C-235/82

APPLICATION requesting the Court to declare void the decision of 13 August 1982 by which the Commission, pursuant to Article 9 of Commission Decision N o 2794/80/ECSC of 31 October 1980, imposed a fine of 165 570 European Currency Units on the applicant for exceeding by 2 007 tonnes the production quota allocated to it for the fourth quarter of 1980 in respect of products falling within Category IV (light sections),

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

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

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

gives the following

JUDGMENT OF 30. 11. 1983 — CASE 235/82

Article 7 (1) of the decision provides I — Facts and written procedure that, subject to transitional corrections, undertakings must comply with the production quotas notified to them by the Commission. Article 7 (2) states that A — Outline of the facts "with regard to the delivery of products subject to the quota system, undertakings may not exceed, by group of products, for deliveries within the common market, (a) The relevant provisions the ratio of Community deliveries to total deliveries in those 12 months of the period from July 1977 to June 1980 in which the total production of the four In the course of the third quarter of 1980 groups of rolled products was the the Commission decided that the highest". European iron and steel industry was facing, in the words of Article 58 of the ECSC Treaty, a period of manifest crisis, Article 9 provides: and since the means of indirect action at its disposal had proved ineffective or insufficient to deal with the crisis it "Firms exceeding their production quota considered that it was necessary for it or that part of this quota which, under to intervene in the production process Article 7 (2) and (3), may be delivered directly and with mandatory effect in within the common market, shall be order to re-establish a balance between fined. This fine shall generally be 75 supply and demand. ECU per tonne of excess for ordinary steels and 150 ECU per tonne of excess for special steels . . . This amount shall be increased by 1% for each month of Consequently, by Decision N o 2794/80 delay of payment, from the date fixed in of 31 October 1980 (Official Journal, the penalization decision." L 291, p. 1) it introduced a system of steel production quotas for the fourth quarter of 1980 and the first two Articles 10 to 13 require undertakings to quarters of 1981 for undertakings report to the Commission each month operating in the Community iron and from October 1980 onwards their steel industry. production, by plant, of crude steel and

rolled products as well as the subdivision open the oral procedure without any of their deliveries between deliveries in preparatory inquiry. However, the Court the Common Market and exports to decided to ask the parties to answer the non-member countries. following questions before the oral procedure : Finally, Article 14 enables the Com- mission to adjust the provisions of the decision "where the production or "A — The Commission of the European delivery restrictions imposed by [the] Communities is requested to reply decision or its implementing measures in writing before 1 May 1983 to entail exceptional difficulties for an the following questions : undertaking", provided that appropriate supporting documentation is submitted (a) General information to the Commission. 1. The Commission is requested to (b) The position of Ferriere San Carlo produce its communications with SpA during the fourth quarter of Ferriere San Carlo SpA laying down its 1980 production quotas from the fourth quarter of 1980 to the fourth quarter of The Commission fixed a production 1981. quota for the applicant for the fourth quarter of 1980 of 5 792 tonnes of steel 2. The Commission is requested to in respect of products falling within produce the declarations received from Category IV. the undertaking relating to production of rolled products during those quarters or, It is agreed that the applicant exceeded in the absence of such declarations, all the production quota allocated to it by the information relating to the under- 2 007 tonnes. taking's steel production during the period in question of which the Commission is aware. Consequently, by decision of 13 August 1982, the Commission imposed a fine of 165 570 ECU on Ferriere San Carlo (b) The existence of an infringement after the undertaking had been given an opportunity to submit its comments as 3. The Commission claims (rejoinder, provided for by the first paragraph of page 3, paragraph 3) to have notified Article 36 of the ECSC Treaty. iron and steel undertakings even before 7 October 1980 that it was preparing to introduce a system of steel production B — Written procedure quotas with effect from 1 October 1980. It is requested to produce all the relevant information and documents in that On 17 September 1982 Ferriere San respect. Carlo brought an action seeking to have the Commission's decision of 13 August 4. Does the Commission accept that 1982 declared void. the production quota . allocated to the undertaking for the fourth quarter of The written proceedings followed the 1980 had been exhausted and even normal course. exceeded by the date on which Decision No 2794/80/ECSC (published in the Upon hearing the report of the Judge- Official Journal of the European Rapporteur and the views of the Communities on 31 October 1980) came Advocate General the Court decided to into force and that consequently the

2. The undertaking is requested to (d) The method of calculating the fine specify in respect of each month of 1980 the tonnage produced by it of products 7. Article 9 of Decision N o 2794/80/ falling within Category IV referred to in ECSC provides that the fine is generally, Article 2 of Decision No 2794/80/ to be 75 ECU per excess tonne for ECSC. ordinary steels. Is it the practice of the Commission to vary the amount of the (b) The existence of an infringement fine according to the 'contributive capacity' of an undertaking and in 3. The undertaking is requested to particular in view of the exceptional produce all supporting documentary difficulties which it may encounter? evidence concerning its contention that the production quota allocated to it for 8. The Commission is requested to the fourth quarter of 1980 was exhausted comment on the applicant's claims and even exceeded at the date on which concerning the method of calculating the Decision No 2794/80/ECSC (published fine and in particular on the following in the Official Journal of the European points: Communities on 31 October 1980) came

FERRIERE SAN CARLO v COMMISSION

into force and that consequently it II — C o n c l u s i o n s of t h e p a r t i e s ceased to operate during the months of November and December 1980 in order that it should not exceed the quota even The applicant claims that the Court more. should:

(a) Primarily: (c) The. application of adjustments Declare the decision of 13 August provided for in Decision No 2794/ 1982 unfounded and accordingly 80/ECSC void;

By order of 9 March 1983 the Court 1. The submission that the contested decided to assign the case to the Fifth decision is illegal because it does not Chamber pursuant to Article 95 (1) and take into account the fact that the (2) of the Rules of Procedure. alleged surpassing of its quota by the

JUDGMENT OF 30. 11. 1983 — CASE 235/82

FERRIERE SAN CARLO v COMMISSION

of 1980 in order to determine any The Commission adds that the retro- excess because normally production active effect of Decision N o 2794/80 in October and orders accepted cannot be regarded as unlawful, because before 31 October should not be it was necessary for practical reasons to taken into account. Consequently the fix quarterly quotas from 1 October Commission should, at the very 1980 in order to enable undertakings the least, withdraw its objections in better to adapt their production respect of half the alleged excess programmes since it is the custom in the production. steel industry to fix production according to quarterly programmes and to draw up accounts at the end of the calendar year.

(b) In its defence the Commission maintains that Decision No 2794/80 applied even to contracts which were in In order to alleviate the difficulties which the process of being performed and that the decision might cause undertakings, the applicant's two deliveries to Libya moreover, Article 14 thereof enables the could not avoid that rule. Commission to adjust its provisions where an undertaking experiences exceptional difficulties.

In its rejoinder the Commission contends that because of the deterioration in the steel market it was necessary to put the The applicant did not make use of that possibility and its failure to do so, which quota system into effect as quickly as is in no way attributable to the possible and to prevent some under- Commission staff, cannot reduce its takings taking advantage of an abnormal liability. increase in their production in October 1980,

penalized, but on the contrary should various objectives as necessary the have been congratulated for having Commission enjoys a wide discretionary faithfully applied the principles pursued power to decide what the order of priority among the objectives of the by the Commission and confirmed by Treaty should be and to select those the Court. which it regards as the most important. In its opinion, penalizing it for having delivered 2 000 tonnes of its products In this case the quota system clearly outside the EEC will have one of the two gives priority to the attainment of following consequences: fundamental objectives by enabling production to be adjusted to demand Either the profit from supplying the and by seeking to avoid the even greater goods will be reduced to nothing by the economic and social difficulties which imposition of a fine from which might arise from an imbalance between uneconomic undertakings will benefit supply of and demand for the products because they receive subsidies; in question.

Secondly, with regard to the alleged The defendant maintains that in fact infringement of Articles 3 and 4 of the discrimination would only exist if the ECSC Treaty it states that those articles Commission did not extend the quota form part of the general description of system to undertakings' deliveries outside the purposes of the Community and the common market because such under- define more than ten different objectives. takings would then have an unfair It is impossible to pursue all those advantage over those which limited their objectives at the same time and therefore operations to the Community. it is necessary to make a choice between them, particularly at a time of crisis justifying the adoption of exceptional 4. The submission that the contested measures. decision wrongly charges the applicant with failing to make the The Court has consistently held that in reports provided for by Articles 10 making that choice and combining the and 14 of Decision No 2794/80:

FERRIERE SAN CARLO v COMMISSION

(a) Ferriere San Carlo contends that it carried forward to a subsequent period, is a small family concern and that but does not allow the contrary. because it was not familiar with the very numerous rules laid down by ECSC directives it had omitted in all good faith Consequently any reduction in pro- to make the reports required by Article duction effected by the undertaking in 10 et seq. of Decision No 2794/80 the course of the following quarter has because it believed that products no effect on the legality of the decision exported to non-member countries did to impose a fine. not fall within the quotas.

JUDGMENT OF 30. 11. 1983 — CASE 235/82

In its final submissions the applicant It points out that according to Article 58 states that the question of the excess with of the Treaty the maximum amount of which it is charged seems to have been the fine is the value of the excess settled by the grant of new allocations production. and that it is therefore content to rely on the wisdom of the Court on this point. Consequently, if the Court considers that the fine was justified in principle, it (b) The Commission is of the opinion should be re-calculated on the following that no account can be taken of the basis: submission since it relates to events which are unconnected with the Excess tonnage limited to 1 000 tonnes; contested decision and which cannot be raised in these proceedings. Amount of the fine limited to the profit made on the 1 000 excess tonnes, that is to say 56 775 ECU, as opposed to the B — The amount of the fine 165 570 ECU represented by the fine actually imposed; 1. The effects of the contested fine Interest at the rate of 1% per month (a) Fernere San Carlo maintains that since 25 October 1982. the enforcement of the fine imposed on it would force it to close its workshops and to lay off its 30 employees. (b) The Commission considers that by playing upon /the words "value of the : tonnages produced in disregard" of its It adds that in view of its small capital decision the applicant is attempting to resources and the level of its have the fine reduced by maintaining indebtedness payment of the contested that the profit from the products fine would result in its bankruptcy. exported to Libya was less than 82.5 ECU per tonne, the figure adopted as the basic amount of the fine. (b) The Commission observes that even if the applicant's alleged difficulties are real, the economic position of the under- On that specific point the Commission taking could not prevent the Commission restricts itself to stating that the infor- from imposing a fine to enforce its mation contained in the file at present is decision, having regard to the serious not sufficient to enable it to know how condition of the Community steel much profit the undertaking actually market. made on the transaction in question.

the value of the excess production in I V — R e p l i e s of t h e p a r t i e s t o accordance with Article 58 of the Treaty. t h e q u e s t i o n s p u t by the Court The Commission considers that its sole duty in this respect is to penalize the excess production. A — The Commission's replies Finally, the Commission emphasizes that for the purposes of Article 58 of the Treaty the expression "value of the Questions (a) 1 and 2: The Commission tonnages produced in disregard" of its produced the communications and decisions means the market value, that is declarations requested. to say the selling price of the products, and not the amount of the profit as is suggested by the applicant. Question (b) 3: The Commission produced copies of the minutes of two Consequently, the Commission maintains meetings it held with independent Italian that Article 58 of the Treaty would only producers on 4 and 17 October 1980 in have been misapplied if the amount of order to inform them of the introduction the fine had been greater than the selling of a quota system for steel production. price, which was not the case here. Question (b) 4: The Commission maintains that the undertaking had not C — The request for time to pay exhausted or exceeded its production quota by the date on which Decision No 1. Ferriere San Carlo maintains that if 2794/80 came into force, that is to say the Court considers that it must uphold 31 October 1980. The undertaking's the fine imposed on the applicant it production for the last quarter of 1980 should lay down "reasonable terms and was in fact as follows: October: 3 166 payment periods" such as had been tonnes; November: 2 194 tonnes; granted in the past, that is to say: December: 2 439 tonnes, making a total of 7 798 tonnes. Since the quota allocated to it for that quarter and 15 years at a rate of interest communicated to it on 1 November 1980 corresponding to the customs and laws was 5 733 tonnes, it is clear that not only of the Benelux countries and to the rate was production continued in November provided for in the decision of 13 August and December but the quota was not 1982. exceeded until December.

/By letter of 22 September 1981 Fernere San Carlo stated that the modifications Question (d) 7 and the first and second were the first step in a modernization paragraph of Question (d) 8: The plan which was to be completed in Commission submitted replies which December 1981. were identical to those which it gave in Case 234/82 (Ferriere di Roê Volciano) to Question (d) 6 and the first and A further inspection was therefore second paragraphs of Question (d) 7 in carried out on 21 October 1981 which that case. established that the alteration was not a new rolling-mill, or work which would at least double the preceding production Question (d) 8, third paragraph; The capacity, and there was therefore no Commission considers that the criterion possibility of granting a supplementary of the value added or the profit made is quota under Article 13 of Decision No impracticable and that that is shown 1831/81. precisely by the case of Ferriere San Carlo.

For those reasons a decision rejecting its request was sent to the undertaking on In its opinion the applicant's figure of LIT 75 000 per tonne is derived from its 27 January 1982. submission regarding the Ferriere di Roè Volciano case. On 24 September 1982 Fernere San Carlo informed the Commission that the operations to replace the old plant had In fact the figure was justified in that been more extensive than expected and case on the ground that Ferriere di Roè that they had continued until April 1982. Volciano only processed on behalf of others.

The Commission therefore carried out a fresh inspection on 26 October 1982, in Since that is not the case with Ferriere the course of which it was established San Carlo, the Commission considers that the alterations had been carried out that the figure suggested by the latter for between August 1981 and February 1982 the fine to be imposed on it has no and that as a result of the work financial basis whatsoever.

JUDGMENT OF 30. 11. 1983 — CASE 235/82

3 By this action the applicant seeks primarily to have the contested decision fixing the fine declared void or in the alternative to have the fine reduced, and finally requests the Court to grant "terms and payment periods" which take account of both its financial position and the current situation of the iron and steel industry.

T h e c l a i m t h a t t h e c o n t e s t e d d e c i s i o n s h o u l d be d e c l a r e d v o i d

4 In support of its claim that the decision should be declared void the applicant relies on the following submissions: the contested decision took no account of the fact that the quota in question was exceeded solely because of an order exported to a non-member country; the general decision on which the contested decision is based, Decision N o 2794/80, has unlawful retroactive effect; the contested decision infringes Articles 3 and 4 of the ECSC Treaty; it also infringes Article 14 of Decision N o 2794/80 and Article 33 of the ECSC Treaty; the quota allocated to the applicant was not adjusted despite the fact that its production potential had increased; the contested decision took no account of the applicant's conduct after 31 October 1980.

T h e first s u b m i s s i o n in the a p p l i c a t i o n

s The applicant contends that its alleged surpassing of its quota was due exclusively to the exportation of two consignments of 1 000 tonnes each to Libya on 10 November and 4 December 1980. It argues therefore that the Commission should not penalize an undertaking for exporting to a non- member country, particularly when in doing so the applicant has complied with the spirit of the Treaty as expressed in Articles 3 and 4 and has, moreover, caused no injury to its competitors established in the Member States.

9 The reply to be given to that submission, as the Court has held on a number of occasions O'udgment of 16. 2. 1982 in Case 258/80 SpA Metallurgica Rumi v Commission [1982] ECR 487; judgment of 16. 2. 1982 in Case 276/80 Ferriera Padana SpA v Commission [1982] ECR 517), is that Decision No 2794/80/ECSC did not have genuine retroactive effect since the under- takings were able to adjust their production in November and December to take account of their quotas for the quarter and thereby avoid any infringement. Moreover, although in general the principle of legal certainty precludes a Community measure from taking effect from a point in time before its publication, it may exceptionally be otherwise where the purpose to be achieved so demands and where the legitimate expectations of those concerned are duly respected.

JUDGMENT OF 30. 11. 1983 — CASE 235/82

,o In the circumstances of this case it was necessary to include the month of October in the system in order to prevent undertakings from increasing their production in October in anticipation of the reductions subsequently to be applied.

1 1 Furthermore, the Commission respected the legitimate expectations of ¿hose concerned by means of the communication of 11 October 1980 Official Journal, C 264, p. 2) whereby it gave notice of its intention to include the month of October in the system of quotas, and by means of the decision published on the same date (Official Journal, L 268, p. 25) requiring the undertakings to supply information on their production for October 1980.

1 2 Moreover, the documents produced by the Commission show that it held two meetings with independent Italian producers on 4 and 17 October 1980 in order to inform them of the introduction of a quota system tor steel products.

i6 The submission amounts to a preliminary objection which challenges in eiiect once more the legality of the general decision, Decision N o 2794/80.

i7 As the Court has already held in response to comparable arguments (judgment of 16. 2. 1982 in Ferriera Padana SpA, cited above, and judgment of 7. 7. 1982 in Case 119/81, Klöckner v Commission of the European Communities [1983 ECR 2627), the applicant's argument fails to appreciate the true purpose of Article 58 within the system of the Treaty as a whole The provision is intended to enable the Community to deal with a crisis caused by a decline in demand. It provides for the introduction of a system oí production quotas which is intended to spread equitably throughout the iron and steel industry of the Community the unavoidable consequences of the adjustment of production to the reduced number of possibilities of

is The goal of those restrictive measures is to improve market conditions so as to enable the profitability of undertakings to be maintained or restored in the long term and thereby enable the jobs which depend on it to be preserved as iar as possible. However, contrary to the applicant's contentions, Article 58 does not in any way require the Commission to guarantee each individual undertaking a minimum level of production determined in accordance with the undertakings's own criteria of profitability and development. The aim of that article is to spread in the most equitable manner possible amongst all undertakings the reductions required by the economic situation, not to guarantee undertakings a minimum level of employment proportionate to their capacity.

22 The Court finds that the applicant has not adduced any evidence in support of its submissions which would enable the Court to determine whether it is well founded. In the circumstances the submission must be rejected.

T h e fifth s u b m i s s i o n in the a p p l i c a t i o n

23 The applicant maintains that the quota allocated to it for the fourth quarter of 1980 was not adjusted despite the fact that its production potential had increased due to the activation of a new rolling-mil . It is therefore of the opinion that the contested decision infringes Article 14 ¿ ^ 1 2794/80, Articles 13 and 14 of Commission Decision N o 1831/81/ŁCbC ot 24 Tune 1981 (Official Journal, L 180, p. 1) and Articles 14 and 15 of Commission Decision N o 1696/82/ECSC of 30 June 1982 (Official Journal, L 191, p. 1).

24 The Court notes first that the only provisions which the applicant may usefully rely upon, in view of the fact that the alleged excess production took place during the fourth quarter of 1980, are those contained in Arude 4 (4) of Decision N o 2794/80, which states as follows:

"Where further to an investment programme duly reported and not the subject of an unfavourable opinion, the undertaking activates a new plant after 1 Tulv 1980, the Commission shall adapt appropriately the reference production of this undertaking, provided it finds that the new production

FERRIERE SAN CARLO v COMMISSION

28 The Court considers that this submission must be rejected because in the first place even if it were proven, the fact relied upon by Ferriere San Carlo is wholly irrelevant to the question of the legality of the contested decision, and in the second place it appears from the evidence that its statement is in

JUDGMENT OF 30. 11. 1983 — CASE 235/82

fact incorrect: during the quarter in question the applicant produced 3 166 tonnes in October, 2 194 tonnes in November and 2 439 tonnes in December. It is therefore not reasonably possible to maintain that the applicant ceased operations during November and December 1980.

29 It follows from the whole of the foregoing that the claim in the application to the effect that the contested decision should be declared void must be rejected.

T h e a l t e r n a t i v e c l a i m for a r e d u c t i o n of t h e fine

30 The Court notes first that the fifth and sixth submissions considered previously, which may be regarded as arguments presented in support of both the claim for a declaration that the contested decision is void and the claim for a reduction of the fine, have been rejected because they are based on allegations which have proved to be false.

35 T h e C o u r t observes, first, that aformentioned provisions of Article 58 of the ECSC Treaty are based on the notion of the value of the tonnages produced in disregard of the quota, not the profit realized in respect of such production, and secondly that the reference to the argument put forward by Ferriere di Roè Volciano is in any case unjustified since that argument was based essentially on the fact that that undertaking operated exclusively as a processor for other undertakings; that is not the case with the applicant. In the circumstances there was no special reason in this case to depart from a strict application of the provisions of Article 58 and the Commission applied it correctly.

36 Finally, although the applicant sought to rely on its good faith the Court has found no reason in that respect to justify a reduction in the amount of the fine.

37 It follows from the whole of the foregoing that the claim for a reduction of the fine must be rejected.

JUDGMENT OF 30. 11. 1983 — CASE 235/82

T h e claim t h a t the Court should grant the applicant " t e r m s and payment p e r i o d s " taking into account both its financial position and the c u r r e n t situation in the iron and steel industry

38 Claims of this sort which in fact require the Court to issue instructions to the Commission, which alone has the power to grant terms of payment to under- takings which have been fined, are manifestly inadmissible.

2. Orders the applicant to pay the costs.

Galmot Pescatore Mackenzie Stuart Due Everting

Delivered in open court in Luxembourg on 30 November 1983.

For the Registrar

H . A. Rühi Y. Galmot Principal Administrator President of the Fifth Chamber