C-234/82

JUDGMENT OF 30. 11. 1983 — CASE 234/82

In Case 234/82

FERRIERE DI R O È VOLCIANO S P A , whose registered office is at 24 Via Garibaldi, Roè Volciano (25077), Province of Brescia, acting through its Chairman, Renato Zerbio, a surveyor, and represented by Fabrizio Massoni, with an address for service in Luxembourg at the Chambers of André Elvinger, 15 Côte d'Eich, applicant, v

COMMISSION OF THE EUROPEAN COMMUNITIES, 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 requesting the Court to declare void the decision of 13 August 1982 by which the Commission, pursuant to Articles 9 and 12 of Commission Decision N o 1831/81/ECSC of 24 June 1981, imposed a fine of 75 900 ECU on the applicant for exceeding by 1012 tonnes the production quota allocated to it for the third quarter of 1981 in respect of products falling within Categories V and VI (reinforcing bars and merchant bars),

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

The facts of the case, the course of the Towards the middle of 1981 it thus procedure and the conclusions, sub- became apparent that the European steel missions and arguments of the parties industry was still experiencing a period may be summarized as follows : of manifest crisis and that the attainment of the aims set out in Article 3 of the ECSC Treaty was seriously jeopardized.

JUDGMENT OF. 30. 11. 1983 — CASE 234/82

production quotas or the pan of its Consequently, by a decision of 13 quotas which may be delivered in the August 1982 the Commission imposed a common market may carry forward to fine of 75 900 ECU on Ferriere di Roè the following quarter up to 5% of those Volciano. amounts for the same category of product. B — Written procedure Article 12 of the decision provides that a fine, generally of 75 ECU for each tonne in excess, is to be imposed on any under- On 17 September 1982 Ferriere di Roè taking exceeding its production quotas Volciano brought an action seeking to or the part of those quotas which may be have the Commission's decision of 13 delivered in the common market. August 1982 declared void.

FERRIERE DI ROE VOLCIANO v COMMISSION

taking's steel production during the (d) The method of calculating the fine period in question of which the Commission is aware. 6. Article 12 of Decision No 1831/81/ ECSC provides that the fine is generally to be 75 ECU per excess tonne for ordinary steel. Is it the practice of the (b) The existence of an infringement Commission to vary the amount of the fine according to the undertaking's ability to pay and in particular in view of 3. What conclusions does the the exceptional difficulties which it may Commission draw, with regard to the encounter? system of production quotas and the existence of an infringement, from the 7. The Commission is requested to fact that the applicant claims to be the comment on the applicant's claims only Italian processor of steel products concerning the method of calculating the which operates exclusively on behalf of fine and in particular on the following others and which has experienced special points : difficulties on that count? Does the Commission consider that the provisions of Article 15 of Decision N o 1831/81/ Is the method of calculating the fine the ECSC, in particular, are capable of being same in the case of steel producers as it applied in this case? is in the case of undertakings which merely process steel ?

4. The Commission is requested to give In the case of the latter undertakings, a detailed reply to the applicant's does the Commission interpret Article 58 submission relating to the applicability of of the ECSC Treaty as meaning that the Article 11 (2) and (3) of Decision No amount of the fine is limited to the value 1831/81/ECSC (tolerance of 3 % in added as a result of the processing? excess of production quotas in the case of undertakings which produce only one Can the Commission comment fully on category and ability to carry forward. up the undertaking's claim that the fine to 5 % in the case of undertakings which should be reduced from 75 900 ECU to have not exhausted their quotas). 57 684 ECU?

3. Are Fernere San Carlo SpA and II — C o n c l u s i o n s of t h e p a r t i e s Ferriere di Roè Volciano SpA completely separate companies or is there an The applicant claims that the Court economic or financial relationship should: between them? (a) Primarily: (b) The existence of an infringement Declare that the applicant is not 4. The undertaking is requested to required to pay the fine imposed produce all supporting documentary upon it by the decision of 13 August evidence concerning its submission that 1982; the contested decision infringed Article 11 (2) and (3) of Decision No 1831/81/ (b) In the alternative : ECSC. If the Court takes the view that a 5. Did the undertaking submit a fine should be imposed on the request to the Commission for the applicant, reduce the fine to a more application of the provisions of Article 5 modest figure, to be determined at of Decision N o 1831/81/ECSC? the Court's discretion,

(c) Make an appropriate order as to (c) The application of adjustments costs. provided for in Decision No 1831/ 81/ECSC In its reply the applicant also claims that 6. Did the undertaking submit a the Court should: request to the Commission for the application of Articles 13 and 14 of Declare that interest at the rate of 1% a Decision N o 1831/81/ECSC? month is sufficient for the fines imposed during 1982; and (d) The method of calculating the fine Order the defendant to pay the costs. 7. The undertaking is requested to produce all the information necessary in order to calculate the value added (per The Commission contends that the tonne) to rolled products by its Court should: processing operations during the third quarter of 1981. (a) Dismiss the action as unfounded; and 8. The undertaking is requested to produce any information that would (b) Order the applicant to pay the costs.

Since that situation has changed since 20 2. The submission that the contested November 1982 the applicant considers decision is illegal because it is in- that it need not claim damages but equitable requests that "its compliance with its civic duties and its spirit of solidarity in relation to competitors established in the (a) The applicant maintains that it is Member States of the EEC be contrary to the most elementary concept recognized". of equity that a small undertaking, whose profitability is secured by sound management, should be penalized for (b) The Commission refutes the having produced and sold, during a argument submitted by the applicant. period of 12 months, a quantity of goods

JUDGMENT OF 30. 1!. 1983 — CASE 234/82

It also states that it is the sole under- taking in Italy which operates exclusively Thus a fine must be in the nature of a as a processor of steel products and sanction and the fact that, in the final works solely on behalf of others. As a analysis, the penalty may have result of the present economic situation unexpected results, such as insolvency, its customers are processing their cannot alter the equitable and necessary products themselves, thereby depriving it character of the system. of the opportunity to use its production capacity and forcing it to obtain delivery quotas. Secondly, the Commission considers that although the applicant relies on the concept of equity such a principle does In the applicant's opinion that justifies its not apply in this case: the Court has release from the fine imposed on it by always held that the principle of equity the decision of 13 August 1982. may only be used in the absence of any relevant legal provision or where a provision contains a lacuna, which is not (b) The Commission considers that line so in this case. of argument to be irrelevant because the

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Community legislation disregards the provisions of Article 14 of Decision N o fact that the excess products were not 2794/80/ECSC, of Articles 14 and 15 sold but put into storage and takes into of Decision No 1831/81/ECSC and account solely the quantity of goods Articles 14 and 17 of Decision No 1696/ produced. 82/ECSC.

JUDGMENT OF 30. 11. 1983 — CASE 234/82

applicant's arguments are inconsistent in respect of fines imposed by the that respect. Commission.

In fact, according to the applicant, the Commission would like to charge B — Submissions with regard to the interest varying according to the country amount of the fine in question and the rate for Italy would be around 2 2 % per annum. Such a 1. The applicant contends that it decision would treat undertakings from follows from Article 58 of the Treaty different Member States differently and that the amount of the fine may be no would be contrary to Articles 3 and 4 of higher than the value of the excess the ECSC Treaty. production. Thus the Court should declare that a In this case it has been fined LIT 99 075 rate of interest of 1 % a month is per tonne, whereas, according to its sufficient for fines imposed during 1982. calculations, it only received, as a processor, LIT 75 307 per tonne. 2. The Commission states that the decision amending the system of interest Consequently, even if the Court rates and time-limits for payment is still considers the imposition of a fine to be under consideration and that, as it has justified in principle, the amount of the not been published, it cannot adversely fine should be reduced from 75 900 ECU affect the applicant. to 57 684 ECU, that is to say LIT 76 200 564. In any event, the Commission states that a variable rate of interest would not treat undertakings from different States 2. The Commission states first that it differently but would in fact be designed never received the applicant's letter to put an end to the current situation informing it of those calculations. which gives unjustified advantages in that respect to certain undertakings as a Secondly, it states that it is not able to result of the different interest rates comment on that argument in the applicable in the different Member absence of any evidence having the States. slightest probative value.

difficulties in operating solely as a manufactured product not covered by processor arise in relation to deliveries the system; in any event, Article 15 (the part of the quota which may be would merely have made it possible to delivered on the common market) and allocate an additional quota to the not in relation to production. applicant's suppliers so as to enable the applicant to fulfil its quota in respect of processed products. The production quotas are, in fact, allocated to the processor and not to the undertaking placing the orders. Conse- Question 4: The Commission points out quently, according to the Commission, that Anicie 11 (2) of Decision No Ferriere di Roè Volciano possesses 1831/81 accords undertakings which production quotas regardless of whether produce only one category a 3 % it receives processing ordes. tolerance margin only as regards the part of the quota which may be delivered on the common market and only within the Nevertheless, the Commission recognizes limits of the production quota. that difficulties may arise with regard to deliveries. In that respect Article 8 (3) of Decision No 1696/82 enables parts of quotas to be delivered in the common The justification for that measure is that market by undertakings whose process- such producers, unlike producers who ing contracts have come to an end and diversify their production, do not have who therefore find that, in order to the possibility of making up for excess continue production, they must production (of up to 3 %) in one themselves deliver in the common category by reducing production in market. The applicant benefited from another category. that provision and was allocated additional quotas on 18 November 1982. However, according to the Commission, that possibility did not exist before July Accordingly, it was provided that they 1982 and, furthermore, neither the should have such a possibility of applicant nor any other undertaking exceeding the quotas by delivering in the informed the Commission of such common market part of their production difficulties. intended for export.

quarter, is intended to make the system In response to that request the more flexible so as to take into account applicant's quotas were adjusted by an the practical difficulties involved in individual decision of 11 March 1982. adapting the rhythm of production and sales precisely to the quarterly quotas. Question 6: The Commission states that, as a general rule, the fine only varies in relation to the amount by which the The same flexibility was to be found in quota is exceeded, thus ensuring the the preceding decision, Decision No effectiveness of the system. 2794/80, which was in force until 30 June 1981. Only such a strict and automatic application of the rules avoids discri- However, under that decision the mination between undertakings which provisions for carrying forward were would undermine the quota system. different since the quotas related to a different categorization of products and it was possible to carry forward to the Exceptional difficulties for an under- following quarter up to 50 % of the taking are taken into account by the unused part of the quota. granting of additional quotas (Article 14 of Decision No 2794/80) rather than at the stage of fixing the penalty. According tó the Commission, the differences in that system relating to The Commission also takes account of carrying forward and to the definition exceptional difficulties which may arise of the products established a clear from the level of the fine by granting a separation between the system provided period within which to pay in certain for in Decision N o 2794/80, which was cases. in force until 30 June 1981, and the system provided for in Decision No 1831/81, which came into force on 1 With regard to an undertaking's ability July 1981. to pay, that is only taken into account in so far as an undertaking which has been declared insolvent is fined at a rate of The Commission therefore concludes one ECU per excess tonne. that it was not possible to carry forward any unused part of the quota for the second quarter of 1981 to the third Question 7: The Commission replied to quarter of that year. the different parts of this question as follows :

quotas allocated to them: they should of "fines not exceeding the value of the neither make a profit from the excess tonnages produced in disregard" of its tonnage nor be encouraged to reduce decisions, regardless of the way in which their losses by production above the the tonnages were produced and quota. Moreover, the figure of 75 ECU therefore without relating the amount of was fixed on the basis of an "average fine to the value added by the processing integrated undertaking" and the operation. intention is to deprive it of the benefit brought about by the reduction in its fixed costs as a result of each tonne In this case the value of the excess produced in excess of the quota. production (finished products) was far higher than the amount of the fine (225 ECU per tonne against 75 ECU). Such justification does not mean that every fine must be in proportion to the The Commission considers that the benefit obtained by the undertaking criterion based on the value added or the being fined, since that might lead to the profit margin cannot be used for the fine's ceasing to apply. Moreover, the simple reason that it makes the amount of the fine cannot be limited to imposition of a fine very difficult and in the value added by the processing some cases even impossible. operation.

Finally, with regard to the applicant's In the first place, the value added letter of 5 October 1982, the depends on a number of factors and Commission simply notes that the figures varies according to the product cited in the letter correspond roughly to processed and, secondly, there are not the average income of a rolling mill merely two types of steel undertakings concerned with such processing (producers and processors) but a whole operations. range of undertakings.

Question 6: The applicant states that as Question 7: In order to prove the value early as 15 October 1981 it asked the of the processing operations the Commission for an adjustment of its applicant states that in the third quarter quotas to take into account its new of 1981 the total amount invoiced to production capacity following the customers was just over LIT 72 per kg as bringing into operation of a new rolling opposed to an average of just over LIT mill. That request was granted in part 75 for the whole of 1981. It attaches an inasmuch as its reference production was annex containing a month-by-month increased from 72 740 tonnes per annum summary of the value of its processing to 91 400 tonnes per annum. operations invoiced to each customer. Question 8: The applicant produced various documents and accountancy Subsequently, by letter of 22 November vouchers to prove that a further burden 1982, it requested a further adjustment in the form of a fine would aggravate its of its quotas under Article 14 of Decision financial position to such an extent that N o 1696/82/ECSC, as amended and it would have no option but to suspend extended by Decision N o 2751/82/ payment of its debts, put its affairs in the ECSC. hands of the court or completely close its factory. As a result of that request the Commission granted a provisional adjustment of the reference production on 20 December 1982 and, in view of V — Oral procedure the fact that the decision was not notified until 3 January 1983, the At the sitting on 21 September 1983 oral Commission allowed the whole of the argument was presented by Fabrizio additional quota to be carried forward to Massoni, Avvocato, for the applicant, the first quarter of 1983. and by Sergio Fabro, acting as Agent, for the Commission. A further request for adjustment in The Advocate General delivered his respect of the second quarter of 1983 is opinion at the sitting on 26 October being considered at the present time. 1983.

4 In support of its claim that the decision should be declared void the applicant argues that the contested decision fails to comply with Article 14 of Decision No 2794/80/ECSC and with Articles 3 and 4 of the ECSC Treaty, that the principle of equity was infringed, that the products produced in excess of the quotas were put into storage and not put on the market until November 1982, and that the contested decision disregarded the fact that the applicant was entitled under Article 11 (2) and (3) of Decision No 1831/81, to carry forward part of its quotas and to exceed the quotas by a small margin.

5 The Court considers it necessaiy to examine first the submission that the contested decision disregarded the applicant's entitlement to carry forward part of its quotas to the next quarter.

6 Article 11 (3) of Decision No 1831/81 is worded as follows:

"Any undertaking which has not come to the end of its production quotas or of the part of its quotas which may be delivered on the common market may carry forward into the ensuing quarter up to 5% of, as the case may be, their quotas or part of quotas for the same category of product."

JUDGMENT OF 30. 11. 1983 — CASE 234/82

7 The applicant maintains that by virtue of that provision it was entitled to carry forward to the third quarter of 1981 a proportion of the 2 512 tonnes of the quota which it did not use up during the second quarter of 1981, provided that the amount carried forward did not exceed 5 % of the quota ot 12 729 tonnes allocated to it for the third quarter of 1981, that is to say 636 tonnes. The excess production with which it is charged is thereby reduced to 376 tonnes.

to It must be noted, moreover, that all the general decisions adopted by the Commission since 1980 establishing the successive systems of production quotas for steel which have applied since the fourth quarter of 1980 made provision for such carrying forward from one quarter to the next. More

FERRIERE DI ROE VOLCIANO v COMMISSION

specifically, Decision No 1831/81 did not contain any provision excluding the possibility of carrying forward unused quotas from the second quarter of 1981 to the third quarter.

1 1 In those circumstances the Commission was under a duty to ensure, for the benefit of every producer, the continuity of the system of carrying forward quotas between the second and third quarters of 1981, at least in so far as the amendments made by Decision No 1831/81 to the system which had previously been in force did not make it technically impossible to calculate the amount which the producer in question was entitled to carry forward. The relevance of the arguments put forward by the Commission in its defence must be examined in the light of that duty.

i2 In that respect, it must be noted that no difficulties of a technical nature prevented Article 11 (3) of Decision N o 1831/81 from being applied in favour of the applicant.

i3 In fact, the Commission's first argument, based upon the alteration in the method of calculating the amount which may be carried forward, is without substance, since that alteration does not, of itself, prevent the amount to be carried forward from being calculated on the basis of the new provisions.

is As a result the amount which it produced unlawfully in excess of its quota is reduced from 1012 tonnes to 323 tonnes.

i9 As the Commission itself admitted at the hearing, it follows a well established practice, in relation to all undertakings in the steel industry, of waiving the imposition of a fine where an undertaking infringes the quota system for the first time and exceeds its quota by less than 500 tonnes.

20 It is accepted that the two conditions upon which the operation of that practice depends are satisfied in this case.

2i Consequently, the Commission was precluded from imposing a fine on the applicant by virtue of the principle of equality, which requires that similar situations should not be treated differently, unless different treatment can be justified objectively, which is not the case here.

22 From the whole of the foregoing, and without its being necessary to consider the other submissions pleaded, it follows that the applicant was justified in seeking a declaration that the contested decision imposing a fine on it was void.

23 Accordingly, the submissions pleaded in the alternative for the reduction of the fine and the submissions concerning the rate of interest applicable to fines imposed in 1982 have lost their purpose and it is therefore not necessary to give a ruling on them.

1. Declares void the Commission's decision of 13 August 1982 imposing a fine of 75 900 ECU on Ferriere di Roè Volciano SpA; and

2. Orders the Commission to pay the costs.

Galmot Pescatore

Mackenzie Stuart Due Everling

Delivered in open court in Luxembourg on 30 November 1983.

For the Registrar