Contents
In Joined Cases 31, 138 and 204/82Metallurgiki Halyps AE, a company incorporated under the laws of Greece, having its registered office in Athens, represented by Joannis E. Stamoulis, Aleksandros Lykourezos and Christos D. Arvanitis of the Athens Bar, with an address for service in Luxembourg at the Chambers of Ernest Arendt, 34 B Rue Philippe-Il,vCommission of the European Communities, represented by Frank S. Benyon, Georges D. Kremlis and Xenophon Yataganas, members of its Legal Department, acting as Agents, with an address for service in Luxembourg at the office of Oreste Montako, a member of its Legal Department, Jean Monnet Building, Kirchberg,THE COURT (Second Chamber)composed of: K. Bahlmann, President of Chamber, P. Pescatore and O. Due, Judges,Advocate General: P. VerLoren van ThemaatRegistrar: H. A. Rühi, Principal Administratorgives the following
Judgment
Facts and Issues
The facts of the case, the course of the procedure, and the conclusions, submissions and arguments of the parties may be summarized as follows:
I —Summary of the facts
II —Written procedure
On 18 January 1982 Metallurgiki Halyps AE brought an action for a declaration that the Commission's decisions of 11 and 14 December 1982, as amended by decisions of 5 January 1982, concerning the fourth quarter of 1981 and the first quarter of 1982 respectively, were void. That application was registered as Case 31/82.On 30 April 1982 the undertaking brought an action for a declaration that the Commission's decision of 24 March 1982 concerning the second quarter of 1982 was void. That application was registered as Case 138/82.On 11 August 1982 the undertaking brought an action for a declaration that the Commission's decision of 6 July 1982 concerning the third quarter of 1982 was void. That application was registered as Case 204/82.The written procedure in the three cases followed the normal course.Upon hearing the report of the Judge-Rapporteur and the views of the Advocate General, the Court decided to open the oral procedure without any preparatory inquiry.By order of 20 April 1983 the Court decided to join Cases 31/82, 138/82 and 204/82 for the purpose of the procedure and the judgment.By another order of 20 April 1983 the Court decided to assign the case to the Second Chamber pursuant to Article 95 (1) and (2) of the Rules of Procedure.Following the judgment of the Court (Second Chamber) of 9 December 1982 in Case 258/81, between the same parties, the applicant, by a letter dated 4 July 1983, informed the Court, at the latter's request, that it considered that a ruling should be given in these applications on the submissions and arguments which were not examined or appraised in that judgment; in addition, is stated the grounds for annulment which it intended to pursue at the hearing and those which it was withdrawing.
III —Conclusions of the parties
The applicant claims in each of the cases that the Court should :(a) Admit the application as lawful and well-founded;(b) Declare void the contested individual decisions adopted pursuant to Decision 1831/81 and Decision 1696/82 respectively; and(c) Order the Commission to pay the costs.The Commission contends in each of the cases that the Court should :(a) Dismiss the application as unfounded; and(b) Order the applicant to pay the costs.
IV —Submissions and arguments of the parties in the written procedure
Having withdrawn certain submissions set out in its applications, the applicant primarily bases its actions on objections of illegality directed against the general decisions — Decision 1831/81 (as amended by Decisions 1832/81, 2804/81 and 533/82) and 1696/82 — pursuant to which the contested individual decisions were adopted: the applicant alleges that the general decisions are in breach of Article 58 (2) and Articles 1 to 5, in particular Article 4 (b), of the ECSC Treaty.In support of its applications in Cases 31 and 138/82, the applicant further claims that the contested individual decisions infringe Article 14a of Decision 1831/81.The Commission considers that all of the applicant's submissions and arguments are unfounded.
A —Infringement of Articles 58 and 1 to 5 of the ECSC Treaty
The applicant considers that the general decisions on which the contested individual decisions are based are contrary to certain provisions of the ECSC Treaty and to the general principles arising from them, in particular the principle of equal treatment.(a) Article 58 (2) of the ECSC Treaty allows quotas to be determined “taking account of the principles defined in Articles 2, 3 and 4”, which are themselves based on the fundamental principle of equal treatment. However, the quota system established by Decision 1831/81 and extended by Decision 1696/82 creates serious inequalities to the detriment of Greek steel undertakings and of the applicant in particular.The “reference period” adopted was based on a period prior to the accession of Greece during which the rate of utilization of production capacity by Greek steel undertakings (35 to 40%) was considerably lower than that of undertakings in the European Coal and Steel Community (approximately 65%); the applicant's particularly low rate is due to the fact that its plant is recent and that after July 1980 it sustained serious damage as a result of earthquakes.During the reference period 1978 to 1980, prior to accession, the Community steel undertakings had built up sufficient reserves, whereas the less developed Greek undertakings did not meet even 50% of the needs of the domestic market. The reserves held by steel undertakings in the other Member States put them in a much better position and lead to discrimination against Greek undertakings.The Greek steel industry is also discriminated against because it must bear high financing costs, whereas most European steel undertakings receive substantial support from the State.Owing to the difference in the factual situation of the Greek steel industry compared to the Community steel industry during the reference period, the uniform application of the quota system obviously results in discrimination and offends against the principle of proportionality, inasmuch as it takes no account at all of the fact that in 1979 and 1980 steel production amounted to 140 million tonnes in the Community countries, whilst in Greece it did not exceed one million tonnes in the same period.(b) Article 1 of the ECSC Treaty envisages the creation of a common market in which the conditions of competition between undertakings must result from undistorted conditions of production. However, the general decisions and the contested individual decisions are based on the premise that production conditions for Greek steel undertakings and Community steel undertakings are the same; they entirely overlook the enormous differences in structure, level of development and rate of utilization of capacity which distort competitive conditions to the detriment of the Greek steel industry.(c) The second paragraph of Article 2 of the ECSC Treaty requires the Community to bring about conditions which will of themselves ensure the most rational distribution of production at the highest possible level of productivity. By imposing quantitative restrictions on production, the contested decisions waste the applicant's production capacity and prevent it from exploiting its new technology and from remaining competitive; they inevitably have the effect of reducing employment and fundamentally disturb the Greek economy because the steel industry is the most important sector of the country's heavy industry.(d) In breach of Article 3 (d) and (g) of the ECSC Treaty, the production quotas fixed by the contested decisions for Greek undertakings make it impossible for them to expand and improve their production capacity; they constitute an obstacle to the improvement of production conditions and establish a system which favours the large unprofitable groups in the North and is clearly unfavourable to the smaller, though more competitive and flexible, industrial undertakings.(e) The failure, in the contested decisions, to recognize clear differences between Greek steel undertakings and Community undertakings in their level of development and the introduction of a single quota system lead to the creation, in disregard of Article 4 (b) of the ECSC Treaty, of unwarrantable discrimination between producers who operate under different conditions.(f) By referring to Article 4 of the ECSC Treaty, Article 58 lays down the fundamental principle of equal treatment between the steel undertakings subject to the jurisdiction of the Commission. Since the crisis affects only certain categories of products, the fixing of a single abatement rate, applicable only to those categories, results in manifest inequality and hence in unjustifiable discrimination between producers. For undertakings manufacturing several categories of steel products, the abatement rate for the whole of their production clearly differs from that of undertakings whose production is limited to only one or a few products or that of undertakings which produce only products in the category subject to quotas. In fact, Decisions 1831/81 and 1696/82 classified all steel products into six categories and fixed uniform abatement rates only for certain products in Category I and for Categories IV, V and VI. The application of single abatement rates only to certain categories of products as regards all undertakings, irrespective of whether they produce those categories alone or also produce other categories of products not subject to the quota system, clearly makes undertakings subject to unequal treatment. Thus, for an undertaking manufacturing exclusively products in Categories IV and V, the reduction of the whole of its production fluctuates around a rate of 40 or 50%; on the other hand, an undertaking producing the six categories of products is only compelled to reduce its production as a whole by a much lower proportion. The general decisions at issue thus directly infringe the provisions of Articles 58 and 4 of the ECSC Treaty and the principle of equality which is laid down therein, in so far as they introduce “manifest discrimination between producers”.The contested individual decisions introduced such discrimination at the expense of the applicant, which manufactures solely products in Categories IV and V.It is true that Decisions 533/82 and 1698/82 provide for a reduction, for undertakings producing only a few products, of five percentage points in the abatement rate for products in Category V; however, that wholly arbitrary reduction does not restore the principle of equality in relation to the compulsory quota system. Equality can be restored only if and in so far as the reductions imposed are regulated in such a way that they represent the same rate of reduction in relation to the entire production of each undertaking.In the preamble to Decision 1698/82, the Commission itself acknowledged, indirectly but none the less clearly, the unequal treatment of a number of small and medium-sized undertakings which depend mainly on the production of concrete reinforcing bars and for which the reduction of the abatement rate by five percentage points by no means results in treatment comparable to that accorded to the large steel concerns.(g) According to Article 5 of the ECSC Treaty, the Community must ensure the establishment of normal competitive conditions. However, by imposing quotas on Greek undertakings' production, the contested decisions make the operations of those undertakings clearly uneconomic and deny them normal competitive conditions.The Commission considers that Decisions 1831/81 and 1696/82 do not infringe any provision of the ECSC Treaty or any general principle of law governing its application.(a) The quota system established by Decisions 1831/81 and 1696/82 is perfectly fair and nondiscriminatory. It provides for all undertakings to have reference productions which take account not only of the best months of actual production during the period from July 1977 to June 1980 but also all the adjustments granted under the old system introduced by Decision 2794/80. Below a certain level of production small undertakings are not subject to the quota system; reference quantities, and consequently the part of the quota which may be delivered within the common market, may be adjusted; adjustments are also possible in the case of certain medium-sized undertakings faced with exceptional difficulties; Decision 2804/81 makes it possible to grant adjustments to Greek undertakings if the quota system causes them exceptional difficulties likely to prevent their adaptation to the structural developments in Greece's economy.The rate at which Greek undertakings use their quotas shows that the quota system does not place them in an unfair situation or discriminate against them.The quota system was not imposed in order to redistribute the rate of utilization of undertakings' production capacity or to define the system of aid for the steel industry, but solely to restore the balance between supply and demand.As far as the principle of proportionality is concerned, the contested decisions do not constitute excessive and unacceptable intervention, in relation to the aim pursued, and did not impose disproportionate burdens on certain undertakings.(b) It is difficult to understand why the applicant challenges the contested decisions on the basis of Article 1 of the ECSC Treaty, unless it considers that the difference in structures and level of development between the Greek undertakings and other European undertakings is such that their coexistence in the framework of a common market is not justified. However, Greece applied for and obtained entry to the European Coal and Steel Community, of which it is a full member.(c) The applicant relies on an erroneous interpretation of Article 2 of the ECSC Treaty inasmuch as it has recourse to purely national criteria and thereby restricts that provision to Greece, which is quite contrary to the spirit of the ECSC Treaty. Moreover, in view of the state of manifest crisis in the Community steel industry, Decisions 1831/81 and 1696/82 are not incompatible with the second paragraph of Article 2 of the Treaty: they are intended to avoid very serious economic and social problems which might occur as a result of a disturbance of the balance between supply and demand.(d) Article 3 of the ECSC Treaty lays down no fewer than eight distinct objectives, and it is not certain that they can all be simultaneously pursued in their entirety and in all circumstances. A compromise must be found between those various objectives, especially in a period of crisis justifying the adoption of exceptional measures which derogate from the normal rules governing the working of the common market in steel and which may entail noncompliance with certain objectives laid down by Article 3, such as that mentioned in paragraph (b). It is the Commission's task to choose the objectives which it believes are necessary for solving the problems that exist. The fact that Article 3 requires it to act in the common interest certainly does not mean that it must act by taking into account the interests of all undertakings without exception; it weighs up the various interests and seeks to avoid damaging results if the decision which it adopts reasonably allows it to do so. According to the case-law of the Court, the Commission may, in the common interest, use its power of decision according to the requirements of the circumstances, even to the detriment of certain individual interests.(e) The claims relating to the infringement of Article 4 (b) of the ECSC Treaty and of the prohibition of discrimination, to the detriment of Greek undertakings and the applicant in particular, are proved to be unfounded by the quantitative information available concerning their production and deliveries in the common market: in recent quarters they remained well within the quotas allocated to them. Those figures show that there is no discriminatory treatment in this case, nor even the slightest damage.(f) The applicant's conception of equal treatment is wholly mistaken and fallacious.The crisis facing the steel industry does not affect to the same degree the six categories of products, which cannot be regarded as a single whole. Each category must be treated separately, according to its particular characteristics and the development of the relevant market. A separate abatement rate was fixed for each of the categories of products referred to in the general decision, whilst for one of them an increase in production was authorized. Those different rates faithfully reflect the differential development of the market for the categories of products to which they relate; the application of a uniform abatement rate to the entire Community steel production would not result in the equal treatment of undertakings but would deprive the general decisions of any legal basis under Article 58 of the Treaty.The reduction in the abatement rates for small and medium-sized undertakings which comply with certain criteria is not at all arbitrary and does not constitute an acknowledgement on the part of the Commission that those undertakings are subject to unequal treatment. Treatment is unequal only where undertakings in the same situation are treated differently; in this case, undertakings which produce several categories of products are by their nature in a different position from undertakings producing a single product, which are consequently treated differently. There would be genuine discrimination between producers if different situations were treated in the same way.Equal treatment involves the sharing of cuts in production necessitated by the crisis in accordance with criteria chosen for all producers on the basis of objective data and in pursuit of the same common objective.(g) With regard to the alleged infringement of Article 5 of the ECSC Treaty, the Commission observes that Article 58 (2) refers only to the principles set out in Articles 2, 3 and 4 of the Treaty and that, moreover, it is going too far to claim that intervention by the Commission must not cause any change in an undertaking's competitive position.
B —Infringement of Article 14a of Decision 1831/81
In support of its applications in Cases 31 and 138/82, the applicant claims that the individual decisions contested in those applications infringe Article 14a of Decisión 1831/81, as amended by Decisions 1832/81 and 2804/81.Article 14a of Decision 1831/81 provides for an appropriate adjustment to be made to the reference production figures for products manufactured by an undertaking whose plant is located in Greece, where the Commission finds that the quota system is causing it exceptional difficulties likely to prevent it from adapting to the structural developments in that country's economy. The part of the preamble to Decision 2804/81 relating to that provision confirms the inappropriateness of applying any quota system to Greece during the transitional period, since it would jeopardize the industrial development of Greece and its adjustment to the level of development of the other Member States.At the very least, Article 14a of Decision 1831/82 requires the Commission to fix, by individual decisions adopted in each case in relation to the steel undertakings operating in Greece, quotas which enable those undertakings to have a production which is no less than Community steel undertakings' rate of utilization of their production capacities; that interpretation is borne out by Article 2 of the ECSC Treaty, which requires compliance with the principle that undertakings in the Community should be treated equally.However, in 1981 the average rate of utilization of the production capacities of Community steel undertakings was 63%, whereas the contested decisions permit the applicant a maximum rate of utilization of its production capacity of 54%.The Commission considers that no text or general principle of law requires it to exempt Greek undertakings from the application of Article 58 of the ECSC Treaty. In particular, the insertion by Decision 2804/81 of Article 14a into Decision 1831/81 does not amount to the performance of an obligation which has its source in the Act of Accession: Article 14a does not grant general exemption from the quota system to the Greek steel industry as a whole; it merely permits an adjustment of the quotas for a particular undertaking and particular products.Furthermore, it should be noted that the rate of utilization of the production capacity of steel undertakings is not among the criteria adopted by Decision 1831/81 for the fixing of quotas; nor does Article 14a require such a criterion to be taken into account when quotas are adjusted. The criterion based on the rate of utilization of production potential is linked to the criterion of production capacity. Previous judgments of the Court have acknowledged that the criterion based on the actual production of undertakings, chosen by the Commission, constitutes an equitable basis within the meaning of Article 58 of the ECSC Treaty.
V —Oral procedure
At the sitting on 6 October 1983 oral argument was presented by J. Stamoulis and C. Arvanitis, for the applicant, and by X. Yataganas and G. Kremlis, for the Commission.The applicant submitted essentially that it was the victim of discrimination because, first, as an undertaking manufacturing only products in two categories, it was more seriously affected by the quota than undertakings manufacturing products in all categories and, secondly, Greek undertakings were penalized by the fact that their reference period related to a period prior to Greece's accession to the Communities.The Commission relied essentially upon the absence of any interest in pursuing the applications, in view of the fact that the applicant did not use up its quotas. It also disputed the existence of s.ny discrimination and, in reply to ;he arguments relating to Article 14a of Decision 1831/81, referred to the recent judgments of the Court.The Advocate General delivered his opinion at the sitting on 17 November 1983.
Decision
Contravention of Article 58 and of the principles of the ECSC Treaty
Infringement of Article 14a of Decision 1831/81
Costs
Operative part
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