C-363/88

FINSIDER AND FALCK v COMMISSION

OPINION OF MR ADVOCATE GENERAL VAN GERVEN delivered on 19 November 1991 *

Summary

1. The factual and legal background 1-385

1.1 Article 15B of Commission Decision No 234/84/ECSC and the refusal to apply it for 1984 1-385

1.2 The implied refusal to apply Article 15B of Decision No 234/84 and of Decision No 3485/85 for 1985 and 1986 respectively I - 388

2.4 Legal basis for the action for damages relating to Community measures not declared void (and not comparable to measures declared void) (first paragraph of Article 40 of the ECSC Treaty) I - 396

* Original language: Dutch.

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3. Has the Commission committed a fault within the meaning of the first paragraph of Article 34 or a wrongful act or omission within the meaning of the first paragraph of Article 40 of the ECSC Treaty or both? I - 400

3.t The concept of fault in the first paragraph of Article 34 and of wrongful act or omission in the first paragraph of Article 40 of the ECSC Treaty I - 4O0

5. Conclusion I - 409

Mr President, Falck SpA, the applicant in Case C-364/88 Members of the Court, (hereinafter referred to as 'Falck', claim that, by refusing to adopt, for 1984 and 1985, the measures provided for in Article 15B(4) and (5) of Commission Decision N o 234/84/ECSC ' and, for 1986, the measures provided for in Article 15B(4) of 1. Joined Cases C-363/88 and C-364/88, Commission Decision No 3485/85/ECSC, 2 now before the Court, both concern with a view to correcting the imbalance in proceedings for damages under the second paragraph of Article 34 and the first paragraph of Article 40 of the ECSC 1 — Commission Decision of 31 January 1984 on the extension Treaty. The Società Finanziaria Siderurgica of ihe system of monitoring and production quotas for Finsider SpA and Italsider SpA, the certain products of undertakings in the sted industry (OJ 19Í4 L 29, p. 1). applicants in Case C-363/88 (hereinafter 2 — Conunisâon Decision of 27 November 1985 on the referred to as 'Finsider-Italsider*) and the extension of the system of moiiitoring and _ production quotas for certain products of undertakings in the steel Società Acciaierie e Ferriere Lombarde industry (OJ 1985 L 340, p. 5).

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1.1 Arüde 15B of Commission Decision No 234/84/ECSC and the refusal to apply it for 1984 4. It shall consult the Member Sutes concerned if it considers that the complaint is justified. In this event, it shall request the undertakings in question to give a 2. The purpose of the measures in question commitment in writing that, during the was to ensure, during the most critical following quarter, they will correa the period of the crisis in the iron and steel imbalance in their traditional deliveries. industry, the restructuring of the industry within a competitive context compatible with the solidarity imposed by the production quota system.3 With that object 5. If an undertaking does not give such a Article 15B of Commission Decision commitment, or if the commitment is not honoured, the Commission may reduce the 3 — With retard to the n u o legis of Anide ISB of part of the undertaking's quou which may Commission Decision No 234/84/ECSC of 31 January be delivered in the common market for 1984, see Recial 9 to that decision, Monitoring of tradì- tional patterns of trade (Article 15B), which referred to the the following quarter by a quantity not Council meeting of 21 December 1983. See abo the repon for the hearing m Case 45/84 R EISA v Commission exceeding that which caused the imbalance [1984] ECR 1759. at pp. 1761 and 1762. in traditional deliveries.

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6. The Commission shall inform the in practices which are contrary to Member States concerned of the action Community law; taken on the complaint.'

'Since the procedure provided for in Article 15B will be used against undertakings which '(a) First, Article 15B will not be applied have altered their deliveries to a significant simply because an alteration in tradi­ extent compared with traditional deliveries, tional deliveries has been observed; it it cannot as first sight be excluded that will only be applied where the change Article 15B may be directed towards in traditional deliveries may be ascribed objectives other than those permitted by to the action of undertakings engaging 5 — Order in C u e 45/84 R, EISA v Commission [1984] ECR 4 — Set the repon foi the heirinž in Čaje « / 8 4 R EISA v 1759 paragraph 13. Commission, (previously ched in footnote 3), at p. 1762. 6 — Ibid., paragraphs 12 to 14.

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' . . . those assurances remove the threat with which the undertakings were confronted The Commission in no way challenged the and which could have justified the urgent accuracy of the dau supplied by the Iulian measures requested by the applicant'.8 authorities as to the imbalance in the tradi- tional patterns of trade but on the contrary suted that these dau were confirmed by its own calculations.10 Nevertheless, it did not decide to u k e the measures envisaged in After that order EISA did not in fact Article 15B of Decision No 234/84. It did proceed with its application for a however in March 1985 initiate procedures declaration that the article was void, so that against the producers responsible for the the Court did not have occasion to give imbalance in the traditional patterns of judgment on the compatibility of Article trade for infringement of the pricing rules 15B with the ECSC Treaty. In any event the for iron and steel products and on 27 Court's order seems to have confirmed the September 1985 it imposed fines on six Commission's view that it should confine producers for infringement of those rules. itself to a restrictive interpretation of Article That approach by the Commission was 15B and even its view that otherwise the clearly in accordance with the restrictive validity of Article 15B would otherwise be interpretation of Article 15B which it had at risk. advocated before the Court in Case 45/84 R EISA v Commission (see in particular subparagraph (c) of the passage set out in

9 — By Inter of 18 February 1985, Assidcr, the Italian steel industry federation, also asked for the application of the measures provided for in Article 15B of Commission 5. After establishing that deliveries of steel Decision N o 234/84, basing its request on data relating to the first, second and third quarters of 1984. products in categories la, lb and II had 10 — See the letter of 21 December 1984 (Annoi 5 to the applications) as regards the dau relating to the 6 r e three quarters of 1984 and the letter of 20 March 1985 (Annex 9 7 — Ibid., paragraph 8. to the applications) as regards the dau relating to the 8 — Ibid., paragraph 14. fourth quarter of 1984.

The Court gave judgment in that case on 9 April 1987." In view of the fact that the Commission had acknowledged the imbalance in the traditional patterns of trade of which the Italian Government complained, Commission, the Court declared that the Commission was required 7. As emerged clearly from the data by the provisions of Article 15B(4) to supplied by the Italian authorities to the request the undertakings concerned to give Commission l s and as was substantially a commitment in writing that they would confirmed by the Commission,16 deliveries correct the imbalance during the following on the Italian market of steel products in quarter. ' 2 The Commission's refusal to categories la, lb and II by the steel under- apply Article 15B(4) was therefore illegal takings of other Member States were altered and the Court declared the implied decision to a significant extent in comparison with of refusal void. Hence the Court rejected the restrictive interpretation which the 13 — Ibid., paragraph 19. In fact, according to the Court, the measure provided for by Ankle 15B(4) is not in the nature Commission had thought it should give to of a penalty and consequently is not conditional on a Article 15B of Decision No 234/84 and on finding that the undertakings responsible for the imbalance in the traditional patterns of trade have committed any which the Court based its order in Case infringement. 45/84R rejecting the urgent interim 14 — In paragraph 10 the Court stated: It must be pointed out measures applied for. In fan, in its that, although in their requests to the Commission the appÚcams sought to obtain the implementation of Article judgment in Joined Cases 167/85 and 15B of the aforesaid ECSC decision without giving further details, it b clear both from the applications themselves 212/85 the Court expressly rejected the and from the proceedings before the Court that Aisidcr, Commission's arguments to the effect that like the Italian Government, seeks only the annulment of the Commission's implied decision refusing to apply the outcome of the procedures for paragraph 4 of the article in question. 15 — See the leners of 29 May, 7 August and 30 November 1985, 6 March, 31 March, 7 August and I December 1986 11 — Judgment in Joined Cases 167/83 and 212/85 Assidrr v and 13 March 1987 (Annexes II to 18 to the applications). Commission [ 1 9 8 7 ] ECR 1701. 16 — See the letters of 9 January and 10 June 1986 and II 12 — Ibid.. paragraph 17. November 1987 (Annexes 19 to 22 to the applications).

traditional deliveries. 17 The Italian auth- April 1987 — that, in view of the need to orities therefore repeatedly requested the interpret Article 15B restrictively, it could Commission to apply the said Article 15B of not have recourse to the powers conferred Decision No 234/84 and, after 1 January on it by Article 15B(4) (or, for 1985, to 1986, Article 15B of Decision No 3485/85 those conferred on it by Article 15B(5]. which replaced it.

Article 15B of Decision No 3485/85 was repealed in its entirety as from 1 January 1987. ' 8 8. The Commission not only refused to take the measures provided for in Article 15B of the abovementioned decisions to correct the imbalance in traditional patterns of trade. During the period from 1984 to In spite of these repeated requests by the 1986 it is alleged even to have encouraged Italian Government, the Commission also the imbalance in the traditional patterns refused to take for 1985 and 1986 the by granting to steel undertakings in measures provided for in Article 15B of the other Member States under the second abovementioned decisions.

The increase in deliveries of steel products in within the quota system, a special semi- categories la and II by the steel undertakings of other liberal scheme under which: Member States was 7.3% in 1984, 8.4% in 1985 and 12.2% in 1986. The increase in deliveries of steel products in category lb reached 5.2% in 1984, 3.9% in 1985 and 2.8% in 1986. In view of this increase in the deliveries by foreign steel undertakings, there was an equivalent reduction in deliveries by the Italian producers. 18 — See Anicie 1(4) of Commission Decision No 3746/86/ECSC of 5 December 1986 OJ 1986 L .48, '1. With regard to category la products

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in the Community, with a diameter not As may be seen from the annexes to its larger than 406.4 mm, undertakings shall be defences, 20 the Commission's view was that authorized to increase their quotas and that question should be answered in the parts of quotas which may be delivered in affirmative. Its opinion was that the said the common market by an amount up to principle did apply to products intended for 5 000 tonnes per quarter or up to 30% of the production of small welded tubes, a the quantity of these products contained in view which may be found inter alia in a the parts of quotas which may be delivered memorandum on the application of Article in the common market. . . . 10(1) (commonly called the '12-point memo- randum'), which the Commission sent to all interested parties in December 1984 stating inter alia as follows:

9. The question raised by Article 10(1), which has given rise to considerable 5. If the total deliveries resulting from the differences of opinion between the contracts exceeds the estimated demand for Commission on the one hand and certain semi-finished products for small welded Member Sutes and steel undertakings on tubes on a given market the Commission the other, is whether Article 15B, which has will call a meeting with the producers to been discussed above, and the principle of discuss the market situation and the tradi- conformity with traditional patterns of trade tional patterns of trade. embodied therein, applied also to the products intended for the production of 20 — See Annexes 3, 6, 8, 9, 12, 13, 15, 16, 22 and 29 to the defences. It may be seen from a memorandum of 25 June small welded tubes, referred to in Article 1984 that the Commission thought that Article 15B applied also to products intended for the production of mull 10(1). arelded tubes (Annex 3 to the defences).

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6. The Commission will allot to under- mentioned in point 4 or to take part in the takings additional quotas exceeding 30% meetings envisaged in point 5. but will ask the undertakings concerned not to exceed traditional patterns by a significant extent...

22 — See, for example, the Commission letter of 6 February 1985 to CockerillSambre SA, Annex 16 to the defences. 23 — See, on this subject, the internal memorandum (of 13 December 1985) sent to the Commissioner responsible, However, the Benelux Member States in stating: 'On the other hand i tis open to you to encourage the under- particular and their steel industries have takings to come to an agreement with regard to observance of the ruleson traditional patterns of trade which we worked out never accepted that the principle of in the context of Article 15B of the quota system. Our system conformity with traditional patterns of trade iscertainly at the limitof legality. Artide 15B is certainly not a hard and fast feature of the system of quotas. The Court left should be applied, as advocated in that open the question whether Artide 15B is compatible with Article 58 of the ECSC Treaty.' memorandum, to products intended for (See Annex 29 to the defences, p. 1, point 2). the production of small welded tubes. See a l s oa memorandum (of 3 January 1985) from the Commission's Legal Department to the Director General They therefore refused to provide the responsible in which it was stated that the application of Article10(1) as envisaged in the 12-point memorandum Commission with the information would quickly give rise to applications to the Court (Annex 14 to the defences). 21 — See Annex 12 to the defences. 24 — See p. 23 of the rejoinders.

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11. After the judgment in Joined Cases 167 and 212/85 Assider in which the Court declared void the implied decision refusing to apply Article 15B(4) of Decision N o 234/84 for the year 1984 (see section 6 above) Assider and its members Finsider- In response to the Commission's clear Italsider and Falck, by letters of 29 May refusal to redress the harm they had and 30 July 1987, informed the Commission suffered, Finsider-Italsider (in Case of the amount of the injury they had C-363/88) and Falck (in Case C-364/88) suffered as a result of the failure to apply instituted these proceedings for damages Article 15B for the years 1984, 1985 and before the Court under the second 1986. They, asked the Commission, in paragraph of Article 34 and the first pursuance of the first paragraph of Article paragraph of Article 40 of the ECSC 34 of the ECSC Treaty, to take steps to Treaty. ensure, by the payment of damages, equitable redress for the harm resulting directly from the failure to apply Article 15B. By letters of 8 July, 7 November, 30 October and 10 November 1987, the Iulian Government put forward through adminis- trative channels a similar claim for damages. It should be stated that at that time the Commission was no longer in a position to 12. In the following sections I shall consider use the power conferred on it by Article first the legal basis of the proceedings for 15B(5) to reduce quotas, since that damages (below, sections 13 to 21) and paragraph had already been deleted as from secondly the question whether, in these 1 January 1986 and, moreover, the cases, the conditions for liability on the part remainder of the article had also ceased to of the Community are met (below, sections apply as from 1 January 1987. 22 to 35).

and the first paragraph of Article 40 provides:

14. In the legal basis relied on by the applicants as far as the second paragraph of 'Without prejudice to the first paragraph of Anicie 34 of the ECSC Treaty is concerned Article 34, the Court shall have jurisdiction it is possible to note a further lack of to order pecuniary reparation from the precision arising from the wording of that Community, on application by the injured article. I shall mention it briefly as it gives party, to make good any injury caused in me the opportunity to explain the provisions carrying out this Treaty by a wrongful act of Article 34. or omission on the pan of the Community in the performance of its functions'.

In its defences the Commission observes, In the second paragraph of Article 34, and not entirely incorrectly, that in their there only, reference is made to the possi- applications the applicants have not given a bility of instituting proceedings for damages sufficiently precise indication of the legal before the Court. It may be seen, however, basis for their actions for damages, but it from the wording of the first paragraph of does not raise an objection of inadmissibility Article 34 that those proceedings for on that account. It may however be seen damages must be preceded by a procedure clearly from the applicants' replies that their requiring the Commission to take the actions are based on the second paragraph necessary steps to comply with a prior

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(Article 34 of the ECSC Treaty) This somewhat complicated procedure is clearly inspired by the concern to maintain a balance between the powers of the Community institution whose act has been 15. According to the applicants, the declared void and the rights of the under- grounds on which they rely in claiming takings injured. It may be seen from the redress, set out above at the end of section description of this procedure that there is 13, are based in law on Article 34 or the between a judgment by the Court declaring first paragraph of Article 40 of the ECSC a measure void and proceedings for Treaty. damages before the Court an independent right of action with a view to a finding by the Court of a fault of such a nature as to render the Community liable and, where The Commission rightly claims, by appropriate, of the existence of direct and reference to the drafting, which is clear on special harm suffered by the undertakings. " this point, of both paragraphs of Article 34, As will appear subsequently, the that the actions brought by the applicants under Article 34 arc admissible only in so 25 — For further deuils c« this subject tee the Opinion of far as the harm results from a decision or Judge BiancarcUi of 30 January 1991 in Case T-120/B9 recommendation, or from an implied SuSjwcrkc Prine-Salzgmer AC v Commission [1991] ECR 11-279, at section I I A3. decision of refusal, which has been declared

void in pursuance of Article 33 or, as the reasonable time available to the Commission case may be, Article 35 of the ECSC Treaty. has not yet started to run, the claim relating That point was moreover confirmed by the to the finding and acknowledgment of Court in the judgment in Joined Cases injury with regard to this decision of refusal 81/85 and 119/85 Usinor. » It must be (which has been declared void) is further observed that, as may be seen from premature. 2S In my view that does not the opening words of the first paragraph of mean, as I have already said in the previous Article 40 of the ECSC Treaty, redress for section, that the Court is not already seised the harm resulting from a decision or of the actions brought by the applicants so recommendation (or from an implied as to give judgment in this case on the decision of refusal) declared void by the question whether the decision of refusal Court may be claimed only under Article which has been declared void involves on 34. the Commission's part a fault rendering the Community liable and one which has caused the applicants direct and special harm (see, on this subject, sections 26, 31 and 32 to That is undoubtedly the position with 34). regard to the Commission's implied refusal to apply Article 15B(4) of Decision No 234/84 with regard to the imbalance in the traditional patterns of trade established 2.3 Legal basis for the action for damages for 1984. That refusal was declared void by relating to Community measures with the the Court in the Assider judgment previously Mme content as a measure declared void mentioned. 17 That means, according to Article 34, that an action for damages may be brought only where the Court has found that the implied decision of refusal which 16. The question arises whether the same has been declared void involves a fault of view must be taken with regard to the such a nature as to render the Community applicants' actions in so far as they claim liable and that the harm suffered is direct redress for the harm resulting from the and special and after the Court has so found Commission "s implied refusal to apply, for and provided that, after that finding, a 1985 and 1986, Article 15B(4) of Decision reasonable time has elapsed during which No 234/84 and of Decision N o 3485/85 the Commission has had the opportunity to respectively although the Court did not take the necessary steps to make good the declare that refusal void. harm suffered as a result of the refusal which has been declared void.

Instance took the view that, for the apply that article for 1985 and 1986, which purposes of the application of Article 34 of were not expressly declared void, it is the ECSC Treaty, express or implied appropriate for the Court to determine measures having substantially the same therefore in this case whether those refusals content as a measure declared void and involved a fault on the part of the adopted between the date on which the Commission and whether they caused the decision declared void came into force (with applicants direct and special harm within the retroactive effect) and the judgment meaning of the first paragraph of Article 34 declaring h void should be assimilated to the of the ECSC Treaty. measure declared void. In fan the Court of First Instance took the view that the solution adopted by the Court in the Asiens judgment for the purposes of the application I must, however, point out that the of Artide 176 of the EEC Treaty should be Commission, which has in the meantime valid also for the application of Article 34 of entered an appeal against the judgment of the ECSC Treaty in view of the fact that the the Court of First Instance in the Peine- two articles are drafted in similar terms. Salzgitter case, is contesting the analogy drawn by that Court between Article 176 of the EEC Treaty, which was applied in the Asteris judgment, and Article 34 of the ECSC Treaty which is at issue in the Peine-

Commission. M Article 15B(4), quoted in jurisdiction to consider, in this case, section 2, requires the Commission, if it whether the Commission has committed a justifiably takes the view that there is an fault in connection with the failure to apply imbalance in traditional patterns of trade, to Article 15B(4) for 1985 and 1986. consult the Member States concerned and to request the undertakings in question formally to give a commitment in writing that they will correct the imbalance during the following quarter. There is no indication 2.4 Legal basis for the action for damages that in this respect the Commission adopted, relating to Community measures not declared for 1985 and 1986, an attitude different void (and not comparable to measures from that adopted in 1984, a year for which declared void) (first paragraph of Article 40 of the Court, in the Assider judgment had on 9 the ECSC Treaty) April 1987 declared void the Commission' implied decision refusing to apply Article

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For the purpose of reparation for this injury the applicants rely 19. In so far as the actions for damages on the first paragraph of Article 40 of the brought by the applicants are based on the ECSC Treaty in view of the fatt that this first paragraph of Article 40 of the ECSC claim involves Commission decisions which Treaty, the question arises whether that the Court has not declared void and which article actually lends itself to such an action in addition are not comparable to a decision in relation to Commission decisions which which has been declared void. have not been declared void (and which are not comparable to decisions declared void). In that respect the Commission contends that Anicie 34 of the ECSC Treaty deals exhaustively and restrictively with the Community's extra-contractual liability under the ECSC Treaty where the cause of the harm results from a decision, a recom- With regard to the refusal to apply Arude mendation or an implied decision of refusal 15B(5), I should nevertheless like to state by the Commission and that an action for that this refusal is closely linked to the damages under the first paragraph of Article refusal to apply Article 15B(4), discussed 40 is excluded in such cases.

Nevertheless application of that provision (see section 2 it seems to me that none of the judgments for the text). Notwithstanding that close referred to by the parties (Vloeberghs," connection, it could not however be main- tained that for the application of Article 34 32 — See paragraph 15 of the judgment, previously cited in footnote U. a refusal to apply Article 15B(5) must be 33 — Joined Cases 9/60 and 12/60 Vhxbttghs v High Authority assimilated to a refusal (declared void or [1961] ECR 197, at p. 213.

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entirety. Contrary to the Commission, I think that an action for damages under the first paragraph of Article 40 may be brought to make good an injury which has been caused by a decision, recommendation or an implied decision of refusal not declared void by the Court. 38 Contrary to the Commission's contention, the saving clause 20. The restrictive interpretation of the contained in the first paragraph of Article possibility of proceedings envisaged in the 40 regarding the provisions of the first first paragraph of Article 40 would paragraph of Article 34 relates solely to the moreover conflict with the fundamental requirement, consistently expressed in the 34 — Joined Cases 19/60 and 21/60 and 2/61 and 3/61 Société Court's case-law in various fields, of Fives Lille Cail v High Authority [1961] ECR 281, at

was based on other grounds. 35 — Joined Cases 14/60, 16/60, 17/60, 20/60, 24/60, 26/60 and implied decisions. In fact, the time for 27/60 and 1/61 Meroni & Co. v High Authority [1961] making an application to have a measure ECR 161, at p. 166. In these cases the Commission does not directly rely on the Meroni judgment. However, it declared void under Article 33 or, as the quotes a passage from Mr Advocate General Lagrange's case may be, under Article 35 of the ECSC Opinion in Case 36/62 Aciéries du Temple v High Authority [1963] ECR 289 referring to the relevant points Treaty is very short (one month), whereas in the Meroni judgment. In my view it is open to doubt the harm arising from an act or omission whether it is possible to see in these points, considered in their context, a confirmation of the Commission's point of will often not become apparent until after

For a this point. In fact I think that the reference in Article 40 to previous judgment, see Case 6/60 Humblet v Belgium the first paragraph of Article 34 should not be so [1960] ECR 559, in which the Court declared that: 'In understood. In my view that reference merely draws case of doubt, a provision establishing guarantees for the attention to the fact that, in the event of a decision's being protection of rights cannot be interpreted in a restrictive declared void, the special rules of Article 34 apply. manner to the detriment of the individual concerned.'

The same tendency, designed to ensure adequate protection of the courts for those subject to the jurisdiction, may be seen in 21. That does not mean that there are no the Court's case-law on the admissibility of limits to the admissibility of an action for an action for damages based on the second damages resulting from a measure which paragraph of Article 215 of the EEC Treaty, has not been declared void. It follows from in which the Court indicates in particular the case-law of the Court relating to the that an action for damages is not in second paragraph of Article 215 of the EEC principle conditional upon a prior Treaty, and more particularly from the declaration that the act causing the damage Krohn judgment, previously cited, that an is void. In its judgment in Case 175/84 action for damages may not be diverted Krohn v Commission [1986] ECR 753 from its purpose and in particular cannot be relating to an illegal decision attributable to used as a substitute for an action to have a the Commission, against which Krohn had measure declared void. That would be the not brought an action for a declaration that position for example in a case in which: it was void, the Court summarized its previous case-law as follows: 'an application for compensation is brought for the payment of an amount precisely equal to the duty which the applicant was 'As the Court has pointed out above, the required to pay under an individual action provided for by Article 178 and the decision, so that the application seeks in fact second paragraph of Article 215 of the the withdrawal of that individual decision. Treaty was introduced as an autonomous At all events, such considerations are form of action with a particular purpose to foreign to this case'.43 fulfil. It differs from an action for annulment in particular in that its purpose is not to set aside a specific measure but to repair the damage caused by an Such considerations are equally foreign to institution'.41 the case now before the Court.

claims reparation for damage which the quotas for products intended for the applicant who has suffered it may avoid if production of small welded tubes during the he brings a further action to have the period from 1984 to 1986, based on Article measure declared void or even in the case of 10(1) of Decisions Nos 234/84 and injury which he might have limited or 3485/85 represent a wrongful act or avoided if he had at the proper time omission on the part of the Commission brought an action to have it declared void within the meaning of the first paragraph of and cannot offer a valid excuse for having Article 40. failed to do so. In fact such a failure to act is of such a nature as to break the causal link between the fault of the Community 3.1 The concept of fault in thefirstparagraph authority and the injury (or a portion of the of Article 34 and of wrongful act or omission injury). in the first paragraph of Article 40 of the ECSC Treaty

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declaration that a measure is void but in my In any case the applicants have not speci- view does not extend to diverging, as fically demonstrated that there have been regards the concept of fault, from the inexcusable mistakes'.*6 general rules for liability in Article 40.

Moreover, in the Fives Lille Coil judgment, 24. The case-law of the Court is rather also previously cited, the Court took the sparse also as regards the concept of view that: wrongful act or omission in Article 40, though it does contain a few useful pointers. Thus in the Meroni judgment, previously cited, the Court stated: 'the High Authority... gravely neglected the duties of supervision required by a normal standard of care, and it is this short- coming which gives rise to its liability'.47 'Although the delay of 411 days in notifying the rate applicable to December 1958 can be regarded as excessive, it must nevertheless be admitted that this single exception is not 25. This is not to proper place to make a itself suffiaently smous to justify the comparison, as regards the concept of fault, inference that there has been a wrongful act between the rules for liability in the second or omission';45 paragraph of Article 215 of the EEC Treaty and those in the first paragraph of Article 34 and the first paragraph of Article 40 of the ECSC Treaty. I shall simply observe that and it may be seen from the much more copious case-law relating to the second paragraph of Article 215 that where a Community authority is vested with a wide discretion for the purpose of carrying out a given 'Finally, as a general observation, it must be policy—which will almost always, though said that, to the extent to which previous by no means exclusively, be the case in the errors or defects . . . may have called for field of legislative measures4e — the certain corrections, those errors and defects Community cannot be rendered liable as a do not amount ipso Jacto to a wrongful act result of an illegal act 'unless the institution or omission. concerned has manifestly and gravely disre- garded the limits on the exercise of its powers', 4 ' that is to say, when it has acted

in a manner inappropriate to any authority Court relied in the EISA order made on 28 acting in a reasonable manner. March 1984 in refusing the interim measure requested. In the Assider judgment, delivered on 9 April 1987, however, the Court stated that that interpretation was incorrect, at least as far as Article 15B(4) of Decision 234/84 was concerned. Retrospec- In relation to the exercise of discretionary tively considered, therefore, the implied powers, Article 215 of the EEC Treaty and decisions of refusal relating to 1984, 1985 Articles 34 and 40 of the ECSC Treaty, and 1986 must certainly be regarded as understood in this way, are based on an illegal. analogous concept of illegality, that is, an illegality which, regard being had to the discretion available to the Community institution concerned for the exercise of a given power and to the complex economic and legal context in which such powers Contrary to the applicants, however, I do must frequently be exercised, is of such a not think that this retrospectively established nature that it must be regarded as a illegality can be regarded as a fault of such manifest and serious disregard of the limits a nature as to render the Community liable. imposed on the exercise of the power of In fact, because of the doubts which arose discretion available to the institution. at an early suge as to the compatibility of Article 15B with the ECSC Treaty, the application of that article raised a difficult legal problem for the Commission, which it thought it might resolve by interpreting Article 15B restricùvely. The Court's order 3.2 Do the implied refusals to apply Article in the EISA case, which was made on 28 15B(4) of Decision No 234/84 or of Decision March 1984 and therefore precedes the first No 3485/8Í constitute a fault within the decision of refusal adopted with regard to meaning of the first paragraph of Article 34 of 1984, confirmed the Commission's view that the ECSC Treaty? the restrictive interpretation of Article 15B which it advocated was not unacceptable. The subsequent decisions of refusal, relating to 1985 and 1986, follow the same line. However, that did not prevent the Commission, as I have previously mentioned lb. The implied refusal to apply Article (footnote 50) from trying — though in 15B(4) of Decisions Nos 234/84 and vain — to correa the imbalances recorded 3485/85 (formally50) was based on the by way of consultation with the under- restrictive interpretation already referred to takings concerned, on whose collaboration (in section 3) which, during the period from it was in any case dependent. 1984 to 1986, the Commission thought it should give to Article 15B and on which the

3.4 Does the decision to grant additional quotas under the second subparagraph of Article 10(1) of Decisions Nos 234/84 and 17. If the Court agrees with the assessment 3485/8Í constitute a wrongful act or omission I have made, it will be appropriate, in my within the meaning of the first paragraph of view, to accept also that the implied refusal Article 40 of the ECSC Treaty? to apply Article 15B(5) of Decision No 234/84 — Decision No 3485/85 no longer contained any similar provision (see section 7 above) — cannot be regarded in these cases as a wrongful act or omission within the meaning, this time, of the first paragraph of Article 40. 28. As I have already mentioned (in section 8), Article 10(1) provides for the possibility for steel undertakings to increase their production and delivery quotas by a certain amount for hotrolled products (coming Under Article 15B(5) the Commission under category la) intended for the simply had the power to reduce the quotas production of small welded tubes (first of the steel undertakings responsible for the subparagraph). This possibility amounts to a imbalance in the traditional patterns of right for the steel undertakings, it being trade if they refused to commit themselves, understood that they must provide proof at the Commission's (formal) request, to that the semi-finished products have correa the imbalance or if they had given actually been used for the production of the commitment and then not honoured it. small welded tubes (end of the first If we admit, as I think we must, that the subparagraph). In addition the Commission fact that the Commission did not address a may grant additional quotas 'on a duh/ formal request to the undertakings was not, at the material time (that is, after the EISA 51 — See abo in this respect the Opinion of Mr Advocate order made on 28 March 1984 and before General Mische, delivered on 10 February 1987, in which reference is also made, at p. 1721, to the dose link the Assider judgment, delivered on 9 April between paragraphs (A) and (5) of Article 1SB.

substantiated request' by an undertaking, in the sector of the semi-finished products and may make it conditional on the in question, the Commission found that that production of a report drawn up by a firm was not possible because certain Member of auditors certifying the actual receipt of Sutes and undertakings failed to cooperate, the semi-finished products by the tube- it was undoubtedly in a position to refrain manufacturing customer and their actual use from using the power available to it under for the production of small welded tubes the second subparagraph of Article 10(1). (second subparagraph). To use it would have meant that under- takings which had customers for those products and which had asked for additional quotas would have been unable to supply such customers except by making a parallel correction as regards other During the period from 1984 to 1986, the products (which they were refusing to do). Commission thus granted additional quotas to steel undertakings in competition with the applicants.

As regards validity of the system provided for by the latter point, it must be stated at least Article 15B, the Commission proceeded to that the Commission's view, as set out in the allocate additional quotas without ensuring 12-point memorandum, in favour of the that the traditional patterns were respected. application of that principle, finds little to The question now arises whether, in so support it in Decision N o 234/84 or acting, it committed a wrongful act or Decision No 3485/85; in this respect I may omission within the meaning of the first observe that, 'apart from the exceptional paragraph of Article 40 of the ECSC instance', an incorrect interpretation of a Treaty. legal provision does not, according to the Court, in itself constitute a wrongful act. 52 Moreover it is clear that the intention in those decisions was to bring about a freer system which would have diverged less from the normal trade and market conditions for those products, that the terms of the second

I-404

FINSIDER A N D FALCK v COMMISSION

purpose of applying the power thereby 'special', that is, that it must specifically conferred contain no reference to the affect an identified or identifiable group principle of conformity with traditional of persons.53 The harm must also be real patterns of trade and that in Article 15A(2) and certain (not merely hypothetical). M of the decisions in question, in which the Moreover, as required by the first paragraph benefit of the quota adjustments referred to of Article 34 and, in my opinion, the first in other articles is refused to undertakings paragraph of Article 40 also, the harm must which have not complied with the quota be 'directly' caused by the alleged fault of system, there is no reference to the second the Commission, which means immediately, subparagraph of Article 10(1). without any other intervening factor. It is for the applicants to adduce proof of such harm and of such a causal link.55

30. If, contrary to what I have suggested ' . . . the Commission acknowledged that the above, the Court were to take the view that statistics produced by the Iulian authorities the Commission did commit a manifest and grave fault either by refusing to apply 53 — According to the judgment of the Court of First Instance in the Peine-Sãlzgitter judgment, the adjective special Article 15B(4) or (5) or both, or by relates to the importance of trte harm as well as to the fan granting, in pursuance of the second that there is only a restricted and definable number of those suffering injury: see paragraph 131 of that judgment, subparagraph of Article 10(1), additional previously cited in footnote 28. quotas to competing undertakings, the 54 — See, for example, the judgments in Case 26/74 Roquette v Commission [1976] ECR 677 at paragraph 21 et seq., and question then arises whether such faults in Joined Cases 197/80 to 200/80, 243/80, 245/80 and caused the applicants harm causally related 247/80 ütdvigshtfeoer WtlzmOhk v Carnài an/ Commission [1981] ECR 32)1 at paragraph 50. to the said faults. I shall therefore now 55 — See, for example, the judgments in Joined Cases 9/60 and examine this question in the alternative. I 12/60 Vheberghs. previously cited in footnote 33, at pp. 216 and 217; in Case 36/62, Aciéries du Tempk v take as my starting point the fact that, High Authority [1963] ECR 289 at p. 296; in Joined under the first paragraph of Article 34 of Cases 64/76 and 113/76, 167/78 and 239/78 and 27/79, 28/79 and 45/79 Dumortier Frères v Coanca [1979] ECR the ECSC Treaty — and this point seems to 3091 at paragraph 21 ; and the more recent Wílzmünle me to apply equally to the first paragraph of case, previously cited m footnote 54, at paragraph 51 et seq.. Article 40 — the harm suffered must be 56 — Previously cited in footnote II.

'After considering the effects on the market, The Commission denies the existence of they (that is, the Commission's officers) are such a causal link. In the first place it sutes in a position to sute that the damage that, even if, in pursuance of Article 15B(4), suffered by the undertakings Finsider and it had formally requested the steel under- Falck is of the order of roughly 200 000 ukings concerned to correa the imbalance, tonnes per annum and is limited to category that would not necessarily have restored the la, products intended for the production of traditional patterns in view of the fact that small rubes'.57 the steel undertakings were not obliged (as may be seen from Article 15B(5), the next paragraph,) to accede to the Commission's request. If they refused to do so, or if they did not honour any commitment they had It may also be observed in this respect that made, the Commission certainly had the Knsider-Iulsider and Falck were the only power (until 1 January 1986) under Article Iulian producers of steel products in 15B(5) to require a reduction of deliveries but, the Commission sutes, it was not 57 — See Annex 30 to die defenecí, p. 1. It may be observed certain that it would actually have used that that the applicants daim that the damage is ¿teater, but power in view of the wide discretion that the important feature of this natrmem by the Cűmnmaion is the fact that the existence of damate vas available to it. 58 accepted, wnüst the Commission states, wrongly m my view, that that report does not amount to recognition of the existence of damage but simply reproduces the figures 58 — See the Aakkr judgment, previously ched in footnote 11, produced by the applicants. at paragraph 15.

One must agree with the Commission that, quotas of the undertakings responsible for if the applicants wish to claim that they the imbalance in the traditional patterns, or have discharged the burden of proof, they even if it had refused to grant to those must show that the harm they have undertakings additional quotas for products suffered — which, according to them, intended for the manufacture of small consisted in their inability, as a result of the welded tubes, Rnsider-Italsider's and Commission's wrongful decisions, to deliver Falck's share of the market would still have the quantities which competing Community been reduced. Apan from the fact that a undertakings sold over and above their reduction of delivery quotas is no guarantee traditional delivery quantities — is the direct that the undertakings responsible for the or immediate consequence of the imbalance in the traditional patterns would Commission's fault.

The possibility of an increase in by not making a formal request to the imports into Italy from other third countries undertakings and not imposing on them, was even greater.62 In fact a considerable when necessary, a reduction of quotas part of the quotas for imports into Italy but, on the contrary, by granting them allocated to the countries with which the additional quotas), the Commission Community had concluded agreements excluded from the start all possibility or remained unused. In view of the fan that, chance of a compulsory restoration of tradi- tional patterns to the advantage of the

traditional patterns. 60 — Sec the rejoinder in the Fmader-italsidcr att, p. 61 et seq., and the rejoinder in the Hick case, p. 60 et seq. . 33. However, the Commission contends 61 — See the rejoinders, p. 47. 62 — See the rejoinder in the fimacfer-fta/swriT case, p. 63, and that even if it had reduced the delivery the rejoinder in the Hkk case, pp. 61 and 62.

apart from a few exceptions, the applicants 35. The fact that the applicants would not, had always refused during the period from in all probability, have succeeded in 1984 to 1986 to adapt their prices to the profiting from the said reduction or the said lower prices of their competitors outside the non-allocation of quotas may also be seen, Community, it was moreover obvious that according to the Commission, from the fact in the event of a reduction of imports from that the applicants, above all Rnsider- other Member Sutes, imposed by the Italsider, were to a large extent themselves Commission, Italian purchasers of steel responsible for their loss of market share.63 products would obtain supplies from In this respect the Commission refers to the producers outside the Community rather damning report 'Review of Rnsider*s than from the applicants. 1982-1986 Operational Performance in reaching 1984-1986 Objectives', drawn up by McKinsey & Company at the request of the Italian Government and the Commission, and to its decision of 23 December 1988 'concerning aid that the Iulian Government proposes to grant to the public steel sector, in which it sutes in particular: 34. An assessment of the existence of a direct causal Link between the (assumed) faults of the Commission and the harm caused to the applicants must be made in concreto, that is, with regard to the actual circumstances which would in all probability have existed if there had been no fault, as compared with the situation assuming there had been a fault. So it is not only a question 'In spite of these major structural changes of whether, in the absence of fault on the the viability target was not attained during Commission's part, there would have been a the following years by Finsider, which, by reduction in the deliveries of competing contrast to its main competitors in other undertakings, or at least whether there Member Sutes, continued to accumulate would have been a possibility of such a losses and had difficulties in maintaining its reduction, (see section 32 above), but in market position. addition whether the applicants could have taken advantage of such a reduction, or the possibility thereof, to increase their own deliveries. If the applicants, on whom the burden of proof rests, cannot manage to make it seem probable that they — and not third country undertakings, as the Commission asserts — would have been able to take advantage of the reduction (or An expert investigation (McKinsey report) chance of reduction) in quantities or of the into the reasons underlying this failure by absence of allocation of additional quotas to Finsider to attain viability established that it competing Community undertakings, they had been mainly caused by an industrial and have not sufficiendy demonstrated that commercial structure still insufficiently there is, in concreto, a direct causal link competitive, by delays in the implemenution between the harm they have suffered and the Commission's assumed fault. 63 — See dit »joinder in the Finsider-Ialsider cue, pp. 71 and 72.

37. Having regard to the foregoing considerations, I propose that the Court declare the actions for damages brought by Finsider-Italsider and Falck under Articles 34 and 40 of the ECSC Treaty to be admissible but unfounded. In view of the discretion enjoyed by the Commission and regard being had to the complex economic and legal context in which the Commission had to exercise the powers conferred on it, there are not grounds for stating that it was guilty of manifest and grave disregard of the limits imposed on the exercise of its powers. Accordingly, in the circumstances of this case, the Commission cannot be charged with a fault or a wrongful act or omission within the meaning of the first paragraph of Article 34 or of the first paragraph of Article 40, as the case may be. Alternatively, the applicants have not succeeded in demonstrating sufficiently the existence of a direct causal link between the alleged faults and the harm suffered.

64 — Sec lhe second and duid paragraphs of Pan I of the recitals (OJ 1989 L 86, p. 76).

I-409