C-9/83

JUDGMENT OF 16. 5. 1984 — CASE 9/83

taking is charged may be clearly periodic penalty payment cannot be established from the statement of understood as requiring the Com­ objections in conjunction with the mission to put forward its counter-ar­ decision and the undertaking had guments in relation to the arguments already clearly perceived, in the put forward in its defence by the course of the administrative pro­ party concerned. The rights of the cedure, the scope of the objection defence are guaranteed by that article communicated to it. since it provides the party concerned with an opportunity to put forward its 3. It is clear from the terms of Article 36 arguments. The Commission cannot of the ECSC Treaty that the be required to reply to those obligation on the part of the Com­ arguments, to carry out further mission to give the party concerned inquiries or to hear witnesses for the the opportunity to submit its party concerned, where it considers comments before imposing a that the preliminary investigation of pecuniary sanction or ordering a the case has been sufficient.

In Case 9 / 83

EISEN UND METALL AKTIENGESELLSCHAFT, Gelsenkirchen , represented by- Martha Grünning , Rechtsanwalt , Düsseldorf, with an address for service in Luxembourg at the Chambers of Ernest Arendt , 34 B Rue Philippe-Il ,

applicant ,

COMMISSION OF THE EUROPEAN COMMUNITIES , represented by its Legal Adviser , Rolf Wägenbaur , acting as Agent , with an address for service in Luxembourg at the office of Oreste Montalto , a member of the Commission's Legal Department , Jean Monnet Building, Kirchberg ,

gives the following

JUDGMENT

Facts and Issues

I •—• Facts and written procedure Article 7 provides that: "Steel dealers need not publish rebates for sub-standard products or seconds." They are then 1. Legal background required to state on the invoice the reasons for classification as sub-standard products or seconds. Commission Decision No 1836/81/ ECSC of 3 July 1981 on the obligation of distributive undertakings to publish Article 8 forbids steel dealers "to apply price lists and conditions of sale and on in the common market dissimilar practices prohibited for these under­ conditions ... to comparable transactions takings (Official Journal 1981, L 184, Transactions are considered 4. 7. 1981, p. 13) was adopted in order comparable, under Article 9 ( 1 ), where: to ensure that undertakings engaged in distribution activities in the steel sector (a) they are concluded with purchasers: observed the same rules as those applicable to production undertakings Who compete with one another, or pursuant to Article 60 of the ECSC Treaty and its implementing decisions. Who produce the same or similar goods, or Article 2 of Decision No 1836/81 provides that: "Steel dealers shall be Who carry out similar functions in obliged to publish price lists and distribution; conditions of sale for direct and ex-stock sales in accordance with the provisions and set out below and to communicate them to the Commission." (b) they involve the same or similar products; Articles 3 to 6 contain detailed rules for the publication of price lists. and

JUDGMENT OF 16. 5. 1984 — CASE 9/83

II — Conclusions of the parties 2. Facts

Eisen und Metall Aktiengesellschaft Eisen AG claims that the Court should: (hereinafter referred to as "Eisen AG"), a steel dealer, published on 12 October Declare the Commission decision of 1981 a price list "valid as from 14 9 December 1982 void and, con­ October 1981". sequently, annul the fine amounting to DM 133 736 imposed by Article 2 of that From 25 to 29 January 1982 a decision; Commission inspector carried out checks exclusively in relation to transactions In the alternative, reduce the amount of effected after 14 October 1981 to the fine; ascertain whether Eisen AG had fulfilled its obligations under Decision No Order the defendant to pay the costs.

EISEN UND METALL AKTIENGESELLSCHAFr / COMMISSION

JUDGMENT OF 16. 5. 1984 — CASE 9/83

times required to buy together with the relied upon by Eisen AG for the first products in Category II (a) which are the time on 20 September 1982 in its reply main subject-matter of the applicant's to the Commission's statement of commercial dealings. objections. It . also points out that whenever products in Category II (a) were delivered to Bergbau, this was shown in the applicant's invoices, as is The Commission states by way of reply clear for instance from an invoice dated that the transactions which took place 14 January 1982 which is attached to the betwen Eisen and Markmann concerning rejoinder. products in Category I (a) cannot be regarded as special transactions on the sole ground that Markmann was a par­ ticularly reliable and faithful customer of As regards the "framework contract" the applicant. That factor might have entered into with Schlafhorst which was justified the grant of a fidelity rebate but signed before 24 June 1981, Eisen AG cannot, according to the Commission, points out that, if general Decision No authorize the applicant to charge 1836/81 is permitted to influence the Markmann prices below its list prices. terms of a contract concluded before its The Commission adds that if those entry into force, a retroactive effect of transactions were to be regarded as that kind is contrary to the principle of special transactions, it would be obliged legal certainty and amounts to inter­ to challenge the applicant's factual ference with the fundamental principles contentions. In that regard, the of national civil law, an area that is to Commission points out that, as far as it say which is entirely outside the is aware, sales by the applicant from its Commission's jurisdiction. Moreover, if stocks of products in Category I (a) the decision were endowed with retro­ amounted to 9 572 tonnes and therefore active effect, it would lead to an absurd greatly exceeded sales of products in situation since after publishing its price Category II (a) which in the same period list, a dealer could proceed to charge its amounted to 1 627 tonnes. list prices instead of the fixed prices stipulated in pre-existing contracts.

(b) Infringement of Article 15 of According to Eisen AG, the Commission Decision No 1836/81 infringed the right in question inasmuch as, before adopting its decision imposing Eisen AG contends that the infringement a fine, it failed to draw the applicant's of Article 15 of Decision No 1836/81 attention to the fact that it had no may be regarded both from the point of intention of carrying out an inquiry into view of the failure to comply with the the evidence in exoneration adduced by obligation to state the reasons on which the latter. the decision was based and from that of the infringement of a provision of sub­ In reply, the Commission states that by stantive law. The obligation to provide a offering to organize a hearing for the statement of reasons was not complied applicant, it went beyond what is laid with, in the applicant's view, inasmuch as down by Article 36 which requires the Article 15 provides for the imposition of Commission merely to "give the party fines for the infringement of Articles 2 to concerned the opportunity to submit its 14 of Decision No 1836/81 and the comments". Since the applicant declined Commission referred to Article 15 in that offer on the sole ground that general terms without specifying which the Commission had considered it provisions the applicant was alleged to unnecessary to discuss certain matters in have infringed. greater detail, it cannot after turning down that offer rely on the contention The infringement of Article 15 viewed as that its right to a fair hearing was a provision of substantive law lies in the infringed. fact that the article in question does not refer as a separate infringement to the "undercutting of a dealer's own list prices", that is to say the practice which B — Infringement of the ECSC Treaty led the Commission to adopt a decision and of the rules of law relating to its imposing a fine. application

The Commission observes that if — as it (c) Breach of the general principle that has already, in its opinion, established in a decision may not be based on connection with the other submissions obvious mistakes or be contradictory relating to the failure to comply with the or illogical obligation to provide a statement of reasons — the decision did contain a sufficient statement of the reasons on According to Eisen AG, the contested which it was based, there can be no decision is vitiated by obvious mistakes question of an infringement of Article 15 and contradictions since, first of all, it of the ECSC Treaty. neither denies nor refutes the argument that the contested contracts were concluded before the price list became applicable or even before the entry into (b) Infringement of Articles 47 and 36 of force of Decision No 1836/81 and, ' the ECSC Treaty and of Articles 11 secondly, it alleges that those contracts and 14 of Decision No 1836/81 constitute an infringement of the latter decision. Those obvious contradictions and mistakes show that the defendant's reasoning is illogical. In this submission Eisen AG maintains that the Commission infringed Articles 47 and 36 of the ECSC Treaty and The Commission rejects that objection in Article 14 of Decision No 1836/81, in so its entirety and emphasizes that since it far as it disregarded the fact that those was not prepared to accept the reference articles, which authorize the Commission to "framework contracts" or to the to gather information necessary for the agreements allegedly concluded, earlier accomplishment of its task and to carry which are mentioned by the applicant, it out the necessary checks, thereby require could take no other decision than that in it to verify every aspect of a situation, question. It is therefore consistent in its including those aspects which may lead attitude and its decision is not vitiated by to the conclusion that no infringement any kind of contradiction of illogicality. has been committed. The same applies to Article 11 of Decision No 1836/81 which authorizes the Commission to require steel dealers to provide C — Misuse of powers information concerning the facts and circumstances justifying their conduct. Eisen AG contends that the Commission exercised the power to impose a fine, In reply, the Commission states that its conferred upon it by Article 15 of officers examined all the exonerating Decision No 1836/81, not in order circumstances and finally rejected them to penalize certain infringements but because they did not stand up to . exclusively in order to set an example, scrutiny. Accordingly, the Commission without taking the trouble to establish cannot be reproached with failing to whether in the present case the verify the facts of the case. imposition of a fine was really justified. The intention of frightening steel dealers as a whole into complying with Decision Article 11 " does not require the No 1836/81 also emerges from the Commission to request undertakings to public statements made by certain provide it with information if it considers Commission officials. Moreover, the that such information is unnecessary. failure to comply with the obligation to

2 The contested decision states that during the period from 14 October 1981 to the end of January 1982 Eisen AG on several occasions sold rolled products at a price lower than the list price which it had published in accordance with the aforesaid decision, No 1836 / 81 , and it established, in Article 1, that the price reductions in question constitute infringements of the latter decision.

JUDGMENT OF 16. 5. 1984 — CASE 9/83

3 In support of its application, Eisen AG advanced three categories of submissions relating to :

(a) infringement of essential procedural requirements;

(b) infringement of the ECSC Treaty and of the rules of law relating to its application;

(c) misuse of powers.

s Moreover, that requirement was expressly referred to in the third recital in the preamble to Decision No 183^/81 where it is emphasized that the steel

EISEN UND METALL AKTIENGESELLSCHAFT / COMMISSION

market continues to be seriously affected by the deterioration of the economic situation and that, in order to create economic conditions favourable to the indispensable restructuring of the iron and steel industry, "immediate action with regard to the sales prices of steel is absolutely necessary; . . . urgent implementation of such action is becoming increasingly essential in this period of crisis".

9 It must be remembered in that regard that Decision No 1836/81 was based, as is also clear from the recitals in the preamble thereto, on the need "to implement a very short-term action for rationalization of the steel market in such a way as to bring about the rise in prices necessary to prevent financial disaster". Thus, the obligation incumbent on undertakings engaged in distribution activities to publish their price lists and to refrain from selling their products at a price lower than the list price constitutes the method selected by the Community legislature to terminate forthwith the grant of individual rebates and the dissimilar conditions of sale resulting therefrom and thus to contribute to a general increase in the level of prices.

10 It follows that the provisions of Decision No 1836/81 must apply to all transactions still in progress after its entry into force and must take precedence, where appropriate, over any obligations arising under pre-existing framework agreements.

1 4 Next, it must be observed that the mere fact that Markmann purchases products in Category I (a) from Eisen AG more frequently than do other undertakings, such as Claas and Schlafhorst, to which the applicant itself admits having sold first-grade steel, cannot endow the contracts concluded with Markmann with commercial characteristics which are materially different from those of the contracts concluded with the other undertakings. Furthermore, it would have been possible to take account of the stability of the relationship with Markmann by the grant of a fidelity rebate which is by no means prohibited by Decision No 1836/81, provided that it is published in the price list.

15 Finally, Eisen AG contended that the transactions concluded with Bergbau were covered by Article 9 (1) (b), inasmuch as the products delivered in pursuance of those transactions consisted in practice of sub-standard rolled products, that is to say products which are not "the same [as] or similar" to those delivered in connection with other transactions. That was possible, it is claimed, because Bergbau used those products for purposes in respect of which certain characteristics distinguishing first-grade steel from sub­ standard steel were of no importance.

16 It is clear from the "framework contract" of 3 April 1981 that the agreement entered into with Bergbau is for the delivery of "Steel 37 quality sheet corresponding to DIN 17100, grade one". That contract also expressly provides as follows:

EISEN UND METALL AKTIENGESELLSCHAFT / COMMISSION

"As regards all the R ST 37-2 quality sheet, please provide, on delivery, factory certificates in accordance with DIN 50049/2.1 or control slips in accordance with DIN 50049/2.2. Deliveries unaccompanied by control slips can no longer be accepted."

JUDGMENT OF 16. 5. 1984 — CASE 9/83

Bergbau was always imported from the German Democratic Republic and was therefore sub-standard. According to Eisen AG, the material in question does not satisfy the conditions laid down by the rules on standardization (DIN standards) of the Federal Republic of Germany, although the commercial authorities of the exporting country always describe it in their invoices as a first-grade product.

22 In order to determine whether that argument is well founded, it is however unnecessary to examine the characteristics of the product imported from the German Democratic Republic. There are other factors on the basis of which the conclusion may be drawn that the material delivered by Eisen AG to Bergbau normally fell within Category I (a).

23 In that regard it must in the first place be stated that on several occasions during the period taken into account by the Commission's inspectors, Eisen AG supplied Bergbau with Category II (a) material and each time indicated expressly on the invoice that a "special consignment" was involved (see Invoices No 40/32749 of 10. 12. 1981, No 40/32808, No 40/32809 and No 40/32810 of 16. 12. 1981, No 40/32895 of 21. 12. 1981, No 40/30037 of 11. 1. 1982 and No 40/30076 of 14. 1. 1982). That indication would have been unnecessary if, as Eisen AG has stated, Bergbau had tacitly accepted deliveries of sub-standard material in place of first-grade material. It may therefore be concluded that in case in which no such indication was provided, first-grade material was supplied.

24 Furthermore, as regards more particularly the steel imported from the German Democratic Republic, it is possible to state, on the basis of the table of stocks submitted by the applicant at the Court's request, that the serial numbers assigned to those products are not given in any of the contested invoices, which seems to rule out the possibility that Eisen AG delivered to Bergbau material imported from the German Democratic Republic.

29 It must therefore be concluded that the infringement with which Eisen AG is charged may be clearly established from the statement of objections in conjunction with the decision and that the applicant had already clearly perceived, in the course of the administrative procedure, the scope of the objection communicated to it.

30 As regards the submissions concerning the infringement of essential procedural requirements, Eisen AG also contended that the Commission infringed the rights of the defence inasmuch as, in the course of the procedure which led to the adoption of the contested decision, it failed to draw the applicant's attention to the fact that it had no intention of making any inquiry into the evidence in exoneration adduced by the applicant.

31 In reply the Commission stated that Article 36 of the ECSC Treaty requires it, before imposing a pecuniary sanction or ordering a periodic penalty payment, to "give the party concerned the opportunity to submit its

JUDGMENT OF 16. 5. 1984 — CASE 9/83

comments". By giving the applicant an opportunity to submit written comments, the Comission complied with that obligation, it claims.

32 It is clear from the provisions of Article 36 that the abovementioned obligation cannot be understood as requiring the Commission to put forward its counter-arguments in relation to the arguments put forward in its defence by the party concerned. The rights of the defence are guaranteed by that article since it provides the party concerned with an opportunity to put forward its arguments. The Commission cannot be required to reply to those arguments, to carry out further inquiries or to hear witnesses for the party concerned, where it considers that the preliminary investigation of the case has been sufficient, for that would be likely to render the procedure for establishing an infringement too cumbersome and extend its duration unnecessarily. That submission must therefore be rejected.

37 Finally the submission concerning the alleged misuse of powers must be rejected in the light of the consideration set out above in so far as it is based on the contention that the Commission imposed a fine on the applicant for infringements which have not been established.

38 In so far as the submission in question is based on the contention that the amount of the fine was fixed at a very high level for the purpose of the general prevention of infringements, it is sufficient to point out that the decision itself expressly states that: "The amount of 'the fine must be sufficiently high to deter the undertaking from undercutting its list prices

39 The imposition of a fine in order to penalize an unlawful practice and to deter the undertaking concerned from repeating the infringement is in conformity with Community law, irrespective of the fact that the penalty may also act as a general deterrent.

40 In those circumstances, it follows that consideration of this submission has disclosed no factor of such a kind as to establish that the Commission was guilty of a misuse of powers. This submission must therefore be rejected

41 In the alternative, Eisen AG has requested the Court to reduce the amount of the fine.

42 In that regard, it must be pointed out that the measures adopted for the onalization he te arke ap ly fir and rati of t s el m t p st foremost to steel producers and that the role of steel dealers in the rationalization of that market, albeit important, is secondary to that of producers.

47 Under Article 69 (2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs. Since the applicant has been largely unsuccessful in its submissions, it must be ordered to pay the costs.

On those grounds,

THE COURT (Fourth Chamber)

hereby:

1. Fixes the amount of the fine imposed on the applicant at DM 66 868;

EISEN UND METALL AKTIENGESELLSCHAFT / COMMISSION

OPINION OF MR ADVOCATE GENERAL VERLOREN VAN THEMAAT DELIVERED ON 29 FEBRUARY 1984 1

Mr President, In support of its application, the Members of the Court, applicant relies on the following grounds: 1. Introduction I. Infringement of essential procedural The application lodged by Eisen und requirements and, in particular, Metall Aktiengesellschaft which I am to insufficient statement of the reasons deal with today is directed against a on which the decision is based; Commission decision of 9 December II. Infringement of the ECSC Treaty 1982 imposing a fine. That decision is and of the rules of law relating to its itself based on Article 15 of the general application; decision, No 1836/81/ECSC. The ap­ plicant claims that the Court should: III. Misuse of powers.

1. Annul the fine imposed amounting to Before I consider those submissions in DM 133 736, or, in the alternative, detail, I have certain general remarks to reduce the amount thereof; make with regard to this case. 2. Declare Articles 1 and 2 of the As is clear from Article 80 of the ECSC decision void. Treaty, the obligations arising from

1 — Translated from the Dutch.