JUDGMENT OF 15.7.1960 — JOINED CASES 36, 37, 38 AND 40/59 GEITLING v HIGH AUTHORITY
I — In Joined Cases
THE COURT composed of: A. M. Donner, President, A. M. Delvaux (Rapporteur in Cases 36 to 38/59) and R. Rossi, President of Chambers, O. Riese and N. Catalano (Rapporteur in Case 40/59), Judges, Advocate-General: M. Lagrange Registrar: A. Van Houtte
gives the following
JUDGMENT
Issues of fact and of law
I — As regards Cases 36, 37 and 38/59
A — Conclusions of the parties
B — The facts
C — Submissions of the parties
1. On admissibility
2. On substance
(a) On the submission of infringement of an essential procedural requirement
(b) On the submission of infringement of the Treaty and manifest disregard for its provisions
(c) On the submission of a misuse of powers
As regards Case 40/59
Conclusions of the parties
The facts
C — Submissions of the parties
1. Admissibility
2. As to substance
(a) As regards the principal claim
(aa) Infringement of an essential procedural requirement
(bb) Infringement of the Treaty and misuse of powers
(b) Concerning the alternative claim
D — Measures of inquiry
E — Procedure
Grounds of judgment
I — Preliminary considerations
II — Admissibility
III — Substance
A — On the submission as to infringement of an essential procedural requirement
1. Refusal to authorize the criterion of60000metric tons
2. Maintenance in principle and the alteration of the amounts of the criteria of30000 (20000) and9000 (6000) metric tons
B — The submissions as to infringement of the Treaty and misuse of powers
1. The complaint of infringement of the Treaty
2. The complaint as to misuse of powers
Costs
I —. As regards Cases 36, 37 and 38/59
A —. Conclusions of the parties
(A). Annul Decision No 36/59 of the High Authority No 40 of 8.7.1959, p. 736) in so far as that decision rejects the request by the applicants on 11 and 12 December 1958 for an extension for a further year of the authorizations already granted by the High Authority concerning the commercial rules which the applicants have adopted:
(B). Order the High Authority to bear the costs.
B —. The facts
C —. Submissions of the parties
1. On admissibility
2. On substance
(a). On the submission of infringement of an essential procedural requirement
(b). On the submission of infringement of the Treaty and manifest disregard for its provisions
1. It has wrongly interpreted subparagraphs (b) and (c) of Articles 65 (2) and has infringed the rules of logic. For the High Authority judges the quantitative criteria proposed by the applicants as having more restrictive consequences than are necessary for an improvement in distribution. Its argument is that those criteria have had the result that a certain number of wholesalers of average size have lost their status as first-hand traders. The said wholesalers had obtained their supplies directly from the sales organizations of the Ruhr basin before the creation of the Common Market.
2. The High Authority is wrong in saying that in practice most of the first-hand wholesalers retained by selling agencies must also satisfy the requirements laid down for their acceptance by the two other joint selling agencies and that this situation is contrary to the general principle of the independence of the three agencies. This erroneous assertion is not based on any reason other than the fact that first-hand traders obtain their supplies principally from the coal from the Ruhr. This situation is due exclusively to natural causes such as price competition and the transport situation and not to a restriction on competition within the meaning of Article 65 of the Treaty. In the present cases the High Authority has reacted to the facts on which the Court passed judgment in Case 2/56, but those facts do not have anything in common with the present dispute.
3. The High Authority states that under the rules which it is authorizing, and taking into account the number of wholesalers accepted for direct supplies, neither the mining companies nor certain wholesalers will be able to control or limit the sales of a large percentage of fuels. Yet that assertion is neither complemented nor supported, as it ought to be, by the finding that the previous rules were capable of facilitating that control and limitation of sales over a sizeable amount of fuel.
4. The High Authority has wrongly and unwarrantably abolished criterion No 1 (sales of 60000 metric tons of Community coal within the Community). In fact any wholesaler coming within the two other minimum limits (criteria Nos 2 and 3) may, even for small orders, become a first-hand wholesaler without fulfilling any other conditions, despite being in too small a line of business to bring about an improvement in distribution as required by Article 65(2)(a) and (b).
5. The only reason stated by the High Authority for lowering criterion No 2 from 30000 to 20000 metric tons is that but for that reduction certain wholesalers would be excluded who otherwise could have been accepted as first-hand traders because of the scope of their activities. That line of reasoning is incompatible with Article 65 (2).
6. The High Authority has reduced criterion No 3 from 9000 to 6000 metric tons stating as its reason that it considers the said reduction necessary, without more explanation.
7. The High Authority has neglected to inquire into the facts enabling it to arrive at the findings required by Article 65(2). No explanation is given concerning the figures under the old rules nor concerning the number of first-hand wholesalers under the rules now authorized, and in this regard the High Authority has manifestly failed to observe the provisions of the Treaty.
8. The High Authority has contravened Article 5 of the Treaty, according to which it can only act directly on the market when the circumstances so require, and the reasons stated for the decision do not mention such circumstances.
(c). On the submission of a misuse of powers
1. Declare that Article 6(1) and (2) of Decision No 36/59 of the High Authority dated 17 June 1959 is void (JO of 8.7.1959, p. 736 et seq.);
2. Alternatively, declare null and void or inapplicable the provisions of Article 6 (1) and (2) of Decision No 36/59 of 17 June 1959 (JO of 8 July 1959, p. 736 et seq.) in so far as those provisions have the effect of excluding certain traders who, prior to that decision, were considered as first-hand wholesalers from being such.
3. Order the defendant to bear the costs.
C —. Submissions of the parties
1. Admissibility
2. As to substance
(a). As regards the principal claim
(aa). Infringement of an essential procedural requirement
1. The applicant argues that the reasons put forward for the contested decision enable neither the Court nor the interested parties to ascertain whether the rules:
2. The applicant replies that the statement of the reasons for the contested decision discloses the considerations and the conclusions of the High Authority, but not the facts on which it based its decision. Nor, in omitting to put figures on the effects of the rules and on the probable effects of the new rules, does the contested decision permit the applicant to adduce pertinent reasons in support of the other submissions that it might have an interest in submitting.
(bb). Infringement of the Treaty and misuse of powers
(a). It argues that the rules authorized by Decision No 36/59 have the effect, in its sales area, of excluding it alone from being a first-hand trader. Thus, under the guise of a set of general rules, a decision has been taken which concerns the applicant alone. It complains that the High Authority has failed in its duty to weigh the facts, because, in those circumstances, the contested rules cannot possibly bring about significant improvements in the distribution of coal. That in turn means that in eliminating the applicant the High Authority is at the same time creating a restriction which is more severe than is required by it's purpose.
(b). It asserts that while there may be some justification for a joint selling agency's requiring that a trader sells a minimum quantity of its production, there is nothing to justify the further requirement that it must have sold large quantities of goods from other sources. At all events the commercial organization necessary for the sale of 4000 or 5000 metric tons of coal suffices to class the trader as a wholesale trader.
(c). It asserts that the quantitative criteria in force in the sales area of the Oberrheinische Kohlenunion before the establishment of the Common Market could be achieved much more easily because at that time no direct supply to large-scale users took place, and the latter therefore had to go through first-hand traders.
(d). It asserts that the coal crisis, which has meant a reduction in sales, would have justified a subsequent reduction of the quantitative criteria quite apart from the complaints against the old criteria. Accordingly, not even the historical criterion of 6000 metric tons, which was justified before the entry into force of the Common Market, is justified now. Moreover the fact that a certain number of traders have gone under may aggravate the crisis, for it may be that their former customers stop using coal and go over to oil.
(a). The applicant fails to understand the purposes of the double limit. The purpose of the limit of 20000 metric tons is to establish the sales capacity of a wholesaler, and the other limit (6000 metric tons) would not be adequate because it is at too low a level. A further point is that it is not true that it is necessary to have sold different types of coal, brown coal and coke.
(b). It is true that in the applicant's sales area a limit of 24000 metric tons was applied before the establishment of the Common Market, whereas a limit of 6000 metric tons was applied on the rest of German territory. There can be no possible justification for the applicant's attacking the limit of 6000 metric tons merely because its turnover has now fallen.
(c). The fall in the volume of the applicant's business is not to be explained by the commercial rules organized by the High Authority, because those rules provide that all users consuming less than 30000 metric tons per annum must address themselves to the traders. Moreover, in Southern Germany, users consuming more than 30000 metric tons were allowed to obtain supplies direct even before the rules authorized by the High Authority were adopted.
(d). The coal crisis and competition from oil cannot explain the fall in the applicant's turnover. Moreover the general reduction in the consumption of coal is not comparable with the contraction of the applicant's business. The very purpose of the new rules was to favour direct access by independent traders. In fact, since the new rules came into force thirty-nine new traders have been accepted for direct trading. That number would be higher if all the second-hand traders that satisfy the new quantitative criteria had asked to be accepted. Rather more than half of the 340 wholesalers formerly accepted were in some way connected with the collieries. Now that the new rules are in force (32 of the new traders are independent) more than half the traders are independent. As regards turnover, there still exists a preponderance of wholesalers connected in some way with the collieries, which sell two-thirds of the coal from the Ruhr. These facts suffice to refute the applicant's assertion that only traders connected with the collieries could fulfil the necessary conditions.
(e). It is true that before the establishment of the common market the selling agencies of the Ruhr applied no criterion other than that of 6000 metric tons over a large part of the Federal Republic. However it should not be forgotten that in Southern Germany the criterion was 24000 metric tons. The considerations giving rise to the criterion of 20000 metric tons is a distinction in functions to be made between the different stages of commerce. There exist quite a few second-hand traders who manage to sell as much as and more than 20000 metric tons, as is proved by the fact that there have been thirty-nine new acceptances.
(f). Even though each joint selling agency only sells coal, the coal comprises a large range of categories and types.
(g). The applicant's argument that the limit of 20000 metric tons in practice means that dealers must purchase these tonnages from other joint selling agencies of the Ruhr is unfounded. That argument was correct as regards the tonnage of 60000 metric tons and it has in effect been used by the High Authority (Decision No 36/59, II 9th recital), but it is not correct as regards the limit of 20000 metric tons. The reason for this is that, although it is true that in Germany it is mainly coal from the Ruhr that is sold, sales of brown coal, coke and coal from other basins may make up a sizeable part of the limit of 20000 metric tons. In these circumstances, the criterion of 6000 metric tons is justified, because the trader is not required to fulfil to an identical extent the conditions of acceptance of the three joint selling agencies in order to be accepted by just one of them. The fact that of thirty-nine newly accepted traders, twenty-five have been accepted by only one joint selling agency constitutes proof of this assertion.
(b). Concerning the alternative claim
D —. Measures of inquiry
E —. Procedure
I —. Preliminary considerations
II —. Admissibility
III —. Substance
A —. On the submission as to infringement of an essential procedural requirement
1. Refusal to authorize the criterion of60000metric tons
2. Maintenance in principle and the alteration of the amounts of the criteria of30000 (20000) and9000 (6000) metric tons
A —. The considerations put forward on this matter in the statement of reasons (Part II), in so far as they are clearly expressed, may be summarized as follows:
B —. Although it cannot be denied that certain quantitative restrictions may make for a substantial improvement in distribution in so far as they facilitate effective and rational sales, it remains to be seen whether the High Authority has shown first that the quantitative limits which it has authorized make for an improvement in distribution, secondly whether they are not more restrictive than is necessary for the purpose of the agreement authorized and, finally, whether convincing reasons have been given for reducing the criteria from 30000 to 20000 metric tons and from 9000 to 6000 metric tons.
(a). Why is the interrelated maintenance of a Community coal criterion and an agency coal criterion essential in order to ensure an improvement in distribution?
(b). Why do acceptable expectations in an improvement in distribution depend on distributors accepted as direct traders having available a large range of categories and types?
(c). Why — supposing indeed that this is the case — has the High Authority not considered that the clause approved by Article 6(3) of Decision No 17/59 as altered by the contested decision is sufficient?
(d). Have sufficient reasons been given for the reduction of the Community coal criterion from 30000 to 20000 metric tons?
(e). Have sufficient reasons been given for the reduction of the agency coal criterion from 9000 to 6000 metric tons?
B —. The submissions as to infringement of the Treaty and misuse of powers
1. The complaint of infringement of the Treaty
2. The complaint as to misuse of powers
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 4, 5, 14, 15, 31, 33, 65 and 80 of the Treaty establishing the European Coal and Steel Community; 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 Communities, THE COURT hereby:
1 Declares that Applications Nos 36/59, 37/59 and 38/59 are admissible;
2 Declares that Application No 40/59 is admissible with the exception of its conclusions in the alternative;
3 Annuls Article 2 of Decision No 36/59 of the High Authority of 17 June 1959, in so far as it replaces Article 6 (1) and (2) and Article 9 of Decision No 17/59 of the High Authority of 18 February 1959;
4 Orders that in Cases 36/59, 37/59 and 38/59 the defendant shall bear its own costs and half of the costs of each of the applicants, the remainder to be borne by the latter;
5 Orders that the costs in Application No 40/59 shall be borne in the same proportions.