Opinion of Mr Advocate General Lenz
Mr President,
Members of the Court,
The two cases before the Court today, which were joined for the purposes of the oral procedure and the judgment by an order of 28 November 1984, deal once again with problems relating to the system of steel production quotas, which, in its various versions, has engaged the attention of the Court on numerous occasions.
For the purposes of these proceedings, it should be mentioned that the first Decision governing those production quotas (No 2794/80 of 31 October 1980, Official Journal 1980, L 291, p. 1) provided for an adjustment of reference production where new plant was activated after 1 July 1980 (Article 4 (4)). I would refer the Court to the provision itself for details of the conditions governing such an adjustment. Article 13 of the first Decision extending the quota system (No 1831/81 of 24 June 1981, Official Journal 1981, L 180, p. 1), as amended by Decision No 1832/81 of 3 July 1981 (Official Journal 1981, L 184, p. 1), also contains such a provision, though in an amended form, the essence of which is that appropriate adjustments of reference production are possible in cases in which new rolling mills or new processing lines have been brought into service after a certain date. The subsequent decision, No 1696/82 of 30 June 1982 (Official Journal 1982, L 191, p. 1), which came into force on 1 July 1982 and, after being extended by Decision No 1809/83, remained in force until the end of July 1983, contained similar adjustment provision. Article 15 of that Decision provides as follows:
However, Decision No 2177/83 of 28 July 1983 (Official Journal 1983, L 208, p. 1), which followed upon the abovementioned Decision and was in force until the end of January 1984, no longer made provision for such a possibility and the same was true of Decision No 234/84 (Official Journal 1984, L 29, p. 1) of 31 January 1984, which came into force on 1 February 1984 and governs the quota system until December 1985.
An undertaking controlled by the applicant in these proceedings, Italsider, notified the Commission on 16 May 1979 of an investment programme in accordance with the terms of Decision No 22/66 of 16 November 1966 on information to be furnished by undertakings about their investments (Official Journal, English Special Edition 1965-66, p. 280). That programme provided inter alia for the construction of a wide strip mill in Bagnoli, which was to have a capacity of 1 million tonnes a year and to be brought into service in July 1982.
When it came to consider that plan, the Commission apparently was at first reluctant to deliver a positive opinion under the fourth paragraph of Article 54 of the ECSC Treaty. Such an opinion was delivered only after Italsider's representatives (in the context inter alia of an application for a loan under Article 54 of the ECSC Treaty) provided certain explanations during negotiations with representatives of the Commission on 12 May 1980. Those explanations made clear that the wide strip mill would, after completion of the construction work (expected to occur in December 1982) and after trials, be brought into service in the period leading up to August 1983. It was also stated that, in view of the Commission's fear that there would be an imbalance between supply and demand in respect of coils in 1983, the maximum annual production for 1983 would be 65000 tonnes and would grow to 715000 tonnes in 1984, 835000 tonnes in 1985 and would finally reach 1 million tonnes in 1986. Moreover, certain closures and conversions were to be carried out as a contribution to the restructuring of the steel industry.
The Commission delivered its opinion on 31 May 1980. It reads as follows (I quote it in full because it is of fundamental importance for the case) :
Subsequently, the installations in Bagnoli were built (though it appears that their capacity was larger than had been originally planned) and they were brought into service according to plan.
As I have already mentioned, there no longer existed the possibility under Decision No 234/84 — of obtaining an adjustment of reference production on the ground that new installations had been brought into service. The applicant regards that as a serious defect in the rules currently governing the quota system and it therefore applied to the Court on 7 March 1984. In that application, registered as Case 63/84, it asks the Court to:
In a letter addressed to the Vice-President of the Commission on 7 June 1983, the applicant asked that Finsider should be granted additional quotas which would allow it to achieve a more reasonable position in 1984 and 1985; in particular, it asked the Commission to grant the Nuova Italsider company an additional 1.2 million tonnes in quotas for rolled products. It repeated that request on 3 December 1983, on which occasion it stressed the need to introduce a provision similar to the former Article 15 (2) which would have allowed additional quotas to be granted in respect of the Bagnoli plant. On 2 February 1984, it wrote once again to the Commission. In that letter, it stated that if the mill in Bagnoli had been brought into service as originally planned the application of Article 15 (2) of Decision No 1696/82 could have been requested. It therefore sought additional quotas based on an average annual production of 1.2 million tonnes, on the ground that the Commission could not, because of the principle of legitimate expectation and independently of the aforementioned provision, refuse to grant such quotas. On 18 April 1984, the Commission rejected that application. In the statement of reasons for its decision it pointed out that Decision No 234/84 did not permit the adjustment of quotas sought by the applicant and it contended that the applicant was not entitled to rely on the principle of legitimate expectation in this connection.
That gave rise to a further application (Case 147/84) lodged on 12 June 1984. In that application the Court was asked to:
B. My opinion on these applications, which the Commission considers should be dismissed, is as follows:
I — Before going into the various arguments advanced in support of the claims, let me make a few preliminary remarks.
1. It appears that the grounds of the two applications are generally similar since the applicant merely relies on the arguments advanced in Case 63/84 in order to justify its claim that the Commission's refusal to grant additional quotas in its letter of 18 April 1984 was unlawful. Both cases can therefore largely be dealt with together and it will only be necessary to make particular reference to the third claim in the first case (adoption of any other measures considered necessary) and to the claim for damages in the second case.
2. In the written procedure the applicant complained inter alia of the fact that the application of the adjustment provisions in Articles 14 and 14A of Decision No 234/84 (as can be seen from the first indent of the first paragraph of Article 14 and the fourth indent of Article 14A (4)) is conditional upon the undertaking in question not having received any aids authorized by the Commission with a view to covering its operating losses (which provision had already been introduced into the rules governing the quota system by Decision No 2748/83, Official Journal 1983, L 269, p. 55). In that regard, it advanced the same arguments in Case 250/83, which also dealt with Decision No 2748/83.
3. With regard to the first submission (breach of the principle of legitimate expectation inasmuch as Decision No 234/84 contains no provision permitting an adjustment of quotas in respect of new installations), the Commission contends inter alia that even if Decision No 234/84 contained a provision similar to Article 15 of Decision No 1696/82, it would have been of no value to the applicant. It simply did not meet the conditions laid down therein and it must therefore be held that it has no interest to defend by seeking a declaration that Decision No 234/84 is void by reason of the absence of such a provision.
4. As the Court will be aware, the Commission also takes the view that, even if Article 15 had remained in force, the applicant would still have no legitimate interest in bringing the proceedings, irrespective of the conditions laid down therein, because it could not have counted on being granted additional quotas since that provision, as can be seen from the use of the word may and the condition that the quota system must not be disturbed, grants the Commission a discretion. The Commission observes that in the course of administering the system it has developed a number of implementing rules (additional quotas are granted only for Category Id; the reference production of installations which have been closed down is the primary source of quotas for new installations) and in the light of those rules it would be difficult to grant the applicant an increase in reference production by reason of the Bagnoli plant's being brought into service.
II — The submissions advanced in both applications in support of the main claims
1. Breach of the principle of the protection of legitimate expectation
2. Infringement of the right to engage in economic activity
In its second submission the applicant argues that, because the contested decision, in spite of the fact that the installations had been approved, did not grant additional quotas for the hot-rolled strip mill in Bagnoli, it is not possible, on account of unfavourable operating conditions, to achieve the goal of improving production and profitability which those installations were intended to achieve. In that way, the conditions vital to the applicant's existence have been affected. It was even stated in the reply that the Bagnoli plant could not be used, which may be regarded as depriving the applicant, without compensation, of the favourable effects of an initiative which had been approved.
On this point also, I am unable to agree with the applicant.
It must not be forgotten that it is incorrect to speak of a Commission approval of the Bagnoli plant, and that an opinion delivered under Article 54 of the ECSC Treaty does not constitute a guarantee that an investment will be turned into practical reality. It must also not be forgotten that the Court clearly emphasized in an earlier decision (Judgment in Case 244/81, p. 1482) that acceptance of the proposition that the system of production quotas should be organized in such a way that undertakings may find in it a guarantee of proper utilization of their production capacity would fail to appreciate the true purpose of Article 58 of the ECSC Treaty. That article in no way places the Commission under a duty to guarantee a minimum level of production to any given undertaking (paragraphs 26 and 27). Furthermore, the Commission is right in saying that the contested rules do not make it entirely impossible to operate the Bagnoli plant. In reality, the applicant can transfer to Bagnoli reference production from within its group (that is to say, from plants which have been closed or which are to be closed under the restructuring programme) in a quantity such as to permit a level of utilization of the plant which is above the average level of utilization in this sector in the Community. That is immediately obvious if it is borne in mind that:
3. Contradiction between the Commission's earlier statement of its intentions and its attitude at the time that the contested decision was adopted
In its third submission the applicant complains that the Commission, by failing to provide in Decision No 234/84 for the possibility of granting the applicant additional quotas (which would have made the Bagnoli plant economic and facilitated essential restructuring, so as to create a viable, modern plant), contradicted its statements regarding the applicant's competitivity and its contribution to restructuring made at the time that the investment programme for Bagnoli was approved. It also complains that the Commission thereby disregarded the objectives laid down in Article 3 of the ECSC Treaty (which speaks inter alia of orderly supply to the common market, allowing necessary amortization, increasing production potential and improving the working conditions and standard of living of workers). The way in which Decision No 234/84 is drafted, so far as the adjustment of reference production is concerned, does not make it possible to ensure that an improvement in production actually takes place and that the Bagnoli plant operates in such a way that the necessary amortization is possible. Moreover, it is thus made impossible for the applicant to satisfy the demands of its customers and to fulfil longterm contracts concluded with rolling mills, with the consequence that Italy has become a net importer of rolled products since the ratio between domestic production and domestic demand is lower than that prevailing in the other Member States.
As the Court is aware, the Commission also disputes this claim and here too the better arguments lie on its side.
It rightly contends that it is difficult to imagine how there could be a contradiction between statements of intention of totally different kinds: on the one hand, an opinion under Article 54 which is merely advice given in the light of the then prevailing situation and, on the other, a quota system established in a crisis situation for the purpose of reestablishing the equilibrium between production and demand, a system, moreover, which had to be made stricter as a result of the deepening crisis, so that there is no question of Decision No 234/84 being intended to make it possible for undertakings to return to a situation of economic and financial equilibrium, as the applicant claims it was. If, on the other hand, the applicant's argument were to be accepted and opinions given under Article 54 were to be regarded as significant for the purposes of the subsequently adopted rules governing quotas, that would undoubtedly entail an unacceptable limitation on the powers granted for the purpose of overcoming the crisis, and the danger would thereby arise that the crisis machinery might no longer be able to function. As far as the alleged disregard of the objectives laid down in Article 3 of the ECSC Treaty is concerned, it must be borne in mind in the first place that the Commission cannot simultaneously pursue them all in their entirety in all circumstances (as was already made clear in the cases cited by the Commission on page 18 of the defence). Secondly, it cannot be accepted that the Commission's estimation of the relative importance to be attributed to each of those objectives when drafting Decision No 234/84 constitutes a misuse of powers simply because the Commission's assessment did not accord with the applicant's. In that regard, it is important to remember that, as has already been mentioned, it was by no means impossible for the applicant to bring its Bagnoli plant into operation and that the plant can be made perfectly viable with the help of production quotas transferred from plants which have been or are to be closed. Furthermore, it should also be pointed out that Article 3 (a) speaks of an orderly supply to the common market. Thus, it cannot possibly be concluded that every undertaking must be guaranteed a certain share of its domestic market in respect of every product.
4. Breach of the principles of solidarity and proportionality
Under this heading the applicant claims that Decision No 234/84 is defective inasmuch as it makes it impossible to take account of the particular situation of the applicant (as regards its production capacity and the fact that it was forced to delay full implementation of its investment programme). In that way the applicant, which had lost part of its market share, claims to have been placed at a disadvantage. The correct thing to do would have been to enable it to achieve a utilization of capacity consonant with the size of its market in Italy, something which would also have avoided unlawful discrimination. In fact, it maintains, there is a negative balance in Italy (and in Great Britain) in trade in rolled products (which account for part of the applicant's production), while in France and in the Federal Republic of Germany, there is a positive balance. The applicant pointed out in its reply that its production capacity in respect of rolled products was to be reduced by 4.1 million tonnes, while no correspondingly large reduction in capacity was required from German undertakings. Finally, at the hearing it showed, with the help of the Commission's statistics, the extent to which the market share held by Italian undertakings in products falling under Categories la and II declined both as regards the Italian market and as regards the Community as a whole, by comparing the statistics for the period from July 1981 to June 1982 with those for the first three quarters of 1984.
In addition to what has been said in this connection with regard to related arguments, I would like to make the following observations.
In my opinion, it must be accepted that the Commission rightly sought to share out the consequences of adjusting production to the lower level of demand in a nondiscriminatory way by fixing production quotas basically in accordance with actual production for the years 1977 to 1980. It was also justified in taking no account of the national markets when establishing that system. (It should be noted in this regard that Italy is apparently a net exporter of what are known as long products, which compensates to some extent for the fact that Italy has a negative balance in regard to rolled products.)
With regard to the applicant's reference to the planned reduction in capacity, it is also interesting to note that its particular situation most certainly was taken into account in this connection. The Commission demonstrated this in detail in regard to the products which were taken into account and with express reference to the reductions carried out before 1980, even though they could not as such be taken into consideration.
With regard to the applicant's complaint of discrimination, it is also useful to examine how the applicant's production (including the additional quotas for Category I granted under Decision No 2794/80) developed. The Commission showed, and the applicant did not dispute, that, if the period in which Decision No 1831/81 was in force is compared with that in which Decision No 234/84 was in force, the applicant's production in respect of Category la and in respect of Categories la to d taken together shows a significant increase as a proportion of total production in spite of the fact that demand in Italy for those products had decreased to a greater degree than demand in the Community as a whole.
With regard to the statistics which the applicant produced at the hearing, the Commission demonstrated that they need to be corrected on certain points, with the consequence that the decline in the share of the Italian market and of the Community market as a whole held by Italian undertakings is not as great as the applicant claims. Moreover, the Commission not only convincingly showed how the market share held by Italian undertakings in the common market declined (because Italian undertakings requested fewer additional quotas for the production of welded tubes than undertakings in other countries); it also made clear that the phenomenon which the applicant sought to establish on the basis of those statistics was in fact caused by Article 15 B of Decision No 234/84 (which provides for special measures where there have been significant alterations in traditional deliveries).
It follows that the submission just dealt with, with its various details which are often difficult to grasp and appraise, also provides no grounds for a declaration that Decision No 234/84 is unlawful.
5. Breach of the law (presumably meaning infringement of Article 58 and other provisions of the ECSC Treaty)
This submission is not mentioned in the reply and that doubtless justifies the conclusion that the applicant is no longer pursuing it (perhaps because of the Commission's objection that since it could not be subsumed under the heading misuse of powers it is inadmissible under the second paragraph of Article 33 of the ECSC Treaty).
If that is not the case (and in the second action the applicant was not limited to pleading misuse of powers), it must be stated that the arguments advanced in this connection add nothing new to the case. Essentially, all that has been claimed is that Article 58 (like Article 54) of the ECSC Treaty does not justify a prohibition on production or a prohibition on the construction and bringing into operation of new installations. All that needs to be said on this subject has already been said in other contexts, where it has been pointed out in particular that the result feared by the applicant was not inevitable, even if additional quotas were not granted for the Bagnoli plant, because that plant could still function in a perfectly satisfactory way by making use of reference production transferred from plants which had been closed or which were to be closed. Moreover, the Commission rightly drew attention to the relevant case-law (judgment in Joined Cases 311/81 and 30/82), in which it is emphasized that it is not the purpose of Article 58 of the ECSC Treaty to give undertakings a guarantee that their production capacity will be properly used, because that provision is not in fact designed to enable undertakings to exempt themselves in a period of crisis from the consequences of their earlier decisions regarding investment and output when such decisions have proved to be ill-suited to the trend of the economy (paragraph 25).
6. Absence of a statement of reasons
I can deal in an equally summary fashion with the final submission, which complains that no reasons were given for repealing the provision on adjustments contained in Article 15 of Decision No 1696/82.
It is sufficient to state in that regard that the repeal in question had already been carried out by the decision preceding Decision No 234/84, so that there was no reason to deal with that matter in the statement of reasons for Decision No 234/84. Moreover, the Commission has shown that, by means of numerous contacts with representatives of Eurofer, the opinion of the undertakings concerned was obtained on the draft of what later became Decision No 2177/83. In that context it was stated — with supporting reasons — that the adjustment rules in question were to be repealed and that fact was also mentioned in the communication sent to the Council. It is thus not possible to speak of the absence of a statement of reasons in regard to the decision preceding Decision No 234/84.
For all the foregoing reasons, Decision No 234/84 cannot be regarded as defective on the ground that it did not permit the applicant to obtain an adjustment of its reference production by reason of the fact that it had brought its Bagnoli rolling mill into service. The consequence of that is that the main claim in Case 63/84 is without foundation, as is the main claim in Case 147/84.
III — The remaining heads of claim
1. Adoption of measures under Article 34 of the ECSC Treaty (Case 63/84)
The measures which may be adopted when a contested decision or recommendation is declared void are (a) reference of the matter back to the Commission and (b) a declaration that the measure involves a fault of such a nature as to render the Community liable.
Reference back to the Commission is clearly excluded in this case because there are no grounds for declaring Decision No 234/84 void. With regard to the second of the above-named measures, no evidence was produced which suggests the existence of a fault of such a nature as to render the Community liable. It thus appears that a measure of that kind is not what the applicant had in mind. If it were, it would follow from the finding that Decision No 234/84 is not unlawful that the Community cannot in principle incur liability on account of that measure.
The only conclusion which may be reached therefore is that the additional claim brought in case 63/84 is obviously without foundation.
2. Declaration that the Commission is liable to compensate the applicant (Case 147/84)
If this claim refers to a declaration to be made under the first paragraph of Article 34 of the ECSC Treaty, it is clear without any further discussion that it cannot be accepted. The only ground which the applicant advances for its claim is that Decision No 234/84 is unlawful and that has already been shown not to be the case.
If however the applicant intended to seek damages under the second paragraph of Article 34 of the ECSC Treaty, then it must be observed that such a claim can only succeed if the Commission fails to take within a reasonable time the necessary steps to comply with a decision that a measure is void. Such a claim may not therefore be brought at the same time as a claim for a declaration that a measure is void; not even — contrary to the applicant's contention — in the form of a conditional claim.
Thus the additional claim made in Case 147/84 must fail.
C. Consequently, all that remains is for me to propose that the applications should be dismissed as unfounded and that the applicant should be ordered to pay the costs.
1 Translated from the German.
2 Judgment of 15 January 1985 in Case 250/83 Finsider v Commission [1985] ECR 142.
3 Judgment of 10 December 1957 in Joined Cases 1 and 14/57, Usines à Tubes de la Sane v High Authority, [1957] ECR 105.
4 Judgment of 3 May 1978 in Case 112/77, August Töpfer & Co. GmbH v Commission, [1978] ECR 1019.
5 Judgment of 14 May 1975 in Case 74/74, Comptoir National Technique Agricole (CNTAJ SA v Commission, [1975] ECR 533.
6 Judgment of 1 February 1978 in Case 78/77, Firma J. Lührs v Hauptzollamt Hamburg-Jonas, [1978] ECR 169.
7 Judgment of 13 June 1978 in Case 146/77, British Beef Company Limited v Intervention Board for Agricultural Produce, [1978] ECR 1347.
8 Judgment of 14 May 1975 in Case 74/74, Comptoir National Technique Agricole (CNTĀ) SA v Commission, [1975] ECR 533.
9 Judgment of 14 February 1978 in Case 68/77, IFG-Intercontinentale Fleischhandelsgesellschaft mbH & Co. KG v Commission, [1978] ECR 353.
10 Judgment of 27 April 1978 in Case 90/77, Helmut Slimming KG v Commission, [1978] ECR 995.
11 Judgment of 14 February 1978 in Case 68/77, IFG-Intercontinentale Fleischhandelsgesellscbaft mbH & Co. KG v Commission. [1978] ECR 353.
12 Judgment of 11 May 1983 in Case 244/81, Klockner-Werke AG v Commission, [1983] ECR 1451.
13 Judgment of 11 May 1983 in Joined Cases 311/81 and 30/82, Klöckner-Werke AG v Commission, [1983] ECR 1549.