JUDGMENT OF 21. 12. 1954 — CASE 2/54 ITALY v HIGH AUTHORITY

In Case 2/54

THE COURT composed of: M. Pilotti, President, P. J. S. Serrarens and Ch. L. Hammes (Presidents of Chambers), O. Riese, L. Delvaux, J. Rueff and A. van Kleffens, Judges, Advocate General: M. Lagrange, Registrar: A. Van Houtte,

gives the following

JUDGMENT

Facts

Law

A. The submission of infringement of the Treaty

I. Decision No 1/54

II. Decision No 2/54

III — Decision No 3/54

B. The submission of misuse of powers

C. Production of documents under Article 23 of the Statute of the Court

Costs and reference of the case back to the High Authority

A. Infringement of the Treaty ;

B. Misuse of powers.

(a). Infringement by Decision No 1/54 of Article 60 (1) in conjunction with Article 4(b) of the Treaty: the latter has created an insoluble link between the principle of publicity and that of non-discrimination such that only the previous rules can be regarded as lawful. The grant of any variations in relation to the price-lists substitutes a system of flexible prices for the system of fixed prices provided for by the Treaty and opens the door to unlawful advantages granted to certain buyers for none of them has any longer the means of ascertaining whether the price required of him is lawful.

(b). Infringement by Decisions Nos 2/54 and 3/54 of Article 60 (2) of the Treaty: the admission of differences in relation to the published price-lists derogates from the system prescribed by the Treaty: it follows from the words at the beginning of Article 60 (2): For these purposes, that the obligation to publish has been prescribed to ensure that the prohibition on discrimination is observed. The new rules take no account of the close link existing between paragraphs (1) and (2) of Article 60; they allow discrimination which in certain cases may greatly exceed the margin of 2.5 %. Further (a submission raised for the first time in the reply) the new rules do not take into account the reservations expressed within the Consultative Committee and the Council of Ministers. According to the Treaty publication is an indispensable means of preventing discrimination; only full publication ensures equal treatment for all buyers. For this reason the High Authority is not generally entitled to allow differences in relation to the price-lists. The words to the extent and in the manner prescribed by the High Authority contained in Article 60 (2) (a) give the High Authority the right only to regulate the conditions of publication but not the right to determine its content. Further, Decision No 2/54 allows undertakings to keep the differences applied secret for sixty days. The exemption provided for transactions which do not come within the categories of transactions provided for by the price-lists allows both the obligation to publish and the prohibition on discrimination to be evaded and to escape from any control. The new rules allow the prices charged to remain unpublished. For these reasons also they are contrary to the letter and spirit of the Treaty.

(c). Infringement of Article 30 (2) of the Convention on the Transitional Provisions: the decisions in question allow non-Italian steel producers to agree to reductions on the Italian market which by reason of the introduction of the average difference of 2.5 % may be quite high in particular cases. As appears from the said provision the High Authority ought never without the agreement of the Italian Government to have authorized the reductions in relation to the published price-lists. Any reduction in prices agreed by foreign undertakings in. favour of Italian buyers threatens the Italian steel industry. Even if price reductions were lawful in other countries of the Community they ought not to be applied in Italy.

(d). Misuse of powers: there is always a misuse of powers where the High Authority contravenes the Treaty in exercising the power which is granted to it by the Treaty. The High Authority has used this power for objectives other than those which it is required to pursue according to the Treaty. It is required:

(a). As regards the infringement of Article 60 (1) in conjunction with Article 4 (b) of the Treaty by Decision No 1 /54:

(b). As regards the infringement of Article 60 (2) of the Treaty by Decisions Nos 2/54 and 3/54:

(c). As regards the infringement of Article 30(2) of the Convention on the Transitional Provisions:

(d). Misuse of powers.

1. Admissibility

2. The substance of the Case

A. The submission of infringement of the Treaty

I. Decision No 1/54

(1). Decision No 1 /54 introduces a clear distinction between publication and discrimination, thereby creating two kinds of infraction, namely the more serious one of discrimination and the less serious one of infringing the rules as to price publication. However, whilst recognizing that the two paragraphs of Article 60 are linked as regards purpose, the Court does not consider that distinction amounts to an infringement of the Treaty. In fact, nowhere does the Treaty prescribe that any infringement of the rules governing price publication amounts in itself to one of the practices prohibited under Article 60 (1). As regards the prohibition of discriminatory practices in particular, it cannot be disputed that the fact of departing, to whatever extent, from the prices or conditions laid down in the price-list of an undertaking does not amount to discrimination when it is a case of an exceptional transaction or when the same variation is made in the case of all comparable transactions. On this point, Decision No 1 /54 is therefore consistent with the Treaty. On the other hand, it might be objected that Decision No 30/53 was open to criticism, since without expressly admitting evidence to the contrary it held certain transactions to be discriminatory which, in fact, were not.

(2). Decision No 1/54 in no way does away with the duty to publish prices: on the contrary, it expressly retains it. There is therefore nothing in the objection that the decision is contrary to the rules governing price publication and that it sacrifices the principle of publication as a means of preventing prohibited practices. The Court, when it investigates Decision No 2/54, will consider whether the fact of permitting variations and, within certain limits, exempting undertakings from making a new publication is in accordance with the Treaty; in any case this is not a fact which can be relied on in contesting Decision No 1/54, which in no way affects the principle of publication.

(3). Decision No 1/54 in no way prevents the imposition of penalties if there is discrimination. If comparable transactions are entered into at different prices and under different conditions of sale, the penalties provided for by Article 64 still apply.

(4). Lastly, there is nothing in the applicant's argument that Decision No 1/54, instead of defining prohibited practices, in fact legalizes certain practices which were illegal under the old system. It has been shown above that Decision No 1/54 gives a new definition of prohibited practices by distinguishing between the rules as to non-discrimination and the provisions governing publication. If the new definition permits practices, which were previously prohibited, namely departures from published prices, it also lays it down that prices or conditions must be departed from uniformity in all comparable transactions, apart from any exceptional transaction which cannot give rise to discrimination. The principle of prohibiting any discriminatory practice is therefore strictly observed; Decision No 1/54, whilst doing away with the former automatic system, stays within the definition of prohibited practices.

II. Decision No 2/54

(1). Before Article 60 (2) of the Treaty is interpreted in detail, it is proper to examine what the High Authority's objectives must be when it defines prohibited practices and regulates the publication of prices and conditions of sale.

(2). Article 60 (1) directly and categorically prohibits certain practices; the High Authority is authorized to define them but it may not derogate from the rule that they are prohibited.

(3). Article 60 (2) (a) does not expressly state the time when price-lists and conditions of sale must be published. One only has to read subparagraph (2) (b) on the methods of quotation to understand that the price-lists must precede any sale effected in the Common Market.

(4). Now that it is established that the price-lists and conditions of sale must be published before they are applied on the Common Market, it remains to be decided whether the- Treaty requires the publication of exact prices or whether it is enough to publish average or approximate prices. There is no doubt that the Treaty requires the publication of exact prices in the form of price-lists. This follows from the objectives to which the principle of price publication is intended to lead: the information aquired by purchasers is only of value to them if it informs them of the exact prices at which they can buy. Likewise publication must make alignment possible and this must be based on a competitor's exact prices. Alignment is a right granted to undertakings by the Treaty, not a mere possibility to which effect could only be given if undertakings were in a position to gain information by other more or less fortuitous means as to prices charged by their competitors.

(5). It now remains to consider whether the conclusion to which the Court has come as a result of its examination of the words used and the reasons underlying them is contrary to the Treaty's other objectives, or whether it may be invalidated by other considerations. This is not the case. It must first be repeated, that the method of prior publication of the exact prices is the mandatory rule laid down by Article 60 (2). It follows that this rule cannot be disregarded, even if this would facilitate some other method which might better attain the aims in view. It is not for the Court to express a view as to the desirability of the method laid down by the Treaty, or to suggest a revision of the Treaty, but it is bound, in accordance with Article 31, to ensure that in the interpretation and application of the Treaty as it stands the law is observed.

6. The applicant has claimed for the first time in its reply that the new system allows undertakings to conceal discriminatory transactions for 60 days. The defendant considers this to be a new submission which is inadmissible under Article 29 (3) of the Rules of Procedure.

7. Submission that the Consultative Committee has not been consulted in accordance with legal requirements:

8. Submission that the contested decisions contained an insufficient statement of the reasons on which they were based in view of the omission of contrary opinions:

9. Moreover, the Court of its own motion has examined the question whether Article 1 of Decision No 2/54 amounts to an infringement of an essential procedural requirement. According to its wording this article only defines the conditions under which new price-lists must be published. It may, nevertheless, be asked whether the said article, read in conjunction with Decision No 1/54, does not indirectly supplement the definition of prohibited practices. If this were the case, then the Council should have been consulted, under the terms of Article 60 (1). Yet such consultation did not take place officially, and could not be re-placed by a mere notification to the Council by the High Authority so that Article 60 (1) would be infringed. However, the Court is of opinion that Article 1 of Decision No 2/54 does not supplement the definition of prohibited practices and does not even contain an indirect definition, but merely lays down how price-lists are to be published.

10. The reference, in Article 2 of Decision No 2/54, to Article 1 thereof, does not justify the annulment of Article 2 as that reference becomes pointless as a result of the annulment of Article 1.

11. The applicant seeks the annulment of Articles 1, 2 and 3 of Decision No 2/54 on the grounds of infringement of Article 30 of the Convention on the Transitional Provisions. As regards Articles 2 and 3 of Decision No 2/54 this application must be rejected on the above-mentioned grounds. Although the provision of Article 3 of Decision No 2/54 reducing the period provided for the application of the new price-lists forces the Italian undertakings to react more quickly to any alterations in the price-lists of their competitors, it does not, however, seriously affect the special protection given to them.

III —. Decision No 3/54

B. The submission of misuse of powers

C. Production of documents under Article 23 of the Statute of the Court

(1). Under the terms of Article 60 of the Rules of Procedure of the Court, in any contentious matter the unsuccessful party shall be ordered to pay the costs. Nevertheless the Court may, in accordance with paragraph (2) of that article, order that the parties bear their own costs wholly or in part, where each party succeeds on some and fails on other heads.

(2). Under Article 34 of the Treaty, if the Court declares a decision void, it shall refer the matter back to the High Authority, which must take the necessary steps to comply with the judgment.

On those grounds, Upon reading the pleadings; Upon hearing the parties; Upon hearing the opinion of the Advocate General; Having regard to Article 31, 33, 34 and 60 of the Treaty; Having regard to the Protocol on the Statute of the Court of Justice; Having regard to the Rules of Procedure of the Court including those regarding costs; THE COURT hereby:

1 Translator's Note: The English version speaks in Article 60 (2) (a) of price-lists … applied.