Opinion of Mr Advocate General Reischl

Mr President,

Members of the Court,

The case with which I am about to deal is another case on the system of steel production quotas introduced by Decision No 2794/80 (Official Journal L 291, p. 1 of 31 October 1980).

An undertaking which is affected by those arrangements is Ferriera Padana SpA, a relatively small business, which buys crude steel for the manufacture of concrete reinforcing bars of Group IV within the meaning of Article 2 of Decision No 2794/80. Ferriera Padana was notified on 1 November 1980 of the production quota allocated to it for the fourth quarter of 1980. On 10 november 1980 it requested under Article 4 (4) of Decision No 2794/80 an increase in the reference production in respect of the activation of new plant. The request was granted in a decision of 18 December 1980.

However, Ferriera Padana had already applied to the Court, requesting it to:

The applicant persisted in these claims even after it was notified of the said decision of 18 December 1980 because it objected in principle to the introduction of production quotas for concrete reinforcing bars.

In this case I shall set out my opinion as follows, beginning with the submissions relating to the infringement of essential procedural requirements and then considering whether the Commission infringed provisions of the Treaty.

I — Infringement of essential procedural requirements

As I have already mentioned in my Opinion in the Rumi case (Case 258/80), Article 58 of the ECSC Treaty requires that before the adoption of a decision based on that provision the Consultative Committee be consulted and that studies made jointly with undertakings and associations of undertakings be carried out before the quotas are fixed.

The applicant doubts, in the first place, whether the consultation took place because the statement of reasons on which Decision No 2794/80 is based contains nothing to that effect. It considers, secondly, that studies were not carried out jointly with the association of manufacturers of concrete reinforcing bars, but only with the association of producers of crude steel. In this connection it refers to the considerations concerning undertaking's rate of utilization contained in the statement of reasons for the decision and submits that those considerations are clearly not appropriate to concrete reinforcing bars because a prediction of that nature is rendered impossible by factors which cannot be foreseen. Furthermore, studies within the meaning of Article 58 (2) were begun only a few days before the official announcement of the measures so that, since the provision was by then really complete, the studies could no longer have had any influence on it.

In reply to that submission, the Commission stresses, first of all, that the Consultative Committee in fact delivered its opinion on 16 October 1980. That must be decisive, since the circumstance that nothing was mentioned in the statement of the reasons on which the decision was based may not be considered an infringement of an essential procedural requirement and accordingly does not constitute a ground for annulment.

With regard to the studies to be made pursuant to Article 58 (2) the Commission explained that it not only carries out continuous studies of the market in accordance with Articles 46 and 48 of the EEC Treaty but also conducted additional, complementary ad hoc studies for the purposes of the system of quotas. In that connection meetings were held not only with the associations of steel producers but also with the association of the so-called Bresciani. The procedure followed in this matter was plainly proper. In the first place, there are no grounds for doubting that the studies were carried out in good time, as I have shown in detail in my Opinion in the Rumi case. Secondly, the circumstance that the applicant is not a member of the above-mentioned association is irrelevant. In any case, as the Commission has assured us, it has in fact the right of presenting its views to the Commission as an individual under-taking; nevertheless, it refrained from exercising that right.

Accordingly, on the basis of the arguments set out by the applicant there is no doubt that, in the adoption of Decision No 2794/80, there was no infringement of an essential procedural requirement.

II — Infringement of Article 58 (1) of the ECSC Treaty

With regard to the alleged breach of substantive law, to which I now turn, the applicant invokes first of all Article 58 (1) of the ECSC Treaty. According to that provision it is a condition for fixing production quotas, first, that there should be a decline in demand of such a nature as to constitute a period of manifest crisis and, secondly, that the means of action provided for in Article 57 should be insufficient to deal with it. The applicant considers that on the market for concrete reinforcing bars neither condition was fulfilled and that therefore the quota arrangements were not justified.

1. In relation to the first point the applicant relies principally upon a communication from the Commission of July 1980 which refers to a decline in orders caused by a fall in demand in the United States. But that is said to be irrelevant with regard to concrete reinforcing bars because transport costs would render the American market unprofitable for such products. Furthermore, in the proposal submitted to the Council by the Commission on 6 October 1980 the emphasis was placed upon the reduced utilization of capacity in crude steel. According to the applicant, that cannot serve to establish the existence of a crisis in concrete reinforcing bars, because crude steel can in fact be processed into other products and furthermore an increase in the production of concrete reinforcing bars, which was hampered by the system of quotas, could have helped to mitigate the crisis. Furthermore, the Commission itself had stated that in the first half of 1980 the delivery programmes for concrete reinforcing bars had been increasingly disregarded, which, according to the applicant, indicates that there was an increase in production caused by a rise in demand. It is also pointed out that even in 1977 only 50% of the producers of concrete reinforcing bars participated in delivery programmes, whilst in other sectors up to 90% of the producers participated.

2. The applicant submits that the second condition laid down in Article 51 (1) of the ECSC Treaty was not fulfilled because, in its opinion, the problems which had arisen on the market could have been overcome by indirect measures, such as for example action to influence consumption in cooperation with the governments of the Member States, intervention concerning prices or measures concerning commercial policy.

III — Infringement of Article 58 (2)

A second substantive submission concerns Article 58 (2) of the ECSC Treaty in which reference is made to the determination of quotas on an equitable basis taking account of the principles set out in Articles 2, 3 and 4.

The applicant makes the following points:

In my view the following remarks should be made on these points:

1. With regard to the minimum price arrangements and the voluntary restrictions on deliveries in previous years, the Commission assures us that the former did not affect the applicant at all; moreover, as the Commission has shown in detail, the applicant itself failed to comply with the delivery programmes during the months which were used as the reference period for the fourth quarter of 1980. The question might accordingly be raised whether the applicant has any interest at all in proceeding with that submission.

2. With regard to the inclusion of the month of October in the quota system, I can in principle refer to my observations in the Rumi case.

3. Finally, the argument that the Commission failed to observe the principles contained in Anieles 2, 3 and 4 is advanced at too general a level and is quite lacking in specification. Moreover, it has long been established in the case-law of the Court that in manv situations it is impossible to observe at the same time all the objectives and principles of the Treaty and that it may be appropriate to accord a certain degree of priority to one or more of them, in accordance with the economic circumstances.

IV — Misuse of powers and breach of the principle of proportionality

I now come to a group of submissions, some of which are extremely heterogeneous, and which the applicant has assembled under the heading misuse of powers and breach of the principle of proportionality.

1. In the first place, the applicant alleges that the measures adopted were not conducive to the aims pursued; as was shown after the first seven weeks, everything remained as it was before and there was nothing to compensate for the increase in production costs as a result of the quota system.

2. Secondly, it is argued that no suitable action was taken to counter imports so that traders in non-member countries were able to lay in stocks at lower prices than those prevailing in the Community because of the increased production costs there.

3. Thirdly, the applicant submits that the Commission failed to have regard for the difference between integrated undertakings having a complete production cycle and undertakings such as itself which buy crude steel for processing. In addition the Commission failed to appreciate that producers of crude steel, who had to curtail their production, derived no benefit from the fact that demand from non-integrated rolling mills was reduced at the same time.

4. Finally, the applicant considers that a further ground for criticism resides in the fact that exports to non-member countries were not excluded from the system of quotas, which weakened the Community undertakings in those bitterly contested markets. Furthermore, it complained, albeit for the first time in the reply, that quotas were allocated to undertakings which had suspended production. That gave rise to a trade in quotas and conferred an advantage on manufacturers who acquired such quotas.

V — Absence of a manifest crisis and abnormal application of the principle of solidarity

Finally, we have now to examine a group of arguments which, like the previous group, are extremely heterogeneous.

1. The applicant considers that a crisis cannot be said to exist when one part of a sector is organized in a more modern and productive fashion than the rest and that the degree of utilization of plant is in any event no evidence of the existence of a crisis when it is established that the branch in question had been unwisely expanded with the help of public funds. Furthermore, by its nature a crisis within the meaning of Article 58 is transitory, whilst for five years now the Commission has been endeavouring with all kinds of measures to overcome the difficulties which have arisen in the steel sector.

2. When the applicant refers in addition to an abnormal application of the principle of solidarity I cannot see how the quota system can be defeated in that way.

All this points — and indeed without the need for the preparatory inquiry requested by the applicant — to the conclusion that its application for the annulment of the decision of 1 November 1980, and of Decision No 2794/80 in so far as it constitutes the basis for the former, cannot be granted. It follows that the claim for a declaration that the Commission is obliged to take measures to ensure fair compensation for the damage alleged to have been caused is unfounded, quite apart from the fact that it is impossible to identify from the evidence of the applicant the direct and specific damage caused to it.

I am accordingly of the opinion that the application should be dismissed as unfounded and that the applicant should be ordered to pay the costs.

1 Translated from the German.