T-57/91

NALOO v COMMISSION

J U D G M E N T O F T H E C O U R T O F FIRST INSTANCE (Third Chamber, Extended Composition) 24 September 1996 *

In Case T-57/91,

National Association of Licensed Opencast Operators, a company incorporated under English law and having its registered office in Newcastle upon Tyne (United Kingdom), represented by Nicholas Green, Barrister, of the Bar of England and Wales, and David James Malcolm Wilson, Solicitor, with an address for service in Luxembourg at the Chambers of Victor Gillen, 13 Rue Aldringen,

applicant,

v

JUDGMENT OF 24. 9. 1996 — CASE T-57/91

Lloyd Jones, Barrister, of the Bar of England and Wales, together with Peter J. Sigler and Rebekah M. Gershuny, Solicitors, with an address for service at the Chambers of M. Loesch, 8 Rue Zithe,

intervener,

A P P L I C A T I O N for the annulment in part of Commission Decision SG(91)D/9467 of 23 May 1991 rejecting the applicant's complaint concerning the market in coal for electricity generation,

T H E C O U R T O F FIRST INSTANCE OF THE EUROPEAN COMMUNITIES (Third Chamber, Extended Composition),

composed of: C. P. Briet, President, K. Lenaerts, B. Vesterdorf, P. Lindh and A. Potocki, Judges,

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'British Coal') under the Coal Industry Act of 1987. Under the C I N A , British Coal owns practically all coal reserves in the United Kingdom and enjoys the exclusive right to work and extract coal.

2 The private sector of the British coal industry consists of some 200 small and medium-sized companies, approximately 160 of which operate underground mines and 34 of which engage in opencast coal mining.

3 The applicant, the National Association of Licensed Opencast Operators (herein- after ' N A L O O ' ) is a trade association covering at present 16 private mining con- cerns established in the United Kingdom and operating mines, most of which are opencast.

4 British Coal ensures the working of its opencast sites primarily by awarding their operation to licensees. In 1989/1990, 17.5 million tonnes of coal were thus extracted from opencast mines, on behalf of British Coal, by private undertakings, including some of the members of the applicant association.

7 British Coal has, since December 1990, withdrawn the option of delivered licences other than for operators with whom it had been negotiating this arrangement prior to that date.

8 The deposits operated by British Coal amount to approximately 2 million tonnes. The 1990 Coal Industry Act increased from 25 000 tonnes to 250 000 tonnes the maximum reserves which could be granted to licensed opencast operators.

9 Of the total production of 95.2 million tonnes extracted in the United Kingdom in 1989/1990, British Coal produced 93 million, or more than 97%.

io In 1989/1990, licensed opencast operations extracted 1068 000 tonnes of coal under royalty licences and 773 000 tonnes under delivered licences, making a total of 1 841 000 tonnes. The total volume produced from licensed opencast mines increased from 1 210 000 tonnes in 1984/1985 to 2 095 000 tonnes in 1990/1991.

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is N A L O O thereupon requested the Office of Fair Trading to investigate under the 1980 Competition Act and subsequently brought judicial review proceedings when it refused to do so.

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i6 In a letter of 13 May 1988 which it sent to British Coal, N A L O O stated that:

'If the Corporation [British Coal] will reduce all opencast royalties by £2.50 per tonne as previously agreed, N A L O O will

1. withdraw the current judicial review proceedings;

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tonnes for the first two years and 65 million tonnes for the third year. The basis price was fixed at 170p/Gj gross and 177.9p/Gj net, subject to escalation (and de-escalation) formulas to take account of movements in the retail price index and the exchange rate between the pound sterling and the US dollar.

19 When the agreement entered into force on 1 April 1990, National Power and Pow- erGen offered to licensed producers prices ranging from 122p/Gj to 139p/Gj at the mine.

20 From 1 April 1990 until 13 December 1990, the royalty rate of £11 per tonne was reduced to £7 per tonne (£6 per tonne plus £1 per tonne for administrative costs).

2i N A L O O and the Federation of Small Mines of Great Britain, which represents nine regional associations of mining companies, lodged a complaint with the Com- mission on 29 March 1990 in which they alleged that the agreement and British Coal's extraction licence scheme were unlawful under Community competition rules.

22 In the first place, the complainant associations claimed that the agreement was contrary to Article 63 of the ECSC Treaty in so far as the prices which the electric- ity generating companies were offering to British Coal, being higher than those offered to the licensed operators, constituted systematic discrimination by pur- chasers against the licensed producers.

26 The complainant associations pointed out that British Coal's system of extraction licences, including in particular the royalty, was itself subject to the competition rules and constituted a breach thereof. They referred to a description of the licens- ing system, attached as Annex D to their complaint, detailing the difficulties encountered by the licensed sector.

27 They alleged that the royalty imposed by British Coal on opencast coal mined under licence also breached the combined provisions of Article 4 and Article 60 of the ECSC Treaty because it was excessive, made the coal extracted under licence uncompetitive and thus constituted an unfair competitive practice involving dis- crimination between producers.

28 In Annex G to their complaint of 29 March 1990, they concluded that the royalty rate of £11 was too high by £8.50 per tonne (34p/Gj) and that the price of 120p/Gj offered by the electricity generating companies was too low by £8.50 per tonne

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(34p/Gj). The complainants added that if the electricity generating companies brought their prices for licensed coal into line with those offered to British Coal, that is to say, 170p/Gj ex-mine, a royalty of £6 per tonne might be sustainable. Finally, they maintained that a selling price of less than 170p/Gj ex-mine would require a lower royalty.

JUDGMENT OF 24. 9. 1996 — CASE T-57/91

sector should be fixed at 153p/Gj ex-mine, plus 15p for transport costs, making a total of 168p/Gj for coal delivered within a maximum radius of 30 miles. Other- wise, the price should be fixed at 153p/Gj ex-mine, transport costs being agreed on a case-by-case basis.

32 In the complainants' opinion, the price of 153p/Gj was 10% below the average of prices granted to British Coal, which amounted to 170p/Gj. N A L O O took the view that this price was entirely reasonable on an interim basis and would largely cover the administrative costs arising from the handling and checking of the smaller quantities sold by licensed operators.

33 In their supplemental complaint of 27 June 1990, the complainants reiterated that the electricity generating companies had manifestly infringed Article 63 of the ECSC Treaty individually and collectively in view of the discrepancy between the prices for coal which they paid to British Coal and to the licensed producers, and that the agreement was contrary to Article 65 of the ECSC Treaty or, if that provi- sion was not applicable, to Article 85 of the EEC Treaty.

34 By decision of 28 June 1990, the Commission, without prejudice to the position that it might take on the substance, rejected the request for interim measures on the ground, inter alia, that, in the light of the amount of coal purchased from licensed operators, their position had not deteriorated vis-à-vis the situation obtaining prior to the agreement. It also took the view that the absolute prices paid to the private mines had not changed following the entry into force of those con- tracts, whereas the pit-head price to British Coal had been reduced from 180p/Gj in 1989/90 to 172p/Gj in 1990/91, resulting in an improvement in the relative pos- ition of the private mines. Finally, the royalties paid by the private mines had not been changed by the entry into operation of the agreement.

38 By a document of 5 September 1990, the complainants submitted to the Commis- sion, in response to the latter's request, a summary of their essential arguments. They complained that the electricity generating companies had systematically prac- tised discrimination as purchasers within the meaning of Article 63 of the ECSC Treaty and had infringed both Articles 85 and 86 of the EEC Treaty.

39 They maintained that British Coal, as a party to the agreement, had sought, along with the electricity generating companies, to make it more difficult for the private sector to supply coal to those generating companies, thereby creating a barrier t o entry or expansion for the private sector that British Coal did not face.

40 The complainants took the view that British Coal was in breach of Article 63 of the ECSC Treaty in so far as the rules which it had laid down for the purchase of coal from the private sector were specifically designed to increase the burden faced by that sector in supplying British Coal or, indeed, the electricity generating companies.

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4i The complainants also criticized British Coal for having adopted a policy of mak- ing it more difficult for the private sector to obtain licences to mine coal, as explained in Annex D to the complaint of 29 March 1990. In that regard, they stated that British Coal had repeatedly refused requests for a proper appeal pro- cedure for refusals or delays in granting licences. In their view, British Coal has thus used its power to grant licences in a manner likely to increase the barriers to entry to the market, preserving its dominant position.

— retroactive application of these conditions to 1 April 1990, the date on which the agreement entered into force.

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46 O n 30 October 1990, the Commission informed the complainants that, subject to their comments, the conditions proposed seemed to it to be reasonable and unlikely to give it cause to seek more extensive measures on the part of the authorities and public undertakings in the United Kingdom.

47 The Commission stressed that the royalty had to be considered in the light of the price to be received for coal mined under licence. If, as appeared to be the case, the royalty on opencast coal was not so large as to prevent efficient companies from making a profit at the prices available to them or to impose a significant competi- tive disadvantage on such companies, there should be no objection to a particular level of royalty. The Commission stated that, since the complaint had been lodged, the royalty had been reduced from £11 to £5.50 per tonne (£6 per tonne after the first 50 000 tonnes), whereas the supply price, in England and Wales, had been increased by almost 2 3 % or approximately £7 per tonne.

48 The complainants replied on 7 November 1990 that the offer was unacceptable. The difference between the price paid to British Coal and that paid to them remained too great, in all the circumstances then obtaining, and the royalties pro- posed were still too high. They stated in particular that it was clear that their mem- bers were incurring a substantial competitive disadvantage in having to pay high royalties to their competitor in a monopoly situation, while selling their coal at a price significantly lower than the price of that competitor.

53 By letter of 11 January 1991, the complainants pointed out that they had expressed their clear desire to have other important issues dealt with, including the legality or otherwise of the pricing policy adopted by British Coal towards independent pro- ducers, which had the effect of excluding private producers from access to a sub- stantial group of customers.

54 In particular, they contested the conclusion which the Commission reached at paragraph 45 of its letter of 21 December 1990 on the ground that the positions of British Coal and the licensed operators were not comparable.

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55 By letter of 15 February 1991 to the Commission, they also stated their view that the Commission had not hitherto addressed the question of whether Article 65 of the ECSC Treaty was applicable to the licensing agreements. They requested the Commission to notify them of its views on the matter.

56 By letter of 14 March 1991, the complainants also disputed the reasonableness of the royalty rate in the United Kingdom authorities' offer of 24 October 1990 and informed the Commission that they would be submitting to it accounts from Brit- ish Coal's annual reports demonstrating that that rate was excessive.

60 By decision of 23 May 1991, notified t o N A L O O on 29 May 1991 (hereinafter 'the contested decision'), the Commission rejected the complaints of 29 March 1990 and 27 June 1990. It explained that since British Coal, National Power and Pow- erGen had undertaken to modify their position, there was no longer any reason for the Commission to take proceedings against them in respect of conduct alleg- edly in restraint of competition under Articles 4, 60, 63, 65 and 66(7) of the ECSC Treaty and Articles 85 and 86 of the E E C Treaty.

The content of the decision

6i The contested decision dealt with the position in England and Wales in the light of the new situation arising from the entry into operation of the agreement on 1 April 1990. Examination of other issues, such as the situation prior to that date and Brit- ish Coal's licensing powers, was expressly excluded from the contested decision, which dealt only with the two essential questions in the case, namely the agree- ment and the royalty.

62 According to the contested decision, the agreement did not fall within the scope of Article 65 of the ECSC Treaty, since that provision applied only to agreements between at least two undertakings engaged in the production or distribution of coal and steel and National Power and PowerGen were not undertakings of that kind (paragraph 69).

63 In its examination of the allegation of discrimination in the light of Articles 63 and 66(7) of the ECSC Treaty and Article 86 of the EEC Treaty, the Commission took the view that the terms of the agreement which British Coal had negotiated with

64 The new differential of 20.9p/Gj, or 12%, between the price offered, with effect from 1 April 1990, by National Power and PowerGen, for coal from licensed mines (157p/Gj net at the mine) and for that provided by British Coal (177.9p/Gj) was not so large as to constitute discrimination justifying further intervention by the Commission. The complainants had themselves accepted that there was a case for a certain price differential between British Coal and the licensed producers. I n addition, the Commission considered that the new price differential reflected the inability of the members of the complainant associations to supply the same vol- ume as British Coal and the additional costs involved in dealing with a large num- ber of small transactions. The Commission also noted that the small mines, unlike British Coal, were not exposed to variations in the £/US $ exchange rate and that it was impossible to quantify precisely all the elements to be taken into account when considering the difference in price, while the complainants also had been unable to put forward any convincing arguments for a lower figure (paragraphs 57 to 61).

65 In the Commission's view, the contracts for the purchase of coal that the electricity generating companies had already concluded with the licensed mines guaranteed to the latter a production level in excess of their total production for 1989/90. If the commitments given for the future related to lower quantities, this was in particular because the licensed mines could not make long-term commitments. In any event, the sales guaranteed to the licensed mines for 1990/91 and 1991/92 were substan- tially above the level that would secure them, over those two years, equivalent treatment to that of British Coal in regard to guaranteed volumes of sales. The

'72. The level of royalty cannot be considered in isolation. The relationship between the price received for the coal and the costs, including the royalty, of producing that coal must be such as to enable efficient companies to make a profit and must not impose a significant competitive disadvantage on them.

73. In so far as the opencast mines are concerned, the royalty has been reduced from £11.00 a tonne before 1 April 1990 to £5.50 a tonne (£6.00 a tonne after the first 50 000 tonnes) while the price the small mines receive has increased by over 2 3 % .

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82. If the terms of the U K authorities' offers dated 24 October 1990 are incor- porated into contracts on the basis set out in this decision, the licensed mines will no longer be discriminated against in comparison with BCC. O n this

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basis, those parts of the complaints under Article 63 ECSC, Article 66(7) ECSC in so far as it concerns purchase conditions, Article 85 EEC and Article 86 E E C are no longer valid and in so far as they relate to the present situation are rejected.

83. With regard to the part of the complaints under Article 66(7) ECSC concern- ing the royalty levied by BCC, the new royalty levels set out in the UK authorities' letter dated 24 October 1990 and subsequently implemented by BCC with effect from 1 April 1990 are not unreasonably high. That part of the complaints concerning royalty payments under Article 66(7) ECSC is therefore no longer valid and in so far as it relates to the present situation is rejected.'

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7i O n 1 June 1991, Hopkins (a company) and others instituted proceedings before the High Court of Justice of England and Wales against National Power and Pow- erGen seeking compensation for the damage which they alleged that those two electricity generating companies had caused them from 1985 to 31 March 1990. In support of their action, they relied inter aim on breach of Articles 4 and 63 of the ECSC Treaty (hereinafter 'the Treaty') and argued that National Power and Pow- erGen, as the successors to the CEGB, had discriminated against them in relation to British Coal by purchasing coal from them under terms as to price and volume which were less favourable than those offered to British Coal.

72 By orders of 13 January 1994 and 12 May 1994, the High Court stayed the pro- ceedings and submitted to the Court of Justice for a preliminary ruling a number of questions asking, in particular, under which Treaty provisions the dispute fell to be determined.

73 By judgment of 2 May 1996 in Case C-18/94 Hopkins and Others v National Power and PowerGen [1996] ECR1-228, the Court held, inter alia, that the provisions of the ECSC Treaty, and in particular Articles 4(b) and 63(1) thereof, constituted the legal framework for dealing with discrimination by purchasers against producers as regards price, volume and other terms and conditions for the purchase of coal.

74 In the interim, N A L O O lodged a fresh complaint with the Commission on 15 June 1994 seeking examination under Articles 4(d), 65 and 66(7) of the Treaty of the royalties levied by British Coal on licensed producers from 1 January 1973, the date on which the United Kingdom acceded to the European Communities, to 31 March 1990, a period expressly excluded by the contested decision.

77 By separate document lodged on 30 September 1991, the Commission, pursuant to Article 114(1) of the Rules of Procedure, raised an objection of inadmissibility, on which decision was reserved for final judgment by order of the Court of 1 Octo- ber 1992.

78 By order of the Court of 30 January 1992, British Coal was given leave to inter- vene in support of the Commission.

79 By two orders of 31 March 1992 and 2 June 1992, the Court upheld in part N A L O O ' s requests that certain documents be treated confidentially in relation to British Coal.

so O n 11 February 1991, Banks & Co. Ltd, a member of N A L O O , brought an action against British Coal before the High Court of Justice of England and Wales seek- ing compensation for the damage which it claimed to have suffered by reason of

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Forms of order sought by the parties

85 In its application, N A L O O seeks:

(1) A declaration that its application is admissible under Article 33 of the Treaty;

(2) A declaration that the royalty of £5.50 or £6.00 per tonne is unlawful as being contrary to Articles 4(d), 60, 63, 65 and 66(7) of the Treaty;

(3) A declaration that the decision is void in so far as it finds that a royalty of £5.50 or £6.00 per tonne is lawful under Article 66(7) of the Treaty;

NALOO v COMMISSION

(9) An order requiring the Commission to reopen the investigation into the level of royalty imposed by British Coal upon licensed coal producers and into the price paid for coal pursuant to delivered licences;

(10) An order requiring the Commission to instruct British Coal to repay the roy- alties found to have been overcharged and sums found to be underpaid follow- ing the investigation referred to in the preceding paragraph;

( l l ) A n order requiring the Commission to find that the conduct of British Coal prior to 1 April 1990 was in breach of Articles 4, 60, 65 and 66(7) of the Treaty;

(12)An order requiring the Commission to pay the costs;

(13)Such further or other declarations and orders as the Court shall see fit in all the circumstances.

(3) In the further alternative, reject the application as unfounded;

(4) Order the applicant to pay the costs.

ss British Coal claims that the Court should:

(1) Declare the application inadmissible to the extent indicated in British Coal's observations on admissibility and on the merits;

(2) Reject the application as unfounded;

(3) Order the applicant to pay the intervener's costs.

9i In so far as it requests the Court to order the Commission to reopen its investiga- tion into the level of the royalty and British Coal's purchase prices, the applicant's ninth head of claim constitutes a request for the Court to issue directions to the Commission, which the Court has no jurisdiction to grant. The same applies with regard to the tenth and eleventh heads of claim, although the applicant has aban- doned these two heads of claim.

92 Moreover, in so far as they request the Court to declare that the royalty of £5.50 or £6.00 per tonne is unlawful as being contrary to Articles 4(d), 60, 63, 65 and 66(7) of the Treaty and that British Coal's conduct also infringed Articles 4, 60, 63 and 65 of the Treaty, the applicant's second and seventh heads of claim seek pre- cisely to secure from the Court the measures that the implementation, by the insti- tution concerned, of a judgment annulling the contested decision might entail.

93 It follows that the second, seventh and ninth heads of claim are inadmissible.

The initial subject-matter of the action

94 As is clear from the summary of the facts, the applicant criticizes British Coal for two practices in restraint of competition: first, the excessively high rates which British Coal levied on coal extracted under royalty licences and, second, the unreasonably low prices at which British Coal purchased coal extracted from opencast mines under delivered licences (hereinafter 'British Coal's purchase prices').

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The objection of inadmissibility raised by the Commission

Arguments of the parties

too In its objection of inadmissibility, the Commission argues essentially that all of the applicant's pleas seeking annulment seek to obtain from the Court an evaluation, under the second sentence of the first paragraph of Article 33 of the Treaty, of the situation arising from the economic facts or circumstances in the light of which the contested decision was adopted, without providing, as that provision requires in such a case, any relevant evidence whatever of a misuse of power or manifest fail- ure to comply with the provisions of the Treaty.

101 It submits that the Court has jurisdiction solely to review the legality of the con- tested decision and not to re-examine the economic facts or circumstances on which that decision is based. All of the pleas relied on by the applicant in support of its claims request the Court to re-examine the applicant's complaint and to sub- stitute its own assessment of the economic facts and circumstances for that of the Commission.

104 The Court notes first that the first paragraph of Article 33 of the Treaty empowers the Community judicature to hear actions seeking to have Commission measures declared void on grounds of lack of competence, infringement of an essential pro- cedural requirement, infringement of the Treaty or of any rule of law relating to its application, or misuse of powers. However, the Community judicature may not examine the evaluation of the economic facts or circumstances in the light of which the contested decision was taken, save where the Commission is alleged to have misused its powers or to have manifestly failed to observe the provisions of the Treaty or the rules relating to its application.

ios According to the case-law of the Court of Justice (Joined Cases 154/78, 205/78, 206/78, 226/78, 227/78, 228/78, 263/78, 264/78, 31/79, 39/79, 83/79 and 85/79 Val- sabbia and Others v Commission [1980] E C R 907, paragraph 11), the first part of the second sentence of the first paragraph of Article 33 of the Treaty sets limits on the judicial review of choices of economic policy made by the Commission, while the second part removes those limits where the applicant alleges misuse of powers or manifest failure to comply with the Treaty.

IOC It follows from the summary of the applicant's pleas in law (see above) that it has raised only the complaint of manifest failure to observe the provisions of the Treaty in its first two pleas, while the third, fourth and fifth pleas do not seek to have the Court examine the evaluation of the economic facts and circumstances in the light of which the contested decision was taken.

no It is therefore possible to declare admissible the applicant's first two pleas in law in so far as they seek a review by the Court of the Commission's assessment of the economic facts or circumstances in the light of which the contested decision was adopted.

m In carrying out that review, the Court must confine itself to determining whether the contested decision is manifestly unjustified, in the light of the conditions laid down in the Treaty and an overall assessment of the economic situation, it

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being understood that the term 'manifest' presupposes a breach of the relevant legal provisions of such gravity that it appears to derive from an obvious error in the evaluation, having regard to the provisions of the Treaty, of the situation in respect of which the decision was taken (NetherUnds v High Authority, at p. 115, and Valsabhia, paragraph 72, cited above).

112 It follows that, contrary to the Commission's arguments, the limits thus imposed on judicial review do not in any way mean that the Court lacks jurisdiction to rule on whether the decision is lawful.

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117 Accordingly, the five pleas in support of annulment relating to British Coal's pur- chase prices must be dismissed as inadmissible because they are no longer sup- ported by the forms of order actually sought.

The substance

The remaining subject-matter of the dispute

us N A L O O abandoned, during the proceedings, the heads of claim which sought annulment of the contested decision on the ground that it did not confirm the alleged illegality of the royalties levied by British Coal prior to 1 April 1990 (see paragraph 86, above).

119 It also states in point 60 of its reply that it has 'sought to concentrate its analysis upon the central issue remaining in this application for judicial review, namely whether the Commission was correct to conclude that a royalty of £5.50/6.00 per tonne was lawful in all the circumstances.'

Arguments of the parties

123 The applicant argues that the Commission made manifest errors of factual and legal assessment in concluding that a royalty level of £5.50 or £6.00 per tonne was lawful, even though the applicant had established that this rate was excessive in so far as it prevented its members from making any, or any reasonable, profit, and imposed on them a serious competitive disadvantage as regards British Coal.

124 The Binder Hamlyn Report examined the five-year period up to 31 March 1991 and considered, first, an analysis based on British Coal's operating costs, second, the methodology which British Coal claimed to apply and, third, the method used in the contested decision, based on British Coal's operating profits.

125 The applicant states that the Binder Hamlyn Report sets out 'the results of an accountancy exercise undertaken based upon BCC's annual accounts and upon accounting data Binder Hamlyn collected from members of the applicant associa- tion', the purpose of which was to 'establish to the Commission that upon any reasonable accountancy basis the current BCC royalty was excessive', irrespective of the method used.

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130 According to the applicant, although it is clear from paragraph 72 of the contested decision that the test was the costs and profit of the licensee, the Commission none the less applied that test in paragraph 74 of the contested decision using the costs of British Coal, notwithstanding the fact that the Commission itself had recog- nized that British Coal and the licensed sector had different cost structures.

131 It is clear, it claims, from Annex G to the complaint of 29 March 1990 that the operating costs of licensed opencast mines are at least 20% higher than those of British Coal's opencast pits, with the result that the reduction of the royalty to £5.50 or £6.00 per tonne was not sufficient to reduce the severe competitive harm suffered by licensed producers.

132 In its letter of 28 August 1990 to the United Kingdom's Permanent Representative, the Commission had stated that the royalty of £7 per tonne then being levied appeared to be too high in all the circumstances. The applicant therefore asks how the Commission could have concluded that a minor reduction in the royalty level would remove the competitive harm, in the light of the applicant's extensive evi- dence to the contrary.

133 According to the Commission, supported in the main by British Coal, the appli- cant implicitly accepts that it is lawful for British Coal to impose a royalty and that different royalties can be applied in different situations. In order to determine whether the contested royalty was contrary to the objectives of the Treaty, the Commission applied, at paragraph 72 of the contested decision, a test based on the reasonableness or proportionality of a royalty rate of £5.50 or £6.00 per tonne (see Case 395/87 Ministère Public v Tournier [1989] ECR2521).

us The Report makes a number of adjustments, all intended to favour the arguments of N A L O O ' s members, without presenting any factual or statistical basis for so doing. Furthermore, the evidence on which the Report relied pre-dates the period covered by the contested decision.

139 The Commission points out that, although it recognized the differences of scale between British Coal's operations and those of N A L O O members, it did not, in particular, agree that the costs of the licensed opencast operators were 20% higher than those of British Coal. In the first place, there was no evidence before it as to

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what the costs of N A L O O members themselves were. Second, there was evidence that the parties concerned had continued to operate profitably while paying royal- ties of up to £16 per tonne. In that regard, the Commission notes that licensed production has experienced a steady increase from year to year.

HO It points out that, contrary to the applicant's assertions, British Coal and licensed mines do not compete for the same reserves, since British Coal is not interested in small-scale deposits. British Coal and the small mining companies have different operating arrangements, as the applicant itself recognized in point 10 of its com- plaint of 29 March 1990.

144 British Coal also submits that its costs are substantially higher than those of lic- ensees and include washing, blending and contract-supervision costs. Furthermore, its overheads include contributions to deep mine overheads and other elements not incurred by licensees.

us According to British Coal, the first method used by the Binder Hamlyn Report, that of making additions to British Coal's costs, ignores the fact that the coal being licensed is an asset belonging to British Coal. Moreover, the adoption of a profit element of 37% is arbitrary and based on the comparison of one year's operating costs and selling prices. There is no logical explanation why this margin must be applied to administration costs to determine the royalty rate. In particular, this approach employs assumptions as to British Coal's costs which are quite unjusti- fied.

146 British Coal notes that the Binder Hamlyn Report criticizes certain alleged flaws in British Coal's methods of calculation, one of which is said to be its lack of information relating to licensees. However, even in making provision for these weaknesses, the Report does not employ actual figures from licensees but instead makes 'reasonable assumptions'.

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147 Finally, the method based on British Coal's operating profits involves taking Brit- ish Coal's profit and attempting to adjust this 'for the different prices obtainable by the licensed operators, and then the different costs which the licensed operators face'. This again employs an arbitrary costs differential of 15%.

152 The Commission never required the applicant to put forward its own costings. This was explicable on a number of grounds.

153 In order to determine a flat-rate royalty level which would be reasonable for all concerned, the only sensible approach was to use the costs of the largest producer in the industry, namely British Coal. Furthermore, British Coal uses its own costs to calculate the royalty, even though it is in possession of detailed costings for the licensed sector as the operator of the system of supply licences, which require their holders to supply it with information on costs. The contested decision itself uses British Coal as a benchmark for determining the lawfulness of the royalty.

154 The Commission never objected to the method of starting with British Coal's costs and calculating the cost differential between British Coal's opencast pits and those of the licensed operators. Had the Commission at any time considered that the approach adopted both by the applicant and by itself was incorrect, it is incon- ceivable that it would have confirmed its validity throughout the entire proceed- ings and would not have requested the applicant to provide costings relating to its own members as the basis for determining whether the royalty was reasonable.

iss Finally, in so far as British Coal applies a concessionary operating scheme for pri- vate operators, in parallel with the licence contracts, its own extraction costs reflect a highly competitive costing.

156 In contrast, the costs of the applicant's members, who do not represent all of the licensed opencast operators in the United Kingdom, do not necessarily reflect those of the sector as a whole. Licensed operators are multi-faceted and it is for that reason impossible to obtain accurate average costings, since each company allocates its costs in a different manner and it was always accepted that it was impossible for N A L O O to obtain accurate and meaningful costs data for the

160 The Commission failed to understand the relationship between costs and coal- seam depth: the fact that a licensee can only exploit shallow sites is a major restric- tion, not an advantage. Consequently, the system obstructs licensees and restricts

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their opportunity to spread their fixed costs. In any event, the quantitative limit of 250 000 tonnes remains a severe restriction on the competitive relationship between British Coal and the licensed sector, a fact which the Commission accepted, at least at the start of the investigation.

iei With regard to profitability, the Binder Hamlyn Report took account, in its analy- sis of the royalty, of the increased size of possible sites available to licensees pursu- ant to the 1990 Coal Industry Act.

162 Furthermore, private operators are clearly at a disadvantage in so far as British Coal does not pay royalties and obtains from the electricity generating companies a coal price which is 12% higher than that of licence holders.

166 In those circumstances, the Commission formed the view that, in the light of the profit which British Coal had made in operating its opencast sites during the finan- cial year 1989/90 with an undisputed income of 160p/Gj, the new royalty rate was not contrary to Article 66(7) of the Treaty, although there were differences, nota- bly of scale, between British Coal's opencast operations and those of the licensed operators.

167 O n the basis of the inventory of operating costs of licensed opencast sites set out in Annex G to its complaint of 29 March 1990 and drawn up on the basis of Brit- ish Coal's official accounts for 1988/89, the applicant concluded that the royalty of £11 per tonne was too high by £8.50 per tonne (34p/Gj) and that the price of 120p/Gj then being offered by the electricity generating companies was too low by £8.50 per tonne (34p/Gj).

168 The applicant was thus seeking, by way of its complaint, to secure an overall improvement of 68p/Gj in the operating conditions for its members during the financial year 1988/1989.

169 However, the prices paid by the electricity generating companies to the licensed operators were increased from 1 April 1990 to 157p/Gj, 37p/Gj more than the abovementioned former price of 120p/Gj, whilst the royalty of £11 per tonne (44p/Gj) was reduced to £5.50 or £6.00 per tonne (24p/Gj), 20p/Gj less, with effect from the same date.

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175 With regard to the first method, the authors of the Binder Hamlyn Report state at point 4.5 thereof that they based themselves on British Coal's operating costs for the financial year 1989/1990.

176 With regard to the second method, the Report notes at point 5.14 that 'since the information relating to the financial year 1990/1991 is not yet available, it has been assumed that the costs were the same as those for the financial year 1989/1990, in view of the fact that the figures were similar for the previous four financial years'.

177 In connection with the third method, the Binder Hamlyn Report also assumes that British Coal's operating profit remained constant at £13.34 from the 1989/1990 financial year to that of 1990/1991.

178 However, the applicant cannot, for the purposes of demonstrating that the royalty rate of £5.50 or £6.00 per tonne levied by British Coal since 1 April 1990 is exces- sive, validly rely on a simple extrapolation for the 1990/1991 financial year of the operating results for British Coal's opencast sites recorded during the previous financial year up to 31 March 1990.

179 It is clear from the applicant's letter to the Commission of 6 December 1991, men- tioned above, that the operating results for British Coal's opencast sites recorded during the financial year 1990/1991 are appreciably different from those of the pre- vious financial year, since the operating profit of its sites fell from £13.34 per tonne to £8.86 per tonne by reason of, in particular, the increase in their operating costs.

iso Moreover, far from producing the actual operating costs of its members with a view to establishing that the royalty is excessive, the applicant stated, at point 25 of its reply, that it had no accurate and meaningful costs data for the whole of the licensed sector.

iss It is thus clear that the accountancy report purporting to establish that the dis- puted royalty rate was excessive was not drawn up on the basis of British Coal's accounts for the financial year 1990/1991 and neither did it make use of accounting data obtained from NALOO members.

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186 Consequently, the Court cannot accept the applicant's contention, set out above, to the effect that the Binder Hamlyn Report establishes that the royalty is exces- sive irrespective of which method is used, on the basis of 'an accountancy exercise ... based upon BCC's annual accounts and upon accounting data Binder Hamlyn collected from members of the applicant association'.

187 In particular, the Court cannot attach sufficient probative value to the first method of calculation proposed by the applicant and based on the application, to the cost represented by the levying of the royalty, of the profit margin of British Coal's opencast sites.

iss In the first place, the applicant is unable to justify the mere extrapolation to the 1990/1991 financial year of the 37% profit margin of British Coal's opencast sites which the applicant identified on the basis of the 1989/1990 financial year, even though the operating results of those sites changed from one financial year to the next, as has been found above.

193 The table annexed to the Binder Hamlyn Report assesses at a uniform 156p/Gj the delivered costs incurred by licence holders during the two financial years 1989/1990 and 1990/1991.

194 This stability in operating costs gives rise to doubt as to whether, as the applicant asserts, the authors of the Binder Hamlyn Report took account in their calcula- tions of the tenfold increase in the maximum size of the sites which could be granted to licensed operators under the 1990 Coal Industry Act, which should logically have resulted in variations in the operating costs of those sites from one financial year to the next.

195 Nor has the applicant been able to adduce conclusive evidence to support its asser- tion that, in the light of the average operating costs of licensed opencast sites, the second method of calculation resulted in a negative royalty.

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196 In that regard, the applicant declared at point 25 of its reply that it was unable to produce accurate average costs data for licensed operators, either individually or as a whole.

201 This assertion is not convincing, since the applicant asserts elsewhere that it was unable to produce accurate and significant average costs data for licensed opera- tors, whether individually or as a whole.

202 Moreover, the difference between the operating costs of British Coal's opencast sites and those of the licensed operators for the 1990/1991 financial year, calculated by the authors of the Binder Hamlyn Report at 17p/Gj, does not rest on any veri- fiable factual basis.

203 In that regard, the authors of the Binder Hamlyn Report calculated the same ostensible difference of 17p/Gj for the 1989/1990 financial year. Since the operat- ing costs of British Coal's opencast sites were calculated at a uniform l l l p / G j for both the 1989/1990 and 1990/1991 financial years, as established by Annex 1 to the Report, again it does not appear, from a reading of that Report, that its authors took account of the tenfold increase in the maximum size of opencast mines which licence holders have been entitled to operate since the 1990 Coal Industry Act entered into force.

204 It follows from all of the foregoing that the applicant has not adduced conclusive factual evidence capable of supporting its claims.

205 It is necessary, none the less, to point out that, in its letter of 28 August 1990 to the United Kingdom's Permanent Representative, the Commission had expressed the view that the royalty of £7 per tonne then being levied by British Coal appeared in any event to be too high.

206 However, that statement, which was moreover expressed in a tentative manner, was made within an economic context in which the level of prices paid to licensed producers by the electricity generating companies was appreciably lower than that to which those prices were raised with effect from 1 April 1990.

211 Moreover, the applicant itself acknowledged during the proceedings before the Commission that, in view of British Coal's size, a slight difference between the prices offered to British Coal and those offered to the private sector might be rea- sonable and that a price difference of 5p/Gj, or indeed even 10p/Gj, might be justi- fied.

212 Finally, the argument which the applicant, in its letter of 6 December 1991, draws a posteriori from the fall in British Coal's operating profit from £13.34 per tonne for the year ending 31 March 1990 to £8.86 per tonne for the year ending 31 March 1991 is not valid.

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213 Quite apart from the fact that this factor could not in any event be conclusive, since it cannot be compared with the actual operating results of the licensed open- cast mines, there is nothing in the documents before the Court to indicate that the Commission had access to the latter figures when it adopted the contested decision.

2H In conclusion, in the absence of sufficiently cogent evidence to the contrary, the difference still outstanding between the overall conditions actually secured by the applicant following the intervention of the Commission and the objectives which it had set itself in its complaint, in particular in Annex G thereto, is not sufficient to justify the conclusion that the Commission was manifestly in breach of Article 66(7) of the Treaty when it formed the view that the royalty of £5.50 or £6 per tonne which British Coal charged licensed opencast sites with effect from 1 April 1990 was not so high as to be contrary to that provision, bearing in mind the price increase-introduced by the electricity generating companies in favour of licensed operators with effect from Ï April 1990 and the reduction in the prices paid by the electricity generating companies to British Coal.

The first part of the second plea

217 The applicant contends first that Article 4(d) of the Treaty, which prohibits restric- tive practices that tend towards the sharing or exploiting of markets, lays down a prohibition that is independent of the other Treaty provisions. It constitutes a fun- damental provision establishing the common market and the common objectives of the Community, from which flow the competition rules contained in Articles 60 to 67 of the Treaty.

218 In response, the Commission, supported in substance by British Coal, states that, in the contested decision, it ensured compliance with Articles 2, 3 and 4 of the Treaty, which establish the fundamental objectives thereof, and that it also observed the procedure for the application of those principles, as laid down in Article 66(7) of the Treaty, in accordance with the case-law (Case 13/57 Wirtschaftsvereinigung Eisen-und Stahlindustrie v High Authority [1957-1958] E C R 265, Joined Cases 27/58, 28/58 and 29/58 Compagnie des Hauts Fourneaux et Fonderies de Givors and Others v High Authority [1960] ECR 241, at page 252, and Case 30/59 Steenkolenmijnen v High Authority [1961] ECR 1, at p. 40). Hav- ing made relevant findings under Article 66(7) of the Treaty, the Commission claims that it was not under an obligation to consider the same matters under other Treaty articles which are less specific.

The second part of the second plea

219 Secondly, the applicant submits that Article 60 applies to the royalty-setting prac- tices of British Coal and that the imposition of the opencast royalty has had a direct effect on British Coal's ability to purchase coal produced under delivered licences. A royalty for the production of coal has a direct effect on the price at which coal is sold by the licensee. Article 60 is in any event sufficiently broad to include simple royalty setting by a dominant producer such as British Coal.

223 The Commission and British Coal argue that the applicant confined itself, in two letters of 15 February 1991 and 14 March 1991, to relying on Article 65 of the Treaty in the context of British Coal's licensing scheme, a matter specifically excluded from the scope of the contested decision. Article 65 was not mentioned in relation to the level of the royalty.

224 I n any event, t h e C o m m i s s i o n gave reasons for the contested decision u n d e r Article 66(7) of the Treaty and was n o t u n d e r a d u t y t o go o n t o consider all o t h e r possible claims.

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225 British Coal adds that the plea that the royalty was too high was rejected by the Commission pursuant to Article 66(7) of the Treaty, and it is inevitable that the Commission would have reached the same result under Article 65. In any event, the Commission has a discretion, in appropriate cases, to take its decision under either or both of Article 65 and Article 66(7) of the Treaty, as it may with respect to Article 85 and Article 86 of the EC Treaty (Case 85/76 Hoffmann-La Roche v Commission [1979] E C R 4 6 1 , point 116). In the present case, Article 66(7) was obviously the more appropriate provision, as N A L O O accepted at point 8 of its summary of submissions of 5 September 1990.

Findings of the Court

230 Next, Article 60 of the Treaty does not apply to coal extraction licences issued b y British Coal, since the position of that provision within Chapter 5 of the Treaty makes it clear that it relates only to unfair and discriminatory product-pricing practices.

231 British Coal cannot be regarded as engaged in the sale of products where it grants licences to extract coal (see paragraph 13 of Banks).

232 As regards the part of the plea based on failure to apply Article 65 of the Treaty, it was only at the stage of the application that the applicant claimed that 'whilst the mere existence of a clause requiring payment of a royalty is not a breach of Article 65, the imposition of an excessively high royalty pursuant to that clause can be a breach since, in these circumstances, the agreement has a significantly restrictive effect upon competition in the market as a direct result of the manner of its operation'.

233 In its previous correspondence, the applicant relied on Article 65 only in relation to either the supply agreement between British Coal and the electricity generating companies, which is not the subject of this dispute, or the general extraction licence system, but without specifically mentioning that the disputed royalty rate might be unlawful in the light of that provision.

234 In these circumstances, regard being had to the applicant's abovementioned affir- mation that Article 66(7) of the Treaty covered all the contested practices of British Coal, the applicant cannot complain that the Commission did not rule on whether the disputed royalty rate was lawful under Article 65 of the Treaty.

239 It follows from all of the foregoing that the plea based on manifest failure to comply with Articles 4(d), 60 and 65 of the Treaty must be dismissed.

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3. The third plea concerning the administrative proceedings

240 The applicant sets out its third plea in three parts.

The first part of the third plea

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245 I n t h e latter case, it is f o r t h e complainant t o set o u t t h e facts in s u p p o r t of his claim (Case T-24/90 Automec v Commission [1992] E C R 1 1 - 2 2 2 3 , p a r a g r a p h 79). I n particular, w h e r e t h e C o m m i s s i o n h a s exclusive c o m p e t e n c e t o take a decision u n d e r Articles 65 a n d 66(7) of the Treaty, it is u n d e r a d u t y t o examine t h e issues of fact a n d l a w indicated b y t h e complainant in o r d e r t o decide w h e t h e r t h e c o m - p e t i t i o n rules have b e e n infringed (Case 210/81 Demo-Studio Schmidt v Commis- sion [1983] E C R 3045, p a r a g r a p h 19, a n d Case 2 9 8 / 8 3 CICCE v Commission [1985] E C R 1105, p a r a g r a p h 18) and set o u t its views o n t h e c o m p l a i n t w h e n so r e q u e s t e d , as in t h e p r e s e n t case (Case 26/76 Metro SB-Großmärkte v Commission [1977] E C R 1875).

246 T h e applicant is essentially contesting t h e elements of fact o n w h i c h t h e C o m m i s - s i o n based itself in c o n c l u d i n g that t h e r o y a l t y applied w i t h effect from 1 April 1990 w a s reasonable. T h e C o u r t ' s task in this regard, it is argued, is t o examine t h e evidence originally s u b m i t t e d t o the C o m m i s s i o n and d e t e r m i n e w h e t h e r t h e r e are facts w h i c h w o u l d r e a s o n a b l y s u p p o r t t h e C o m m i s s i o n ' s a r g u m e n t s a n d c o n c l u - sion.

247 The applicant itself failed to provide the Commission with the financial raw mate- rial relating to individual licensees or licensees taken as a whole, even though it could easily have obtained such information. The applicant preferred to make arti- ficial and inaccurate deductions and extrapolations from the accounts published by British Coal.

250 The applicant submits, on the one hand, that the Commission refused to take account of relevant and conclusive information which the applicant submitted to it but declares, on the other hand, that it is unable to produce accurate information on the operating costs of licensed sites, whether individually or as a whole. In these circumstances, and given that the applicant itself considered that such infor- mation was decisive, the applicant's own statements show the plea in law to be unfounded.

251 According to points 4.40 and 4.137 of the application and point 7 of the reply, moreover, the Commission informed the applicant that '[it] considered the BH Report to be "irrelevant"', that 'no account would be taken of it in the final decision' and that 'when asked whether the Commission had examined the evi- dence it was replied that the evidence was "irrelevant"'.

252 Finally, the complaint essentially challenges the soundness of the contested decision. As is clear from the examination of the first two pleas in law, however, there is no evidence that the Commission manifestly failed to comply with the Treaty provisions relied upon.

253 The first part of the plea must therefore be dismissed.

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Findings of the Court

258 According to well-established case-law (see Automec, cited above, paragraph 79), it is for the complainant to bring to the Commission's notice the elements of fact and law underlying its complaint.

259 The applicant, which ought to have had better information at its disposal than oth- ers, stated that it was unable to produce accurate operating costs for licensed mines, either individually or as a whole.

260 Even if, as the applicant contends, one were to assume that British Coal, as the operator of the licensing system, had information relating to the operating costs of the applicant's members, it does not appear in this case that the Commission was under any obligation to request such information from British Coal.

265 All the parties are agreed that, in the same way as Annex G, the Binder Hamlyn Report is not based on the average operating costs of opencast extraction licence holders but on an extrapolation of British Coal's costs plus a flat-rate differential of 1 5 % .

266 In those circumstances, the applicant cannot criticize the Commission for not hav- ing carried out an exhaustive investigation into the production costs of the licensed mines.

267 The second part of the plea in law must therefore be dismissed.

The third part of the third plea in law

Arguments of the parties

268 The applicant contends that the Commission has infringed its rights of defence. It claims that during the written procedure the Commission raised a number of points which had never previously been brought to the applicant's attention and on which it was never properly permitted to submit its observations. In particular, it claims that the Commission never took issue with the method based on British Coal's costs and the cost differential between British Coal's opencast sites and those of the licensed operators.

273 Contrary to the assertions of the applicant, the fact that the Commission, in the contested decision, does not rely on evidence submitted to it in the context of the administrative procedure does not adversely affect the right to be heard (Joined Cases 40/73 to 48/73, 50/73, 54/73 to 56/73, 111/73, 113/73 and 114/73 Suiker Unie and Others v Commission [1975] ECR 1663, paragraphs 100 to 103, and Case

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T-66/89 Publishers Association v Commission [1992] ECR 11-1995, paragraph 65 et seq.), since the assessment of the probative value of the facts in question consti- tutes a distinct phase in the examination of the complaint by the Commission (Case 27/76 United Brands v Commission [1978] ECR 207, paragraph 257).

274 British Coal challenges the contention that the applicant was not given a fair opportunity to make its case. A complainant is not entitled in law to an oral hear- ing or to insist on British Coal's being present at such a hearing; at most, a com- plainant is entitled to submit written observations on the Commission's provi- sional decision. The applicant, it submits, had more than adequate opportunity to put its case.

Findings of the Court

279 The facts of the case, as set out above, and in particular the applicant's correspon- dence with the Commission, show that the applicant had ample opportunity to put forward its views on the essential question of whether the disputed royalty rate was lawful.

280 In its letter of 30 October 1990 approving the compromise offer from the United Kingdom authorities, the Commission concluded that there was no need to chal- lenge a royalty the level of which was not so high as to prevent efficient undertak- ings from making a profit or impose on them a significant competitive disadvan- tage regarding the prices obtained for their coal. The applicant had the opportunity at an early stage to contest that conclusion in its letter of 7 November 1990 to the Commission.

281 Furthermore, as is clear from the Commission's provisional definition of its pos- ition of 21 December 1990, referred to above, which substantially reproduced its conclusions of 30 October 1990, the Commission explained that it would not be adopting a definitive position until it had examined any comments which the applicant might wish to make.

282 As the applicant itself acknowledges at points 4.133 and 4.145 of its application, it subsequently provided detailed submissions and supporting accountancy data directly relevant to the criteria set out in the provisional definition of position.

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288 In these circumstances, the third part of the plea must therefore be dismissed.

289 It follows that the third plea in law must be dismissed in its entirety.

4. The fourth plea in law: inadequate reasons for the contested decision

290 The applicant sets out the plea in three parts.

293 The contested decision does not indicate why the Commission failed to take account of the differences in the cost structure between British Coal's opencast sites and those of the licensed operators, even though it was in possession of directly relevant evidence establishing the opposite and expressly accepted, at para- graph 74 of the contested decision, that there were significant cost differences.

294 Paragraph 72 of the contested decision, it contends, fails to indicate that the Com- mission took account of the facts and matters referred to in the statement of defence. If such was the case, it does not clearly follow from the decision, which is therefore inadequately reasoned.

295 In reply, the Commission, supported in substance by British Coal, argues that it set out clearly the reasons for its conclusions, in accordance with Articles 5 and 15 of the Treaty and in a manner consistent with the decided case-law, and that it does not have to discuss all the issues of fact or law raised during the administrative procedure (Case 14/61 Hoogovens v High Authority [1962] E C R 2 5 3 , at p. 275, Joined Cases 209/78 to 215/78 and 218/78 Van Landewyck and Others v Commis- sion [1980] ECR3125, paragraph 66, Case 86/82 Hasselblad w Commission [1984] E C R 8 8 3 , paragraph 17, and Joined Cases 43/82 and 63/82 VBVB and VBBB v Commission [1984] ECR 19, paragraph 22).

296 The application ignores entirely the balanced reasoning of the Commission in the contested decision in determining the reasonableness of the royalty. In particular, the Commission took into account the need for the licensed operators to enjoy comparable pricing and access to the market for electricity-generating coal. In its plea, the applicant has simply reiterated that the Commission placed insufficient weight on the Binder Hamlyn Report.

299 However, the Commission is not obliged, in stating the reasons for the decisions which it takes to ensure the application of the competition rules, to adopt a pos- ition on all the factual or legal issues raised by the complainants in support of their request that the Commission should find that those rules have been breached. It need only set out the facts and legal considerations which are of decisive impor- tance in the context of the decision {La Cinq, cited above, paragraph 41, Asia Motor France, cited above, paragraph 31, and Case T-l 14/92 BEMIM v Commis- sion [1995] ECR 11-147, paragraph 41).

300 Finally, the requirement of a statement of reasons must be viewed in the context of the circumstances of the case, in particular the content of the measure in question, the nature of the reasons relied on and the context in which the measure was adopted (see Case 41/83 Italy v Commission [1985] ECR 873, paragraph 46, and Case T-46/92 Scottish Football Association v Commission [1994] ECR 11-1039, paragraph 19).

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301 Contrary to the assertions of the applicant, it is clear from the preamble to the contested decision that the decision did set out the essential reasons which led the Commission to regard the royalty rate of £5.50 or £6.00 per tonne as lawful. It did so with sufficient clarity as to enable the applicant to ascertain the considerations relied upon to justify the measure adopted and the Court to exercise its power of review as to the legality thereof.

302 It appears from the reasoning of the contested decision that, in conjunction with the new volumes of sales guaranteed to the licensed operators and the increase, by some 20%, in the prices which they received for their coal, the royalty rate, reduced from £11 per tonne to £5.50 or £6.00 per tonne, was not considered so high as to be unlawful, in the light of the operating profit which British Coal was at that time obtaining from its opencast sites and notwithstanding the difference in operating arrangements between British Coal's opencast sites and those of the licensed operators.

306 The Commission's approach appears all the less open to criticism given that, as the applicant itself has pointed out, the only sensible approach was to proceed on the basis of the operating costs of the opencast sites of British Coal, the largest pro- ducer in the sector.

307 While it is true that the Commission did not explain that its recourse to the oper- ating results of British Coal's opencast sites was due to the fact that the licensees' operating costs were unavailable, such an omission does not constitute a defect in the reasoning of the contested decision since it is clear that the applicant must have been aware of that fact.

308 The Commission was not obliged, in the contested decision, to refute specifically the conclusions of the Binder Hamlyn Report. That document was submitted by the applicant itself as an interim report; moreover, it advocates a differential of 15% between the operating costs of British Coal's opencast sites and those of the licensed opencast mines. N o explanation was given for that percentage, any more than for the figure of 20% proffered by the applicant in its complaint of 29 March 1990, and which by itself had not induced the Commission to regard the disputed royalty rate as illegal in the provisional definition of its position of 21 December 1990.

309 Furthermore, the Commission informed the applicant that it regarded the Report as irrelevant.

310 The first part of this plea in law must therefore be dismissed.

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315 Finally, the applicant cannot criticize the Commission for failing to explain why it did not apply Article 65 of the Treaty to the disputed royalty rate, since, as is clear from the examination of the third part of the second plea in law (see paragraph 238 above), the applicant did not even provide the Commission with the information necessary to enable it to examine whether the disputed royalty rate was lawful under Article 65.

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316 It follows that the second part of this plea in law must be dismissed.

The third part of the fourth plea in law

317 The applicant also criticizes the Commission for failing to explain why it did not consider it necessary to request British Coal to comment upon the arguments which the complainants had put to the Commission.

322 C o n s e q u e n t l y , t h e t h i r d p a r t of this plea c a n n o t b u t be dismissed.

323 I n t h e light of these considerations, the f o u r t h plea m u s t b e dismissed in its entirety.

5. The fifth plea in law: misuse of powers

A r g u m e n t s of the parties

324 T h e applicant s u b m i t s t h a t t h e contested decision is vitiated b y misuse of p o w e r s . I n s u p p o r t of this allegation, it sets out again the a r g u m e n t s s u b m i t t e d in respect of t h e f o u r preceding pleas in law.

325 T h e C o m m i s s i o n , s u p p o r t e d in substance b y British C o a l , c o n t e n d s t h a t t h e appli- c a n t d o e s n o t p r o v i d e a n y evidence t h a t t h e contested decision p u r s u e d an objec- tive o t h e r t h a n t h a t for w h i c h the C o m m i s s i o n w a s e m p o w e r e d t o act.

328 The arguments submitted by the applicant in support of the four preceding pleas and reiterated in the plea here under consideration cannot in any way support the claim that there was a misuse of powers.

329 The applicant does not specify for what purpose other than that mentioned in the contested decision the Commission employed or, on the contrary, refrained from exercising the powers conferred on it by the Treaty.

330 This plea in law must accordingly be dismissed.

331 It follows from all of the foregoing that the application must be dismissed in its entirety.

Costs

332 Under Article 87 of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party's pleadings. Since the applicant has been unsuccessful in its pleas seeking annulment and the Commission has applied for the applicant to be ordered to pay the costs, the latter must be ordered to pay the costs, including those incurred by the intervener Brit- ish Coal.

2. Dismisses the remainder of the applicant's claims;

3. Orders the applicant to pay all the costs of the proceedings, including those of the intervener British Coal.

Briët Lenaerts Vesterdorf

Lindh Potocki

Delivered in open court in Luxembourg on 24 September 1996.

H.Jung C. P. Briët