JUDGMENT OF 11. 12. 1980 — CASE 1252/79 LUCCHINI v COMMISSION
In Case 1252/79
THE COURT (Second Chamber) composed of: P. Pescatore, President of Chamber, A. Touffait and O. Due, Judges, Advocate General: F. Capotorti Registrar: H. A. Rühi, Principal Administrator
gives the following
JUDGMENT
Facts and Issues
The facts of the case, the course of the procedure and the claims, submissions and arguments of the parties may be summarized as follows:
I — Facts and procedure
This case concerns the sale of merchant bars by the Italian undertaking Acciaierie e Ferriere Lucchini SpA (hereinafter referred to as “Lucchini”) by way of export to other countries of the Community at prices lower than those fixed by Commission Decision No 3000/77/ECSC of 28 December 1977 fixing minimum prices for hot-rolled wide strips, merchant bars and concrete reinforcing bars (Official Journal L 352, p.1)
As the result of an investigation carried out at that undertaking and an inspection of the certificates of conformity, the Commission found that, when merchant bars were exported to France and Austria during 1978, then to the Federal Republic of Germany in September and October 1978, Lucchini did not comply with the provisions of Decision No 3000/77/ECSC. In fact it complained that Lucchini, as far as the former transactions were concerned, sold below the minimum prices fixed by Decision No 3000/77/ECSC and, as far as the latter transactions were concerned, also charged effective selling prices lower than the alignment prices which should have been equal to or higher than the minimum prices, by omitting to charge for certain extras for quality, in particular for size and length, and extras for quantity.
Under the provisions of Article 36 of the ECSC Treaty, the Commission gave Lucchini the opportunity to submit its observations. Having obtained explanations and heard the director of the undertaking at a hearing in Brussels on 7 May 1979, the Commission abandoned the complaints relating to the sales in Austria; however, those relating to the sales in France and in the Federal Republic of Germany were maintained and led to the imposition on Lucchini of a fine of 25000 European units of account, in other words LIT 28770000, by decision of 31 October 1979, which was notified on 16 November 1979. The applicant lodged this application against that decision; the application was received at the Court Registry on 21 December 1979.
After hearing the report of the Judge-Rapporteur and the views of the Advocate General, the Court decided to open the oral procedure without any preparatory inquiry.
By order of 18 June 1980 the Court, pursuant to Article 95 (1) of the Rules of Procedure, decided to assign the case to the Second Chamber.
II — Conclusions of the parties
In its application, the applicant claims that the Court should:
“— Primarily, annul the decision of 31 October 1979 imposing a pecuniary sanction on the undertaking on the ground of the illegality of Decision No 3000/77/ECSC which the applicant is alleged to have infringed and which the applicant considers vitiated by infringement of and manifest failure to observe the Treaty, misuse of powers and infringement of essential procedural requirements; — In the alternative, annul the said decision of 31 October 1979 on the ground of illegality consisting in defects pertaining to that decision in the form of failure to observe rules of law relating to the application of the Treaty, violation of the general principles of law and infringement of essential procedural requirements; and — In the further alternative, amend the contested decision by making provision for a purely nominal fine; — In any case, order the defendant to bear the costs”.
In its reply, the applicant claimed that the Court should:
“— Annul the individual decision of 31 October 1979 on the ground of illegality consisting in defects pertaining to that decision in the form of failure to observe rules of law relating to the application of the Treaty, violation of the general principles of law and infringement of essential procedural requirements; — Amend the contested decision by making provision for a purely nominal fine; — Order the defendant to bear the costs”.
The Commission contended that the Court should:
“— Dismiss the application as unfounded; — Order the applicant to bear the costs”.
Ill — Summary of the submissions and arguments of the parties
Taking note, in its reply, of the judgment of 18 March 1980 in the joined cases known as “the concrete reinforcement bars cases” in which the Court dismissed the submission based òn the illegality of Decision No 962/77/ECSC of 4 May 1977 (Official Journal L 114, p. 1), Decision No 3000/77/ECSC merely prolonging that decision as regards concrete reinforcing bars and extending the system of minimum prices to hot-rolled wide strips and merchant bars, the applicant abandoned its first submission based on the illegality of Decision No 3000/77/ECSC and merely contests the individual decision imposing the fine.
A — Submission based on the failure to observe rules of law relating to the application of the Treaty and violation of general principles of law
(a) Alignment in general
Decision No 3000/77/ECSC laid down in respect of each producing country a minimum selling price for iron and steel products, each undertaking being obliged, on this basis, to publish the pricelist of the goods which it markets. These pricelists lay down a basic price which is affected by various additional charges or extras according to the quality, size and quantity of the product sold, it being specified that in no case may the prices be lower than the minimum prices.
As regards exports to Community countries, Decision No 3000/77/ECSC has maintained the already existing possibility for a producer to use the alignment procedure which enables him to apply, rather than his own pricelist, that of an undertaking in the country of destination.
The applicant claims that, contrary to the Commission's allegations, it complied with the functioning of the alignment mechanism. In order to show this, it maintains that when Decision No 3000/77/ECSC was adopted the Community authorities, having regard to the special situation of the industries in Brescia already described in the concrete reinforcement bars cases, formally assured Italian producers that they should apply, in cases of alignment, not the pricelist of an undertaking in the country of destination, but the minimum prices of that same country “and no more”.
Moreover, the Commission itself acknowledged that it acted preater legem in this field since it admitted that it had “closed its eyes” to the infringements of the rules relating to the alignment procedure and agreed not to impose any fine where prices were lower than those of foreign pricelists where the prices thus obtained. were still higher than the minimum prices.
The applicant states that its objective is not to turn against the Commission the argument of the flexibility which the Commission must show towards undertakings but simply to show that the Commission was “the first to abandon the reference to a specific pricelist of another producer with regard to alignment”.
The Commission formally contests this argument and states that it did not authorize alignment on the minimum price of the country of destination. It only permitted the seller to take as a reference not the basic price of a producer (which may be considerably higher than the minimum price) but the minimum price of the producing country in so far as that seller also applied the extras which, in the case of the Federal Republic of Germany, are substantially identical in all pricelists. It showed flexibility in not requiring the undertaking to prove on what pricelist it aligned itself if it complied with the general conditions of sale applied in the Federal Republic of Germany, and in not taking action against undertakings which took as the basic price for their sales the minimum price even if they did not abide by the basic price of foreign producers, riowever, although it did not penalize infringements of Article 60, the Commission always required “that all the components of the alignment pricelist which were significant as regards the application of decisions on minimum prices should be abided by”.
(b) Extras for quality
The applicant maintains first of all that the extra for quality is included in the minimum prices, as follows from Article 2 (1) of Decision No 3000/77/ECSC. This argument is confirmed by the fact that in the following decision, Decision No 3139/78 of 29 December 1978, the Community legislature took care to delete the expression “including extra for quality”.
Moreover, it considers that by authorizing this special application of. alignment on the minimum national price, the Commission at the same time abandoned the requirement that extras for quality which may only be laid down in the producers' pricelists should be taken into account; thus, by not penalizing a sort of alignment which the applicant describes as “unlawful”, the Commission cannot on the other hand require the persons under its administration to apply rigidly rules which it itself has failed to apply.
The Commission is rigorously opposed to the applicant's interpretation. Article 2 (1) of Decision No 3000/77/ECSC means, in its view, “that it is necessary to consider as included in the legal minimum price the extras which may have been laid down before the minimum prices came into force in respect of the qualities for which a minimum price was fixed and which are listed in Article 1” of that decision: thus, if, prior to Decision No 3000/77/ECSC, a pricelist had laid down a price of LIT 198000 for concrete reinforcing bars and an extra of LIT 7000 for improved adhesion concrete reinforcing bars, that extra should not have been maintained, since the minimum price for improved adhesion concrete reinforcing bars was LIT 205000 and thus included that extra.
It considers moreover that there is no contradiction with Decision No 3139/78 and bases an argument a contrario on Article 4 (3) of Decision No 3000/77/ECSC, “an ad hoc provision which provides for cases where pricelists contain effective prices, in other words prices in which the basic prices include extras for quality and/or size”, deducing from this that the minimum price contains solely any extra provided for quality on the basis of which that minimum price is fixed. It quotes by way of example the pricelist of the London Works and Cockerill undertakings in support of its argument.
(c) Extras for quantity
The applicant emphasizes first of all that Italian producers do not bear any additional charge when supplying their clients small quantities and that it is therefore “neither fair nor just” to require an additional charge on the basis of something which does not exist especially since, conversely, it grants them discounts for large supplies. In its view, that extra does not correspond to the facts of the market; in fact, Lucchini manufactures 450 varieties of product, a figure multiplied by the various qualities and, normally, the demand for each of those angles, shapes and sections, especially the smallest, is considerably less than 25 tonnes, a threshold beyond which no additional charge for small quantities is laid down. In fact, it is necessary to take into account the quantity of goods supplied during the year, not at each delivery, since customers prefer to receive what they need immediately rather than to stock materials and use them over a period of time.
Next, it calls in question the very principle of extras for quantity because of “the statements made by the Community authorities intending to ensure that the minimum prices are adhered to without additional conditions”.
Moreover, it relies upon its good faith, first, recalling that additional charges for reduced quantities do not exist in Italy and, secondly, maintaining that “producers in other Member States” do not charge the additional charges in question either and that despite this no action is taken against them. Thus the general principle of legitimate expectation is infringed.
Finally, the applicant takes note of the fact that the Commission limited, for the purposes of under-pricing with regard to which a fine could be imposed, the calculation of the extras for quantity to the maximum figure of DM 60 per tonne even where the German pricelists laid down larger amounts.
The Commission replies that in the cases of alignment referred to in this instance it is necessary to apply not its own pricelist but that of a producer in the country of destination. It is irrelevant, therefore, that there are no extras for quantity in Italian pricelists. On the contrary, German pricelists all lay down additional charges for small quantities.
Even if it were correct that over a oneyear period the orders of Lucchini's customers are for a quantity of more than 25 tonnes, the additional charge for small quantities would still be payable since the German pricelists provide for it in respect of each Posten, in other words “each consignment of materials which forms the subject-matter of a single order of identical length, breadth and quality, to be delivered at a single time to the same address”; thus the annual quantity is not important in this instance. It states moreover that German undertakings apply that provision and that the checks carried out have not revealed any infringements in this respect.
The Commission adds that even including these extras for quantity in the selling prices charged by the Italian company, the alignment option enabled the applicant to charge prices considerably lower than the minimum prices by itself defraying the high transport costs.
(d) The state of necessity in which Lucchini found itself
The applicant maintains in the alternative that it acted out of necessity since charging such extras for quantity would have compelled Lucchini to sell at a price higher than the effective price of foreign producers which would inevitably have entailed the risk of “losing the traditional ECSC markets which constitute a vital need as far as Lucchini is concerned”.
The Commission recalls first of all that “apart from the question of principle relating to the permissibility of a state of necessity as an exonerating factor in the absence of an express rule” the infringements in question represent, as the applicant itself states, only a tiny proportion of its turnover; therefore, in fact, the applicant was not in a state of necessity. Moreover, so as to preserve the competitiveness of the undertakings in Brescia, the Commission has permitted the abovementioned derogations to the principles of alignment.
B — The submission based on the infringement of essential procedural requirements
The applicant contests the legality of the decision of 31 October 1979 on the ground of the failure to state sufficiently the reasons on which that decision was based. It complains in fact that the decision did not state the method used to determine the amount of under-pricing and consequently the fine, in that the Commission reconstructed the price components which, in its opinion, should have been charged only as regards some of the sales in question whereas “as regards the major proportion of the cases of under-pricing, only the total amount under-priced was stated without further explanation”. It points out moreover that the explanations supplied by the. Commission in its defence, apart from the fact that they are not complete either, were given after the adoption of the individual decision imposing the fine: it is therefore impossible to deny that there has been an infringement of essential procedural requirements.
The Commission replies that its letter of 14 December 1978 sent under Article 36 of the ECSC Treaty clearly set out each component of the under-pricing and that additional information as to the methods of calculation used with regard to each infringement were supplied to Lucchini by letter of 18 January 1979. Moreover, the representative of that undertaking, at the hearing on 7 May 1979, did not ask questions in this connexion which means that the allegations were clear to him. The Commission adds that schedules listing the sales complained of were annexed to the decision imposing the fine.
C — The applicant wonders, finally, how it was possible to accuse it of an infringement of minimum prices as a result of improper alignment when the Commission had “abandoned the alignment procedure” laid down by the Community rules and why the Commission did not immediately take action as regards the infringement of the rules on alignment.
The Commission recalls first of all that the alignment procedure was not disregarded but that certain aspects of it had no reason in a system of minimum prices; consequently, it was possible to take action on the ground of an infringement of minimum prices as a result of improper alignment. It adds that until now it has only initiated procedures relating to the infringement of minimum prices but that it is ready to examine whether another fine is appropriate under Article 60.
D — In the further alternative, the applicant requests that the contested decision should be amended and that it should be ordered to pay a nominal fine.
The Commission contends that the fine, which was fixed at 25% of the under-pricing, should be upheld, as in the other concrete reinforcing bars cases. It emphasizes that the applicant's conduct caused considerable damage to all the undertakings in the ECSC which must be punished by a substantial fine, as the Court emphasized in its judgment of 12 July 1979 (Rumi, Case 149/78 [1979] ECR 2523).
IV — Oral procedure
At the hearing on 9 October 1980, the applicant, represented by Mr Marchesini, Advocate at the Milan Bar, and the Commission, represented by Mr Prozzillo, presented oral argument and replied to questions put by the Court.
The Advocate General delivered his opinion at the sitting on 12 November 1980.
Decision
1. By application lodged at the Court Registry on 21 December 1979, the Italian company Acciaierie e Ferriere Lucchini SpA brought, under Artide 36 of the ECSC Treaty, proceedings for the annulment and, if necessary, the amendment of the individual decision of 31 October 1979 by which the Commission imposed on it a fine of 25000 European units of account, in other words Lit 28770000, for infringements of general Decision No 3000/77/ECSC of 28 December 1977 fixing minimum prices for hot-rolled wide strips, merchant bars and concrete reinforcing bars (Official Journal L 352, p. 1). The contested decision was taken after an investigation had been carried out at the Lucchini undertaking; the Commission complained that, as regards sales of merchant bars in France, it sold below the minimum prices fixed by Decision No 3000/77/ECSC, and as regards sales of the same product in the Federal Republic of Germany, that, by not charging certain extras for quality and quantity laid down in the German pricelists, it charged effective selling prices below the alignment prices which should have been equal to or higher than the minimum prices.
2. The applicant first of all requested the annulment of the individual decision on the ground that the basic decision, Decision No 3000/77/ECSC, was illegal. In its reply, it subsequently took note of the judgment delivered on 18 March 1970 in Joined Cases 154/78, 205 and 206/78, 226 to 228/78, 263 and 264/78, 31, 39, 83 and 85/79, SpA Ferriere Vahabbia and Others, in which the Court dismissed the submission based by the applicants on the illegality of general Decision No 962/77/ECSC of 4 May 1977 (Official Journal L 114, p. 1); Decision No 3000/77/ECSC merely prolongs that decision as regards concrete reinforcing bars and extends it to hot-rolled wide strips and merchant bars. Consequently, the applicant limited its application to the annulment of the individual decision imposing a fine of 31 October 1979 on the ground of illegality “consisting in defects pertaining to that decision”; in the alternative it requested the amendment of that decision by reducing the fine to a “purely nominal” level.
3. It is necessary to take note of that amendment of the applicant's claims and to examine the four submissions which it puts forward for the purpose of contesting the legality of the individual decision of 31 October 1979.
4. First of all, the applicant maintains that it complied with Decision No 3000/77/ECSC by exercising the faculty of alignment granted by Article 60 (2) (b) of the Treaty and expressed within the framework of that decision by Article 6 which provides as follows : In this respect it emphasizes that, in calculating the alignment, it did not take into account extras for quality on the ground that it follows from Article 2 (1) of Decision No 3000/77/ECSC that minimum prices are basic prices exbasing point “including extra for quality” and that the meaning of these words is emphasized by the fact that the Community legislature deleted the expression “including extra for quality” in the subsequent decision, Decision No 3139/78/ECSC of 29 December 1978 (Official Journal L 370, p. 79). The Commission, for its part, maintains that alignment cannot be carried out on the minimum'price in force in the Member State of destination but on the prices contained in the pricelists of the producers in that Member State and that the general conditions of sale which are applied in that State must be complied with; in particular, it claims that it was impossible to ignore the price differences corresponding to extras for quality and quantity.
“The minimum prices shall not preclude alignments on more favourable delivered prices based on the pricelists of other producers in the Community or in the countries referred to in Article 5.”
5. In this connexion, it is appropriate to recall that it follows from Article 4 (2) and (3) of general Decision No 3000/77/ECSC that surcharges or extras of any sort must in fact be shown in pricelists and conditions of sale. Alignment on the pricelists of producers of the Member State of destination can therefore only be carried out on the effective prices listed therein for similar products corresponding to precise specifications, including all extras. Otherwise the option of alignment on the actual prices of competitors referred to in'Article 6 of general Decision No 3000/77/ECSC would be meaningless.
6. With regard to the argument from the wording of Article 2 (1) of Decision No 3000/77/ECSC, it is necessary to emphasize that that provision must be understood as meaning that the minimum legal price included extras which may have been laid down in the pricelists published before minimum prices were introduced by Decision No 962/77 of 4 May 1977, but exclusively as regards the qualities for which the minimum legal price was fixed and which are listed exhaustively and specifically in Article 1 (2) of the decision; this measure does not therefore concern merchant bars as a whole but only merchant bars in ordinary mild steel, the only quality of merchant bars specified in the decision which cannot include any additional charge whatsoever. It is moreover necessary to understand to this effect the interpretation given by the Court to Article 2 (1) of Decision No 3000/77/ECSC in the judgment of 18 March 1980 (Case 154/78, Valsabbia and Others, paragraph 176 of the decision), which only referred to concrete reinforcing bars.
7. Intra-Community alignment cannot in any case enable goods to be sold below the minimum prices since all pricelists of Community undertakings must comply with the decision establishing those minimum prices. It follows that any sale by alignment below the minimum prices constitutes not only an improper intra-Community alignment, which is an infringement of Article 60 of the Treaty, but also an infringement of the minimum prices. The first submission is therefore unfounded.
8. Secondly, the applicant states that there has been an infringement of general principles of law, in particular of the principle of legitimate expectation and that of the prohibition or discrimination. The Commission, it claims, has failed to fulfil its legitimate expectation by adopting temporarily a permissive attitude towards other undertakings guilty of the same actions and putting aside this conduct with regard to Lucchini. The applicant claims that the Commission also discriminated against it in relation to those undertakings, more precisely, with regard to the additional charge for small quantities.
9. It is necessary to observe first of all that a concession on the part of the authorities cannot make an infringement legitimate, still less justify making that infringement more serious. The fact that the Commission may have shown some laxity as regards alignment not on specific pricelists but on a basic price formed by the minimum price in no way justifies selling at prices lower than the minimum prices or the failure to take into consideration extras for quality or quantity. Moreover, it has not been shown that producers in other Member States benefited from a concession enabling them not to charge the extras for quality or quantity.
10. With regard to the alleged discrimination, which the applicant claims follows from the concession to certain undertakings in respect of considerable under-pricing as regards extras for quantity, it is necessary to state that such discrimination only occurred before the coming into force of the rules the infringement of which forms the basis of the contested decision. The second submission is therefore unfounded.
11. Thirdly, the applicant maintains that it acted out of necessity so as not to lose traditional markets of vital importance to it.
12. Without its being necessary to examine whether this threat could have given rise to a state of necessity justifying its conduct, it is sufficient to state that the applicant has not shown that it was in danger of bankruptcy or winding-up, especially since, as the applicant itself states, the amount of the improper sales relates only to a tiny proportion of its turnover. This submission must therefore be dismissed.
13. Fourthly, the applicant pleads the infringement of essential procedural requirements on the ground that the contested decision did not state sufficiently the grounds upon which it was based. The applicant claims that it was therefore not possible to find out from the contested decision exhaustive details of the method of calculating the under-pricing, and consequently that of calculating the fine imposed.
14. It is clear from the letters of 14 December 1978, 18 January 1979 and 8 February 1979 sent by the Commission to the applicant that the Commission provided explanations as to its methods of calculation in this connexion. Those explanations must have appeared to be adequate since it follows from the minutes of the hearing of the applicant's representative on 7 May 1979 that the latter did not ask any questions in this connexion. It follows from these findings that the applicant, which participated in the procedure whereby the contested decision was drawn up, knew the methods of calculation used by the Commission and that, in these circumstances, the statement of the grounds upon which the decision was based itself, although succinct, must be considered to be sufficient. This complaint must therefore be rejected.
The amount of the fine
15. In the alternative, the applicant requests the amendment of the contested decision and that it should be ordered to pay a nominal fine. The Commission insists that the fine should be maintained and refers to the precedent formed by the decision adopted in the judgment of 12 July 1979 (Case 149/78, Rumi [1979] ECR 2523).
16. The applicant has not put forward any arguments which may, even partially, justify its conduct on the basis of circumstances particular to it, and the Commission, by taking into account the amount of the improper sales and the present financial resources of the undertaking, took the facts of the case into consideration fairly. It is therefore unnecessary to uphold the request for reduction of the fine.
Costs
17. Under Article 69 (2) of the Rules of Procedure, the unsuccessful party shall be ordered to pay the costs.
18. Since the applicant has failed in its submissions, it is necessary to order it to pay the costs.
On those grounds, THE COURT (Second Chamber) hereby:
1 Dismisses the application;
2 Orders the applicant to pay the costs.