Opinion of Mr Advocate General

Mr President,

Members of the Court,

1. Introduction

The application lodged by Eisen und Metall Aktiengesellschaft which I am to deal with today is directed against a Commission decision of 9 December 1982 imposing a fine. That decision is itself based on Article 15 of the general decision, No 1836/81/ECSC. The applicant claims that the Court should:

In support of its application, the applicant relies on the following grounds:

Before I consider those submissions in detail, I have certain general remarks to make with regard to this case.

As is clear from Article 80 of the ECSC Treaty, the obligations arising from that Treaty are applicable — without prejudice to the exceptions referred to therein which are not however relevant to the present case — only to coal and steel producers and therefore not to dealers. Thus, in order to apply to steel dealers rules on prices and conditions of sale which are comparable to those applicable to steel producers under Article 60 of the ECSC Treaty and its implementing provisions, the Commission was obliged to have recourse to the first and second paragraphs of Article 95 of the ECSC Treaty.

During the oral procedure the applicant explained why it did not intend to challenge that legal basis for Decision No 1836/81 as such.

The recitals in the preamble to that decision make it clear first of all that it is a transitional measure designed to cover the period required by certain Member States to implement Recommendation No 1835/81/ECSC, also of 3 July 1981.

The preamble to the decision also demonstrates unequivocally that the latter is an intervention measure relating to prices which it was considered necessary to adopt as a matter of urgency and is not — in contrast to the original purpose of Article 60 — a measure for the promotion of fair and effective competition. I would refer in that connection to the third, fourth, fifth and sixth recitals in the preamble to the decision. It is clear from those recitals that the measure was regarded from the outset as a kind of rule on minimum prices which was to enter into force at once (third recital), and that it is indispensable to implement a very short-term action for rationalization of the steel market in such a way as to bring about the rise in prices necessary to prevent financial disaster (fourth recital). The recitals in general contain no further reference to the objectives of Article 60, namely the prevention of the abuse of an oligopolistic position and of price discrimination to the detriment of buyers particularly on grounds of nationality.

I wish to state at once, in the light of those express objectives of the decision, that the transitional problems and the more fundamental problems resulting from the abrupt transformation of provisions designed to promote fair competition into a measure on prices which restricts competition do not arise in the present case. For a survey of those transitional problems in connection with the application of Article 60 I would refer to the opinion which I delviered on 18 January 1984 in Case 8/83 Bertoli [1984] ECR 1665.

Those differences between Decision No 30/53 (as amended on 22 December 1972) which was applicable in the Sertoli case and Decision No 1836/81 which is applicable in this case, are in my opinion sufficient to have serious consequences with regard to the assessment of certain basic problems in the present case.

In the first place, provisions on (minimum or maximum) prices and other measures for regulating the market (for instance in the agricultural sector) usually take account of existing long-term contracts to a lesser extent than is considered necessary, for example, in connection with the application of Article 85 of the EEC Treaty to existing contracts. The short-term objective pursued by conjunctural policy, namely, the adoption of a rule on minimum or maximum prices, would no doubt be jeopardized, if certain undertakings were able to carry out, in performance of long-term framework contracts concluded earlier, certain transactions which are incompatible with such rules on prices. Moreover, it is also true that the application of those rules of competition — in spite of the special transitional system which they provide for old agreements, decisions and restrictive practices — does not depend on the conclusion under civil law of agreements restricting competition which are governed by such rules. Furthermore, that transitional system in no way prevents the actual application of the articles concerned also to old agreements, decisions and concerted practices. That is the first consequence of the difference established between this case and the Bertoli case and, in my view, the entire discussion concerning the nature and scope under civil law of the framework contracts on which the applicant relies is therefore immaterial. I shall therefore pay only relatively little attention to it in dealing with the applicant's submissions.

The second consequence of the difference between this case and the Bertoli case is that, as regards Decision No 1836/81, the Commission at the outset apparently had no need for an internal criterion for the imposition of fines of the kind applied in relation to the consecutive periods in which Decision No 30/53 was infringed. It will no doubt be recalled that those internal directives on fines provided for a gradual increase in the level of fines which the Court in its judgment in Case 149/78 Rumi [1979] ECR 2523 considered appropriate for infringements of Article 60. In the opinion which I delivered in the Bertoli case, I stated that that gradual increase in the amount of the fine for infringements of Article 60 was a logical and — in the light of the general principles of proper administration — also a necessary consequence of the transition in policy referred to earlier, that is to say from a relatively marginal competition policy to a deliberate policy of intervention. Considerations of that kind have no role to play in the present case since the — exclusively interventionist — objectives of Decision No 1836/81 had to be clear to all from the outset. I shall return later on the question whether the nature of that decision supplementing Article 60 or transitional problems which are exclusively of a practical nature can justify the annulment of the fine imposed in the present case. For the time being, I shall confine myself to the observation that, in spite of the absence of a corresponding power m the decision, the Commission, according to the submissions put forward during the proceedings, in practice prescribed an additional period to enable the dealers concerned to comply with the express obligation henceforth to publish their price lists. In view of the complicated administrative problems which that obligation entailed for steel dealers, I consider that such a period of grace did not exceed the limits of proper administration. In the case of the applicant, that period of grace amounted to approximately three months. The applicant is not charged with committing any infringements during that period. Of course, it would have been more appropriate, from the point of view of legal certainty and of equality before the law, if Article 16 of the decision had also made provision for the extension of that further period for compliance with the decision to all steel dealers. In my view, however, no legally relevant criticism can be made of the Commission in the present case for taking account only in administrative practice of real and unmistakable transitional problems.

Before I consider in turn the various submissions relied upon by the applicant. I would merely observe that, apart from the report for the hearing, it is now of course necessary to take account also of:

For a survey of the legal context of these proceedings, the infringement with which the applicant is charged and the arguments already put forward by the parties during the written procedure, I would refer, for the time being, to the report for the hearing.

2. First submission (infringement of essential procedural requirements)

2.1. In its first submission the applicant contends, as stated earlier, that the statement of reasons on which the contested decision was based is insufficient. Secondly, however, it also contends that the Commission infringed its right to a fair hearing. The first contention in particular displays a formal in addition to a substantive aspect. The substantive aspect, however, partly coincides with the explanation regarding the second submission. In order to avoid repetition, therefore, I propose to consider the substantive aspect of this submission in connection with the second submission.

2.2. As far as the first contention is concerned, I should like to state at once that the statement of reasons on which the decision was based is indeed rather concise. That is particularly true as regards certain parts of the arguments relied upon by the applicant during the administrative procedure in relation to the infringements with which it was charged. Nevertheless the infringements established are in my view set out in the decision with sufficient clarity to enable the applicant to defend itself in the proceedings before the. Court against the infringements with which it is charged. That is certainly true if the decision is read in conjunction with the letter which the Commission sent to the applicant on 16 February 1982 during the administrative procedure (see Annex 1 to the Commission's defence). Moreover, the fact that the arguments put forward by the applicant before the Court were in substance already set out in its reply to the Commission of 20 September 1982 (see Annex 2 to the Commission's defence) confirms that the decision did not in that respect infringe the rights of the defence as regards the applicant. In that connection it must, moreover, be borne in mind that — in contrast to the Bertoli case — the nature and the legal classification of the alleged infringements in this case are quite straightforward. Although this is not expressly stated in the decision, the applicant seems to have been left in no doubt that what was alleged against it was that by undercutting its own list prices in the instances specifically listed, it acted in a manner contrary to Article 8 of Decision No 1836/81, that is to say contrary to the prohibition of applying dissimilar conditions to comparable transactions. In formal terms, therefore, the Commission did not, in my view, fail to discharge the obligation to provide a statement of reasons in this case. As I mentioned earlier, I shall return to the substance of the applicant's contentions when I consider its second submission.

2.3. The second infringement of essential procedural requirements which the applicant alleges against the Commission is the failure to discharge the obligation laid down in Article 36 of the ECSC Treaty namely that, before imposing a pecuniary sanction or ordering a periodic penalty payment as provided for in this Treaty it must give the party concerned the opportunity to submit its comments. May I state at once, as regards that contention, that Article 36 does not provide that, after submitting their written comments concerning the infringements with which they are charged, the parties must also be given an opportunity to express their views orally. Still less does Article 36 require the Commission, in the administrative procedure preceding the adoption of its decision, to submit its counter-arguments in relation to the defence pleaded by the parties concerned. The applicant finally — and according to the file expressly — waived the opportunity which the Commission in fact gave it to enlarge on its defence orally (see Annex 3 to the Commission's defence). This contention of the applicant must therefore be rejected.

3. Second submission

3.1. In its second submission the applicant contends that the Commission infringed Articles 15, 47 and 36 of the ECSC Treaty and Articles 11, 14 and 15 of Decision No 1836/81.

3.2. The framework contracts. As regards all four groups of infringements, the applicant relies on the fact that the transactions at issue were carried out in performance of framework contracts which had already been entered into with the four parties concerned prior to 15 October 1981. As far as Markmann and Claas are concerned, it appears from the documents submitted in reply to questions put by the Court that two contracts were concluded on 7 September 1981. A contract was concluded with Schlafhorst on 24 June 1981 and was renewed on 9 September 1981. The framework contract with Bergbau was concluded earlier, on 3 April 1981.

3.3. The alleged dissimilarity of the transactions concluded with Markmann. As regards the contested transactions concerning Category I (a) material effected with Markmann, the applicant has however already contended in the administrative procedure that they were not comparable to its other transactions, since Markmann, in contrast to its other customers, purchased mainly Category II (a) material from the applicant. That argument must in my opinion be rejected since the obligation to publish prices and the other provisions of Decision No 1836/81 are concerned exclusively with transactions involving Category I (a) material. In any comparison of transactions, therefore, no account may be taken of undertakings given at the same time to deliver Category II (a) material. Furthermore, the applicant would have been permitted under the decision, in the case of package deals of that kind, to grant rebates on sales of Category II (a) material to Markmann. In that respect there was no reason, even from a commercial point of view, for the price of the Category I (a) material delivered to Markmann to be at variance with the applicant's list price.

3.4. The alleged special nature of the transactions with Bergbau. As regards the transactions with Bergbau, the applicant has moreover contended that they were concerned exclusively with Category II (a) material, or at least with steel imported from the German Democratic Republic in respect of which the Commission grants a price rebate of 6% on importation. In my view, this contention gives rise to serious doubts, which the Commission has not been entirel able to dispel, as to whether the charges concerning the contested practices are justified. That view is supported in the first place by the fact that the material in question was to be used in mining, for which purpose its strength and the possibility of welding it but not its precise length and breadth or its freedom from rust are important. Furthermore, the plausibility of that view is confirmed by the fact — which has not been denied by the Commission — that the applicant is one of the largest customers in the Federal Republic of Germany for steel from the German Democratic Republic. The Federal Republic of Germany is, according to the file, required to purchase a fixed quantity of steel from the German Democratic Republic as partial compensation for the larger quantity of steel which the German Democratic Republic acquires from the Federal Republic. Whether the fact that the steel in question originates in the German Democratic Republic is a sufficient ground for clasifying it as Categoiy II (a) material is a question which may in my opinion be disregarded. In my view this question remains open for a number of different reasons which have been referred to by the parties in the oral procedure. However, since that steel, as is recognized by the Commission, may be purchased at a lower price than other steel, transactions involving such steel, concluded on the basis of Article 9 (1) (b) of Decision No 1836/81 can, in my view, in no way be regarded as comparable transactions within the meaning of Article 8 of the decision. Moreover, it seems to me that, in view of the problem of classifying such steel, it has not been established that in the present case Article 7 of the decision has been infringed. It strikes me as unreasonable to regard steel from the German Democratic Replublic as Categoiy II (a) material merely because of its origin and of its lower purchase price. Accordingly, I do not consider either Article 8 or Article 7 of the decision to have been infringed by the transactions with Bergbau. This will have to be taken into account when the amount of the fine is determined.

4. Third submission (alleged misuse of powers with regard to determination of the amount of the fine)

Article 15 of Decision No 1836/81 empowers the Commission to impose on steel dealers who have infringed the provisions of Articles 2 to 13 fines not exceeding twice the value of the sales effected in disregard of those provisions. In this case, according to the fourth recital in the preamble to its decision, the Commission imposed a fine equal to 110% of the total amount of the reductions granted on its list prices. In that regard, according to Annexes 3 and 4 to the Commission's reply of 7 October 1983 to questions put to it by the Court in Case 8/83 Bertoli [1984] ECR 1649, the Commission has since 9 December 1982 treated as equivalent the criteria for the imposition of fines for infringements of Decision No 30/53 and of Decision No 1836/81.

The applicant now contends that the Commission misused its powers in that respect. In the first place the Commission, it claims, has failed to prove the alleged infringements. That contention must be rejected on the basis of my previous analyses, except in so far as it relates to the transactions with Bergbau. This also applies to the argument, which is repeated in the third submission, that the statement of reasons on which the decision was based is deficient. Finally, the applicant maintains that the amount of the fine was in fact determined by considerations relating to general deterrence and by the need to set an example to all steel dealers in order to ensure stricter compliance with Decision No 1836/81. Not only was the applicant's assertion denied by the Commission during the oral procedure, but also there is no evidence for it in the wording of the decision imposing a fine. On the contrary, it is stated after the second indent of the fourth recital in the preamble to that decision that the amount of the fine must be sufficiently high to deter the undertaking (emphasis added) from undercutting its list prices again. Moreover, a fine of that kind will undoubtedly, in itself, have a general deterrent effect at the same time and even if that was inter alia the Commission's intention (as the applicant maintains though only on the basis of vague and unsupported assertions concerning certain views expressed by the Commission), I should not regard it as in itself in any way contrary to the general principles of the law on the imposition of penalties.

In its application, the applicant seeks in the alternative a reduction of the fine imposed. Accordingly, in view of the unlimited jurisdiction conferred on the Court by the second paragraph of Article 36 of the ECSC Treaty, I propose to conclude this Opinion with my views concerning the amount of the fine.

As far as this point is concerned, it follows directly from the observations which I made earlier that, in my view, for the purposes of the imposition of the fine, no account must be taken of the transactions with Bergbau. The amount of the price reductions established is thus DM 5436.68 (for the transactions with Markmann) plus DM 66683.18 (for the transactions with Schlafhorst) plus DM 9126.45 (for the transactions with Claas), totalling DM 81246.31.

As regards the gravity of the infringements, a factor which unquestionably militates in favour of the application of the criterion in question by the Commission is that, in contrast to what steel producers might have expected having regard to the origin of Decision No 30/53 and the longstanding procedure and the case-law of the Court concerning that decision, Decision No 1836/81 was clearly intended from the outset as an important emergency measure relating to prices. According to the preamble thereto, that measure has little or nothing in common with the objectives of competition policy on which Article 60 of the ECSC Treaty was originally based. Even the internal criteria for the imposition of fines for infringements committed in the period in question, which were identified in the Bertoli, case, were inapplicable to infringements of Decision No 1836/81. As I seated in my Opinion of 18 January 1984 in the Bertoli case, a gradual increase of the amount of the fines, from an original 7'/2% of the price reduction to 25% thereof in the case of infringements committed after 31 August 1981 (and not later than 9 December 1982, when the Commission fixed the rate of fines thenceforth at 100% or 110% of the price reductions established) was to be considered, regard being had to the previous history of the matter, as a reasonable and, in principle, even necessary general criterion in respect to manifest substantive infringements of Article 60 and of its implementing provisions. No such prior history of an entirely different objective of the provisions in question combined with an entirely different practice exists in this case. That might be regarded as providing ample justification for the application of the same criteria for the imposition of fines as those applied since 9 December 1982 also in respect of infringements of Decision No 30/53 and those established by the Commission since it adopted its enabling decision of 19 January 1983 (Annex 4 to the Commission's reply of 7 October 1983 to the questions put to it by the Court in the ¿ertoli case) also as general criteria in respect of infringements of Decision No 30/53 and of Decision No 1836/81.

However, I should like to propose a different conclusion for two reasons. In the first place, Decision No 1836/81, according to the recitals in the preamble thereto, is clearly intended to supplement Article 60 (according to the modified interpretation thereof). In my view it is unreasonable, on that ground alone, to impose on steel dealers a fine higher than that originally prescribed for steel producers in respect of infringements committed in the fourth quarter of 1981. According to the Commission's internal guidelines for the imposition of fines, which were in force at the time, the criterion applied led to the imposition of fines amounting in principle to 25% of the price reductions established, with the possibility of a 40% upward or downward adjustment of the amount thus calculated.

Secondly, in my opinion, considerations relating to transitional policy must also apply to steel dealers, albeit for reasons entirely different from those which might be advanced in the case of steel producers. To begin with, it has become abundantly clear in these proceedings that steel dealers experienced serious problems owing to the application of a system which was originally created for steel producers. Whereas steel producers as a rule supply different kinds of steel of uniform quality, steel dealers as a matter of course sell products of different origin and quality. Moreover, the commercial practices of steel dealers are different from those of steel producers, as became apparent at the sitting inter alia from the discussions and the information submitted concerning the question of the application of fixed prices and price clauses which make the price conditional on the date of delivery. I gained the impression from those discussions that when the Commission adopted Decision No 1836/81, it had an incomplete and moreover somewhat incorrect picture of those commercial practices. Furthermore, by adopting a flexible attitude in connection with the implementation of the new system, the Commission showed some understanding of certain of the difficulties referred to. On those grounds, therefore, I do not consider it reasonable to penalize from the outset the deficiencies which have come to light in the application of the new system with the severity which seems justified only after a reasonable period of adaptation has elapsed. Finally, I take the view that the Commission is right in its contention that the decision must also be applied to transactions carried out in performance of framework contracts. However, that does not mean that dealers might not in good faith take a-different view, as long as the Court has not upheld the Commission's contention.

In the light of all those considerations, I am of the opinion that it is appropriate in the present case to apply a rate of 25% of the amount of the price reductions established, increased by 10% of the sum thus calculated, for the infringement in the fourth quarter of 1981 which are to be considered proven. This means that the amount of the fine must in my view be reduced to (0.25 x DM 81246.31 =) DM 20211.58 + 10%, in round figures totalling DM 22 233.

5. Final remarks and conclusion

5.1. I should like to conclude my Opinion with a few general remarks.

5.2. In conclusion, I consider, in the light of the views which I have expressed, that:

1 Translated from lhe Dulci).