Opinion of Mr advocate-general Lagrange
Mr President,
Members of the Court,
It would, I think, be an insult to the Court to relate, even summarily, the history of the joint-selling organization for Ruhr coal and the vicissitudes it has undergone since being subjected to the provisions of Article 65 of the ECSC Treaty: the Court has been too closely involved to be unable to approach with full knowledge of the facts the new situation constituted by Decisions Nos 5/63 and 6/63 of the High Authority and the application made against them by the Government of the Kingdom of the Netherlands. This does not mean, however, that the present application does not, like its predecessors, merit serious consideration, particularly in that this is the first time that a Member State has contested before you an authorization decision apparently accepted by the mining undertakings and agencies concerned.
I shall merely recall that from a legal point of view the dispute is necessarily confined within the limits of the Opinion 1/61 of the Court of 13 December 1961 and of its judgment in Case 13/60 of 18 May 1962 and, from an economic point of view, of a competitive situation far different — as is shown by the evidence — from that which existed in the first few years after the introduction of the Treaty. This is very important, for it is not unthinkable that an authorization similar to that resulting from the contested Decisions, had it been granted when the Common Market in coal started to operate, might have had very different effects from those likely to follow in the present market conditions and perhaps (who knows?) at that time might even have resulted in an organization which conformed with the rules of the Treaty and satisfied its aims, which, as the applicant Government justly recalls, has not been the case.
Also, I do not think it necessary here to analyse in detail the contested Decisions. You know that they authorize, subject to various conditions, two agreements, each of which grouped together about half the mining companies of the Ruhr Basin for the joint selling of fuels from their respective operations through two selling agencies; Geitling for one of the groups, and Präsident for the other. There no longer exists, as there had been, a joint office allocating orders between the agencies, nor does the standards board, nor the financial arrangements for compensation, nor the joint export company; on the other hand, in the case of Konzerne, all the companies within the same group are affiliated to the same agency.
However, there remain common organizations of Ruhrkohle-Treuhand and Ruhrkohlen-Beratung still working for the two agencies, the former, however, being obliged to limit its activity to the technical and electronic processing of data without having the right to intervene in the agencies' accounting methods or in their financial management (Recital 7) and the second being responsible for technical studies concerning publicity for Ruhr coal and general investigations concerning the energy market (Recital 8).
The four grounds mentioned in Article 33 of the ECSC Treaty are invoked in support of the application. However, as the submission of misuse of powers has been neither developed nor separately presented I may ignore it. I shall treat the submission of lack of competence in the same way, although the applicant appears to attach a certain importance to it. In fact, as usually happens, the submissions of lack of competence which have been raised coincide with the grounds of complaint based on infringement of the Treaty: it is contended that the High Authority failed to appreciate the extent of its competence in exercising those of its powers which are not disputed. The question whether or not such grounds of complaint are based on lack of competence would only be of interest if the Court were to raise it of its own motion because this ground concerns public policy; however, once the submission is raised expressly it matters little whether it be examined under the heading of lack of competence or of infringement of the Treaty. Generally in such cases the Court deals with it under the latter heading, which is to be expected, since the limits of the High Authority's powers are determined by the provisions of the Treaty.
As for the infringement of an essential procedural requirement, which in this case is the absence or insufficiency of grounds for the Decision, in such matters this is always partly linked to the substance, that is, to the legality, since, as you have several times had occasion to recall, the requirements of the reasons for the decision vary according to the more or less discretionary nature of the power exercised and must enable the Court to exercise its power to review the legality of the actions of the High Authority while observing the limits of the discretionary power which result as much from the nature of the application for annulment as from the restrictions of Article 33 (judgments in Case 18/57, Nold, 20 March 1959, Rec. 1958-59, p. 114; Case 36/57 Nold et Comptoirs, 15 July 1960, Rec. 1960, p. 890). In the latter case you only examined the various grounds of complaint in detail when the submission of infringement of an essential procedural requirement was raised. In this instance, however, certain grounds of complaint concern only the reasons for the decision: I shall consider them separately. I shall then deal with the other grounds of complaint which either concern infringement of the Treaty alone or both submissions in such a way that a separate consideration of each one would be somewhat artificial or likely to involve repetition. This method will also have the advantage of following more closely the order of the three subparagraphs (a), (b) and (c) of Article 65 (2).
I — Grounds of complaint based solely on infringement of an essential procedural requirement
The first is based on the absence of publications in extenso of the contracts and resolutions authorized, from which it follows that the grounds for the contested Decisions give only an incomplete picture of the system approved by the High Authority.
This ground of complaint cannot be maintained. It is clear that the reasons required for an authorization decision taken under Article 65 (2) do not extend to the necessity to publish the agreements authorized in their entirety: it is enough that, as in this case, the decision gives a sufficiently complete analysis of these reasons for their character to be assessed in the light of the requirements of the Treaty.
This does not mean that, in appropriate cases, the production (not the publication) of agreements might prove useful in order to enable the parties better to support particular aspects of their argument and the Court to be better informed. But this depends, as in any action, on the preparatory inquiries made into the case and not on the statement of reasons. In fact, during the proceedings the applicant received all the documents and is thus clearly in a position to understand the scope of the references to the text of the agreements made in certain provisions of the contested Decisions or in reasons given for them.
The second ground of complaint deals only with infringement of an essential procedural requirement and concerns the insufficiency of reasons given for the contested Decisions in the light of the first requirement of Article 65 (2) (a). The contested Decisions did not show, or only showed insufficiently, in what way the authorized agreements will make for a substantial improvement in the … distribution of those products.
The reasons for this requirement are found in the first subparagraph of Recital 26. In my opinion the reasons given are sufficient to meet the requirements of subparagraph (a). In fact, the various advantages of the joint selling of coal products in general and of those of the Ruhr in particular, as regards the improvement in distribution, are well known and have never been disputed; nor are they disputed by the applicant Government. In my opinion, it was enough that the contested Decisions summarized these advantages, as they did clearly and precisely in Recital 26.
II — Other grounds of complaint
A — Grounds of complaint based on the application of Article 65 (2) (b)
Here it is no longer simply a question of establishing that specialization, joint-buying or joint-selling agreementswill make for a substantial improvement in the production or distribution of those products when compared with the situation which would exist in the absence of such agreements. It must still be shown that the agreement in question is essential in order to achieve these results and is not more restrictive than is necessary for that purpose, which implies a real assessment of all the features of the agreement and of its possible effects. Such an assessment necessarily involves a large measure of appreciation mainly of a technical and commercial character, since it is essentially a question whether the restrictions on the liberty and the autonomy of undertakings provided for in the agreement, are both necessary and sufficient to achieve the improvements sought in the scheme of production or the system of distribution. Then, but only then, do we come up against the requirements of subparagraph (c), which involves above all an anticipatory assessment of an economic nature concerning the possibly restrictive effects of the agreement on competition in the market which would result from the dominant position which it is likely to give to the undertakings concerned: this would amount in fact to an arbitration between the technical optimum and the need to safeguard that measure of competition which must, according to your judgment in Case 13/60, always exist even in an imperfect market. Allow me to refer here to some remarks made in my opinion in Nold et Comptoirs, Rec. 1960, pp. 913 et seq.
It is quite clear, however, that the concept of competition underlies even a consideration of the requirements of subparagraph (b), since the obligation to reject those restrictions in the agreement which are unnecessary is already justified by the attack on competition constituted by the agreement itself and which, for that reason, entails its prohibition in principle under Article 65 (1). It is for this reason that certain recitals in the contested Decisions, for example, Recitals 27 to 33, which are intended to ensure the mutual independence of the two agencies, come under both (c) and (b).
What, therefore, are the criticisms of the requirements of subparagraph (b) made in the application?
1. First, there is one which refers to the structure and, in particular, to the number of agencies authorized: we are told that there was no imperative reason for establishing only two selling agencies in the Ruhr.
2. The second ground of complaint concerning subparagraph (b) is based on the fact that the High Authority did not give sufficient reasons for and did not legally justify its Decisions, in so far as it admits that the agreements are not more restrictive than is necessary for that purpose; this question has only been considered in relation to one section of the clauses of the agreements.
B — Grounds of complaint based on the system of supervision employed by the High Authority
The applicant divides its grounds of complaint between the submissions of lack of competence and of infringement of the Treaty (there is no question here of infringement of an essential procedural requirement). I prefer to consider them together both for the reasons set out at the beginning of my observations and also for the following two reasons:
At first sight it may seem strange that the applicant government which considers that the agreements authorized do not fulfil the legal requirements, should also complain of the provisions drawn up to supervise their application as strictly as possible. Hitherto, it is the agencies which have had nothing to say in this field. In fact, the basic criticism by the applicant government concerns the fact that the High Authority had substituted for precise and objective conditions enumerated in the authorization decisions, merely a subsequent check on the actual manner in which the agencies executed those agreements, which had been subjected to all too lax conditions: in short, the High Authority had thought: let us trust the parties concerned and we shall see how they behave. Such an attitude is contrary to the Treaty.
Criticisms of the system of preventive and repressive intervention established by the High Authority are made in relation to the provisions of Article 15 (3) and the second section of Article 16 (1) of the contested Decisions. Let me recall the terms of these passages:
It appears possible to reduce the criticisms of these provisions to two:
1. The first concerns the fact that the express or tacit right of approval of certain company measures, which under the contested Decisions belonged to the High Authority, results in replacing the power of authorization which is granted to the High Authority by Article 65 (2) and may only be exercised, in the circumstances set out in that Article, by a discretionary power exercised without control or the right to legal protection, for the benefit of the Member States in particular. It was even a new power, the principle of which was condemned by the Opinion 1/61 of the Court and also by the judgments of 15 July 1960 on road transport. The applicant refers also to the Opinion 1/61 insofar as it censures the substitution of a subjective a posteriori check for an objective a priori consideration of the compatibility of an agreement with the Treaty.
2. The second criticism concerns the illegality of the delegation to the departments of the High Authority powers which, in any case, may only be exercised by the institution acting as a body; on this point, the applicant Government does not fail to refer to the numerous judgments which you have given in this field, as well as to Decision No 22/60.
C — Grounds of complaint based on the application of Article 65 (2) (c)
It is quite clearly this third category of complaint which raises the most serious problems. Here we are no longer dealing with the submission of lack of competence, but with the absence or insufficiency of reasons and infringement of the Treaty. Despite the importance of these grounds of complaint my observations on them will be limited, for this is the most well known aspect of the problem and one on which each of you has certainly formed an opinion. I shall merely express my own view, while trying to confine myself to matters of law and to remain within the relatively strict limits of your Opinion 1/61, your judgment in Case 13/60 and, of course, the context of the argument put forward by the applicant Government.
The latter, in attempting to establish that the authorized agreements are liable to give the undertakings concerned the power to determine the prices, or to control or restrict the production or marketing of a substantial part of the products in question within the Common Market, is basing its argument essentially on two considerations: the first concerns the structure of the organizations, which does not ensure the independence of each agency in relation to the other; the second, of an economic nature, is based on the duopoly theory.
1. As regards the structure, the applicant Government complains first of the identity of structure of the two agencies, both as regards the volume of production, the sales and the types of product as well as the internal organization and regulation of sales. Secondly, it complains of the collaboration between the two agencies within the common organizations Ruhrkohle-Treuhand and Ruhrkohlen-Beratung. Finally, it objects to the division of the mining companies controlled by the State between the two agencies. Let me deal with these three points:
2. I shall now consider the purely economic aspect of the discussion, which deals with the duopoly.
1 Translated from the French.