C-83/83

JUDGMENT OF THE COURT (SECOND CHAMBER) 17 MAY 1984 1

Estel NV v Commission of the European Communities

(ECSC — Exceeding of steel production quotas — Fines)

Case 83/83

ECSC — Production — System of steel production and delivery quotas — Production in excess of quotas — Fine — Different view as to the method of calculating quotas — Whether circumstance affording a defence — No — Breach of the principle of legality — None (ECSC Treaty, Art. 58; general Commission Decision No 1831/81/ECSC, Arts 10 and 12)

In Case 83/83

THE COURT ( Second Chamber )

composed of: K. Bahlmann , President of Chamber , P . Pescatore and O . Due , Judges ,

Advocate General : Sir Gordon Slynn Registrar : J. A . Pompe , Deputy Registrar

gives the following

JUDGMENT

Facts and Issues

by proof of use for such a purpose, up to double the amount mentioned adjust the quota and authorize the above. relevant deliveries. B — Statement of the facts The first paragraph of Article 12 provides that a fine, generally of 75 In pursuance of the above-mentioned European currency units (ECU) for each decision, the Commission, by letter dated tonne in excess, is to be imposed on any 10 November 1981, notified Estel of the undertaking exceeding its production production quotas which had been quotas or part of such quotas which may allotted to it and the part of those quotas be delivered in the common market. The which might be delivered on the second paragraph provides, inter alia, common market (hereinafter referred to that if the undertaking has already as "delivery quota") for the fourth exceeded its quota or quotas during one quarter of 1981. Those quotas were fixed of the previous quarters, the fine may be as follows:

(hi totwcs)

Production quota Delivery quota

Category la 530 379 343 166 Category lb 398 315 238 148 Category Ic 112 847 66 735 Category Id 86 947 59 040 Category V 92 628 61551 Category VI 110374 94817

That decision was notified to Estel by a registered letter of 30 March 1983, Ill — Submissions and argu­ delivered on 5 April 1983. ments of the parties

By application lodged at the Court Registry on 10 May 1983, the applicant In the first submission made in its instituted proceedings against that application, the applicant maintains that decision. the Commission has infringed Article 15 of the ECSC Treaty by failing to state sufficient reasons, or at least intelligible reasons, for the contested decision, with II — Written procedure and respect to the fine imposed upon it in conclusions of the parties relation to an excess of 5 459 tonnes and the amount of that fine. The reasons Upon hearing the report of the Judge- on which the decision was based did Rapporteur and the views of the not take into account the comments Advocate General, the Court decided to submitted by Estel both in writing and open the oral procedure without any orally, including those submitted at the preparatory inquiry. hearing by the Commission. Above all, the Commission has simply not con­ By order of 18 January 1984 the Court sidered the arguments relied upon by assigned the case to the Second Estel, namely that the Commission Chamber. should have taken account, in fixing the The applicant claims that the Court fine, of the fact that the relevant quotas should: had not yet been fixed in the fourth quarter, that there was no excess which "I. Primarily declare void, wholly or at could be attributed to Estel, and that least in part, the Commission's there were exceptional circumstances decision of 24 March 1983 addressed requiring that the fine should be to Estel NV ; reduced. Again, the disputed decision does not contain any grounds for In the alternative, reduce to nil or to holding that this action relates to a case such amount as the Court shall think covered by the expression "generally" fit the fine imposed by the contested contained in Article 12 of Decision No decision; 1831/81, or that a fine of 82.5 ECU per II. In either case make such further tonne exceeded, mounting to 2 183 445 order as the Court shall think fit; ECU, is appropriate.

(in tonnes)

Estcľs method The Commission's method

(a) Deliveries during the reference period 100 155 116 676 (b) Deliveries during the reference period less the abatement of 20 % 8 0 1 2 4 9 3 3 4 1

(c) Deliveries during the fourth quarter 176 767 177 684 (d) Adjustment ((c) less (b)) 96 6 4 3 8 4 3 4 3

For details of the different methods and method from that of the Commission, the reasons which led Estel to apply and as well as for argument on the legal to consider that it could apply a different relevance of its own method, the

JUDGMENT OF 17. 5. 1984 — CASE 83/83

Only in the last week of November 1981 did the Commission draw Esteľs attention to the fact that it was Since the manner in which the quota recommending a different method. In. should be adjusted under Article 10 had December 1981 and January 1982 Estel not been determined, and Estel was and the Commission discussed their unable to foresee that the delivery of a difference of opinion concerning Article quantity of products for re-rolling might 10, and the Commission finally rejected lead to its delivery quota being exceeded the method advocated by Estel only in its by 5 459 tonnes, the fine is contrary to letter of 3 February 1982 (in relation to the principle of legality. the third quarter of 1981). Consequently, the applicant takes the view that no complaint can be made against it with reference to an excess of 5 459 tonnes over its quota. Even if Estel had been aware throughout that fourth quarter — which it was not — that it was equally possible to apply different methods of calculation, the Commission should have refrained from Having regard to the fact that deliveries imposing a fine, because Estel's method in Category la were 5 056 tonnes below was "reasonable and perfectly tenable." the quota, and that a tolerance of 3 % The fact that the Commission relied in excess is allowed by virtue of Article solely on its own method to determine 11 (1) of Decision No 1831/71, the the excess amounts for which a fine was Commission calculated that the quota imposed is equally contrary to the had been exceeded by 22 132 tonnes in principle of legality, which forms part of Category lb and by 4 334 tonnes in the Community legal order. In support Category V, and accordingly imposed a of that opinion, the applicant refers to a fine for a total excess of 26 466 tonnes. report by Professor Tiedemann of the

University of Freiburg (Federal Republic allotted to Estel for products in Category of Germany), which is annexed to the la in accordance with Article 10 of reply in Case 270/82. Decision No 1831/81. However, since Estel failed to institute proceedings within the period of one month laid down by Article 33 of the ECSC Treaty, the decision of 8 March 1982 can no In the alternative, the applicant argues longer be challenged, nor can the that the fine is contrary to the principle Commission's point of view regarding nulla poena since culpa. During the fourth adjustment of the quota be disputed in quarter, Estel was able to consider and the proceedings in this case. In support did consider that it was entitled to apply of that argument, the Commission refers its own method, having regard to the to the case-law of the Court and in reasonableness of the latter and the particular to its judgment of 31 March background to Article 10. Since Estel 1965 in Case 21/64 Macchiorlati Dalmas had thus made an excusable mistake as v High Authority [1965] ECR 175, in to the meaning of Article 10, it cannot be which the Court stated that the strict criticized for having exceeded the quota time-limit for instituting proceedings laid by 5 459 tonnes. With reference to the down by Article 33 of the ESCS Treaty importance of the principle nulla poena "is in keeping with the necessity to since culpa in Community law, the prevent the legality of administrative applicant again refers to Professor decisions being called in question Tiedemann's report. indefinitely." Moreover, the third paragraph of Article 36 of the ECSC Treaty is not applicable to this case, since it concerns an individual decision addressed to Estel. Again in the alternative, the applicant maintains that the Commission should have taken account of extenuating circumstances, the seriousness of the breach committed, and Estel's share of On the substance, the Commission responsibility — criteria which are set maintains that both Estel's submissions out at length in Professor Tiedemann's are unfounded. As regards Estel's fiist report. In the case before the Court, the submission, the Commission considers exceptional circumstances which led to that according to the case-law of the an excess of 5 459 tonnes justify at all Court a decision need only set out the events a reduction in the fine to such an main points of law and of fact upon amount as the Court may consider which it is based and which are necessary appropriate. in order that the reasoning which has led the Commission to its decision may be understood, and that the reasons on which a decision is based are sufficiently stated if it contains an indication of the grounds of both fact and law on which it In its principal submission, the Com- is founded, without its being necessary to mission advances an objection of inad- discuss the objections which may be missibilitay against the action, arguing made against it. Furthermore, it is not that Estel's application amounts in reality under a duty to explain the reasons why to a claim relating to the legality of the it does not consider itself bound to act Commission's decision of 8 March 1982, upon the comments made or upon facts which adjusted the quota initially which were not and could not have been

relevant at the time at which the decision With reference to the applicant's second was taken. submission, the Commission raises the general objection that quotas exceeded and quotas unused, to which reference is made in Article 11 (which allows excess amounts in certain categories to be offset The Commission takes the view that by quotas fixed for other sub-categories Article 12 of Decision No 1831/81 of Category I which remain unused) do provides for a fine which is objectively not bear any relation to the adjustment determined in cases in which quotas are provided for in Article 10. That provision exceeded and that it cannot therefore authorizes adjustments to the quotas take into account subjective factors such fixed for Category la only when and in as the extent of blame or certain special so far as the quotas fixed for products circumstances. Consequently, the Com­ for re-rolling, forming a part of such mission has no margin of discretion in quotas, are insufficient to cover actual imposing the fine and hence is not bound deliveries of products for re-rolling to state further reasons for its decision within the Community during the on that point. relevant quarter. If Estel had been granted the adjustment of an additional 12 300 tonnes which it requested, it would have obtained that additional Similarly, the Commission has no discret­ amount twice over, first as a part of the ionary power in fixing the fine pursuant delivery quota fixed initally for products to the first paragraph of Article 12, and for re-rolling, and secondly as a part of it is therefore not bound to provide the adjustment. In the event, a quota of further reasons for its decision on that 96 643 tonnes (an adjustment of 84 343 point. By contrast, the Commission tonnes added to 12 300 tonnes allotted considers that it has a certain discretion as a delivery quota for products for re- to increase the fine in certain cases under rolling) would have been sufficient to the second paragraph of Article 12. cover actual deliveries of products for re- However, where an undertakning has rolling. Estel sought to use certain already exceeded its quotas in the unused quots in Category la, which had previous quarter, it is to be expected that been intended to cover actual deliveries an increase of 10% of the fine may of products for re-rolling but which were be imposed upon that undertaking not used for that purpose, to reduce an without any need for an additional excess amount of 22 132 tonnes in statement of reasons for the increase. In Category lb by 5 459 tonnes to 16 673 the case in point, Estel had already tonnes, so as to moderate it a little. exceeded its quotas in the third quarter of 1981.

As regards the method which the apparent from a letter from Eurofer Commission applied in calculating the dated 29 September 1981 and addressed adjustment to the quotas pursuant to to the Commission that the former, and Article 10 of Decision No 1831/81, the by implication Estel, as a member of Commission states that it had to take Eurofer, were not presented with any into account the fact that the production difficulty as to the basis of products and delivery quotas initially fixed already for re-rolling who had requested ad included a quantity designated for justments used other factors as a basis of deliveries of products for re-rolling. In calculation or brought proceedings any event, the undertaking in question against the Commission's decision. had the advantage of cover for all its

re-rolling. It follows from the nature of steel producers, and it is untenable since the scheme itself that adjustments are it conflicts with the whole scheme always made after the event by virtue of introduced by Decision No 1831/81. the fact that the figures for products for Estel therefore made the mistake of re-rolling actually delivered on the believing that its deliveries of products Community market can be established for re-rolling could give rise to a set-off only after the end of any quarter for the under Article 11 whereas that would undertaking concerned. be contrary to the purpose of the adjustment provided for by Article 10.

It follows that its penalty. In any event, the fact that an method of calculating the adjustment undertaking has made a perfectly honest was consistent with the method of calcu mistake in interpreting an article of lation for the quota initially fixed. It is the aforementioned decision does not

constitute a circumstance which may be rate that the fine should be wholly taken into consideration in applying remitted. Article 12. Should the Court conclude in favour of a different interpretation of Article 12, the Commission maintains The applicant retorts in its reply that as that Estel may be accused of having regards the objection of inadmissibility knowingly exceeded its quota. raised by the Commission, it has not requested the Court to decide as to the legality of the method applied by The Commission also contests the claim the Commission in calculating the that it has breached the principle nulla adjustment to the quotas in its decision poena sine culpa since at the material of 8 March 1982. On the contrary, what time, that is to say during the fourth it is disputing is solely the fine imposed quarter of 1981, Estel knew or should and the amount thereof. have known that it was exceeding the quotas which had been allotted to it and With regard to the substance, the that such a course of action constituted applicant holds to its argument that the an offence. statement of the reasons on which the contested decision is based is inadequate. A more detailed statement of reasons As regards the submission made in the was indispensable, since the Com further alternative by Estel, alleging that mission's argument that Article 12 of the Commission did not take into Decision No 1831/81 does not give it account the circumstances in which the any margin of discretion as to the excess at issue arose, its seriousness or penalty to be imposed is not correct.

account. In view of the fact that it could No 1831/81 and its individual decision as much as double the fine by virtue of of 8 March 1982. that provision and that in the event it increased it by only 10 %, the Commission considers that it has already In connection with the first ground of sufficiently allowed for the subjective claim in its second submission the factors. applicant disputes the Commission's view that an unused amount made available by an adjustment under Article 10 Finally, the Commission stresses that, in cannot be used by way of set-off.

ESTEL / COMMISSION

excess amounts in any of the other cate­ mission agrees with Estel in considering gories. that the question which is raised by this case is whether Estel was entitled to adopt a different method of calculation The applicant also disputes that it knew from that recommended by the or should have known that its method of Commission; and it states that that was calculation was not a correct method; on not the case, since the bases for the the contrary, it has demonstrated both in method of calculating the adjustment this case and in Case 270/82 that the must be the same as for the method of method of calculation which it relied calculating the initial quota. The upon was perfectly tenable. The letter Commission provided confirmation by from Eurofer dated 29 September 1981 telex message dated 1 December 1981, does not deal with the question whether addressed to Estel, of its method of an adjustment must be a flat-rate calculation under Article 10, which it adjustment or "kundenorientiert". That had already explained to Estel on several question was never mentioned before 1 occasions in the past in conversations at December 1981, except in a conversation meetings and on the telephone. which took place on 29 September 1981.

JUDGMENT OF 17. 5. 1984 — CASE 83/83

since it was evident that the calculation applicable. However, that did not of the adjustment was determined by the remove the differences of opinion with method of calculation for the reference respect to the applicability of the method figures. In any event, Estel had actual described as "kundenorientiert". On the notice of it after receiving the Com­ other hand, the discussion between the mission's telex message of 1 December Commission and Estel on that subject 1981, and Estel adapted in due time its did not begin until the end of November production programme for products 1981, by which time the delivery other than those in Category la. contracts had already been concluded. In any event, the Commission should have Against that, Estel argued that even notified its method of calculation to towards the end of November 1981, the Estel at the beginning of the fourth Commission had not finally adopted as quarter of 1981, and it did not do so position on the matter of the method of clearly and definitively until after the end calculation for the adjustment. It is true of that quarter. that the Commission informed Eurofer by letter of 10 November 1981 that the The Advocate General delivered his method based on percentages was opinion at the same sitting.

Decision

1 By application lodged at the Court Registry on 10 May1983 , Estel NV , (hereinafter referred to as " Estel "), Nijmegen , brought an action , pursuant to the second paragraph of Article 36 and Article 33 of the ECSC Treaty , for a declaration that the Commission's decision of 24 March 1983 , imposing upon it a fine of 2 183 445 ECU , or HFL 5 482 849 , was void .

6 In pursuance of Decision No 1831/81, the Commission notified Estel, by letter of 10 November 1981, of its production quotas and the part of such quotas which might be delivered on the common market for the fourth quarter of 1981. In a letter dated 26 January 1982, Estel made a request to the Commission, under Article 10 of Decision No 1831/81, for an adjustment to the quota fixed for those of its products in Category Ia which were intended for the production in the Community of welded tubes with a diameter not exceeding 406.4 mm, so as to increase it by 96 643 tonnes. However, the Commission, in its letter of 8 March 1982, granted Estel only an increase of 84 343 tonnes, that is to say 12 300 tonnes less than the amount requested; Estel did not bring legal proceedings to challenge that decision.

7 By letter dated 6 October 1982, the Commission fixed Estel's final quotas for the fourth quarter of 1981, having regard in particular to the adjustment granted by letter of 8 March 1982; in the same letter, the Commission

JUDGMENT OF 17. 5. 1984 — CASE 83/83

notified Estel that it had exceeded its quotas for the fourth quarter of 1981 and that it was therefore liable to a fine.

8 On 24 March 1983, the Commission took the contested decision, finding that the quotas had been exceeded by a final amount of 26 466 tonnes, that is to say by 22 132 tonnes in the case of products in Category lb and 4 334 tonnes in the case of products in Category V, and imposing upon Estel a fine of 2 183 445 ECU by virtue of Article 12 of Decision No 1831/81.

9 The decision referred to the fact that Estel had already exceeded its production and delivery quotas during the previous quarter, and increased the amount of the fine for the fourth quarter by 10% in relation to the normal fine of 75 ECU, thereby raising it to 82.5 ECU per tonne.

13 In this connection it should be pointed out that although it is true that according to a consistent line of decisions of the Court, an applicant may not, in proceedings for a declaration that an individual decision is void, invoke the illegality of another individual decision addressed to him which has become definitive, in this case the application does not relate to the legality of the quota adjustment or to the method of calculation adopted for that purpose by the Commission but solely to the legality of the fine imposed upon the applicant and to the amount thereof, as indeed Estel has expressly stated.

14 The objection of inadmissibility must therefore be rejected.

Substance

15 As to substance, Estel invokes in the first place, in support of its action for a declaration of nullity, its submission that the statement of reasons relating to an infringement of Article 15 of the ECSC Treaty is insufficient. In view of the fact that the other submissions in the case have a direct bearing on the substance of that submission, it would be appropriate to return to it after the others have been examined.

Breach of the principle of legality (nulla poena sine lege)

16 In that submission, Estel argues that the Commission committed a breach of the principle of legality by basing its contested decision exclusively upon a method of applying Article 10 of Decision No 1831/81 which it did not notify to Estel until after the fourth quarter of 1981, and which decisively affects the meaning of the concept "quota", as provided in Article 12 of the above-mentioned decision.

21 The Commission did not finally take a view as to the method to be applied, it is claimed, until mid-November 1981, and it did not notify Estel of it definitively until its letter of 3 February 1982.

22 Since the method for adjusting the quota under Article 10 remained undetermined in the fourth quarter of 1981, Estel was unable to foresee that the delivery of a quantity of products for re-rolling might produce an excess over its delivery quota for which it might therefore be penalized.

ESTEL / COMMISSION

23 The Commission denies that Estel, in spite of the Commission's exchanges of views in correspondence and in conversations with Eurofer — the European Confederation of Iron and Steel Industries, of which Estel is a member — and with Estel itself, did not know the method of calculation for the adjustment at the beginning of the fourth quarter of 1981. Indeed, in a letter d Se tember 1981 date 29 p , Eurofer confirmed that its members would have no difficulty as to the basis of calculation for the adjustment provided for in Article 10; and the Commission clearly defined its position in a letter dated 10 November 1981 which was sent to Eurofer and, finally, by telex message to Estel on 1 December 1981.

24 In any event, Estel could and should have known, the Commission claims, that the method of calculation for the adjustment had to be the same as that for the initial quota; at the least, Estel knew that the reference production and deliveries as well as the production and delivery quotas initially fixed were determined on a flat-rate basis and that they bore no relation to any given customers, that is to say, they were not "kundenorientiert".

30 With reference to the question whether the Commission correctly applied Article 10 of Decision No 1831/81, it should be observed that Estel did not bring proceedings before the Court to challenge the validity of the Commission's decision adjusting its quotas, and that it accepted the Commission's view on that point in February 1982.

31 As regards the third quarter of 1981, the Court has declared in its judgment of 29 February 1984 in Case 270/84 Estel [1984] ECR 1195, that the Commission should itself have informed the undertakings concerned of the method of calculation which it intended to apply, and should have done so at the beginning of the quarter. Furthermore, the Court has found that the Commission, since it did not do so, contributed to the general uncertainty over the correct method of calculation, and consequently it reduced the fine imposed upon Estel.

32 However, although Estel may indeed have been in doubt during the third quarter of 1981 regarding the method to be applied in calculating the adjustment, it nevertheless actually knew, at the latest in mid-November 1981, that the Commission would apply a method different from its own.

33 The file on the case shows that several exchanges of view took place between Estel and Eurofer, on the one hand, and the Commission on the other, relating to the calculation of the quota adjustments, and that the Commission let it be known in due time what it considered to be the correct method of calculation.

ESTEL / COMMISSION

34 Even is it was not possible to infer as much from Eurofer's letter of 29 September 1981 addressed to the Commission, it is nevertheless clear from the Commission's letter of 10 November 1981 addressed to Eurofer that Estel must have known the method which the Commission deemed to be correct. The Commission has referred to its various exchanges of view with Estel in its telex message of 1 December 1981 addressed to Estel.

JUDGMENT OF 17. 5. 1984 — CASE 83/83

40 Against that, the Commission argues that a system of fines must of necessity be automatic. It follows that it little matters whether or not Estel is at fault or whether it has made an excusable mistake.

41 As the Court has already stated with reference to the main head of Estel's second submission, Estel, in the light of the facts recited above, did in fact knowingly assume the risk of a possible mistake. That mistake is not excusable, because the applicant should not have substituted its own interpre­ tation for the Commission's opinion.

42 It also follows from the facts that Estel could have avoided exceeding its quotas and being fined in consequence, since it was still in a position to adapt its production programme even on the supposition that it became cognizant of the Commission's position only as a result of the latter's letter to Eurofer dated 10 November 1981.

43 Consequently, it must be declared that any mistake made by Estel regarding the method for the adjustment of its quotas in accordance with Article 10 of Decision No 1831/81 was not excusable, and that the Commission has not committed a breach of the principle invoked.

44 The submission to that effect must therefore also be rejected.

49 However, in this instance, the applicant has not given evidence sufficient in law to demonstrate the existence of exceptional circumstances justifying a reduction of the fine. On the contrary, as the Court has noted in its exam­ ination of the previous submissions, Estel cannot, as regards the fourth quarter, rely on either its alleged good faith as to the proper method of calculating the quota adjustment, or doubts or uncertainties as to the Commission's position.

50 That submission must therefore also be rejected.

Insufficient statement of reasons

51 In support of its application for a declaration of nullity, Estel alleges that the Commission infringed Article 15 of the ECSC Treaty by failing to provide a sufficient statement of the reasons on which the contested decision and the amount of the fine were based.

52 It follows from the recitals in the preamble and text of the contested decision that the Commission satisfied the requirements of a statement of reasons as far as the material points of the contested decision are concerned. Beyond that, as the Court has repeatedly pointed out, it is not obliged to discuss, in the statement of the reasons on which its decisions are based, all the objection which might be advanced against the view which it has taken.

JUDGMENT OF 17. 5. 1984 — CASE 83/83

hereby:

1. Dismisses the application;

2. Orders the applicant to pay the costs.

Bahlmann Pescatore Due

Delivered in open court in Luxembourg on 17 May 1984.

For the Registrar