OPINION OF MR ADVOCATE GENERAL REISCHL
DELIVERED ON23 FEBRUARY 1983 ( 1 )
Mr President,
Members of the Court,
The proceedings on which I shall now give my opinion are concerned with the provisions governing steel quotas, as laid down by Commission Decision 1831/81 of 24 June 1981 (Official Journal L 180 of 1 July 1981, p. 1 et seq.), after the expiry of Decision 2794/80 (Official Journal L 291 of 31 October 1980, p. 1). The first-mentioned decision, - which entered into force on 1 July 1981 and covered the period from 1 July 1981 until 30 June 1982, was amended and extended on several occasions, notably by Decision 1832/81 which took effect on 4 July 1981 (Official Journal L 184 of 4 July 1981, p. 1 et seq.), by Decision 2804/81 which took effect on 1 October 1981 (Official Journal L 278 of 1 October 1981, p. 1 et seq.), and also by Decision 533/82 which took effect on 9 March 1982 (Official Journal L 65 of 9 March 1982, p. 6 et seq.).
I do not wish to set forth now the content of the new provisions in full detail.. It is. sufficient for the present proceedings to remind the Court briefly of the following:
The decision no longer refers to four categories of product but now specifies two further categories, Categories V and VI, which had previously been covered by Category IV. Under the decision, production quotas are no longer fixed for crude steel but — as far as the product categories specified therein are concerned — for only a few of the products listed, since, moreover, the main steel producers decided to reduce production on a voluntary basis.
As regards Category I — the only relevant category in this case — it has been subdivided into Categories I a to I d. Category I a covers not only the primary products, hot-rolled wide and narrow strip, but also some derived products, whereas Categories lb to Id contain only derived products, which had not been covered by Decision 2794/80. Under Decision 1831/81, quotas were to be fixed for the products listed in those categories.
An important innovation was introduced for calculating reference production in Category I. Decision 1831/81 makes two figures relevant in determining the arithmetical mean. The first figure corresponds to the arithmetical mean of production in three periods: the year 1974, the 12 calendar months of the period from July 1977 to June 1980 during which production of the four categories of rolled products I to IV, as defined in Article 2 of Decision 2794/80, was the highest; and the period of 12 months from July 1979 to June 1980. The second figure is to be an annual reference quantity resulting from the production quotas granted under Decision 2794/80 during the fourth quarter of 1980 and the first quarter of 1981, including adjustments. For that purpose — for the details I would refeito the Report for the Hearing — the reference production figures are reconstituted from the production quotas and a corresponding calculation is carried out for the second and third quarters of 1981.
As with the earlier Decision 2794/80, not only were there restrictions on production, but it was also provided that only a given percentage of the restricted output might be delivered within the common market. The calculation of the percentage was, however, no longer left to the undertakings themselves but was carried out by the Commission, regard being had to the reference quantity to be ascertained pursuant to Article 8. Accordingly, Article 9 stipulated that the Commission was to fix, each quarter, the abatement rates for establishing the production quotas and that proportion of those quotas which might be delivered within the common market. Under Article 5, the Commission was required to fix quarterly the production quotas for each undertaking and that proportion thereof which might be delivered within the Common Market and, under Article 9, it was to notify each undertaking of its reference production and reference quantities, together with its production quotas and the proportion thereof which might be delivered within the common market.
It is also worth mentioning that, in cases of exceptional difficulty, an adaptation of the reference productions was no longer generally available but was subject to certain preconditions; as far as Categories la to Id were concerned, the total reference production had to be less than 1 million tonnes per annum at least 75 % of which was to consist of products whose abatement rate exceeded 20 %. In addition, Decision 533/82 introduced a special hardship clause — Article 14 (b) — for those producers whose total output of the products listed in Article 1 of Decision 1831/81 eluring the year 1981 did not exceed a given quantity and whose output in Categories IV, V and VI constituted a given percentage of their total production. In the second quarter of 1982 they were subject to lower abatement rates in their production quotas and in that proportion thereof which might be delivered within the common market, in so far as Category V was concerned.
Pursuant to those provisions, Commission Decision 1833/81 of 3 July 1981 (Official Journal L 184 of 4 July 1981, p. 6) specified in detail, in respect of the third quarter of 1981 — with which the present case is concerned — the abatement rates for establishing the production quotas and that proportion of those quotas which might be delivered within the Common Market.
In those circumstances, a notification under Article 9 of Decision 1831/81 was issued to the applicant on 28 July 1981, from which it was possible to establish, in relation to Categories I a, I b and I c, the reference productions and reference quantities together with the production quotas and the proportion thereof deliverable within the Common Market, applicable during the third quarter of 1981. After the appropriate representations had been made by the applicant, it was corrected by a further notification from the Commission, dated 31 August 1981, which stated that the annual reference production for Category I a was increased by the inclusion of a monthly tonnage which had accidentally been overlooked, thereby entailing a minor increase in the production quota for Category I a.
On account of those notifications Klöckner applied to the Court of Justice on 8 September 1981, claiming that it should:
1.
Declare the defendant's decisions of 28 July 1981 and 31 August 1981 null and void;
2.
In the alternative:
(a)
declare void the production quotas laid down in so far as they fell short of certain quantities for production categories I a and I b (somewhat higher figures being later quoted in the applicant's reply);
(b)
declare the production quota for Category I a void in so far as it covered cold-rolled plate of 3 mm and over;
(c)
declare the production quotas void in so far as it might be shown that production was intended for nonmember countries ;
and
(d)
declare the decisions void in so far as they determined the proportion of the production quotas which might be delivered in the Community market.
The Commission considers the alternative claims, 2 (a) and 2 (c), to be inadmissible, and the main application, together with alternative claims 2 (b) and 2 (d) to be unfounded.
The applicant points out that Decision 2804/81 corrected a textual error in Decision 1831/81, inasmuch as the words “hot-rolled wide strip for processing into ...” were inserted before the words cold-rolled plate of 3 mm and over” in the fifth indent of the second paragraph of Article 1. The applicant goes on to say in its reply that the main issue has thereby been resolved and that the only outstanding decision concerns costs, which decision would, according to its submissions made in the course of the oral procedure, undoubtedly have to go against the Commission.
My opinion in this case is as follows:
A — Main claim
The main claim rests upon the following four submissions :
Failure to provide for the minimum employment enjoined by Article 58 of the ECSC Treaty:
Nonobservance of the implications of the prohibition of subsidies under Article 4 (ç) of the ECSC Treaty;
Unacceptable fixing of delivery quotas, both for export and for the common market; and
Absence of assent to the quota provisions on the part of the Council of Ministers.
I — First submission
There are in fact three aspects to be kept apart here.
1.
The application gave prominence to the objection that the general Decision 1831/81 wrongfully omitted any provision to ensure that affected minimum employment for the undertakings concerned and a minimum utilization of their present capacity, in keeping with the average utilization of all undertakings as computed by reference to the reduced reference production figures. That shortcoming is an infringement of Article 58 (2), which provides that employment should be maintained by means of an appropriate level of production. Decision 1831/81 is not therefore consistent with the basic philosophy of social justice as expressed in a series of articles of the Treaty, or with the prime objective of Article 2, namely to safeguard continuity of employment. Furthermore, a breach of the prohibition of discrimination is apparent. In its reply the applicant has also asserted the need for a suitable provision which would have entailed higher quotas for itself, referring to a general legal principle whereby even in the face of mandatory enforcement minimum rights are conceded to the parties concerned. Moreover, in other cases (Cases 311/81 ( 2 ) and 136/82 ( 3 )) the applicant has cited Article 14 (b) (mentioned at the outset), which was introduced by Decision 533/82 and which refers to reinforced concrete; the applicant states that the Commission has therein acknowledged a principle which goes even further than the one to which the applicant has alluded.
As far as the first aspect of the first submission is concerned, it is my impression that it is now no longer necessaiy to examine the arguments put forward in this respect. The reason is that, after they had been put before the Court (together with the reply in Case 136/82, ( 3 ) dated June 1982), the judgment in Case 119/81 ( 4 ) was delivered on 7 July 1982 in which a similar objection is dealt with. In response to the view that the Commission should have had regard, as the basis for its quota system, not only to actual production but also to manufacturing capacity, reference is made to the Court's findings in the judgment in Case 14/81, ( 5 ) according to which the criterion of actual production is perfectly consistent with Article 58 of the ECSC Treaty because it avoids the uncertainties necessarily inherent in evaluating productive capacity and because it enables total production to be reduced without altering the positions of the undertakings on the market as between one another (paragraph 28). Moreover, the Commission did not in fact have resort to the second sentence of the first subparagraph of Article 58 (2), nor did it, in reality, disregard the need to maintain employment as far as possible, in view of the fact that consideration had to be given, in the context of Article 4 (3), to the level of utilization of capacity (paragraph 14). Furthermore, Article 58 does not in any way require the Commission to guarantee to each individual undertaking a minimum level of production, and its aim is not to guarantee to undertakings a minimum level of employment proportionate to their capacity (paragraph 13).
Consequently, in a special memorandum of August 1982, the applicant declared that it did not wish to maintain the objection that the Commission was obliged to guarantee to all undertakings a minimum level of utilization. It now confines itself to arguing that it is necessary for it to receive an — unspecified — minimum quota so as to enable it to survive, and in that connection it relied, during the oral procedure, on the existence of a state of emergency. That is, however, somewhat different from the thesis which it originally put forward, and I shall return to it presently in a separate section.
All that remains to be said is that, if it is not a matter of securing for the applicant a minimum level of utilization commensurate with the average for all undertakings, it must surely be unnecessary to examine the issue as to the exact margin by which its utilization differs from the average within the Community. In this connection the problem to be encountered in Case 303/81 ( 6 ) is also relevant, namely whether the capacity of the applicant's No II rolling-mill was correctly assessed and whether the capacity of No I rolling-mill should be taken into account. Now that the submission has been amended, it is clear that the alternative claim numbered 2 (a) is also presumably thereby invalidated — a claim which was evidently based upon the applicant's original thesis, and which reflected the manner in which the necessary minimum quotas were to be calculated after its capacity had been assessed.
2.
In connection with the argument alleging the existence of a state of emergency, to which I shall now turn, the applicant has claimed that the new quota system has entailed such low quotas for its business — inter alia because the adjustments to the reference productions under Decision 2794/80 took effect only in a considerably attenuated form — that its very existence is threatened. The applicant tried to demonstrate that point in camera during the oral procedure. It referred — I shall not quote the figures in connection with that submission — to the expert report of a firm of accountants which discloses the enormous additional losses which would have been entailed in compliance with the production quotas, measured against average utilization within the Community. It further pointed to the size of its capital and reserves, to the absence of hidden reserves, to the structure of its pension fund and the previous closure of other plants within the group. Its submission must be understood to mean that such an emergency calls for a clause in the quota provisions which would make it possible to raise the production quotas to a level at which the danger of the extinction of modern and fundamentally sound undertakings would be eliminated.
In response, the Commission has taken the view that, in the first place, after the line of argument had been amended, there arose a fresh submission which, having been brought out of time, should be dismissed as inadmissible. As to the substance of the applicant's argument, it has relied upon the judgment in Case 119/81 (cited previously), according to which any obligation on the Commission's part to ensure a minimum level of production is to be denied generally and without restrictions. Furthermore, if arguments of profitability, such as those put forward by the applicant, were to be accepted, then the capacity of the system would be overloaded, because eveiy raising of quotas necessarily entails the lowering of the quotas for other undertakings, which might thereby fall below the level of profitability and, in their turn, claim an increase in their quotas. What is more, there are methods other than quotafixing which are relevant to the reorganization of individual undertakings; in that connection the Commission refers particularly to the aid programme in Decision 2320/81/ECSC (Official Journal 1981, L 228, p. 14), which enables Member States to pay subsidies to undertakings during a transitional period for the purposes of restructuring. Lastly, the Commission has expressed doubts as to whether, as a matter of fact, a state of emergency affecting the applicant, directly attributable to the quota provisions, has been demonstrated; in that context the Commission has referred not only to the extent of the applicant's losses, which were evident even before the quota system commenced, but also to the fact that the expert opinion presented says nothing about the group's circumstances as a whole, including the possibility of compensatory factors in the form either of positive results from other areas of the group's activities or of exceptional financial returns.
(a)
The Commission's misgivings concerning admissibility are in my view unjustified; the applicant's new line of argument cannot therefore automatically be discarded as having been brought out of time. Indeed, it must be acknowledged that the essential evidence disclosed by the abovementioned expert opinion has already been submitted to the Court of Justice in the application, and it must also be conceded that the amendment of the legal conclusions drawn therefrom is not so far removed from the applicant's original thesis as to warrant speaking in terms of a completely new line of argument which impedes the defence and delays the Court proceedings. Nor can it be ruled out that the new arguments expose so important an objection that the Court should have regard to it of its own motion.
(b)
Hence it may readily be imagined that the quota provisions lead to serious difficulties and indeed to a state of emergency threatening the existence of certain undertakings, so that letting matters rest would offend against elementary concepts of justice. It is for that reason that Decision 1831/81 contains the hardship clause (mentioned at the beginning) in Article 14 and that further special clauses were later incorporated, namely an Article 14 (a) inserted — with Greece in mind — by Decision 2804/71, and Article 14 (b), also mentioned above, which was inserted by Decision 533/82 for the benefit of producers of concrete reinforcing bars. An essential point, however, is that Decision 1831/81, unlike its predecessor, 2794/80, is devoid of any general hardship clause, for which reason certain undertakings — such as the applicant — which do not satisfy the restrictive criteria in the abovementioned provisions cannot obtain the benefit of an exceptional adjustment of their production quotas.
It is my opinion that no sound reasons may be discerned for restricting the equity clause in that way. This undoubtedly provides justification for speaking in terms of a grave shortcoming in the new quota provisions, perhaps even — althought the question may, in the final analysis, remain unresolved — in terms of a disregard for the prohibition of discrimination, since undertakings above a certain size and having a given production programme cannot rely upon receiving any production bonus, should they find themselves in a state of emergency.
(c)
This is, of course, not the moment for a detailed and conclusive examination of whether a general hardship clause, if included in Decision 1831/81, would in fact have taken effect in the applicant's case, that is, whether in its case we are in fact confronted with a state of emergency essentially caused by the quota provisions. Judging by the figures submitted to the Court, that cannot at all events be ruled out, and it is further necessary to bear in mind my observations in Case 303/81 (cited previously) concerning the assessment of the applicant's present capacity and hence its degree of utilization as compared with that of other undertakings.
Thus it seems to me perfectly justifiable to declare the decision on the applicant's production quotas to be void, on the ground that the new quota provisions wrongly lack a general hardship clause which would have made it possible to relieve the output restrictions imposed upon the applicant in the same way as was apparently provided for (according to all our information) in the context of Decision 2794/80.
(d)
Furthermore, it does not seem to me that the arguments put forward by the Commission in its defence on this point are completely irrefutable.
(aa)
Thus, the Commission's approach to the judgment in Case 119/81 (cited previously) is surely wrong. It must not be overlooked that the sentence which the Commission quotes, namely that Article 58 does not in any way require it to guarantee to each individual undertaking a minimum level of production, was drafted in the context of the appraisal of the quota provisions in Decision 2794/80; Article 14 of that decision did, however, contain a general hardship clause which made possible a minimum level of employment, inasmuch as it was concerned with a comparison of utilization with the Community average.
(bb)
I also find quite unconvincing the Commission's fears that, if the applicant's arguments were accepted, it would therefore be necessary to be prepared for the collapse of the whole system. In reality it is, of course, not a matter of ensuring the profitability of undertakings in every case bus merely of providing aid in emergencies which may be caused to undertakings by the quota provisions. But if that was deemed acceptable under the system originally applied it is hard to understand how a similar hardship clause introduced under the system created by Decision 1831/81 would be bound to impair its efficacy.
(cc)
Moreover, there seems to me to be no justification for referring to the aid programme in Decision 2320/81; that decision does not permit Member States — quite apart from the problem of the availability of appropriate means — to adopt general measures of support in cases of emergency, but rather focuses upon the financing of restructuring measures. Measures such as those, however, are hardly relevant to the applicant's case, since, as it stated without challenge, it restructured its rolling-mill in Bremen, which is the main point at issue, long ago to accord with the Community's steel policy.
3.
The third limb of the first submission — which in fact no longer requires to be examined, in the light of the considerations arising out of the applicant's argument with regard to a state of emergency — is based upon the observation that the system under Decision 1831/81, as compared with the system instituted by Decision 2794/80, has entailed an appreciable deterioration of the situation, both for the applicant and for a number of other undertakings. The complaint is that it occurred without any adequate statement of reasons.
In this connection it is necessary to bear in mind what has been stated in the Report for the Hearing concerning the calculation of the reference production figures which govern the production quotas. Under Decision 1831/81 a relevant factor is the computation of an arithmetical mean from a number of figures (that is, roughly speaking, from the actual production during given periods and the reference production under Decision 2794/80). Obviously, the result is that the adjustments to the reference production which had to be carried out pursuant to Decision 2794/80 took effect in reduced form only under Decision 1831/81. At this stage no detailed examination is required as to whether the figures quoted by the applicant are correct; as the Court will remember, it has stated that, with a 5% average utilization of all hot-rolled widestrip mills in the second quarter of 1981, the utilization of its Number II rolling-mill declined, following Decision 1831/81, from 39% during that quarter to 29.6%, in the third quarter of 1981, when average utilization stood at 48%. It is not contested that the applicant's position, and that of other undertakings in a similar situation, has indeed deteriorated since Decision 1831/81. In this regard the Commission has submitted that the objective of Decision 1831/81 was to reflect as accurately as possible the production figures of undertakings on the basis of market developments, and to disregard unusually acute recessions in production. In particular, it was intended to correct deviations from the mean level of production which had occurred owing to individual adjustments of the reference production figures and which especially benefited German undertakings, namely by a margin of up to 32% in the case of Category I products, whereas adjustments either could not be made for undertakings in other Member States or amounted to no more than 3, 5 or 15%. The resultant situation was that undertakings whose reference production was not increased following Decision 2794/80 were awarded higher reference production figures under the new system, whilst others with considerable increases had to make do with lower reference production figures; discernible disparities were therefore overcome by a partial withdrawal of excessive benefits.
The matter in question is quite manifestly an important innovation in the quota system and not a mere detail of minor significance. It undoubtedly calls for a statement of the reasons on which it is founded, not by way of an explanation of the applicant's particular situation — which is how the Commission appears to construe the complaint brought against it — but by way of justifying the general repercussions of the new system on a series of undertakings. Such a statement of reasons, properly presented, is nowhere to be found, however. The only passage in the preamble which is relevant here is the third recital under subheading 4, which reads :
“It appears necessary to lay down reference periods in respect of these four groups of products which take account of the quotas, and their adjustments, as laid down for the production of hot-rolled wide strip in implementation of Decision 2794/80/ECSC, and of the experience gained in managing the system set up by that decision.”
Even if the demands made of a statement of the reasons on which a general decision is based should not be set too high, it is none the less difficult to imagine that the mere reference to “experience gained” could be perceived as adequate reasoning. Hence, on the grounds that no appropriate statement of reasons is given for the new method of calculating reference production figures, that part of Decision 1831/81 may be regarded as unlawful which removes the legal basis for the individual notification to the applicant of its quotas, in which, of course, the reference production represents an essential element.
Possibly — and I consider this perfectly justifiable — it is feasible to go one step further and to hold that no objective justification may be perceived for the abovementioned innovation. The raising of the reference production under Article 4 (3) of Decision 2794/70, which is the only matter of concern for the present proceedings, was regarded as appropriate at the time for good reasons of industrial management, namely the inclusion of all undertakings, if possible, in the average utilization within the Community, the purpose being to give effect to the principle embodied in Article 58 of maintaining employment as far as possible. Reference thereto is made by the judgment in Case 119/81 (cited previously), with the observation that in establishing the quota system the Commission did not disregard the need to maintain employment as far as possible because it took account, in Article 4 (3) of Decision 2794/80, of the level of utilization of capacity (paragraph 14). The present decision, 1831/81, has far less regard to that need, inasmuch as it creates an arithmetical mean. Furthermore, the possiblilities of adjustment as provided for in Article 14 were appreciably restricted inasmuch as they were made available only up to a certain level of reference production. Accordingly — and I shall return later to the problem of the distortion of conditions of production by State subsidies, which were not taken into account either — it is legitimate to ask whether the system created by Decision 1831/81 continues to be founded upon a “base équitable”. The question is unlikely to receive an affirmative answer.
A finding that the notification of quotas addressed to the applicant is void is therefore suggested not only by the fact that no reasons are given for the new method of calculating the reference production but also by the consideration that Decision 1831/81 has unduly ignored the important requirement expressed in Article 58 that employment should be suitably maintained by means of adequate utilization of capacity.
II — Second submission
In the light of the foregoing observations, I propose to treat the allegation made in this submission of disregard of the consequences of the prohibition of subsidies — together with the other submissions — as merely an ancillary matter and shall therefore deal with it comparatively briefly.
I do not need to rehearse in detail the arguments presented, since they duplicate, in essence, those put forward in Case 119/81 (cited previously). In addition, the applicant has since made reference to the levies (determined by the size of the subsidies awarded) which have been imposed in the United States of America on steel imports from the Community; these, it is alleged convey an idea of the extent to which competition in the Community is distorted by State aid.
As far as that statement is concerned it is my impression that everything which needed to be said is contained in the judgment in Case 119/81 (cited previously).
It indicates, in the first place, that some of the arguments advanced by the Commission in its defence are unsound. This applies to the Commission's reference to recent decisions on aid, namely Decision 257/80 (Official Journal 1980, L 29, p. 5) and the decision which superseded it, 2320/81. In fact, neither that reference nor a consideration of procedures introduced under those decisions can be conclusive, because the applicant concentrates on aid schemes which in earlier years distorted the conditions of production and which were not actually covered by the decisions mentioned above. The same holds good for the Commission's contentions that it is only Article 88 of the ECSC Treaty which is relevant in such circumstances rather than that account should be taken of them under Article 58, since it was expressly declared in that judgment that the Commission, when formulating the quota provisions, could take account of situations which were inconsistent with Article 4 (3) of the ECSC Treaty.
On the other hand — and this argument runs against the applicant — it was further emphasized in the judgment that the Commission was not under an obligation when adopting measures under Article 58 to take account of distortions on the steel market caused by the grant of aids which might be incompatible with the Treaty; it could not be demanded that the anti-crisis measures envisaged by Article 58 should be used to counteract the effect of illegal aids granted by Member States (paragraph 19). According to the judgment, the implementation of Article 58 called for speedy action necessarily based on relatively simple criteria; thus it was incompatible with such action to take into account circumstances such as the grant of public aids, whose appraisal would require especially complicated investigations. Nor may it readily be asumed that the situation in that regard was significantly different at the time when Decision 1831/81 was adopted from what it had been at the adoption of Decision 2794/80. Admittedly, during the currency of the latter decision there was, strictly speaking, sufficient time to deal with the problem of subsidies. It must be acknowledged, however, that the quota provisions of Decision 1831/81 had also to be prepared rather rapidly, because it did not become apparent until a late stage that a continuation of the scheme on a voluntary basis could not altogether be achieved. It must further be acknowledged that any proper assessment of the subsidies in the light of the amended system would have required new and complicated investigations and calculations which could not be undertaken at short notice.
Moreover, the above-mentioned judgment stressed, in connection with the basic possibility of taking subsidies into account in the setting up of a system under Article 58, that proof of them would have had to be duly furnished by way of the procedures provided for the purpose. Such proof — and obviously one need only consider here the possibilities open to the Member States concerned for preparing their defence — was lacking when Decisión 1831/81 was adopted, and I cannot imagine that the objection that such proceedings had not been concluded by the time the said decision was adopted justifies the inference that consideration should have been given to subsidies in the context of the quota provisions even without their existence having been demonstrated in the correct manner.
Therefore, the complaint that forbidden subsidies were left out of account — by which the applicant has in mind at least the grant to unsubsidized undertakings of a bonus under the quota provisions — can really be of no avail in the present proceedings even though it must be conceded straight away that the shortcoming referred to may contribute appreciably — as I have suggested above — to the impression that the system created by Decision 1831/81 is devoid of any “base équitable”.
Ill — Third submission
Since the applicant maintains that they are closely connected, I shall now combine the objections, respectively that production destined for exportation was improperly restricted, and that the Commission wrongly fixed delivery quotas for the common market; if the Court were to uphold them, the two objections would demonstrate that a recasting of the general decision and therefore a rearrangement of the quotas were essential.
1. Restriction on exportation
The applicant gives prominence to the claim that the general restriction on production, as laid down by Decision 1831/81, also had the indirect effect of restricting exports, because (apart from existing stocks) all that can be exported is whatever part of current production fails to find a market within the Community, in other words the residue of the output permitted under the quota provisions. In the light of the basic structure of the ECSC Treaty, by virtue of which the control of foreign trade is a matter for the Member States (Article 73), the applicant does not consider that situation to be permissible. It points, first, to Article 3 (f) of the ECSC Treaty, according to which the institutions of the Community are required to promote the growth of international trade, and secondly, to the provisions of Article 61 whereby inter alia — and subject to strict reservations — maximum and minimum prices for export may be fixed, whereas Article 58 makes no mention whatever of maximum export quantities. The Commission, it claims, may properly introduce quotas only where it has the possibility of influencing other offers in the relevant market, which is not the case in nonmember countries. The absurdity of the Commission's attempt to make a worldwide contribution towards establishing market equilibrium in nonmember countries by means of Community quotas — and incidentally without the Community's receiving any quid pro quo — is illustrated in exemplary fashion by the reaction of the United States of America, which then necessitated the conclusion of a special agreement pursuant to Article 95. Instead, it would in the opinion of the applicant — which also deplores the absence of any statement of reasons for including exports in the quota provisions — have been proper to formulate the quota system in such a way as to enable quotas to be fixed for projected sales within the Common Market (that is, for the estimated domestic requirement), and to enable quantities for which evidence of exportation was furnished to be deducted from the actual output. In view of the danger of reimportation, the applicant admits the possibility of excluding, if need be, a few countries such as Switzerland and Austria, and perhaps all Western European countries, from the calculations, which would be unnecessary in the case of exports to other parts of the world on account of the prevailing price situation and transport costs.
(a)
As far as that submission is concerned, it must be conceded at the outset that it cannot be held to be inadmissible simply because no complaint was forthcoming from the applicant. Indeed, the applicant has pointed out not only that it pursued a different production policy on account of the legislation in force, making no additional effort to sell to nonmember countries, but also that it applied to have its quotas increased for the third quarter of 1981, on the grounds of increased exports; the application was rejected in September, for lack of a hardship clause similar to Article 14 of Decision 2794/80, which did make such allowances.
(b)
Moreover, the applicant's arguments serve, if need be, to demonstrate a further aspect of the formulation (criticized above) of the hardship clause under Article 14 of Decision 1831/81, namely that it no longer enables undertakings of, or above, a given size to expand their exports. On the other hand, the arguments hardly afford evidence of the illegality of the quota system as a whole.
(aa)
It cannot but be recognized that the alternative solution advocated by the applicant might possibly be even more radical than the system in force, because it would mean — if I have understood it correctly — that exports to certain countries would have to be excluded altogether; it cannot therefore be put forward to demonstrate that the indirect restriction on exports, which is the subject of the complaint, is excessive.
(bb)
As to the applicant's other arguments, it is now perhaps unnecessary to deal with them in great detail, since the Court of Justice has already expressed its views, in its judgment in Case 119/81 (cited previously), where the applicant's arguments were essentially the same, on the problem at issue here.
It was held in that judgment that, in so far as the fixing of production quotas had a restrictive effect on export opportunities, it was an inevitable consequence of the application of the machinery established by Article 58 (paragraph 24). The extent to which external trade must be taken into consideration in connection with measures to be adopted under Article 58 was for the Commission to decide and in arriving at that decision it must take account of the Community steel industry's own needs and the Community's interests in its relations with nonmember countries (paragraph 25). Finally, it is not possible to infer from Article 58 any obligation for the Commission to exempt from the quota system the production which certain undertakings might prefer to channel towards export markets (paragraph 25).
The clear implication is that the allusions previously made in Case 119/81 (cited previously), both to Article 73 of the ECSC Treaty, to Article 3 (f) — in which connection, incidentally, the applicant overlooks Article 3 (a) — and to Article 61 are no more relevant than the fact that in dealings with certain nonmember countries the quota provisions, which operate only a general control, may need to be supplemented by special agreements.
(cc)
I should now like to make a short remark concerning the objection that no statement of reasons was supplied, which — to come straight to the point — is in my opinion somewhat ill founded in this particular regard. It is possible to leave unresolved the question whether, in themselves, the statements made under Section 5 of the recitals in the preamble to Decision 1831/81, read in conjunction with Section 6 of the recitals to Decision 2794/80 (which distinguishes between deliveries made inside and outside the common market) may be regarded as sufficient to justify the need to include exports in the quota provisions. At all events it is possible to follow what my colleague, Mr Advocate General VerLoren van Themaat, has said about a similar argument in Case 119/81 (cited previously). In his view it is sufficient to refer, in the statement of reasons, to the existence of a worldwide crisis and to recognize that it is inherent in the system that a quota system for production will have repercussions on export opportunities. It may thus be said that the reasons given for quota provisions are automatically adequate also as reasons for their possible repercussions on exports.
2. Delivery quotas for the common market
As its second objection under the third submission, the applicant argues that the Commission exceeded its authority when making provisions as to the share of the restricted output which might be sold within the common market, on the ground that Article 58 of the ECSC Treaty speaks in terms of laying down only production quotas, but not of delivery quotas. The applicant claims that it is not possible to extend Article 58, regard being had to its purpose, so as to include expedients other than those provided for; the article is not in fact concerned with establishing a balance between supply and demand, because only the supply aspects fall within the ambit of the ECSC Treaty (and even then, only partially), and hence the most that may be said is that the Commission is required, by means of Article 58, to contribute to establishing that balance. Even invoking the doctrine of implied powers — which the judgments of the Court have declared to be subject to extremely restrictive criteria — is irrelevant as a justification, especially as the problem of deliveries was indeed perceived in the drafting of the Treaty, namely in paragraph 29 of the Convention on the Transitional Provisions — which admittedly was valid only for a limited period — and yet no provision on the matter was included in Article 58, which was therefore manifestly a conscious decision. Thus the quota provisions should properly have been limited to the production side, and, if that were considered inadequate, consideration should have been given either to supporting measures on the part of the Member States or to an application of Article 95 of the ECSC Treaty.
(a)
The first point to be made about that submission is that in the present case there appear to be no doubts concerning the admissibility of dealing with the subject, such as were called for in previous proceedings. In Case 119/81 (cited previously), which related to Decision 2794/80, no examination could be made of a similar objection, on the ground that delivery quotas and therefore the provisions of Articles 7 and 9 of that general decision were not involved in the fixing of production quotas, which at that time constituted the only matter dealt with by the individual notifications to the undertakings. The same cannot be said here, since Decision 1831/81 is formulated differently; not only is a restriction of deliveries provided for in the general decision, but also individual binding notifications were issued to the undertakings concerned. In that respect, however, it must undoubtedly be conceded that they affect the undertakings no less directly than the notifications concerning production quotas, and thus are likewise directly open to challenge, and there is no need to await notice of a fine before application is made for a judicial review.
(b)
However, my impression is — as will be demonstrated shortly — that the objection to the delivery quotas is no more capable of exposing the illegality of the quota provisions than was the accusation that a restriction of exports was not permissible.
(aa)
I have already disposed of an essential argument — and one which is important for the applicant's claim — namely that the illegality of including in the quota provisions output which is destined for exportation cannot afford any justification for the need to limit the amounts which may be delivered in the common market. If, as demonstrated above, it was indeed not wrong to introduce general restrictions on production which covered exports as well, then any partitioning according to market outlet is clearly unacceptable, otherwise the main objective of the provisions, namely to adapt supply to a lower level of demand on the Community market, would clearly not be attainable.
(bb)
The Commission was also right in contending that, since the limits relate only to production quotas, it is really impossible to speak in terms of “delivery quotas”. Indeed, deliveries from stock (that is, from earlier production) were not limited, and this rules out any claim that the Commission had interfered with stock levels.
The Commission was equally right to maintain, in response to the applicant's important arguments derived from Article 29 of the Convention on the Transitional Provisions, that the point should not be overlooked that the provision was concerned, not with controlling delivery quotas generally but with limiting the net increase in deliveries from one territory of the Common Market to another. The provisions of Articles 5 and 8 Decision 1831/81, however, are quite distinct since they deal purely and simply with deliveries in the common market, not with controlling the channels of delivery within that area.
(cc)
Lastly, it is my opinion that it is not really a problem of implied powers which is at issue but only a proper application of Article 58 of the ECSC Treaty, and one which is consistent with the principle of proportionality.
Its purpose is to cope effectively with a crisis due to a decline in demand, by ensuring that supply is adapted to demand. If — as has been shown, legitimately, — the result is comprehensive restrictions on production which embrace exports as well, it is easy to imagine how the attainment of the desired goal might be endangered should marketing difficulties in nonmember countries force the consignments essentially destined for them on to the common market. There are only two possible countermeasures: either an imposed restriction of production in accordance with the decline in foreign demand, or the creation of machinery which indirectly causes undertakings of their own accord to modify their output whenever demand from nonmember countries declines, thereby keeping constant the maximum level of domestic supply. It is precisely the second solution which the disputed provisions aim to achieve, that is to say, in certain situations they obviate the need for further imposed reductions in output such as would, of course, be possible.
Seen in that light, the provisions, observing as they do the principle of proportionality, undoubtedly keep within the limits of Article 58 and there can be no question of an encroachment upon areas lying beyond the scope of the Treaty which would have called for the procedure under Article 95.
IV — Fourth submission
Finally, the applicant has also expressed the view that there has been no proper assent by the Council of Ministers to the quota provisions in Decision 1831/81, and therefore no valid legal basis for the notification which it challenges.
The same objection was brought into the proceedings in Case 119/81 (cited previously), that is in the context of Decision 2794/80. At the time, the applicant's principal assertion — which was initially given prominence in the present proceedings as well — was that it was insufficient for the Council to assent to the intention of introducing quota provisions, that is to say, as to whether they should be introduced, but rather that the assent was required to a fully formulated draft decision, and such assent is clearly lacking. The applicant has relied mainly upon an interpretation of Article 58, upon comparable phenomena in national administrative and constitutional law and also upon the need to legitimize the quota decision in sociological terms.
It seems to me that the applicant relinquished that extreme point of view in the course of the present proceedings. At all events, the claim was not upheld by the judgment in Case 119/81 (cited previously), after my colleague, Mi-Advocate General VerLoren van Themaat, had convincingly cast doubt upon it and had emphasized, on the basis of an analysis of Article 58, that even if it were insufficient merely to assent to the question whether the provision should be introduced, assent was adequate if given to their broad outlines, as was undoubtedly done in the case in point.
Although the existence of an assent by the Council of Ministers is not in doubt — which would hardly be possible, in view of the press notices laid before the Court which had been issued by the General Secretariat of the Council concerning the Council's meetings of 4 and 24 June 1981, together with the announcement made by the President of the Council (reprinted in Official Journal C 196 of 4 August 1981, page 6), according to which the Council, on 4 June 1981, had given the assent requested by the Commission — the applicant further demands that all the documents submitted to the Council, together with minutes and tape recordings of the meeting in question, should be disclosed; it alleges that that is the only means of establishing with any certainty that the Council's assent did in fact have the necessary content, embracing all the essentials, and that subsequently no substantial amendment was made to the Commission's proposal which might have deviated from the injunctions and conditions laid down by the Council.
There are no cogent grounds for concurring with the applicant on that point. As we know, the Commission's request to the Council dated 22 May 1981, which has been submitted to tne Court together with the request relating to Decision 2794/80, not only formulated general intentions but set forth all the essential points of the provisions. The Commission has also rightly pointed out that the applicant was unable to disclose any deviations of the decision from the Commission's draft, and failed to put forward any incisive reasons for supposing that agreement on important points was lacking. However, since the Court of Justice, in circumstances which relate correspondingly to Decision 2794/80, found in Case 119/81 (cited previously) that it was undisputed that the Council's assent had been sought by the Commission in accordance with Article 58 of the ECSC Treaty and that the Council had in fact approved the draft measures about which it had been informed by the Commission (paragraph 7), and since the Court dismissed the applicant's objection in this regard arid its request for proof, emphasizing that the applicant had not been able to adduce any evidence which might give reason to doubt that the Council was given the information it required and that it had expressed its assent (paragraph 8), I fail to see how a different view could now be taken, especially as in the present instance the fact that no Member State espressed any criticism or spoke of the Commission's having exceeded its powers may be seen as an important indication that Decision 1831/81 was properly adopted.
Moreover, the above holds good not only for Decision 1831/81 but also for the amending Decision 1832/81; in that connection the Court was assured that the same procedure was observed, and the applicant has in any case made no special submissions on the matter.
B — The alternative claims
For the sake of completeness, a few brief remarks are now called for concerning the alternative claims formulated in the application.
I —
As far as the alternative claim number 2 (a) is concerned, as I have already indicated, it does not seem to have been pursued following the amendment to the first submission, since thereafter the applicant ceased to concentrate on average utilization within the Community to which its own utilization was to be adapted.
There are therefore no grounds for investigating further the problems involved, nor indeed are there any grounds for taking the tacit withdrawal of the request into consideration in the order on costs. For, if my views are accepted, the main application must be regarded as well founded and thereafter, since the applicant will basically be the successful party, all the costs of the proceedings will be borne by the Commission.
II —
The alternative claim number 2 (b) sought a declaration that the production quota for Category I a was void in so far as it covered cold-rolled plate of 3 mm and over. It was submitted in the application that Article 1 of Decision 1831/81 — which provides that Category I a shall include inter alia“cold-rolled plate of 3 mm and over (cut or coiled)” — constituted, unless and until the Council unanimously decided to extend Annex I to the ECSC Treaty, an infringement of Articles 81 and 84 thereof, read in conjunction with that annex, because the Treaty covers only “cold-rolled sheets under 3 mm”.
In reply the Commission has explained that the definition to which the objection relates was rectified by Decision 2804/81 of 23 September 1981, Article 1 (9) of which provides inter alia that the words “Hot-rolled wide strip for processing into ...” shall be inserted before the words “cold-rolled plate of 3 mm and over” in the fifth indent of the second paragraph of Article 1 of Decision 1831/81. The applicant therefore stated that that issue had been resolved and merely awaited a decision as to costs.
However, the matter of costs may be ignored, because in my view the alternative claim is irrelevant in any case. If, on the other hand, the Court takes the view that the main application must be dismissed, it would presumably have to be conceded with regard to the alternative request number 2 (b) that the Commission gave cause for the complaint, and consideration would then have to be given to ordering it to bear at least a part of the applicant's costs.
III —
Finally, it may be observed with regard to the alternative claims numbers 2 (c) and (d) that the arguments on the subject may — as indicated in my examination of the main application — hardly be considered sound. The claims would therefore, in any event, have to be dismissed as unfounded, for which reason no further investigation of the Commission's doubts as to their admissibility is called for.
C — To summarize:
In my opinion, part of the objections put forward to general Decision 1831/81 is justified. That leads to the conclusion that the quota decision notified to the applicant is devoid of any valid legal basis, and must therefore be declared void. In the light of that outcome the costs of the proceedings must also be awarded against the Commission.
( 1 ) Translated from the German.
( 2 ) Case 311/81, Klòckner-Wcrke AG v Commission.
( 3 ) Case 136/82, Klöckner-Werke AC v Commission.
( 4 ) Judgment of 7 July 1982 in Case 119/81, Klòchwr-Wcrke AC v Commission [1982] ECR 2627.
( 5 ) Judgment of 3 March 1982 in Case 14/81, Alpha Sleel Lut. v Commission [1982] ECR 749.
( 6 ) Case 303/81, Klöckner-Werke AG v Commission.
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