JUDGMENT OF 16. 2. 1982 — CASE 258/80 RUMI v COMMISSION

In Case 258/80

THE COURT

gives the following

JUDGMENT

Facts and Issues

I — Facts and Procedure

A — The background to the dispute

B — The course of the procedure

II — Conclusions of the parties

Principally

By way of a preparatory inquiry

III — Submissions and arguments of the parties

IV — Oral procedure

Decision

The first submission

The second submission

The third submission

The fourth submission

The fifth submission

Costs

I —. Facts and Procedure

A —. The background to the dispute

1. By Decision No 2794/80/ECSC of 31 October 1980 (Official Journal 1980, L 291, p. 1), the Commission, considering that by reason of the decline in demand for steel the Community was confronted with a period of manifest crisis within the meaning of Article 58 of the ECSC Treaty and that the means of action provided for in Article 57 were not sufficient to deal with that situation, established a system of production quotas for crude steel (Article 1) and for four groups of rolled products (Article 2).

2. Article 1 (4) of Decision No 2794/80 provides for the quota system, to be managed by the Commission. It also provides that the Commission may obtain assistance from independent agencies or from experts and that the business secrecy of the undertakings must be maintained.

3. By virtue of Articles 3, 4 and 5 of that general decision, the quotas for Group IV for the fourth quarter of 1980 were to be fixed by application of an abatement rate of 17.39 % on the basis of the reference production figures referred to in Article 4. By virtue of Article 5 (2) of the decision, the rate of abatement in the case of crude steel is to correspond to the average abatement rates of the four groups of rolled products weighted according to the reference production of each of those groups of products.

4. Article 4 provides that the quarterly reference production figures for each undertaking shall be calculated as follows :

5. Article 7 (2) of the decision provides :

6. Articles 10, 11 and 12 require undertakings to supply the information stipulated therein, whilst Article 13 provides :

7. By an individual decision dated 1 November 1980 the Commission fixed the applicant's production quotas for the period between 1 October and 31 December 1980 as follows:

8. By letter of 3 November 1980 the Commission informed the applicant that the information needed to check that its production quotas were being observed would be gathered by auditors assisted by engineers. It requested the applicant to supply the names of the persons whom it had made responsible for maintaining contact with the said agents for the Commission. On 10 November 1980 the applicant wrote to the Commission giving the name of its general manager, who was to be responsible for relations with the Commission's inspectors.

9. The applicant refused to agree to the checking of its production quotas on the ground that the engineer engaged by the Commission was an employee of a competing steel producer. By engaging that engineer as an expert for the purpose of executing the inspections which had to be carried out at the applicant's premises the Commission was failing to maintain the applicant's business secrecy and that was contrary to Article 1 (4) of the decision of 31 October 1980.

10. In a telex message sent to the applicant on 26 November 1980 the Commission confirmed that since it was responsible for carrying out inspections it must inevitably have recourse to the services of experts on the steel industry. The message further stated :

B —. The course of the procedure

1. By an application dated 20 November 1980, which was received at the Court Registry on 24 December 1980, the applicant brought an action in which it seeks a declaration that the Commission's decision of 1 November 1980 fixing the applicant's production quotas for the fourth quarter of 1980 pursuant to the general decision, Decision No 2794/80, is void.

2. On 28 November 1980 the applicant submitted an application for the adoption of interim measures pursuant to Article 39 of the ECSC Treaty and Article 83 of the Rules of Procedure of the Court. That application sought an order:

3. Upon hearing the report of the Judge-Rapporteur and the views of the Advocate General, the Court decided to open the oral procedure without any preparatory inquiry.

II —. Conclusions of the parties

1. Declare that, for the reasons set out in the application, the general decision, Decision No 2794/80/ECSC, is inapplicable;

2. Declare void the individual decision of 1 November 1980 whereby the Commission fixed the undertaking's production quotas for the fourth quarter of 1980;

3. Order the defendant to pay the costs.

(i). the minutes of the meeting at which the Consultative Committee of the ECSC considered the measures proposed by the Commission under Article 58 of the ECSC Treaty;

(ii). the minutes of the meeting at whichıthe Council of Ministers of the European Communities considered the aforesaid measures under Article 58 and the necessary assent;

(iii). the minutes of the meetings between the Commission's representatives and the representatives of the Association of Italian Steel Producers (the ISA) and the records of the consultations with individual undertakings held under Article 58 of the ECSC Treaty;

(iv). the standard-form contract between the Commission and the undertakings which made their own employees available to the Commission to carry out the inspections and verifications.

III —. Submissions and arguments of the parties

1. Retroactive nature of Decision No 2794/80/ECSC (breach of the general rules of law governing the application of the Treaty)

2. Determination of the production quotas (infringement of the ECSC Treaty, in particular Article 58. In the alternative, infringement of essential procedural requirements)

3. Freezing the volume of sales within the ECSC (lack of competence, infringement of Article 4 (b) and (d) of the ECSC Treaty; infringement of Article 3 (b); infringement of an essential procedural requirement through the failure to provide an adequate statement of reasons)

4. Absence of protection against imports from non-member countries (manifest infringement of the Treaty and of the rules of law governing its application)

5. Insufficient protection of the business secrecy of the undertakings with regard to the persons authorized to carry out inspections and verifications (infringement of Article 47 of the Treaty)

IV —. Oral procedure

1. By application lodged at the Court Registry on 24 November 1980 Metallurgica Rumi SpA brought an action under the second paragraph of Article 33 of the ECSC Treaty for a declaration that the Commission's individual decision of 1 November 1980 fixing the applicant's production quotas for the fourth quarter of 1980 pursuant to Commission Decision No 2794/80/ECSC of 31 October 1980 establishing a system of steel production quotas (Official Journal 1980 L 291, p. 1) is void.

2. The application is not based on an erroneous fixing of the applicant's individual quotas. The applicant considers the contested decision unlawful, on the one hand, because it is in application of various allegedly unlawful provisions of the general decision, Decision No 2794/80/ECSC, and, on the other hand, because, in applying Articles 1 (4) and 13 of that general decision, the Commission failed to ensure that the inspectors or experts whom it engaged provided the guarantees of independence indispensable to the protection of the business secrets of the undertakings.

3. This submission concerns the fact that the Commission engaged employees of competing undertakings to carry out the checks and verifications prescribed in Articles 1 (4) and 13 of Decision No 2794/80/ECSC, with the alleged result that business secrets were not protected. According to the applicant, such experts may not be considered third parties or independent agencies within the meaning of Article 1 (4) of the decision; the Commission therefore misapplied those provisions.

4. The applicant, however, has not claimed that there was any breach of its business secrecy during the inspections carried out by the Commission. This submission must accordingly be rejected.

5. The second submission concerns the provisions of Article 7 (2) of Decision No 2794/80/ECSC, according to which undertakings may not exceed, for deliveries within the common market, the ratio which existed, before the entry into force of the quota system, between Community deliveries and total deliveries.

6. It should be pointed out that although, in an action for a declaration that an individual decision is void, the applicant may submit that certain provisions of the general decisions which the contested decision implements are illegal, he may do so only if the individual decision is based on the rules alleged to be illegal.

7. In this case the individual decision does not concern the implementation of Article 7 (2) oı the general decision and its lawfulness does not depend on the lawfulness of that provision. The applicability of that article flows directly from the general decision without the need for the Commission to issue individual decisions to the undertakings. The ECSC Treaty does not permit undertakings to challenge by means of a direct action such provisions unless a misuse of powers has occurred. On the other hand, it provides for judicial review of any decision of the Commission imposing a fine on an undertaking which has infringed the general decision. This submission is therefore inadmissible.

8. In this submission the applicant argues as follows: Decision No 2794/80/ECSC, which did not enter into force until its publication in the Official Journal of the European Communities on 31 October 1980, prescribed production quotas for the steel industry from 1 October 1980. The decision was retroactive and thus in breach of one of the general principles of law governing the application of the Treaty. Its effect was that commercial operations carried out in October 1980 were ex post facto given legal significance in determining whether an undertaking's subsequent behaviour was lawful or not. If production and deliveries in the month of October exceeded the quota allocated for the quarter the retroactive effect of the provisions in question would ex post facto render unlawful acts which were not unlawful at the time when they were performed. Whilst it is true that the Commission had announced its intentions, it is no less true that the press reported differences within the Council so that the adoption of the Commission's proposal appeared improbable and the undertakings may not have reckoned with it.

9. It should be pointed out that the applicant has not indicated whether certain undertakings in fact exhausted their production quotas for the fourth quarter of 1980 before the entry into force of Decision No 2794/80/ECSC. That hypothesis, which appears improbable, does not in any event apply to the applicant and may accordingly be disregarded.

10. In these circumstances Decision No 2794/80/ECSC did not have genuine retroactive effect since the undertakings were able to adjust their production in November and December to take account of their quotas for the quarter and thereby avoid any infringement.

11. Moreover, although in general the principle of legal certainty precludes a Community measure from taking effect from a point in time before its publication, it may exceptionally be otherwise where the purpose to be achieved so demands and where the legitimate expectations of those concerned are duly respected.

12. Those two conditions are fulfilled in the circumstances of this case. It was necessary to include the month of October in the system in order to prevent undertakings from increasing their production in October in anticipation of the reductions subsequently to be applied. Furthermore, the Commission respected the legitimate expectations of the persons concerned by means of the communication of 11 October 1980 (Official Journal C 264, p. 2), whereby it gave notice of its intention to include the month of October in the system of quotas, and by means of the decision published on the same date (Official Journal L 268, p. 25) requiring the undertakings to supply information on their production for October 1980. Although in its communication of 11 October 1980 the Commission did not in fact indicate what the level of the quotas would be, which might have prevented the undertakings from establishing the precise consequences of the Commission's recommendation and ensuring that their production was not excessive in relation to the quotas which were to be allocated for the quarter as a whole, it nevertheless remains that the undertakings received notice of the Commission's intentions.

13. According to the applicant, the Commission failed to satisfy the requiremınt of consulting the undertakings concerned laid down by Article 58 of the ECSC Treaty which provides that the Commission must determine the quotas on the basis of studies made jointly with undertakings and associations of undertakings. The Commission imposed its own proposals and the association of Italian steel producers had neither the time nor the means to put forward counterproposals regarding the method of calculating the quotas and the rate at which production was to be reduced.

14. The Commission's obligation to carry out studies jointly with undertakings and associations of undertakings must receive a wider interpretation than that placed upon it by the applicant. In fact the Commission obtains information on the general situation in the steel industry and its various sectors by conducting continuous studies. In this connection it should be recalled that, according to Article 46 of the ECSC Treaty, undertakings and their associations are entitled to present any suggestions or comments to the High Authority on questions affecting them. Furthermore, the applicant, like any other steel producer, is bound regularly to furnish the Commission with its production figures and prices. In addition the Commission carried out specific studies concerning the requirements of the quota system. These various factors constitute the studies within the meaning of Article 58 (2) of the ECSC Treaty which the Commission was able to take into account.

15. Although the Commission is obliged to consult undertakings and associations of undertakings in conducting such studies, that obligation does not imply that it must consult each undertaking individually or that it must obtain the agreement of the steel producers to the measures proposed under Article 58. In this case the Commission informed the steel producers of the measures which it itended to take and it held meetings with the associations of undertakings concerned, including the association of Italian producers of concrete reinforcing bars, allowing them to bring their proposals to the Commission's attention. The applicant was represented at one at least of these meetings, namely the meeting on 17 October 1980. The Commission thus discharged its duty to conduct studies jointly with undertakings and associations of undertakings.

16. The applicant complains that the Commission failed to take the measures against import provided for by Article 74 of the ECSC Treaty if such imports cause or threaten to cause serious injury to production within the common market of like or directly competing products.

17. Under the terms of Article 58 the Commission has power to take to the necessary extent the measures provided for in Article 74 at the same time as any measure taken on the basis of Article 58. The appraisal of the necessity of taking such measures is a matter for the Commission, subject to the Court's power to review the lawfulness of the Commission's exercise of its discretion.

18. In this connection it must be emphasized that the applicant has not adduced any evidence in support of its submission that the Commission misused its discretion. On the contrary, even before the introduction of the quota system, the Commission took steps to control the level of prices and the quantity of imports of steel products from non-member countries. In particular, it fixed basic prices, concluded arrangements with non-member countries and took supervisory action. At the time of the adoption of Decision No 2794/80/ECSC it further intensified that supervision and reviewed the basic prices. Moreover, according to the figures supplied by the Commission, the level of imports fell between 1977 and 1979 and that tendency continued before and after the introduction of the quota system. Therefore the Commission cannot be accused of not having tried to combat imports from non-member countries.

19. It is important to point out also that in its negotiations with non-member countries the Commission faces considerable difficulties asıa result of the fact that the ECSC is a net exporter of steel; in such circumstances it is compelled to ensure the continuance of Community exports at the same time as it must attempt to limit imports into the Community, and it had reason to fear that by taking non-negotiated restrictive decisions with regard to non-member countries it might provoke retaliatory measures on their part which would be detrimental to the general interest.

20. In view of the foregoing the application must be dismissed as unfounded.

21. Under Article 69 (2) of the Rules of Procedure, the unsuccessful party must be ordered to pay the costs.

22. Since the applicant has failed in its submissions it must be ordered to pay the costs, including the costs of the application for the adoption of interim measures.

On those grounds, THE COURT hereby:

1 Dismisses the application;

2 Orders the applicant to pay the costs, including the costs of the application for the adoption of interim measures.