C-8/83

1. The purpose of the obligation to state measure in question and on the the reason on which an individual context in which it was adopted. decision is based is to enable the Court to review the legality of the decision and to provide the person concerned with sufficient information 2. Even on the assumption that there to make it possible to ascertain was a period in which the Com­ whether the decision is well founded mission may to some extent have or whether it is vitiated by a defect shown a certain laxity towards which may permit its legality to be alignment, a concession on the part contested. of the authorities cannot make an infringement of the pricing system The extent of the obligation to state provided for by Article 60 of the reasons depends on the nature of the ECSC Treaty legitimate.

In Case 8 / 83

OFFICINE FRATELLI BERTOLI SPA , Udine , represented by its Legal Adviser, assisted by Franco Pasquali , Advocate at the Italian Corte di Cassazione [ Court of Cassation ], with an address for service in Luxembourg at the Chambers of Jean-Claude Wolter , 2 Rue Goethe ,

applicant,

i — Language of the Case: Italian.

JUDGMENT OF 28. 3. 1984 — CASE 8/83

gives the following

JUDGMENT

Facts and Issues

The facts of the case, the course of the check under Article 60 of the ECSC procedure and the conclusions, sub­ Treaty on sales effected by Bertoli SpA, missions and arguments of the parties Udine, between 1 July and 30 September may be summarized as follows : 1981. At the time the inspectors established that, as regards first-grade products, discounts had been granted to customers without being published, that I — Facts and written procedure the price supplements had been published but had not been invoiced or had been At the end of September 1981, two invoiced only in part and that transport Commission inspectors carried out a costs had not been invoiced. The price

BERTOLI / COMMISSION

reductions established by the inspectors applicant did not justify the in­ amounted to LIT 38 807 000 for 915 fringements committed, the Commission, tonnes sold, corresponding to irregular by decision of 9 December 1982, sales to the value of LIT 324 884 000. In imposed upon it a fine of LIT the case of the products defined by the 94 579 100, equal to 100% of the price applicant undertaking as "not of the first reductions, increased by 10% since those grade", the inspectors established that reductions amount to more than 10% of infringements similar to those referred to the prices which should have been above had been committed. The price invoiced. reductions established amounted to LIT 47 174 000 for 710 tonnes sold, cor­ responding to irregular sales to the value The applicant submitted its application of LIT 247 347 000. on 13 January 1983.

JUDGMENT OF 28. 3. 1984 — CASE 8/83

BERTOLI / COMMISSION

producer but not on the basis of the attitude in a specific case must therefore prices of competitors". Similarly the be regarded as an arbitrary act. In the Commission did not attach any im­ light of the maxim nullum crimen, nulla portance to the fact that products "which poena sine lege, even though the are not of the first grade" could not be Commission has more recently modified sold on the same terms as those its general criteria in order to intensify applicable to "first-grade" products, its repressive policy, it is under an since such sales are unforeseeable and obligation, whatever the date on which occasional and involve products which the penalty is imposed, to apply only the do not undergo the entire process of criteria in force at the time of the working but only certain stages thereof, infringement, which is to say that in the which are to be determined case by case present case it should not have looked with the customer and are therefore to beyond the end of the third quarter of some extent specific in nature. That 1981. Accordingly, even if the first and hardening in the Commission's attitude, second submissions are not accepted, the compared to the tolerance previously fine imposed should be reduced to shown to other undertakings, constitutes approximately 25 % of the price a breach of the principle of the pro­ reductions (see the judgment of the tection of legitimate expectation, on Court in Joined Cases 26 and 86/79 which those concerned are entitled to Forges cie Tby-Marcinelle et Monceau v rely, and of the principle of non-discrimi­ Commission [1980] ECR 1083). nation and equal treatment.

JUDGMENT OF 28. 3. 1984 — CASE 8/83

The Com mission's officers have always been aware that, unless there is verification of compliance by undertakings with Article 60, market transparency cannot be achieved, with all the attendant con sequences. Moreover, the Commission is unable to understand in what respect it acted unlawfully by pointing out that it was forbidden to carry out an alignment on market prices and that only list prices were lawful, since that is the very rule which ensures the absence of dis crimination between purchasers. The The Commission contends in relation to Commission adds that in a circular the applicant's second submission that issued in 1962, it reminded undertakings the High Authority was never guilty of that it was appropriate to specify in the slightest omission with regard to the commercial and accounting documents implementation of what, according to the actual price list on which the Decision No 31/53, is a mere option and alignment was carried out. Failure to not a specific obligation. For some years comply with that circular is in practice an official publication (Serial No CB- tantamount to carrying out an a AE-82-001-7A-C entitled " Iron and posteriori alignment (which according to steel: basis prices" — a basic document the Court is unlawful; see Case 16/61 concerning the situation as on 1 January Modena v High Authority [1961] ECR and variations thereof which appears 289). Finally, at the hearing on 21 June every month and sets out all the price 1982 Bertoli's representatives were asked variations occurring in the period in to explain what they understood by question, has been issued under the "products which are not of the first auspices of the Commission's Directorate grade". Their reply was that such General for the Internal Market and products were not second grade but that Industrial Affairs.

BERTOLI / COMMISSION

Secondly, the Commission observes that since the delegation of powers to one of its Members constitutes a derogation from the principle that decisions taken by the Commission must be adopted collectively, the powers thus conferred are limited and can only be given a restrictive interpretation since the As regards its second submission, the Commission may always revoke them, applicant points out that in the third inasmuch as they are provisional and it quarter of 1981 it was obliged to apply retains the power to decide cases which the system of alignment — which in itself fall outside the scope of day-to-day is lawful — and did so by deducing the

of its discretion. The Commission ob takings. In recent years the Commission serves that at the same meeting the auth has considered it more appropriate to orization conferred upon Mr Com verify compliance by undertakings with missioner Davignon on 4 June 1981 was the rules on minimum prices and with withdrawn. Accordingly, there was no the system of production quotas, as is abuse of power in the present case. apparent from the case-law of the Court.

The applicant satisfied those criteria proportions. The conclusion must inasmuch as it did not exceed the quotas therefore be drawn that, precisely allocated to it and maintained its prices, because the Court regarded those criteria even where it aligned them, at a level as valid and had approved them, the higher than that of the prices charged by Commission wished to confirm that the undertakings whose invoices it has "practice" by formally including it in submitted. The Commission considered it the authorization conferred upon its necessary to warn undertakings that as Vice-President, Mr Davignon. In those from 1 July 1981 and 1 October 1981, circumstances it seems clear that an checks under Article 60 would be infringement committed in the third resumed and would be stricter. That is quarter could not be penalized on the clear from the minutes of the hearing basis of new, more stringent criteria which took place on 21 June 1982. which, according to the defendant, were introduced on 9 December 1982 and are in any event devoid of any retroactive As regards its third submission, the effect. In the event of the unlikely applicant contends that the Commission's dismissal of the application for a conduct is manifestly unlawful in the declaration that the contested decision is light of the fundamental principles of void, the decision should be amended administrative law applied at both and the amount of the fine should be national and Community level. In Cases substantially reduced. 81/72 Commissions Council[197'3] ECR 581 and 70/7'4 Commission v Council [1975] ECR 795, the Court held that it The applicant, requests the inclusion of was a general rule of .law that every the following documents in the file: administration is bound to observe rules which it has itself adopted, which are binding upon it at least until they are The minutes of the hearing on 21 June reviewed. Even the Commission must 1982; concede that the imposition of fines and penalty payments is a way of exercising a punitive power since the principle of The authorization of 4 June 1981, sub­ the protection of legitimate expectation sequently withdrawn on several oc­ requires the administration to exercise casions; the power in question subject to certain minimum guarantees which are certainly not inferior to those applicable in the the Written procedure in which a "more criminal sphere. That did not happen in severe penalty" was proposed for the the present case. From 4 June 1981 to applicant; 9 December 1982, that is to say for almost a year and a half, the Commission maintained, in relation to the practice of The withdrawal of the authorization underpricing, the rate which. had been conferred upon Mr Commissioner defined as "the normal rate of the fine", Davignon; and namely 25 % of the price reduction, increased or decreased, within narrow limits, according to the circumstances of Any fresh such authorization. the case. However, even before June 1981, as is clear from the judgment of the Court in Case 149/78 Rumi v In its rejoinder, the Commission argues Commission [1979] ECR 2523, the that the list of invoices together with the practice was to impose penalties of those relevant price reductions was in the

possession of the applicant when the the principle that a public authority's letter under Article 36 was sent to it and discretion is restricted by its own acts that it was in the applicant's own interest implies that there can be a limit to such to check that letter in order to be able to restriction. In view of the fact that the make appropriate observations at the administration can always modify its hearing. In fact the applicant did not conduct — whenever the public interest dispute the accuracy of that evidence at so demands — it is difficult to the hearing but did so only in its reply. understand why in the present case the The applicant's objection is in any event Commission should not have been able misconceived since the figures in to withdraw the authorization conferred question are apparent from the invoices examined. upon a Commissioner. An authority is always entitled to change its mind for the simple reason that the right to do so The Commission emphasizes in relation forms part of its "power/duty" to to the applicant's second submission that administer. As regards the case-law since in times of crisis compliance with referred to by the applicant, it is the rules of the Treaty must necessarily concerned with an entirely different be far stricter than when the market is matter, namely, the Staff Regulations of stable and compliance with the quota Officials. It is clear from the written system makes little sense if the rules on procedure, on completion of which the prices are infringed, it is difficult to contested decision was adopted, that in understand how an undertaking can order to re-assert a degree of authority complain that the Commission has drawn over the market, it appears necessary to the attention of steel producers to their penalize more severely infringements well-established obligation to comply relating to prices. Moreover, it is pro­ with ECSC rules on prices and how that posed that the Commission should can adversely affect their rights as the modify the new criteria suggested, and applicant maintains. As regards the withdraw the authorization conferred reference to the authorization allegedly upon Mr Vice-President Davignon on granted by the Commission to under­ 4 June 1981 as a result of the modi­ takings to refrain from publishing certain fication of the relevant criteria, and that conditions of sale in their price lists, it a proposal for the renewal of such auth­ must be pointed out that Commission orization should be submitted to the Decision 72/441 / ECSC of 22 December Commission in the near future. 1972 amending Decision No 31/53 (Official Journal, English Special Edition 1972 (30/31 December), p. 22) provides in Article 5 that steel undertakings need not publish certain prices for certain types of products (of marginal im­ portance) in their price lists, whilst IV — Oral procedure requiring such undertakings to notify those prices to the Commission. Moreover, the Commission may always require an undertaking to publish its At the sitting on 16 November 1983 oral price list. In practice, the rules on the argument was presented by the parties. publication of prices are always complied with.

3 The results of that check showed that, as regards both first-grade products and those defined by the applicant as products "which are not of the hrst grade", discounts had been granted without being published, that the price supplements which had been published had not been invoiced, or had been invoiced only in part and that transport costs had not been invoiced.

4 As regards first-grade products, the price reductions established by the inspectors amounted to LIT 38 807 000 for 915 tonnes sold corresponding to sales deemed to be irregular to the value of LIT 324 8 4 000 As regards the other products, the price reductions amounted to LIT 47 174 000 lor 710 tonnes, corresponding to sales deemed to be irregular to the value or LIT 247 347 000.

s By letter of 18 March 1982 the Commission referred to the findings made by its inspectors, charged Bertoli with failing to comply with Article 60 ol the ECSC Treaty and with the decisions adopted for its implementation, and requested it / pursuant to Article 36 of the ECSC Treaty, to submit its comments.

BERTOLI / COMMISSION

6 By letter of 6 April 1982 Bertoli contended that in view of its marginal importance on the Italian market, it had been compelled to abide by the principle of supply and demand and that, since it was unable to apply its own price list, it had been obliged to carry out a partial alignment on the prices of its competitors, whilst maintaining prices higher than those actually charged by them. In support of its contentions, it forwarded to the Commission photocopies of its competitors' invoices.

JUDGMENT OF 28. 3. 1984 — CASE 8/83

11 The Commission considers that submission to be unfounded. It is possible in its view, by examining the list of invoices annexed to the decision to establish the discounts granted and the precise amount thereof. The various calcu­ lations made by the Commission may easily be deduced from the annexes. No additional factor need be considered to justify the measure in question.

12 As the Court has stated in its consistent case-law, the purpose of the obligation to state the reasons on which an individual decision is based is to enable the Court to review the legality of the decision and to provide the person concerned with sufficient information to make it possible to ascertain whether the decision is well founded or whether it is vitiated by a defect which may permit its legality to be contested.

13 It may be recalled that in its judgment of 11 January 1973 in Case 13/72 Netherlands v Commission [1973] ECR 27, the Court held that the extent of the obligation to state reasons depends oh the nature of the measure in question and on the context in which it was adopted.

14 It must be observed in that regard that the contested decision was adopted following a check carried out on the premises of the applicant undertaking in the course of which, as is clear from the applicant's letter of 6 April 1982, there was an exchange of views between the management of the undertaking and the Commission's inspectors, and following an administrative procedure which the Commission initiated by the dispatch of a letter on 18 March 1982 informing the applicant in precise terms, and enclosing invoices as evidence of each transaction, of the infringements with which it was charged.

i9 According to the applicant, the Commission's conduct has been charac­ terized in recent years by alternating periods of legislative provisions and checks succeeded by periods of acquiesence and leniency. In its view, the hardening in the Commission's attitude undermined the principles of the protection of legitimate expectation and equal treatment. More particularly, the applicant contends that the 'Commission changed its policy regarding the monitoring of price alignments carried out by undertakings, by a transition from a system of acquiescence to a system of strict checks.

2o The Commission denies the applicant's contention that there was a time when it showed an acquiescent attitude towards alignment. The decrease at one point in the number of checks carried out to monitor compliance by undertakings with Article 60 of the ECSC Treaty was attributable to a shortage of staff and to the need to cany out other, more urgent checks but is by no means evidence of a specific intention on its part as a matter of policy to adopt a compliant attitude towards alignment. Furthermore, since compliance with the rules of the Treaty must, in times of crisis, be far stricter

JUDGMENT OF 28. 3. 1984 — CASE 8/83

than when the market is stable, the fact that the Commission reminded undertakings that the economic crisis did not exempt them from the obligation to; comply with the rules contained in Article 60 and that it sub­ sequently proceeded to carry out checks to ascertain whether its reminders had been heeded is quite consistent and does not adversely affect the rights of steel undertakings.

24 Taking the view that a misuse of powers also includes an abuse of power and ultra vires acts consisting in the arbitrary exercise by the administration of the powers vested in it, the applicant recalls that, by decision of 4 June 1981, the Commission had authorized its Vice-President to impose fines for the infringement of Article 60 of the ECSC Treaty at a basic rate to amount to approximately 25 % of the price reductions, with the possibility of adjusting the rates upwards or downwards, by up to 40 % of the value of the reductions, according to the specific circumstances of each case. Since the Commission thus restricted the wider powers conferred upon it by Article 64 of the ECSC Treaty, it was bound by the criteria laid down until such time as it decided to modify them. The Commission's failure to satisfy those criteria in its contested decision should, in the applicant's view, be regarded as arbitrary. Moreover, even if the Commission was entitled to modify its

SERTOLI / COMMISSION

general criteria in order to intensify the serverity of its punitive action, it was under an obligation, by virtue of the principle nullum crimen, nulla poena sine lege, whatever the date on which the penalty was imposed, to refer to the criteria in force at the time of the infringement. Those considerations justify in the applicant's view a reduction of the fine to approximately 25 %.

25 The Commission on the other hand contends that the principle of criminal law to which the applicant refers is not applicable to the Commission decision imposing a fine on the applicant since it is an administrative measure which, as such, does not come within the scope of the rules and principles of criminal law. Moreover, the delegation of powers to a Member of the Commission constitutes a derogation from the principle that decisions must be adopted collectively. The Commission retains the power to decide cases which fall outside the scope of day-to-day administration. That was the procedure followed in the present case, it is claimed. In its decision the Commission merely applied Article 64 of the ECSC Treaty by virtue of the discretion vested in it, and was not guilty of any abuse of power.

29 Although the submission relied upon by the applicant in support of its application for a reduction of the fine imposed upon it cannot be accepted for the reasons specified above, certain circumstances peculiar to this case justify a reduction on equitable grounds. In the last 30 years, in spite of numerous checks carried out by the Commission, no penalty has ever been imposed on the applicant for infringing the rules on prices, levies or quotas. An additional factor is the uncertain nature of the notices issued by the Commission which, whilst warning the undertakings concerned that the system of checks to monitor compliance with the prices and conditions of sale imposed by Article 60 of the ECSC Treaty would be tightened and extended, did not draw their attention to the Commission's intention of penalizing more severely, as it was empowered to do, any infringements established. In those circumstances the Court considers that the amount of the fine fixed by the Commission is excessive. Accordingly, the fine must be reduced by 75 %.

Costs

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

However, under the first subparagraph of Article 69 (3) where each party succeeds on some and fails on other heads, the Court may order that the parties bear their own costs in whole or in part. As the parties have both been unsuccessful in some of their submissions, they must be ordered to bear their own costs.

On those grounds,

THE COURT (Fourth Chamber)

Pescatore O'Keeffe Bosco

Delivered in open court in Luxembourg on 28 March 1984.

J. A. Pompe T. Koopmans Deputy Registrar President of the Fourth Chamber

OPINION OF MR ADVOCATE GENERAL VERLOREN VAN THEMAAT l DELIVERED ON 18 JANUARY 1984

Mr President, ECSC Treaty, belong to the group of Members of the Court, provisions whose purpose is to ensure genuine and fair competition on the 1. Nature of and background to market in coal and steel. 2 Article 60 of the ECSC Treaty . It is well-known that American anti-trust 1.1. To ensure a proper understanding legislation was an important source of of the Bertoli case, I believe it is inspiration for the last-mentioned three necessary to make some brief opening provisions and that is particularly true as remarks concerning the nature of, and regards the prohibition of price dis­ the background to, Article 60 of the crimination which is laid down in Article ECSC Treaty. 60. As is stated in the latest extensive 3 commentary on that article, the In contrast to Articles 58 and 61 and Clayton Act of 1914 and the Robinson- other provisions of the ECSC Treaty Patman Act of 1936 in the United States which provide rather for intervention, 2 — Sec in that respect Zimmermann in Quadri-Monaco- Article 60, like Articles 65 and 66 of the Irabucchì, Commentario CECA, Part II, Milan 1970. p. 780. ' 1 — Translated from the Dutch. 3 — Ibidem, also as regards the rules on the alignment of prices, p. 813.