C-320/92

O P I N I O N OF MR D A R M O N — CASE C-320/92 P

OPINION OF ADVOCATE GENERAL DARMON delivered on 15 December 1993 *

Mr President, 'Where an undertaking does not expect to Members of the Court, attain its quotas during the quarter in ques- tion, the Commission may (...) allow the undertaking an advance on the quotas for the following quarter not exceeding 20% of the quotas for the current quarter'.

1. The power of the High Authority to establish a system of steel production quotas is based on Article 58(1) of the ECSC Treaty. 3. Relying on that article, Finsider requested on 9 June 1988 an advance, during the sec- ond quarter of 1988, on production quotas for the third quarter, up to a ceiling of 20%.

2. The system of production quotas for cer- tain products of undertakings in the steel 4. Although there was never an express industry, introduced by Commission Deci- reply to that request, Finsider's production sion N o 2794/80/ECSC of 31 October during the second quarter of 1988 exceeded 1980, ' was extended for the years 1986 the quotas allocated to it. and 1987 by Commission Decision N o 3485/85/ECSC of 27 November 1985 2 and, for the first six months of 1988, by Commis- sion Decision N o 194/88/ECSC of 6 January 1988 3 which provides in Article l(3)(e) that

5. On the basis of Article 58(4) and 92 of the * Original language: French. ECSC Treaty and of Article 12 of the Deci- 1 — Decision establishing a system of steel production quotas for sion N o 194/88/ECSC, * the Commission, undertakings in the iron and steel industry (OJ 1980 L 291, by decision of 21 March 1990, found that p. 1). 2 — Decision on the extension of the system of monitoring and Finsider had exceeded during the second production quotas for certain products of undertakings in the steel industry (OJ 1985 L 340, p. 5). See in particular Article 18(2) 3 — Decision extending the system of monitoring and production quotas for certain products of undertakings in the steel 4 — Which attributes to the Commission the power to impose industry (OJ 1988 L 25, p. 1). See in particular Article 18(2)- fines in the event that production quotas are exceeded.

5 — Case T-26/90 [1992] ECR 11-1789. 6 — Appeal, page 45 of the French translation. 7 — Paragraph 103 of the contested judgment. 8 — 218/87, 223/87, 72/88 and 92/88 [1989] ECR 1711.

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194/88/ECSC was infringed; (iii) finally, 17. More recently, with regard to the rules bearing in mind the practice observed by the on steel quotas in force in the second quarter Commission until then, the principle of the of 1983, the Court considered that the protection of legitimate expectations was request for the allocation of an additional infringed. annual production reference to which the Commission had not replied explicidy should be regarded as having been implicitly rejected by the first decision fixing the pro- duction quotas adopted after the submission of the request and without taking it into account. The Court further stated that only 15. May the silence of the Commission be that decision was capable of adversely affect- construed, under the ECSC Treaty, as ing the applicant. " implicit acceptance of a request for advance on quotas?

18. It follows, on the one hand, that modifi- cation of a quota must be effected by express 16. The Court has already answered that decision and, on the other, that a decision kind of question in its judgment in Boël v finding that quotas have been exceeded over Commission. 9 The Court held that a given period and imposing a fine on the steel undertaking concerned may, where appropriate, mean that a request for an increase of quotas submitted prior to the quota being exceeded was implicity refused for that period.

20. In declaring that the reasons for that 22. With regard to the alleged error of inter- refusal had been provided to Finsider, the pretation by the Court of First Instance judgment of the Court of First Instance of Article ll(3)(e) of Decision No properly referred to the preamble to the con- 194/88/ECSC, I would make the following tested decision 13 which notes, in particular, observations. that 'the system of quotas is quarterly and mandatory and gives no automatic entitle- ment to advances' and that during a meeting which took place on 24 May 1989 between the representatives of the parties, it was emphasized that the advance on quotas was 23. As the Court of First Instance has no longer possible during the course of the clearly shown, the system of Article last quarter of application of the quota sys- 11 implies that '(...) the overshooting of the tem. The judgment also took into account quota during a quarter may be offset by not the context in which the decision had been using up the quota during the next quar- adopted, 14 in particular, a letter of 2 August ter'. 16 Consequently, Finsider could not 1988 in which the Commission explained to claim any advance on quotas after 30 June Finsider its reasons for refusing to grant 1988 since, as noted above, the system of advances on quotas for the second quarter of quotas had been brought to an end from the 1988 and the telex by which Eurofer third quarter of that year. informed its members on 6 April 1988 that it would not be granted advances on quotas from the third quarter for the second quarter of 1988, in view of the fact that the quota system would end on 30 June 1988. 24. Finsider also maintains before this Court that the conditions for an advance on quotas have been met, since an advance is offset by an actual reduction of the production or delivery quantities during the course of the quarter following that for which the advance has been granted, even if quotas have been 21. It appears from those documents, with- abolished. 17 out any possible ambiguity, that Finsider had been informed of the reasons for the refusal to grant those advances in such a way that a court could review the legality of the deci- sion and the party concerned would have sufficient information available to make it 25. In my view, such an argument gives rise possible to ascertain whether the decision to perplexity. H o w can advances be made on was well founded or whether it is vitiated by quotas which will never exist? More specifi- a defect allowing its legality to be contest- cally, how can account be taken of quotas by ed. 1 5 reference to a period during which the mar- ket is totally liberalized and production is no

30. The second plea is based on the judg- ment in Hoogovens in which the Court of Justice annulled Articles 5 and 17 of Deci- sion N o 194/88/ECSC (hereinafter referred 27. I would like to note at this point, first, to as 'Article 5' and 'Article 17'). The former that the advance is not a right which is auto- gave the Commission the power to fix each matically granted to undertakings, and sec- quarter, for each undertaking, the production ondly, that a quota may be 'moved' from one quotas and the part of such quotas which quarter to another only if those two periods could be delivered in the common market. are subject to the quota system. Thus, carry- The latter authorized undertakings, subject overs — the opposite of advances — to the to certain conditions, to convert each quarter first quota of 1988 from the fourth quarter a portion of the difference between their of 1987 was possible only because quotas production quota and the proportion of the existed for that period (see Article ll(3)(b) quota which may be delivered in the com- of 194/88/ECSC and Article 18(2) of Deci- mon market into quotas for delivery in the sion N o 3485/85/ECSC). common market at the rate of 1: 0.85 — referred to as I: P 20 —, thus allowing them to increase their deliveries on that market.

28. As regards the third limb of the plea, Finsider cannot invoke a breach of the prin- ciple of the protection of legitimate expecta- 31. That plea (see paragraphs 42 to 66 of the tions since the end of the quota system n o contested judgment) is divided into two longer enabled advances to be granted, the limbs. end was entirely foreseeable, in view of the actual wording of Decision N o 19 — See paragraph 1 of the recital and Article 18(2), as well as paragraph 97 of the judgment of the Court of First Instance. 18 — Reply, page 9 of the French translation. 20 — The ratio between production quotas and delivery quotas.

'Article 5 of Decision N o 194/88/ECSC takes over the wording of Article 5 of Deci- 36. Since the sole ground for the annulment sion N o 3485/85/ECSC. Consequently, it of Article 5 of Decision N o 194/88/ECSC must be annulled for the same reasons which upheld in the judgment of 14 June led to the annulment of that provision in the 1989 refers to the grounds of the judgment judgment of 14 July 1988'. 22 of 14 July 1988, the Court of First Instance could properly consider that the later annul- ment could not be more extensive than the earlier one 26 and that '(...) the Court of Jus- tice has not annulled Article 5 in so far as it constitutes the legal basis for the Commis- 34. It follows that, as the Court of First sion's power to fix the quotas of steel under- Instance rightly points out, 23 the grounds of takings quarterly, but solely in so far as the the judgment in Peine-Salzgitter and Others reference levels which it employs in order to v Commission of 14 July 1988 24 must be fix those quotas do not enable delivery quo- referred to in order to determine the scope tas to be determined on a basis which the of the judgment in Hoogovens. Commission regards as equitable for under- takings whose I: P ratios are significantly lower than the Community average'. 27

21 — Appeal, see page 29 of the French translation. 22 — Paragraph 26, cited in the judgment of the Court of First Instance at paragraph 53. 25 — Paragraph 1 of the operative part, my emphasis. See also 23 — Paragraph 53 of the contested judgment. paragraph 28 of the grounds. 24 — Joined Cases 33/86, 44/86, 110/86, 226/86 and 26 — Paragraph 55 of the contested judgment. 285/86 Peine-Salzgitter and Others v Commission [1988] ECR 4309. 27 — Paragraph 57 of the contested judgment, my emphasis.

42. In the Hoogovens judgment the Court of Justice considered that the adjustment of the 39. The individual decisions fixing Finsider's I: P ratio, as it appeared in Article 17 of quotas for the second quarter of 1988 thus Decision N o 194/88/ECSC — which merely remained valid and could '(...) be used as a restates the provisions of Article 1 of Deci- reference for the calculations of the amounts sion N o 1433/87/ECSC — did not ensure by which the Commission has charged the the equitable allocation of quotas required applicant with exceeding its quotas'. 3 1 by Article 58(2) of the ECSC Treaty and the Court of Justice annulled Article 17.

28 — Paragraph 56 of the contested judgment. 29 — Paragraph 58 of the contested judgment. 32 — See paragraph 46 of the contested judgment. 30 — Paragraph 59 of the contested judgment. 33 — See on this point paragraph 18 of the judgment of 14 June 31 — Paragraph 62 of the contested judgment. 1989 in Hoogovens, supra, footnote 8.

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FINSIDER v COMMISSION

43. The fine was imposed on Finsider for 46. The appellant's argument may be exceeding quotas during the second quarter reduced here to three points: of 1988. It is common ground that for that period and for the category of products referred to in the decision '(...) the Commis- sion acted on that annulment in favour of the applicant by decreasing the excesses initially calculated for the two categories of product concerned'. 3* — the effects of the annulment of Article 17 must be offset against the excess over quotas noted in the second quarter of 1988; 37

48. As regards the first point, the two proce- wording of Article 34 of the ECSC Treaty, dures which lie at the heart of the matter the Court of Justice held that must not be confused.

'If the Court entertains the application, it may not dictate to the High Authority the 49. The decision imposing a fine concerns an decisions which should be consequent upon excess over quotas during the second quarter the judgment annulling the decision but the of 1988, 40 since it is stated that the effect of Court must confine itself to referring the the annulment of Article 17 for that period matter back to the High Authority.' 43 (and therefore the re-establishment of certain quotas for Finsider) was taken into account by the Commission. 41

53. It is clear that if the Court of First Instance had offset the exceeding of the quota of the second quarter, as Finsider had requested, against the quotas re-established 50. Moreover, in application of the first from the previous quarters in Finsider's paragraph of Article 34 of the ECSC Treaty, favour, following the judgment of the Court it was for the Commission alone to take the of Justice annulling Article 17 of Decision necessary steps to comply with the judgment N o 194/88/ECSC, it would have been exer- annulling Article 17. cising a power which Article 34 of the ECSC Treaty denies to it.

51. It follows from Article 34 that the Com- munity judicature cannot dictate to the 54. The Court of First Instance was there- Commission, the source of the annulled act, fore right to refuse to engage in that exer- what steps it must take. cise. 44

57. The Court of Justice has consistently held that Observance of the right to be heard is in all proceedings in which sanctions, in particular fines or penalty payments, may be 60. It is indeed common ground that the lat- imposed a fundamental principle of Commu- ter calculations taken into account in assess- nity law which must be respected even if the ing the overshooting of quotas were raised proceedings in question are administrative during a meeting between the parties with- proceedings'. 46 out being communicated formally to the appellant. 49

58. In its judgment in Belgium v Commis- sion of 10 July 1986, 47 the Court stated that 'in order to respect [that principle], the 61. The failure to do so would be such as to person against whom an administrative constitute an infringement of the right to be heard which might result in the annulment of the measure, if it were established that, had it not been for that irregularity, the out- 45 — Article 5(1) of Decision N o 194/88/ECSC. 46 — Judgment in Case 85/76 Hoffmann-La Roche v Commission [1979] ECR 461, paragraph 9, (especially paragraph 14). See also the judgment in Case 322/81 Michelin v Commission [1983] ECR 3461. 48 — Paragraph 108 of the contested judgment. 47 — Case 234/84 Belgium v Commission [1986] ECR 2263, paragraph 27. 49 — Paragraph 109 of the contested decision.

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O P I N I O N O F MR D A R M O N — CASE C-320/92 P

come of the procedure might have been dif- 65. By judgment of 1 October 1991 in ferent. 50 Vidrányi v Commission, 53 the Court of Jus- tice accepted a ground of appeal based on the infringement by the Court of First Instance of the obligation to state the reasons on which its decisions are based. 54

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FINSIDER v COMMISSION

should be a reference to that principle in the 70. In the alternative, Finsider requests the grounds given for refusing to reduce the Court of Justice to reduce the amount of the amount of the fine. fine.

69. It follows that the Court of First Instance had no duty to justify itself with regard to that principle. It provided Finsider with sufficient information to make it possi- ble to ascertain whether its decision was well founded or whether it might be vitiated by a 71. In the absence of an error in law com- defect allowing its validity to be contested mitted in that respect at first instance, the and enabling the Court of Justice to review Court of Justice may not substitute its deci- its legality. sion for that of the Court of First Instance.

72. I am therefore of the o p i n i o n that the C o u r t s h o u l d dismiss the appeal and that it should o r d e r the appellant t o p a y the costs of the proceedings.

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