Opinion of Mr Advocate General Reischl

Mr President,

Members of the Court,

The action on which I am about to give my opinion challenges the fixing of production quotas for the first quarter of 1981 pursuant to Commission Decision No 2794/80/ECSC of 31 October 1980, establishing a system of steel production quotas for undertakings in the iron and steel industry (Official Journal, L 291, 31.10.1980, p. 1), and Commission Decision No 3381/80/ECSC of 23 December 1980 (Official Journal, L 355, 30.12.1980, p. 37), fixing the rates of abatement for the period in question. As the Court is acquainted with the svstem of production quotas, I may confine my remarks to a recapitulation of the provisions which are relevant to thi present case.

Article 4 of Decision No 2794/80 contains the methods for calculating the reference production figures on which the abatement is to be based. Paragraphs (1) and (2) of that provision indicate the method for calculating the actual production during the reference period, whilst paragraphs (3), (4) and (5) govern the circumstances in which the actual reference production figures may be adjusted. Thus paragraph (3) provides as follows:

In addition to that general possibility of adjustment, Article 14 of Decision No 2794/80 provides for relief to be granted in individual cases.

The first paragraph of that article reads as follows:

On 5 January 1981 the applicant, Alpha Steel Ltd, which makes and processes steel, received a communication dated 19 December 1980 pursuant to Article 3 (2) of the decision. The reference production for hot-rolled wide and narrow strip, items comprised in Group I in Article 2 of the decision, was stated to be 102993 tonnes, giving, after application of the abatement rate of 27.73 %, a production quota of 74433 tonnes for those products. For crude steel the reference production figure used was 87500 tonnes, which resulted after application of the same abatement rate of 27.73 % in a production quota of 63236 tonnes for the first quarter of 1981. It was expressly stated, as in the previous notification concerning the last quarter of 1980, that the reference production figures had been adjusted pursuant to Article 4 of the decision.

However, the Commission had informed the applicant in a telex message dated 12 December 1980, that is to say, before the quotas at issue in the present proceedings were fixed, that Article 4 (3) of the decision had been wrongly applied, since the delivery programme which had been established for the applicant had not been fixed taking 1974 as a basis. The adjustment to the reference production was therefore based on Article 14.

Dissatisfied with the quotas fixed for the first quarter of 1981, the applicant wrote to the Commission on 19 January 1981 asking for the quotas to be determined on the basis of the total capacity of its works. That was said to be necessary because it was a new undertaking whose production had just come on stream during the reference period used by the Commission and whose expansion had in addition been restricted by the mandatory minimum prices which were imposed at the time.

Even before a decision had been taken on its request, the applicant brought an action before the Court of Justice on 29 January 1981 under the second paragraph of Article 33 of the ECSC Treaty seeking the annulment of the decision of 19 December 1980. It complained that the individual decision contained an inadequate statement of the reasons on which it was based, that the general decision on which it was based, Decision No 2794/80, was unlawful and that Article 4 (3) and Article 14 of that decision had not been applied.

After the commencement of the proceedings the Commission informed the applicant in a letter of 24 February 1981 that it had been in error in applying Article 4 (3). The quotas should have been determined on the basis of a reference production of 63537 tonnes for rolled steel products and 40153 tonnes for crude steel. Pursuant to Article 14 of the general decision, however, the abatement rates for both products would be reduced to zero, so that the quotas would be fixed at the same level as the reference production figures. The decision was to annul and replace the previous decision dated 19 December 1980.

In consequence the applicant amended its claim in the reply, and now seeks the annulment of the defendant's decision of 19 December 1980, as amended on 24 February 1981, and an order requiring the defendant to pay the costs.

The Commission contends that the case need not proceed to judgment and that the question of costs should be settled at the discretion of the Court pursuant to Article 69 (5) of the Rules of Procedure.

Mv opinion on these submissions is as follows:

I — The question whether the case need proceed to judgment

The view taken by the Commission is that the application has been deprived of its purpose by the withdrawal of the individual decision dated 19 December 1980 and therefore the case need not proceed to judgment. The decision was wholly defective and therefore it was necessary, after weighing the interests of the applicant against those of other undertakings affected by the quota system, to withdraw it. Consequently the applicant's interests were affected either not at all or only slightly because the withdrawal occurred within a reasonable time and the applicant had in any case used only 10 % of its quotas at the time.

Since, in particular, Article 4 of the general decision ought not to have been applied in respect of the applicant and the reference production itself had mistakenly been calculated on the basis of that provision, it was imperative, according to the Commission, to replace the original decision by a wholly new one which differed from the first not only in the statement of reasons on which it was based but also with regard to the provisions which were applied, the reference production on which it was based and the quotas which were allocated. As the decision of 24 February 1981 was not challenged in its own right and the first decision has been withdrawn, there is, in the Commission's view, no need for the case to proceed to judgment.

The applicant, by contrast, would have the decision of 24 February 1981 regarded merely as a rectification of the original decision, supplementing the inadequate statement of reasons and thus giving rise to a fresh calculation of the quotas. The telegram of 12 December 1980, which admittedly related to the last quarter of 1980, made it clear that the provision to be applied in the applicant's case was not Article 4, but Article 14. The letter of 24 February 1981 merely confirmed that finding, which ought logically to have applied to the first quarter of 1981 too. The main damage and the implied unlawfulness of Decision No 2794/80 which are the subject of complaint, as well as the refusal to apply Article 4 of the decision to the applicant and the misapplication of Article 14, have not been remedied. The applicant observes moreover that according to the courts of some of the Member States, there is considerable doubt as to whether it is permissible for an authority to withdraw a defective decision after the initiation of proceedings against it and after the expiry of the limitation period, in order to replace it with a less favourable one.

In my view, however, the question whether or not there is any need for the case to proceed to judgment after the Commission's letter of 24 February 1981 does not depend on the legal nature of that communication. Only if the injury against which the action is directed no longer exists may it be said that there is no need for the case to proceed to judgment. If, like the applicant, we consider the letter of 24 February to be, not a decision in its own right, but merely a rectification of the allocation of quotas for the first quarter of 1981, then the complaints concerning the legality of the general decision, Decision No 2794/80, the failure to apply Article 4 (3) of that decision and the wrongful application of Article 14 remain none the less to be settled.

If, however, we adopt the defendant's view that the letter of 24 February was a new decision replacing the first, then the rephrasing of the applicant's claim in the reply may be regarded as an amendment of its pleadings which, owing to the close legal and factual connection with the original claim, must be considered to be in the interests of expediting the procedure, and therefore admissible.

A further question which may remain open in this connection is whether it was possible for the original decision to be withdrawn and replaced bv a more adverse decision when the proceedings were in progress and after the period for bringing an action had expired. The decisive factor is that the letter of 24 February 1981 had legal consequences. Since the decision therefore adversely affected the applicant, the proceedings have not lost their purpose.

In that respect I may add that the following decisions cited by the defendant, in which the Court of Justice held that there was no need to proceed to judgment because the cause of action had ceased to exist, are not relevant: judgment of 11 February 1955 in Case 4/54 Associazione Industrie Siderurgiche Associate (I.S.A.) v High Authority ([1954-56] ECR 91), and judgment of 1 June 1961 in Joined Cases 5, 7 and 8/60 Meroni and Others v High Authority ([1961] ECR 107).

II — Substance

At the hearing the applicant expresslyabandoned its first ground of complaint, namely infringement of the Treaty and of an essential procedural requirement inasmuch as the individual decision contained an inadequate or contradictory statement of the reasons on which it was based. I may therefore turn directly to the second ground of complaint, in which, as you are aware, the applicant claims that the general decision, Decision No 2794/80, is unlawful. In support of that claim the applicant pleads infringement of an essential procedural requirement, infringement of the Treaty and misuse of powers.

1. Inadequate statement of reasons and infringement of Article i8 (1) and Article 74 of the ECSC Treaty

The applicant contends that the Commission infringed the abovementioned provisions because in introducing the production quotas it failed to consider the need for ancillary action in the field of commercial policy under Article 74 of the ECSC Treaty. Article 58 of the ECSC Treaty contains a mandatory provision, where the conditions listed therein are present, for the establishment of a system of production quotas, accompanied to the necessary extent by the measures provided for in Article 74. The two provisions are closely interlinked, both being instruments for controlling crises, and since Article 58 of the ECSC Treaty is mandatory it is imperative to ascertain, before applying it, whether the measures provided for in Article 74 of the ECSC Treaty are necessary. Yet in the present case the need for them ought to have been acknowledged. If the Commission did make such an inquiry its failure to mention the fact constitutes a breach of its obligation under Article 15 of the ECSC Treaty to state the reasons on which the legal measures it adopts are based. The greater the margin of discretion allowed, the more stringent must be the requirements concerning the dutv to state reasons, not least in order to facilitate the task of judicial review.

The Commission, which has discussed the substance of the case only in the alternative, argues in reply that sufficient ancillary measures of commercial policy, including action under Article 74 of the ECSC Treaty, have already accompanied the introduction of production quotas. In confirmation of that view the Commission points to the fact that imports of rolled steel products fell considerably in 1980.

The Commission rejects the argument that the statement of reasons was inadequate, there having been no need to refer to Article 74 in the statement of reasons for Decision No 2794/80, which was based on Article 58. The question of the relationship between Article 58 and Article 74 was discussed in detail in Section II.3. of the opinion which I delivered today in Case 258/80 (Rumi). In order to avoid unnecessary repetition I beg the Court to refer to those observations.

Moreover, the applicant has failed to substantiate its claims concerning misuse of powers or manifest failure to observe the provisions of the Treaty.

It would be overstretching the requirements of the duty to sute reasons to demand that the statement of reasons include an account of the complex process of balancing different interests; on the other hand, the bald statement that the need for action under Article 74 was considered would be of little service in a review of the manner in which the quotas were fixed.

The judgments of the Court of Justice cited by the applicant, namely the judgments of 20 March 1959 in Case 18/57 J. Nold KG v High Authority ([1957-58] ECR 121) and 15 July 1960 in Joined Cases 36, 37, 38 and 40/59 Geitling and Others v High Authority ([1960] ECR 423), are not relevant to the present case inasmuch as the issue before the Court in those instances was the lawfulness of authorizations granted pursuant to Article 65 (2) of the ECSC Treaty, the granting of which was subject to the fulfilment of the conditions described in that article.

The decisions which do apply, by contrast, are the ISA. judgment cited above and the judgment of 20 March 1957 in Case 2/56 Geitling v High Authority ([1957-58] ECR 3), which make it clear that the only reasons which must be stated are those which induced the Commission to adopt the legal measure in question. Since none of the provisions of Decision No 2794/80 is based on Article 74 of the ECSC Treaty there was no need to refer to that article.

The submission based on the infringement of the Treaty and of an essential procedural requirement must therefore be rejected as unfounded.

2. Infringement of Article 58 (2) of the ECSC Treaty

3. Infringement o/Article 14 of the ECSC Treaty and other grounds of complaint

According to the applicant, there are other grounds for questioning the compatibility with the Treaty of Article 4 (3) of the decision. Under that provision the possibility of increasing the reference production is reserved for the undertakings which participated in the voluntan delivery programmes referred to therein, whereas other undertakings which did not take part or which were unable to do so may not benefit from the provision. It is argued that such treatment offends against the principle of nulla poena sine lege, fails to have regard to the fact that in view of Article 14 of the ECSC Treaty the programmes were not binding and, moreover, constitutes a breach of the principle that legitimate expectations must be protected. Article 14 of the Treaty is further infringed by Article 4 (4) of the decision inasmuch as legal consequences are attached thereby to unfavourable opinions which are similarly not binding.

Since, if I am not mistaken, the applicant intends the last-mentioned argument concerning Article 4 (4) of the decision to be considered merely as an example, there is no necessity for examining that argument further in detail. In any case since it was raised for the first time in the reply it must be rejected as being out of time. Furthermore, such a complaint must be inadmissible because neither the communication of 19 December 1980 nor that of 24 February 1981 was based on the provision complained of and therefore they do not represent applications of that general rule.

As to the submission that Article 4 (3) of the decision is incompatible with Article 14 of the Treaty and other fundamental principles of law, the reply to that has already been supplied in my remarks about the purpose of the provision. I concur with the Commission in considering that compensating for the disadvantage which the undertakings covered by that provision had borne and which would have been reflected in the quota system cannot be considered a sanction against other undertakings which had made no such sacrifice. For the same reason it is inappropriate to speak of a breach of the principle of nulla poena sine lege, which belongs to the field of criminal law.

As to the applicant's claim that there has been a breach of the principles governing acts adopted by Community institutions, described in particular in Article 14 of the Treaty, it may be conceded for the applicant that the action taken by the Commission in drawing up delivery programmes is intended to provide guidance, which undertakings are, in principle, at liberty to heed or disregard. The provision for adjustment contained in Article 4 (3) of the decision is not incompatible with the nonbinding nature of those programmes. The provision merely establishes the consequences which are to flow from the disadvantage in fact incurred in following the programmes. For the same reason there can be no question of a breach of the principle that legitimate expectations must be protected, for undertakings which did not participate in the programmes in question and therefore suffered no disadvantage could scarcely expect to receive more favourable treatment than those which did accept such disadvantages.

4. Infringement of Decision No 2794/80

III — Costs

The question of costs must therefore be decided on the basis that the application is unfounded. Regard must also be had, however, to the circumstance that the application directed against the notification of 19 December 1980 would have been successful, at least in so far as the inadequacy of the statement of reasons on which that communication was based is concerned. Although it is not necessary to declare that the case need not proceed to judgment as a result of the amendment of the application, it seems to me appropriate, in accordance with the basic principle in Article 69 (5) of the Rules of Procedure, to order the defendant to pay one-third of the costs in spite of the fact that it was successful in its submissions.

Accordingly, I propose that the application be dismissed as unfounded and the applicant be ordered to bear two-thirds of the costs and the defendant one-third.

1 Translated from the German.