C-280/99

OPINION OF MR GEELHOED — JOINED CASES C-280/99 P, C-281/99 P AND C-282/99 P

OPINION OF ADVOCATE GENERAL GEELHOED delivered on 8 February 2001 1

Table of contents

I —Community law 1-4721

II — National legislation I - 4723

III — The Commission decision authorising the aid scheme I - 4724

D — Casilina's and Lamifer's first plea: infringement of Article 4(c) of the ECSC Treaty and inadequate statement of reasons in regard to unlawfulness of the Fifth Code; infringement of Article 95 of the ECSC Treaty and inadequate statement of reasons in regard to non-application by the Commission of the possibility of derogation pursuant to this provision 1-4739

E — Casilina's and Lamifer's second plea: infringement and misapplication of the second indent of Article 4(2) of the Fifth Steel Aid Code 1-4743

F — Casilina's and Lamifer's third plea: infringement and misapplication of the Commission decision of 12 December 1994 1-4749

G — Casilina's and Lamifer's fourth plea: misuse of power from the point of view of unequal treatment I - 4754

VIII— Costs 1-4758

IX — Conclusions 1-4759

3. Article 4(c) of the ECSC Treaty pro- vides:

4. Under the first paragraph of Article 95 of the ECSC Treaty, the Commission adopted Decision No 257/80/ECSC of 1 February 1980 establishing Community 'The following are recognised as incompa- rules for specific aids to the steel industry.4 tible with the common market for coal and This decision is commonly referred to as 'the First Steel Aid Code'. According to the second paragraph of Part I of the preamble 2—Joined Cases T-164/96, T-165/96, T-166/96, T-167/96, T-122/9- and T-1.10/97 Mm™ Irme ,md Others v Com- mission 11999| ECU II-1447. 3 — OJ 1996 L .116, p. 24 and OJ 1997 1. 102, p. 42. 4 — OJ 1980 I. 29, p. 5.

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to that decision, the prohibition in the 7. The provisions of the Fifth Code relevant ECSC Treaty on subsidies or aid granted by for present purposes provide as follows: States applies only to measures constituting purely national steel policy instruments and not to aid aimed at setting up a Community steel policy, such as the restructuring of the steel industry, which was the aim of — in Article 4(2): Decision No 257/80.

'aid to steel undertakings which per- manently cease production of ECSC iron and steel products may be deemed compatible with the orderly function- ing of the common market provided that the undertakings

comments, of any plans to grant or restructuring programme. Pursuant to Arti- alter aid of the types referred to in cle 6(1) of the Fifth Code, it notified the Articles 2 to 5. ...'; Commission thereof in February 1994.

— in Article 6(4): 9. The validity of that decree-law was extended by Decree-law No 234 of 14 April 1994 and again subsequently by Decree-law No 396 of 20 June 1994. The 'If, after giving notice to the interested latter decree-law was finally transformed parties concerned to submit their com- into Law No 481/94 of 3 August 1994 on ments, the Commission finds that aid the restructuring of the Italian private steel in a given case is incompatible with the sector (GURI No 183 of 6 August 1994, provisions of this decision, it shall p. 12, hereinafter 'Law No 481/94'). inform the Member State concerned of its decision. ...';

— in Article 6(6): 10. Article 1(1) of Law No 481/94 pro- vides for the grant of aid for the closure of steelworks on condition that the plant and equipment are dismantled within a speci- fied period. Under Article 1(3) requests for aid must be submitted before 30 July 1994, 'All individual awards of the types of whilst plant and equipment must be dis- aid referred to in Articles 4 and 5 shall mantled before 31 March 1995. Full pay- be notified to the Commission. ...' ment must be made by 31 December 1996. Under Article 1(4) the technical rules for its implementation are to be laid down by decree of the Italian Minister for Industry, Trade and Craft Trades.

II — National legislation

8. At the beginning of 1994 the Italian 11. Article 1(1) of Ministerial Decree Government enacted Decree-Law No 103 No 683 of 12 October 1994 (Decree of 14 February 1994 introducing urgent No 683/94), notified to the Commission measures for the implementation of its steel in August 1994, provides that, in order to

TV — Facts

13. By decision of 12 December 1994, the Commission authorised the aid scheme in principle, 6subject to prior notice being given of all actual cases of application of 16. On 8 September 1995 and 11 March 1996 the Italian Government notified the Commission, under Article 6(6) of the Fifth 6 — OJ 1994 C 390, p. 20. Code, of aid for the definitive closure under

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Law No 481/94 of, inter alia, Moccia, and actual production of 11 356 Casilina and Lamifer, three undertakings tonnes/year (14.2% of production specialising in the production of steel and/ capacity). or hot-rolled products.

18. In total, 43 ECSC steel undertakings established in Italy submitted requests for aid under Law No 481/94.

grant to Moccia and Casilina, amongst pay the costs including, jointly and sever- others, was incompatible with the common ally, those of the Commission. market within the meaning of Article 4(c) of the ECSC Treaty.

22. By Decision 97/258 the Commission made the same finding as regards certain other undertakings, including Lamifer. VI — Pleas on appeal

26. Moccia raises the following three pleas V — Procedure before the Court of First against the judgment appealed against: Instance

23. By applications lodged at the registry of the Court of First Instance on 19 October 1996, Moccia and Casilina brought the — infringement and misapplication of actions registered as T-164/96 and Article 4(c) of the ECSC Treaty — T-166/96 respectively. By application insufficient and internally contradic- lodged on 18 April 1997 Lamifer brought tory statement of reasons — misuse of the action registered as T-122/97. powers;

24. By order of the President of the Third Chamber, Extended Composition, of the Court of First Instance of 18 December — infringement and misapplication of the 1998, the cases were joined for the pur- second indent of Article 4(2) of the poses of the judgment. Fifth Steel Aid Code;

25. By judgment of 12 May 1999 (herein- after 'the judgment appealed against') the Court of First Instance dismissed all the — infringement of the principle of non- applications and ordered the applicants to discrimination. I - 4726

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provisions adopted under Article 95, '82. The Court observes that the purpose of namely the Fifth Steel Aid Code, are also Article 4 of the Treaty is, as described not applicable to it. At the very most, were above, to ensure "the establishment, the latter provisions to be applicable they maintenance and observance of normal would have to be applied flexibly in regard competitive conditions" (De Gezamen- to closure aid. lijke Steenkolenmijnen in Limburg v High Authority, cited above in para- graph 81, at p. 22). Article 4(c) prohi- bits subsidies or aids granted by States "in any form whatsoever". That phrase does not appear in Articles 4(a), 4(b) or 4(d) and this gives an unusually wide meaning to the prohibition it describes (judgment cited above, at p. 21). The prohibition so expressed is formulated 31. The reasoning on the basis of which the in exceptionally strict terms because it Court of First Instance dismissed that plea targets direct interference in the opera- in paragraphs 75 to 91 of its judgment is tion of the common market in coal and said by Moccia to be contradictory: on the steel, which is considered, as such, to one hand it states that Article 4 of the be contrary to the very conditions on Treaty seeks to secure normal competitive which the common market was estab- conditions; on the other, it takes no account lished. For that reason, such aid is of that statement in the interpretation of deemed incompatible with the common the prohibition of the grant of aid con- market without the need to establish or tained in paragraph (c) of that article. even to consider whether there is, in Moreover, the Court of First Instance actual fact, any interference with the wrongly omitted to give its reasons for conditions of competition or it is liable adopting such a rigorous interpretation to occur (see the Opinion of Advocate which in some cases would render the General Lagrange in De Gezamenlijke provision devoid of any plausible meaning. Steenkolenmijnen in Limburg v High Authority, cited above, [1961] ECR 34, at p. 41).

unconditional prohibition on all aid, nomic developments in the national econo- which is in substance contrary to the mies concerned which may manifest them- very conditions in which the common selves for example in divergent price and market in coal and steel was estab- wage inflation trends. Secondly, they are lished. The latter, on the other hand, sensitive to discrepancies in general mea- only prohibits aid where it is such as to sures adopted by the Member States which, distort or threaten to distort competi- although not exclusively directed at the tion by favouring certain undertakings coal and steel sectors, such as for example or the production of certain goods. an alteration in the general charges imposed on undertakings, have an impact on those sectors. Thirdly, they are sensitive to measures adopted by the Member States which are specifically and exclusively direc- ted to the coal and steel sector, whether in the form of specific relief from charges (subsidies and other forms of State aid), or in the form of specific increases in such 84 It follows that aid for closure granted charges. by a Member State to an ECSC steel undertaking falls within the prohibi- tion of Article 4(c) of the ECSC Treaty, without its being necessary to establish that the conditions of competition have been undermined. The Fifth Code, whose purpose is to provide for dero- gations from that prohibition, can therefore apply to such aid.'

measures may be directed at the coal and ing to policy in areas in which the Member steel industry of the State adopting the States have not transferred their competen- measures concerned or at the coal and steel cies, but from which consequences may industries of other Member States, depend- flow in the form of competitive distur- ing on the content and consequences of the bances on the common market. relevant measures. As for the last men- tioned category of distortions flowing from specific national measures directed exclu- sively at the coal and steel industry, the ECSC Treaty contains the categorical pro- hibition laid down in Article 4(c). 37. In respect of the measures caught by the categorical prohibition under Arti- cle 4(c), only under Article 95 of the ECSC Treaty may these, by way of derogation, be permitted under the strict substantive and 35. The rationale for that difference in procedural conditions laid down therein. treatment provided for in the ECSC Treaty by the framers of the Treaty is that specific intervention by national governments directed exclusively at the coal and steel industry are very apt to affect the function- ing of the common market in coal and steel and to distort competitive conditions in it. 38. It occasions no surprise that legal The mere existence of such measures is questions concerning the scope and applic- deemed sufficient by the framers of the ability of Article 4(c) and the demarcation Treaty to give rise to a presumption that line to be drawn between Article 4 afore- competitive conditions are being affected. said and Article 67 of the ECSC Treaty In addition, under the ECSC Treaty, the formed the subject-matter of the Court's Member States have given up their compe- earliest case-law. The far-reaching limita- tencies in regard to the establishment and tion entailed by Article 4(c) on the Member operation of the common market in coal State's authority to act made its application and steel. Those competencies also include very controversial. specific intervention in the coal and steel market in the form of State aid to under- takings.

40. In its judgment some years later in De Gezamenlijke Steenkolenmijnen in Lim- burg v High Authority 8the Court had to rule on a German mineworker's bonus paid out of public funds in favour of German 42. What is the significance of the above coalminers. In that case the Court held that analysis to the plea raised by Moccia? such a bonus was to be regarded as a specific subsidy within the meaning of Article 4(c) of the Treaty and thus prohib- ited. In the context of the case now before the Court, that judgment continues to be of considerable importance because it was the 43. First, it is abundantly clear that the start of the development of the notion of closure aid at issue also comes within the subsidies, further elaborated in the Court's unconditional prohibition on the grant of subsequent case-law, 9and because it fur- aid laid down in Article 4(c). That it is a ther specifies and elucidates the reciprocal national aid measure is not in dispute and scope of Articles 4(c) and 67 of the ECSC that the measure is directed at and limited Treaty. Thus, the Court dismissed expressis to the ECSC steel industry is expressly laid verbis the German Government's argument down in Italian law No 481/94. Thus, in that Article 67 further elaborates on the the present case there can be no doubt as to application of the prohibition in Arti- the applicability of Article 4(c) to the cle 4(c). These are two provisions which contested closure aid. differ in their sphere of application.

8 — Case 30/59 [1961] ECR 1. 9 — Cf., inter alia, judgments in Case C-301/87 France v Commission [1990] ECR I-307. Case C-39/94 SFEI and 44. Secondly, as regards the application of Others [1996] ECR I-3547 and Case C-200/97 Ecotrade [1998] ECR I-7907. Article 4(c) aforesaid it does not need to be

46. These findings are in themselves cap- able of leading to the conclusion that the reasoning at paragraphs 82 to 84 of the judgment appealed against is correct in 49. Moreover, in fairly homogeneous pro- light of the wording and scheme of the duction markets such as those for crude ECSC Treaty and that the plea raised steel and hot-rolled steel products, any against those paragraphs must therefore measure which seeks on the supply side to fail. limit production capacity is very apt to have an influence on market conditions and thus its operation. In economic effect such measures are comparable to agreements between competitors to limit production. Their consequences become apparent not only in competitive relationships between 47. I wish to add one further point. Both at the remaining producers but also in the first instance and now on appeal Moccia relationship between the demand and sup- has contended that the prohibition under ply sides of the market. In view of its Article 4(c) of the ECSC Treaty on a less effects, aid for closure or disinvestment is rigid interpretation 'tailored more to eco- therefore caught, in the same way as its nomic practice' should not be applicable to counterpart aid for establishment or invest- closure aid because that form of aid will by ment, by the prohibition under Article 4(c).

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Thus, Moccia's view of the matter is with- — prohibition of aid is the norm and the out any substantive foundation. Fifth Steel Aid Code is an exception to it which must therefore be strictly interpreted;

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— it ensures that its effects are sufficiently 53. Moccia contends that the reasoning of significant, not only in terms of the the Court of First Instance set out above dismantlement of plant and equipment demonstrates an incorrect view of the law but also in terms of reducing the resulting in an unnecessarily restrictive current level of production (paragraph interpretation of the second indent of 155); Article 4(2) of the Fifth Code. That provi- sion, according to Moccia, is intended to prevent antiquated installations which have been out of commission for a long time and could therefore be of no significance to the endeavour of limiting production at Com- — that objective was achieved because the munity level from nevertheless being con- closure aid granted reduced production sidered for closure aid. A reasonable and of hot-rolled steel by more than 5 plausible interpretation of this provision million tonnes (paragraph 156); would have to mean that undertakings such as Moccia which have recently modernised their plant and, because they were engaged in further modernisation, did not produce during the reference period, could never- theless be considered for the grant of closure aid. — the alternative criterion put forward by the applicants, namely the mere possi- bility of producing, plainly conflicts with that condition because it takes no account of the requirement that there be actual regular production;

54. In its refutation of this view of the matter the Commission relies on all parts of the Court of First Instance's reasoning set — application of that criterion would out above. therefore undermine the objective pur- sued, that is to say a reduction in actual production (paragraph 157);

57. The desirability of such strict interpre- tation is further emphasised by the Com- munity legislature itself in Part I of the 61. The wording of Part I of the preamble preamble to the Fifth Code in the following to the Fifth Code is also clear: aid to terms: 'The strict regime thus established, 'finance the permanent cessation of all which now applies to the entire territory of ECSC activities by the least-competitive 12 the (Community) ...'. enterprises'. The use of the term 'competi- tive' can hardly be construed otherwise than as confirmation of the point of departure that the closure aid permitted under Article 4(2) of the Code can only concern undertakings which are regularly engaged in production. Idle undertakings 58. The interpretation to be given to the or ones operating with only a fraction of second indent of Article 4(2) of the Fifth their capacity can hardly be described as Code must be approached in the light both 'competitive'. of the general principle that exceptions under Article 95 to the general prohibition under Article 4(c) on the grant of aid are to be strictly interpreted and of the preamble to the Fifth Code itself which gives a restrictive meaning to the aid measures permitted under the Code. 62. The purpose of this exception to the general prohibition on the grant of aid, namely to reduce existing overcapacity in the territory of the ECSC affords further justification for limiting that measure to those undertakings which are 'regularly' in production. When such undertakings dis- 59. It follows that Moccia must have appear from the market that has immediate weighty substantive arguments to warrant consequences for total product supply and a more extensive interpretation of the the objective pursued becomes immediately second indent of Article 4(2). discernible in market conditions. That

66. In the judgment appealed against this plea is refuted in the following terms:

64. Moccia's third plea is directed against paragraphs 227 and 233 of the judgment appealed against. In those paragraphs the — The Court of First Instance established Court of First Instance found Moccia's plea on the basis of a largely verbatim that, for the purposes of closure aid, reproduction of Article 1(1) and (2) of undertakings with one site were discrimi- the ministerial decree that Article 1(1) I - 4736

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laid down the conditions to be met by a of one of its production sites need not steel undertaking in order to be con- fulfil the requirement of regular pro- sidered for closure aid. One of those duction laid down in Article 1(1 )(e)' conditions is the requirement of regular (paragraph 231); production (paragraphs 228 and 229);

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67. Moccia states that this reasoning is In order to prevent the measure from being insufficient because inherent in it is an applied to the closure of sites on which only implicit yet unfounded refusal to view the ancillary or support activities were carried definition of the 'production site' as a on, the ministerial decree had to give a special provision. Furthermore, the Court definition of 'fully operational' production of First Instance's arguments are said to sites capable of being considered for closure contain a petitio principii. The judgment aid. That definition in Article 1(2) of the states that in the event of closure of a ministerial decree in no way detracts from production site the latter must satisfy not the requirement of regular production laid only the criterion of regular production but down in Article 1(1). The Court of First also of suitability for production. Satisfying Instance's reasoning set out above which the requirement of regular production is found Moccia's view of the matter to be said to subsume within itself the require- unsubstantiated adheres to these pointers ment of suitability for production. Thus, and draws the correct conclusion from according to Moccia, the Court's reasoning them. There is therefore no question of is illogical. any failure to provide an adequate state- ment of reasons.

68. The Commission rightly points out that this plea essentially seeks to highlight a flaw in the reasoning of the judgment appealed against. That is why I reproduced in extenso the Court of First Instance's contested reasoning at point 68 above. 70. The allegation contained in the initial part of that plea of a misuse of powers is neither elucidated nor substantiated in the notice of appeal. It is therefore in my view inadmissible. I also refer in that connection to my observations on the fourth plea raised by Casilina and Lamifer. 69. I can be brief in my appraisal of this plea.

76. In my opinion that must also remain the case where a party in a case joined at first instance raises a plea on appeal which was put forward not by it but by other parties in the joined case. Where cases are 73. In the Commission's opinion, that view joined for the purposes of the judgment of the matter is further corroborated by each party to the proceedings remains paragraph 41 of the judgment appealed responsible for the pleas and defences against from which it appears that the which it raises. That is true of proceedings appellants directly raised not a single argument against the Fifth Code. More- over, that paragraph of the judgment 13 — Case CM/98 P [1999] ECR I-5202. paragraph IS.

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77. At the hearing Casilina and Lamifer countered the objection of inadmissibility 79. I therefore conclude that the first part raised by the Commission with the argu- of this plea is inadmissible. ment that at first instance they were claiming a n n u l m e n t of Decision No 96/678, the decision of 12 December 1994, together with 'any other earlier, related or derivative act'. Thus, their appeal is said to be directed also against parts of the Fifth Steel Aid Code whose legal validity they are seeking to dispute in the plea at issue. Viewed in that light the plea, they say is not 'new' but an extension of 80. For an assessment, on a purely ancillary their submissions at first instance. basis, of the content of that part I refer to my observations on Moccia's first plea. Although Casilina and Lamifer highlight 14 — Case T-295/94 [1998] ECR II-813, paragraph 138. certain other aspects in their arguments, 15 — Case C-136/92 P Commission v Brazzelli Lualdi and their submissions also focus on the view Others [1994] ECR I-1981, paragraph 59, reaffirmed in, for example, Case C-19/95 P San Marco v Commission that closure aid does not by definition [1996] ECR I-4435, paragraph 49 et seq. and, most affect the operation of the Community steel recently, in Case C-458/98 P Industrie des Poudres Sphériques v Council [2000] ECR I-8147, paragraph 74. market and therefore falls outside the scope

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of Article 4(c) of the ECSC Treaty. They argument in favour of the non-applicability deduce therefrom the further consequence of Article 4(c) can be derived from Groupe- that authorisation by the Commission ment des Industries Sidérurgiques Luxem- under Article 95 of the ECSC Treaty is bourgeoises for the purposes of the present not necessary for closure aid and that case which concerns a subsidy directed therefore those parts of the Fifth Steel Aid solely at the steel industry. Code which relate to closure aid are unlawful.

85. The Commission also raises an objec- tion of inadmissibility to the second part of the first plea in which it is stated that Article 95 of the ECSC Treaty was infringed and that the reasons for the non-applicability of that provision are 82. In my view, and I find support for my inadequately stated. position in the Opinion of Advocate Gen- eral Lagrange in the judgment cited above in De Gezamenlijke Steenkolenmijnen in Limburg v High Authority, the issue in Groupement des Industries Sidérurgiques Luxembourgeoises was primarily whether 86. That plea is directed at paragraphs 259 a specific charge imposed without distinc- and 260 of the judgment appealed against tion on the whole of Luxembourg industry in which the Court of First Instance refutes could be deemed to be a special charge the plea raised by Sidercamuna in Case within the meaning of Article 4(c) of the T-130/97 that the Commission discrimi- ECSC Treaty. The Court held that it could nated against it by treating its case differ- not, with the consequence that Article 67 ently from other comparable cases in the of the ECSC Treaty was applicable to it. No past.

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It is not apparent from the judgment that 90. The Court of First Instance rejected this Casilina and Lamifer at first instance raised plea on the ground, in sum, that Side- the same or a comparable plea. rcamuna had not in any event demonstra- ted that there were special circumstances applicable to it which, in light of the objectives of Articles 2 to 4 of the ECSC Treaty, would have compelled the Commis- sion to adopt a specific decision addressed to it.

88. Again purely in the alternative, I am compelled to conclude that this plea is also 92. This view of the matter is unsustain- unfounded. able. According to recent case-law on the application of Article 95 aforesaid, 16 where the Commission finds that a national aid measure does not satisfy the conditions of a steel aid code it may nevertheless consider undertakings for the grant thereof on an individual basis where pursuit of the objectives laid down in Articles 2, 3 and 4 of the ECSC Treaty so require. That is reaffirmed in paragraph 258 of the judg- 89. In support of its plea the applicant ment appealed against. The Court of First Sidercamuna at first instance submitted Instance rightly makes that subject in that the Commission wrongly did not avail paragraph 259 to the requirement that the itself of its competence under Article 95 of undertakings which invoke this ground for the ECSC Treaty to adopt a specific deci- sion derogating from the general rules of the steel aid code. Since the Commission 16 — Case T-239/94 EISA v Commission [1997] ECR II-1839, Case T-244/94 Wirtschaftsvereinigung Stahl v Commission has so availed itself in the past, it treated [1997] ECR II-1963 and Case T-243/94 British Steel v comparable situations unequally, thus pla- Commission [1997] ECR II-1887. See also Case C-1/98 P Corus UK v Commission [2000] ECR I-10349, paragraph cing Sidercamuna at a disadvantage. 40.

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97. In regard to this plea the Commission observes that the appellants are essentially repeating their factual arguments which they submitted before the Court of First E — Casilina's and Lamifer's second plea: Instance and were rejected by that court. It infringement and misapplication of the is of the view that the plea therefore runs second indent of Article 4(2) of the Fifth counter to Article 32 of the ECSC Treaty Steel Aid Code and Article 51 of the ECSC Statute of the Court because it demands a re-appraisal of the facts on appeal. 17 Moreover, that plea is said to lack the precision required under Article 51(1) of the Statute and Arti- 95. In their second plea the appellants in sum criticise the Court of First Instance for wrongly accepting the application by the 17 —Case C-283/90 P Vidrányi v Commission [1991] ECR Commission of the criterion of the highest I-4339, paragraphs 11 to 13.

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cle 112(1)(c) of the Rules of Procedure of down therein of "regular" production, the the Court. 18 The Commission infers there- Commission had to apply the criterion of from that that plea too is inadmissible. the highest possible production and the period from 1 January 1993 to the date of notification as the reference period.'

98. Indeed both the formulation and the reasoning of that plea leave much to be desired because, on the one hand, it seems strongly to challenge the view formed on In the alternative: the facts by the Court of First Instance as to the applicants' actual production in the years 1991 to 1993 and, on the other, if not expressly then by implication, it is calling in question the legal appraisal of the Court of First Instance. 'The Court of First Instance's judgment in this regard is underpinned by inadequate reasoning.'

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101. In the judgment appealed against the impossible to judge whether the presence of Court of First Instance, recognising that the an undertaking on the market is significant. Commission has a certain margin of dis- They are reiterating these complaints on cretion in establishing the relevant criteria, appeal, this time against the Court of First determined that the highest possible pro- Instance's reasoning, althought they were duction provides an acceptable criterion in found to be unsubstantiated at first assessing whether the requirement of reg- instance. ular production is satisfied. Such a criter- ion, the Court of First Instance observes at paragraph 138 of the judgment appealed against, prevents a situation where 'aid would ultimately be awarded even to undertakings which, although in irreversi- 104. On this point as well the choice made ble crisis, none the less managed to survive by the Commission in delimiting the refer- on the market for some years with a level of ence period must be assessed in the light of production which is very low'. the wording and scope of the Fifth Code. At paragraphs 120 to 127 the Court of First Instance explained why the Commission was not obliged to allow the reference period to commence as at 1 January 1991:

102. In view of the wording and scope of the Fifth Steel Aid Code which is not primarily concerned with the dismantling — it is clear from the wording of Arti- of production capacity but with removing cle 4(2) laying down the conditions for productive capacity from the market the the grant of closure aid that each of the Court of First Instance was entitled to form three conditions referred to has its own that view of the matter. Therefore the time-limit: appellants' plea to the contrary, though admissible, is ill-founded.

— if the Community legislature had inten- ded to set 1 January 1991 as the date of 106. The appellants' most significant com- commencement of the reference period, plaint against that part of the judgment it would have done so expressly (para- appealed against which refuted their view- graph 123); point that the reference period applied by the Commission, that is to say commencing 1 January 1999, was too short is that the Court of First Instance failed to recognise that the requirement of 'regular produc- tion' entails a continuous level of produc- tion stretching over several years. Addi- tionally, the Court of First Instance in — the scope of the first and third indents taking the view of the matter which it did is different from that of the second failed to take into account that the choice indent. In the first two cases the of 1993 as reference year was inappropriate intention is clearly to prevent fraud since that was a period of reduced eco- (formation of companies or increase in nomic activity in Italy which depressed production of a plant purely in order to output. Finally, the appellants consider that benefit from aid). In the latter case the the Court of First Instance was wrong to objective is 'to ensure that the award of dismiss out of hand their reference to closure aid brings about an appreciable Commission Decision No 89/467/EEC19 reduction in production, which implies in paragraph 132 of the judgment appealed that such aid is to be awarded only to against. They thereby sought to show that undertakings which at the time of variations in the market share of under- closure had a reasonable level of pro- takings from one year to the next did not duction' (paragraph 124), necessarily reflect changes in their eco- nomic presence on the market which was instead to be assessed as part of a dynamic process. An assessment of that process required a longer reference period than was applied by the Commission in this case. — therefore there is no compelling reason why the requirement of regular pro- duction should be assessed from 1 Jan- 19 — Commission Decision of 12 July 1989 concerning a proceeding under Article 85 of the EEC Treaty (IV/ uary 1991 (paragraph 126). 30.566-UIP) (OJ 1989 L 226, p. 25).

— the Court of First Instance concluded •— the closure of undertakings which had that it had not been 'shown that the produced in 1991 and 1992 but no Commission, in fixing the duration of longer or to a much smaller extent the period within which regularity of from 1993 to the date of notification production must be assessed, mani-

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110. The argument which they advance in connection with the poor economic situa- tion in Italy in 1993 is of a factual nature and must be regarded as inadmissible. Even if it were admissible it would be unfoun- ded. The rules provided for in the Fifth 112. My conclusion is that Casilina's and Code were intended to deal with the Lamifer's second plea, in as far as it is structural crisis with which the steel sector admissible, is unfounded.

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statement that the law has been infringed reasons on which its decision is based the are sufficient according to settled case- situation as a whole which led to the law. 20 Only when the reasoning underlying adoption of the decision and the general that part of the plea has, with some objectives which it seeks to attain. 22 difficulty, been reconstructed, can it be construed as a complaint against the rea- soning in paragraphs 272 to 280 of the judgment appealed against. I shall assess it as such in what follows below.

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119. The Commission was thereby By keeping on their staff, organising train- prompted to initiate, by letters dated ing courses and requesting the authorities 15 December 1995 and 2 February 1996, for aid for restructuring, they gave the the procedure laid down in Article 6(4) of appearance of wishing to confront the crisis the Fifth Code. In that connection the in which they found themselves. It would Commission requested the Italian Govern- also appear from other factors, such as the ment to submit its observations, whilst the maintenance of energy supply contracts, other Member States and other interested that the limited production or absence parties were kept informed by publication thereof in the reference period was wholly of the decision initiating the procedure. due to the unfavourable economic circum- Those concerned, including Casilina and stances and that the undertakings with Lamifer, communicated their observations good production facilities were desirous of to the Italian authorities and the Commis- resuming regular production at the right sion. moment in order again to acquire a market presence.

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OPINION OF MR GEELHOED — JOINED CASES C-280/99 P, C-281/99 P AND C-282/99 P

1994, criteria other than the Commission's 124. In assessing the reasoning underlying were permissible but that they had to be both decisions against the requirements able to demonstrate regular production governing the statement of reasons set out during the reference period. However, the above, the Court of First Instance was criteria put forward by the Italian Govern- entitled at paragraphs 274 to 280 of the ment were not able to do so; at most they judgment appealed against to conclude that could show that the undertakings con- it satisfied the requirements of lucidity and cerned had been in a position to manufac- reviewability and that the factual and legal ture ECSC products. Where an extensive context was sufficiently clearly stated interpretation of the requirement, laid therein. The statement of reasons clearly down in the Fifth Code, of regular produc- sets out the factual context in which the tion up to the date of notification was not closure aid has to operate, namely the permitted, the alternative criteria put for- structural sales problems on the steel mar- ward by the Italian Government were ket, and convincingly reflects the scope of therefore not acceptable. The Commission the Fifth Code in that connection. The ended its statement of reasons with an conclusion that under the code closure aid explanation of why the argument put could be granted only if undertakings forward by the Italian Government con- actually regularly producing in the refer- cerning the poor economic situation cut no ence period are removed from the market is ice: in the reference period the total pro- supported by this reasoning. In its assess- duction of the relevant products on the ment of the reasoning underlying the con- Italian and European markets had gone tested decisions at paragraphs 273 to 280 down only very slightly or slightly. The very of the judgment the Court of First Instan- small production of the undertakings con- ce's view of the matter was the correct one. cerned could not therefore be attributed to I share that view. that fact alone.

including the applicants, whilst not fulfill- production of hot-rolled steel. The appli- ing the main criterion, could none the less cants reiterate their viewpoint expressed at be deemed regularly to have produced steel first instance and produce in further eluci- products. This is clearly stated in Belgium v dation thereof Questionnaire 2-20 ECSC of Commission. 23 the Commission's statistical office. That is said to show that the production rhythm of rolling mills is lower than that of steel factories. Therefore, the criterion applied by the Commission of production at the rate of at least 25% of the highest possible 126. The applicants cannot infer from the production resulted in unwarranted out- fact that, responding to the request by the comes for undertakings operating rolling Commission and in accordance with Arti- mills. cle 6(4), they made known their observa- tions, that the Commission should furnish them with a reasoned statement in response to their observations. Those observations served merely to enlighten the Commission in connection with the decision pending before it. The Court's view on this matter is 129. If that part of the plea is interpreted as in my view thus also correct. a mere repetition of the arguments raised at first instance, it is inadmissible. From the point of view of content I am also inclined to regard it as inadmissible because it is entirely directed against the facts as found at first instance. 127. I therefore conclude that the criticisms in that part of the plea of the reasoning of the contested decisions and the relevant paragraphs of the judgment appealed against are unfounded.

131. If this part of the plea were construed, 133. In those paragraphs the Court of First albeit with some difficulty, as being direc- Instance states that Lamifer's arguments ted at a lack of reasoning in the judgment that it could not produce at night for appealed against, I consider it in the environmental reasons is factually incor- alternative to be manifestly ill-founded. rect. As the Court understands it, the The essential part of the Court of First municipal rules relied on by Lamifer simply Instance's reasoning is to be found in impose on Lamifer the obligation to adapt paragraph 141. Therein it is stated that its plant in order to maintain noise levels the organisation of production on a basis within acceptable limits. No appeal lies other than three shifts per day is not ideal. against this finding of fact. The Court placed specific reliance on an experts' report submitted by Lamifer which confirms that for reasons relating to the efficiency of the heat cycle, that is to say, the need to avoid the huge consumption of gas necessary to cool the furnace, rolling mills normally operate on the basis of three 134. Moreover, the reasoning on the basis shifts. On the basis of this finding as well of which the Court of First Instance the Court of First Instance was entitled to concludes that Lamifer's plea must be conclude that the Commission, in deciding rejected, because it is not borne out by the that for rolling mills as well the calculation factual evidence adduced, is correct. In the of the highest possible production had to be alternative I consider that part of the third based on three shifts, did not manifestly plea to be also manifestly ill-founded. infringe any Treaty provision or any rule of law enacted thereunder, nor did it misuse its powers.

136. However, a closer analysis of that plea 138. According to Part III of the preamble shows that the gravamen of the appellants' to Decision 97/258, Diano had repeatedly complaint is directed at that part of the to halt production of its rolling mill for judgment appealed against in which the maintenance purposes during the reference Court of First Instance appraised and period. Had it not been for the need on rejected the applicants' pleas accusing the objective technical grounds to halt produc- Commission of infringing the prohibition tion, Diano would have achieved a capacity on discrimination. The Court is said to utilisation rate not of 2 1 % but of 31% of have infringed Community law by incor- highest possible production during the rectly classifying the factual evidence reference period. The Commission there- adduced by the applicants at first instance. fore had reason to believe that Diano was Viewed in that light the plea may be in regular production at the time of closure. deemed admissible.

— it follows that the reasons why OLS and Diano suspended production have been duly established, are the result of an objective situation, are limited in — given that, under the strict rules time and are justified by the need to imposed by the Fifth Code, the purpose continue production and by the inten- of the requirement of regular produc- tion to remain on the market (para- tion is to ensure that aid for closure graph 212); achieves maximum effectiveness on the market so as to reduce steel production as substantially as possible, the refusal to allow aid for Casilina and Lamifer, which recorded production which fell short of the 25% minimum threshold by 10.8% and 9.8% respectively, is — in contrast, the alleged reason for the perfectly justified (paragraph 208); suspension of production by Lamifer has not been duly established. More- over, the reason alleged by Lamifer is not justified by the need to continue production or improve efficiency (para- graph 213);

— accordingly, the difference in treatment as between OLS and Diano —· whose production was 4% below the mini- mum threshold — and that of the applicants is thus based on objective —· as regards the justification adduced by factual criteria in line with the goals Lamifer the Court refers to paragraph which the Commission is under a duty 181 of its judgment in which its

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143. In the case of Lamifer the Court was entitled without more ado to assume that Finally, Lamifer points to the incongruous the justification produced for the shortfall situation in which Diano with actual pro- in regard to the production limit was duction of 16 807 tonnes in 1993 is inadequate because it was in fact non- permitted to benefit from closure aid existent. In the case of Casilina the justifi- whereas it with actual production of 23 cation given was by its nature insufficient. 542 tonnes in the same year is excluded If, however, in a given market situation an from it. undertaking can no longer produce whereas other comparable undertakings

24 —Cf. Joined Cases 17/61 and 20/61 Klockner-Werke and 142. In the judgment appealed against it is Hoechst v High Authority [1962] ECR 325 and Case 250/83 Finsider v Commission [1985] ECR 131, para- in my view convincingly demonstrated that graph 8.

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OPINION OF MR GEELHOED — JOINED CASES C-280/99 P, C-281/99 P AND C-282/99 P

144. The argument raised by both appel- lants on appeal that the unfavourable economic situation affecting them was just as much an objective justification as the need to carry out technical maintenance in the cases of OLS and Diano is incorrect on the face of it. Indeed, the unfavourable vm — Costs economic situation was an objective fact for all undertakings eligible for closure aid. That this presented an obstacle for the appellants, as opposed to the great majority of the other companies in line for closure 147. Under Article 122 of the Rules of aid in satisfying the criterion of regular Procedure, where the appeal is unfounded production indicates a subjective inability the Court is to make a decision as to costs. to compete properly. Where the Fifth Code Since the appellants have been unsuccess- states at point II of the preamble that only ful, they must be ordered to pay the costs in competitive undertakings can be considered accordance with Article 69(2) of the Rules for closure aid, the appellants' arguments of Procedure, it being understood that they rather confirm the correctness of the Court must also, jointly and severally, pay the of First Instance's view than detract from it. costs incurred by the Commission.

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IX — Conclusions

148. In light of the foregoing I propose that the Court should:

(a) dismiss the appeals in their entirety;