reduce the fine. out that quotas as established by

Decision No 2794/80 are quarterly and (b) The Commission's reply is that therefore excess in one quarter cannot be according to calculations made by its made good by a reduction of production officers the excess recorded was solely in in following quarters. Group IV products as stated in the decision. The production of the Lucchini group for the first quarter of 1981 was 1613 tonnes for Group II and 80 965 tonnes for Group IV. Since the 3. Wrong assessment of the facts production for Group II was 1 322 tonnes less than the quota allocated (2 935 tonnes) the quota allocated to Group IV (74 155 tonnes) was increased by that difference within a margin of (a) The applicant claims that the 3 %, that is to say to 75 477 tonnes. The contested decision is vitiated because the excess thus amounted to 5 488 tonnes Commission exceeded its powers owing (80 965 — 75 477) in respect of Group to a wrong assessment of the facts. In IV products only. that respect it points out that the contested decision records an excess of 5 488 tonnes for Group IV products The Commission adds that in any event alone whereas in fact that figure is made the total excess recorded in the contested up of an excess of 1 157 tonnes of Group decision is identical to the total claimed II products and 4 331 tonnes of Group by the applicant. IV products. Moreover the finding in the recitals to the decision to the effect that the production from the mill at Casto As regards the rolling mill at Casto the consists only of Group II products is Commission states that production was incorrect since that plant supplied both originally confined to Group IV Group II and Group IV products. products but since the technical alterations which are at the origin of this case it includes both Group II and Group IV products. Its view is however that the facts recited in the descriptive The applicant states that the mill at part of the decision have no relevance to Casto produced during the period in the decision itself which contains all the question 4 092 tonnes for Group II decisive factors. (against 2 935 tonnes allowed by the quota, namely an excess of 1 157 tonnes) and 29 563 tonnes for Group IV. The total Group IV production of all the establishments of the Lucchini group was 78 486 tonnes (against 74 155 tonnes IV — Oral procedure allowed by the quota, namely an excess of 4 331 tonnes).

4 In this action the applicant claims a declaration that the contested decision imposing the fine is void or alternatively a reduction of the fine. For that purpose it submits that there has been a failure to provide a sufficient statement of the reasons on which the decision is based, a wrong assessment of the facts and special circumstances.

Failure to state sufficient reasons

5 In the first place the applicant claims that there is no sufficient statement of reasons in the contested decision inasmuch as the decision does not show the

LUCCHINI v COMMISSION

reasons which led the Commission to impose a fine of 75 ECU per tonne of excess production. In that respect it states that both Article 58 (4) of the ECSC Treaty and Article 9 of Decision No 2794/80 give the Commission a discretion, which it must exercise, in fixing the fine.

6 On the other hand, the Commission is of the opinion that Article 9 of Decision No 2794/80 leaves it no discretion. It stated during the proceedings that it applied the latter provision in such a way as to fix the fine at 75 ECU per tonne of excess production, save in certain exceptional cases. As a result, no special statement of reasons in relation to the determination of the amount of the fine is necessary, save in exceptional cases.

all the information necessary for the applicant to know its rights and the Court to exercise its power of review.

9 That submission must therefore be rejected.

"Wrong assessment of the facts

10 The applicant claims further that the contested decision is based on a wrong assessment of the facts. The operative part of the decision records an excess of 5 488 tonnes in Group IV products alone whereas in fact that figure is made up of 1 157 tonnes of Group II products and 4 331 tonnes of Group IV products.

11 The Commission disputes the figures put forward by the applicant and confirms the statements in its decision which are based on the findings of its inspectors. Moreover it challenges the relevance for these proceedings of the alleged difference in figures.

12 It must be observed that even if the applicant's allegations were established, that fact would not be likely to affect the fine in any way since the total excess recorded in the decision is not challenged and the rate of the fine which the Commission must impose by reason of the excess is independent of the question whether the excess production has occurred in respect of one group rather than another.

16 The applicant adds that immediately following its telex message it programmed a reduction in its production in order during the second stage to keep within the limits fixed, which it in fact did. During the second quarter of 1981 it had kept 11 028 tonnes below the quota allocated to it for Group IV products. Since the contested decision records an excess of 5 488 tonnes of Group IV products for the previous quarter the view must be taken that the whole excess for the first quarter of 1981 was offset during the following quarter.

17 The Commission emphasizes the strictly quarterly nature of the quotas on which the Community rules are based. The mere fact of exceeding the quota thus leads to a fine quite apart from the reason for the excess. Therefore if the quota is exceeded it cannot be made good by a subsequent reduction.

18 In particular the Commission denies that the increase in production of a trial mill is an abnormal and unforeseeble event. The applicant thus knowingly took the risk of producing excess output. In any event it could have reduced or suspended production in its other establishments.

JUDGMENT OF 19. 10. 1983 — CASE 179/82

19 The Commission further states that the telex message in which the applicant gave notice that it had exceeded its quota is irrelevant since the Commission already had knowledge of the facts by reason of the regular inspections made by its agents. As regards the alleged compensation, the Commission observes that the reduction in production during the second quarter of 1981, which is not disputed, might also be due to other causes such as reduction in demand on the market.

LUCCHINI v COMMISSION

production, save in exceptional cases justifying a departure from the normal rate. In this case exceptional circumstances justify such a departure.

26 It is not disputed that during the quarter in question the applicant encountered exceptional difficulties in observing the quota allocated and that it made a reduction in its subsequent production. Although there may be many reasons for such a reduction it must nevertheless be borne in mind in the present case that in its telex message of 7 April 1981 the applicant offered in advance to offset the excess, which indicates that it voluntarily reduced its production in order to compensate for exceeding the quota and to regularize the situation.

27 Since the Commission did not answer that telex message and thus regrettably neglected the rules of good administration, it left the applicant in doubt as to whether the Commission was accepting the applicant's offer. Since in those circumstances the applicant in fact reduced its production to a considerable extent to compensate for having exceeded the quota, it is necessary to recognize in its favour that there was an exceptional situation justifying the fixing of a rate lower than the normal rate.

28 In those circumstances the fine must be reduced. In view of the amount of the reduction in production made during the second quarter of 1981 a fine of an amount equal to half that imposed, namely 205 800 ECU (LIT 272 349 546) appears appropriate.

Costs

1. Reduces the amount of the fine imposed on the applicant to 205 800 ECU (LIT 272 349 546);

2. Dismisses the remainder of the application;

3. Orders the parties to bear their own costs.

Galmot Mackenzie Stuart

Due Everling Kakouris

Delivered in open court in Luxembourg on 19 October 1983.