JUDGMENT OF 4. 2. 1959 — CASE 1/58 STORK v HIGH AUTHORITY

In Case 1/58

THE COURT composed of A. M. Donner, President, O. Riese (Rapporteur) and J. Rueff, Presidents of Chambers, L. Delvaux, Ch. L. Hammes, R. Rossi and N. Catalano, Judges, Advocate-General: M. Lagrange Registrar: A. Van Houtte

gives the following

JUDGMENT

Facts

I — Conclusions of the parties

II — Summary of the facts

III — Submissions of the parties

1 — Admissibility

2 — Substance

A — First ground of complaint

B — Second ground of complaint

C — Third ground of complaint

1 — Admissibility

2 — The justification for the ground of complaint

D — Fourth ground of complaint

IV — Procedure

Law

I —. Conclusions of the parties

II —. Summary of the facts

1. The applicant carries on business at Bünde (Westphalia) as a coal wholesaler and until 1952 was a first-hand wholesaler.

2. As a result of the above decisions the applicant company became a second-hand wholesaler, since it was unable to achieve a turnover -of 48000 metric tons. On 23 April 1953 the company brought an action against GEORG before the Landgericht Essen (Essen Regional Court), in which it asked the court to:

3. In the meantime, by letters dated 25 and 31 August 1953, GEORG and the six above-mentioned joint selling agencies requested the High Authority to authorize all the agreements and decisions of 5 February 1953 in accordance with Article 65(2) of the Treaty establishing the European Coal and Steel Community. As a result of the negotiations which followed, the Ruhr collieries submitted fresh, amended requests for authorization.

III —. Submissions of the parties

1 —. Admissibility

2 —. Substance

A —. First ground of complaint

(a). The applicant considers that the validity of the decisions adopted on 5 February 1953 must be assessed solely by reference to the law in force in Germany at that time. The common market in coal was only established on 10 February 1953. Under Article 1 of the Convention on the Transitional Provisions the High Authority had no power to take any decision before that date and therefore could not apply the provisions of the Treaty. Even if reference is made to 1 April 1953, the date on which the decisions in question took effect, the result is the same since, under the terms of Decision No 37/53, Article 65 of the Treaty only became applicable on 31 August 1953. The applicable texts are, therefore, Article 1(2) of Order No 78 of the British Military Government of 28 January 1947 and Article 134 of the Bürgerliches Gesetzbuch (Civil Code). On the basis of those provisions the decisions of 5 February 1953 are totally void. That being so, the High Authority should not have found that they were compatible with the Treaty, since only valid decisions may be considered from the point of view of their compatibility with Community law. On the contrary, it should have ruled that the decisions could not be assessed by reference to the provisions of the Treaty.

(b). The High Authority replies that it alone is competent to decide whether agreements and decisions governing competition are compatible with the Treaty. It is, on the other hand, for the national courts and tribunals to decide, where necessary, whether such decisions were properly adopted in accordance with the national law which may then have been applicable.

B —. Second ground of complaint

(a). The applicant maintains that the contested decision wrongly assumes that the decisions of 5 February 1953 were subsequently authorized. Decisions Nos 5 to 7/56 authorized agreements which had nothing in common with the original agreements except the aim sought, namely a joint agreement on commercial practices and nothing else. As is clear from Decisions Nos 5 to 7/56, the agreements authorized are dated 13 December 1955 and 6 February 1956 and the legal persons by whom they were concluded, namely the three joint selling agencies at present in existence, are quite distinct from the six joint selling agencies in existence in 1953.

(b). The High Authority replies that the applicant's view is not justified by either the wording or the aim of Decision No 37/53.

C —. Third ground of complaint

1 —. Admissibility

2 —. The justification for the ground of complaint

(a). The applicant maintains that by adopting Decisions Nos 5 to 7/56 the High Authority infringed the basic principles of the Treaty, in that it authorized practices which result in discrimination against certain wholesalers and which are likely to restrict competition and completely to exclude certain interested parties. It has overlooked the fact that the wholesale coal trade was only beginning to pick up again in 1950-51 and that the decisions of 5 February 1953 have made the work of reconstruction impossible. Most wholesalers were not able to reach a turnover of 48000 metric tons again by 1952-1953. In the Detmold Regierungsbezirk (administrative district), for example, the decisions in question resulted in 24 and perhaps even 26 out of the 27 wholesalers who were until then entitled to obtain supplies directly from the coalmines of the Ruhr becoming second-hand dealers.

(b). The High Authority replies that for the purposes of the solution to the present action it is unnecessary to decide whether or not Decisions Nos 5 to 7/56 are in accordance with the Treaty. It is not the content of those decisions which is of interest; they are only important to the extent to which they put an end to the procedure set in motion in accordance with Decision No 37/53 and thus to its suspensory effect. Even if the decisions of the High Authority in question had required a turnover of 6000 metric tons—the limit before the adoption of the decisions of 5 February 1953-as a condition for operation as a wholesaler, the terms of the contested decision could have been no different, since the original request made by the Ruhr organizations must be regarded as only having been rejected by the final decision of the High Authority.

D —. Fourth ground of complaint

(a). For the first time during the hearing the applicant maintained that the contested decisions had to be regarded for legal purposes as an agreement drawn up after the creation of the common market. As such it could not be covered by Article 12 of the Convention on the Transitional Provisions and Decision No 37/53, although it was from the outset covered by Article 65. The decisions were clearly adopted ad hoc, that is, with reference to the imminent entry into force of the provisions of the Treaty on agreements and concentrations, including the transitional legal provisions.

(b). In reply the High Authority objects that the date of the reorganization is rather the result of the time-limit fixed by Order No 20 of the Allied High Commission. By their nature transitional rules are drawn up with reference to specific dates. Rules adopted a short time before such date cannot be subjected to special treatment on the ground that they constitute an attempt to frustrate the law, since it is impossible in such a situation to fix any clear time-limit for their adoption.

IV —. Procedure

1. In its principal conclusions the application contests the decision of the High Authority of 27 November 1957 which, in answer to a decision to stay the proceedings adopted by the Landgericht Essen, had found that the prohibition contained in Article 65(1) of the Treaty did not apply to the decisions adopted on 5 February 1953 by the six joint selling agencies for Ruhr coal. Under the second sub-paragraph of Article 65(4) an application against such a decision of the High Authority may be brought before the Court, which therefore has jurisdiction in the present action.

2. Since the application is brought within the context of Article 65 of the Treaty, the applicant is entitled under Article 80 to appear before the Court, even though it is engaged in the distribution rather than the production of coal. The right of action of undertakings engaged in distribution is not limited to cases in which they are parties to the agreement in question but extends to cases such as the present in which a decision based on Article 65 directly affects the interests of the applicant distributive undertaking.

3. Under Article 65(4) the High Authority has jurisdiction to rule whether any agreements or decisions adopted by such groups of undertakings are compatible with the provisions of that article. That rule must be interpreted to mean that the High Authority is also entitled to rule whether the Article in principle is applicable to such agreements or decisions by virtue of other provisions of the Treaty or of the Convention on the Transitional Provisions. Therefore, no objection can be made to the fact that in this instance the High Authority did not reply directly to the question raised by the Landgericht Essen, in its decision to stay the proceedings, whether the decisions of 5 February 1953 are in breach of the prohibition contained in Article 65(1) of the Treaty but found that the prohibitions contained in Article 65 did not apply to those decisions until the entry into force of Decisions Nos 5 to 7/56. The foregoing cannot alter the fact that the Court is required to deal with an application for annulment based upon Article 65(4) of the Treaty. On the grounds set out under Nos 1 and 2 above the Court has jurisdiction to hear the action and the applicant has the right to institute proceedings.

4. The applicant considers that a misuse of powers or an infringement of the Treaty sufficient to justify the annulment of the contested decision is to be found in that the High Authority wrongly failed to take account of the fact that the decisions in question had to be assessed from the point of view of German law, by virtue of which they were void. That argument is unfounded.

5. Since the Court cannot base its judgment on legal arguments whose validity is not established, it considers it necessary to make a preliminary examination of the question whether Article 65 was applicable not only on the establishment of the common market in coal (10 February 1953) but already on the entry into force of the Treaty establishing the European Coal and Steel Community (on 25 July 1952).

6. (a) It emerges from the second paragraph of Article 12 of the Convention, together with Articles 1, 2 and 3 of Decision No 7/53 of the High Authority of 11 July 1953 (JO 1953, p. 153), that the existing agreements concluded before 10 February 1953 did not become invalid on the establishment of the common market (10 February 1953) but were regarded as authorized subject to subsequent prohibition and, in the absence of any special decision adopted by the High Authority, only fell under the prohibition in Article 65 and became invalid as from 31 August 1953. If a request for authorization has been submitted before that date the said agreement remained in force as long as the High Authority adopted no decision rejecting it. (b) If the legal principles set out above are applied to this case it appears that, when it adopted the contested decision, the High Authority rightly ruled that the prohibitions in Article 65(1) of the Treaty were not applicable to the decisions of 5 February 1953 until the entry into force of Decisions Nos 5 to 7/56, since such decisions, adopted five days before the establishment of the common market, constituted existing agreements in respect of which a request for authorization had been submitted before 31 August 1953 and was only rejected by Decisions Nos 5 to 7/56. The objections put forward by the applicant in this respect are therefore unfounded. (i) The applicant has alleged that the decisions of 5 February 1953 were in fact not existing agreements but that they had been adopted ad hoc only a few days before the establishment of the common market, that is, in order to avoid the immediate application of the prohibitions in Article 65(1) of the Treaty. Even if such an intention had encouraged the parties concerned to adopt the decisions of 5 February 1953, which the Court considers to be possible but unproved, it would not be sufficient to prevent the application of Articles 1 to 3 of Decision No 37/53 of the High Authority. Order No 20 of the Council of the Allied High Commission of 9 September 1952 had compelled the joint selling agencies for Ruhr coal to reorganize the sale of coal before 31 March 1953. That measure encouraged the agencies concerned to take steps at the same time to limit the ability of wholesalers to place direct orders, a fortiori since Order No 2 had expressly referred to such dealers several times. Although there was, therefore, a legal obligation on the joint selling agencies for Ruhr coal to adopt agreements on their reorganization, it is not sufficiently established in law that the decisions of 5 February 1953 were only adopted in order to avoid the application of Article 65 of the Treaty. According to Article 1 of Decision No 37/53 of the High Authority, the decisive question is whether the agreements, decisions or concerted practices were already in existence when the common market was established (10 February 1953). That question may be answered in the affirmative as regards the decisions of 5 February 1953. (ii) The applicant also maintains that since the decisions of 5 February 1953 have never been authorized they are covered by the absolute prohibition in Article 65 and are therefore void. That argument is unfounded. The High Authority in fact refused to authorize the decisions of 5 February 1953. That refusal has never been expressly stated but it was clearly implied in the authorization of the regulations on sales given by Decisons Nos 5 to 7/56. The Court therefore considers the defendant to be justified in its view that the authorization given to the new regulations by Decisions Nos 5 to 7/56 amounted in law to a formal refusal to authorize the earlier regulations and that, for the reasons set out under point 6, paragraph (a) and (b) above, the date set for the entry into force of the new regulations (22 February 1956) had to be considered as the date on which, in accordance with Article 3 of Decision No 37/53, the prohibitions in Article 65 were to apply to the earlier regulations. Furthermore, the applicant's view that from the differences between the agreements which were finally authorized and the decisions of 5 February 1953 it may be concluded that the former did not form the subject of a request for authorization submitted within the required time cannot be accepted, since the agreements authorized by Decisions Nos 5 to 7/56 were submitted for authorization by parties other than those who adopted the decisions of 5 February 1953 and the content of those authorizations does not coincide with the terms of the decisions. After examining the regulations governing the sale of Ruhr coal which were submitted to it for examination and which included the decisions of 5 February 1953, the High Authority let it be understood that it could not authorize the regulations existing earlier. It had, however, to avoid a situation in which the previous legal organization governing the sale of Ruhr coal became ineffective without being replaced by new regulations compatible with the Treaty. To wait until the coal-mines of the Ruhr submitted new regulations which could be authorized before formally rejecting the earlier regulations corresponded to the desire, which was based on the general aims of the Treaty and in particular on Article 3(a) thereof, to avoid that situation. All the efforts towards the adoption of regulations governing the sale of Ruhr coal form a single entity, beginning with the requests for the authorization of the decisions of 5 February 1953 and ending with the authorization given to the agreements finally adapted to the requirements of the High Authority and referred to in Decisions Nos 5 to 7/56. It is impossible for that continuous development to be artificially divided and for the first request for authorization which was presented within the required time to be thereby deprived of the suspensory effect provided for in Decision No 37/53. (c) There is therefore no error of law in the finding made by the contested decision that the prohibitions in Article 65(1) of the Treaty were not applicable to the decisions of 5 February 1953 until the entry into force of Decisions Nos 5 to 7/56 on 22 February 1956. Such a finding does not prejudge the question, which the Landgericht Essen did not raise in its decision to stay proceedings, what law to apply to those decisions during the period from 5 to 10 February and whether or not they were valid according to that law. (d) It is true, as the applicant has observed, that the contested decision is mainly based on the fact that the High Authority took no steps against the commercial regulations in question until Decisions Nos 5 to 7/56 were adopted. Article 12 of the Convention sets no specific period within which action must be taken against the existing agreements, with the result that the High Authority is entitled to use its discretion. The fact that it took three years to make a thorough examination of the organization of the sale of Ruhr coal and to introduce a new method of organization cannot be regarded as an abuse of its discretionary power in the light of the complexity and great economic and social importance of the reorganization in question. If the applicant considered that the High Authority should have taken separate and earlier action against the commercial regulations in dispute, it was entitled to refer the matter to it in accordance with Article 35 of the Treaty and to bring an action for failure to act if the High Authority adopted no decision or recommendation. As no such proceedings were instituted by the applicant the High Authority is deemed not to have infringed the Treaty by taking no action at that period.

7. The applicant's conclusions based on the alleged illegality of Decisions Nos 5 to 7/56 of the High Authority are no better founded.

8. The application must therefore be dismissed on those grounds and, in accordance with Article 60(1) of the Rules of Procedure of the Court, the applicant must be ordered to pay the costs.

Upon reading the pleadings; Upon hearing the report of the Judge-Rapporteur; Upon hearing the parties; Upon hearing the opinion of the Advocate-General: Having regard to Articles 3, 4, 8, 31, 33, 35, 65 and 80 of the Treaty establishing the European Coal and Steel Community, as well as Articles 1, 2, 8, 12 and 13 of the Convention on the Transitional Provisions; Having regard to the Protocol on the Statute of the Court of Justice of the European Coal and Steel Community; Having regard to the Rules of Procedure of the Court of Justice of the European Coal and Steel Community; Having regard to Decisions Nos 1/53 and 37/53 of the High Authority and the letters of the High Authority of 7 and 10 February 1953 addressed to the Governments of the Member States, THE COURT hereby:

1 Dismisses the application for the annulment of the decision of the High Authority of 27 November 1957, notified to the applicant on 6 December 1957:

2 Orders the applicant to pay the costs of the action.