C-103/85

did not receive aids authorized by the 2. In the absence of a reply from the Commission with a view to covering Commission to its request Peine-Salzgitter operating losses, AG originally brought an action for failure to act (Article 35 of the ECSC Treaty). Subsequently, on 11 June 1985, the Commission adopted a formal decision was not the subject of penalties in respect of rejecting Peine-Salzgitter's request. The the price rules or paid fines due, applicant then extended the scope of its action to cover that decision. the Commission shall, in respect of the quarter in question, make a suitable adjustment to the quotas and / or parts of 3. The Commission expressed doubts as to quotas which may be delivered in the whether it was permissible to transform an common market for the category or action for failure to act into an action for a categories of products in question . . . ' declaration that a decision was void, but did not formally contest it.

6. The Commission considers that the action is unfounded at least for one of the 4. I think it would not be in the interest of two following reasons, namely: the due administration of justice and the requirements of procedural economy to 1 — See, for example, the judgment of 29 September 1987 in Joined Cases 351 and 360/85 Fabrique de fer de Charleroi oblige the applicant to bring a fresh action SA and Diliinger Hüttenwerke AG v Commission [1987] ECR 3639 at paragraph 11 or the judgment of 3 March 1982 in Case 14/81 Alpha Steel v Commission [1982] ECR * Translated from the French. 749, paragraph 8.

12. Further, according to the judgment in Boël 3 8. The Commission considers that Article 14 applies only if the undertaking satisfies a fundamental condition: it must have suffered losses at least during the quarter to 'Article 14 of Decision 1696/82/ECSC, which its request relates. The Commission according to its wording, provides limited states that it relies in principle on that inter­ scope for adjusting the quotas solely when pretation for it is scarcely possible to speak an undertaking experiences "exceptional of 'exceptional difficulties' if an undertaking difficulties" "by virtue of the scale of the makes a profit. abatement rates". In those circumstances the Commmission is required to take into consideration the special situation in each case in order to determine whether the undertaking in question is confronted with 9. Peine-Salzgitter AG, on the other hand, exceptional difficulties resulting from the claims that Article 14 imposes no such reductions in production imposed on it. condition. It states that it suffered losses in relation to its heavy sections production (the subject of the request for an additional quota) because of the extremely unfa­ Accordingly only difficulties which are the vourable relationship between the part of its direct consequence of the establishment and quota which may be delivered on the common market and its total quota (the I:P 2 — Judgment of 3 March 1982 in Case 14/81 Alpha Steel v ratio). It alleges that its overall results can Commission [1982] ECR 749. 3 — Judgment of 22 June 1983 in Case 317/82 Usines G. Boil v be regarded as positive only if the losses Commission [1983] ECR 2041.

14. Let us imagine for example two under­ takings, A and B, both with an identical and 16. In his Opinion of 19 March 1985 in very unfavourable I:P ratio in relation to Case 27/84 (Wirtschaftsvereinigung Eisen- Category III products. Let us also imagine und Stahlindustrie v Commission [1985] that undertaking A has made a sustained ECR 2385, at p. 2391) Mr Advocate and systematic effort at reorganization and General Darmon also came to the by reason of the profit which it succeeds in conclusion that it was wrong to say that the achieving on other categories of products exceptional difficulties referred to by subject or not to quotas no longer suffers a Articles 14 and 16 must necessarily result in general loss on its activities as a whole. a loss for undertakings. Undertaking B has not made the same effort: it has retained large surplus capacity in relation to other categories of products and it ends its year with a loss. If additional quotas are granted to undertaking B 17. The Commission must therefore because it has made a loss and refused to consider the undertaking's situation in each undertaking A because it has not done so, a case and the nature and scope of the excep­ vital role would be attributed to exceptional tional difficulties caused by the quota difficulties which do not have their origin in system. the abatement rate applicable to Category HI products. As we have seen, that is not allowed.

18. That is, moreover, the interpretation which the Commission itself followed in reaching the decisions in which it allocated 15. On the other hand the fact that an Peine-Salzgitter AG additional quotas for undertaking does not suffer a general loss the third and fourth quotas of 1984. After does not necessarily mean that it does not pointing out that the undertaking's I:P ratio have exceptional difficulties in one of its had fallen from 52 to 44 % and that that sections. Thus it may happen that a percentage was 20 points less than the particular factory specialized in the manu­ Community average, the Commission facture of a product subject to a high concluded in its decisions:

'Since in the present case the exceptional 23. The Commission's individual decision difficulties solely concern the quota shares, of 11 June 1985 is thus based on a wrong it is they and not the production quotas interpretation of the term 'exceptional diffi­ which must be adjusted.' culties' in Article 14 of Decision No 234/84/ECSC. The Commission has failed to show that Peine-Salzgitter AG was not in a situation of exceptional difficulty. It remains to determine whether the 20. Finally, it transpired at the hearing and application could be rejected because the from documents lodged at the request of the undertaking had received aid intended to Court that it was not only in one case, as cover operating losses. the Commission stated during the written procedure, but in several cases that the Commission granted additional quotas under Article 14 although the undertaking II — The nature of the aid received in question was making a profit. The fact that in certain cases the profit was due to products which did not come under the 24. The second reason for which Article 14 ECSC Treaty or was even due to the grant of Decision No 234 / 84 / ECSC was stated of additional quotas under Article 14 is not to be inapplicable to the applicant was, capable of affecting that observation. according to the Commission, that 'in November 1984 the applicant received aid for depreciation in relation to the operation of the plant which must be regarded as aid 21. It may thus be concluded that the to cover operating losses.' simple fact that an undertaking is making a profit is not in itself sufficient reason to refuse to apply Article 14. 25. It is not denied that at the said time Peine-Salzgitter AG received aid pursuant to the Directive of the Federal Minister for Economy on the grant of aid for structural 22. In the decision of 11 June 1985 improvement of steel undertakings of 28 (annexed to the reply) in which the December 1983 (Bundesanzeiger No 245 of Commission refused Peine-Salzgitter AG 31 December 1983). Aid intended for additional quotas for the first and second structural improvements covers:

29. Already two months later, by Decision 27. However, the aid received by Peine- 2748/83, 6 the first indent of the first Salzgitter AG must clearly be defined not paragraph of Article 14 was amended to under the provisions of the 'Aids Code' but provide that the undertaking in the light of the notion of 'Aids ... with a view to covering operating losses' which appears in Article 14 of Decision 234/84 and not in the Aids Code. 'did not receive aids authorized by the Commission with a view to covering operating losses'.

28. In that respect the applicant rightly 5 — Commission Decision No 2177/83/ECSC of 28 July 1983 on the extension of the system of monitoring and draws attention to the development which production quotas for certain products of undertakings in the steel industry (OJ L 208, 31. 7. 1983, p. 1).

4 — Commission Decision 2320/81/ECSC of 7 August 1981 6 — Commission Decision 2748/83/ECSC of 30 September 1983 amending for the second time Decision No establishing Community rules for aids to the steel industry 2177/83/ECSC (OJ L 269, 1. 10. 1983, p. 55). (OJ L 228, 13. 8. 1981).

OPINION OF MR MISCHO — CASE 103/85

30. That amendment was justified in the 35. It is thus undeniable that the fifth recital by the fact that Community legislature intended to widen appreciably the class of beneficiaries of this equity clause. Whereas under Decision 'it would appear inequitable not to allow 2177/83 all traders who had received any those which have received aids to benefit aid, apart from aid for closure pursuant to from adjustments under Articles 14 and 14a, Article 4 of the Aids Code, were barred with the exception, however, of those from the benefit of Article 14, under undertakings which have received aids auth­ Decision No 2748/83 all traders, even those orized by the Commission with a view to who had received aid, were allowed to covering operating losses'. benefit from Article 14 with the sole exception of those who had received aid with a view to covering operating losses.

STAHLWERKE PEINE-SALZGITTER v COMMISSION

39. The aid was thus paid independently of steel industry that it cannot be aggregated the undertaking's financial situation. It with additional quotas. could be granted even if there were no losses and if there were such losses their amount was irrelevant in fixing the amount of aid. The necessary condition for their grant was 'a programme of restructuring of particular expedience from the point of view 42. It seems to me difficult to contend that of economic policy ... the feasibility of Stahlwerke Peine-Salzgitter AG has which was checked and confirmed by an received 'aid likely to delay the desired independent auditor or by an independent restructuring' since the aid was granted audit company' (point 4 of the directive). precisely on the basis of a restructuring programme.

40. In its judgment of 15 January 1985 (Case 250/83 Finsider v Commission [1985] 43. The aid, which is granted in the form of ECR 131, 142, paragraph 9 at p. 152) the subsidies refundable from 1986 in so far as Court made the following statement on the the undertaking makes a profit, must be subject of justification for the refusal of returned if the undertaking decides to additional quotas where an undertaking had abandon wholly or partly the closure or received aid intended to cover operating restriction of capacity before 31 December losses: 1989 (point 12 of the directive).

'it is consistent with that aim (namely to 44. In its rejoinder, however, the promote the restructuring needed to adapt Commission however relies on the fact that production and capacity to foreseeable the major part of the contested aid was not demand and to re-establish the competitivity granted for the purpose of a reduction in of the European steel industry) that under­ capacity but solely for the purpose of takings which have received a form of aid reducing the utilization rate of plant which likely to delay the desired restructuring, continues to function in order to contend namely aid intended to cover operating that the object of the aid was to cover losses, should be excluded from the benefit operating losses. of the additional quotas, the grant of which may likewise reduce their willingness to restructure.'