JUDGMENT OF 21. 6. 1958 — CASE 13/57 EISEN- UND STAHLINDUSTRIE v HIGH AUTHORITY
In Case 13/57
THE COURT composed of: M. Pilotti, President, A. van Kleffens and L. Delvaux, Presidents of Chambers, P. J. S. Serrarens, O. Riese, J. Rueff and Ch. L. Hammes, Judges, Advocate-General: M. Lagrange Registrar: A. Van Houtte
gives the following
JUDGMENT
Issues of fact
1. Facts
2. Conclusions of the parties
3. Submissions and arguments of the parties
A — Admissibility
1. Whether the contested decision constitutes a series of decisions which are individual in character within the meaning of the second paragraph of Article 33 of the Treaty and which concern each of the applicants in particular
2. Whether claims based upon different and quite distinct interests may be submitted in the same application
3. Whether an application by an association of undertakings is admissible if the individual interests of the undertakings which are members of the association differ
4. Whether the submissions put forward by the applicants constitute complaints of misuse of powers
B — Substance
First complaint: Misuse of powers with regard to Articles 57 and 59 and Annex II to the Treaty.
Second complaint: Misuse of powers with regard to Article 54 and 57 of the Treaty.
Third complaint: Misuse of powers with regard to Articles 58 and 59 of the Treaty.
Fourth compaint: Misuse of powers with regard to Articles 3 and 53 (1) (b) of the Treaty.
Fifth complaint: Misuse of powers with regard to Articles 2, 3,4 and 5 of the Treaty.
Sixth complaint: Misuse of powers with regard to Article 65 of the Treaty.
Seventh complaint: The High Authority has infringed Articles 2, 3, 4, 5, 53, 54, 58, 59 and 65 of the Treaty together with Annex II thereto.
4. Procedure
Law
A — Admissibility
B — Substance
1. The submission of misuse of powers with regard to Article 53 (b) and Articles 2, 3, 4 and 5 of the Treaty, that is to say, that the objectives pursued by the High Authority by means of financial arrangements under Article 53 are contrary to the objectives defined by Articles 3 and 4 of the Treaty
2. The complaint of misuse of powers with regard to Articles 53 (b), 57, 58 and 59 and Annex II to the Treaty, namely that, since the defendant has effected the allocation of ferrous scrap in the guise of a financial arrangement whilst refraining from observing the provisions of Articles 58 and 59 under the guarantees fixed in Annex II, it has committed a misuse of powers
3. The complaint of misuse of powers with regard to Articles 53 (b), 54 and 57 of the Treaty, namely that the High Authority cannot have recourse to financial arrangements under Articles 53, whilst disregarding the provisions of Article 54
4. The complaint of misuse of powers with regard to Article 65 of the Treaty, namely that by refusing to grant a reference consumption for plant and manufacturing processes put into operation after 31 January 1958 and imposing a supplementary charge on excess consumption, the High Authority adopted measures which were more restrictive than was necessary for that purpose
5. The complaint based on the infringement of Articles 2, 3, 4, 5, 53, 54, 58, 59 and 65 of the Treaty and Annex II thereto
Costs
1. Facts
(1). Membership of the Wirtschaftsvereinigung Eisen- und Stahlindustrie is open to all iron and steel undertakings in the Federal Republic. Its objective is to defend the collective interests of its members.
(2). The Gußstahlwerk Carl Bönnhoff undertaking is a steelworks which does not produce its own pig-iron. Since integrated works retain their pig-iron as a substitute for scrap the applicant must of necessity increase its input of scrap. Furthermore it has plans to start operating an electric furnace in 1958: without a reference consumption the supplementary rate will be imposed in full and the increased consumption will not be profitable because of the excessive cost price. In fact, taking the supplementary rate at US $10 and, since a charge of 1033 kg of ferrous scrap is needed to produce a metric ton of pig-iron, the supplementary charge amount to DM 43.40 per metric ton of pig-iron produced.
(3). Gußstahlwerk Witten is not an integrated undertaking and manufactures special steel in Martin furnaces and electric furnaces. Accordingly it is entirely dependent on the market for its supplies of pig-iron and scrap. The scarcity of scrap on the market has also led it to increase its input of ferrous scrap. Furthermore there are urgent technical reasons for not reducing the specific input reference of the electric furnaces.
(4). The Ruhrstahl undertaking is in the process of installing an electric furnace with a capacity of 80 metric tons which can only begin operations after 31 January 1958 and will therefore have no reference consumption. Because of the supplementary rates and the inclusion of increases in stocks in the consumption subject to tax, each metric ton produced in the new furnace between the date when it is put into operation and the date when the decision expires will be subject to a supplementary contribution of approximately US $ 13.85.
(5). The undertaking Eisenwerk Annahutte Alfred Zeller, a steelworks which does not produce its own pig-iron, employs two Martin furnaces which must be used at full capacity in order to feed two recently-installed sets of rollers. Because the steelworks has an insignificant reference consumption it is subject to a very high supplementary rate. The taxable consumption of ferrous scrap is 842 kg per metric ton produced. Taking the supplementary rate at US $10 the additional charge amount to DM 35.40, that is, 9.8 % of the selling price. Taking as a notional basis for the levy US $10 per metric ton of ferrous scrap, the supplementary rate at the time when a new electric furnace is put into operation after 31 January 1958 amounts to DM 48 per metric ton of laminated steel, that is, 6 % of the cost price of DM 800. So penalized, the product cannot compete with producers who are not subject to this charge.
2. Conclusions of the parties
3. Submissions and arguments of the parties
A —. Admissibility
1. Whether the contested decision constitutes a series of decisions which are individual in character within the meaning of the second paragraph of Article 33 of the Treaty and which concern each of the applicants in particular
(a). that each of the various provisions of the decision affects a clearly-specified group of undertakings, which cannot be increased, for example, the undertakings referred to by Article 6 (2) and (3) which put new plant, within the meaning of the said Article 6, into operation between 1 February 1957 and 31 January 1958;
(b). that the supplementary rate is in the nature of a penalty;
(c). that Article 13 of the decision requires undertakings which are members of the Office commun des consommateurs de ferraille (the Joint Bureau of Ferrous Scrap Consumers, hereinafter referred to as the OCCF) and of the Caisse de perequation des ferrailles importées (the imported Ferrous Scrap Equalization Fund, hereinafter referred to as the CPFI) to amend the statutes of those institutions.
2. Whether claims based upon different and quite distinct interests may be submitted in the same application
3. Whether an application by an association of undertakings is admissible if the individual interests of the undertakings which are members of the association differ
4. Whether the submissions put forward by the applicants constitute complaints of misuse of powers
B —. Substance
4. Procedure
A —. Admissibility
B —. Substance
1. The submission of misuse of powers with regard to Article 53 (b) and Articles 2, 3, 4 and 5 of the Treaty, that is to say, that the objectives pursued by the High Authority by means of financial arrangements under Article 53 are contrary to the objectives defined by Articles 3 and 4 of the Treaty
(a). Pursuant to Article 53 (b) of the Treaty the High Authority may, with the unanimous assent of the Council, itself make any financial arrangements which it recognizes to be necessary for the performance of the tasks set out in Article 3. The exercise of the powers thus conferred upon the High Authority is subject to the conditions set out in Articles 2 to 5 concerning the establishment, administration and guidance of the Common Market.
(b). The purpose of the provisions contested in the present application was to make the contribution for the equalization of the prices of imported ferrous scrap progressively selective by increasing the rate applicable to the consumption of bought scrap above a given reference level and by graduating the charges thereby imposed in terms of a specific input coefficient for ferrous scrap in the installations and the manufacturing processes requiring scrap. Furthermore, the said provisions contain a set of transitional measures intended to permit undertakings to adapt themselves progressively to the conditions thereby created for them, in particular, the choice by each undertaking of its own reference period, the period of six months during which payment of the contribution at the supplementary rate is suspended, the graduated nature of the rate, the allocation of a reference consumption and a specific input reference for plant which began operations during the year following the entry into force of the decision, together with the allocation of a specific input reference without a time-limit for all plant beginning operations after the expiry of this latter period. Through those measures the High Authority provided the scheme for the equalization of the prices of imported ferrous scrap, which it had previously established, with conditions intended to prevent a fall in the price of ferrous scrap resulting from equalization from encouraging producers in the Common Market to increase their consumption of scrap.
(c). Nevertheless consideration must be given to the question whether the measures taken are compatible with the rules in Article 3 (b), the beginning of subparagraph (d) and subparagraph (g) and the applicant alleges that the High Authority's adoption of the said measures constitutes serious disregard of these objectives.
(d). Pursuant to Article 3 (d) and (g) of the Treaty the institutions of the Community, and particularly the High Authority in exercising the powers conferred upon it by Article 53 (b), are required to ensure the maintenance of conditions which will encourage undertakings to expand and improve their production potential and promote the orderly expansion and modernization of production and the improvement of quality. The High Authority refers to those legal objectives at the beginning of the disputed decision, the stated aim of which is to ensure regular supplies to the market in ferrous scrap and to encourage undertakings to save ferrous scrap without, however, making it more difficult to increase output capacity.
(e). Furthermore, the objectives laid down in Article 3 of the Treaty must be appraised as a whole and pursued exclusively in the common interest. The concept of the common interest referred to in Article 3, far from being restricted to the sum of the individual interests of coal and steel undertakings subject to the jurisdiction of the Community, considerably exceeds the scope of such interests and is defined in relation to the general aims clearly laid down in Article 2. Consequently pursuit of the objectives prescribed in Article 3 does not rule out selective measures based in particular upon the nature of the means of production to be developed or created if it appears that economic circumstances and the reasonably foreseeable trend of market conditions call for such measures. This is certainly so when there are dangers of a serious shortage of one of the basic raw materials for the steel industry or if it appears necessary to adopt a policy of using resources rationally in order to avoid their unconsidered exhaustion. The distinctions which may consequently prove necessary to maintain conditions which will encourage undertakings to expand and improve their production potential and to promote its regular development nevertheless must be based upon purely objective criteria in accordance with the principle of equality laid down in the Treaty. The provisions of Article 6 of the contested decision are by their nature transitional and are intended progressively to encourage steel undertakings to use scrap as rationally as possible. To attain this the provisions alter the cost of financing the equalization of the prices of imported ferrous scrap both in terms of the nature of the plant and manufacturing processes and the date when operations were commenced, through the combined action of reference consumption and refunds granted in respect of relative economies in scrap. The graduated increase in the cost of ferrous scrap and the selective influence thereof on the cost price of steel products vary in terms of objectively — determined quantitative and qualitative criteria. Consequently, the contested measures constitute, with regard to the principle of non-discrimination, provisions encouraging undertakings to develop new capacities considered compatible with regular supplies of scrap for the steel industry and the orderly expansion of production.
(f). The indirect means of action in relation to production prescribed in Article 57 are to be distinguished from the direct influence referred to in the third subparagraph of the second paragraph of Article 5 not by the aims pursued but by the methods appropriate to attain them. Indirect means of action, by affecting, especially as a result of the financial arrangements under Article 53, certain of the factors which play a part in forming prices, create conditions which encourage undertakings freely and willingly to choose the behaviour desired by the High Authority for the accomplishment of the tasks with which it is charged under the Treaty.
2. The complaint of misuse of powers with regard to Articles 53 (b), 57, 58 and 59 and Annex II to the Treaty, namely that, since the defendant has effected the allocation of ferrous scrap in the guise of a financial arrangement whilst refraining from observing the provisions of Articles 58 and 59 under the guarantees fixed in Annex II, it has committed a misuse of powers
3. The complaint of misuse of powers with regard to Articles 53 (b), 54 and 57 of the Treaty, namely that the High Authority cannot have recourse to financial arrangements under Articles 53, whilst disregarding the provisions of Article 54
4. The complaint of misuse of powers with regard to Article 65 of the Treaty, namely that by refusing to grant a reference consumption for plant and manufacturing processes put into operation after 31 January 1958 and imposing a supplementary charge on excess consumption, the High Authority adopted measures which were more restrictive than was necessary for that purpose
5. The complaint based on the infringement of Articles 2, 3, 4, 5, 53, 54, 58, 59 and 65 of the Treaty and Annex II thereto
Upon reading the pleadings; Upon hearing the parties; Upon hearing the opinion of the Advocate-General; Having regard to Articles 2,3,4, 5,33,46,47,48, 53, 54, 57,58,59,65 and 80 of the Treaty and Annex II thereto; Having regard to the Protocol on the Statute of the Court of Justice; Having regard to the Rules of Procedure of the Court of Justice and the rules of the Court on costs, THE COURT hereby: