Opinion of Mr Advocate-General Roemer
Mr President,
Members of the Court,
The proceedings before us today concern the application of the provisions concernings aids in the Treaty establishing the European Economic Community. I must make the following preliminary remarks on the facts.
Since the end or the war, quinquennial plans have been drawn up in France for the modernization and gearing of its economy. The Vth Plan, covering the years 1966 to 1970, concerned the reorganization of industrial structures. For this purpose loans were available on special terms (as regards rates of interests, duration and methods of repayment) through the Fonds du développement économique et social (FDES: Economic and Social Development Fund), that is, out of public funds (to be more precise: out of a special treasury account). The fact which interests us in the present case is that in a schedule to the Vth Plan the problems of the French iron and steel industry were dealt with in a plan professionnel. This plan referred to the large debts of the French iron and steel industry and its resulting difficulties in financing its investment programmes. Its purpose is to rationalize and alter structures so as to re-establish competitive capacity on an international level, to contribute towards the maintenance of possibilities of employment and to consolidate the economic position of certain regions, in particular Lorraine. In order to attain these objectives, on 29 July 1966 the State and the Chambre Syndicate de la Sidérurgie Française concluded a General Agreement, the preamble of which makes express reference to the schedule to the Vth Plan devoted to the iron and steel industry and to which I have just referred. This Agreement provides for the rationalization and expansion of production (optimum use of existing capacities, the construction of plant of the maximum size, the fixing of manufacturing programmes, the shutting-down of certain plant and the reorganization of undertakings) and gives details of certain regrouping operations in the form of the formation of companies, contracts for the acquisition of shareholdings, mergers, the establishment of joint subsidiaries, etc. The agreement contains in particular a detailed investment programme (for example, for the construction of new coking plants and blast furnaces, the construction or enlargement of steel works, etc.). As regards the financing, the Agreement states that the cost of the investment projects is put at 4500 million francs, to which must be added certain other expenses connected with the investments to be made by the undertakings, which brings the total figure for the financial needs to 11275 million francs. These expenses must be bornne by the undertakings up to the amount of 5090 million francs and the undertakings also agreed to increase capital. The State participation is provided for in the form of loans of a total of 2700 million francs, to be granted by the FDES on special terms for repayment and special rates of interest, fixed at 3 % for the first five years and at 4 % for the remainder of the duration of the loans. The terms and conditions of these loans were to be drawn up in special agreements to be concluded with the undertakings concerned. It is also important to point out that another section of the General Agreement dealt with the question of maintaining employment. The Agreement pointed out that the improvement in the conditions of production was to bring about a reduction in the size of the work force and that it was therefore necessary to create new productive activities and new jobs in the regions concerned. On this point also the State and the iron and steel industry undertook to act jointly (for example, as regards aids to workers, compensation for dismissal, easier access to new jobs, retraining etc.). In this connexion details may be obtained from the very comprehensive Agreement (for example, the project for the creation by the undertaking of a special finance company).
As I have already said the necessary details of the investment programmes were fixed in special agreements concluded with the undertakings concerned, in which the General Agreement was stated as the compulsory frame of reference which must not be exceeded. The special agreements did not merely define in detail the investment and work programmes, indicating the sums necessary for the investments, the amount of the loans to be granted by the FDES and the special conditions attaching to them: they also set out the obligation to apply the General Agreement as regards the retraining of workers and the creation of new jobs. It appears that most of these individual agreements were concluded during the years 1967 and 1968 and that since then they have been implemented by the payment of credits.
As such action has an effect on me conditions of competition it is clear that it is of significance for the ECSC Treaty. For this reason a meeting was held on 28 September 1966 at an administrative level at which the French Government submitted to the High Authority explanations of the plan professionnel. Subsequently, on the basis of further information provided by that Government, the High Authority reached the provisional conclusion that the prohibition contained in Article 4(c) of the ECSC Treaty did not apply and also that there was no need to make a recommendation under Article 67 of that Treaty. It informed the Member States of this view during a meeting of the Council of Ministers held on 29 June 1967. However, on this occasion the High Authority encountered reservations on the part of the Netherlands Government. In a letter dated 5 April 1968 the Netherlands Government requested the Commission (which in the meantime had taken the place of the High Authority) to define its attitude further and also sought an exchange of views. The Commission considered itself in a position to explain its final attitude at the end of 1968. In a letter from the Commission to the French Government dated 4 December 1968 (a copy of which was sent to the Netherlands Government on 9 December 1968) it stated that the grant of credits at reduced rates of interest to the French steel industry did not represent a subsidy prohibited by Article 4(c) of the ECSC Treaty, since it did not constitute a special aid. It must be observed, according to the Commission, that the special rates of interest laid down are provided for in favour of all those sectors of the economy which have been given priority in the French plans and it must be remembered that the iron and steel industries which benefit from the special credits bear special burdens in social matters. As regards Article 67 of the ECSC Treaty, the letter from the Commission stated that the conditions of application of paragraphs (2) and (3) thereof were not satisfied. The Commission maintains that since the essential burden of the financing is borne by the undertakings, and since the debts owed by the French iron and steel industry are particularly large and the undertakings are subject to burdens in social matters, the financial benefits allowed to these undertakings have only a limited effect on the cost price of their goods. Finally, the Commission pointed out that as the loans from the FDES are not limited to the iron and steel sector alone, it was impossible to claim that the iron and steel industry was given a special benefit within the meaning of Article 67(3).
However, this view did not convince the Netherlands Government. It regards the granting of loans to the French steel industry on special terms which, at that time, could not be obtained in the general capital market as a violation of the prohibition on subsidies contained in the Treaty establishing the ECSC. For this reason on 24 June 1970 it addressed a letter to the Commission in which it requested that a decision be made under Article 88 of the ECSC Treaty, that is, that a statement be made that in granting the abovementioned credits the French Government has infringed the Treaty. In the alternative it requested that a recommendation be made to the French Government under Article 67 of that Treaty.
As the Commission did not comply with this request within the period of two months laid down in Article 35 of the ECSC Treaty, on 13 October 1970 the Netherlands Government lodged an application before the Court of Justice for failure to act.
As a result of this we must now consider the question whether the Commission's assessment of the measures adopted by the French Government is correct or whether, by reason of the infringement of Article 4(c) of the ECSC Treaty, a decision must be adopted under Article 88 or, at the least, a recommendation made to the French Government under Article 67 on the grounds that these measures had influenced the conditions of competition.
However, before I can begin a consideration of this question, which forms the basis of the action, I must deal with certain problems of admissibility, to which the Commission has referred.
1. I must first consider whether the Netherlands Government reacted within the required time to the view held by the Commission of the measures taken by the French Government and which it considered incorrect.
2. The Commission s second objection to the admissibility of the application deals with the reasons which are given for it. In this connexion the Commission alleges that as regards the decisions to be adopted under Article 88 of the ECSC Treaty (and the application concerns principally the adoption of such a decision), it has a certain measure of discretion. It maintains therefore that applications intended to record its failure to adopt such a decision must be based on the second paragraph of Article 35, which amounts to saying that a misuse of powers must be alleged. It concludes that as the applicant has not alleged any such misuse of powers, its application cannot be regarded as admissible.
The substance of the case
1. As you are aware the applicant's chief complaint is that the Commission wrongfully failed to adopt a decision under Article 88 of the ECSC Treaty and to record that by granting special credits to the French iron and steel industry the French Government had violated the prohibition on subsidies set out in Article 4(c) of that Treaty. The essential difference between the parties therefore concerns this prohibition and the manner in which it must be defined.
2. Having established this point I must still examine the alternative conclusions put forward by the applicant. As you are aware, the applicant refers in these to Article 67 of the ECSC Treaty and alleges that the Commission failed, at least in pursuance of that provision, to make a recommendation to the French Government. Under the third (sic) subparagraph of Article 67(2) (which is the provision referred to by the Netherlands Government), a recommendation may be made in cases where the action of a Member State is liable, by substantially increasing differences in production costs otherwise than through changes in productivity, to provoke a serious disequilibrium and where such action is having harmful effects on the coal or steel undertakings within the jurisdiction of other Member States. This quotation of the terms used in Article 67 is sufficient to show that the application of this text in part implies an evaluation of the situation, resulting from economic facts or circumstances which, according to Article 33 of the Treaty, the Court may not undertake in detail. Thus, the review by the Court may only concern the question whether, on the whole, the Commission's evaluation of the economic facts and circumstances may be regarded as in accordance with reality and logic, or whether its attitude appears to be vitiated by serious errors. With this reservation I shall begin to consider the final group of problems raised by the application brought by the Netherlands Government.
Summary
My opinion is therefore as follows:
Contrary to the view held by the Commission the admissibility of the application cannot be questioned. However, the conclusions contained therein must all be dismissed as unfounded. It is therefore for the applicant to pay the costs.
1 Translated from the German.
2 Wirtschaft und Wettbewerb,. 957, p. 641.
3 La Communauté du charbon et de l'acier, p. 194 et seq.
4 Sonderlasten und Subventionen im Gemeinsamen Markt der EGKS, Wirtschaft und Wettbewerb, 1957, pp. 638 to 640.
5 Das Recht der Montanunion, p. 108.
6 Daa Diskrimmierungs- und Subventionsverbot in der EGKS und EWG, p. 126.
7 Das Subventionsverbot im Vertrag über die EGKS, pp. 155, 166.
8 Official Journal of the French Republic of 1 December 1965.
9 Translator's note: presumably the first subparagraph is meant.