JUDGMENT OF 9. 12. 1982 — CASE 258/S1 METALLURGIKI HALYPS v COMMISSION

In Case 258/81

THE COURT (Second Chamber) composed of: P. Pescatore, President of Chamber, O. Due and K. Bahlmann, Judges, Advocate General: P. VerLoren van Themaat Registrar: J. A. Pompe, Deputy Registrar

gives the following

JUDGMENT

Facts amd Issues

I — Summary of the facts

II — Written procedur

III — Conclusions of the parties

IV — Submissions and arguments of the parties in the written procedure

A — Breach of the Act concerning the Conditions of Accession of the Hellenic Republic and the Adjustments to the Treaties, of Protocols 3 and 7 thereto and of general principles of kw governing their application

B — Infringement of Articles 58 and 1 to 5 of the ECSC Treaty and breach of the general principles of Uw governing their application

V — Oral procedure

Decision

Application of Decision 1831/81 to Greek undertakings

Compatibility of Decision 1831/81 with the principles contained in Articles 1 to 5 and 58 of the ECSC Treaty

Costs

I —. Summary of the facts

II —. Written procedur

III —. Conclusions of the parties

(a). Declare the application admissible;

(b). Declare void the individual decision of 12 August 1981 adopted pursuant to general Decision 1831/81;

(c). Order the Commission to pay the costs.

(a). Dismiss the application as unfounded;

(b). Order the applicant to pay the costs.

IV —. Submissions and arguments of the parties in the written procedure

A —. Breach of the Act concerning the Conditions of Accession of the Hellenic Republic and the Adjustments to the Treaties, of Protocols 3 and 7 thereto and of general principles of kw governing their application

(a). It argues that the Act concerning the Conditions of Accession of the Hellenic Republic and the Adjustments to the Treaties, in particular Articles 25 to 34, 38, 116, 129(1) and 130 thereof as well as Protocol 3 thereto on the granting by the Hellenic Republic of exemption from customs duties on the importation of certain goods and Protocol 7 on the economic and industrial development of Greece, introduced transitional arrangements whose purpose was to harmonize and align the level of development of the Greek steel industry with that of the steel industry of the other Member States during a transitional period of five years. Those arrangements may not be amended or repealed by measures adopted by the Community institutions. But that is what happens when a specific measure adopted by the Community institutions is contrary to the purpose and spirit of the transitional arrangements provided for in the Act of Accession and the protocols thereto.

(b). As regards the application of Article 58 of the ECSC Treaty during the transitional period, although the Act of Accession does not provide for any special derogations for the Greek steel industry, it would be contrary to the general spirit, aim and clear intention of the Contracting States, with regard to the structuring of the special transitional arrangements made for Greece to conclude from a strictly literal interpretation of Article 2 of the Act of Accession that it is lawful also during the transitional period to adopt pursuant to Article 58 rules of secondary law which are also binding on the Greek steel industry.

(c). In view of the spirit of the transitional provisions of the Act of Accession and regard being had to the intention of the Contracting States it should be said that it was thought to be in the common interest to foster the development not only of the Greek economy in general but also, more specifically, of the Greek steel industry in order to enable it to reduce the considerable gap and catch up with the level of development of the Community steel industry within the limited time made available in the transitional period.

(d). The production limits imposed on Greek steel undertakings by Decision 1831/81 are contrary to the general principles of legal certainty, protection of legitimate expectation and the right to property.

(e). The Commission has itself subsequently recognized that it cannot be right to impose on the Greek steel industry during the transitional period cuts in production which by their nature put a stop to the industrialization of Greece and prevent all the major structural changes needed to integrate Greece into the Community. In its Decision 2804/81 of 23 September 1981, amending for the second time Decision 1831/81 (Official Journal 1981, L 278, p. 1) it stated that:

(a). The Act of Accession made absolutely no exception as far as the application of Article 58 of the ECSC Treaty to Greek steel undertakings is concerned. In accordance with Article 2 of the Act of Accession, Article 58 therefore applies to them unconditionally and ab initio. The Act of Accession makes a derogation from the rules of the ECSC Treaty which, like any derogation, must be interpreted strictly. It is not possible, by invoking an imaginary spirit of the Act of Accession and interpreting it widely, to arrive at the conclusion that that spirit must prevail over the express provisions of the ECSC Treaty which are applicable without exception to Community undertakings.

(b). As regards the applicant's contentions about the purpose of the transitional protective arrangements applicable to Greece, it must be said that Protocol 7 to the Act of Accession concerns only the European Economic Community and in any case its aim is to align living standards in Greece with those of other European nations and not to enable Greece to achieve selfsufficiency in steel. Protocol 3, which does not apply to the European Coal and Steel Community either, expressly states that only exemption measures may be maintained and not the other measures provided for by the Greek Laws concerning the national development scheme.

(c). The reliance placed on the general principle of legal certainty conflicts in this case with the express wording of Protocol 3 and with the principle of the primacy of Community law. Moreover, in the case-law of the Court the principle of legal certainty does not have the substance which the applicant attributes to it.

(d). The applicant is mistaken about the purpose and meaning of Decision 2804/81 and derives from them arguments which are wholly without merit.

B —. Infringement of Articles 58 and 1 to 5 of the ECSC Treaty and breach of the general principles of Uw governing their application

(a). Article 58 (2) of the ECSC Treaty allows quotas to be determined taking account of the principles set out in Articles 2, 3 and 4 which are based on the fundamental principle of equal treatment. However, the quota system established by Decision 1831/81 creates serious inequalities detrimental to Greek steel undertakings.

(b). Article 1 of the ECSC Treaty envisages the creation of a common market on which conditions of competititon between undertakings must result from undistorted conditions of production. However, general Decision 1831/81 and the individual decision of 12 August 1981 are based on the premise that production conditions for Greek steel undertakings and Community steel undertakings are the same. They entirely overlook the enormous differences in structure, level of development and rate of utilization of capacity which distort competitive conditions to the detriment of the Greek steel industry.

(c). General Decision 1831/81 was published in the Official Journal of the Communities on 1 July and the amending Decisions 1832 and 1833/81 on 4 July 1981. The contested individual decision did not reach the applicant until 24 August, that is 54 days after the publication of the general decision on which it is based. The applicant cannot possibly comply with it. During the period of 54 days the applicant exhausted most of the production quota granted to it, which entailed the obligation to cease operating during the remaining 36 days.

(a). The quota system established by Decision 1831/81 is perfectly fair and nondiscriminatory. It provides for all undertakings to have reference production which takes account not only of the best months of actual production during the period from July 1977 to June 1980 but also all the adjustments granted under the old system introduced by Decision 2794/80. Below a specific level of production small undertakings are not subject to the quota system. Reference quantities and consequently the part of quotas which may be delivered on the Common Market may be adjusted. Adjustments are also possible in the case of certain medium-sized undertakings faced with exceptional difficulties. Decision 2804/81 makes it possible to grant adjustments to Greek undertakings if the quota system causes one of them exceptional difficulties likely to prevent it from adapting itself to the structural developments in Greece's economy.

(b). Article 3 of the ECSC Treaty lays down no fewer than eight distinct objectives and it is not certain that they can all be simultaneously pursued in their entirety and in all circumstances. A compromise must be found between those various objectives, especially in a period of crisis justifying the adoption of exceptional measures which derogate from the normal rules governing the working of the common market in steel and which may entail noncompliance with certain objectives laid down by Article 3, such as that mentioned in paragraph (b). It is the Commission's task to choose the objectives which it believes are necessary for solving the existing problems. The fact that Article 3 requires it to act in the common interest certainly does not mean that it must act by taking into account the interests of all the undertakings without exception. It weighs up the various interests and seeks to avoid damaging results if the decision which it adopts reasonably allows it to do so.

(c). As regards the principle of non-retroactivity, the Commission observes that the applicant itself is solely responsible for the time taken for it to receive the contested individual decision of 12 August 1981. It was not until 7 August that it sent to the Commission all the information which the Commission had asked for on 3 July and which was essential for the quotas to be fixed.

V —. Oral procedure

1. By application lodged at the Court Registry on 22 September 1981 Metallurgia Halyps AE, a limited liability company incorporated under the laws of Greece and having its registered office in Athens, brought an action under Article 33 of the ECSC Treaty to have declared void the decision of 12 August 1981 by which the Commission, acting pursuant to Commission Decision 1831/81/ECSC of 24 June 1981, a general decision establishing for undertakings in the iron and steel industry a monitoring system and a new system of production quotas in respect of certain products (Official Journal 1980 L 180, p. 1), fixed the applicant's reference production, reference quantities and production and delivery quotas for rolled products in Categories V and VI (concrete reinforcing bars and merchant bars) for the third quarter of 1981.

2. On the basis of its submissions as they now stand the applicant claims, in support of its action against the decision of 12 August 1981, that general Decision 1831/81 on which it is based is not applicable to Greek undertakings because it fails to have regard, first, to the transitional arrangements made in the Act of Accession concerning Greece and, secondly, to Articles 1 to 5 and 58 of the ECSC Treaty and the general legal principles governing their application.

3. The applicant claims that the application of the production quota system to Greek undertakings is contrary to the objective of the transitional provisions forming part of the Act of Accession, even if it might appear to be justified on a strictly literal interpretation of Article 2 of the Act.

4. In this respect it relies more specifically on Articles 25 to 34 concerning the gradual abolition of import duties by 1 January 1986, Article 38 concerning the gradual abolition of the import deposit system, Article 129 containing certain specific transitional provisions for the steel industry, Article 130, which is the general safeguard clause, Protocol 3 on the granting by the Hellenic Republic of exemption from customs duties on the importation ot certain goods to aid development of the economy and, finally, Protocol 7 on the economic and industrial development of Greece.

5. The applicant takes the view that, taken as a whole, those provisions show that Decision 1831/81 cannot be applied per se to Greek undertakings since its effect is to reduce production, which is already insufficient to meet Greece's development needs, and it not only slows down industrial development but also disrupts the operation of Greek steel undertakings. In this regard it is argued that the application of the quota system to Greek undertakings is contrary to the general principles of legal certainty, protection of legitimate expectation and the right to property.

6. That argument of the applicant fails to take account of the scheme of the Act of Accession.

7. Article 2 of the Act provides that from the date of accession, the provisions of the original Treaties and the acts adopted by the institutions of the Communities shall be binding on the Hellenic Republic and shall apply in that State under the conditions laid down in those Treaties and in this Act. Article 9(1) states that the application of the original Treaties and acts adopted by the institutions shall, as a transitional measure, be subject to the derogations provided for in this Act.

8. It appears from those provisions that the Act of Accession is based on the principle that the provisions of Community law apply ab initio and in toto to new Member States, derogations being allowed only in so far as they are expressly laid down by transitional provisions. None of the provisions mentioned by the applicant has the effect of derogating from Article 58 of the ECSC Treaty.

9. It should be observed on this point in particular that recourse to Article 130, the safeguard clause, is subject to precise conditions, substantive and procedural, and that no inferences may be drawn from that article if those conditions are not satisfied. As to Protocol 7 on the economic and industrial development of Greece, this is a declaration addressed to the institutions of the Community to the effect that they should implement all the means and procedures laid down by the EEC Treaty. Therefore that provision may not be used as a basis for the legal conclusions which the applicant deduces from it.

10. Finally, the applicant points out that the Commission recognized the particular situation of the Greek industry and inserted in Decision 1831/81 a new article, Article 14 a, which thereafter enabled the application of the general decision to be adapted to the particular situation of Greek undertakings.

11. From the information provided during the proceedings it appears that the Commission recognized the particular needs of the Greek steel industry and, by Article 14 a inserted into Decision 1831/81, agreed to allow an appropriate adjustment of the reference production figures of Greek steel undertakings faced with exceptional difficulties as soon as it could obtain sufficiently precise information about their situation. The introduction of this degree of flexibility may not be used as an argument for contesting the principle of the application of the quota system to the Greek undertakings during the previous period.

12. The applicant has failed to specify how the application of Decision 1831/81 might have adversely affected legal certainty in its regard or its legitimate expectation. On this matter it need only be observed that the effect of the accession of Greece to the Community was to extend the whole of Community law to the undertakings of that State and that those undertakings may not claim exemption from the rules and constraints which, depending on the circumstances, may apply to them as a result of the application of that law on an equal basis with the other undertakings in the Community.

13. Since the purpose of Decision 1831/81 is to spread the effects of the crisis in the most equitable manner possible among all undertakings in the Community, the fact that the restrictions on production necessitated by the economic situation might affect the profitability and very existence of certain undertakings cannot be considered to be an infringement of the right to property. The applicant may not claim respect for its right to property in order to evade the constraints imposed upon the entire European steel industry.

14. There are therefore no grounds for contesting the application of Decision 1831/81 to Greek undertakings.

15. The applicant claims that if Decision 1831/81 were held to be applicable to Greek undertakings it would entail consequences for those undertakings which would be inconsistent with the principles forming the subject-matter of the introductory articles of the ECSC Treaty. In essence it claims in this respect that the taking into consideration of a reference period which preceded the accession of Greece and was chosen in such a way as to reflect the position of the undertakings in the Community as previously constituted worked to the disadvantage of Greek undertakings, whose utilization rate in that period was substantially lower than that of other Community undertakings. The applicant's utilization rate was particularly low because its plant is new. The applicant further argues that by making it impossible for the Greek undertakings to expand and improve their production capacity the quota system puts them at a disadvantage in relation to undertakings located in the Community as previously constituted. It believes that those circumstances constitute a breach of the principle of nondiscrimination and adversely affect conditions of competition.

16. Finally the applicant complains that the principle of non-retroactivity has been infringed inasmuch as after general Decision 1831/81 had entered into force the Commission was slow in sending it the decision concerning it individually. That decision, dated 12 August 1981, did not reach it until well after the beginning of the quarter in question.

17. To the extent to which the applicant's complaints consist of arguments which may be defined and classified in legal terms they call for the following observations.

18. As the Court has repeatedly indicated in other contexts (see in particular the judgments of 16 February 1982'in Joined Cases 39, 43, 85 and 86/81 Halyvourgiki and Another v Commission [1982] ECR 593 and of 7 July 1982 in Case 119/82 Klòckner v Commission [1982] ECR 000), the purpose of the system of production quotas established by Decision 2794/80 of 31 October 1980 (Official Journal 1980, L 291, p. 1) and renewed by Decision 1831/81 is not to guarantee to undertakings a minimum level of employment or scope for development but to spread in an equitable manner the effects of the steel crisis among undertakings according tó their actual production. The fact that the reference period taken into consideration preceded the accession of Greece is not of such a nature as to give rise to inequality of treatment to the detriment of the undertakings of that State since at the time under consideration they were totally free to expand their investment and production programmes. Nor, for the reasons given above, is it part of the purpose of the contested general decision to alter the conditions of competition created by the structure, level of development and utilization rate of Greek undertakings compared to the other undertakings in the Community.

19. As to the complaint that there was some delay in the communication of the contested individual decision, it seems from the explanations given by the Commission during the proceedings that the applicant must bear its share of the responsibility for the delay since it was late in communicating the information for which it was asked. The Commission rightly observes that in any case from the date of publication of Decision 1831/81 the applicant was m a position to calculate, at least approximately the quota which would be allocated to it and could have arranged its production programme accordingly.

20. It thus appears that there are no grounds for upholding any of the complaints and that the application must therefore be dismissed.

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

22. As the applicant has failed in its submissions it must be ordered to pay the costs.

On those grounds, THE COURT (Second Chamber) hereby:

1 Dismisses the application;

2 Orders the applicant to pay the costs.